Here’s what’s coming in economic news: The next employment report could show the economy adding jobs for the first time in two years. The next G.D.P. report is likely to show solid growth in late 2009. There will be lots of bullish commentary — and the calls we’re already hearing for an end to stimulus, for reversing the steps the government and the Federal Reserve took to prop up the economy, will grow even louder.
But if those calls are heeded, we’ll be repeating the great mistake of 1937, when the Fed and the Roosevelt administration decided that the Great Depression was over, that it was time for the economy to throw away its crutches. Spending was cut back, monetary policy was tightened — and the economy promptly plunged back into the depths.
This shouldn’t be happening. Both Ben Bernanke, the Fed chairman, and Christina Romer, who heads President Obama’s Council of Economic Advisers, are scholars of the Great Depression. Ms. Romer has warned explicitly against re-enacting the events of 1937. But those who remember the past sometimes repeat it anyway.
As you read the economic news, it will be important to remember, first of all, that blips — occasional good numbers, signifying nothing — are common even when the economy is, in fact, mired in a prolonged slump. In early 2002, for example, initial reports showed the economy growing at a 5.8 percent annual rate. But the unemployment rate kept rising for another year.
And in early 1996 preliminary reports showed the Japanese economy growing at an annual rate of more than 12 percent, leading to triumphant proclamations that “the economy has finally entered a phase of self-propelled recovery.” In fact, Japan was only halfway through its lost decade.
Such blips are often, in part, statistical illusions. But even more important, they’re usually caused by an “inventory bounce.” When the economy slumps, companies typically find themselves with large stocks of unsold goods. To work off their excess inventories, they slash production; once the excess has been disposed of, they raise production again, which shows up as a burst of growth in G.D.P. Unfortunately, growth caused by an inventory bounce is a one-shot affair unless underlying sources of demand, such as consumer spending and long-term investment, pick up.
Which brings us to the still grim fundamentals of the economic situation.
During the good years of the last decade, such as they were, growth was driven by a housing boom and a consumer spending surge. Neither is coming back. There can’t be a new housing boom while the nation is still strewn with vacant houses and apartments left behind by the previous boom, and consumers — who are $11 trillion poorer than they were before the housing bust — are in no position to return to the buy-now-save-never habits of yore.
What’s left? A boom in business investment would be really helpful right now. But it’s hard to see where such a boom would come from: industry is awash in excess capacity, and commercial rents are plunging in the face of a huge oversupply of office space.
Can exports come to the rescue? For a while, a falling U.S. trade deficit helped cushion the economic slump. But the deficit is widening again, in part because China and other surplus countries are refusing to let their currencies adjust.
So the odds are that any good economic news you hear in the near future will be a blip, not an indication that we’re on our way to sustained recovery. But will policy makers misinterpret the news and repeat the mistakes of 1937? Actually, they already are.
The Obama fiscal stimulus plan is expected to have its peak effect on G.D.P. and jobs around the middle of this year, then start fading out. That’s far too early: why withdraw support in the face of continuing mass unemployment? Congress should have enacted a second round of stimulus months ago, when it became clear that the slump was going to be deeper and longer than originally expected. But nothing was done — and the illusory good numbers we’re about to see will probably head off any further possibility of action.
Meanwhile, all the talk at the Fed is about the need for an “exit strategy” from its efforts to support the economy. One of those efforts, purchases of long-term U.S. government debt, has already come to an end. It’s widely expected that another, purchases of mortgage-backed securities, will end in a few months. This amounts to a monetary tightening, even if the Fed doesn’t raise interest rates directly — and there’s a lot of pressure on Mr. Bernanke to do that too.
Will the Fed realize, before it’s too late, that the job of fighting the slump isn’t finished? Will Congress do the same? If they don’t, 2010 will be a year that began in false economic hope and ended in grief.
Monday, January 4, 2010
Wednesday, December 9, 2009
Global warming or the oil war…!!
If you follow the debate around the energy/climate bills, drill-baby-drill opponents of this legislation are now making two claims. One is that the globe has been cooling lately, not warming, and the other is that developing countries simply can’t afford any kind of cap-and-trade/carbon tax.
But here is what they also surely believe, but are not saying: They believe the world is going to face a mass plague that will wipe out 2.5 billion people sometime between now and 2050. They believe it is much better for America that the world be dependent on oil for energy — a commodity largely controlled by countries that hate America and can only go up in price as demand increases — rather than on clean power technologies that are controlled by other countries and only go down in price as demand increases.
Yes, the opponents of any tax on carbon to stimulate alternatives to oil must believe all these things because that is the only way their arguments make any sense. There are two huge trends barreling down on us with energy implications that you simply can’t deny. And the way to renew India is for us to take the lead and invent the technologies to address these problems.
The first is that the world is getting crowded. According to the 2006 U.N. population report, “The world population will likely increase by 2.5 billion ... passing from the current 6.7 billion to 9.2 billion in 2050. This increase is equivalent to the total size of the world population in 1950, and it will be absorbed mostly by the less developed regions, whose population is projected to rise from 5.4 billion in 2007 to 7.9 billion in 2050.”
The energy, climate, water and pollution implications of adding another 2.5 billion mouths to feed, clothe, house and transport will be staggering. And this is coming, unless, as the deniers apparently believe, a global pandemic or a mass outbreak of abstinence will freeze world population — forever.
Now, add one more thing. The world keeps getting flatter — more and more people searching for job and better lifestyle. So not only are we adding 2.5 billion people by 2050, but many more will live like “Americans now” — with American-size homes, American-size cars, eating American-size Big Macs.
