May 30, 2012

Europeans ambivalent to the euro: survey | News | Business Spectator

The debt crisis that has ravaged Europe for the best part of three years has exposed a dislike of the single currency but little desire to abandon it, a wide-ranging survey of public opinion found Tuesday.
Pew Research Center's survey across eight European Union countries, including five members of the 17-country eurozone, indicated that the region's financial problems have triggered full-blown fears about the future of Europe as a political project.
"This crisis of confidence is evident in the economy, in the future, in the benefits of European economic integration, in EU membership, in the euro and in the free market system," Pew said in a statement accompanying its survey.
Despite those concerns, Pew found there was no desire for those countries that use the euro to return to their former currencies, such as the French franc or the Spanish peseta. The euro launched in 1999 and is now used by 17 countries.
In Greece, the epicentre of the debt crisis, 71 per cent of those polled want to keep the euro, as against to 23 per cent that want to return to the drachma. More people in Greece, which is now in its fifth year of a savage recession, think the euro has been good for them than bad - 46 per cent of those surveyed compared to 26 per cent who thought it was a bad thing.
These findings may be crucial as Greece heads to the polls on June 17 in a general election many see as a referendum on the country's euro membership.

No freedom in too much choice

Choice is good, right? Well yes, but even the chief executive of Choice admits too much of it can be a bad thing.
''When it comes to mobile phone plans, we call it a confuse-opoly,'' Nick Stace says. ''Often phone companies talk in terms of units, not minutes. They'll say, 'You get 300 free units.' But what is a unit? How on earth can an individual make the right decision?''
An individual can't. What's more, mobile phones are merely the tip of the choiceberg.
In the Western world, choice is a top-shelf ideal. With its links to individualism and self-expression, freedom of choice is a fundamental value. It underpins our economies, our way of thinking and our way of life. Yet academics such as the US psychologist Barry Schwartz argue that in the West we now face too many choices. This, he says, can cause us to make bad choices, or can paralyse us into making no choice at all. Worse, it can cause depression.
''There is good reason to believe that overwhelming choice at least contributes to the epidemic of unhappiness spreading through modern society,'' says Schwartz, who has counted 175 varieties of salad dressing in his supermarket.
Schwartz, the Dorwin Cartwright professor of social theory and social action at Swarthmore College in Pennsylvania, has been refining his case in articles, talks and the 2004 book The Paradox of Choice: Why More Is Less. He argues that we need to limit, not expand, our choices, in everything from goods to ideology. In a sense, he's practising what he preaches: at heart, he offers only one argument.
''The only change from seven years ago when I wrote the book,'' he says, ''is that the economic downturn may have worked to reduce effective choice for lots of people, though the world still provides a million versions of everything. This is especially true of culture, where people can customise everything they read, watch or listen to.''
His point is not new, echoing the exhortations of Epicurus, Buddha and Gandhi to live a simple life. What is new is the range of options available to the average Western citizen, not just in consumer goods but in lifestyle and beliefs. What shall I be? Single, married or de facto? Catholic, Buddhist or atheist? Shall I have IVF, adopt a toddler or remain a childless Surry Hills hipster?
Jenn Barrie is a Perth teacher who recently had her eyes opened to all the choices on offer in Australia.
''In the last two years I have experienced many cultures, none with the degree of choice we have in Australia,'' she says.
In 2010, during a two-year sailing adventure, Barrie, her husband, Andrew, and their two daughters were north of Papua New Guinea when they encountered 13-metre waves and 200km/h winds during a storm. With both anchors and the keel of their catamaran lost, the Barries spent 12 hours adrift before bumping into the island of Mogmog in the Ulithi atoll.
The family of four spent the next five months shipwrecked among the island's 200 residents, living without electricity, running water or shops. And whereas the islanders fished, tended their chickens and grew bananas and pumpkins, the Barries had to buy their provisions. These transactions proved to be unpredictable and irregular.
''On the island of Mogmog, there are no vehicles,'' says Barrie, who has written a book about her adventure. ''Supplies come by ship from Yap, some 180 kilometres away, roughly every 14 weeks. We were reliant on the ships and the store in Yap. When we placed an order with the store it was like Christmas: you never knew what you were going to get. I asked for tinned vegies, we got chocolate mousse. Choice, in a consumer sense, became irrelevant.''
Returning to Perth last year, Barrie was stunned.
''When we returned to Perth, my daughter Di and I went to Woolies to do grocery shopping. I walked in the door and just stopped. I didn't move for about a minute. Especially overwhelming was the vast array of fresh fruit and vegies. And yesterday I was standing at the fridge, saying out loud, 'Apple? Pear? Apple? Pear?' Our 11-year-old daughter wandered past and said, 'Aren't you lucky to have the choice?'''
Unlike Schwartz, Barrie regards all this choice as desirable rather than problematic.
''I can't help but feel that the level of choice here is fantastic,'' she says. ''Unless one has a medical predisposition to a mental condition, to be overwhelmed by our choices is, to me, frankly self-indulgent.''
Even Schwartz concedes some people deal well with the abundance of options in modern life. Many do, he says, but many don't. He divides people into ''maximisers'' and ''satisficers'': ''maximisers'' always aim to make the best possible choice, whereas ''satisficers'' tend to be satisfied with good enough.
As Schwartz writes: ''No one can check out every option, but maximisers strive towards that goal, and so making a decision becomes increasingly daunting as the number of choices rises. Worse, after making a selection, they are nagged by the alternatives they have not had time to investigate. In the end, they are more likely to make better objective choices than satisficers but get less satisfaction from them.''
The consequences of these choices extend far beyond buying the best tin of tuna.
''Individuals with high maximisation scores experienced less satisfaction with life and were less happy, less optimistic and more depressed than people with low maximisation scores,'' Schwartz writes. ''Indeed, those with extreme maximisation ratings had depression scores that placed them in the borderline clinical range.''
Jenn Barrie, then, is a satisficer. But at Choice, Nick Stace is performing the work of a maximiser in his job as a consumer advocate.
At the Choice testing facility in Marrickville, Stace's team compares and contrasts hi-fis, fridges, super funds and smartphones. They poke and prod, dissect and discuss to sort good from bad. And, like Barrie, he doesn't think it's a problem that consumers are facing more and more choices.
''I think the number of choices available is definitely increasing,'' says Stace, who is familiar with Schwartz's arguments. ''But you won't get the head of Choice saying that giving people more choice is a problem. While some might complain we have too many choices, we'd all complain an awful lot more if we had fewer. If anything, people want more choice. That's why a lot of people are choosing to shop online and offshore.''
For Stace, choice per se is not a problem. The problem arises only when the various choices are too difficult to compare, as in the case of mobile phones.
But for the American philosopher Gerald Dworkin, choice per se is a potential problem. In his 1988 book, The Theory and Practice of Autonomy, Dworkin uses the example of giving blood. Let's assume the only way to give blood is via a voluntary donor system, he says. Now what happens if we add the option of allowing people to sell their blood? Doesn't this just increase the range of options from one to two?
No, says Dworkin.
''Freedom is diminished,'' he writes. ''Prior to the introduction of the freedom to sell we were free to give something that cannot be purchased. Now we are only free to give something that can be purchased as well … By increasing the options available, one changes the nature of the old options and may, therefore, affect the likelihood of individuals exercising such options.''
Hence increasing choice is not as uncomplicatedly positive as conventional wisdom dictates. Each choice comes with costs, even when there are only two options. For a start, each choice comes with the requirement of the time and effort to choose. Once the number of choices is drastically expanded, the costs can become overwhelming.
Taking up this point, Schwartz cites studies demonstrating that people consistently make better decisions when confronted with six options rather than 30. In one study, university students were shown to be more likely to write an essay for extra marks when presented with six topics rather than 30. Even more surprisingly, of the students who did write essays, those who had only six choices performed better than those with 30 choices. It turns out that 30 is just too daunting a number for many people. So they disengage: either they make no choice, or choose arbitrarily, to get the process over with.
Businesses are taking note of such studies. A decade ago, when Procter & Gamble reduced the number of Head & Shoulders shampoos from 26 to 15, their sales jumped 10 per cent. A 2006 study by the Bain consultancy firm claimed that, by reducing complexity and narrowing choice, companies can boost revenues up to 40 per cent and cut costs up to 35 per cent.
If less is more for some companies, the same may be true for individuals. Even Stace agrees that it helps to have strategies to make sense of the barrage of choices. In the supermarket, for instance, he has habits and filters that enable him to buy everything he needs in 20 minutes - ''even if there are 20 brands of tuna''.
When making other purchases, he relies heavily on the advice of family and friends. ''There are certain people I go to,'' he says. ''There's a friend who's a great photographer, so if I want to buy a camera I go to him and trust his opinion.''
Schwartz makes similar recommendations. To cope with all life's options, he advocates putting on metaphorical blinkers.
''We can arbitrarily limit the number of options we consider,'' he says. ''For example, only two shops, only three websites. We can let others choose for us. For example, buy the same smartphone your friend got two weeks ago, without even looking. We can seek 'good enough' rather than the 'best', which will make it unnecessary for us to examine everything.''
If Schwartz is right, one of the keys to happiness seems to be to adopt the outlook of a satisficer, rather than a maximiser. To work towards being easygoing instead of a perfectionist. As Schwartz says, we live in a world of high expectations. With all the choices of the world available to us, we have come to expect perfection. That's a recipe for disappointment.
''Adding options to people's lives can't help but increase the expectations people have about how good those options will be,'' Schwartz says. ''The secret to happiness is low expectations.''

