National / International News

Spy Chief Says Classified Leaks 'Pose Critical Threat' To U.S.

NPR News - Wed, 2014-01-29 10:51

James Clapper, the director of national intelligence, listed "insider threats," alongside cyber attacks and terrorism. This marks the first time unauthorized disclosures are given such prominence in a threat assessment report.

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Neanderthals gave us disease genes

BBC - Wed, 2014-01-29 10:46
Gene types that influence disease in people today were picked up through interbreeding with Neanderthals, a major study in Nature journal suggests.

What tapering in the U.S. has to do with Turkey and South Africa

Marketplace - American Public Media - Wed, 2014-01-29 10:37

WE GOT 99 PROBLEMS, AND CURRENCY’S ONE.

India, South Africa, Turkey, Argentina – they’ve all had currency depreciations.  Brazil has faced inflation concerns.  The MSCI Emerging Markets Index, an average of emerging market stocks, has fallen nearly 7 percent this month, recently reaching a five month low. Emerging market equities have lost more than $995 billion in value since May. 

To explain this, we have to talk about money -- and how money moves. 

THAT GIANT SLOSHING SOUND

"There are trillions of dollars sloshing around global markets looking for high returns," says Gerald Epstein, director of the Political Economy Research Institute at the University of Massachusetts Amherst.  That money belongs to hedge funds, institutional investors, sovereign wealth funds, and regular investors alike. 

With productive investments few and far between, "there’s more money out there, more money looking for more speculative investments."

During the depths of recession, the one place you wouldn’t be getting higher returns was in developed countries like the U.S. On the one hand, their economies weren’t doing well. And on the other, Central Banks were keeping interest rates low. 

"It’s kind of simple," says Andrew Burns, manager of Prospects at the World Bank. "In the past, if you’re an investor, you have options.  You could invest in U.S. Treasuries; they were giving a return of 1.5 percent last April. Or you can invest in Brazil where you’re getting return of 5 or 6 percent, maybe it’s a little bit risky."

So investors put money into developing economies.

EASY COME....

At the same time, commodity prices were high, fueling emerging markets to the point they were leaders in global growth.

"The last four or five years, supported by very strong commodity prices, we’ve had very material capital flows into these countries," says Robert Kahn, senior fellow at the Council on Foreign Relations.   "These are small economies relative to the U.S. or Japan, and their ability to absorb this capital is not as great, and there is a tendency for these markets to go through boom bust cycles."

EASY GO.....

When the Fed first started talking about tapering last May, it became clear to investors that the economy was getting better, and interest rates in the U.S. would start to rise.  And they have.  The return on some treasury bonds has nearly doubled since then.

"In that context you say, ‘You know what? I had $100 over here in Brazil. I’m gonna pull some of it back in the United States,”" says the World Bank’s  Burns.

“The Fed’s decision to taper was a trigger for these outflows,” says Kahn, “but at the end of the day, it’s not the primary reason for it.”  Rather, it was the simple realization that there are safer -- and possibly better --  investments reappearing elsewhere in the developed world.  

SOPHIE’S CHOICE

And indeed, money moved out.  Local currencies continue to fall. As a result, it becomes more expensive for people in affected emerging markets to buy food and energy from abroad.  Inflation sets in.  Politicians in these countries then have to make a “Sophie’s choice”, says Professor Epstein.  In order to fight that inflation, and in order to incentivize investors to keep their money in the country, governments have raised interest rates.  That creates a drag on the economy.

"Turkey doubled the interest rate, interest rates have gone up in South Africa, Argentina," says Epstein. "And not only does this slow down their economy -- which if they already have a high unemployment rate is a big problem -- but it might also backfire." Backfire as in "push some companies into bankruptcy, further scaring off international investment."

Epstein argues there are few good options for lower income countries other than to control capital flows, a tool which has its own risks.

COMPLACENCY VS. PREPAREDNESS

On the one hand, many emerging markets came out of the global financial crisis in fairly good shape.  But it doesn’t mean they’re not vulnerable – as has become evident.

"Policy makers got complacent in these countries," says Kahn, "because they had access to very cheap money... We’ve seen before when things reverse – when commodity prices fall and capital flows turn around – it can be pretty hard. We’re at the beginning of that cycle."

WE’RE NOT DONE YET

"It’s not going to be smooth," says Kahn, "and there’s still more turbulence to be seen."

The process of global capital reallocation is not over.  Throw in the fact that developing countries aren’t making as much from commodities, China is buying less from them, and a spate of political scandals, and it may be a very rough ride for lower income countries, indeed.

Brazil's Slaves Are Being Freed, But Owners Go Largely Unpunished

NPR News - Wed, 2014-01-29 10:37

In the past 20 years, almost 50,000 enslaved Brazilian workers have been freed from some 2,000 worksites. But an estimated 200,000 remain trapped in slavery, due to deep-seated impunity: Slaveholders can pay hefty fines and civil damages, but criminal convictions and jail time are rare.

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How Industrial Chemical Regulation Failed West Virginia

NPR News - Wed, 2014-01-29 10:36

For Charleston Gazette reporter Ken Ward, the recent chemical spill — and sometimes confusing information authorities have provided about the risks to citizens — reflects longstanding regulatory failures in the state. He says West Virginia has "basically ignored" recommendations for stricter oversight.

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Commonwealth baton route revealed

BBC - Wed, 2014-01-29 10:33
The route of the England leg of the Queen's Baton Relay ahead of the Glasgow Commonwealth Games is revealed.

