Shedding Some Light on Shadow Banking - Don't let a vaguely sinister label for this useful financing prompt harmful regulations

Shedding Some Light on Shadow Banking. By Tony James
Don't let a vaguely sinister label for this useful financing prompt harmful regulations.
WSJ, Mar 04, 2014
http://online.wsj.com/news/articles/SB10001424052702304255604579408991330843998

The term "shadow banking" is one of those Orwellian terms that can undermine critical thought. It has a negative, vaguely sinister connotation about a source of financing that is an essential and desirable part of the financial system. As discussion about the regulation of nonbank entities begins in earnest, it's time to clear the air about what these institutions are and how they operate.

Shadow banking—or more accurately, market-based financing—is simply the provision of capital by loans or investments to some companies by other companies that are not banks. Examples include insurance companies, credit investment funds, hedge funds, private-equity funds, and broker dealers. These institutions do not operate in the dark. Market-based finance in the U.S. amounts to trillions of dollars and is significantly larger than the country's entire banking system.

Mark Carney, Governor of the Bank of England, has correctly noted the role of shadow banking in "diversifying the sources of financing of our economies in a sustainable way." For example, traditional bank financing is not always available for many small- and medium-size companies. Market-based financing has fueled the creation of companies (and thousands of jobs) in many industries. It has rescued companies on the edge of bankruptcy and saved the jobs associated with them. And market-based financing has built warehouses, manufacturing plants and hotels, such as the Four Seasons Hotel and Residences in downtown New York City, when traditional banks could not, or would not, provide capital.

Large banks concentrate risk in relatively few hands, which can pose a risk to the economic system. That is not the case for market-based financing. Risks are safely dispersed across many sophisticated investors who can readily absorb any potential losses. Unlike traditional banks, market-based funds do not borrow from the Federal Reserve, nor do they rely on government-guaranteed deposits. Substantially all their capital comes from well-advised institutional investors who know what they are getting into, and understand the associated risks. Bank depositors (and taxpayers) on the other hand, do not typically know what a bank's investments are or how risky they may be.

Typically, market-based funds also lack the elements that are sources of systemic instability, including high leverage and interdependence. Each investment within a fund is independent and not cross-collateralized or supporting a common debt structure. Losses in any one fund are without recourse to any other fund or to the manager of the capital.

In addition, investors in many market-based funds, including credit investment funds, hedge funds and private-equity funds often cannot instantly withdraw their capital, unlike depositors in banks. Large, sudden withdrawals can lead to runs on the bank or force "fire sales" of assets. With stable, in-place capital, these funds can provide a critical source of liquidity to trading markets in times of turmoil.

Of course, some regulation may be appropriate for nonbank entities that present bank-like risks to financial stability or that lend to consumers. But let's not forget that it was the regulated entities that were the source of almost all the systemic risk in the financial crisis.

Regulations are far from a panacea and would need to be carefully constructed to ensure that the enormous economic benefits of market-based financing are not lost through inappropriate and stifling regulatory policies established for large, deposit-taking banks.

While banks in the U.S. are better capitalized and much safer today than before the financial crisis, market-based financing—shadow banking, if you prefer—still brings enormous economic advantages to a wide range of businesses and employees, and fills a real gap in the market.

In Europe, where banks are less well capitalized, the need for market-based financing is even more critical. As the G-20's Financial Stability Board noted in its policy framework last August, market-based financing creates "competition in financial markets that may lead to innovation, efficient credit allocation and cost reduction."

It is critical that any misunderstanding of the shadow banking system does not result in regulations that undermine the many thousands of companies and jobs that need market-based financing to survive and grow.

Mr. James is president and chief operating officer of Blackstone, a global investment and advisory firm.

How Dodd-Frank Doubles Down on 'Too Big to Fail'

How Dodd-Frank Doubles Down on 'Too Big to Fail'
Two major flaws mean that the act doesn't address problems that led to the financial crisis of 2008.
http://online.wsj.com/news/articles/SB10001424052702304691904579345123301232800 
By Charles W. Calomiris And Allan H. Meltzer WSJ, Feb. 12, 2014 6:44 p.m. ET

The Dodd-Frank Act, passed in 2010, mandated hundreds of major regulations to control bank risk-taking, with the aim of preventing a repeat of the taxpayer bailouts of "too big to fail" financial institutions. These regulations are on top of many rules adopted after the 2008 financial crisis to make banks more secure. Yet at a Senate hearing in January, Elizabeth Warren asked a bipartisan panel of four economists (including Allan Meltzer ) whether the Dodd-Frank Act would end the problem of too-big-to-fail banks. Every one answered no.

Dodd-Frank's approach to regulating bank risk has two major flaws. First, its standards and rules require regulatory enforcement instead of giving bankers strong incentives to maintain safety and soundness of their own institutions. Second, the regulatory framework attempts to prevent any individual bank from failing, instead of preventing the collapse of the payments and credit systems.

The principal danger to the banking system arises when fear and uncertainty about the value of bank assets induces the widespread refusal by banks to accept each other's short-term debts. Such refusals can lead to a collapse of the interbank payments system, a dramatic contraction of bank credit, and a general loss in confidence by consumers and businesses—all of which can have dire economic consequences. The proper goal is thus to make the banking system sufficiently resilient so that no single failure can result in a general collapse.

Part of the current confusion over regulatory means and ends reflects a mistaken understanding of the Lehman Brothers bankruptcy. The collapse of interbank credit in September 2008 was not the automatic consequence of Lehman's failure.
 
Rather, it resulted from a widespread market perception that many large banks were at significant risk of failing. This perception didn't develop overnight. It had evolved steadily and visibly over more than two years, while regulators and politicians did nothing.

Citibank's equity-to-assets ratio, measured in market value—the best single comprehensive measure of a bank's financial strength—fell steadily from about 13% in April 2006 to about 3% by September 2008. And that low value reflected an even lower perception of fundamental asset worth, because the 3% market value included the value of an expected bailout. Lehman's collapse was simply the match in the tinder box. If other banks had been sufficiently safe and sound at the time of Lehman's demise, then the financial system would not have been brought to its knees by a single failure.

To ensure systemwide resiliency, most of Dodd-Frank's regulations should be replaced by measures requiring large, systemically important banks to increase their capacity to deal with losses. The first step would be to substantially raise the minimum ratio of the book value of their equity relative to the book value of their assets.

The Brown-Vitter bill now before Congress (the Terminating Bailouts for Taxpayer Fairness Act) would raise that minimum ratio to 15%, roughly a threefold increase from current levels. Although reasonable people can disagree about the optimal minimum ratio—one could argue that a 10% ratio would be adequate in the presence of additional safeguards—15% is not an arbitrary number.

At the onset of the Great Depression, large New York City banks all maintained more than 15% of their assets in equity, and none of them succumbed to the worst banking system shocks in U.S. history from 1929 to 1932. The losses suffered by major banks in the recent crisis would not have wiped out their equity if it had been equal to 15% of their assets.

Bankers and their supervisors often find it mutually convenient to understate expected loan losses and thereby overstate equity values. The problem is magnified when equity requirements are expressed relative to "risk-weighted assets," allowing regulators to permit banks' models to underestimate their risks.

This is not a hypothetical issue. In December 2008, when Citi was effectively insolvent, and the market's valuation of its equity correctly reflected that fact, the bank's accounts showed a risk-based capital ratio of 11.8% and a risk-based Tier 1 capital ratio (meant to include only high-quality, equity-like capital) of about 7%. Moreover, factors such as a drop in bank fee income can affect the actual value of a bank's equity, regardless of the riskiness of its loans.

For these reasons, large banks' book equity requirements need to be buttressed by other measures. One is a minimum requirement that banks maintain cash reserves (New York City banks during the Depression maintained cash reserves in excess of 25%). Cash held at the central bank provides protection against default risk similar to equity capital, but it has the advantage of being observable and incapable of being fudged by esoteric risk-modeling.

