Emotions and Work

An exasperated Tom Hanks, in A League of Their Own, told his sobbing female right fielder: "There's no crying in baseball," creating a catch phrase for the ages. He also raised a question. Does the same hold true for the office?

I've written about crying in the workplace in the past. But it occurred to me -- what about emotion in general? Is it good? Is it bad? Should it be checked at the door? Or have the rules changed with the rising importance of emotional IQ -- becoming more attuned to our emotions and those of others?

The answer was obvious in the days when the tough-guy workplace was organized by dominance and fueled by testosterone. Showing emotion -- especially the weepy variety -- was like wetting your pants in the school yard: a life-altering event.

If a workplace that is replacing powerful titles and chains of command with collaboration and teams is becoming more emotion-friendly, women certainly have at least something to do with it.

It's with the greatest caution that I commit to print the idea that women are more emotional than men. Back away from that Tweet. Science is on my side.

Women, studies say, cry four times more often than men. One possible reason is that they have had less social programming not to cry: boys and girls cry roughly the same amount until around age 12. Then the guy rules kick in.

Another is hormonal. Women have six times more prolactin -- the tear hormone -- than men. Plus, women have larger tear ducts, which may account for why women gush and men trickle.

Putting aside for the increased social and biological possibilities of women crying at work -- what about office reaction?

Opinion varies. Some would chock it off as a women thing -- it's just what they do. Others see manipulation -- it's a tool to get something she wants. For crying men, the typical reaction is extreme discomfort -- akin to watching someone get sloppy drunk and tell off the boss at the Holiday party.

As for other emotions, men tend to get a pass. the double standard is alive and well. With anger: women are difficult, men are tough. A confident woman might be typed as cocky or aloof. A man is a take-charge guy. Sympathy means she's weak. For men -- he's a sweet guy.

Generalizations, all. But it's hard to deny that, for women, emotions are a field of brambles that men seem to stroll through without a scratch.

I asked a few manager-level professionals for some help on this one.

One related a hard lesson learned. Allyson is 30, capable, and has some clear goals for a career in brand marketing. "To shorten the story considerably," she said, "a project I'd been working on for six months was cancelled. The reasons don't matter -- but they were stupid. After another meeting getting nowhere with my boss, my frustration got the better of me. I cried. Really cried. Worse than that, other people saw me cry.

"They were incredibly supportive and sympathetic. They all said they understood my frustration. It wasn't until later than I found out my new office nickname was 'sniffles.' For me, lesson learned. Don't cry at work. Ever. It doesn't help. And it's always with you -- like a tattoo on your neck."

I tried to find a similar story from the other side of the gender divide, but my search came up empty. So I asked both men and women what they would think if a male colleague cried in the office. Their replies were interestingly consistent. Men just don't -- at least not about work.

Said one: "I would assume that something bad was happening in his life -- like he just had to put his dog to sleep. If it turned out he was crying because of something went wrong at work, it would creep me out."

Another said: "I just can't imagine that happening. I can't even picture it. I've seen guys fired. I've seen them get blistered by the boss at meetings. I've seen them get mad. I've seen them raise their voice. I've seen them quit and walk out. I've seen them threaten to beat the s__t out of someone. But I've never seen anybody cry."

Crying, of course, is just one show of emotion. What about others that may stray beyond the guardrails of decorum?

Avoidance may go against nature. Neuroscience tells us that emotion is hardwired into every aspect of our lives -- including work. There are 600 words in the English language that describe emotions. And we have 43 facial muscles to convey them -- even those speaking different languages can easily parse expressions -- I like you; I want to hurt you.

So it's not realistic that we'll navigate Spock-like through the day with only a raised eyebrow. That is especially true when the under-staffed, over-committed workday is packed with pressure.

Shows of emotion are also associated with some very desirable outcomes -- like showing the human side of leadership, exhibiting passion for results, driving up a sense of urgency. They divide the old and new work model -- conveying the difference between encouragement and intimidation; empathy and fear.

