Communications over the world wide doesnt depend on sytax or eloquence or rethoric or articulation but on the emotional context in which the message is being heard.
People can only hear you when they are moving toward you and they are not likely to when your wordss are pursuing them
Even the choices words lose their powe when they are used to overpower.
Attitudes are the real figures of speech '-Friedman

Sunday, July 25, 2010


picture of Edward de BonoEdward de Bono is regarded by many to be the leading authority in the world in the field of creative thinking and the direct teaching of thinking as a skill. He has written 62 books with translations into 37 languages and has been invited to lecture in 54 countries. He is the originator of lateral thinking which treats creativity as the behaviour of information in a self-organising information system - such as the neural networks in the brain. From such a consideration arise the deliberate and formal tools of lateral thinking, parallel thinking etc.

...wordy people...

Politics is mainly made up of wordy people such as lawyers, teachers, journalists and trade unionists. Such people do not have much experience of constructive thinking - of making things happen. There are many engineers, architects, scientists or executives. Such people do not want to take the risk. If you are not elected the second time you cannot go back to where you were.

"On the Internet there is much misleading and erroneous information about 'lateral thinking' and 'parallel thinkingtm'. Some of the sites make false claims about me and my work. Because this is my official website I want to take this opportunity of clarifying matters regarding lateral thinking and parallel thinking

I invented the term 'lateral thinking' in 1967. It was first written up in a book called "The Use of Lateral Thinking" (Jonathan Cape, London) - "New Think" (Basic Books, New York) - the two titles refer to the same book.

For many years now this has been acknowledged in the Oxford English Dictionary which is the final arbiter of the English Language.

There are several ways of defining lateral thinking, ranging from the technical to the illustrative.

1. "You cannot dig a hole in a different place by digging the same hole deeper"

This means that trying harder in the same direction may not be as useful as changing direction. Effort in the same direction (approach) will not necessarily succeed.

2. "Lateral Thinking is for changing concepts and perceptions"

With logic you start out with certain ingredients just as in playing chess you start out with given pieces. But what are those pieces? In most real life situations the pieces are not given, we just assume they are there. We assume certain perceptions, certain concepts and certain boundaries. Lateral thinking is concerned not with playing with the existing pieces but with seeking to change those very pieces. Lateral thinking is concerned with the perception part of thinking. This is where we organise the external world into the pieces we can then 'process'.

3. "The brain as a self-organising information system forms asymmetric patterns. In such systems there is a mathematical need for moving across patterns. The tools and processes of lateral thinking are designed to achieve such 'lateral' movement. The tools are based on an understanding of self-organising information systems."

This is a technical definition which depends on an understanding of self-organising information systems.

4. "In any self-organising system there is a need to escape from a local optimum in order to move towards a more global optimum. The techniques of lateral thinking, such as provocation, are designed to help that change."

This is another technical definition. It is important because it also defines the mathematical need for creativity.


I introduced this term in my book 'PARALLEL THINKING' (published by Viking, London and Penguin Books, London).

Parallel thinking is best understood in contrast to traditional argument or adversarial thinking.

With the traditional argument or adversarial thinking each side takes a different position and then seeks to attack the other side. Each side seeks to prove that the other side is wrong. This is the type of thinking established by the Greek Gang of Three (Socrates, Plato and Aristotle) two thousand four hundred years ago.

Adversarial thinking completely lacks a constructive, creative or design element. It was intended only to discover the 'truth' not to build anything.

With 'parallel thinking' both sides (or all parties0 are thinking in parallel in the same direction. There is co-operative and co-ordinated thinking. The direction itself can be changed in order to give a full scan of the situation. But at every moment each thinker is thinking in parallel with all the other thinkers. There does not have to be agreement. Statements or thoughts which are indeed contradictory are not argued out but laid down in parallel.In the final stage the way forward is 'designed' from the parallel thought that have been laid out.