Several researchers have suggested a variety of ways to supplement simple equity and cash requirements with creative contractual devices that would give bankers strong incentives to make sure that they maintain adequate capital. In the Journal of Applied Corporate Finance (2013), Charles Calomiris and Richard Herring propose debt that converts to equity whenever the market value ratio of a bank's equity is below 9% for more than 90 days. Since the conversion would significantly dilute the value of the stock held by pre-existing shareholders, a bank CEO will have a big incentive to avoid it.

There is plenty of room to debate the details, but the essential reform is to place responsibility for absorbing a bank's losses on banks and their owners. Dodd-Frank institutionalizes too-big-to-fail protection by explicitly permitting bailouts via a "resolution authority" provision at the discretion of government authorities, financed by taxes on surviving banks—and by taxpayers should these bank taxes be insufficient. That provision should be repealed and replaced by clear rules that can't be gamed by bank managers.
 
Mr. Calomiris is the co-author (with Stephen Haber ) of "Fragile By Design: The Political Origins of Banking Crises and Scarce Credit" (Princeton, 2014). Mr. Meltzer is the author of "Why Capitalism?" (Oxford, 2012). They co-direct (with Kenneth Scott ) the new program on Regulation and the Rule of Law at the Hoover Institution.

Number of new antibacterial-drug approvals in the US

Source: Drug Makers Tiptoe Back Into Antibiotic R&D. By Hester Plumridge
As Superbugs Spread, Regulators Begin to Remove Roadblocks for New Treatments
WSJ, Jan 23, 2014
http://online.wsj.com/news/articles/SB10001424052702303465004579322601579895822

MRSA Infections, swine effluent lagoons, and farm consolidations

Answering to some comments in a book review, 'In Meat We Trust,' by Maureen Ogle (http://online.wsj.com/news/articles/SB10001424052702303482504579177742158078278), WSJ, Dec. 17, 2013 6:36 p.m. ET:

A recent paper* in a FAO publication summarizes advances in hog manure management. Obviously, the cases mentioned are small in comparison with the great consolidated farms, but even so, there are multiple ways to manage better the effluents and some useful ways to profit from the lagoons/catchments are shown here.

@Mr Evangelista: I got access to the paper** you mentioned. If interested you may ask for it. I'd like, though, to calm down things. As it says other paper*** published at the same time, which it is likely it is the one Mr Blumenthal mentioned:

"In 2011,we estimated the overall number of invasive MRSA infections was 80 461; 31% lower than when estimates were first available in 2005"

The reasons are not well understood (several explanations are offered), but that is not relevant now. The important idea is that despite increasing consolidation of farm operations and an increasing population (from approx 295 million in 2005 to approx 311 million in 2011), there are 31% less MRSA infections.


References

* Intensive and Integrated Farm Systems using Fermentation of Swine Effluent in Brazil. By I. Bergier, E. Soriano, G. Wiedman and A. Kososki. In Biotechnologies at Work for Smallholders: Case Studies from Developing Countries in Crops, Livestock and Fish. Edited by J. Ruane, J.D. Dargie, C. Mba, P. Boettcher, H.P.S. Makkar, D.M. Bartley and A. Sonnino. Food and Agriculture Organization of the United Nations, 2013. http://www.fao.org/docrep/018/i3403e/i3403e00.htm

** High-Density Livestock Operations, Crop Field Application of Manure, and Risk of Community-Associated Methicillin-Resistant Staphylococcus aureus Infection in Pennsylvania. By Joan A. Casey, MA; Frank C. Curriero, PhD, MA; Sara E. Cosgrove,MD, MS; Keeve E. Nachman, PhD, MHS; Brian S. Schwartz, MD,MS. JAMA Intern Med. Vol 173, No. 21, doi:10.1001/jamainternmed.2013.10408

*** National Burden of InvasiveMethicillin-Resistant Staphylococcus aureus Infections, United States, 2011. By Raymund Dantes, MD, MPH; Yi Mu, PhD; Ruth Belflower, RN, MPH; Deborah Aragon, MSPH; Ghinwa Dumyati, MD; Lee H. Harrison, MD; Fernanda C. Lessa, MD; Ruth Lynfield, MD; Joelle Nadle, MPH; Susan Petit, MPH; Susan M. Ray, MD; William Schaffner, MD; John Townes, MD; Scott Fridkin, MD; for the Emerging Infections Program–Active Bacterial Core Surveillance MRSA Surveillance Investigators. JAMA Intern Med. Vol 173, No. 21, doi:10.1001/jamainternmed.2013.10423

New meat regulations could spark a trade war with Canada and Mexico and will raise costs

This Label Will Raise the Cost of Your Steak. By Scott George and Randy Spronk
New meat regulations could spark a trade war with Canada and Mexico.
Wall Street Journal, Dec. 5, 2013 6:42 p.m. ET
http://online.wsj.com/news/articles/SB10001424052702303670804579234642364948248

Right before Thanksgiving, while Congress was on break, federal meat labeling regulations took effect that could result in Americans paying higher prices on everything from beef and pork to apples and maple syrup. While legislators, as part of the continuing farm bill negotiations, are considering a fix to the Country of Origin Labeling (Cool) statute, the regulations implementing it went into effect Nov. 23.

The new Cool rules require more detailed labels on meat derived from animals born outside the United States. Labels must now list the country in which livestock were born, raised and slaughtered. For example, a package of rib-eye steak might be labeled: "Born in Canada, Raised and Slaughtered in the United States."

The previous Cool rules required less detailed labeling, such as "Product of Canada and the United States." Ironically, the U.S. Department of Agriculture issued the new rules in May in an effort to improve the previous Cool rules, which the World Trade Organization last year ruled discriminated against Canada, Mexico and other U.S. trading partners.

Not surprisingly, Canada and Mexico are also fighting the new, more stringent rules at the WTO. Should the trade organization rule in their favor, our North American neighbors will likely retaliate against U.S. products through tariffs that will limit U.S. exports and kill American jobs. Canada, the second-largest export market for U.S. agricultural products, valued in 2012 at $20.6 billion, already has a preliminary retaliation list that includes fresh pork and beef, bakery goods, rice, apples, wine, maple syrup and furniture.

U.S. cattle ranchers and hog farmers who purchase livestock from Canada or Mexico will be affected by those retaliatory tariffs in a number of ways. Most crucially to those of us in the industry, the duties will prompt U.S. beef and pork exports to fall while American farmers and ranchers who import animals will see significant cost increases.

Alpha 3 Cattle Company in Amarillo, Texas, for example, imports roughly 38,000 feeder cattle a year from Mexico. When the original Cool law took effect in 2009, meat packers, fearing consumers would be less inclined to buy meat labeled "Product of Mexico and the United States" and incurring added costs to label mixed-origin meat, discounted Alpha 3's Mexican-origin animals by $35 a head. That alone cost Alpha 3 more than $1 million.

Under the new Cool regulations, the company expects the discount to be even higher, or for packing plants to stop processing Mexican-born cattle altogether. Why? Because under the new regulations those animals—and the meat from them—now need to be tracked, verified and segregated from U.S.-born cattle. (The 2009 law allowed co-mingling of animals.)

A Michigan hog farmer who gets most of his feeder pigs from Canada, and who took a financial hit when the labeling law took effect in 2009, has been told by the packing plant to which he sends his animals that he'll have a 10-hour window each week to get his Canadian-born hogs to market. That will be nearly impossible to accomplish—it's 32 truckloads—and it will be extremely costly.

That's because the new regulations will force the packing plant to shut down the lines processing U.S.-born hogs and switch to processing Canadian-born ones—which spend five of their six months in the U.S.—so that pork cuts can be tracked, labeled and kept separate. That's a logistical headache and a huge expense for the plant, which will likely pay the hog farmer less for his Canadian-born hogs and charge consumers more for the meat from those animals.

