US Marines launch Afghan offensive

Thousands of US Marines descended upon the volatile Helmand River valley in helicopters and armoured convoys early Thursday morning, mounting an operation that represents the first large-scale test of the US military's new counter-insurgency strategy in Afghanistan.

The operation will involve about 4,000 troops from the 2nd Marine Expeditionary Brigade, which was dispatched to Afghanistan earlier this year by President Obama to combat a growing Taliban insurgency in Helmand and other southern provinces. The Marines, along with an army brigade that is scheduled to arrive later this summer, plan to push into pockets of the country where Nato forces have not had a presence.

In many of those areas, the Taliban has evicted local police and government officials, and taken power.

in rather pointed fashion...

Merkel attacks central banks

Angela Merkel, the German chancellor, criticised the world's main central banks in surprisingly strong terms on Tuesday, suggesting that their unconventional monetary policies could fuel rather than defuse the economic crisis.

The attack on the US Federal Reserve, the Bank of England and the European Central Bank is remarkable coming from a leader who had so far scrupulously adhered to her country's tradition on never commenting on monetary policy.

"What other central banks have been doing must stop now. I am very sceptical about the extent of the Fed's actions and the way the Bank of England has carved its own little line in Europe," she told a conference in Berlin.

"Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds," she said. "We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years' time."

Ms Merkel's decision to ignore one of the cardinal rules of German politics - an unwritten ban on commenting monetary policy out of respect from central bank independence - suggests Berlin is far more concerned about the route taken by the ECB than had hitherto transpired.

I don't see this as an attack on central banks, quite the contrary - this is a defense of the independence of the Central Banks - at least the ECB - against the massive pressure from bankers, pundits and others who have said that salvation can only come from massive monetary injection into the financial system. But it is interesting that the angle chosen to describe her words are strongly critical - under the very rules that the Germans are supposed to uphold.

edited by whataboutbob

House prices rose by 1.2 per cent during April and May, according to Nationwide Building Society. It said that the increase was because of huge demand from buyers and a shortage of properties to choose from. Estate agents have reported that good-quality homes are in such short supply that gazumping -- when a buyer makes a higher offer than one already accepted by the seller -- is making a comeback in some areas.

The Times of London: Gazumping is back as house prices rise and buyers fight over fewer properties

The General Motors Corp. bankruptcy means months of shedding plants, brands, jobs and dealers just as the recession shows signs of abating. But part of the gamble is that it will prove to be better for the economy than the alternatives.

WSJ: Filing Has Potential to Lift Economy in Long Term

We briefly discussed the study by the Columbia Journalism Review about the responsibility of the media in the (non-)coverage of the early signs of the financial crisis and I wanted to revisit this here a bit.

The CJR article is an indictment of the business media, which it says did not do its job of bringing up the recklessness, irresponsibility and sheer fraud that characterised the housing and banking boom of the past decade. The CJR acknowledges that there were a number of articles in various publications (in particular the Financial Times) pointing to problems, but none that really brought about a change in behavior. They contrast this with some isolated cases where well-researched articles (usually about local scandals) led to actual investigations and punishment of financial firms, and note that enforcement of rules by public authorities is intimately linked to critical coverage of the issues by an investigative media corps.

COULD there be a better time to be a bank? If you have capital and courage, the markets are packed with opportunities--as they well understand at Goldman Sachs, which is once again filling its boots with risk. Governments are endorsing high leverage and guaranteeing huge parts of the financial system, so you get to keep the profits and palm off the losses on the taxpayer. The threat of nationalisation has receded, reinvigorating the banks' share prices. Money is cheap, deposits plentiful and borrowers desperate, so new lending promises handsome margins. Back before the crash, banks' profits just looked big; today they might even be real.

The bonanza is intentional. Governments and regulators want the banks to make profits so that they regain their health faster after roughly $3 trillion of write-downs. It is part of the monstrous bargain that bankers have extracted from the state (see our special report this week). Taxpayers have poured trillions of dollars into institutions that most never knew they were guaranteeing. In return, economies look as if they have been spared a collapse in payment systems and credit flows that would probably have caused a depression.