A simple and practical way of carrying out 'parallel thinking' is the Six HatsTM method which is now being used widely around the world both because it speeds up thinking and also because it is so much more constructive then traditional argument thinking.

Information on Lateral Thinking and Six HatsTM methods are available on this website. Particulars of training courses are also given.

Edward de Bono

Lateral Thinking Puzzles

  • lll
  • lll
  • lll
  • lll
  • lll
  • lll
  • lll
  • lll
  • lll

One of the classic lateral thinking puzzles involves nine dots, as in the example above. The challenge is to connect them all in four straight lines, without lifting the pen or pencil from the page. When you figure this one out you will have a new appreciation for the expression "thinking outside of the box." Lateral thinking puzzles like this help you increase your brain power by getting you out of thinking "ruts." They habituate you to creative thought as a normal function of thinking and problem solving

Lateral thinking

A way of understanding lateral thinking is through its opposite, vertical thinking. A vertical thinker is analytical, careful and precise, taking the data around a problem and analysing it with defined methodologies to find logical solutions. A lateral thinker understands vertical thinking, but chooses to deliberately outside of this bounded thought process. One reason that you have to dig in many other places is that creativity is like a joke: you do not get it until the punch-line at the end. It is not an easy concept to teach and a good way to learn is through examples. Here is one that de Bono used in his original book:

There is a girl who is to be gambled by her father against a heavy debt. If she draws a white pebble from a bag containing one white and one black pebble, the debt is cleared and she is freed. If, however, the black pebble is drawn out, she must go with the merchant. The dilemma is that she sees the merchant sneak two black pebbles into the bag, so what should she do? The vertical thinker considers all options and concludes that she should say what she has seen. The lateral thinker, however, thinks beyond this solution that, at best, leaves the girl with a 50% chance of freedom. If we think about the pebble that is left behind, which is black, all she has to do is pull out one pebble, and whilst keeping concealed, clumsily drop it where it cannot be found, then say ‘All we need to do is look at the pebble that is left.’

Lateral thinking is thus very much about standing back, looking at the big picture and understanding concepts. It also requires that you focus in on the parts that have perhaps been overlooked, challenging assumptions and seeking alternatives.

Saturday, July 24, 2010

Immigration: State's Right or Not??

While I am certainly against the new law in Arizona, I can also see how it stems from intense frustration at our federal government's lack of political will in stemming the tide of illegal immigrants. Those with agendas deliberately confuse "illegal immigrants" with "all immigrants" even though the two are entirely different.

It is not racist to not want illegal immigrants; it is simply law abiding. Upper class people and corporate interests don't care, because they are not directly hit-- their own jobs are not threatened in the least by cheap labor -- and moreover, they are benefited by the same cheap labor--cheap nannies, cheap maids, cheap farmers, etc etc. Corporations LOVES a pool of cheap labor--and illegal immigrants, desperate to find a job, with no power to protest at all, are perfect fodder.

This falls under the same poison that has been spreading throughout our country--patriotism and the laws of the people are irrelevant. Only money for the top few--that is all that matters. They will do anything--break any law, destroy any life, rip apart any social fabric--anything so that they can make more money.

Meanwhile everyone  is putting this on Arizona instead of  the lap of the real culprits? Washington knew of this problem and has watched it grow for more than 20 years.

People have voted their reps and their Presidents in because they promised to do something about the problem.

Many think this is a new issue caused by  Gov. Jan Brewer or that she must be a republican, not actually factual assumptions.

In 2006 then AZ.  Gov. Janet Napolitano shocked her fellow democrats when she called for National Guard troops at the border and received them later in the year by former President Bush. (more info here)  In 2007  former AZ Gov. Janet Napolitano warned her party leaders that they must do something about immigration or that it might harm them in the then mid-term elections. As you can see this is not a new issue for AZ. governors and for good reasons according to polls of AZ citizens, 68% in favor of Senate Bill 1070.