So why is the U.S. risking trade retaliation and prohibitive cost increases on American producers and consumers of meat? Groups that support Cool, such as the U.S. Cattlemen's Association and the Consumer Federation of America, think U.S. consumers will buy American if they see a "Product of the United States" label. But since the 2009 law went into effect, the USDA says there's been little effect on demand for U.S. meat, and that consumers buy primarily based on taste and price. Most Americans know, even if their legislators don't, that all meat products, regardless of their country of origin, must pass the same USDA safety regulations.

When the Cool proposal was first debated in Congress, the U.S. meat industry said it would be a costly program with little if any benefit to consumers. The USDA estimated it would cost $2.5 billion to implement and nearly $212 million annually over 10 years to maintain.

With our North American neighbors set to impose tariffs on dozens of U.S. products, livestock producers and meat packers facing greater costs and American consumers ultimately bearing higher prices, it appears that assessment was an understatement.

Mr. George is a cattleman from Cody, Wyo., and president of the National Cattlemen's Beef Association. Mr. Spronk is a hog farmer from Edgerton, Minn., and president of the National Pork Producers Council.

Tesla Meets the Auto Regulators - Remember Toyota's invisible defect and drivers that are inordinately prone to "pedal misapplication"

Tesla Meets the Auto Regulators. By Holman W Jenkins 
The feds have opened a safety investigation into the Model S fires. Elon Musk should be worried.
WSJ, Nov 27, 2013
http://online.wsj.com/news/articles/SB10001424052702304465604579222051067101342

Look out, Elon Musk. Expecting rational results from regulatory agencies is often a recipe for disappointment.

Two of Mr. Musk's Tesla Model S cars burned up when road debris punctured the battery, a vulnerability not seen in other electric cars. Mr. Musk says his cars are no more fire-prone than gasoline cars. He claims to welcome a National Highway Safety Administration investigation into whether the cars are defective and warrant a recall.

Good luck with that. Mr. Musk is embroiled in a process that, he may soon discover, can quickly become more about politics than engineering. GM pickups with side-mounted gas tanks in the 1980s were necessarily more fire-prone in side collisions. Yet the truck's overall safety record was exemplary and the vehicle fully complied with federal fuel-system safety standards. That didn't stop the feds from eventually ruling the trucks defective, in response to over-the-top media and interest-group allegations against the company.


Those nearing ecstasy over the driverless car ought to sober up too. Tesla is not the only example of how unwelcoming our system of auto regulation is to new ideas. At a congressional hearing on the robotic car last week, a GM executive pleaded for "protection for auto makers and dealers from frivolous litigation for systems that meet and surpass whatever performance standards are established by the government." NHTSA's David Strickland was also present and seemed a lot more interested in extending his agency's remit to "things like, you know, navigation on an iPhone. . . . That is a piece of motor vehicle equipment and I think we have a very strong precedent."

And recall NHTSA's performance during the furor almost four years ago over alleged runaway Toyotas. Its then-overseer, Transportation Secretary Ray LaHood, happily participated in congressional hearings designed to flog for the benefit of trial lawyers the idea of a hidden bug in Toyota's electronic throttle control.

When the agency much more quietly came out with a report a year later debunking the idea of an electronic defect, notice how little good it did Toyota. The car maker still found it necessary to cough up $1.2 billion to satisfy owners who claimed their cars lost value in the media frenzy over a non-defect. Toyota has also seen the tide turning against it lately as it resists a deluge of accident claims.

At first, opposing lawyers were hesitant to emphasize an invisible defect that government research suggested didn't exist. That was a tactical error on their part. In an Oklahoma trial last month involving an 82-year-old woman driver, jurors awarded $3 million in compensatory damages and were ready to assign punitive damages in a complaint focused on a hypothetical bug when Toyota abruptly settled on undisclosed terms.

In another closely-watched trial set to begin in California in March, an 83-year-old female driver (who has since died from unrelated causes) testified in a deposition that she stepped on the brake instead of the gas. The judge has already ruled that if the jury decides to believe her testimony, it is entitled to infer the existence of a defect that nobody can find.

These cases, out of some 300 pending, were chosen for a reason. Study after study, including one last year by the University of North Carolina Highway Safety Research Center, finds that elderly female drivers are inordinately prone to "pedal misapplication." If Toyota can't prevail in these cases, the company might be wise to run up the white flag and seek a global settlement that some estimate at upwards of $5 billion—quite a sum for a non-defect.

Why do we mention this? These episodes describe the regulatory-cum-political thicket that Tesla wandered into when it started making cars. This thicket has served as a near-perfect barrier to entry to startup car makers for the better part of a century.

Even more so because Tesla's troubles come at a time when much bigger companies, with vast lobbying and political resources, are entering the market for high-end electric cars—including Cadillac, Porsche, BMW and Audi. Maybe this explains a note of hyperbole that has begun to creep into Mr. Musk's frequent blog postings. "If a false perception about the safety of electric cars is allowed to linger," he wrote last week, "it will delay the advent of sustainable transport and increase the risk of global climate change, with potentially disastrous consequences worldwide."

Federal regulators have been warned. They can always be denounced as climate criminals if they find the Tesla Model S defective. Maybe Mr. Musk is ready to play the political game after all.

L'Energia Verda és la realment subvencionada. Per Bjorn Lomborg

L'Energia Verda és la realment subvencionada. Per Bjorn Lomborg
Espanya malgasta l’1% del PIB en energies verdes
Les renovables reben tres vegades més diners per unitat d'energia que els combustibles Fòssils.

Wall Street Journal , 11 novembre 2013

Translation of Green Energy Is the Real Subsidy Hog to Catalan by Un Liberal Recalcitrant
http://online.wsj.com/news/articles/SB10001424127887324432404579051123500813210

Extractes :

Durant 20 anys el món ha provat de subvencionar l'energia verda en lloc de centrar-se en fer-la més eficient . Avui Espanya gasta al voltant de l'1% del PIB en energies verdes com la solar i l'eòlica . Aquests 11.000 milions d’euros anuals sobrepassen la despesa espanyola en educació superior .

A finals d’aquest segle, amb els actuals compromisos, aquests esforços dels espanyols hauran retardat l'impacte de l’escalfament global en unes seixanta- una hores, segons les estimacions del prestigiós model dinàmic integral econòmic-climàtic de la Universitat de Yale. ¿Milers de milions d’euros per a seixanta-una hores adicionals? És un mal negoci .

Però quan es critiquen aquests ineficients subsidis verds, poden estar sergurs de que els defensors assenyalaran que el planeta subsidia encara més els combustibles fòssils. No hauríem de fer-ho amb cap. Però la desinformació que envolta els subsidis energètics és considerable i ajuda a impedir que el món prengui mesures raonables .

Tres són els mites dels subsidis de combustibles fòssils que val la pena desmuntar. El primer és l'al·legació [ ... ] de que els EUA subsidien més els combustibles fòssils que les energies verdes. No és així.

[S'estima] que el 2010 [aquests] subsidis van arribar als $4.000 milions anuals. Això inclou $ 240 milions en inversions per a instal·lacions de carbó net [que a aquest traductor no li sembla una cosa molt allunyada del “rotllet verd”], [ i ] una deducció de despeses sobre l'amortització dels equips de control de la pol·lució [alguna cosa que els verds haurien aplaudir, en la meva humil opinió]. Les fonts renovables van rebre més del triple d’squesta xifra, uns 14.000 $ milions . En tot això no considerem $ 2.500 milions per a l’energia nuclear [que estalvia emissions de CO2].

Encara més del que sembla, és més gran la desviació real de real de la despesa a favor de l'energia verda perquè les turbines eòliques i altres fonts renovables produeixen molta menys Energia que els combustibles fòssils, i els EUA estan pagant més per menys. L'electricitat que s'obté a partir del carbó és subsidiat per les Nacions Unides un 5% d’un centau per cada kWh produït, mentre que l'eòlica rep prop d’un centau per kWh. Per a la solar, el cost per al contribuent és de 77 centaus per kWh .

