For a Sick Friend: First, Do No Harm. By Letty Cottin Pogrebin

For a Sick Friend: First, Do No Harm. By Letty Cottin Pogrebin
Conversing with the ill can be awkward, but keeping a few simple commandments makes a huge difference
The Wall Street Journal, April 13, 2013, on page C3
http://online.wsj.com/article/SB10001424127887324240804578416574019136696.html


'A closed mouth gathers no feet." It's a charming axiom, but silence isn't always an option when we're dealing with a friend who's sick or in despair. The natural human reaction is to feel awkward and upset in the face of illness, but unless we control those feelings and come up with an appropriate response, there's a good chance that we'll blurt out some cringe-worthy cliché, craven remark or blunt question that, in retrospect, we'll regret.

Take this real-life exchange. If ever the tone deaf needed a poster child, Fred is their man.

"How'd it go?" he asked his friend, Pete, who'd just had cancer surgery.

"Great!" said Pete. "They got it all."

"Really?" said Fred. "How do they know?"

A few simple commandments makes a huge difference when conversing with the ill.

Later, when Pete told him how demoralizing his remark had been, Fred's excuse was, "I was nervous. I just said what popped into my head."

We're all nervous around illness and mortality, but whatever pops into our heads should not necessarily plop out of our mouths. Yet, in my own experience as a breast-cancer patient, and for many of the people I have interviewed, friends do make hurtful remarks. Marion Fontana, who was diagnosed with breast cancer eight years after her husband, a New York City firefighter, died in the collapse of the World Trade Center, was told that she must have really bad karma to attract so much bad luck. In another case, upon hearing a man's leukemia diagnosis, his friend shrieked, "Wow! A girl in my office just died of that!"

You can't make this stuff up.

If we're not unwittingly insulting our sick friends, we're spouting clichés like "Everything happens for a reason." Though our intent is to comfort the patient, we also say such things to comfort ourselves and tamp down our own feelings of vulnerability. From now on, rather than sound like a Hallmark card, you might want to heed the following 10 Commandments for Conversing With a Sick Friend.

1. Rejoice at their good news. Don't minimize their bad news. A guy tells you that the doctors got it all, say "Hallelujah!" A man with advanced bladder cancer says that he's taking his kids to Disneyland next summer, don't bite your lip and mutter, "We'll see." Tell him it's a great idea. (What harm can it do?) Which doesn't mean that you should slap a happy face on a friend's grim diagnosis by saying something like, "Don't worry! Nowadays breast cancer is like having a cold!"

The best response in any encounter with a sick friend is to say, "Tell me what I can do to make things easier for you—I really want to help."

2. Treat your sick friends as you always did—but never forget their changed circumstance. However contradictory that may sound, I promise you can learn to live within the paradox if you keep your friend's illness and its constraints in mind but don't treat them as if their illness is who they are. Speak to them as you always did (tease them, kid around with them, get mad at them) but indulge their occasional blue moods or hissy-fits. Most important, start conversations about other things (sports, politics, food, movies) as soon as possible and you'll help speed their journey from the morass of illness to the miracle of the ordinary.

3. Avoid self-referential comments. A friend with a hacking cough doesn't need to hear, "You think that's bad? I had double pneumonia." Don't tell someone with brain cancer that you know how painful it must be because you get migraines. Don't complain about your colicky baby to the mother of a child with spina bifida. I'm not saying sick people have lost their capacity to empathize with others, just that solipsism is unhelpful and rude. The truest thing you can say to a sick or suffering friend is, "I can only try to imagine what you're going through."

4. Don't assume, verify. Several friends of Michele, a Canadian writer, reacted to her cancer diagnosis with, "Well, at least you caught it early, so you'll be all right!" In fact, she did not catch it early, and never said or hinted otherwise. So when someone said, "You caught it early," she thought, "No, I didn't, therefore I'm going to die." Repeat after me: "Assume nothing."

5. Get the facts straight before you open your mouth.Did your friend have a heart or liver transplant? Chemo or radiation? Don't just ask, "How are you?" Ask questions specific to your friend's health. "How's your rotator cuff these days?" "Did the blood test show Lyme disease?" "Are your new meds working?" If you need help remembering who has shingles and who has lupus, or the date of a friend's operation, enter a health note under the person's name in your contacts list or stick a Post-it by the phone and update the information as needed.