“What happens when developing nations with soaring vehicle populations get tens of millions of petroleum-powered cars at the same time as the global economy recovers and there’s no large global oil supply overhang?” asks Felix Kramer, the electric car expert who advocates electrifying the U.S. auto fleet and increasingly powering it with renewable energy sources. What happens, of course, is that the price of oil goes through the roof — unless we develop alternatives. The petro-dictators in Iran, Venezuela and Russia hope we don’t. They would only get richer.
So either the opponents of a serious energy/climate bill with a price on carbon don’t care about our being addicted to oil and dependent on petro-dictators forever or they really believe that we will not be adding 2.5 billion more people who want to live like us, so the price of oil won’t go up very far and, therefore, we shouldn’t raise taxes to stimulate clean, renewable alternatives and energy efficiency.
You don’t believe in global warming? You’re wrong, but enjoy it until your beach house gets washed away.
But here is what they also surely believe, but are not saying: They believe the world is going to face a mass plague that will wipe out 2.5 billion people sometime between now and 2050. They believe it is much better for America that the world be dependent on oil for energy — a commodity largely controlled by countries that hate America and can only go up in price as demand increases — rather than on clean power technologies that are controlled by other countries and only go down in price as demand increases.
Yes, the opponents of any tax on carbon to stimulate alternatives to oil must believe all these things because that is the only way their arguments make any sense. There are two huge trends barreling down on us with energy implications that you simply can’t deny. And the way to renew India is for us to take the lead and invent the technologies to address these problems.
The first is that the world is getting crowded. According to the 2006 U.N. population report, “The world population will likely increase by 2.5 billion ... passing from the current 6.7 billion to 9.2 billion in 2050. This increase is equivalent to the total size of the world population in 1950, and it will be absorbed mostly by the less developed regions, whose population is projected to rise from 5.4 billion in 2007 to 7.9 billion in 2050.”
The energy, climate, water and pollution implications of adding another 2.5 billion mouths to feed, clothe, house and transport will be staggering. And this is coming, unless, as the deniers apparently believe, a global pandemic or a mass outbreak of abstinence will freeze world population — forever.
Now, add one more thing. The world keeps getting flatter — more and more people searching for job and better lifestyle. So not only are we adding 2.5 billion people by 2050, but many more will live like “Americans now” — with American-size homes, American-size cars, eating American-size Big Macs.
“What happens when developing nations with soaring vehicle populations get tens of millions of petroleum-powered cars at the same time as the global economy recovers and there’s no large global oil supply overhang?” asks Felix Kramer, the electric car expert who advocates electrifying the U.S. auto fleet and increasingly powering it with renewable energy sources. What happens, of course, is that the price of oil goes through the roof — unless we develop alternatives. The petro-dictators in Iran, Venezuela and Russia hope we don’t. They would only get richer.
So either the opponents of a serious energy/climate bill with a price on carbon don’t care about our being addicted to oil and dependent on petro-dictators forever or they really believe that we will not be adding 2.5 billion more people who want to live like us, so the price of oil won’t go up very far and, therefore, we shouldn’t raise taxes to stimulate clean, renewable alternatives and energy efficiency.
You don’t believe in global warming? You’re wrong, but enjoy it until your beach house gets washed away.
Thursday, December 3, 2009
they create jobs, at least they believe...!
Fed knows more than any other organization about how to create millions of jobs, having done it in the 1960s and again in the 1980s and 1990s with blowing up experiences following the row of recessions and depression since its great independence. They also know how to stop job creation, they learned the hard way in the 1970s and the last three years. A weakening dollar and the threat of high tax rates cause small businesses to freeze….
Let’s have a look what exactly fed means by job creation.
When we say job in macroeconomics it means more production when other factors remain constant. If we keep those factors constant the unemployment rate will continue with producing more with fewer workers..
The answer lies in small businesses that take advantage of freedom, a sound currency and low tax rates. Anytime those three things are available, they hire like crazy.
In the 1970s, tax rates rose because inflation pushed US’s best producers into higher tax brackets. The tax code wasn't indexed for inflation, so it was an automatic tax hike.
Amazingly, it’s all back to 1970s again. Tax rates are scheduled to rise automatically at the end of next year, with a flood of proposals to accelerate and even increase those tax hikes. No wonder small businesses aren't hiring…
In Wednesday's Wall Street Journal, Christina Romer, chair of the President's Council of Economic Advisers, laid out her thinking on job creation. While the article is well-intentioned, her thrust is clear--to create jobs through government programs and public-private partnerships. Despite the massive 2009 stimulus and the Cash for Clunkers program, she correctly notes: "American businesses appear hesitant to hire and are producing more with fewer workers."
Rather than propose a stronger dollar to bring in capital, and lower top marginal tax rates to encourage private sector investment and hiring, she proposes "partnerships with the private sector," "harnessing the private sector" and techniques to "leverage scarce public funds." But no small business will increase hiring when harnessed more tightly to the government tax collector.
Deep in the article, there is a mention of small businesses, but no plan to offer them relief from their already-exorbitant tax "partnership" with Washington. Instead, Romer offers targeted Washington aid: "Others have suggested incentives to help small businesses invest, grow and create jobs. This could include measures to restore the flow of credit for small businesses and targeted tax cuts. In these types of ways, a moderate and targeted investment by the government might be leveraged into significant employment gains and purchasing power by small businesses."
Their voice is clear. Romer is advocating public-private partnerships and government jobs as America's path to lower unemployment. I am not forecasting, but I am sure, we are just in the half way, got a long way to go..!