Els crítics de subsidiar els combustibles fòssils, com el científic climàtic Jim Hansen, també indiquen que la immensa grandària dels subsidis slobals és l’evidència del poder que tenen les companyies de combustibles fòssils i els escèptics del canvi climàtic sobre els governs.

[Aquests] subsidis globals superen els de les renovables en dòlars nominals - $523 milers de milions sobre $88 millers de milions [per a les les renovables], segons l'Agència Internacional d'Energia. Però aquesta disparitat es reverteix si es té en compte la proporció. Els combustibles fòssils suposen més del 80% de l'energia global, mentre que la moderna energia verda suposa prop del 5%. Això vol dir que les renovables reben encara tres vegades més de diners per unitat d'energia.

Però encara més important: els crítics ignoren que aquests subsidis de combustibles fòssils pertanyen gairebé de forma exclusiva a països no occidentals. Dotze d’aquestes nacions són responsables del 75% dels subsidis globals d’aquests combustibles. Iran és el primer amb $82.000 milions anuals, seguit per l’Aràbia Saudita amb $61.000 milions. Rússia, Índia i Xina, apliquen un pressupost d’entre $30.000 i $40.000 milions i Veneçuela, Egipte, Iraq, Emirats Àrabs Units, Indonèsia, Mèxic i Algèria, la resta.

Aquests subsidis no tenen res a veure amb intentar de congraciar-se amb companyies petrolieres o amb fer-los un bon regal als escèptics de l'escalfament global. Aquesta despesa és una manera de que aquests governs comprin estabilitat política: a Veneçuela, la gasolina es ven a uns 5,9 centaus el galó [un galó són 3,8 litres] , el que li costa al govern uns $22.000 milions anuals, més del doble del que es gasta en sanitat.

Un Tercer mite el difon el recent informe de l'FMI, "Reforma dels Subsidis Energètics - lliçons i implications". L'Organització va anunciar el març passat que hi havia descobert uns $ 1.4 bilions de subsidis als combustibles fòssils que ningú havia vist . D’aquesta xifra , al·lega l'Informe, $ 700.000 milions vénen del món desenvolupat.

La gasolina i el dièsel dels EUA són receptors, en sí mateix, de prop de la meitat d’aquests 700.000 dòlars que l’FMI en diu subsidis. La gasolina i el dièsel haurien de tenir impostos més alts, atès l'informe, i així l’FMI considera aquests impostos no aplicats com a “subvencions” [Aquest traductor creu que aquestes idees tan brillants podria ser que sorgissin de la pròpia Administració Federal perquè casen amb les línies, o més ben dit, les corbes sinuoses del raonament de gent amb la preparació del Community Organizer in Chief]. Així, la pol·lució de l'aire acredita un impost de 34 centaus/galó, segons els models de l'FMI, mentre que els accidents de trànsit i la congestió haurien d’afegir prop d’un dòlar per galó .

A més hauria d’haver un IVA del 17% com en altres països, segons l'FMI, o prop de $0.80 per galó. Tots aquests impostos recaptarien $ 350.000, tractats ara per l’FMI com a subsidis.

[Això té diversos problemes.] L'Organització assumeix un cost social del CO2 de cinc vegades el que actualment té la Unió Europea. Els danys atribuïts a la pol·lució de l'aire són deu vegades més grans que les estimacions de la Unió Europea. ¿I què tenen a veure els accidents de trànsit amb els subsidis a la benzina?

Finalment, l’FMI Ignora a la pràctica els 49,5 centaus d'impostos sobre el galó de gasolina que el consumidor americà paga realment. Els models cancel·len, inexplicablement, aquest impost amb un "cost internacional d’enviament" [per mar, oleoductes, etc.] Però fins i tot si  vostè accepta les estimacions de l'FMI dels costos de la pol·lució i l'IVA a l'estil Europeu, el total del que parla l’FMI que no es recapta, es redueix només a 44 centaus / galó - menys que els impostos reals en les  EUA per centaus/galó [ ... ]

Les informacions inexactes com aquesta desinformen de manera innecessària la presa de decisions sobre polítiques públiques. Estic a favor d’acabar amb els subsidis globals als combustibles fòssils -i amb els subsidis a les energies verdes. Subsidiar energies verdes de primera generació, ineficients, fa als acomodats sentir bé en ells mateixos, però no transformarà els mercats energètics .

[ ... ]

El Dr Lomborg, director del Copenhagen Consensus Center , és l'autor de "How Much HaveGlobal Problems Cost the World? A Scoreboard from 1900 to 2050" ( Cambridge,  2013 ).

 --- 

Original, etc.: http://www.bipartisanalliance.com/2013/11/la-energia-verde-es-la-realmente.html

La energía verde es la realmente subvencionada. By Bjorn Lomborg

La energía verde es la realmente subvencionada. Por Bjorn Lomborg

Las renovables reciben tres veces más dinero por unidad de energía que los combustibles fósiles.
Wall Street Journal, Nov 11, 2013
http://online.wsj.com/news/articles/SB10001424127887324432404579051123500813210

Excerpts:

Durante 20 años el mundo ha intentado subvencionar la energía verde en vez de centrarse en hacerla más eficiente. Hoy España tira alrededor del 1% del PIB en energías verdes como la solar y la eólica. Esos €11 000 millones anuales son más de lo que España gasta en educación superior.

A finales de este siglo, con los actuales compromisos, esos esfuerzos de los españoles habrán retrasado el impacto del calentamiento global por unas sesenta y una horas, según las estimaciones del reputado modelo dinámico integral económico-climático de la Universidad de Yale. ¿Cientos de miles de millones de dólares para sesenta y una horas adicionales? Es un mal negocio.

Pero cuando se critican esos ineficientes subsidios verdes, pueden estar seguros de que los defensores señalarán que el planeta subsidia los combustibles fósiles aun más. No deberíamos hacerlo con ninguno. Pero la desinformación que rodea los subsidios energéticos es considerable y ayuda a impedir que el mundo tome medidas razonables.

Tres son los mitos de los subsidios de combustibles fósiles que vale la pena desmontar. El primero es la alegación [...] de que los EE UU subsidian más los combustibles fósiles que la energía verde. No es así.

[Se estima] que en 2010 [esos] subsidios alcanzaron los $4000 millones anuales. Esto incluye $240 millones en inversiones para instalaciones de carbón limpio [que a este traductor no le parece algo muy alejado del rollito verde]; [y] una deducción de gastos sobre la amortización de equpos de control de la polución [algo que los verdes deberían aplaudir, no?]. Las fuentes renovables recibieron más del triple de esa cifra, unos $14 000 millones. En todo esto no consideramos $2500 millones para energía nuclear [que ahorra emisiones de CO2].

Aun más de lo que parece, es mayor el sesgo real del gasto a favor de la energía verde. Ya que las turbinas eólicas y otras fuentes renovables producen mucha menos energía que los combustibles fósiles, los EE UU están pagando más por menos. La electricidad que se obtiene a partir del carbón se subsidia a un 5% de un centavo por cada kWh producido, mientras que la eólica recibe cerca de un centavo por kWh. Para solar, el coste para el contribuyente es de 77 centavos por kWh.

Los críticos de los subsidios de combustibles fósiles, como el científico climático Jim Hansen, también indican que el inmenso tamaño de los subsidios globales es evidencia del poder que sobre los gobiernos tienen las compañías de combustibles fósiles y los escépticos del cambio climático. [En opinión de este traductor, Jim está mayor.]

[Estos] subsidios globales exceden los de las renovables en dólares nominales — $523 miles de millones sobre $88 miles de millones [para las renovables], según la International Energy Agency. Pero la disparidad se revierte cuando la proporción se toma en consideración. Los combustibles fósiles suponen más del 80% de la energía global, mientras que la moderna energía verde supone cerca del 5%. Esto significa que las renovables reciben aun tres veces más dinero por unidad de energía.