Change is slowly coming to Germany's dysfunctional electricity market

The competition regulator is trying to work out why energy prices in Europe's biggest economy are so stubbornly high, and in some cases still rising, even though oil and gas prices have fallen sharply. It suspects that generators may have been keeping prices artificially high by, for instance, shutting power stations in concert to limit supplies. Finding evidence of that sort of skulduggery may be difficult, and proving it even more so. But regulators need not look too hard to see that Germany's electricity market is broken and that a flawed liberalisation of the market over the past decade seems only to have entrenched many of its problems.

The first sign that the market is not working is in Germany's electricity prices, which are among the highest in Europe, even though it has access to abundant cheap coal.

Setting aside for now the issue as to whether coal is "cheap" (it is under current regulations which do not make coal pay for its externalities), I had to choke here. Market prices are not set by the cheapest source, but by the most expensive: it's called "marginal cost", and it's supposed to be one of the first things you learn in economics class. So coal is almost never the price setting generation source.

That a journalist from the Economist would so blatantly contradict a basic rule of economics had me stunned (yeah, I should know better)

Oil, gas and the IFIs: Sketching some lines on the horizon

The sun has still not set on taxpayer support for oil and gas projects via the international public banks. A November 2007 resolution in the European Parliament calling for the "discontinuation of public support, via export credit agencies and public investment banks, for fossil fuel projects" has been studiously shepherded into the long grass by the mantra of "energy security", as IFI investments into oil and gas show no sign of letting up.

Jérôme Guillet, an energy banker and the editor of European Tribune, and Steve Kretzmann, Executive director of Oil Change International, get together to debate what the IFIs have brought to the sector in recent times, and where any future involvement fits in with the need to massively ramp up global investment in clean energy initiatives.

Reposted with the kind permission of BankWatch.

Promoted from Diaries

As a number of you know. I am a banker. I've been financing projets in the energy sector for close to 15 years. I'm aware this diary can and will be seen as self-serving, and indeed it is. But I hope it will also be seen as a useful explanation.

Banking has always been both a utility and a casino. On the one side, you have the vast payments and cash management network, the retail business, the basic corporate lending or brokerage business and a lot of advisory work. On the other, you have the more market driven activities, the support and/or participation to corporate mergers & acquisitions, commodities and securities trading, all the way to own-account speculative risk-taking. The two used to be mostly apart (indeed, the Glass-Steagall Act kept them legally separated in the US), but the line has become increasingly blurred.

From the diaries - afew

Articles like this one are terrible because they give "objective" credence to arguments made exclusively by lobbyists. I imagine the coal industry did not imagine that their lies would be repeated so uncritically:

Curbing carbon dioxide emissions -- a central part of tackling climate change -- will almost certainly raise electricity prices, experts say. And increasing the nation's reliance on renewable energy will in itself raise costs.

These are, quite simply, lies, and the sole purpose of publishing such articles is to undermine the Obama administration drive to develop renewable energy.

Part of the Windpower series

From the diaries - afew

I've just been informed that research financed by L'Etoile de Martin has contributed to an article published in the Journal of Clinical Oncology The goal has been to try to identify genetic causes of some tumors, and that research shows promising results in that respect.

Carmela Dantas-Barbosa, one of the scientists publishing this article, has her stipend paid for by the Etoile de Martin grant, and the plan of the association is to be able to continue to fund such research stipends on a regular basis. The efforts by volunteers over the past year ensure already that this will be done again this year, but this of course could not have been done without your contributions and support.

So many thanks again to all of you who have supported the association over the past couple of years.

After all the meta discussions of the past day or two, I'd like to suggest some ways to move forward. I am, and the other frontpagers are, very grateful for all the messages of support thanks or encouragement, but would like to propose a few ways through which the ET experience can continue to be as pleasant as possible for all of us:

• don't take the Salon, and Fran, for granted. It's a huge amount of work to prepare that press review, and it can turn into a rather thankless task. This is not a machine-generated thread! Don't forget to give her some feedback and, more importantly, don't hesitate to bring in your own contributions - news from your part of the world or about your area of expertise or interest; comments or additional info about any topic already discussed. And remember, there is a "Klatsch" section: it need not be the most serious or highbrow stuff;

