Opinion

The Great Debate

from Commentaries:

Banking? Keep it simple stupid

In 1873, Walter Bagehot wrote that "the business of banking ought to be simple; if it is hard it is wrong." He would have struggled to recognize today's banking system.

It is not just ever more ornate derivatives that bend the mind. Financial firms themselves have become fabulously complicated. Citigroup lists 2,061 subsidiaries and affiliates while the institutional chart of JPMorgan Chase is 267 pages long.

Complexity -- as Bagehot predicted -- has become a curse. If nobody can understand financial firms, they will become ever more accident prone.

The crisis that exploded a year ago offered a salutary lesson in the dangers of complexity. Many shareholders and creditors simply did not fully comprehend their investments. Instead they were forced to trust managers and the rating agencies.

Regulators too could be forgiven for scratching their heads.

"Supervisors are at a decided disadvantage in understanding risk-taking and compliance for firms that might involve dozens of jurisdictions, hundreds of legal entities and thousands of contractual relationships," former Fed official Vincent Reinhart has written.

from Commentaries:

Where the job seekers aren’t

Even in weak employment markets, the United States has typically had a trump card to play. The nation's workers are legendary for their willingness to travel across the country for new opportunities.

The result has been a speedier recovery of job growth than in Europe and possibly a higher productivity rate, since skilled workers are better matched to openings.

With the August employment report on Friday expected to show little improvement in the job market, America has never needed this flexibility more. Yet, at the risk of adding to the gloom, this advantage appears to be fading fast. The good news is that the United States still boasts one of the most dynamic labor markets of any rich nation. OECD rankings of its 30 wealthy member nations put the U.S. far
ahead of other large countries. (It comes second only to Denmark, which has unmatched programs to help the unemployed back to work.)

from Commentaries:

GM blog lifts hood on power struggle over Opel

cfcd208495d565ef66e7dff9f98764da.jpgIt's not often you get to lift the hood and watch a power struggle going on in the engine room of General Motors. But the vice-president of GM Europe, John Smith, has just provided tantilising details of the arguments over the rival bids for Opel/Vauxhall, the main European arm of the fallen U.S. auto giant. Smith is the chief negotiator on the sale of Opel.

In a blog apparently intended to reassure Opel staff, but accessible to the public, he insisted GM had not specified a preferred bidder. But he made clear his own preference for the bid from Belgian financial investor RHJ International, which is loosely related to U.S. private equity fund Ripplewood, over the offer by Canadian-Austrian car parts maker Magna and its Kremlin-backed Russian partner Sberbank.

Smith's post is entitled "Clearing the Air" and was ostensibly written to clarify GM's intentions and dispel erroneous reports ascribed to interested parties. But his account shows just how poisonous the atmosphere appears to be between GM and Magna, and GM and the German government, which backs Magna's bid. It also suggests that the air is not too clear within GM's top management either.

from Commentaries:

CFTC prepares to recant speculators’ influence

johnkempcrop-- John Kemp is a Reuters columnist. The views expressed are his own --

Like Archbishop Thomas Cranmer before he was burned at the stake for heresy, the U.S. Commodity Futures Trading Commission (CFTC) seems about to make a dramatic recantation.

Later today, the Commission will hold the first of three public hearings to discuss whether to impose tougher position limits in energy markets and restrict the availability of hedging exemptions. But it is already preparing to release a report that will accuse speculators of playing a significant role in last year's oil price spike, according to a report in the Wall Street Journal.

While it might seem a minor shift in emphasis, it is a radical reversal of the Commission's previously stated view that there was "no evidence" that investment flows had a material impact on prices. Commission staff have doggedly maintained that physical supply and demand factors could explain all the observed volatility in oil and other commodity prices over the past two years.

from Pakistan: Now or Never?:

The virtues of doing nothing: Why focusing on Afghanistan’s opium makes the opium problem worse

Joshua Foust is an American military analyst. He blogs about Central Asia and Afghanistan at Registan.net . Reuters is not responsible for the content - the views are the author’s alone.

It would be an understatement to call opium cultivation in Afghanistan America's headache. The issue of illegal drug cultivation and smuggling has vexed policymakers for three decades, and led to a multi-billion dollar campaign to combat the phenomenon.

Opium causes all of our problems, so they say—according to a factsheet at the U.S. Embassy in Kabul (pdf), opium creates instability, funds the insurgency, and wreaks havoc on the government. They’re not alone - entire books have been written on the subject.

from FaithWorld:

Has U.S. abortion language created climate of violence?