May 29, 2012

Super-powerful Flame worm could take YEARS to dissect • The Register

The exceptionally complex Flame malware, this week found on numerous systems across the Middle East and beyond, is likely to take months if not years to analyse.
Early indications suggest that Flame is a cyber-espionage toolkit that has penetrated computers primarily, but not exclusively, in Iran and Israel. The worm may have been in circulation for at least two years (and perhaps much longer) but only hit the news on Monday following a series of announcements by security groups and antivirus firms.
Iran's National Computer Emergency Response Team published a warning about the data-stealing virus, promising an antidote: so far the malware has completely evaded detection by commercial antivirus scanners. Iranian researchers described the malware as a "close relation" to Stuxnet, the famously well-engineered nasty that sabotaged industrial control systems linked to Iran's controversial nuclear programme.
Kaspersky Lab said the UN International Telecommunication Union had alerted it to Flame and asked for help analysing the malware, which was believed to be wiping information from Middle Eastern computers. Kaspersky said the unusually large virus has been spreading since March 2010.
However, Hungarian security researchers at the Laboratory of Cryptography and System Security (CrySyS) fear Flame may have been active for somewhere between 5 to 8 years. The Budapest-based lab published a preliminary analysis [PDF] of the malware, which it dubbed sKyWIper - the CrySys Lab realised the complex piece of malicious software that they had been analysing for weeks was clearly a build of Flame.
Other security firms have since waded in with their own observations and early analysis; confusingly, other researchers are calling the threat either Viper or Flamer.
There's general consensus that Flame is the most elaborate malware threat ever uncovered, and that it was almost certainly developed by a state-sponsored team. The Hungarian team concludes that the malware was "developed by a government or nation state with significant budget and effort, and may be related to cyber warfare activities".