6. Help your sick friend feel useful. Zero in on one of their skills and lead to it. Assuming they're up to the task, ask a cybersmart patient to set up a Web page for you; ask a bridge or chess maven to give you pointers on the game; ask a retired teacher to guide your teenager through the college application process. In most cases, your request won't be seen as an imposition but a vote of confidence in your friend's talent and worth.

7. Don't infantilize the patient. Never speak to a grown-up the way you'd talk to a child. Objectionable sentences include, "How are we today, dearie?" "That's a good boy." "I bet you could swallow this teeny-tiny pill if you really tried." And the most wince-worthy, "Are we ready to go wee-wee?" Protect your friend's dignity at all costs.

8. Think twice before giving advice.Don't forward medical alerts, newspaper clippings or your Aunt Sadie's cure for gout. Your idea of a health bulletin that's useful or revelatory may mislead, upset, confuse or agitate your friend. Sick people have doctors to tell them what to do. Your job is simply to be their friend.

9. Let patients who are terminally ill set the conversational agenda.If they're unaware that they're dying, don't be the one to tell them. If they know they're at the end of life and want to talk about it, don't contradict or interrupt them; let them vent or weep or curse the Fates. Hand them a tissue and cry with them. If they want to confide their last wish, or trust you with a long-kept secret, thank them for the honor and listen hard. Someday you'll want to remember every word they say.

10. Don't pressure them to practice 'positive thinking.' The implication is that they caused their illness in the first place by negative thinking—by feeling discouraged, depressed or not having the "right attitude." Positive thinking can't cure Huntington's disease, ALS or inoperable brain cancer. Telling a terminal patient to keep up the fight isn't just futile, it's cruel. Insisting that they see the glass as half full may deny them the truth of what they know and the chance to tie up life's loose ends while there's still time. As one hospice patient put it, "All I want from my friends right now is the freedom to sulk and say goodbye."

Though most of us feel dis-eased around disease, colloquial English proffers a sparse vocabulary for the expression of embarrassment, fear, anxiety, grief or sorrow. These 10 commandments should help you relate to your sick friends with greater empathy, warmth and grace.

—Ms. Pogrebin is the author of 10 books and a founding editor of Ms. magazine. Her latest book is "How to Be a Friend to a Friend Who's Sick," from which this essay is adapted.

BCBS: Monitoring tools for intraday liquidity management - final document

BCBS: Monitoring tools for intraday liquidity management - final document
April 2013

http://www.bis.org/publ/bcbs248.htm

This document is the final version of the Committee's Monitoring tools for intraday liquidity management. It was developed in consultation with the Committee on Payment and Settlement Systems to enable banking supervisors to better monitor a bank's management of intraday liquidity risk and its ability to meet payment and settlement obligations on a timely basis. Over time, the tools will also provide supervisors with a better understanding of banks' payment and settlement behaviour.

The framework includes:

• the detailed design of the monitoring tools for a bank's intraday liquidity risk;
• stress scenarios;
• key application issues; and
• the reporting regime.

Management of intraday liquidity risk forms a key element of a bank's overall liquidity risk management framework. As such, the set of seven quantitative monitoring tools will complement the qualitative guidance on intraday liquidity management set out in the Basel Committee's 2008 Principles for Sound Liquidity Risk Management and Supervision. It is important to note that the tools are being introduced for monitoring purposes only and that internationally active banks will be required to apply them. National supervisors will determine the extent to which the tools apply to non-internationally active banks within their jurisdictions.

Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools (January 2013), which sets out one of the Committee's key reforms to strengthen global liquidity regulations does not include intraday liquidity within its calibration. The reporting of the monitoring tools will commence on a monthly basis from 1 January 2015 to coincide with the implementation of the LCR reporting requirements.

 An earlier version of the framework of monitoring tools was issued for consultation in July 2012. The Committee wishes to thank those who provided feedback and comments as these were instrumental in revising and finalising the monitoring tools.

Authorities' access to trade repository data - consultative report

CPSS: Authorities' access to trade repository data - consultative report
April 2013
www.bis.org/publ/cpss108.htm

The consultative report Authorities' access to trade repository data was published for public comment on 11 April 2013. 

Trade repositories (TRs) are entities that maintain a centralised electronic record of over-the-counter (OTC) derivatives transaction data. TRs will play a key role in increasing transparency in the OTC derivatives markets by improving the availability of data to authorities and the public in a manner that supports the proper handling and use of the data. For a broad range of authorities and official international financial institutions, it is essential to be able to access the data needed to fulfil their respective mandates while maintaining the confidentiality of the data pursuant to the laws of relevant jurisdictions.