Arizona has been hit very hard with drug mules, human trafficking and  the drug lords' war in Mexico and the violence has been spreading over the border to AZ for years. Why many weren't surprised what she said at the signing of the bill, "Washington has had long enough to do something. Now WE need to protect ourselves".

This law is a result of the frustration and rage that Arizona builds on, however repulsively. Until our government address that frustration and rage by actually implementing our laws against illegal immigrants (ILLEGAL, not LEGAL), such laws will continue. You have to go for the root cause, not the symptom.

Admittedly this discussion would have been far more insightful if the individuals actually discussed the legal merits and shortcomings of the law. In this debate, no one seems to be addressing whether this law will survive under federal legal precedent.

 I will try to address some of the legalities of this bill as it relates to the impact it might have  on a federal level.  One argument of the federal government is  no state law can interfere with federal laws and their abilities to enforce said  laws.

This is a very weak argument at best since in 2002 DOJ sent out a memo stating that federal law does not preempt the states from making arrests for civil and criminal violations of federal immigration law. (click here if you wish to read more about the DOJ memo)

The suit filed by  Attorney General Eric Holder on Behalf of President Obama states three specific, “causes of action”, which the Department of Justice claims are unconstitutional.

The “first cause of action” alleges a “violation” of the Supremacy Clause of the Constitution.

The “second cause of action” alleges a “violation” of the “Preemption clause” of the Constitution.

The “third cause of action” alleges a “violation” of the “Commerce clause” of the Constitution.

Those ”causes of action” can be read here on pages 23 & 24.

The ACLU claims that the AZ law would allow unconstitutional racial profiling by police, this claim  has more merit as racial profiling means not only profiling by  individual's race but also one's ethnicity.

Yet even this claim falls short of being  proven, for the ACLU to prove it's claim that the AZ immigration bill would allow racial profiling by AZ law enforcement, ACLU would have to show how AZ lawmakers only intend to target groups of people due to their race or ethnicity. Since illegal immigration is not limited to only one race or ethnicity the ACLU have their work cut out for them.
*note*  Obama Administration and Attorney General Holder’s DOJ did not allege “racial discrimination” or “racial profiling” in the lawsuit.

The solution doesn't lay with States vs: President or even class action lawsuits by organizations such as the ACLU. The real solution can be found in the improvement of the Mexican economy and a more equitable distribution of its wealth so that its citizens don't become so desperate they feel compelled to risk their lives and those of their families to travel to another country to seek a decent way of life. Mexico is a country we seem to be desperate to emulate, where the rich become the super rich and the rest of the population struggles just to survive.

Just My Thoughts

Wednesday, July 21, 2010

Obama suspends Arctic oil drilling plans

BP may sell its refineries and petrol stations

THE board of BP is believed to be examining options for the oil giant
including offloading its refining and petrol stations businesses.
The company declined to comment on "market rumours" yesterday
though it has been suggested that the board has drawn up a
report entitled Future BP, which will be discussed at
the board meeting a week tomorrow when the company is due to unveil

One industry source, who was unaware of the report,
said that rumours about the company splitting itself up
were something that came up regularly.
However, there were strong indications that disposing of assets
may be a response to political pressure for change followin
the oil spill in the Gulf of Mexico.

Its plans are said to include selling its American operations -
with Exxon Mobil considered a potential buyer -
and ending its practice of outsourcing large projects, a move
that appears to deal with the problems associated with
the Deepwater Horizon crisis.
The directors expect to face the Senate committee
investigating possible links with the release
of the Lockerbie bomber.
BP could also face a ban on offshore drilling in the US.

Selling the downstream business would affect 50,000
employees,more than half its workforce.

The EU energy commissioner was criticised yesterday
for calling for a temporary ban on drilling in the North Sea.

Trade body UK Oil & Gas told Scotland on Sunday
it risked £6 billion of investment.

