Daily Archives: October 9, 2008

Hank Paulson warns that more banks and businesses will fail

Hank Paulson: US companies will continue to collapse in coming weeks

Hank Paulson, the US Treasury Secretary, has warned that more banks and businesses will fail amid the financial crisis despite America’s $700 billion bail-out plan.


Telegraph | Oct 8, 2008

By Gordon Rayner and Jonathan Sibun

Mr Paulson said US companies will continue to collapse in the coming weeks and months despite efforts by the American government to rescue its ailing economy and financial markets.

Mr Paulson called for patience, saying: “the turmoil will not end quickly and significant challenges remain ahead”.

He added: “Neither passage of this new law nor the implementation of these initiatives will bring an immediate end to current difficulties.”

Speaking after the Federal Reserve’s decision to cut interest rates by half a per cent, Mr Paulson said: “US and global financial markets continue to be severely strained.”

He said it would be several weeks before the bail-out plan makes its first purchases of troubled assets, and warned that even when the plan is implemented more banks are likely to fail.

Calling for a special meeting of the G20 group of leading industrial nations, he said: “In consultation with Brazil, the G20 president, I am calling for a special meeting of the G20 that will include senior finance officials, central bankers, and regulators from key emerging economies to discuss how we might coordinate to lessen the effects of global market turmoil and the economic slowdown on all of our countries.”

The Treasury, Federal Reserve and Federal Deposit Insurance Corp. will “use all their authorities to promote the process of repair and recovery and to contain risks to the financial system that might arise from problems at individual institutions,” Mr Paulson added.

“It is the policy of the federal government to use all resources at its disposal to make our financial system stronger,” he said. “We will use all of the tools we’ve been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.”

Claiming the “ultimate taxpayer protection will be a stable financial system”, Mr Paulson said financial markets were suffering the joint challenges of system risk and a lack of confidence, capital and liquidity.

“Uncertainty has clogged our basic financial plumbing,” the Treasury chief said, pointing out that consumers and businesses were having trouble getting student loans or mortgages.

In a veiled attack at governments including Ireland and Greece, which have made unilateral moves to save their own banking systems, Mr Paulson said: “We must take care to ensure that our actions are closely co-ordinated and communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole.”

We’re all socialists now, comrade

Given the socialistic leanings of our Prime Minister, it may well have been a move he undertook calmly and, quite possibly, with a little excitement

Telegraph | Oct 9, 2008

By Simon Heffer

A quarter of a century ago, in the era of the Labour manifesto that was dubbed (by a member of the Labour shadow cabinet) “the longest suicide note in history”, when one wanted to depict the absurdity of the view of the world advanced by Tony Benn and Michael Foot one simply had to say: “They want to nationalise the banks!” People fell about laughing.

Today, it is all considerably less funny. We are all socialists now.

For the Government to take stakes in our leading banks in order to re-capitalise them is not quite the sovietisation of Britain, but it is a pretty good start. Given the instinctively socialistic leanings of our Prime Minister, it may well have been a move he undertook calmly and, quite possibly, with a little excitement.

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Perhaps the consequences of his not having socialised our financial system in this way could have been catastrophic – a view taken not just by his closest Cabinet colleagues but also by the main opposition parties. Equally, the consequences of his having done so could be catastrophic, too, because the socialist experiment rarely ends up with people feeling happier, richer and more free until it has ended.

Anyone over the age of 40 will recall the abiding result of the days when we had a socialist economy in this country: poverty. We had better prepare for some more of that. The state does not have its own money to engage in stock market speculations, such as buying shares in clearing banks. It undertakes this gamble with our money.

That is the money we, as taxpayers, have involuntarily handed over to pay for the things we generally accept as being socially necessary: a health service, schools, pensions, a police force and the defence of the realm.