Pero mucho más importante, los críticos ignoran que estos subsidios de combustibles fósiles pertenecen casi exclusivamente a países no occidentales. Doce de tales naciones son responsables del 75% de los subsidios globales de tales combustibles. Irán es el primero con $82 000 millones anuales, seguido por Arabia Saudí con $61 000 millones. Rusia, India y China presupuestan entre $30 000 y $40 000 millones y Venezuela, Egipto, Iraq, Emiratos Árabes Unidos, Indonesia, México y Argelia son el resto.

Estos subsidios no tienen nada que ver con intentar congraciarse con compañías petroleras o con regalar a los escépticos del calentamiento global. Este gasto es una forma de que estos gobiernos compren estabilidad política: en Venezuela, la gasolina se vende a 5.9 centavos el galón [el galón son 3.8 litros], lo que cuesta al gobierno unos $22 000 millones anuales, más del doble de lo que se gasta en sanidad.

Un tercer mito lo difunde un reciente informe del IMF, "Reforma de los subsidios energéticos — Lecciones e implicaciones" ("Energy Subsidy Reform—Lessons and Implications"). La organización anunció en marzo que había descubierto unos $1.4 billones de subsidios a los combustibles fósiles que nadie había visto. De esa cifra, alega el informe, $700 000 millones vienen del mundo desarrollado. [Este traductor está parcialmente de acuerdo con el informe del IMF y cree que Lomborg yerra al no mencionar lo positivas que son muchas de las valoraciones y recomendaciones del informe. Los subsidios en países no desarrollados son una salvajada para esas economías, además de que benefician en igual proporción a todos los consumidores, es decir, benefician también a quienes no los necesitan, como los jerarcas del partido dominante o los crazy mullahs. Otra cosa es lo que comenta Lomborg, que es muy razonable IMHO: el rollo este de estimar costes que deberían ser impuestos y encima los suben más que los locos de Bruselas y que al no ser recaudados los meten en la línea de subsidios.]

La gasolina y el diesel en los EE UU por sí solos son cerca de la mitad de esos $700 000 millones que el IMF dice son subsidios. La gasolina y el diesel deberían tener impuestos más altos, dice el informe, así que el IMF cuenta tales impuestos no impuestos como "subsidios" [este traductor barrunta que estas ideas tan brillantes pudiera ser que surjan de la propia Administración Federal porque casan con las líneas, o más bien sinuosas curvas, del razonamiento de gente con la preparación del Community Organizer in Chief]. Así, la polución del aire amerita un impuesto de 34 centavos/galón, según los modelos del IMF, mientras que los accidentes de tráfico y la congestión deberían añardir cerca de $1 por galón.

Además debería haber un IVA del 17% como en otros países, según el IMF, o cerca de $0.80/galón [es fácil de engordar esta estimación, el gobierno español puede sugerir el vigente 21%]. La suma que tales impuestos recaudarían, $350 000 millones, se tratan como un subsidio.

[Esto tiene varios problemas.] La organización asume un coste social del CO2 de cinco veces el que actualmente emplea la Unión Europea. Los daños atribuidos a la polución del aire son 10 veces mayores que las estimaciones de la Unión Europea. ¿Y qué tienen que ver los accidentes de tráfico con los subsidios a la gasolina?

Por último, el IMF ignora en la práctica los 49.5 centavos de impuestos sobre el galón de gasolina que el consumidor americano paga realmente. Los modelos cancelan, inexplicablemente, este impuesto con un "coste internacional de envío" [por mar, oleoductos, etc.]. Pero incluso si Vd acepta las estimaciones del IMF de los costes de la polución y el IVA al estilo europeo, el total que dice el IMF que no se recauda se reduce a solo 44 centavos/galón — menos que los impuestos reales en los EE UU por cents/galón. [...]

Información inexacta como esta perjudica innecesariamente la toma de politicas públicas. Estoy a favor de terminar con los subsidios globales de combustibles fósiles — y con los subsidios a las energías verdes. Subsidiar energías verdes de primera generación, ineficientes, hace a los acomodados sentirse bien consigo mismos, pero no transformará los mercados energéticos.

[...]

El Dr. Lomborg, director del Copenhagen Consensus Center, es el autor de "How Much Have Global Problems Cost the World? A Scoreboard from 1900 to 2050" (Cambridge, 2013).
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Translation to Catalan: http://www.bipartisanalliance.com/2013/11/lenergia-verda-es-la-realment.html. By Un Liberal Recalcitrant

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Green Energy Is the Real Subsidy Hog. By Bjorn Lomborg
Renewables receive three times as much money per energy unit as fossil fuels.
Wall Street Journal, Nov 11, 2013
http://online.wsj.com/news/articles/SB10001424127887324432404579051123500813210

For 20 years the world has tried subsidizing green technology instead of focusing on making it more efficient. Today Spain spends about 1% of GDP throwing money at green energy such as solar and wind power. The $11 billion a year is more than Spain spends on higher education.

At the end of the century, with current commitments, these Spanish efforts will have delayed the impact of global warming by roughly 61 hours, according to the estimates of Yale University's well-regarded Dynamic Integrated Climate-Economy model. Hundreds of billions of dollars for 61 additional hours? That's a bad deal.

Yet when such inefficient green subsidies are criticized, their defenders can be relied on to point out that the world subsidizes fossil fuels even more heavily. We shouldn't subsidize either. But the misinformation surrounding energy subsidies is considerable, and it helps keep the world from enacting sensible policy.

Three myths about fossil-fuel subsidies are worth debunking. The first is the claim, put forth by organizations such as the Environmental Law Institute, that the U.S. subsidizes fossil fuels more heavily than green energy. Not so.

The U.S. Energy Information Administration estimated in 2010 that fossil-fuel subsidies amounted to $4 billion a year. These include $240 million in credit for investment in Clean Coal Facilities; a tax deferral worth $980 million called excess of percentage over cost depletion; and an expense deduction on amortization of pollution-control equipment. Renewable sources received more than triple that figure, roughly $14 billion. That doesn't include $2.5 billion for nuclear energy.

Actual spending skews even more toward green energy than it seems. Since wind turbines and other renewable sources produce much less energy than fossil fuels, the U.S. is paying more for less. Coal-powered electricity is subsidized at about 5% of one cent for every kilowatt-hour produced, while wind power gets about a nickel per kwh. For solar power, it costs the taxpayer 77 cents per kwh.
Critics of fossil-fuel subsidies, such as climate scientist Jim Hansen, also suggest that the immense size of global subsidies is evidence of the power over governments wielded by fossil-fuel companies and climate-change skeptics. Global fossil-fuel subsidies do exceed those for renewables in raw dollars—$523 billion to $88 billion, according to the International Energy Agency. But the disparity is reversed when proportion is taken into account. Fossil fuels make up more than 80% of global energy, while modern green energy accounts for about 5%. This means that renewables still receive three times as much money per energy unit.

But much more important, the critics ignore that these fossil-fuel subsidies are almost exclusive to non-Western countries. Twelve such nations account for 75% of the world's fossil-fuel subsidies. Iran tops the list with $82 billion a year, followed by Saudi Arabia at $61 billion. Russia, India and China spend between $30 billion and $40 billion, and Venezuela, Egypt, Iran, U.A.E., Indonesia, Mexico and Algeria make up the rest.

These subsidies have nothing to do with cozying up to oil companies or indulging global-warming skeptics. The spending is a way for governments to buy political stability: In Venezuela, gas sells at 5.8 cents a gallon, costing the government $22 billion a year, more than twice what is spent on health care.

A third myth is propagated by a recent International Monetary Fund report, "Energy Subsidy Reform—Lessons and Implications." The organization announced in March that it had discovered an extra $1.4 trillion in fossil-fuel subsidies that everyone else overlooked. Of that figure, the report claims, $700 billion comes from the developed world.

U.S. gasoline and diesel alone make up about half of the IMF's $700 billion in alleged subsidies. Gasoline and diesel deserve more taxation, the report says, so the IMF counts taxes that were not levied as "subsidies." Thus air pollution merits a 34-cents-per-gallon tax, according to the IMF models, while traffic accidents and congestion should add about $1 per gallon.