Repressing them can cloud judgment, blunt emotional IQ, drive up stress.

But the advantage of shows of emotion, says University of Pennsylvania Wharton School professor Dr. Sigal Barsade is also the problem. It spreads. It's called "emotional contagion," says Dr. Barsade, who studies emotion in organizational behavior. It's our human tendency to synchronize our emotions with those around us. Very good for a stirring pep talk to rally the troops around an impossible deadline. Less so for tears of rage in a budget meeting.

Her advice in a Wall Street Journal article by Dennis Nishi is simple: don't vent. Bottle it and open it up at home. Get help. Deconstruct the situation to figure it out. Entertain the possibility that your emotions are trying to tell you something: maybe you and your job just don't get along. Also, she said, consider your place in the organization. The stakes of emotional control are different for a senior manager than they are for an entry-level hire.

One of those stakes is the ability to handle emotions when they explode. I had a young research assistant -- very capable, but very brittle. She was a chronic crier. When I sat her down to explain why that was unacceptable, she cried.

Anne Kreamer, author of It's Always Personal: Navigating Emotion in the New Workplace, says that the key is not to stomp on emotion, but to manage it. Part of that, she argues in a recent Monster.Com article, is to get to the source -- find the emotional trigger in an otherwise valuable team member. Go after the cause, not the symptoms.

With my assistant, it was malignant self-doubt. I worked to build up her confidence. The crying didn't stop. But it was a lot quieter.

As women change the workplace, it's fair to entertain that some of male-driven rules of emotional containment may give way. Repression may yield to expression -- especially in team-sensitive cultures that thrive on human interaction.

With caveats, exceptions and dangerous stereotypes duly considered, it's fair to say that women are -- at least -- more emotionally expressive than man. Call it socialization, call it genetics: there's a reason why women feel free to reach for the tissue box.

There is a line between appropriate and inappropriate displays of emotion in the workplace. The presence of more women may have moved the line toward freer expression. But it's still there. When emotions well up, tread carefully.

Don't let them call you "sniffles."

 

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China Photo of the Day: Welcome Back to Earth! - Matt Schiavenza

China Photo of the Day: Welcome Back to Earth!

Reuters

China made a lot of news this week: In addition to engineering a mini-financial crisis in an effort to get a grip on its teetering banking system, Beijing also helped engineer American exile Edward Snowden's departure from Hong Kong to Moscow. Yet buried beneath these high-profile stories, three Chinese astronauts returned from a 15-day mission aboard the Shenzhou-10 space craft yesterday and, in the tradition of everyone who puts in a stretch of hard work, took the opportunity to take a load off. 

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'Poor English saved Japan's banks from crisis'

Taro Aso said that bankers in Japan had not been able to understand the complex financial instruments that were the undoing of major global players in the 2008 crisis, so had not bought them.

"Many people fell prey to the dubious products, or so-called subprime loans. Japanese banks were not so much attracted to these products, compared with European banks," Mr Aso told a seminar in Tokyo.

"Managers of Japanese banks hardly understood English, that's why they didn't buy," he said.

It is the latest in a line of eyebrow-raising pronouncements from Mr Aso, who was once prime minister and now also serves as deputy prime minister.

But, the politician - who is known as a dapper dresser - claimed that he had managed to keep his foot out of his mouth since Shinzo Abe came to power in December.

However, his boast was somewhat undermined when he initially got the name of the prime minister wrong.

"I have made no gaffes in the past half year even as newspapers said the Aso administration's... No, the Abe administration's biggest problem is Taro Aso's gaffes," he said.

His comments came as Japan got a welcome dose of upbeat economic news on Friday, when the government said industrial production rose 2pc in May from April, the fourth straight monthly increase.

A nationwide consumer price index also stopped falling for the first time in seven months. Data showed it was unchanged from a year earlier after being in negative territory for six months.

The core CPI figure for June in Tokyo - often used as a predictor for the nation - rose 0.2pc.