How Flame spread its digital inferno

The 20MB virus compromises Windows-based PCs and stealthily installs itself before stealing data and passwords, taking screenshots and surreptitiously turning on microphones to record audio conversations. The malware opens encrypted channels to command-and-control (C&C) servers using SSL protocols.
Flame shares some characteristics with the early Duqu and Stuxnet worms, but also has a number of differences.
Like Stuxnet and Duqu, Flame malware can spread via USB sticks and across insecure networks. All three infect machines running Microsoft's operating system. Flame contains exploits for known and fixed vulnerabilities, such as the print spooler's remote code execution bug and the .lnk security hole first found in Stuxnet.
However, Flame is much more complex than either Stuxnet or Duqu: it is made up of attack-launching modules that can be swapped in and out as required for a particular job; it uses various open-source libraries including libz for compression; it is spread out over several files rather than as one executable; and most unusually it uses a database managed by the SQLite library.
It also executes a small set of scripts written in Lua - a programming language favoured by computer game makers such as Rovio for Angry Birds. These direct the operation of the attack modules.
Several Flame files claim to be Microsoft Windows components, but none are signed with a valid (or even possibly stolen) private key, as it was the case with Duqu and Stuxnet.
Both Duqu and Stuxnet targeted industrial control systems, while Flame is far more promiscuous. Crucially, analysis suggests Stuxnet and Duqu use the same building blocks (a common platform most likely used by the same programming team) and that this is not the case with Flame.
"The threat shows great similarity to Stuxnet and Duqu in some of its ways of operation yet its code base and implementation are very different, and much more complex," McAfeenotes, hypothesising that Flame might be a "parallel project" to Stuxnet and Duqu.

Worm rears head after attacks on oil field systems

Over recent weeks, prior to Monday's announcement about the malware, Iran reported intensified cyber-attacks on its energy sector, which they observed as a direct continuation of the Stuxnet and Duqu attacks. This may be linked to a decision last month to disconnect the main oil export terminal on Kharg Island in the Persian Gulf following a computer virus infection.
"Evidently, the threat has been developed over many years, possibly by a large group or dedicated team," McAfee notes.
"We found publicly available reports from anti-spyware companies, and log files in public help forums, which could indicate infections of early variants of Skywiper in Europe and Iran several years ago (for example: March 2010). Skywiper appears to be more wildly spread than Duqu, with similarly large numbers of variants."
Symantec agrees with its rival's assessments that Flame was developed by a team, concluding that the "code was not written by a single individual but by an organised well-funded group of personnel with directives". Unlike Stuxnet, Flame is not particularly targeted and has spread to civilians' systems in many countries.
"Initial telemetry indicates that the targets of this threat are located primarily in Palestinian West Bank, Hungary, Iran, and Lebanon. Other targets include Russia, Austria, Hong Kong, and the United Arab Emirates. The industry sectors or affiliations of individuals targeted are currently unclear," Symantec said.
"However, initial evidence shows the victims may not all be targeted for the same reason. Many appear targeted for individual personal activities, rather than their company of employment. Interestingly, in addition to particular organisations being targeted, many of the attacked systems appear to be personal computers being used from home Internet connections."
David Harley, senior researcher at ESET, agreed with McAfee that Flame and Stuxnet are more different than they are similar.
"Whether it’s actually targeting a specific country is not clear: after all, Stuxnet is nowadays assumed to have been targeting Iran, but was originally detected over a very wide area," Harley said. "While there’s speculation that Flamer is linked in some way to Stuxnet and Duqu, that seems to me to be purely speculative right now, as the code seems very different."
Other than saying it's likely the work of state-sponsored black hat coders, possibly in the employ of an intelligence agency, nobody is speculating who is behind Flame. A lot of the same caveats apply to Stuxnet, but circumstantial evidence does point towards some sort of joint Israeli-US operation.
Even though the full capabilities of Flame, much less who created it and why, remain a bit of a mystery, security firms can at least add detection for the malware now that samples are circulating among researchers.
"Other tricks that Skywiper/Flame might have up its sleeve may take some time to ascertain. It's code more than twenty times larger than Stuxnet, which means it could take substantial effort to analyse it all," writes Graham Cluley, a senior security consultant at Sophos. "Fortunately, complete code analysis is not necessary to add detection." ®

May 28, 2012

[23] discussions and [2] comments on LinkedIn - - Pacificlake Mail

International Monetary Fund managing director Christine Lagarde.
International Monetary Fund managing director Christine Lagarde. Photo: Getty Images/AFP
Greek web users have waged Facebook war against IMF head Christine Lagarde after she accused their countrymen of dodging taxes.
The French managing director of the International Monetary Fund received more than 10,000 messages, many of them obscene, on her page on the online social network - where her postings typically draw a couple of hundred comments.
By late Sunday afternoon a separate Facebook page had sprung up titled "Greeks are against Lagarde".
Its creators described it as "the page through which to show displeasure as a nation towards Lagarde!", with a picture of the IMF chief.
Greeks accused Lagarde on her page of belittling their suffering in an economic crisis that has seen salaries and pensions cut, in a recession now in its fifth year.
Lagarde told Britain's Guardian newspaper in an interview published Friday that Greeks must "help themselves" by all paying taxes, saying she was more concerned about Africans in poverty than Greeks in the economic crisis.
"You should say that to the relatives of the 3000 Greeks that have committed suicide, to the one million unemployed," wrote a Facebook user under the nickname Ntavos Paok.
"You should tell your countrymen, who were many years in colonial Africa enriching themselves by stealing from the grandparents of the children you so hypocritically think of by comparing them with Greeks."
Retired civil servant Christina Tsekoura wrote of the hardship of her and husband whose pensions have been cut and who pay housing tax as well as supporting their unemployed daughter.
"My family does not owe one euro to the tax office, to a public agency or a bank in Greece or abroad," she wrote.
"We believe in honesty, hard work and merit. I forbid you from equating me with thieves and taunting my family."
Greece made a deal in 2010 to receive hundreds of billions of euros (dollars) from the IMF and the EFSF, a European Union bailout fund, to rescue it from financial collapse, in return for tough reforms.
One Facebook user, Litsa Sterp, resorted to ancient Greek wisdom, quoting the first-century scholar Plutarch: "Flee the hostile and tyrannous money-lender who interferes in your freedom and attaches conditions."