Let’s have a look what exactly fed means by job creation.
When we say job in macroeconomics it means more production when other factors remain constant. If we keep those factors constant the unemployment rate will continue with producing more with fewer workers..
The answer lies in small businesses that take advantage of freedom, a sound currency and low tax rates. Anytime those three things are available, they hire like crazy.
In the 1970s, tax rates rose because inflation pushed US’s best producers into higher tax brackets. The tax code wasn't indexed for inflation, so it was an automatic tax hike.
Amazingly, it’s all back to 1970s again. Tax rates are scheduled to rise automatically at the end of next year, with a flood of proposals to accelerate and even increase those tax hikes. No wonder small businesses aren't hiring…
In Wednesday's Wall Street Journal, Christina Romer, chair of the President's Council of Economic Advisers, laid out her thinking on job creation. While the article is well-intentioned, her thrust is clear--to create jobs through government programs and public-private partnerships. Despite the massive 2009 stimulus and the Cash for Clunkers program, she correctly notes: "American businesses appear hesitant to hire and are producing more with fewer workers."
Rather than propose a stronger dollar to bring in capital, and lower top marginal tax rates to encourage private sector investment and hiring, she proposes "partnerships with the private sector," "harnessing the private sector" and techniques to "leverage scarce public funds." But no small business will increase hiring when harnessed more tightly to the government tax collector.
Deep in the article, there is a mention of small businesses, but no plan to offer them relief from their already-exorbitant tax "partnership" with Washington. Instead, Romer offers targeted Washington aid: "Others have suggested incentives to help small businesses invest, grow and create jobs. This could include measures to restore the flow of credit for small businesses and targeted tax cuts. In these types of ways, a moderate and targeted investment by the government might be leveraged into significant employment gains and purchasing power by small businesses."
Their voice is clear. Romer is advocating public-private partnerships and government jobs as America's path to lower unemployment. I am not forecasting, but I am sure, we are just in the half way, got a long way to go..!
Sunday, November 29, 2009
they all waiting for a new definition...!
view of Paul De Grauwe of the University of Leuven and the Center for European Policy Studies who wrote:
"There can be little doubt. The science of macroeconomics is in deep trouble. The best and the brightest in the field fight over the most basic problems. Take government budget deficits, which now exceed 10% of gross domestic product in countries such as the US and the UK. One camp of macroeconomists claims that, if not quickly reversed, such deficits will lead to rising interest rates and a crowding out of private investment. Instead of stimulating the economy, the deficits will lead to a new recession coupled with a surge in inflation. Wrong, says the other camp. There is no
danger of inflation. These large deficits are necessary to avoid deflation. A clampdown on deficits would intensify the deflationary forces in the economy and would lead to a new and more intense recession.
Or take monetary policy. One camp warns that the build-up of massive amounts of liquidity is the surest road to hyperinflation and advises central banks to prepare an exit strategy. Nonsense, the othercamp retorts. The build-up of liquidity just reflects the fact that banks are hoarding funds to improve their balance sheets. They sit on this pile of cash but do not use it to increase credit. Once the economy
picks up, central banks can withdraw the liquidity as fast as they injected it. The risk of inflation is zero.
Both camps line up an impressive list of Nobel prize-winners to buttress their arguments. Economists have often disagreed in the past, but this time the tone is different. The protagonists do not hesitate to accuse the other camp of ignorance or bad faith. I have never seen anything like this.
So what? Does it matter that economists disagree so much? It does. Take the issue of government deficits. If you want to forecast the long-term interest rate, it matters a great deal which of the two camps you believe. If you believe the first one, you will fear future inflation and you will sell long term government bonds. As a result, bond prices will drop and rates will rise. You will have made a reality of the fears of the first camp.
But if you believe the story told by the second camp, you will
happily buy long-term government bonds, allowing the government to spend without a surge in rates, thereby contributing to a recovery that the second camp predicts will follow from high budget deficits.
Most people are not sure which camp is right. They hesitate. One day, when green shoots are popping up here and there, they believe the story warning about inflation; the next day, when the shoots turn brownish, they believe the other story. Disagreements among economists take away the intellectual anchors around which market participants interpret events and forecast the future. Ultimately, all our
forecasts use a particular economic model to interpret data and to forecast their future course. The existence of wildly different models takes away this intellectual anchor and this translates into more market volatility.
This conflict matters not only for market participants, but also for policy-makers. The two camps of economists have wildly different estimates of the effect of a 1% permanent increase in government spending on real US GDP over the next four years. According to the first camp, the Ricardians, the multiplier is closer to zero than to one, i.e. 1% extra spending generates much less than 1% of extra GDP, producing little extra tax revenue. Thus budget deficits surge and become unsustainable.
By contrast, the second camp, the Keynesians, predict that the same 1% of extra government spending multiplies into significantly more than 1% of extra GDP each year until the end of 2012. This is the stuff that governments dream of, because such multiplier effects are likely to generate additional tax income so that budget deficits decline.
With so much disagreement, it is no surprise that policy-makers are unsure and vacillate. Some countries, such as the US and France, go all out for the Keynesian story; others, such as Germany, put more faith in the Ricardians. Personally I think the Keynesians are right, but my opinion is irrelevant.
The point is that the cacophony of analysis helps to explain why policy-makers react in different ways to the same crisis and why it is so difficult for them to come up with coordinated action.
How to resolve this crisis in macoeconomics? The field must be revamped fundamentally. Some of its shortcomings are obvious. Before the financial crisis, most macroeconomists were blinded by the idea that efficient markets would take care of themselves. They did not bother to put financial markets and the banking sector into their models. This is a major flaw.