Acting ban for Ahmadinejad 'lookalike'

BBC - Wed, 2014-01-29 10:31
A well-known Iranian actor reveals he was banned from acting for eight years because of his resemblance to former President Mahmoud Ahmadinejad.

Iceland food bin theft case dropped

BBC - Wed, 2014-01-29 10:23
The case against three men accused of stealing food from bins outside an Iceland store is dropped by prosecutors.

Sharif seeks talks despite attacks

BBC - Wed, 2014-01-29 10:21
Pakistan's Prime Minister Nawaz Sharif says he still wants to hold peace talks with the Taliban, despite a wave of deadly attacks in recent months.

A Little Acid Turns Mouse Blood Into Brain, Heart And Stem Cells

NPR News - Wed, 2014-01-29 10:20

Japanese scientists say they've figured out a fast, easy way to make the most powerful cells in the world: embryonic stem cells. The magic ingredient? Something akin to lemon juice. So far it's still unknown if the method would work with human cells or could be used for medical treatments.

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How cash is like Bitcoin. And how Bitcoin is like Kim Kardashian.

Marketplace - American Public Media - Wed, 2014-01-29 10:14

Bitcoin is a digital currency, controlled only by software, that somehow, some people have collectively decided is worth something. This can be a bit of a brain-bender.

But, it turns out, we do the same every day with cash.

“Money is a form of shared reality,” says Adam Waytz, a professor at Northwestern University’s Kellogg School of Management. It’s a shared illusion: “In order for it to have value, that means that everyone has to agree that this is something we’re going to treat as valuable.” 

With cash, we take paper, with numbers printed on it, and imbue it with value greater than the sum of paper and ink. Bitcoin works the same way.

“It’s sort of the Kim Kardashian of money,” says Waytz. “Kim Kardashian is famous for being famous. Bitcoin is valuable because a lot of people have agreed to value it.” 

One reason people value Bitcoin is that it is hard to trace back to a person. It’s a feature that can make law enforcement a little nervous. There’s no bank keeping tabs. No paper trail. People buy illegal stuff with Bitcoin. But, again, cash is the same.

“If you and I meet at a park, and I give you $100, and you give me something in return, and we part our separate ways, that’s a completely anonymous transaction,” says Jerry Brito, a research fellow at the Mercatus Center at George Mason University. There’s no record of the time, the park we met at, what we traded.

Cash can be better at keeping secrets than Bitcoin. With Bitcoin, Brito says, “you have to keep a record of the transaction, and the amount, and the Bitcoin addresses that were involved. So it’s less anonymous than cash. It's pseudonymous, is one way to put it.”

Bitcoin leaves a digital trail. That’s how Bitcoin works. It’s a trail that cash is very good at erasing.

But cash isn’t entirely invisible. It’s got a physical presence. You have to get it. Move it. And, its physical nature has costs.

“I have to spend time going to the ATM, and take money out, and that could be time that’s taken away from other productive activities,” says Bhaskar Chakravorti with the Fletcher School at Tufts University. It may not sound like a lot, but it adds up, says Chakravorti, to tens of billions of dollars. Time that you wouldn’t have to waste in a Bitcoin world.

There’s also the cost to businesses of using cash. You’ve got to hire services to protect it, and get it to and from the bank. Businesses, say Chakravorti, “incur costs because cash gets stolen from a retail outlet, or because there are robberies.” In a world where everyone uses Bitcoin, instead, there’s nothing in the cash register for robbers to steal.

There’s another big cost of cash to our society. The tax gap. All the money that we don’t send the government in taxes, when we pay for things off the books. Chakravorti estimates that cash costs the U.S. government  more than $100 billion a year.

Bitcoin is enough like cash that that cost wouldn’t disappear.  

Missing For 112 Years, First Porsche Is Found In Warehouse

NPR News - Wed, 2014-01-29 10:08

The P1 that Ferdinand Porsche helped develop was an electric vehicle that could chug along at 22 mph. It was discovered in an Austrian warehouse and is going on display at the Porsche museum in Stuttgart, Germany.

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Congressman apologises for threat

BBC - Wed, 2014-01-29 10:06
A congressman who threatened to throw a reporter off a balcony after President Obama's State of the Union address apologises.

Megan 'entered river after drinking'

BBC - Wed, 2014-01-29 09:58
Police searching for a missing student say it is likely she entered the River Ouse, in York, while "affected by alcohol".

Why Red-State Kentucky Got A Shoutout From Obama

NPR News - Wed, 2014-01-29 09:51

President Obama described the state as "not the most liberal part of the country." In fact, Kentucky gives him lower approval ratings than all but seven other states. Yet the state's Democratic governor has pushed Obama's priorities on health and education more successfully than most other governors.

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Plato planet-hunter in pole position

BBC - Wed, 2014-01-29 09:48
A telescope to find thousands of planets beyond our Solar System is the hot favourite for selection as Europe's next medium-class space science mission.

Cabaye completes £19m move to PSG

BBC - Wed, 2014-01-29 09:45
Ligue 1 champions Paris St-Germain complete the signing of France midfielder Yohan Cabaye from Newcastle in a £19m deal.

Murray marriage tweet 'was a joke'

BBC - Wed, 2014-01-29 09:44
Andy Murray's tweet saying he is to marry his partner Kim Sears later this year was a joke, according to his PR agency.

Sainsbury's boss King to step down

BBC - Wed, 2014-01-29 09:41
Sainsbury's says chief executive Justin King is to leave the supermarket chain in July after 10 years at the head of the company.

Crash-film drivers face prosecution

BBC - Wed, 2014-01-29 09:39
A police force says it may prosecute drivers who were spotted filming the scene of a motorway crash as they went past at rush-hour.

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