Read more:

French canal therapy | The Australian

I USED to think of myself as a sailor. There was never a great deal of evidence for this beyond a few outings in a canoe but somehow I always imagined myself in charge of a great yacht, crossing the Pacific, wiping the spray from my eyes while spinning the captain's wheel.
The dream took a knock a few years ago when I crossed the Atlantic. Mercifully someone else was doing the wheel spinning. For three days we suffered force-8 gales. I still have nightmares about the waves, their crests taller than the ship. The waves made me re-evaluate my nautical fantasies, which is what has brought me to the canals of France, because canals offer boating in a wave-free environment.
I have booked a barge in Burgundy, home to some of France's most idyllic canals, for a trip on the Yonne from Vermenton to St Florentin. The boat is a classic French peniche with the lines of a traditional barge and fitted for live-aboard cruising.
Inside it's caravan chic -- wood veneers, dinky curtains, banquette seating, airconditioning, and a built-in CD player.
The most influential people in Sport
French barges are wide-beamed and the ensuite cabins and well-equipped kitchen feel surprisingly spacious. Outside, the peniche has all the stuff to cater to sailing fantasies -- mooring ropes, an anchor, a gangplank and, best of all, a proper ship's wheel for me to spin. There is also a deck mop, which will prove invaluable.
While French barges are not exactly oil tankers, steering initially can be a bit tricky. There is a telling delay between turning the wheel and the boat beginning to change direction. On the first morning, with an excessive (possibly hysterical) amount of wheel spinning, the barge veers drunkenly from one bank to another. It isn't so much navigating as cross-stitching. I see fishermen on the banks ahead retreating to the safety of chestnut woods.
The mop comes to my rescue. Lashed to the bow, it acts as a sighter, a vertical reference against which I can more clearly discern the bow's movements. Passing boatmen gaze at my navigational aid with expressions ranging from the quizzical to the openly mocking but I have the satisfaction of getting into the first lock without taking out the lock-keeper's cottage.
With the navigation cracked, I turn my gaze to the landscape. In deepest Burgundy, the Yonne meanders through absurdly pretty landscapes, the banks lined with vineyards, sloping fields of maize and yellow corn, deep woods and slumbering stone villages where church bells toll the hours.
The joy of the barge is that my friend and I can enjoy the countryside at walking pace without having to do the walking.
We sit with our feet up, basking in midsummer sun, making an occasional adjustment to the wheel as the mop dictates, while the landscape unfolds around us.
In the late afternoons we moor by villages where country restaurants await with their simple evening meals.
In the mornings we take the bicycles down from the roof rack and cycle to village boulangeries for warm croissants.
In centuries past this canal took stone, wood and wine to Paris. The stone, a soft, malleable limestone, was used to carve the gargoyles on the face of Notre Dame. The wood became the roof rafters under which artists, in their garrets, struggled with masterpieces and rent payments.
The wine was primarily chablis. Before the building of the railways, which opened other wine areas to Paris, this canal ensured chablis was the white wine at almost every Parisian lunch table.
The Yonne curves round the chablis terroir. In Vincelles we abandon our boat to pace around vineyards with Franck Chretien, a wine guide, discussing soil, rainfall, grape varieties and south-facing slopes.
From a high viewpoint on the edge of pine woods, we look down over one of the great French wine panoramas -- the seven clima or plots of Chablis Grand Cru, planted more than 1000 years ago by Cistercian monks.
Every voyage has a Major Port (capitals intended), and ours is Auxerre, a town of narrow lanes and half-timbered houses.
The mooring on the Yonne offers the best view, with the cathedral and the old abbey of St Germain sailing above the rooftops like galleons. Evening is spreading across the river. We open a bottle of chablis and dine on deck as the lights come on in the darkening houses.
As we tuck into dessert, Auxerre's son et lumiere show kicks off and we find ourselves with ringside seats for a drama that runs from Joan of Arc through Louis IV to Napoleon.
From Auxerre we sail downstream, past the flower-decked village of Moneteau, beneath a suspension bridge built by Gustave Eiffel, past a family picnicking like an Edouard Manet painting come to life.
We round a series of grassy river bends where fishermen are falling asleep over their lines.We moor for lunch in Gurgy.
For a moment the village seems empty, an unused stage set for a pre-war French film. Then suddenly people appear, coming in from the vineyards, from outlying villages, from the riverbanks for lunch at the Restaurant de la Riviere, where the cuisine and customers are timelessly provincial.
On through the afternoon we sail down long avenues of reflections -- clouds, trees, fishermen, houses, church spires -- upended and trembling across the surface of the water.
In the late afternoon, as the shadows lengthen and swallows skim the surface, we moor in rural seclusion.
The moon rises through the trees, polishing the canal with a silver sheen.
I sit out on deck listening to the owls hooting in the woods.
It may not be a trans-Atlantic crossing but boating doesn't get much sweeter than this.
Stanley Stewart was a guest of Freewheel Afloat.
There are two options on French canals -- an all-inclusive crewed cruise or self-skipper. Freewheel Afloat offers both, including a seven-night rental of a self-drive Linssen motor cruiser, which sleeps four; boats are available from bases at Anjou and the Canal du Midi, and two in Burgundy. Freewheel Afloat also has a seven-day cruise itinerary on the upper Burgundy canal aboard the 12-passenger La Belle Epoque. More:
French Travel Connection has an offer of at least $899 off a twin-share cabin on a wide range of crewed cruises, including La Belle Epoque. To secure the discount, book by May 31 for selected departure dates to October. More: 1300 858 304;