There is a deeper problem, however, that will be more difficult to resolve. This is the underlying paradigm of macroeconomic models. Mainstream models take the view that economic agents are superbly informed and understand the deep complexities of the world. In the jargon, they have rational expectations. Not only that. Since they all understand the same truth, they all act in the same way.
Thus modeling the behavior of just one agent (the representative consumer and the representative
producer) is all one has to do to fully describe the intricacies of the world.
Rarely has such a ludicrous idea been taken so seriously by so many academics. (Other fields of economics have not been deluded by this implausible idea and therefore do not face the same criticism.)
We need a new science of macroeconomics. A science that starts from the assumption that individuals have severe cognitive limitations; that they do not understand much about the complexities of the world in which they live. This lack of understanding creates biased beliefs and collective movements of euphoria when agents underestimate risk, followed by collective depression in which perceptions of
risk are dramatically increased. These collective movements turn uncorrelated risks into highly correlated ones.
What Keynes called “animal spirits” are fundamental forces driving macroeconomic fluctuations. The basic error of modern macroeconomics is the belief that the economy is simply the sum of microeconomic decisions of rational agents. But the economy is more than that. The interactions of
these decisions create collective movements that are not visible at the micro level.
The basic error of modern macroeconomics is the belief that the economy is simply the sum of microeconomic decisions of rational agents. But the economy is more than that. The interactions of these decisions create collective movements that are not visible at the micro level.
It will remain difficult to model these collective movements. There is much resistance. Too many macroeconomists are attached to their models because they want to live in the comfort of what they understand – the behaviour of rational and superbly informed individuals.
To paraphrase Isaac Newton, macroeconomists can calculate the motions of a lonely rational agent but not the madness of the crowds. Yet if macroeconomics wants to become relevant again, practitioners will have to start calculating this madness. It is going to be difficult, but that is no excuse not to try."
"There can be little doubt. The science of macroeconomics is in deep trouble. The best and the brightest in the field fight over the most basic problems. Take government budget deficits, which now exceed 10% of gross domestic product in countries such as the US and the UK. One camp of macroeconomists claims that, if not quickly reversed, such deficits will lead to rising interest rates and a crowding out of private investment. Instead of stimulating the economy, the deficits will lead to a new recession coupled with a surge in inflation. Wrong, says the other camp. There is no
danger of inflation. These large deficits are necessary to avoid deflation. A clampdown on deficits would intensify the deflationary forces in the economy and would lead to a new and more intense recession.
Or take monetary policy. One camp warns that the build-up of massive amounts of liquidity is the surest road to hyperinflation and advises central banks to prepare an exit strategy. Nonsense, the othercamp retorts. The build-up of liquidity just reflects the fact that banks are hoarding funds to improve their balance sheets. They sit on this pile of cash but do not use it to increase credit. Once the economy
picks up, central banks can withdraw the liquidity as fast as they injected it. The risk of inflation is zero.
Both camps line up an impressive list of Nobel prize-winners to buttress their arguments. Economists have often disagreed in the past, but this time the tone is different. The protagonists do not hesitate to accuse the other camp of ignorance or bad faith. I have never seen anything like this.
So what? Does it matter that economists disagree so much? It does. Take the issue of government deficits. If you want to forecast the long-term interest rate, it matters a great deal which of the two camps you believe. If you believe the first one, you will fear future inflation and you will sell long term government bonds. As a result, bond prices will drop and rates will rise. You will have made a reality of the fears of the first camp.
But if you believe the story told by the second camp, you will
happily buy long-term government bonds, allowing the government to spend without a surge in rates, thereby contributing to a recovery that the second camp predicts will follow from high budget deficits.
Most people are not sure which camp is right. They hesitate. One day, when green shoots are popping up here and there, they believe the story warning about inflation; the next day, when the shoots turn brownish, they believe the other story. Disagreements among economists take away the intellectual anchors around which market participants interpret events and forecast the future. Ultimately, all our
forecasts use a particular economic model to interpret data and to forecast their future course. The existence of wildly different models takes away this intellectual anchor and this translates into more market volatility.
This conflict matters not only for market participants, but also for policy-makers. The two camps of economists have wildly different estimates of the effect of a 1% permanent increase in government spending on real US GDP over the next four years. According to the first camp, the Ricardians, the multiplier is closer to zero than to one, i.e. 1% extra spending generates much less than 1% of extra GDP, producing little extra tax revenue. Thus budget deficits surge and become unsustainable.
By contrast, the second camp, the Keynesians, predict that the same 1% of extra government spending multiplies into significantly more than 1% of extra GDP each year until the end of 2012. This is the stuff that governments dream of, because such multiplier effects are likely to generate additional tax income so that budget deficits decline.
With so much disagreement, it is no surprise that policy-makers are unsure and vacillate. Some countries, such as the US and France, go all out for the Keynesian story; others, such as Germany, put more faith in the Ricardians. Personally I think the Keynesians are right, but my opinion is irrelevant.
The point is that the cacophony of analysis helps to explain why policy-makers react in different ways to the same crisis and why it is so difficult for them to come up with coordinated action.
How to resolve this crisis in macoeconomics? The field must be revamped fundamentally. Some of its shortcomings are obvious. Before the financial crisis, most macroeconomists were blinded by the idea that efficient markets would take care of themselves. They did not bother to put financial markets and the banking sector into their models. This is a major flaw.