According to the IMF, the U.S. also should have a 17% value-added tax like other countries, at about 80 cents per gallon. The combined $350 billion such taxes allegedly would raise gets spun as a subsidy.

The assumptions behind the IMF's math have some problems. The organization assumes a social price of carbon dioxide at five times what Europe currently charges. The air-pollution damages are upward of 10 times higher than the European Union estimates. And what do traffic accidents have to do with gasoline subsidies?

Finally, the IMF effectively ignores the 49.5 cents per gallon in gasoline taxes the U.S. consumer actually pays. The models cancel out this tax, inexplicably, with an "international shipping cost." But even if you accept the IMF's estimated pollution costs and the European-style VAT, the total tax the IMF says goes uncollected comes to only about 44 cents per gallon—or less than the actual U.S. tax of 49.5 cents per gallon. The real under-taxation is zero. The $350 billion is a figment of the IMF's balance sheet.

Inaccurate information of this sort is needlessly misinforming public policy. I'm in favor of ending global fossil-fuel subsidies—and green-energy subsidies. Subsidizing first-generation, inefficient green energy might make well-off people feel good about themselves, but it won't transform the energy market.

Green-energy initiatives must focus on innovations, making new generations of technology work better and cost less. This will eventually power the world in a cleaner and cheaper way than fossil fuels. That effort isn't aided by the perpetuation of myths.

Dr. Lomborg, director of the Copenhagen Consensus Center, is the author of "How Much Have Global Problems Cost the World? A Scoreboard from 1900 to 2050" (Cambridge, 2013).

El cost de l'intervencionisme a Hong Kong

El cost de l'intervencionisme a Hong Kong. WSJ Editorial

En contra de les afirmacions del govern, les taxes dificulten més els negocis a les petites companyies.

Wall Street Journal, 5 nov 2013 11:16 a.m. ET

Translation of The Cost of Hong Kong's Interventionism to Catalan. By Un Liberal Recalcitrant

http://online.wsj.com/news/articles/SB10001424052702303482504579179251139447562

El govern de Hong Kong s'ha resistit fortament a acceptar els crítics que suggereixen que els seus esforços per frenar l'activitat del mercat immobiliari local perjudica la seva reputació de polítiques de lliure mercat i pro-creixement . Potser és hora que s'ho pensin de nou. Vegin el nou informe que mostra que la intromissió del govern en aquest mercat està danyant el clima dels negocis en el Territori .

Encara que Hong Kong figura en el segon lloc en l'informe Doing Business 2014 del Banc Mundial, publicat la setmana passada, la posició d’aquest territori a la categoria "facilitat per registrar propietat" es va desplomar del lloc 60 al 89. La caiguda reflecteix l'increment fins al 7,5% al febrer, un 100%, de les taxes aplicables a les transaccions immobiliàries comercials (no d'habitatges). El govern ha pres aquesta decisió després de diversos intents per refredar el mercat residencial amb impostos especials que simplement van desviar el capital al mercat no residencial.

L'informe Doing Business ressalta el que aquests impostos signifiquen per a petites i mitjanes empreses en termes pràctics. De mitjana, la transferència d'una propietat comercial ara costa el 7.7% del seu valor després d'afegir impostos i taxes. Abans que entrés en vigor la nova taxa estava en el 4%, si bé només és aplicable a les transaccions de més quantia. Encara que altres aspectes de la política econòmica de HK són pro-creixement , això representa un innecessari cost afegit sobre les petites empreses , que solien ser les més beneficiades de la senyera política de Honk Kong de mínima interferència en l'economia .

Això hauria de ser una crida al govern, el qual ha intentat argumentar des del començament, en aquest assumpte de la nova taxa, que aquestes mesures eren excepcionals i afectarien només als immobles. Els crítics van advertir en aquell temps, 2010, que la primera taxa especial sobre propietats residencials posaria al Territori en una pendent relliscosa per l'abandonament del que un antic ministre d'economia anomenava "no intervencionisme decidit". Com a resposta, el portaveu del govern, Michael Wong, va escriure una carta al director d'aquest diari prometent que el nou impost "no tindria més implicacions per a les polítiques de baixos impostos pro-empreses", qualificant les crítiques com "clarament de magnitud incorrecta".

La relliscada del govern cap els impostos especials per a la propietat comercial ha demostrat que els crítics tenien raó i l'informe del Banc Mundial indica que les petites empreses estan pagant el preu d'aquesta ficada de pota. Per mor dels emprenedors del Territori, és hora que el govern de HK porti de nou les seves polítiques immobiliàries al decidit “no-intervencionisme” que funciona tan bé en altres sectors de l'economia.

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Original, etc.: http://www.bipartisanalliance.com/2013/11/el-coste-del-intervencionismo-en-hong.html  

El coste del intervencionismo en Hong Kong

El coste del intervencionismo en Hong Kong. WSJ Editorial

En contra de las afirmaciones del gobierno, las tasas dificultan más los negocios a las pequeñas compañías.
Wall Street Journal, Nov. 5, 2013 11:16 a.m. ET
Translation of  The Cost of Hong Kong's Interventionism to Spanish
http://online.wsj.com/news/articles/SB10001424052702303482504579179251139447562

El gobierno de Hong Kong se ha resistido fuertemente a aceptar a los críticos que sugieren que sus esfuerzos por frenar la actividad del mercado inmobiliario local perjudica su reputación de políticas de libre mercado y pro-crecimiento. Quizá es hora de que se lo piensen de nuevo. Vean el nuevo informe que muestra que la intromisión del gobierno en ese mercado está dañando el clima de los negocios en el Territorio.

Aunque Hong Kong figura en el segundo lugar en el informe Doing Business 2014 del Banco Mundial, publicado la semana pasada, la posición del Territorio en la categoría "facilidad para registrar propiedad" se desplomó del puesto 60 al 89. La caída refleja el incremento hasta el 7.5% en febrero, un 100%, de las tasas aplicables a las transacciones inmobiliarias comerciales (no de viviendas). El gobierno ha tomado esa decisión después de varios intentos por enfriar el mercado residencial con impuestos especiales que simplemente desviaron el capital al mercado no residencial.

El informe Doing Business resalta lo que esos impuestos significan para pequeñas y medianas empresas en términos prácticos. En promedio, la transferencia de una propiedad comercial ahora cuesta el 7.7% de su valor tras añadir impuestos y tasas. Antes de que entrase en vigor la nueva tasa estaba en el 4%, si bien solo es aplicable a las transacciones de mayor cuantía. Aunque otros aspectos de la política económica de HK son pro-crecimiento, esto representa un innecesario coste añadido sobre las pequeñas empresas, que solían ser las mayores beneficiadas de la señera política hongkonesa de mínima interferencia en la economía.

Esto debería ser un llamamiento al gobierno, que ha intentado argumentar desde el principio de sus escarceos en el asunto de la nueva tasa que estas medidas eran excepcionales y afectarían solo a los inmuebles. Los críticos advirtieron en aquel entonces, 2010, que la primera tasa especial sobre propiedades residenciales pondría al Territorio en una pendiente resbaladiza por el abandono de lo que un antiguo ministro de economía llamaba "no intervencionismo decidido". Como respuesta, el portavoz del gobierno, Michael Wong, escribió una carta al director de este periódico prometiendo que el nuevo impuesto "[no tendría más implicaciones para las políticas de bajos impuestos, pro-empresas]", calificando las críticas como "[claramente de magnitud incorrecta]".

El deslizamiento del gobierno hacia los impuestos especiales para la propiedad comercial ha demostrado que los críticos tenían razón y el informe del Banco Mundial indica que las pequeñas empresas están pagando el precio de esta metedura de pata. Por mor de los emprendedores del Territorio, es hora de que el gobierno de HK lleve de nuevo sus políticas inmobiliarias al decidido no intervencionismo que funciona tan bien para otros sectores de la economía.