For years, Japan has been dogged by deflation, or falling prices, which can drag on economic growth, and the Bank of Japan has set a goal of 2pc inflation within the next two years.

Prime Minister Abe, meanwhile, has embarked on an ambitious economic revival programme since taking office six months ago through massive monetary easing, public works projects and structural reforms - dubbed the "three arrows" of "Abenomics."

Junko Nishioka, an economist at RBS Japan Securities, said she is optimistic that Japan's economy will continue to improve in the coming months.

"Domestic consumer demand is following the growth in industry production," she said. "I think it's the result of a promising economic push."

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WORLD GDP CHART

http://charliegaoli.tumblr.com/post/54001005357/timeline-photos-facebook-facebook-com-four

The Economist: World GDP Chart

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Four years after the worst of the finan­cial cri­sis and the world appears to be fal­ter­ing again. Accord­ing to The Econ­o­mist's cal­cu­la­tions, world GDP grew by just 2.1% dur­ing the first quar­ …

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Rana Florida: It's Time for Leaders to Lead

It's Time for Leaders to Lead

Gallup's just-released 2013 State of the American Workplace report, which surveyed more than 150,000 full- and part-time workers last year, finds that an astounding 70 percent of employees are not engaged or inspired by their work. Clearly management bears a large part of the blame.

In my upcoming book Upgrade (McGraw-Hill, September, 2013), I write about business's leadership crisis. The traditional top-down approach, in which the boss sits at the top of the pyramid and orders the underlings to work harder, is no longer flying.

When I asked Sir Ken Robinson, arguably one of the world's top experts in creativity and education, about how management can motivate a workforce, he said, "The role of a leader is to offer a compelling vision of the road ahead and to inspire people so that they'll be able to travel it successfully. Management is about organization. Leadership is about vision. Both are important. Organization without leadership breeds bureaucracy. Vision without management breeds disillusion."

The culture of an organization sets the tone of the workplace and the online shoe retailer, Zappos has made headlines about their culture of delivering happiness. Co-founder, CEO and venture capitalist Tony Hsieh says, "I like to give people a lot of freedom and then see what they are able to do. For my own life, I also value the freedom to think outside the box and do things differently."

When I interviewed the Mayo Clinic's president and CEO, John Noseworthy, MD and asked him to describe his leadership style, he said, "Leaders at Mayo Clinic embody Robert Greenleaf's model of 'servant leadership,' in which the desire to serve supersedes the desire to lead."

Tim Brown, the CEO of the famous consulting firm IDEO, has a similar approach to leadership. He says,"I am not sure I really think of leadership as a style. I try to be the right leader for the moment. Sometimes that means trying to inspire the organization with new ideas that might challenge the status quo. Sometimes that means jumping in and helping solve a problem with a client or IDEO team. Sometimes it means stepping back and leaving room for someone else to take the lead, but being there to support them."

Brown didn't understand this immediately. "It took me a while to learn that approaching every leadership moment the same way is not constructive," he admitted. "Earlier in my career I thought my job was to try to always have the best ideas and I would strive really hard to be as personally creative as I could. Now I realize that this can stifle other talented people, and that I can be far more effective helping them develop their own ideas and giving them the confidence, if they need it, to go and make their ideas happen."

Unfortunately, these gifted CEOs and thinkers are exceptions that prove a rule.

As Gallup CEO Jim Clifton put it, workers, "roam the halls spreading discontent" -- and worse still, they are costing the U.S. up to $550 billion annually in lost productivity. Sure, pay raises and bonuses may help to retain some of these unhappy workers, but they can't replace motivation. Employees are looking to feel good about their work, to learn and grow on the job, personally and professionally; they want to feel that they are part of a vision.

It's not our workforce that needs training, but its bosses, too many of whom haven't the necessary skills to engage, mentor and inspire.