• the Salon mostly includes news from traditional news sources; if you read other interesting blogs, maybe they have content worth sharing - don't hesitate to bring that in as well;

• we probably need to interact more with other blogs, especially European ones. Beyond bringing items in the Salon, it might be good to also do diaries when there is worthwhile content. And this should go both ways: if you are a regular on other blogs, don't hesitate to post links to relevant ET content when the topic is discussed on that blog: that will bring in ore eyeballs to the site, and more exchange with other blogs (we'll try to do the same on the frontpage; I know I've been  reacting maybe too exclusively to the FT, and always welcome other sources posted in the Salon or Open Threads; that should include other blogs);

• do write more diaries about things around you - photo diaries, "object" blogging, the latest big debate in your country: a local eye will usually bring much more interesting perspective than that of the "embedded" journalists from the major media outlets on the same topic. If enough regulars did a diary of that kind per month, it would vastly enrich the diversity of the site;

• in that same perspective, it would be great if all of us could try to start writing regularly on the forthcoming European elections: this is certainly our intent on the frontpage, but we're going to need your help to have coverage from as many countries as possible, to discuss things like what the local voting procedures are, who the main parties are (and how they are aligned with the main EP groups), what the election debate is about, and any other relevant topic. This is not a "hot" topic now, but ET should be in a position - and we need to make it happen - to provide unmatched coverage of this election, and we need YOU to make it happen;

• as a general rule, don't feel intimidated by us - we all started as lurkers, and took our time to be comfortable online. You'll always be welcome on ET, and your contributions valued. We like both facts and opinions (just try not to mix them up too much!), arcane topics and anything in-between.

As many have noted, this is a community blog: its value comes from all of us providing many different things. There is no editorial line per se (I've given my position on a number of things recently here, but these are my opinions, not an official "line", and they are definitely not all shared by other frontpagers, let alone by the rest of the community), so the site will feel like what is posted on it - and that can certainly include your posts on topics that you care about. In fact, as a final request, I really hope we can drop criticism about "ET is not doing enough about this or that": please do it. If we're not doing it, it's not necesarily that we don't care, just that we don't know enough to write about it, or are not even aware of some of the underlying issues: if you enlighten us by writing about it, the site wil be better for it, ans, hopefully, so will we.

Michael Spinnaker

Researchers at the University of Melbourne have found that "left-handed children do significantly worse in nearly all measures of development" - and left-handed boys do even worse than girls.

The Melbourne research, based on a study of 5,000 four and five-year-old children, found that left-handers did well enough in "expressive English", but were less competent than right-handers in "social/emotional skills, gross and fine motor skills and receptive English skills". How much less competent? The Melbourne researchers said: "This difference is large and of the same magnitude as the effect of maternal education on child development." In other words, being left-handed is as damaging to a child's development as having a bad mother.

Nor does it improve as left-handers get older. According to the Journal of Rehabilitation, research shows that left-handers are more likely to suffer from language disorders, autism, dyslexia, "schizotypal behaviour patterns", seizures and post-traumatic stress disorder.

Worse, it is perfectly legal for employers to discriminate against left-handers.

The NBER paper said: "Among the college-educated men in our sample, those who report being left-handed earn 15 per cent more than those who report being right-handed." And here is another twist. Not only do those left-handed men end up overtaking the right-handed. They also overtake the left-handed girls who did better than them as children. Left-handed women earn no more than anyone else.

How to explain all this? The researchers give up: "We do not have a theory that reconciles all of these findings."

Lefties are an oppressed elite, obviously. Just like French bureaucrats and atheists.

The most recent fight on ET has left me wondering what this site is about, what brings us together, and what drives us apart. Beyond the gap on what could be called the rationality vs spirituality divide (best analysed by afew here), it seems to me that the most relevant distinction is still between insiders and outsiders, incrementalists vs revolutionaries, or "realists" vs idealists" (all different labels for the same thing: those inside the system, or benefitting from ot, who want to improve it, and those outside it, or abused by it, who want to get rid of it).