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Translation to Catalonian: http://www.bipartisanalliance.com/2013/11/el-cost-de-lintervencionisme-hong-kong.html

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The Cost of Hong Kong's Interventionism
Contrary to the government's claims, stamp duties are making it harder for small firms to do business in the city.WSJ, Nov. 5, 2013 11:16 a.m. ET
http://online.wsj.com/news/articles/SB10001424052702303482504579179251139447562

Hong Kong's government has steadfastly resisted any suggestion that its efforts to curb the local property market dent its reputation for free-market, pro-growth policies. Maybe it's time they reconsidered. Witness a new report showing that government meddling in property is harming the territory's business climate.

Although Hong Kong ranked second in the World Bank's 2014 Doing Business study released last week, the territory's rank in the ease-of-registering-property category plummeted to 89th from 60th. The drop traces to Hong Kong's doubling of stamp duty on commercial property transactions to 7.5% in February. The government levied this after its earlier attempts to cool the residential market with special taxes merely shunted capital into the commercial real-estate market.

The Doing Business report highlights what these taxes mean to small- and medium-sized businesses in practical terms. On average it now costs 7.7% of a property's value to transfer a commercial property when you include fees and taxes. That's up from 4% before the special stamp duty was implemented, though the duty only applies to larger transactions. Even though other aspects of Hong Kong's economic policies are solidly pro-growth, this represents a needless cost on small firms. They used to be among the biggest beneficiaries of Hong Kong's longstanding policy of minimal interference in the economy.

This should be a wake-up call to the government, which has tried to argue since the beginning of its stamp-duty forays that the measures were unique and would affect only property. Critics warned at the time that the first special duty on residential properties in 2010 put the territory on a slippery slope from its history of what a former financial Secretary called "positive noninterventionism." In response, government spokesman Michael Wong wrote a Letter to the Editor of this paper promising that the new tax would not have "wider implications for the territory's low-tax and business-friendly policies," calling these suggestions "well wide of the mark."

The government's slide into special duties on commercial property proved the critics right, and the World Bank report suggests small businesses are paying the price for this property fumble. For the sake of the territory's entrepreneurs, it's time Hong Kong's government returned its real-estate policies to the positive noninterventionism that works so well in other corners of the economy. 

Conspiracy Theories Permeate Pakistani Society

Pakistan Taliban Lambastes Schoolgirl for U.N. Speech. By Saeed Shah
Anti-Western View Shown in Verbal Attack Permeates Pakistani Society
The Wall Street Journal, July 18, 2013, on page A7
For full article: http://online.wsj.com/article/SB10001424127887323309404578612173917367976.html

ISLAMABAD—Malala Yousafzai, a teenage campaigner for girls' education who was nearly killed by Pakistani militants, was feted at the United Nations last week. Here at home, however, she has been widely portrayed as part of a Western conspiracy against Islam and the developing world.

A 1,800-word open letter in imperfect English by Adnan Rasheed, one of the most feared Taliban leaders in Pakistan, outlined these conspiracy theories Wednesday, describing the type of secular education that Ms. Yousafzai championed as "satanic" and arguing that the U.N. wanted to "enslave the world."

Even as the 16-year-old girl is celebrated abroad as a hero, such radical views are becoming mainstream in Pakistani society, where even commentators hostile to the Taliban widely portray Ms. Yousafzai as a pawn of the West or even a CIA agent.

While Pakistanis usually condemn the violence of the Taliban, the paranoid worldview of the group has soaked deep into society, making the fight against extremism much more difficult. Many in the country, for example, still refuse to believe that Osama bin Laden was found living here in 2011.

"Public opinion is confused about the Malala issue. Many people hate Malala," said Zubair Torwali, a newspaper columnist from her home valley of Swat. "Anything here in Pakistan related to the West or America becomes a thing of conspiracy. The Taliban's ideology is flourishing in Pakistan. It is victorious."

Pakistani society is also influenced by the support that the military has long given to jihadist groups. More recently, the backlash over nearly a decade of U.S. drone strikes, and over the unilateral American raid to kill bin Laden deep inside Pakistan, has created a virulently anti-Western culture that sees spies everywhere.

Ms. Yousafzai narrowly survived an assassination attempt by the Pakistani Taliban in October last year, when she was shot in the head from point-blank range.

When aged just 11, Ms. Yousafzai became a powerful voice against the Taliban through a diary she kept of the extremists' takeover of Swat Valley, in northwest Pakistan. The diary was broadcast by BBC radio in 2009. Following the shooting in Swat, she was airlifted for treatment in England, where she now lives with her family.

Ms. Yousafzai, brought to the U.N. headquarters in New York to mark her 16th birthday, said in a speech Friday that "extremists are afraid of books and pens."

Mr. Rasheed's open letter to Ms. Yousafzai was the first reaction to these remarks by the Taliban leadership.

Mr. Rasheed began the letter by saying that he wishes that the attack on her had "never happened." Then, however, he went on to justify it with detailed arguments, showing, if there were any doubt, the dangers that Ms. Yousafzai would face if she returned home.

"Taliban believe that you were intentionally writing against them and running a smearing campaign to malign their efforts to establish Islamic system in Swat and your writings were provocative," he wrote.

Mr. Rasheed denied that the Taliban were against education—though he went on to spell out the movement's opposition to the "satanic or secular curriculum," which is a "conspiracy of tiny elite who want to enslave the whole humanity for their evil agendas in the name of new world order."

He advised Ms. Yousafzai to return to Pakistan and enroll in a madrassah, or Islamic seminary.

"Your propaganda was the issue and what you are doing now, you are using your tongue on the behest of the others and you must know that if the pen is mightier than the sword then tongue is sharper…In the wars tongue is more destructive than any weapon," the letter said.

When the shooting happened, there was an unprecedented outpouring of public sympathy for Ms. Yousafzai, and anger against the Taliban, inside Pakistan.

However, since then, opinion has hardened against the girl. Last week, on the local Pakistani language versions of the BBC website, in the national language Urdu and the Pashto spoken in her native Swat, the majority of comments were venomously against the schoolgirl. Some even described her as a "prostitute."

Detractors seized on the assistance and attention Ms. Yousafzai received from Western governments and media after the attack. Her appearance at the United Nations seemed to confirm the view that she was somehow working on a Western agenda.

Even Shahbaz Sharif, chief minister of the largest Punjab province and brother of Prime Minister Nawaz Sharif, issued an oblique criticism of Ms. Yousafzai's speech, posting on his Twitter account that it "seemed to be written for global consumption."

Trevor Butterworth's Fad Food Nation

Fad Food Nation. By Trevor Butterworth
A skeptical survey of the claims being made about food, health and the environment.
The Wall Street Journal, July 16, 2013, on page A13
online.wsj.com/article/SB10001424127887323823004578593943760620664.html  

Excerpts:

Not so long ago, I spoke to a chef who ministers to children attending some of the most elite and expensive schools in America. Why, I asked him, was his company's website larded with almost comical warnings about the lethality of eating genetically modified (GM) food? Did he actually believe this as scientific fact or was he catering to his clientele's spiritual fears? It was simply for the mothers, he said, candidly. They ate it up—or, rather, they had swallowed so many apocalyptic warnings about genetically modified food that he had no choice but to echo their terror. How could they entrust their children to him otherwise? The downside of such dogma, he explained, was cost. Many of the mothers wouldn't agree to their children eating anything less than 100% organic, even if organic food required flying in, as he put it, "apples from Cuba."

Mr. Butterworth is a contributor at Newsweek and editor at large for STATS.org.

The Financial Instability Council - Regulators want to make insurers too big to fail. Uh-oh.

The Financial Instability Council
Regulators want to make insurers too big to fail. Uh-oh.
The Wall Street Journal, July 16, 2013, on page A14
http://online.wsj.com/article/SB10001424127887324634304578537490141477314.html

There's finally a healthy discussion in Washington about how to end too-big-to-fail banks. But before the government can start getting rid of taxpayer-backed behemoths, it first has to stop creating them.