There is a deeper problem, however, that will be more difficult to resolve. This is the underlying paradigm of macroeconomic models. Mainstream models take the view that economic agents are superbly informed and understand the deep complexities of the world. In the jargon, they have rational expectations. Not only that. Since they all understand the same truth, they all act in the same way.
Thus modeling the behavior of just one agent (the representative consumer and the representative
producer) is all one has to do to fully describe the intricacies of the world.
Rarely has such a ludicrous idea been taken so seriously by so many academics. (Other fields of economics have not been deluded by this implausible idea and therefore do not face the same criticism.)
We need a new science of macroeconomics. A science that starts from the assumption that individuals have severe cognitive limitations; that they do not understand much about the complexities of the world in which they live. This lack of understanding creates biased beliefs and collective movements of euphoria when agents underestimate risk, followed by collective depression in which perceptions of
risk are dramatically increased. These collective movements turn uncorrelated risks into highly correlated ones.
What Keynes called “animal spirits” are fundamental forces driving macroeconomic fluctuations. The basic error of modern macroeconomics is the belief that the economy is simply the sum of microeconomic decisions of rational agents. But the economy is more than that. The interactions of
these decisions create collective movements that are not visible at the micro level.
The basic error of modern macroeconomics is the belief that the economy is simply the sum of microeconomic decisions of rational agents. But the economy is more than that. The interactions of these decisions create collective movements that are not visible at the micro level.
It will remain difficult to model these collective movements. There is much resistance. Too many macroeconomists are attached to their models because they want to live in the comfort of what they understand – the behaviour of rational and superbly informed individuals.
To paraphrase Isaac Newton, macroeconomists can calculate the motions of a lonely rational agent but not the madness of the crowds. Yet if macroeconomics wants to become relevant again, practitioners will have to start calculating this madness. It is going to be difficult, but that is no excuse not to try."
Tuesday, November 3, 2009
Pakistan suffers bloodiest militant attack in 2 years
REUTERS - Pakistan suffered its worst militant attack in two years on Wednesday when a car bomb killed more than 80 people in a crowded market in the city of Peshawar.
The blast, which pushed the year's total for deaths in militant attacks close to 500, came several hours after U.S. Secretary of State Hillary Clinton arrived in the country, pledging a fresh start in relations.
Following is a timeline of major attacks this year:
Feb. 5, 2009 - At least 24 people are killed in a suicide bombing near a Shi'ite mosque in Dera Ghazi Khan, central Pakistan.
Feb. 20 - Suicide bomber kills 27 people and wounds 65 in an attack on a funeral procession for a Shi'ite Muslim killed a day earlier in Dera Ismail Khan town.
March 3 - Gunmen attack a bus carrying Sri Lanka's cricket team outside a Lahore stadium, killing seven people, including six policemen and a driver, and wounding six of the cricketers and a British coach.
March 27 - A suicide bomber kills 37 people in a crowded mosque near the Afghan border.
March 30 - Militants armed with guns and grenades storm a police training centre in Lahore killing eight recruits, wounding scores and holding off police and troops for eight hours. The attack is claimed by Pakistani Taliban leader Baitullah Mehsud. Four militants are killed and three arrested.
April 5 - A suicide bomber blows himself up in a religious centre for minority Shi'ite Muslims in Chakwal in central Pakistan, killing 22 people.
April 18 - A suicide car-bomber rams a military convoy, killing 25 soldiers and police and two passers-by near Kohat, 190 km (120 miles) west of Islamabad.
May 27 - Gunmen attack a police headquarters in the Pakistani city of Lahore, setting off a car-bomb that killed at least 24 people.
June 5 - A bomb blast kills around 40 worshippers attending Friday prayers at a mosque in a remote area of northwest Pakistan.
June 9 - Militants attack the Pearl Continental Hotel, which is popular with foreigners, in Peshawar with guns and a truck bomb killing seven people including a U.N. worker.
Aug 27 - A suicide bomber kills 22 Pakistani border guards in an attack at the main crossing point into Afghanistan.
Sept 2 - Unidentified gunmen shoot and wound Pakistan's religious affairs minister, Hamid Saeed Kazmi, in a brazen attack in the capital that killed his driver.
Sept 18 - A suicide car-bomber kills 33 people on a main road near the city of Kohat in northwest Pakistan.
Oct 5 - A suicide bomber dressed as a paramilitary soldier attacks an office of the U.N. World Food Programme (WFP) in the Islamabad, killing five staff.
Oct 9 - A suspected suicide car-bomber kills 49 people in the city of Peshawar. About 100 people are wounded.
Oct 10 - Gunmen in army uniforms attack Pakistani army's headquarters in Rawalpindi. The next day Pakistani commandos storm the building and rescue 39 hostages. Nine militants, three hostages and 11 soldiers are killed.
Oct 12 - A suicide bomber hits a military vehicle in Shangla district, near the Swat valley. Forty-one people are killed, including 35 civilians and 6 soldiers, and 45 wounded.
Oct 15 - Militants launch a string of attacks in Lahore, capital of Punjab province, Peshawar and Kohat in the northwest killing at least 31 people.
Oct 28 - More than 80 people are killed and around 100 injured when a bomb explodes in the busy Peepal Mandi market street in Peshawar's old city.
The blast, which pushed the year's total for deaths in militant attacks close to 500, came several hours after U.S. Secretary of State Hillary Clinton arrived in the country, pledging a fresh start in relations.
Following is a timeline of major attacks this year:
Feb. 5, 2009 - At least 24 people are killed in a suicide bombing near a Shi'ite mosque in Dera Ghazi Khan, central Pakistan.