Saturday, July 17, 2010

Manu Ginobili Siempre esta en Argentina"

"<span class=

Al leer esta nota acerca de Manu Ginobili,( La Nación : Siento Culpa de no ir al mundial) muchas cosas vienen a mi mente.El Por que, uno como muchísimas personas que lo admiran tanto ,le creen, lo sienten, es el fiel reflejo de un deportista talentoso y una persona tan humana, tan patriota mas que muchos que dicen serlo, el lo demuestra siempre estando en Argentina o en Estados Unidos o cualquier rincón del mundoManu es así tan directo, elocuente , sensible y lógico.Lo que transmite es siempre genuino y lo bueno que llega a todos no solo a los expertos o profesionales del Basquetbol , o a una elite , el hizo que este hermoso deporte vibre en mucha gente que no estaba involucrada, el llevo y elevo nuestro espíritu de lucha, siendo lógico y no fanático , que la pasión no es fanatismo , que el amor por el deporte no tiene limites o contextos , el ama este deporte , siendo jugador de selección y/o de la NBA y/o observando las divisiones inferiores ,las ligas nacionales e internacionales , tratando que nuestro Basquetbol crezca , que haya un presente y un futuro, las instituciones deportivas , clubes etc que todo parece un laberinto pero lo mas importante si uno valorara cuanto bien hace el deporte a la sociedad , cuantas soluciones a miles de problemas puede ofrecer.

Manu Ginobili Entrevista "Siento culpa de no ir al Mundial"

Basquetbol: Entrevista"Siento culpa de no ir al Mundial"

En su regreso al país tras firmar un nuevo contrato y ser papá de mellizos, Manu Ginóbili señaló: "Me duele dejar al equipo con uno menos", pero aceptó que igual la Argentina puede ganar en Turquía | Deportiva | Martes 13 de julio de 2010

Wednesday, July 14, 2010

limit glacier mining activities with new bill

The Pascua Lama Mining Project Map at the Andes Argentina and Chile Image

The Lower House debated a new bill that contemplates the protection of glaciers and that seeks to limit mining activities in ice fields and their surrounding areas.
The arrival of this project to Congress was surprising, since until a few hours before, two glacier protection bills existed, one created by a ruling party senator and another created by an opposition deputy, each irreconcilable with the other. Both had caused strong criticisms in the last few days.
However, kirchnerite senator Daniel Filmus and opposition deputy Miguel Bonasso finally sat to dialogue and were able to arrive at a consensus project, which they immediately boosted for debate in the Lower House.

Drastic reduction of glaciers

There is a continuous and drastic reduction in all of the glaciers located in the Northeast sector of the Antarctic Peninsula,” Argentine glaciologist Pedro Skvarca told local media last week.

Skvarca, a leader of the Glaciological Division of the Trans-Andean Antarctic Institute, has worked for 38 years in Argentine bases and since 1994 has been a direct observer of the melting process in the Larsen ice barrier, which once lined the Antarctic’s entire eastern coast, from North to South.

The collapse of the Larsen ice barrier started with a 1,600km loss of land mass in the summers of 1994 and 1995, in a matter of just two weeks, a phenomenon known as Larsen A. Then, in the summer of 2001, another large chunk of ice twice the size of the previous one broke off as well, coined Larsen B.

Larsen then continued to lose about 20 km of mass between 2007 and 2009, and what remains today is an unstable trace of the former great ice barrier.

Other glaciers such as Boydell and Sjogren have lost 73km, receding from the land line (where the ocean ends) nine and 11 km, respectively, toward the interior.

“In this sector we have calculated the loss of almost 400km of ice that have already begun contributing to higher ocean levels,” said Skvarca.

The scientist recalled that in 1978 his U.S. colleague, John Mercer, first warned that the disintegration of the barriers at both sides of the Antarctic Peninsula would signal a very serious warming process, a phenomenon that has begun much sooner than Skvarca and most of the climate community initially expected. “These events have happened so fast that the scientific community was not prepared,” he said.