 

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Japan nuclear safety upgrades dazzle, mask industry woes

Japan nuclear safety upgrades dazzle, mask industry woes | ASIA TODAY News & Events

Japan's nuclear utilities face shareholders this week promising restarts of idled plants as soon as next month after costly safety upgrades, plans that look wildly optimistic given they are yet to secure either regulatory or local approval.

A glaring example is the Hamaoka nuclear plant, once dubbed the world's most dangerous for its location near a major earthquake fault zone. Operator Chubu Electric Power Co's $1.5 billion upgrade is unlikely to convince opponents galvanized by ongoing problems from the Fukushima meltdown.

Chubu says it may apply to reboot reactors before March 2015, but others are much more ambitious as they try to cut back on imports of replacement fuels that have added billions to their costs, with firms saying they expect to restart seven reactors by the end of July.

Tokyo Electric Power Co, the operator of the Fukushima plant, and five other listed nuclear operators laid out the schedules to restart reactors in documents submitted to the government to support applications to raise residential electricity prices.

This is despite signs that Japan's atomic regulator will take a tough stance when its new safety guidelines take effect on July 8, and amid fierce local opposition.

"Out of Japan's 50 nuclear reactors, I think Hamaoka is one of the least likely to stay open in the post-Fukushima context," said Hajime Amano, a member of the local regional assembly where the plant is located.

The incumbent governor of Shizuoka prefecture was re-elected by a landslide in regional elections on June 16 after promising to hold a referendum to decide the fate of Hamaoka.

Chubu spokesman Hiroki Kosaka declined to comment when asked whether the company would abide by a popular vote calling for the closure of the plant. He said the company is striving to upgrade safety equipment as much as possible and is explaining its improvements to local residents.

Costly improvements

Upgrades the Nuclear Regulation Authority (NRA) requires in its quest to impose the world's toughest earthquake and tsunami standards will cost the industry an estimated $12 billion, according to Tom O'Sullivan, an independent energy analyst based in Tokyo.

The complexity and cost of safety upgrades was highlighted during a recent tour to show off earthquake and tsunami defenses at the Hamaoka station 190 kilometers (120 miles) southwest of Tokyo.

Chubu has thrown up a 1.6 km (1 mile) curtain of concrete and steel at least 2 meters thick that is being built to a height of 22 meters above sea level. The wall sits on concrete foundations dug into the ground to as deep as 33 meters.

Essential buildings have giant steel doors with thick rubber seals to keep out any water that breaches the wall. The plant's emergency headquarters has giant rubber shock absorbers to protect it from the shaking of an expected earthquake.

But even if the upgrades pass muster with the regulator, Chubu Electric will still need sign off from local residents.

"Utilities cannot be optimistic at all about restarts because their need for restarts is confronted with the NRA's need to show they are tough in order to gain credibility with the public," said Mycle Schneider, an independent nuclear energy analyst based in Paris who frequently visits Japan.

Reactors at four stations are being reassessed after new research suggested they sit above active faults. The NRA signaled it would err on the side of safety when it declared that a 26-year old reactor in Tsuruga, western Japan, sits above a fault.

Costly delays

Any delay to restarts will be costly. The fallout from Fukushima in terms of higher fuel and maintenance costs pushed the utilities into a second annual industrywide loss of $16 billion for the year ending in March, and debt is mounting.

Japan's utilities have a median debt-to-equity ratio of more than 300 percent, more than double the level among U.S. operators, and may need more government support.

"The problem for the banks is that it is very hard to give additional loans to the utilities in the current situation because from a private business perspective they are bankrupt," said Howard Schultz, a senior research fellow at Fujitsu Research Institute.

Some observers are more optimistic and argue the nuclear utilities, which all face their shareholders on June 26 at annual general meetings, have reached a turning point.

"Japan's electric-power sector is marching down the path to normalisation," Penn Bowers, an analyst at CLSA Asia-Pacific Markets wrote in a research note. "This is occurring firstly with tariff revisions to reflect increased fossil-fuel costs."

"With new guidelines for the safety of nuclear reactors to be established over the summer, we expect the second leg of normalisation, restarts, to begin later this year," Bowers said.