With anything up to £500 billion having been pledged by Alistair Darling yesterday to create a state-backed banking system, there is now going to be a struggle to find the money. Mr Darling hopes that most of that guarantee will never have to be called on. If he is wrong – if a substantial bank or banks go under, and the money is called upon – then the Treasury will be heading for bankruptcy. We have been there before under socialism, in the autumn of 1976.

Even the limited purchases the Chancellor is prepared to make of bank stock will be costly – a first tranche of £25 billion, with the same available later. Mr Darling says the banks will pay the Treasury a price for any such money. He perhaps hopes that, as with the Swedish bank rescue in 1990, he will be able to sell the shares at a premium a couple of years later. In the meantime, the loan has to be funded.

That means either public spending cuts or a rise in taxation, or even both. As with any other shareholding, the value of the investment can go down. The liability and risk to the taxpayer is terrifying. The political cost to Labour if all this fails will be as nothing compared with the cost to the British public.

This is what socialist economics brings. The intervention, or rather interference, of the state in financial and economic matters can only lead to sclerosis, the suppression of enterprise, the raising of taxes, starvation of investment, lack of innovation, technological retardation and the rise of the power of organised labour. Judging from yesterday’s interest cut, the much-vaunted independence of the Bank of England has already gone out of the window and state control of the central bank is back with a vengeance.

If you doubt this analysis, recall what happened in this country between 1945 and 1979, when such an ethos as we are now returning to existed unchallenged, even by Tory governments. The more the state intervened, the more it had to intervene: the appetite grew with eating.

By the 1970s the inevitable endgame of socialism was being played out: unions battling with government over rates of pay, prices and incomes policies, food subsidies, the three-day week, the winter of discontent. The state had to create jobs because there was precious little incentive for the private sector to do so. Investment was scarce. The state was everywhere.

The maxim of the American writer and philosopher Ayn Rand came close to fulfilment before the denouement of Old Labour on May 3 1979: that the difference between a welfare state and a totalitarian state is a matter of time.

With the Government about to take shares in banks – and substantial shares at that – the effect of the new socialism will be felt first of all by the customers of those banks. Perhaps again there will be money to lend. But the bank manager will have to lend in accordance with government policy.

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Robotic pterodactyl spy-drones will swoop between buildings and perch on apartment balconies

Texas Tech Paleontologist Sankar Chatterjee poses with a model of the Tapejara petrodactyl at the Texas Tech Museum in Lubbock, Texas, July 25, 2008. Chatterjee and a University of Florida aeronautical engineer have designed a military drone after the Brazilian pterodactyl. The flying dinosaur, about the size of a Canada goose, had a large, thin rudder-like sail on its head that functioned as a sensory organ. Using a similar sensory rudder, the 30-inch drone will hopefully be able to fly over combat zones and collect information to send to military commanders. (AP Photo/Artie Ummer)

New Flying Dinosaur Drone to Resemble Pterodactyl

By Jeanna Bryner

LiveScience.com | Oct 8, 2008

Pterodactyls may have gone extinct millions of years ago, but a newly designed spy plane could bring the flying reptiles to life, albeit replacing blood and guts with carbon fiber and batteries.

“The next generation of airborne drones won’t just be small and silent,” the design team announced recently. “They’ll alter their wing shapes using morphing techniques to squeeze through confined spaces, dive between buildings, zoom under overpasses, land on apartment balconies, or sail along the coastline.”

Called Pterodrone, the spy plane is about the size of a crow but with a much larger wingspan that reaches nearly 32 inches (80 cm).

Its design will be inspired by one of the savviest movers of the Cretaceous, a pterosaur called Tapejara wellnhoferi. This ancient reptile was a morphing machine. On land, Tapejara walked on four legs before rearing up on its two back limbs and running to reach takeoff speed. Once airborne, the beast could cruise at some 19 mph (30 km/h), according to the researchers.