Houla massacre: 108 dead, says UN

The UN Security Council has condemned "in the strongest possible terms" the Syrian government for the Houla massacre, in which at least 108 people were killed.

A statement agreed by the 15-nation council, including Syrian ally Russia, said the attacks "involved a series of government artillery and tank shellings on a residential neighbourhood" and again demanded that President Bashar al-Assad withdraw heavy weapons from Syrian towns.

"The members of the Security Council reiterated that all violence in all its forms by all parties must cease. Those responsible for acts of violence must be held accountable," said the statement.

UN observers in Syria saw at least 108 bodies in Houla, including 49 children and at least seven women, UN officials said.

Britain's UN ambassador Mark Lyall-Grant said that the council statement, while important, was not enough

Read more:

May 25, 2012

Jay Bryan: If Europe goes down, so do we

While the odds still remain low, it’s now possible to envision a messy eurozone exit for Greece that would plunge Canada into a severe recession. This, at least, is the conclusion of a new analysis carried out by a team of analysts under TD Bank chief economist Craig Alexander.
It stresses that the danger of a catastrophic outcome is still quite small, but points out that political paralysis in Greece and a continued failure of European leaders to create a robust rescue plan for the region’s financial system, now make it possible that Europe will spark a new global recession.

And here’s a wake-up call for Canadians: if we do see such an event, Canada is likely to feel it more painfully than the U.S., which is the opposite of what happened in the last recession.
“Our vulnerability to an external crisis has increased significantly” in recent years, warns Derek Burleton, deputy chief economist at TD. That’s because of the household indebtedness problem that federal officials have been nagging Canadians aboot.

Until recently, it looked as if this issue – which is simply the financial reflection of the hot housing market that Canada enjoyed over the past three years – would cure itself as housing continues to cool. After all, most Canadians weren’t borrowing terribly irresponsibly; they simply took advantage of very cheap mortgage loans to buy a home or trade up. Many also borrowed to renovate.  But even if the reasons were sound, the total debt has become large enough to make Canada’s economy more vulnerable to a shock.

When the last recession hit Canada in 2008, we were one of the countries where home prices – and, as a result, household indebtedness – had gone up only modestly in the preceding years. As a result, there was no real meltdown in either home prices or consumer spending, notes a recent research report from the Bank of Canada. “Most of our recession was concentrated in the export sector,” points out Burleton, and as a result, most Canadian households didn’t suffer nearly the distress felt in the U.S. or in Ireland, the European poster child for housing bubbles.

But if Europe collapses, Burleton warns: “It’s pretty safe to say that Canada would underperform the U.S. in any new recession.” A key reason is that housing, now overvalued on average by about 10 to 15 per cent, could suddenly plunge as confidence evaporated.
It’s not that the U.S. would be invulnerable. But housing prices south of the border are already very low, so this all-important part of household wealth is no longer vulnerable. After all, it doesn’t hurt much if you fall out of a basement window.
Happily, this scenario is based on a chain of events that still looks unlikely. For Europe to suffer a financial meltdown, at least two things would have to happen, both within the control of European leaders.  First, Greece would have to be kicked out of the eurozone and second, Europe would have to let this shock destroy banks in the rest of the region.
Neither is probable in the coming months, although Greece’s eventual exit is “a very high likelihood,” Burleton says.
Timing is important. An exit tomorrow would unleash serious stresses in a region already weakened by recession and a troubled banking system, possibly unleashing a disaster. An exit in a couple of years might be much easier to sustain.
But in the immediate future, it’s clear that a big majority of Greeks want to keep the euro, so they could produce a moderate government in new elections next month.
Simultaneously, European leaders – including the most hardline and powerful one, German Chancellor Angela Merkel – are finally waking up to the dangers they’d unleash by ejecting Greece. They’re acknowledging that they should focus more on encouraging growth than on compulsory budget cuts.
But the time left for compromise is very limited. There’s already a slow-
motion run on the deposits of Greek banks as people worry about forced conversion of euro-denominated savings into some unknown new Greek currency.
All of this could be cured overnight, of course, if the European Central Bank were to become as aggressive as the Bank of England or the Federal Reserve in the U.S. This would make sense, since Europe is at risk of depression, not inflation.
But such a turnabout would mean humbling political reversals by Merkel and her allies, so it’s likely that the fate of Europe rests on their ability to change course.

