Monthly Archives: January 2012

Saving London’s financial center

From The Economist:

But the City can compete successfully with other financial centres only if Britain has the right policies on regulation, tax and immigration. On regulation, there is an understandable fear that an outsized financial-services industry means an outsized risk for taxpayers. The proposals from Britain’s Vickers Commission go a long way to deal with this, dividing a tightly regulated domestic banking system (the bit that puts taxpayers at risk) from a more freewheeling international market for global capital. By contrast, the thrust of many of the proposals coming out of Brussels looks harmful. Some, such as the financial-transactions tax, can be blocked by a British veto. The rest are subject to majority vote, and Mr Cameron’s stand-off with his European partners last month—supposedly to protect the City, but really to avoid having to sell a more integrated Europe to Tory Eurosceptics—has now given London’s rivals the excuse to hamstring the City.

The British government’s own policies on tax and immigration are also doing a lot of damage. The 50% tax rate, introduced by the previous Labour government in 2010, brings in little money and has made London the most taxed out of ten financial centres for high net-worth individuals. The present generation of financial bosses, who live in and like London, may tolerate it for a while, but younger ones are feeling the pull of Switzerland, Hong Kong or Dubai. As for immigration policy, the best way to win Asian business is to lure the young Asian financiers to London. Tight limits on talented immigrants damage the City’s prospects—and indeed the prospects of every bit of British business.

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Filed under Domestic Politics, Europe, Finance

Drugs at the UN

I doubt anyone will report these as missing.

If you are a United Nations diplomat missing 30 pounds of cocaine, it is now in the hands of theNew York Police Department.

The shipment turned up last week in the mailroom of the world body, where phony diplomatic pouches into which the drug had been stuffed attracted the staff’s attention, the head of security, Gregory Starr, said Thursday.

Authentic pouches have the words “United Nations” and “Diplomatic Mail” printed on the outside, as well as the body’s logo. But these cheap cotton bags had only the logo. There was no wording, no address, no manifest, no airway bill. They had been delivered from Mexico by the courier company DHL, according to diplomats who spoke on the condition of anonymity because they were not authorized to discuss the seizure.

When the bags were opened, the contents appeared to be 14 notebooks wrapped in cellophane, Mr. Starr said, but on further inspection they were found to be hollowed out and each one filled with a kilogram, about 2.2 pounds, of cocaine.

The contents were handed over to the Police Department and the federal Drug Enforcement Administration for further investigation. The contents did not originate from United Nations offices in Mexico, Mr. Starr said, and DHL handles official mail, he said. Nor did he think it was intended for anyone at the world body.

More likely, he said, is that someone had the idea to use the counterfeit diplomatic pouches to escape inspection at the Mexican border, and the plan went awry when they were actually delivered to the United Nations.

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Filed under Drug Wars, Mexico

Three things to remember about Keystone and U.S. energy policy.

Robert Samuelson writes:

There are three things to remember about Keystone and U.S. energy policy.

First, we’re going to use lots of oil for a long time. The U.S. Energy Information Administration (EIA) estimates that American oil consumption will increase 4 percent between 2009 and 2035. The increase occurs despite highly optimistic assumptions about vehicle fuel efficiency and bio-fuels. But a larger population (390 million in 2035 versus 308 million in 2009) and more driving per vehicle offset savings.

The more oil we produce domestically and import from neighbors, the more we’re insulated from dramatic interruptions of global supplies. After the United States, Canada is the most dependable source of oil — or was until Obama’s decision.

Second, barring major technological breakthroughs, emissions of carbon dioxide, the main greenhouse gas, will rise for similar reasons. The EIA projects that America’s CO2 emissions will increase by 16 percent from 2009 to 2035. (The EIA is updating its projections, but the main trends aren’t likely to change dramatically.) Stopping Canadian tar-sands development, were that possible, wouldn’t affect these emissions.

Finally, even if — as Keystone critics argue — some Canadian oil were refined in the United States and then exported, this would be a good thing. The exports would probably go mostly to Latin America. They would keep well-paid industrial jobs (yes, refining) in the United States and reduce our trade deficit in oil, which exceeded $300 billion in 2011.

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Why is store-bought ground beef red on the outside but dark inside?

Have you ever noticed that the ground meat you just brought home from the supermarket is red on the outside but dark purple or brown on the inside? Is this an indication of meat past its prime? Fortunately, no.