Then, to snap up fish food, the reptile would bend the tips of its wings up to form a three-mast sailboat structure with its body. The membranous crest atop its head would have served as the third sail, used as a rudder for steering, said Sankar Chatterjee, a paleontologist of Texas Tech University who is working on the bio-inspired craft.

Similarly, the Pterodrone will sport morphing wings and a head crest made of carbon fiber and nylon for such multimodal locomotion.

“The crest is analogous to a vertical tail on an aircraft. However, a vertical tail is actually destabilizing if it is placed on the nose instead of the rear, said design team member Rick Lind, a mechanical and aerospace engineer at the University of Florida. “We are investigating the tradeoff such that the crest provides better turn performance and sensor pointing but also requires the wings to compensate and provide stability.”

While the real deal had blood vessels and nerves that served as sensors for temperature, pressure and wind direction, the Pterodrone will be equipped with gyroscopes and a GPS.

“We are trying to build a vehicle that can mimic the motion of the pterosaur, but we are not trying to mimic its nerve/sensory system,” Lind told LiveScience.

Pterodrone is in the design phases right now, but its designers hope to complete a walking, flying and sailing prototype in the near future, depending on funding.

The reptile-inspired concept will be detailed in a presentation this week in Houston at a joint meeting of the Geological Society of America, Soil Science Society of America-American Society of Agronomy-Crop Science Society of America, and Gulf Coast Association of Geological Societies.

Tibet suffering ‘worst period of repression’ by China since the Cultural Revoloution

In this March 28, 2008 file photo, a Tibetan woman in exile enacts a scene of oppression by Chinese authorities during recent crackdowns on Tibet, at a protest rally in Bangalore, India.

Tibet’s people are enduring the worst period of repression at the hands of China’s regime since the Cultural Revolution more than three decades ago, according to the Dalai Lama’s envoy in Europe.

Telegraph | Oct 8, 2008

By David Blair, Diplomatic Editor

Kelsang Gyaltsen told the Daily Telegraph that China’s security forces have mounted a renewed crackdown since the riots which swept Tibet’s capital, Lhasa, in March.

As well as compelling Tibetans to undergo “patriotic re-education”, which includes forced denunciations of the Dalai Lama, the authorities have excluded all foreign journalists and diplomats from the Himalayan region.

“Tibetans feel the whole region is like a giant prison. Nobody can enter and little information comes out,” said Mr Kelsang. “There is the re-emergence of an atmosphere of angst and fear just as it was in the Cultural Revolution days.”

The riots in March and the subsequent crackdown by the authorities claimed 218 lives, according to Mr Kelsang. He added that another 1,290 people have been wounded and 6,705 arrested, with many suffering torture.

Tibet’s last outbreak of sustained unrest was in the late 1980s, culminating in serious riots in 1989. But Mr Kelsang said: “The numbers of people arrested, the numbers injured and the numbers killed are higher in 2008 than it was in the late 80s.”

Only the repression of the Cultural Revolution, which ended with Mao Tse-tung’s death in 1976, was worse than today’s conditions. “That is how the Tibetan people feel,” he said.

China has refused to meet the Dalai Lama, but Beijing has conducted seven rounds of talks with his representatives since 2002. Mr Kelsang took part in the last meeting in Beijing in July. But he said that no progress had been achieved.

China says that Tibet has been part of the “motherland” for centuries and points to the region’s rapid economic development, symbolised by the new railway to Lhasa. Beijing says that the Dalai Lama does not represent Tibet’s six million people, who have been “liberated” from the obscurantist rule of Buddhist monks.

But Mr Kelsang pointed out that the Dalai Lama seeks “autonomy” for Tibet, not independence or separation. While the government’s “hardline” stance remains unchanged, China’s intelligentsia has a new view of Tibet, he said.

“The Chinese perception of Tibet has changed dramatically in a very positive way. Twenty years ago, people saw Tibet as undeveloped, superstitious, primitive, backward and so on. Now this has changed, especially among the educated,” said Mr Kelsang.