Natural phenomena like these, along with the breaking off of a colossal iceberg the size of Luxembourg from the Mertz Glacier on February 26, call attention to two issues Chile and the world must deal with in the future: how handle rising sea levels and the coming scarcity of fresh water.

Skvarca’s affirmation of continued, rapid glacier melt came just days before March 22 World Water Day event.

World Water Day, a United Nations initiative started in 1992 to raise general awareness of 21st century water issues, will be marked by conventions and scholarly discussion around the world. In Santiago the Comité Chileno para el Programa Hidrológico Internacional (CONAPHI) held its Water Day commemoration Monday in the Humberto Fuenzalida Auditorium at the University of Chile’s School of Physical Sciences and Mathematics, located at 850 Beauchef.

Tuesday, July 13, 2010

BP in talks with Apache and others on assets:

A BP petrol station is reflected in a car, in London April 28, 2009. REUTERS/Luke MacGregor

Under-pressure BP Plc (BP.L)(BP.N) is in talks with U.S. oil and gas company Apache Corp (APA.N) and other companies over potential asset sales, a source familiar with the situation said on Sunday, as it weighs how to pay costs related to theGulf of Mexico oil spill.

BP, the British energy major, said in June it wanted to raise $10 billion from sell-offs to boost a $20 billion fund to clean up the worst oil spill in U.S. history.
Talks over any potential asset sales are at an exploratory stage, the source said. It is uncertain any plans will be advanced enough to be disclosed before BP announces second-quarter earnings later this month.

The Sunday Times earlier reported that BP is in talks to sell up to $12 billion in assets to Apache. The paper said Houston-based Apache approached BP with a plan a few weeks ago and negotiations were under way on the structure of an agreement.

The Wall Street Journal said on Sunday a deal with Apache could be up to $10 billion and could include stakes in BP's Alaskan oil fields. The paper also said BP is moving along two tracks -- it is in talks with Apache on a package deal worth $10 billion and in talks with a number of companies on a spectrum of assets.
A BP spokesman declined to comment on market rumors or speculation. Apache also declined comment.

The Sunday Times reported the Obama administration had told Exxon Mobil Corp (XOM.N) and another group -- which it said was thought to be Chevron Corp (CVX.N) -- it would not block a bid for BP, citing oil industry sources.

Exxon had sought clearance from Washington although there was no certainty it would make a move, the newspaper said.

Separately, the Independent newspaper reported on Sunday that Standard Chartered PLC (STAN.L) was believed to be one of the banks behind a $5.25 billion crisis fund set up for BP in May.

The bank contributed $2 billion to the fund, with Credit Suisse (CSGN.VX), Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) said to be among those providing the balance, the newspaper said.

Standard Chartered was named in media reports in June as one of the banks advising on BP's asset sales.

Both Standard Chartered and BP declined to comment to the Independent on Sunday.

Separately, the National Commission on the BP Deepwater Horizon Spill and Offshore Drilling said in a statement it will hold its first public meeting in New Orleans on July 12-13.

It will include testimony from Gulf Coast citizens, BP, and leading U.S. officials, the commission

(Reporting by Megan Davies and Paul Sandle; additional reporting by Anna Driver in Houston editing by Hans Peters and Jeffrey Benkoe)

Monday, July 12, 2010

Spain wins first-ever World Cup title


Spain's place among world football's all-time greatest teams was assured Sunday when Andres Iniesta scored with four minutes of extra time remaining to beat the Netherlands 1-0 and clinch his country's first World Cup.

With the teams facing a penalty shootout after an often ill-tempered game of few clear chances, Iniesta collected a sliding pass into the area from substitute Cesc Fabregas and smashed the ball across goalkeeper Maarten Stekelenburg and in at the far post.

The goal clinched Spain's fourth straight 1-0 victory in South Africa and made the team only the third to be world and European champion at the same time.