But long term the utilities need a more predictable operating environment after the LDP returned to power and said it would overturn the previous government's decision to abandon atomic energy, according to Schneider.

"I do think that utilities badly need an energy planning framework that clarifies what capacity will be available, and thus will be needed, and when," Schneider said.

"Only then will they decide to invest either in new capacity or in efficiency."

SOURCE / Reuters

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「忘れられる�利」はなぜ必要か？ネットに�散した�人情�は削除できるのか

http://www.huffingtonpost.jp/2013/06/22/personal_data_n_3484569.html?utm_hp_ref=japan

「忘れられる権利」はなぜ必要か？ネットに拡散した個人情報は削除できるのか

ネットにあふれる個人情報 「忘れられる権利」はなぜ必要か？

インターネットに情報が集約されてきた現在、個人のプライバシーにかかわるような情報が、ちょっと検索するだけでずらずらと出てくる。なかには、必ずしも本人が公開してほしくない情報も含まれているだろう。そういったプライバシー情報がネットで公開されていたとき、掲載サイトの管理者に削除を要求できる権利、それが「忘れられる権利」だ。

今はまだ「人権」として広く認められているとまでは言えないが、インターネット上のアンケート投票サイト「ゼゼヒヒ」では、実に83％もの人が「忘れられる権利が必要」と回答している（6月20日現在）。ヨーロッパなどでも同種の議論は活発化している。誰しも「忘れてほしい話」の一つや二つはあるということだろう。

だが「ネットは広大」だ。サイト管理者の責任や、権利の及ぶ範囲などを定め、権利の実効性を確保するためには、まだ様々なハードルがあるように思われる。いま日本では「忘れられる権利」について、どのような議論が行われているのだろうか。ネット情報の削除問題に取り組んでいる神田知宏弁護士に聞いた。

●現状では、「誰に連絡すれば消してもらえるのか」さえ、なかなかわからない

「『忘れられる権利』は、インターネット時代の新しい権利のアイデアであり、昨年ＥＵで提案されました。プライバシー権に近いとも捉えられますが、人の名誉権や、刑事手続の対象となった者が『更生する利益』なども含んでおり、憲法上は『幸福追求権』『人格権』の１つと考えられます」

――なぜいま、それが問題なのか。

「インターネットは『決して忘れてくれない』。つまり、ずっと情報が残ってしまうからです。個人の名前で検索すれば、その人に関するいろいろな情報が表示されます。たしかに、中には重要な話（公益性の高い話）もあるでしょうが、井戸端会議や単なる噂話レベルのものも、個人名検索でどんどん出てきます。

『忘れてほしいのに、忘れてもらえない』のは、つらいことだと、みなさん異口同音に話します。ネットの情報が気になって眠れない人や、心の病気・体調不良を訴える人が『どうすれば削除してもらえるのか』と、私のところへ相談にやってきます」

――忘れられる権利を使うためには、誰に対して、どういう要求をすればいいのか。

「要求の内容は、個人の情報をネットから削してもらうことです。そのための方法は、裁判所の『削除仮処分』や、テレコムサービス協会（テレサ協）の『送信防止措置依頼書』を使った削除請求です。

ただ、誰に対して、というところが問題です。インターネットの情報発信者の多くは匿名だからです」

――その場合、どうする？

「情報発信者が分からない場合は、ブログや掲示板の管理会社、サーバー管理会社に削除依頼を送ることになりますが、場合によってはそれらの会社さえ不明というケースもあります。また、外国企業の管理しているサイトであれば、ハードルはさらに高くなるため、問題は深刻です。

現行法では、サイトに連絡先を表示する義務はありません。いったい誰にどうやって削除請求を送ればよいのか。これが分かるだけでもずいぶん見通しが違います。私は、このあたりの法整備が急務と感じます」