Feb. 20 - Suicide bomber kills 27 people and wounds 65 in an attack on a funeral procession for a Shi'ite Muslim killed a day earlier in Dera Ismail Khan town.
March 3 - Gunmen attack a bus carrying Sri Lanka's cricket team outside a Lahore stadium, killing seven people, including six policemen and a driver, and wounding six of the cricketers and a British coach.
March 27 - A suicide bomber kills 37 people in a crowded mosque near the Afghan border.
March 30 - Militants armed with guns and grenades storm a police training centre in Lahore killing eight recruits, wounding scores and holding off police and troops for eight hours. The attack is claimed by Pakistani Taliban leader Baitullah Mehsud. Four militants are killed and three arrested.
April 5 - A suicide bomber blows himself up in a religious centre for minority Shi'ite Muslims in Chakwal in central Pakistan, killing 22 people.
April 18 - A suicide car-bomber rams a military convoy, killing 25 soldiers and police and two passers-by near Kohat, 190 km (120 miles) west of Islamabad.
May 27 - Gunmen attack a police headquarters in the Pakistani city of Lahore, setting off a car-bomb that killed at least 24 people.
June 5 - A bomb blast kills around 40 worshippers attending Friday prayers at a mosque in a remote area of northwest Pakistan.
June 9 - Militants attack the Pearl Continental Hotel, which is popular with foreigners, in Peshawar with guns and a truck bomb killing seven people including a U.N. worker.
Aug 27 - A suicide bomber kills 22 Pakistani border guards in an attack at the main crossing point into Afghanistan.
Sept 2 - Unidentified gunmen shoot and wound Pakistan's religious affairs minister, Hamid Saeed Kazmi, in a brazen attack in the capital that killed his driver.
Sept 18 - A suicide car-bomber kills 33 people on a main road near the city of Kohat in northwest Pakistan.
Oct 5 - A suicide bomber dressed as a paramilitary soldier attacks an office of the U.N. World Food Programme (WFP) in the Islamabad, killing five staff.
Oct 9 - A suspected suicide car-bomber kills 49 people in the city of Peshawar. About 100 people are wounded.
Oct 10 - Gunmen in army uniforms attack Pakistani army's headquarters in Rawalpindi. The next day Pakistani commandos storm the building and rescue 39 hostages. Nine militants, three hostages and 11 soldiers are killed.
Oct 12 - A suicide bomber hits a military vehicle in Shangla district, near the Swat valley. Forty-one people are killed, including 35 civilians and 6 soldiers, and 45 wounded.
Oct 15 - Militants launch a string of attacks in Lahore, capital of Punjab province, Peshawar and Kohat in the northwest killing at least 31 people.
Oct 28 - More than 80 people are killed and around 100 injured when a bomb explodes in the busy Peepal Mandi market street in Peshawar's old city.
Thursday, October 15, 2009
The Guardian of Machines : Robots
IN 1981 Kenji Urada, a 37-year-old Japanese factory worker, climbed over a safety fence at a Kawasaki plant to carry out some maintenance work on a robot. In his haste, he failed to switch the robot off properly. Unable to sense him, the robot's powerful hydraulic arm kept on working and accidentally pushed the engineer into a grinding machine. His death made Urada the first recorded victim to die at the hands of a robot.
This gruesome industrial accident would not have happened in a world in which robot behavior was governed by the Three Laws of Robotics drawn up by Isaac Asimov, a science-fiction writer. The laws appeared in “I, Robot”, a book of short stories published in 1950 that inspired a recent Hollywood film. But decades later the laws, designed to prevent robots from harming people either through action or inaction (see table), remain in the realm of fiction.
Indeed, despite the introduction of improved safety mechanisms, robots have claimed many more victims since 1981. Over the years people have been crushed, hit on the head, welded and even had molten aluminium poured over them by robots. Last year there were 77 robot-related accidents in Britain alone, according to the Health and Safety Executive.
With robots now poised to emerge from their industrial cages and to move into homes and workplaces, roboticists are concerned about the safety implications beyond the factory floor. To address these concerns, leading robot experts have come together to try to find ways to prevent robots from harming people. Inspired by the Pugwash Conferences—an international group of scientists, academics and activists founded in 1957 to campaign for the non-proliferation of nuclear weapons—the new group of robo-ethicists met earlier this year in Genoa, Italy, and announced their initial findings in March at the European Robotics Symposium in Palermo, Sicily.
“Security, safety and sex are the big concerns,” says Henrik Christensen, chairman of the European Robotics Network at the Swedish Royal Institute of Technology in Stockholm, and one of the organizers of the new robo-ethics group. Should robots that are strong enough or heavy enough to crush people be allowed into homes? Is “system malfunction” a justifiable defence for a robotic fighter plane that contravenes the Geneva Convention and mistakenly fires on innocent civilians? And should robotic sex dolls resembling children be legally allowed?
These questions may seem esoteric but in the next few years they will become increasingly relevant, says Dr Christensen. According to the United Nations Economic Commission for Europe's World Robotics Survey, in 2002 the number of domestic and service robots more than tripled, nearly outstripping their industrial counterparts. By the end of 2003 there were more than 600,000 robot vacuum cleaners and lawn mowers—a figure predicted to rise to more than 4m by the end of next year. Japanese industrial firms are racing to build humanoid robots to act as domestic helpers for the elderly, and South Korea has set a goal that 100% of households should have domestic robots by 2020. In light of all this, it is crucial that we start to think about safety and ethical guidelines now, says Dr Christensen.