I don't hide that I'm an insider, and that I'm more on the incrementalist side - but it seems that my discourse is subversive enough to be attractive to the revolutionaries, given how far the debate has shifted to the right, and it has the bonus, for them, of coming from someone with impeccable credentials - a banker, capable of expressing himself properly, not burdened by any quirks (ie married, white and male) and obviously at ease in the system. So I can navigate between both worlds.

That stated, I'm also a member of the French technocratic elite, and I defend that system, the fruits of which I'm enjoying, quite openly - in fact, probably moreso that those within the system who are supposed to be in charge of that task. Like many on the site, I'm pro-European, but in my case it means that I'm a strong believer in the role of the EU Commission bureaucracy (as modelled on the French government bureaucracy, in the ideal version meritocratic, competent and caring for the common interest) and in the role of the EU Parliament (as best representing and supporting that common European interest. I see Europe as a political project rather than an economic one, even if, like the founding fathers, I see economics as a tool to get to more integration and more effective power, thereby leading, almost by accident, to more political legitimacy.

On the energy front, I defend renewables, for obvious reasons, but I'm happy to support nuclear energy, as done by the French. I rail at the Anglos, but write in English, and probably know more English law than code civil from my job, and will look at projects more than as an English laywer than as a German engineer (even if, ultimately, I'll still judge projects on whether the engineers can get it done). I know that Europe will get somewhere when the French and the English will both decide that the most important thing is to find a compromise with each other, just like the French and the Germans (who disagree on just about everything), did over the past 60 years.

European Tribune is a community site, but it's been shaped by my work, and by that of people initially attracted to my writings or my topics, and it includes a core group that could loosely be called technocrats, people who value facts and science and critical thinking, and enjoy their "object" blogging. But it's also, somehat mysteriously, attracted other people, who enjoy the mostly respectful atmosphere here, and bring other perspectives - and take advantage of the relaxed, uncensored context to explore aother avenues and, sometimes, yank a few chains. We all need reality checks, so that's not a bad thing, except when people actually get hurt. And words do hurt.

We've been living in difficult times, with a lot of hurt being caused in our names by our elected leaders, and a lot of crap being spewed by our supposedly smart opinion makers. We've been fighting both, risking exhaustion and despair, with uncertain results so far (even if Obama's election can certainly be seen as the better alternative). Right now, as we see the long predicted crash take place around us, sometimes impacting us directly, vindication and anguish fight it out, as we see both the hurt caused by the crash, and the inadequate grasp of what's going on, wilful or not, by our current leaders - and frayed nerves or burn out are rather obvious or many of us. I know that I've been feeling that I'm repeating myself and have nothing to say, while knowing that this is the moment when we need our ideas to be pushed out there.

We all have lives, often busy or complicated, and yet we feel that we need to do more - and we know that we genuinely have something to offer, which we see ignored or dismissed. It's all too easy to get angry and lash out at the immediate targets available - the people we've learned to disagree with on the site (even as we slowly absorb what they are saying). It's like family - intimate, intense, and safe.

But if we go on like this, we'll become increasingly insular and arcane. How do we channel our energy, which is not negligible, towards the outside, rather than within? Do we want to? (I do) Can we do it? How do we do it?  I think we need to focus on this or risk seeing the site drwon in its own bile sooner or later.

US plan to curb mortgage rates falters

The US Federal Reserve's efforts to drive mortgage rates lower by purchasing home loans have faltered and rates have risen over the past month.

The rise in rates is a disappointment to government officials, who had hoped that a steep fall in house prices and low financing costs would lure new buyers into the nation's depressed housing market.

Since January 13 the rate on standard long-term mortgages charged by lenders to prospective home owners has jumped from 5.04 per cent to reach 5.51 per cent on Friday, according to mortgage market analysts HSH Associates. The jump represents an almost 10 per cent rise in borrowing costs.

For the fourth consecutive year, the US set records in 2008 for the construction of new wind farms, with more than 8,300MW installed in the year, making the country the leader for both yearly installations and, for the first time in many years, overall installed capacity (nudging out Germany which has long been the world leader). The sector created a record number of jobs at a time when few other sectors did.

But for reasons linked to the inconsistent regulatory framework until now, and to the ongoing credit crisis, 2009 is likely to be a bad year for wind, with a decline in installations and, possibly, layoffs.