The color in meat comes from a muscle protein called myoglobin. When the meat is freshly cut, this protein is deep purple. As the meat sits in its packaging (or in the butcher’s display case), the myoglobin will convert to bright red oxymyoglobin on the meat’s exterior, where it is exposed to more oxygen. Inside the meat, where less oxygen can penetrate, it will slowly convert to brown metmyoglobin. Color changes of this nature are purely cosmetic—they have no bearing on the meat’s flavor or wholesomeness.

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Sous vide salmon with Nathan Myhrvold

Surely, somewhere within the 2,000-odd pages, there must be simple, accessible techniques to make real food taste better — or at least easier to cook.

So I issued Mr. Myhrvold a challenge. Which of his modernist dishes could I whip up for a dinner party without having to buy any new equipment or bizarre ingredients (like low-acyl gellan and sodium tripolyphosphate, which are sprinkled throughout the book’s recipes like so much salt and pepper). Mr. Myhrvold would teach me the dishes, then I would recreate them for my guinea pigs — I mean, party guests.

They also make gin-infused celery, pan-seared, oven-baked steaks, and pressure-cooked squash.

Source and accompanying video.

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Wikipedia blackout.

With a Web-wide protest on Wednesday that includes a 24-hour shutdown of the English-language Wikipedia, the legislative battle over two Internet piracy bills has reached an extraordinary moment — a political coming of age for a relatively young and disorganized industry that has largely steered clear of lobbying and other political games in Washington.

The bills, the Stop Online Piracy Act in the House and the Protect IP Act in the Senate, are backed by major media companies and are mostly intended to curtail the illegal downloading and streaming of TV shows and movies online. But the tech industry fears that, among other things, they will give media companies too much power to shut down sites that they say are abusing copyrights.

The legislation has jolted technology leaders, venture capitalists and entrepreneurs, who are not accustomed to having their free-wheeling online world come under attack.

One response is Wednesday’s protest, which will direct anyone visiting Google and many other Web sites to pages detailing the tech industry’s opposition to the bills. Wikipedia, run by a nonprofit organization, is going further than most sites by actually taking material offline — no doubt causing panic among countless students who have a paper due.

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Filed under Role of Government, Technology

Joe Nocera on Karen Petrou and “keeping it simple.”

What has caught me up short recently is the emergence of a new critic of the banking regulations that have been pouring forth from Washington and Europe. Her name is Karen Petrou, and she is the managing partner of Federal Financial Analytics, a consulting firm that, among other things, analyzes bank regulations for clients.

Unlike many in the banking industry, Petrou is not ideologically opposed to regulation. For instance, she was a critic of the lack of regulation that allowed so many sleazy subprime mortgage originators to emerge from the precrisis ooze. Yet, now, she’s worried about something different: that the hundreds of new mandates required by the Dodd-Frank law are creating a new kind of risk. She calls it “complexity risk.” As she put it in a speech she delivered last week in New York: “If we don’t understand the cross-cutting effects and inherent contradictions in all of the stringent standards now being written into final form, we risk doing real damage to the sound, stable and — yes — profitable financial industry regulators say they support and the economies sorely need.”

In a paper she wrote in November, Petrou laid out a number of examples of new regulatory proposals that were either mind-bogglingly complex or contradictory — or both. For instance, she told me recently, bank board directors will have 184 more things they will have to acknowledge responsibility for under the latest systemic standards. “I think boards have to be responsible for what happens at their institutions,” she said, “but requiring them to be on the front lines of forward-looking cash flow is ridiculous.”

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Why does complexity risk matter? One reason is that the more complex the rules are, the greater the likelihood that smart bankers will find ways to game them. Another is that contradictory regulations, however well meaning, simply don’t make the system safer. But the most important reason is that complexity risk is having an effect on business — and that’s not helping the still-fragile economy.

Petrou says that in her own practice she has seen deals fall through — especially in the mortgage industry — because nobody can figure out how the new rules will be applied. Given how badly the country needs a revived housing industry, this is nothing short of tragic.

In her paper, Petrou offers a series of solutions, revolving around simpler regulations, a reliance on market discipline and transparency. She also calls for the regulators themselves to be held accountable, something that is nowhere to be found in Dodd-Frank, despite their obvious shortcomings in the years leading to the financial crisis.

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