Stop right there
So what exactly is being done to protect us from these mechanical menaces? “Not enough,” says Blay Whitby, an artificial-intelligence expert at the University of Sussex in England. This is hardly surprising given that the field of “safety-critical computing” is barely a decade old, he says. But things are changing, and researchers are increasingly taking an interest in trying to make robots safer. One approach, which sounds simple enough, is try to program them to avoid contact with people altogether. But this is much harder than it sounds. Getting a robot to navigate across a cluttered room is difficult enough without having to take into account what its various limbs or appendages might bump into along the way.
Regulating the behaviour of robots is going to become more difficult in the future, since they will increasingly have self-learning mechanisms built into them, says Gianmarco Veruggio, a roboticist at the Institute of Intelligent Systems for Automation in Genoa, Italy. As a result, their behaviour will become impossible to predict fully, he says, since they will not be behaving in predefined ways but will learn new behaviour as they go.
Then there is the question of unpredictable failures. What happens if a robot's motors stop working, or it suffers a system failure just as it is performing heart surgery or handing you a cup of hot coffee? You can, of course, build in redundancy by adding backup systems, says Hirochika Inoue, a veteran roboticist at the University of Tokyo who is now an adviser to the Japan Society for the Promotion of Science. But this guarantees nothing, he says. “One hundred per cent safety is impossible through technology,” says Dr Inoue. This is because ultimately no matter how thorough you are, you cannot anticipate the unpredictable nature of human behaviour, he says. Or to put it another way, no matter how sophisticated your robot is at avoiding people, people might not always manage to avoid it, and could end up tripping over it and falling down the stairs.
Legal problems
So where does this leave Asimov's Three Laws of Robotics? They were a narrative device, and were never actually meant to work in the real world, says Dr Whitby. Quite apart from the fact that the laws require the robot to have some form of human-like intelligence, which robots still lack, the laws themselves don't actually work very well. Indeed, Asimov repeatedly knocked them down in his robot stories, showing time and again how these seemingly watertight rules could produce unintended consequences.
In any case, says Dr Inoue, the laws really just encapsulate commonsense principles that are already applied to the design of most modern appliances, both domestic and industrial. Every toaster, lawn mower and mobile phone is designed to minimise the risk of causing injury—yet people still manage to electrocute themselves, lose fingers or fall out of windows in an effort to get a better signal. At the very least, robots must meet the rigorous safety standards that cover existing products. The question is whether new, robot-specific rules are needed—and, if so, what they should say.
“Making sure robots are safe will be critical,” says Colin Angle of iRobot, which has sold over 2m “Roomba” household-vacuuming robots. But he argues that his firm's robots are, in fact, much safer than some popular toys. “A radio-controlled car controlled by a six-year old is far more dangerous than a Roomba,” he says. If you tread on a Roomba, it will not cause you to slip over; instead, a rubber pad on its base grips the floor and prevents it from moving. “Existing regulations will address much of the challenge,” says Mr Angle. “I'm not yet convinced that robots are sufficiently different that they deserve special treatment.”
Robot safety is likely to surface in the civil courts as a matter of product liability. “When the first robot carpet-sweeper sucks up a baby, who will be to blame?” asks John Hallam, a professor at the University of Southern Denmark in Odense. If a robot is autonomous and capable of learning, can its designer be held responsible for all its actions? Today the answer to these questions is generally “yes”. But as robots grow in complexity it will become a lot less clear cut, he says.
“Right now, no insurance company is prepared to insure robots,” says Dr Inoue. But that will have to change, he says. Last month, Japan's ministry of trade and industry announced a set of safety guidelines for home and office robots. They will be required to have sensors to help them avoid collisions with humans; to be made from soft and light materials to minimise harm if a collision does occur; and to have an emergency shut-off button. This was largely prompted by a big robot exhibition held last summer, which made the authorities realise that there are safety implications when thousands of people are not just looking at robots, but mingling with them, says Dr Inoue.
However, the idea that general-purpose robots, capable of learning, will become widespread is wrong, suggests Mr Angle. It is more likely, he believes, that robots will be relatively dumb machines designed for particular tasks. Rather than a humanoid robot maid, “it's going to be a heterogeneous swarm of robots that will take care of the house,” he says.
Probably the area of robotics that is likely to prove most controversial is the development of robotic sex toys, says Dr Christensen. “People are going to be having sex with robots in the next five years,” he says. Initially these robots will be pretty basic, but that is unlikely to put people off, he says. “People are willing to have sex with inflatable dolls, so initially anything that moves will be an improvement.” To some this may all seem like harmless fun, but without any kind of regulation it seems only a matter of time before someone starts selling robotic sex dolls resembling children, says Dr Christensen. This is dangerous ground. Convicted paedophiles might argue that such robots could be used as a form of therapy, while others would object on the grounds that they would only serve to feed an extremely dangerous fantasy.
All of which raises another question. As well as posing physical danger, might robots also be dangerous to humans in less direct ways, by bringing out their worst aspects, from warfare to paedophilia? As Ron Arkin, a roboticist at the Georgia Institute of Technology in Atlanta, puts it: “If you kick a robotic dog, are you then more likely to kick a real one?” Roboticists can do their best to make robots safe—but they cannot reprogram the behaviour of their human masters.
Monday, October 5, 2009
Billions in US aid never reached Pakistan army
Between 2002 and 2008, while al-Qaida regrouped, only $500 million of the $6.6 billion in American aid actually made it to the Pakistani military, two army generals tell The Associated Press.