Of course, Obama is not to blame for that situation, which he inherits, but it will be a pretty bad signal to see wind power decline significantly this year - and it would be an inexcusable one if that decline continues into 2010. The current stimulus plan does include measures to support the industry, but these seem oddly unambitious given the context of economic crisis and wind's proven ability to create jobs and economic activity, to provide cheap power and to eliminate both carbon emissions and fossil fuel imports.

Earlier diaries: Windpower series

There is no silver bullet to either the financial crisis, the economic crisis, the housing crisis, the industrial crisis, the jobs crisis or the energy crisis we're in right now. But there is one sector of activity which can help in every single one of these: wind power.

the GTK 1100 crane, the largest in the world, able to lift 100 tons 460ft high. It is a product of the Grove company, part of the (US) Manitowoc group, but manufactured in Northern Germany for now.

This is part of the Advice to President Obama series on the Oil Drum

The annual gas squabble between Russia and Ukraine turns nastier--to the alarm of much of Europe

IT STARTED as an ordinary gas dispute between Russia and Ukraine, of the sort that has occurred every winter since January 2006, when Russia first cut off gas supplies to its neighbour. But it has since grown into the biggest energy emergency the European Union has seen in years.

Nope, every winter since January 1992.

In different ways, Nicolas Sarkozy's racial-minority ministers are causing him grief

WHEN France's Nicolas Sarkozy picked three women from racial-minority groups to join his government in 2007, the appointments seemed as daring as the casting looked perfect. In a country with few minority stars outside sport and entertainment, and only a single black parliamentarian from the mainland, the president's new faces brought freshness and modernity. He also upstaged the Socialist Party, which preaches anti-racism but never appointed any minority ministers when in power. And his selection deftly acknowledged France's diversity: the Maghreb, black Africa and the heavily Muslim French banlieues.

Hrmmm. Let's see. Kofi Yamgnane was from Togo. Roger Bambuck was from Guadeloupe. Pierre Beregovoy, who was prime minister, was from Ukraine, Haroun Tazieff was born in Warsaw of Russian parents, and Robert Badinter was born of Polish parents (that doesn't count as "immigrant", presumably, given that there never was any racism against slavs in France, right? And I'm not even going into Italians). Harlem Désir and Malek Boutih were not in government, but are elected politicians, have or have had senior roles within the PS and have had highly public and visible careers.

And let's not mention all the minority writers  who have been celebrated in France (oh, right, litterature is "entertainment").

nd let's keep on pretending that banlieues are "heavily Muslim" when even the majority of North Africans, like all other French people, first and foremost consider themselves secular (and, in a poll that I can't dig up right now, the proportion of Arabs that consider themselves Muslim first and French second is lower than the proportion of Americans that consider themselves Christian first and American second - yet I rarely see America's suburbs described as "heavily Christian."

This topic was already discussed in marco's diary [last month], but as I have now actually read the book, and found it extremely insightful, I wanted to revisit it.

What struck me in the two reviews that marco posted (one from Le Monde, one from the Financial Times, with the more critical one being the French one) is that both fail to mention that Todd bases his arguments, like in previous books, on long-term demographic and sociological trends for which he provides a wealth of data. So presenting his work purely as a political pamphlet is already to deny his background in facts and figures and thus its strength.

It is not surprising, of course, that the media elite would try to dismiss his work given that it is a scathing indictment of said elite, using themes that are rather familiar here on ET:

You can watch my debate in English this morning at this link (the French one is here).

They seem to have liked my contribution since they've asked me to come again this evening for their big debate on the same topic at 7:15pm (1:15pm EST)...

I've fielded a few interviews today, so there might be more press coverage tomorrow, which I'll add here as it becomes available.

In an interview with the FT:

Paulson says crisis sown by imbalance

The US Treasury Secretary said that in the years leading up to the crisis, super-abundant savings from fast-growing emerging nations such as China and oil exporters - at a time of low inflation and booming trade and capital flows - put downward pressure on yields and risk spreads everywhere.

This, he said, laid the seeds of a global credit bubble that extended far beyond the US sub-prime mortgage market and has now burst with devastating consequences worldwide.