May 24, 2012

Greek capital exits banking system while policians gamble

 It may be that a year from now no one will be talking about Alexis Tsipras, the charismatic young leader of Greece’s Radical Left Coalition, who is defying the austerity terms that the European Union has imposed on his country in exchange for bailout funds.
Or this may be the beginning of the revolution.
Tsipras, whose party placed a surprise second in the inconclusive Greek elections earlier this month and currently leads in the polls for new elections June 17, took his message of defiance to France and Germany this week.
“In Greece, we are fighting on behalf of Germans, French and all European people,” Tsipras said in Paris at a joint press conference with French leftist leader Jean-Luc Mélenchon, who captured 11% of the vote in the first round of France’s presidential contest, which Socialist François Hollande won in the second round on May 6.
Along the way, Tsipras found time to tell the Wall Street Journal that Europe would not dare to cut off Greece’s funding because it is not in the financial self-interest of the other euro-zone countries or their banks.
“If they proceed with unilateral action on their side,” Tsipras told the Journal, “in other words, they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors.” Read the interview with Tsipras in the Wall Street Journal.
Tsipras torpedoed the formation of a government after the May 6 elections in his country by refusing to ally with any party that did not reject the austerity terms outright. For him, renegotiation is not on the table.
“The memorandum,” he said in Paris, referring to the bailout terms agreed upon by Greece’s previous, unelected, government, “cannot be negotiated because hell cannot be negotiated.”
Tsipras took his left-wing populism to the two biggest euro countries as a political backlash threatened to engulf Greece in reaction to numerous European leaders warning voters there to choose wisely in the new elections, portraying it as a referendum on staying in the euro(US:EURUSD).

Greek capital exits banking system while policians gamble

 It may be that a year from now no one will be talking about Alexis Tsipras, the charismatic young leader of Greece’s Radical Left Coalition, who is defying the austerity terms that the European Union has imposed on his country in exchange for bailout funds.
Or this may be the beginning of the revolution.
Tsipras, whose party placed a surprise second in the inconclusive Greek elections earlier this month and currently leads in the polls for new elections June 17, took his message of defiance to France and Germany this week.
“In Greece, we are fighting on behalf of Germans, French and all European people,” Tsipras said in Paris at a joint press conference with French leftist leader Jean-Luc Mélenchon, who captured 11% of the vote in the first round of France’s presidential contest, which Socialist François Hollande won in the second round on May 6.
Along the way, Tsipras found time to tell the Wall Street Journal that Europe would not dare to cut off Greece’s funding because it is not in the financial self-interest of the other euro-zone countries or their banks.
“If they proceed with unilateral action on their side,” Tsipras told the Journal, “in other words, they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors.” Read the interview with Tsipras in the Wall Street Journal.
Tsipras torpedoed the formation of a government after the May 6 elections in his country by refusing to ally with any party that did not reject the austerity terms outright. For him, renegotiation is not on the table.
“The memorandum,” he said in Paris, referring to the bailout terms agreed upon by Greece’s previous, unelected, government, “cannot be negotiated because hell cannot be negotiated.”
Tsipras took his left-wing populism to the two biggest euro countries as a political backlash threatened to engulf Greece in reaction to numerous European leaders warning voters there to choose wisely in the new elections, portraying it as a referendum on staying in the euro(US:EURUSD).

The warpath to Australian wealth

Australia is one of the wealthiest countries in the world, ranked in the top 10 in gross domestic product per capita. It is one of the most isolated major countries in the world; it occupies an entire united continent, is difficult to invade and rarely is threatened. Normally, we would not expect a relatively well-off and isolated country to have been involved in many wars. This has not been the case for Australia and, more interesting, it has persistently not been the case, even under a variety of governments. Ideology does not explain the phenomenon in this instance.