The 2010 Dodd-Frank law classified all banks with more than $50 billion in assets as systemically important, and the federal Financial Stability Oversight Council (FSOC) is considering which non-banks should also be deemed too big to fail. Last year the board of regulators slapped the systemic tag on eight "financial market utilities," including clearinghouses, which means taxpayers now stand behind derivatives trading. Congratulations.

And last week the council, chaired by Treasury Secretary Jack Lew, declared that GE Capital, the finance arm of General Electric, GE and AIG are also officially important. Now the council is trying to designate insurer Prudential as systemic, and perhaps MetLife too.

GE Capital was rescued in the 2008 panic and thus deserves the systemic label. AIG seems to welcome the designation, perhaps because its current mix of businesses means that it will face a lighter regulatory burden than some competitors. But taxpayers should be cheered to learn that Prudential and MetLife are resisting membership in the too-big-to-fail club, and for good reason. It's a giant and counterproductive leap to conclude that the insurance business presents a systemic risk to the financial system.

AIG was a giant insurer when it failed, but its disastrous housing bets largely occurred outside its traditional insurance businesses, which have always been regulated by the states. The company's catastrophic wagers on the mortgage market were overseen by the U.S. Treasury's Office of Thrift Supervision. So of course Treasury's solution is to expand federal regulation to the businesses that weren't overseen by the department and didn't fail. Makes perfect Beltway sense.

But this logic should give taxpayers pause. Along with the "systemic" designation comes regulation that was created for banks, not for insurance companies, and that will create problems for taxpayers and policyholders. Any firm dubbed "systemically important" will be regulated by the Federal Reserve. This will likely mean heavy new capital requirements designed to prevent problems that generally don't exist at an insurer.

Banks accept short-term liabilities in the form of deposits and use them to fund long-term loans. This "maturity transformation" has wonderful economic benefits but carries the risk of failure if lots of depositors suddenly want to withdraw their funds. To address this risk, banks are required to maintain capital cushions and liquidity to meet deposit withdrawals that can occur at any time.

Insurers, by contrast, match long-term liabilities with long-term assets. Premiums to cover some event likely to occur decades in the future are invested in assets of a similar duration. There is little risk of a "run on the bank" because policyholders, unlike depositors, typically cannot demand the face value of their policies in cash. Tornadoes, car accidents and terminal cancer do occur, but they don't occur everywhere at once, and they are not triggered by a panic in financial markets.

Insurers can fail, but since customers cannot immediately demand their money the way bank depositors can, the failures tend to play out slowly over many years. States also typically require insurers to contribute to a fund to make up for the shortfall if one of them fails and its assets and liabilities don't match. Without the same immediate demands for cash as at a bank that's heading south, there is less risk of an asset fire sale that could roil markets.

Treating insurers like banks would also raise costs substantially at insurers as they scramble to comply with the new burdens. This means higher premiums for customers. MetLife hired consultant Oliver Wyman to calculate the consumer costs of bank regulation if applied to several insurers that could potentially fall under federal bank rules. The industrywide estimate: $5 billion to $8 billion a year.

If companies can't pass along these higher costs to customers and stay competitive, they are likely to exit the business, especially the capital-intensive life insurance market. That would mean less competition.

The other big risk is that the systemic risk designation could turn out to be self-fulfilling. If an insurer has to accept bank regulation, it might as well consider expanding into bank businesses. If it has to pay the regulatory costs of holding short-term liabilities, then the natural next step is to consider relying more on short-term funding, which almost everyone agrees was a key vulnerability leading into the 2008 crisis. Insurers may become riskier institutions than they now are, which means more risks for taxpayers.

This is no idle fear because the only certainty about financial regulation is that it never prevents the next crisis. Yet in order to reinforce the illusion of effective regulation, and vindicate the folly of Dodd-Frank, regulators are about to force insurance companies and customers who didn't cause the last crisis to pay more while encouraging firms to pursue riskier business thanks to an implied federal backstop. They should have called it the Financial Instability Council.

Contradictory rules are putting bankers in a bind and threatening the housing recovery. By Frank Keating

Regulators Have Created a Mortgage Minefield. By Frank Keating
Contradictory rules are putting bankers in a bind and threatening the housing recovery.
The Wall Street Journal, June 27, 2013, on page A19
http://online.wsj.com/article/SB10001424127887324183204578567993734188214.html

Bankers will soon step into a mortgage minefield—a no-win landscape in which every move will be fraught with peril, and in which the ultimate casualties will be the nascent housing recovery and the American home buyer.

This minefield—a set of incompatible, contradictory regulations—is a creation of the federal government. The first regulation came from the Department of Housing and Urban Development in March, and it said that mortgage lenders can be liable for violations of the 1968 Fair Housing Act if their lending decisions have a so-called "disparate impact" on minorities. No evidence of discriminatory intent or action is required, merely statistical variance in a bank's lending outcomes.

Bankers support equal housing opportunity, but this represents a radical shift in how the government enforces fair housing law. The text of the law prohibits discrimination "because of" race, religion, sex and other protected classes, which means that the lender must have intended to discriminate. This is how we understood the law during the first Bush administration, when I enforced fair housing laws as general counsel and acting deputy secretary atHUD.

The Supreme Court recently agreed to hear the Mount Holly v. Mt. Holly Gardens Citizens in Action case to review whether disparate impact creates liability under the Fair Housing Act. But in the meantime, lenders are facing lawsuits and prosecutions even if they have done nothing wrong.

That's bad enough, but on Jan. 10, the Consumer Financial Protection Bureau's "ability to repay" rule will take effect. This Dodd-Frank mandated rule exposes lenders to risk of litigation if borrowers default on a mortgage—unless the loan falls into a legal "safe harbor" under the CFPB's qualified-mortgage, or QM, guidelines. For example, a loan in which the borrower's total monthly debt payments exceed 43% of his income would presumably fall outside the QM safe harbor.

Even when lenders can prove they have done their best to serve consumers outside the safe harbor, the expected costs of defenses—and delays in resolving defaults—will be passed on to all consumers. This will make lending, even to many creditworthy borrowers, too costly.

Many banks have said that they plan to loan only within the QM guidelines, and Fannie Mae and Freddie Mac —the taxpayer-backed companies that undergird the secondary mortgage market—will buy only qualified mortgages. Thus, the QM will be the primary mortgage product available to home buyers.

The QM requirements will result in an immediate tightening of credit, with banks substituting a one-size-fits-all federal mandate for their own good judgment and sound underwriting. Many creditworthy borrowers who are on the cusp of meeting the requirements—and who may qualify before Jan. 10—will be cut off from the dream of home ownership.

Many of these aspirational home buyers—those who have solid financial futures but who don't fit the QM box—are members of minorities. Moreover, the poverty gap that exists along many racial lines virtually guarantees that tightened mortgage standards will mean that members of some races will be denied credit at a higher rate than others—and voila, disparate impact.

Bankers will be damned if they do and damned if they don't. If they follow the QM guidelines and thus tighten credit, they will run afoul of the novel disparate-impact interpretation of housing laws. If they loosen lending standards to ensure that lending outcomes are identical for every protected group, then they expose themselves to risk of litigation if some of those loans end up in default.

The end result will be confusion and uncertainty. Some banks will stop making mortgage loans altogether, which will further cut access to credit, reduce competition and drive up costs for all home buyers.

Raj Date, the former deputy director of the Consumer Financial Protection Bureau who wrote a large portion of the qualified-mortgage guidelines, now runs a startup venture and mortgage lender that he says will offer loans outside the QM guidelines. As he recently told this newspaper: "It is just way too hard for good, responsible people to get good mortgages today."

We agree. To get people into "good mortgages," the government needs to clear the minefield it created.

Mr. Keating, a former governor of Oklahoma and HUD general counsel, is president and CEO of the American Bankers Association.