The purpose of the report is to provide guidance to TRs and authorities on the principles that should guide authorities' access to data held in TRs for typical and non-typical data requests. The report also sets out possible approaches to addressing confidentiality concerns and access constraints. Accompanying the report is a cover note that lists the specific related issues for comment.
Comments should be sent by 10 May 2013 to both the CPSS secretariat (cpss@bis.org) and the IOSCO secretariat (accessdata@iosco.org). The comments will be published on the websites of the BIS and IOSCO unless commentators have requested otherwise.

• Full report (49 pages, 308 kb)
• Cover note (3 pages, 45 kb)

Market-Based Structural Top-Down Stress Tests of the Banking System. By Jorge Chan-Lau

Market-Based Structural Top-Down Stress Tests of the Banking System. By Jorge Chan-Lau
IMF Working Paper No. 13/88
April 10, 2013
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40468.0

Summary: Despite increased need for top-down stress tests of financial institutions, performing them is challenging owing to the absence of granular information on banks’ trading and loan portfolios. To deal with these data shortcomings, this paper presents a market-based structural top-down stress testing methodology that relies in market-based measures of a bank's probability of default and structural models of default risk to infer the capital losses they could experience in stress scenarios. As an illustration, the methodology is applied to a set of banks in an advanced emerging market economy.

Regulators Let Big Banks Look Safer Than They Are. By Sheila Bair

Regulators Let Big Banks Look Safer Than They Are. By Sheila Bair
The Wall Street Journal, April 2, 2013, on page A13
http://online.wsj.com/article/SB10001424127887323415304578370703145206368.html

The recent Senate report on the J.P. Morgan Chase "London Whale" trading debacle revealed emails, telephone conversations and other evidence of how Chase managers manipulated their internal risk models to boost the bank's regulatory capital ratios. Risk models are common and certainly not illegal. Nevertheless, their use in bolstering a bank's capital ratios can give the public a false sense of security about the stability of the nation's largest financial institutions.

Capital ratios (also called capital adequacy ratios) reflect the percentage of a bank's assets that are funded with equity and are a key barometer of the institution's financial strength—they measure the bank's ability to absorb losses and still remain solvent. This should be a simple measure, but it isn't. That's because regulators allow banks to use a process called "risk weighting," which allows them to raise their capital ratios by characterizing the assets they hold as "low risk."

For instance, as part of the Federal Reserve's recent stress test, the Bank of America reported to the Federal Reserve that its capital ratio is 11.4%. But that was a measure of the bank's common equity as a percentage of the assets it holds as weighted by their risk—which is much less than the value of these assets according to accounting rules. Take out the risk-weighting adjustment, and its capital ratio falls to 7.8%.

On average, the three big universal banking companies (J.P. Morgan Chase, Bank of America and Citigroup) risk-weight their assets at only 55% of their total assets. For every trillion dollars in accounting assets, these megabanks calculate their capital ratio as if the assets represented only $550 billion of risk.

As we learned during the 2008 financial crisis, financial models can be unreliable. Their assumptions about the risk of steep declines in housing prices were fatally flawed, causing catastrophic drops in the value of mortgage-backed securities. And now the London Whale episode has shown how capital regulations create incentives for even legitimate models to be manipulated.

According to the evidence compiled by the Senate Permanent Subcommittee on Investigations, the Chase staff was able to magically cut the risks of the Whale's trades in half. Of course, they also camouflaged the true dangers in those trades.

The ease with which models can be manipulated results in wildly divergent risk-weightings among banks with similar portfolios. Ironically, the government permits a bank to use its own internal models to help determine the riskiness of assets, such as securities and derivatives, which are held for trading—but not to determine the riskiness of good old-fashioned loans. The risk weights of loans are determined by regulation and generally subject to tougher capital treatment. As a result, financial institutions with large trading books can have less capital and still report higher capital ratios than traditional banks whose portfolios consist primarily of loans.

Compare, for instance, the risk-based ratios of Morgan Stanley, an investment bank that has struggled since the crisis, and U.S. Bancorp, a traditional commercial lender that has been one of the industry's best performers. According to the Fed's latest stress test, Morgan Stanley reported a risk-based capital ratio of nearly 14%; take out the risk weighting and its ratio drops to 7%. USB has a risk-based ratio of about 9%, virtually the same as its ratio on a non-risk weighted basis.