Since 1900, Australia has engaged in several wars and other military or security interventions (including the Boer War, World War I, World War II and the wars in Korea, Vietnam, Afghanistan and Iraq) lasting about 40 years total. Put another way, Australia has been at war for more than one-third of the time since the Commonwealth of Australia was established in 1901. In only one of these wars, World War II, was its national security directly threatened, and even then a great deal of its fighting was done in places such as Greece and North Africa rather than in direct defence of Australia. This leaves us to wonder why a country as wealthy and seemingly secure as Australia would have participated in so many conflicts.
Importance of sea lanes
To understand Australia, we must begin by noting that its isolation does not necessarily make it secure. Exports, particularly of primary commodities, have been essential to Australia. From wool exported to Britain in 1901 to iron ore exported to China today, Australia has had to export commodities to finance the import of industrial products and services in excess of what its population could produce for itself. Without this trade, Australia could not have sustained its economic development and reached the extraordinarily high standard of living that it has.
This leads to Australia's strategic problem. In order to sustain its economy it must trade, and given its location, its trade must go by sea. Australia is not in a position, by itself, to guarantee the security of its sea lanes, due to its population size and geographic location. Australia therefore encounters two obstacles. First, it must remain competitive in world markets for its exports. Second, it must guarantee that its goods will reach those markets. If its sea lanes are cut or disrupted, the foundations of Australia's economy are at risk.
Think of Australia as a creature whose primary circulatory system is outside of its body. Such a creature would be extraordinarily vulnerable and would have to develop unique defence mechanisms. This challenge has guided Australian strategy. 
First, Australia must be aligned with – or at least not hostile to – the leading global maritime power. In the first part of Australia's history, this was Britain. More recently, it has been the United States. Australia's dependence on maritime trade means that it can never simply oppose countries that control or guarantee the sea lanes upon which it depends; Australia cannot afford to give the global maritime power any reason to interfere with its access to sea lanes.
Second, and more difficult, Australia needs to induce the major maritime powers to protect Australia's interests more actively. For example, assume that the particular route Australia depends on to deliver goods to a customer has choke points far outside Australia's ability to influence. Assume further that the major power has no direct interest in that choke point. Australia must be able to convince the major power of the need to keep that route open. Merely having amiable relations will not achieve that. Australia must make the major power dependent upon it so that Australia has something to offer or withdraw in order to shape the major power's behaviour.
Creating dependency
Global maritime powers are continually involved in conflict – frequently regional and at times global. Global interests increase the probability of friction, and global power spawns fear. There is always a country somewhere that has an interest in reshaping the regional balance of power, whether to protect itself or to exact concessions from the global power.
Another characteristic of global powers is that they always seek allies. This is partly for political reasons, in order to create frameworks for managing their interests peacefully. This is also for military reasons. Given the propensity for major powers to engage in war, they are always in need of additional forces, bases and resources. A nation that is in a position to contribute to the global power's wars is in a position to secure concessions and guarantees. For a country such as Australia that is dependent on sea lanes for its survival, the ability to have commitments from a major power to protect its interests is vital.
Deployment in the Boer War was partly based on Australian ideology as a British colony, but in fact Australia had little direct interest in the outcome of the war. It also was based on Australia's recognition that it needed Britain's support as a customer and a guarantor of its security. The same can be said for the wars in Korea, Vietnam, Iraq and Afghanistan. Australia might have had some ideological interest in these wars, but its direct national security was only marginally at stake in them. However, Australian participation in these wars helped to make the United States dependent on Australia to an extent, which in turn induced the United States to guarantee Australian interests.
There were also wars that could have concluded with a transformation of the global system. World War I and World War II were attempts by some powers to overthrow the existing global order and replace it with a different one. Australia emerged from the old political order, and it viewed the prospect of a new order as both unpredictable and potentially dangerous. Australia's participation in those wars was still in part about making other powers dependent upon it, but it also had to do with the preservation of an international system that served Australia. (In World War II there was also an element of self-defence: Australia needed to protect itself from Japan and certainly from a Japanese-controlled Pacific Ocean and potentially the Indian Ocean.)
Alternative strategy
Australia frequently has been tempted by the idea of drawing away from the global power and moving closer to its customers. This especially has been the case since the United States replaced Britain as the global maritime power. In the post-World War II period, as Asian economic activity increased, Asian demand increased for Australian raw materials, from food to industrial minerals. First Japan and then China became major customers of Australia.
The Australian alternative (aside from isolation, which would be economically unsustainable) was to break or limit its ties to the United States and increasingly base its national security on Japan or, later, on China. The theory was that China, for example, was the rising power and was essential to Australian interests because of its imports, imports that it might secure from other countries. The price of the relationship with the United States – involvement in American conflicts – was high. Therefore, this alternative strategy would have limited Australia's exposure to US demands while cementing its relationship with its primary customer, China.
This strategy makes sense on the surface, but there are two reasons that Australia, though it has toyed with the strategy, has not pursued it. The first is the example of Japan. Japan appeared to be a permanent, dynamic economic power. But during the 1990s, Japan shifted its behaviour, and its appetite for Australian goods stagnated. Economic relationships depend on the ability of the customer to buy, and that depends on the business cycle, political stability and so on. A strategy that would have created a unique relationship between Australia and Japan would have quickly become unsatisfactory. If, as we believe, China is in the midst of an economic slowdown, entering into a strategic relationship with China would also be a mistake, or at the very least, a gamble.
The second reason Australia has not changed its strategy is that, no matter what relationship it has with China or Japan, the sea lanes are under the control of the United States. In the event of friction with China, the United States, rather than guaranteeing the sea lanes for Australia, might choose to block them. In the end, Australia can sell to many countries, but it must always use maritime routes. Thus, it has consistently chosen its relationship with Britain or the United States rather than commit to any single customer or region.
Australia is in a high-risk situation, even though superficially it appears secure. Its options are to align with the United States and accept the military burdens that entails, or to commit to Asia in general and China in particular. Until that time when an Asian power can guarantee the sea lanes against the United States – a time that is far in the future – taking the latter route would involve pyramiding risks. Add to this that the relationship would depend on the uncertain future of Asian economies – and all economic futures are now uncertain – and Australia has chosen a lower-risk approach.
This approach has three components. The first is deepening economic relations with the United States to balance its economic dependencies in Asia. The second is participating in American wars in order to extract guarantees from the United States on sea lanes. The final component is creating regional forces able to handle events in Australia's near abroad, from the Solomon Islands through the Indonesian archipelago. But even here, Australian forces would depend on US cooperation to manage threats.
The Australian strategy therefore involves alignment with the leading maritime power, first Britain and then the United States, and participation in their wars. We began by asking why a country as wealthy and secure as Australia would be involved in so many wars. The answer is that its wealth is not as secure as it seems. 

May 23, 2012

Panasonic Lumix techno-lust

Panasonic has launched its latest lens for its Lumix G series of interchangeable lens cameras (ILC), covering a versatile 12-35mm focal length (equivalent to 24-70mm in 35mm). It's dust- and splash-resistant, according to the company, with the addition of a nano surface coating to help reduce ghosting and flaring. The addition of this lens brings the Panasonic-branded Lumix lens collection to 15.
With a fixed f/2.8 maximum aperture throughout the focal length, this lens will appeal to anyone looking to upgrade their Micro Four Thirds lens collection, and, particularly, moving beyond the limitations of the kit lenses. There's also in-lens image stabilisation, thanks to the Power optical image stabiliser (OIS) system. No local pricing has been announced, but the lens will be available in July