The murder of Kansas abortion doctor George Tiller has been condemned by prominent groups and activists on both sides of this divisive and emotive issue.

USA-POLITICS/

But the language used by some opponents of abortion rights who reviled Tiller for his work providing late-term abortions remained very strong.

Take this statement by Dr. James Dobson, founder of the conservative evangelical group Focus on the Family.

from Pakistan: Now or Never?:

Garrisons and force protection crowd out other objectives in Afghanistan

- Joshua Foust is a defense consultant who has just spent the last 10 weeks embedded with the U.S. Army in Afghanistan. He also blogs at Registan.net. Any opinions expressed are his own. -

It is a cliché that, in counterinsurgency, one must be among "the people". In Iraq, the U.S. Army did this to great effect under the leadership of General David Petraeus, moving large numbers of soldiers off the enormous bases and into smaller, community-oriented security outposts. As a result, in densely populated urban areas like Baghdad, an active presence of troops played a significant role in calming the worst of the violence. The Western Coalition forces in Afghanistan, however, face an altogether different problem. Kabul is not Baghdad - far less of Afghanistan's population lives there than in Iraq, and the insurgency is concentrated outside the country's largest urban areas. In many urban areas-Herat in the west, Jalalabad in the east, Mazar-i Sharif in the north-a westerner is far safer in the city itself than out in the countryside.

A rural insurgency is a devil's game. It is difficult for a foreign counterinsurgent force to concentrate itself to maximize effectiveness, in part because the insurgency itself is not concentrated. When there are no obvious population clusters, there are no obvious choices for bases. Bagram Air Base, the country's largest military base, is in the middle of nowhere, comparatively speaking - dozens of miles north of Kabul, and a 45-minute drive from Charikar, the nearest city in Parwan Province. FOB Salerno, a large base in Khost Province, is miles away from Khost City, the province's capital-and the road in between is riddled with IEDs.

U.S. fights fire, Germans fear flood

Paul Taylor Great Debate– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

The United States is fighting a fire in the world economy, but Germany and some other European countries fear a flood of inflation as a result.

That clash of cultures is at the heart of transatlantic debate over whether Europe should spend more and ease monetary policy to revive growth, with a deep economic contraction certain this year and an end to the recession not yet in sight.

from FaithWorld:

GUESTVIEW: Canada and the niqab: How to go public in the public square

The following is a guest contribution. Reuters is not responsible for the content and the views expressed are the authors' alone. Sarah Sayeed is Program Associate and Matthew Weiner is Program Director at the Interfaith Center of New York.

By Sarah Sayeed and Matthew Weiner

A Canadian judge recently ruled that a Toronto Muslim woman must take off her face veil while giving testimony in a sexual assault trial. This tension between public space and private religion comes up repeatedly in western urban centers where Muslim women increasingly occupy the pubic square.  This time it happened in Toronto, but the issue arises regularly in western countries in the schools, workplaces and courtrooms that Muslims increasingly share with the majority population. At stake is whether a Muslim woman's choice to dress in accordance with her religious beliefs infringes upon "our way of life." (Photo: Sultaana Freeman testifies in court for right to wear a niqab on her Florida driver's license, 27 May 2003/pool)

While all can agree that identity, tolerance and religious freedom are important, advocates for the face veil emphasize the upholding of freedom while opponents focus on the face veil, or niqab, as a challenge to collective identity.  Such tension between public expression of religion and collective identity is not new.  It has even gone on for centuries in Muslim countries, where religious minorities feel the tension between acceptance and their need to adapt, in varying degrees, to a Muslim majority worldview.  There is also a debate within Muslim communities about whether wearing the niqab is a religious requirement.

from Africa News blog:

Time to stop aid for Africa?

Far from being all bad news for Africa, the global financial crisis is a chance to break a dependence on development aid that has kept it in poverty, argues Zambian economist Dambisa Moyo, who has just published a new book “Dead Aid”.

Moyo’s book, her first, comes out at a time when Western campaigners, financial institutions and some African governments have been warning of the danger posed to Africa by the crisis and calling for more money from developed countries as a result. The former World Bank and Goldman Sachs economist spoke to Reuters in London.

“I’m not saying its going to be easy, I’m just saying that there is a real opportunity for policymakers to focus on coming up with more innovative ways of financing economic development. In a way the crisis actually provides the African governments with the situation where they cannot rely on aid budgets coming through from the West.”

  •