In the U.S. and most other countries, banks can also load up on their own country's government-backed debt and treat it as having zero risk. Many banks in distressed European nations have aggressively purchased their country's government debt to enhance their risk-based capital ratios.

In addition, if a bank buys the debt of another bank, it only needs to include 20% of the accounting value of those holdings for determining its capital requirements—but it must include 100% of the value of bonds of a commercial issuer. The rules governing capital ratios treat Citibank's debt as having one-fifth the risk of IBM's. In a financial system that is already far too interconnected, it defies reason that regulators give banks such strong capital incentives to invest in each other.

Regulators need to use a simple, effective ratio as the main determinant of a bank's capital strength and go back to the drawing board on risk-weighting assets. It does make sense to look at the riskiness of banks' assets in determining the adequacy of its capital. But the current rules are upside down, providing more generous treatment of derivatives trading than fully collateralized small-business lending.

The main argument megabanks advance against a tough capital ratio is that it would force them to raise more capital and hurt the economic recovery. But the megabanks aren't doing much new lending. Since the crisis, they have piled up excess reserves and expanded their securities and derivatives positions—where they get a capital break—while loans, which are subject to tougher capital rules, have remained nearly flat.

Though all banks have struggled to lend in the current environment, midsize banks, with their higher capital levels, have the strongest loan growth, and community banks do the lion's share of small-business lending. A strong capital ratio will reduce megabanks' incentives to trade instead of making loans. Over the long term, it will make these banks a more stable source of credit for the real economy and give them greater capacity to absorb unexpected losses. Bet on it, there will be future London Whale surprises, and the next one might not be so easy to harpoon.

Ms. Bair, the chairman of the Federal Deposit Insurance Corporation from 2006 to 2011, is the author of "Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself" (Free Press, 2012).

China's Demography and its Implications

China's Demography and its Implications. By Il Houng Lee, Qingjun Xu, and Murtaza Syed
IMF Working Paper No. 13/82
Mar 28, 2013
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40446.0

Summary: In coming decades, China will undergo a notable demographic transformation, with its old-age dependency ratio doubling to 24 percent by 2030 and rising even more precipitously thereafter. This paper uses the permanent income hypothesis to reassess national savings behavior, with greater prominence and more careful consideration given to the role played by changing demography. We use a forward-looking and dynamic approach that considers the entire population distribution. We find that this not only holds up well empirically but may also be superior to the static dependency ratios typically employed in the literature. Going further, we simulate global savings behavior based on our framework and find that China’s demographics should have induced a negative current account in the 2000s and a positive one in the 2010s given the rising share of prime savers, only turning negative around 2045. The opposite is true for the United States and Western Europe. The observed divergence in current account outcomes from the simulated path appears to have been partly policy induced. Over the next couple of decades, individual countries’ convergence toward the simulated savings pattern will be influenced by their past divergences and future policy choices. Other implications arising from China’s demography, including the growth model, the pension system, the labor market, and the public finances are also briefly reviewed.

China’s Path to Consumer-Based Growth: Reorienting Investment and Enhancing Efficiency

China’s Path to Consumer-Based Growth: Reorienting Investment and Enhancing Efficiency. By Il Houng Lee, Murtaza Syed, and Liu Xueyan (Xueyan Liu???)
IMF Working Paper No. 13/83
March 29, 2013

http://www.imf.org/external/pubs/cat/longres.aspx?sk=40446.0

Summary: This paper proposes a possible framework for identifying excessive investment. Based on this method, it finds evidence that some types of investment are becoming excessive in China, particularly in inland provinces. In these regions, private consumption has on average become more dependent on investment (rather than vice versa) and the impact is relatively short-lived, necessitating ever higher levels of investment to maintain economic activity. By contrast, private consumption has become more self-sustaining in coastal provinces, in large part because investment here tends to benefit household incomes more than corporates. If existing trends continue, valuable resources could be wasted at a time when China’s ability to finance investment is facing increasing constraints due to dwindling land, labor, and government resources and becoming more reliant on liquidity expansion, with attendant risks of financial instability and asset bubbles. Thus, investment should not be indiscriminately directed toward urbanization or industrialization of Western regions but shifted toward sectors with greater and more lasting spillovers to household income and consumption. In this context, investment in agriculture and services is found to be superior to that in manufacturing and real estate. Financial reform would facilitate such a reorientation, helping China to enhance capital efficiency and keep growth buoyant even as aggregate investment is lowered to sustainable levels.