The account of the generals, who asked to remain anonymous because military rules forbid them from speaking publicly, was backed up by other retired and active generals, former bureaucrats and government ministers.
At the time of the siphoning, Pervez Musharraf, a Washington ally, served as both chief of staff and president, making it easier to divert money intended for the military to bolster his sagging image at home through economic subsidies.
The military itself was financing the war on terror out of its own budget."..the diversion of the money hurt the military in very real ways:
_Helicopters critical to the battle in rugged border regions were not available. At one point in 2007, more than 200 soldiers were trapped by insurgents in the tribal regions without a helicopter lift to rescue them.
_The limited night vision equipment given to the army was taken away every three months for inventory and returned three weeks later.
_Equipment was broken, and training was lacking. It was not until 2007 that money was given to the Frontier Corps, the front-line force, for training.
The details on misuse of American aid come as Washington again promises Pakistan money. Legislation to triple general aid to Pakistan cleared Congress last week. The legislation also authorizes "such sums as are necessary" for military assistance to Pakistan, upon several conditions. The conditions include certification that Pakistan is cooperating in stopping the proliferation of nuclear weapons, that Pakistan is making a sustained commitment to combating terrorist groups and that Pakistan security forces are not subverting the country's political or judicial processes.
The U.S. is also insisting on more accountability for reimbursing money spent. For example, Pakistan is still waiting for $1.7 billion for which it has billed the United States under a Coalition Support Fund to reimburse allies for money spent on the war on terror.
But the U.S. still can't follow what happens to the money it doles out.
"We don't have a mechanism for tracking the money after we have given it to them," Pentagon spokesman Lt. Col. Mark Wright said in a telephone interview.
Musharraf's spokesman, retired Gen. Rashid Quereshi, flatly denied that his former boss had shortchanged the army. He did not address the specific charges. "He has answered these questions. He has answered all the questions," the spokesman said. Musharraf took power in a bloodless coup in 1999 and resigned in August 2008.
Pakistan has received more money from the fund than any other nation. It is also the least expensive war front. The amount the U.S. spends per soldier per month is just $928, compared with $76,870 in Afghanistan and $85,640 in Iraq.
Yet by 2008, the United States had provided Pakistan with $8.6 billion in military money, and more than $12 billion in all.
Some of the money from the U.S. even went to buying weapons from the United States better suited to fighting India than in the border regions of Afghanistan — armor-piercing tow missiles, sophisticated surveillance equipment, air-to-air missiles, maritime patrol aircraft, anti-ship missiles and F-16 fighter aircraft.
For more than a year, the Pentagon paid Pakistan's navy $19,000 a month per vehicle just for repair costs on a fleet of fewer than 20 vehicles. Monthly food bills doubled for no apparent reason, and for a year the Pentagon paid the bills without checking, according to the report.
The account of the generals, who asked to remain anonymous because military rules forbid them from speaking publicly, was backed up by other retired and active generals, former bureaucrats and government ministers.
At the time of the siphoning, Pervez Musharraf, a Washington ally, served as both chief of staff and president, making it easier to divert money intended for the military to bolster his sagging image at home through economic subsidies.
The military itself was financing the war on terror out of its own budget."..the diversion of the money hurt the military in very real ways:
_Helicopters critical to the battle in rugged border regions were not available. At one point in 2007, more than 200 soldiers were trapped by insurgents in the tribal regions without a helicopter lift to rescue them.
_The limited night vision equipment given to the army was taken away every three months for inventory and returned three weeks later.
_Equipment was broken, and training was lacking. It was not until 2007 that money was given to the Frontier Corps, the front-line force, for training.
The details on misuse of American aid come as Washington again promises Pakistan money. Legislation to triple general aid to Pakistan cleared Congress last week. The legislation also authorizes "such sums as are necessary" for military assistance to Pakistan, upon several conditions. The conditions include certification that Pakistan is cooperating in stopping the proliferation of nuclear weapons, that Pakistan is making a sustained commitment to combating terrorist groups and that Pakistan security forces are not subverting the country's political or judicial processes.
The U.S. is also insisting on more accountability for reimbursing money spent. For example, Pakistan is still waiting for $1.7 billion for which it has billed the United States under a Coalition Support Fund to reimburse allies for money spent on the war on terror.
But the U.S. still can't follow what happens to the money it doles out.
"We don't have a mechanism for tracking the money after we have given it to them," Pentagon spokesman Lt. Col. Mark Wright said in a telephone interview.
Musharraf's spokesman, retired Gen. Rashid Quereshi, flatly denied that his former boss had shortchanged the army. He did not address the specific charges. "He has answered these questions. He has answered all the questions," the spokesman said. Musharraf took power in a bloodless coup in 1999 and resigned in August 2008.
Pakistan has received more money from the fund than any other nation. It is also the least expensive war front. The amount the U.S. spends per soldier per month is just $928, compared with $76,870 in Afghanistan and $85,640 in Iraq.
Yet by 2008, the United States had provided Pakistan with $8.6 billion in military money, and more than $12 billion in all.
Some of the money from the U.S. even went to buying weapons from the United States better suited to fighting India than in the border regions of Afghanistan — armor-piercing tow missiles, sophisticated surveillance equipment, air-to-air missiles, maritime patrol aircraft, anti-ship missiles and F-16 fighter aircraft.
For more than a year, the Pentagon paid Pakistan's navy $19,000 a month per vehicle just for repair costs on a fleet of fewer than 20 vehicles. Monthly food bills doubled for no apparent reason, and for a year the Pentagon paid the bills without checking, according to the report.
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