At the final whistle, the Spanish players hurried to swap their blue shirts for their more familiar red colors in time to collect the trophy. They donned shirts decorated with a single gold star to mark their triumph, becoming the eighth nation to receive the honor in the tournament's 80-year history.

"It was a very difficult game but we have some fantastic players who knew how to respond to the problems," Spain coach Vicente del Bosque said. "They had a few chances but we had clear ones. We owe this to a great group of players."

The Dutch players trudged forlornly to collect their runners-up medals, the third squad from the Netherlands to finish second in football's biggest game.

Netherlands coach Bert van Marwijk took off his silver medal as soon as left the podium, with a look of disgust on his face at having failed to better the "Total Football" generation that lost the 1974 and '78 finals.

The teams created few clear chances in normal time at Soccer City but the game opened up slightly after a cagey opening hour in which the Netherlands broke up Spain's attempts to get its famous passing game going with physical play that brought the Dutch eight yellow cards. Cup&photo=11468945

Saturday, July 10, 2010

Intel Supercomputer Tracks Oil Spill

**Guest post by Intel's Phillip Davis

As the catastrophic April 20 oil spill in the Gulf of Mexico grows worse by the day, there's one question everyone in the region is asking: Where is all that oil going to go?

Now, thanks to a complex ocean current model simulated on a supercomputer housed in Intel's New Mexico facility, residents of the Gulf Coast have a better idea--though the new picture is not a pretty one.

Intel_Encanto.jpgIntel's 'Encanto' Supercomputer model paints grim picture

The new model suggests that the oil closest to the surface will be carried by the gulf's powerful Loop Current, which will carry it hundreds of miles, eventually hitting Florida. There it will rapidly curl around the bottom half of the state and dramatically pick up speed when it hits the Atlantic Ocean's Gulf Stream current, extending the spill's impact thousands of miles up the east coast of the United States.

"I've had a lot of people ask me, "Will the oil spill reach Florida?'" said Synte Peacock, a scientist at the National Center for Atmospheric Research (NCAR) in Boulder, Colorado, which created the model, known as the Parallel Ocean Program.

"Actually," she said, "our best knowledge says the scope of this environmental disaster will likely reach far beyond Florida, with impacts that have yet to be understood."

The idea to model the oil's flow came in the first days after the spill, she said. "A number of us were discussing why there were no longer-term scenarios about the impact of the spill," she recalled. "Then we realized we had a perfect model to do just that--the Parallel Ocean Program. It was a completely theoretical experiment we had done, sort of to see if we could measure the 'weather' in the ocean--its various flows and currents."

To model the oil spill, researchers reconfigured the model to have a definite starting point--the latitude and longitude of the "Deepwater Horizon" spill in the Gulf--and then let the model run to see what patterns emerged.

"We basically dropped a 'virtual dye' in the water, and then watched to see where it would go," she explained.

'Encanto' - one of the world's fastest supercomputers

But that simple description belies the tremendous amount of computer power needed to simulate the oil spill's problematic movements.

Intel's Xeon-powered Encanto supercomputer is housed in Intel's Rio Rancho campus. And that's where Intel and the state of New Mexico entered the equation.

Back in 2007, the state worked with Intel to create what was then the third-fastest supercomputer in the world (it's now ranked No. 32). Known as "Encanto," it's a water-cooled behemoth filling 28 tall cabinets and housing 3,500 quad-core Intel® Xeon® processors.

Simulations took thousands of computer hours

The first half-dozen simulations alone took Encanto more than 250,000 hours of computer time, using 1,000 cores in a massively parallel process. In other words, if all 1,000 processor cores had been running throughout all six simulations, the process would have taken about 10 days to complete.

"Each simulation started with a different 'eddy field,' or underlying current, and then we let it go forward into the future," Peacock said.

The simulation showed a big mass of oil deep underwater that was moving very slowly. But up near the surface - from about 65 feet in depth and higher - ocean flows were swifter, showing the oil spiraling up near the Louisiana and Florida coastlines.