Greek Euro Exit By Numbers: What Economists Expect -

The prospect of Greece leaving the euro is the only thing anyone is talking about in the markets at the moment. It even has its own nickname: Grexit.
Nothing is certain here; Greece may or may not leave, and there's a huge range of potential policy responses. So, making allowances for some guesswork, here's a rundown of the latest on some economists' and analysts' views on what could happen next.
CAPITAL ECONOMICS: "Leaving the euro zone could indeed be the only way for these countries to avoid a sustained and damaging period of deflation [and] an exit and devaluation would result in a significant and lasting boost to a departing country's competitiveness, potentially kick-starting an economic recovery."
The repercussions if Italy and Spain left would be immense, causing another deep recession. But for Greece, and possibly for the rest of the currency bloc, the advantage of regaining full control of monetary and fiscal policy is likely to outweigh the costs. "After a partial breakup, euro-zone policy makers may feel less need to set an example for weaker countries that have left, perhaps prompting looser monetary and fiscal policy. It may eventually result in all the existing euro-zone economies staging stronger and more balanced growth than if the euro zone remained intact."
DEUTSCHE BANK: Amid all the concern about Greece leaving the euro altogether, Deutsche Bank suggests another path: introducing a parallel currency, which it nicknames the "Geuro," to run alongside the remaining common currency. Leaving the euro altogether would cause economic, political and social chaos, the bank says, whereas a parallel currency would give the authorities "the power to stabilize the exchange rate of the as to keep the door open to a future return."
Rather than a clear-cut and fully voluntary process, Deutsche Bank thinks that a Greek exit would emerge as the unwanted conclusion of a series of micro-decisions on the austerity package, bank recapitalization and the role of the European Central Bank.
In the long run, Greece could be better off out of the euro area, but the change to another currency regime would be extremely painful for the country in the nearer term, with a contraction in the economy and in disposable income worse than was seen in Russia and Argentina. Containing the damage from a euro exit would require swift action and a capacity for policy coordination that has seldom been seen since the beginning of the crisis.
JP MORGAN: There's now a 50% chance of Greece leaving, up from 20% before the country's politicians failed to produce a coalition government. Regional unemployment could be higher than "anything seen in the past half-century." In terms of policy responses "the euro-system's direct exposure appears manageable in the context of large revaluation gains but if losses exceed the readily available buffer, euro-zone sovereigns may be called upon to make immediate capital injections."
Among the paths it lays out from here, the "chaos scenario" for JP Morgan goes as follows: "outright victory by the Radical Left or significant influence in a coalition and declaration of a debt moratorium, which the ECB/International Monetary Fund/European Union troika would respond to by ending the financing program and denying Greece access to ECB borrowing. If Greece then introduced the drachma, EUR/USD would probably decline to 1.10 due to widespread capital flight from the region. If instead the government backtracked and re-engaged the troika given that 80% of the electorate favors retaining the euro, the currency would stabilize around 1.20."
A Greek departure is likely to be disruptive and disorderly, pushing the euro to around $1.15-1.10 against the dollar and causing a 2% drop in euro-zone gross domestic product.
CITIGROUP: "There are many scenarios for a Greek exit; almost all of them are likely to be euro negative for an extended period," says the bank that coined the now-ubiquitous "Grexit." If the process is managed, which the U.S. bank deems unlikely, expect a short, sharp selloff in the euro, with a subsequent rally up to $1.45 or higher. If Greece just dumps the austerity program and walks, the risk of contagion rises, and "the euro could begin to rally, but so much damage will have been done by then that it would begin its rally from a much lower level and probably not be anywhere close to the current level at the end of the year."
If the stronger countries were to break away, some see euro gains ahead, but Citi reckons that "this can take a very long time and is probably well beyond an investible horizon." All in all, the outlook for the common currency is "not very promising...unless policy makers surprise with decisiveness."
Citi sees three possible scenarios for an exit; a managed departure with a firewall implemented to prevent contagion (which would push the euro to $1.20), a scenario where such a firewall is insufficient to prevent a euro-zone break-up or risk aversion (heralding a drop to $1.13) and a disorderly worst-case exit with excessive volatility in other markets. The latter scenario sees Citigroup forecasting that the euro could fall as low as $1.01.
NOMURA: "Without pretending to be precise about the effects involved, we think it is fair to say that a large swing in the current-account balance would be forced by a lack of capital inflows and inevitable capital flight," Nomura says, stressing repeatedly that bank holidays may be needed to stem the flight of deposits.
DANSKE BANK: "We are in for a long period of uncertainty but we believe that ultimately a deal will be struck between the EU/IMF and Greece that keeps Greece in the euro and austerity will continue. The alternative is too severe for both the EU and Greece." It notes that there is wide backing among the Greek population for the euro, with 81% in favor in the latest poll, and 54% of the Greek population supports sticking to the EU/IMF program.
Danske lays out three scenarios for Greece: positive, negative and very negative.
"In the positive scenario, the euro-pro and austerity-committed parties ultimately win the votes needed to continue implementing the program. This scenario would trigger a relief rally.
"In the negative scenario, Syriza becomes the main party following the election. Despite its verbal resistance against the EU/IMF program having been fierce, it is likely to 'calm down' on the other side of the election.
"In the very negative scenario, the game of chicken between Syriza and the EU/IMF gets out of control and ends with no agreement. The EU/IMF stop the support for Greece and the ECB no longer accepts Greek bonds as collateral. Greece effectively has to undergo the fiscal adjustment overnight. There is a severe run on the Greek banks. Greece defaults on its remaining public debt. The introduction of a new currency would take some time. This scenario would result in initial market chaos. Also, Spain and Italy are likely to come under pressure."
HSBC: "On contagion, one would have to decide how impacted the market elsewhere in Europe would be by a Greek exit, and also how swift and aggressive the associated policy response from the European Central Bank would be. The latter could include a reopening of the ECB's bond-buying program, additional long-term refinancing operations, or something more ground-breaking." The bank has devised a scale for how damaging a Greek exit would be to the common currency as a whole. Broadly speaking, it reckons that the "best" outcome for the euro would involve the experience for Greece being as tough as possible. If it's too easy, the temptation for others to leave would be greater, and the currency would be seen to be easily divisible.