But once the oil curls around Florida and hits the Gulf Stream, things really speed up--the current could possibly carry the oil up to 100 miles a day, or 3,000 miles in a month, according to the simulation.

Peacock stressed, however, that the simulations are not a forecast, but rather reflect a range of possible trajectories. A true forecast would have to take into account the oil's density and buoyancy, among other things. Scientists are working on that now.

As the work continues at NCAR and elsewhere to predict the path and impact of what's being called the nation's worst environmental disaster, Intel processors will continue to help experts deal with some of society's biggest challenges.

@bryanrhoads for Phillip Davis

Twitter Test

this is a test to check rss feed to twitter thanks guy :)

5 Myths about the European debt crisis

By Carmen M. Reinhart and Vincent R. Reinhart
Sunday, May 9, 2010

Just when the American economy appeared to be on the mend, a new crisis is stressing global financial markets. Greece's difficulty in financing its bloated budget deficit -- and the prospect that its debt troubles will spread throughout Europe and beyond -- is dominating the news. The euro has shed 12 percent of its value this year, and U.S. stock markets have shuddered in response, with the Dow declining almost 6 percent in the past week alone.

The authorities have stepped in, with the European Union and the International Monetary Fund putting together a $141 billion rescue plan that compels Athens to swallow some tough austerity measures. Will it work? Or will the problems spread? To answer those questions, it helps to first tackle the myths that have emerged surrounding this latest financial crisis:

1. This is a new type of crisis.

It's easy to imagine that this is a thoroughly 21st-century financial calamity, wrought by modern financial products and a hyper-connected global economy. But in fact, governments have borrowed to live beyond their means -- and have had trouble paying their debts -- for about as long as there have been governments. From the 14th through the 19th centuries, monarchies routinely resorted to debasing their currencies, expropriating private property and defaulting on their debts. And their failure to honor their obligations usually produced severe economic hardship for their populations.

More recently, countries have often defaulted on their debts or been forced to restructure their payments. Some have done it multiple times; for the past 180 years, Greece has been in default about half the time.

As recently as 2001, the government of Argentina ran into funding difficulties. Repeated attempts at fiscal austerity triggered widespread riots. In the end, despite IMF assistance, the authorities could not stanch the fiscal bleeding, and Argentina defaulted on $132 billion of debt obligations, sending its economy into freefall.

2. Small economies such as Greece can't launch major financial turmoil.

Remember Thailand, which has an even smaller gross domestic product than Greece? Thirteen years ago, its financial woes sparked a regional crisis that sent currencies and stock markets plummeting throughout East Asia. South Korea and Thailand narrowly avoided default only through painful new economic policies -- slashing government spending, raising taxes and restructuring private debts-- and international support. By the end of the crisis, Asian economies had contracted by as much as 13 percent.

How do crises spread from one country to another? First, many governments have common lenders, including big international banks and hedge funds. If these institutions suffer large losses in one national market, they often pull back their lending to others.

Second, trouble in one country acts as a wake-up call to investors, who scour their global holdings for similar risks elsewhere. When they look hard enough, they usually find something to worry about, triggering even more funding withdrawals. Greece, Ireland, Portugal and Spain may be miles apart, but to a worried portfolio manager, they look similar: They all have ongoing budget deficits and large private and public debts.

3. Fiscal austerity will solve Europe's debt difficulties.

The need for Greece and other European economies to slash government spending is not some artificial imposition by the IMF or the European Union. Once investors decide that a country living beyond its means will have a hard time meeting its debt obligations, spending cuts become a reality of arithmetic.

But fiscal austerity usually doesn't pay off quickly. A large and sudden contraction in government spending is almost sure to shrink economic activity as well. This means tax collections fall and unemployment and welfare benefits rise, undermining efforts to reduce the deficit. Even if new borrowing is reduced or eliminated, it takes time to whittle down a large debt, and international investors are notoriously impatient.

In recent years, several countries facing market pressures opted for austerity measures and eventually recovered, such as Mexico in 1995, South Korea in 1998, Turkey in 2001 and Brazil in 2002. But they all started with debt burdens significantly lower than Greece's.

Of course, a country such as Greece could seek to negotiate with its creditors to reduce its debt, but that path -- essentially a partial default -- is no panacea. Argentina's economy contracted about 15 percent after its default in 2001, as it was shut out of international markets for a time. When debt dynamics turn as adverse as those in Greece appear to be, authorities have no good options.

4. The euro is to blame for Greece's financial woes.

Greece's adoption of the euro in January 2001 was first considered a blessing. A country with a history of high inflation and currency turmoil would shape up by linking itself to more disciplined economic partners. The immediate reward for Greece was the ability to borrow money at lower rates.

But there can be too much of a good thing. Before it joined the Eurozone, Greece's household debt was only 6 percent of the nation's GDP. By 2009, it was nearly 50 percent of GDP. And by the end of 2009, government debt had marched upward to about 115 percent of GDP. In that sense, the euro did pave the way to this crisis.

However, Greece was not the only country on a borrowing bender. Iceland and the United Kingdom, not to mention the United States, dramatically increased domestic and international borrowing, even as they retained their national currencies. The question is not why politicians were willing to spend freely and tax insufficiently -- that may be part of their DNA. Rather, why did lenders facilitate such overborrowing? Across continents, good economic times bred complacency among investors, who believed that past performance promised a bright future.

5. It can't happen here.

Where have we heard that before?

In the mid-1990s, authorities in the fast-growing countries of East Asia explained that their success was due to "Asian values." The crisis of 1997-1998 changed that tune. Similarly, senior U.S. officials spoke confidently in 2006 as they basked in the glow of the "great moderation," as economists called the easing of business-cycle fluctuations over the prior two decades. Financial institutions were rock solid and not leveraged, we were told. Financial markets were resilient. And housing prices would never decline nationwide. Who would have listened 12 months ago to someone asserting that an E.U. member would teeter on default?

The stark choices before the Greek government are not in America's immediate future. However, a U.S. fiscal deficit at 11 percent of GDP and an overall federal debt level that is rapidly climbing toward 100 percent of GDP are testing the risk tolerance of domestic and international markets. Taking for granted that Uncle Sam can indefinitely borrow at reasonable rates is a risky proposition.

Carmen M. Reinhart is the director of the Center for International Economics at the University of Maryland and the co-author with Kenneth S. Rogoff of "This Time is Different: Eight Centuries of Financial Folly." Vincent R. Reinhart is a resident scholar at the American Enterprise Institute.

source:Washington Post

Cloud Computing 2015

My Blog List


Intel #whatsnext

Jim Parsons pokes around Intel and discovers everyone needs a little downtime. #whatsnext

Sony Style USA | Blog

Interesting &; Recommended Blogs

Alan Boyle Science editor

Alan Boyle Science editor
As's science editor, Alan Boyle runs a virtual curiosity shop of the physical sciences and space exploration, plus paleontology, archaeology and other ologies that strike his fancy. Since joining in 1996, Boyle has won awards from the National Academies, the American Association for the Advancement of Science, the National Association of Science Writers, the Society of Professional Journalists, the Space Frontier Foundation, the Pirelli Relativity Challenge and the CMU Cybersecurity Journalism Awards program. He is the author of "The Case for Pluto," a contributor to "A Field Guide for Science Writers," the blogger behind Cosmic Log: Bacteria can walk on 'legs' — and an occasional talking head on the MSNBC cable channel. During his 33 years of daily journalism in Cincinnati, Spokane and Seattle, he’s survived a hurricane, a volcanic eruption, a total solar eclipse and an earthquake. He has faith he'll survive the Internet as well.

Popular Posts

Blog Archive