●インターネット時代に合った判断が求められている

――どんな場合なら「消してくれ」と要求できるのか。

「これは、一方で表現の自由があり、他方で忘れられる（表現されたくない）権利があるとき、どちらを優位させるかという問題です。はたして削除してよいのか、削除請求された人が迷うケースもあるはずです。一般的な『プライバシー侵害』の裁判では、いまでも『宴のあと』事件判決が示した以下の3要件が使われている印象です。

（1）私生活上の事実、または、それらしく受け取められるおそれのある事実

（2）その人の立場なら公開されたくないだろう、と一般人が思うような事実

（3）まだ、一般に知られていない事実

これらの全てに当てはまれば『プライバシー侵害』となりますが、インターネットの情報では、この（3）が大きな争点となります」

――その理由は？

「インターネットに書いてある情報は、すでに『一般に知られていない事実』とは言えないのではないか、ということです。『インターネットに出ていた情報のコピペであり、（3）には当てはまらず、プライバシー侵害にならない』と、そういう主張をされることも珍しくありません。

しかし、ネットのどこかにその情報があったというだけでは、実際にどのくらいの人がその情報に接していたかはわかりませんし、『みんなが知っている』とまで断言するのは疑問です。高裁レベルの判決では、（3）に当てはまるという判断も、当てはまらないという判断も両方でています」

――インターネット時代にふさわしい新基準はある？

「私が"ここに行き着くだろう"と考えているのは、和歌山カレー事件の被疑者・被告人の法廷内での様子を隠し撮りなどした事件の民事裁判で、最高裁が示した基準です。

それは、（不法行為法上）違法かどうかは、さまざまな事情を総合考慮し、『人格的利益の侵害が社会生活上受忍の限度を超える』かどうかで判断するという基準です。要するに、諸事情から考えて、我慢すべき限度を超えているかどうかがポイントです。

これを『忘れられる権利』に当てはめると、一方で心身の不調を訴え平穏な生活を脅かされている人がいること、他方で情報の持つ公益性・社会的重要性があることなど、諸事情を考慮したうえで、それが我慢すべき限度を超えていれば、情報を削除してよいということになります」

神田弁護士は「結局のところこの分野では、判例も法整備も、インターネット時代に追いついていないというのが実情です」と指摘。「この夏からのネット選挙運動解禁は、ネット時代の表現問題を検討する良い機会ですので、ぜひ立法、行政、司法で取り組んでほしいと思います」と、期待を込めていた。

（弁護士ドットコム　トピックス編集部）

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• 独身の不倫相手を訴える
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• 恋人に携帯電話のメールを勝手に見られた！
• 探偵の撮影した写真は裁判の証拠として有効?

【取材協力弁護士】

神田 知宏（かんだ・ともひろ）弁護士
フリーライター、ＩＴ社長を経て弁護士、弁理士登録。著書としては、インターネット入門書も含めてパソコンソフト入門書が少なくとも７０タイトル。元、日弁連コンピュータ委員会委員。
事務所名： 小笠原六川国際総合法律事務所

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http://phys.org/news/2013-06-frontier-cybersecurity-body.html

New frontier for cybersecurity: your body

So far, the idea of hacking into medical devices has been limited to fiction and hacker demonstrations.

But US regulators and security experts say the threat is real: malicious actors can gain access to devices ranging from pacemakers to insulin pumps, with potentially fatal results.

The US Food and Drug Administration this month warned manufacturers to step up their vigilance, saying it has learned of "cybersecurity vulnerabilities and incidents that could directly impact medical devices or hospital network operations."

Officials say they know of no deliberate hacking of medical devices. But on the television drama "Homeland," the vice president of the United States is assassinated by hackers who gain access to his pacemaker and deliver a fatal electric shock.

"The good news is that we are not aware of any incidents in the real world. But the bad news there is no science behind looking for it," said Kevin Fu, a University of Michigan professor of computer science specializing in health security.

"It takes just a blink of the eye for malware to get in."

Fu co-authored a 2008 research paper highlighting the risks of implantable devices like cardiac defibrillators, which could be reprogrammed by hackers who get into system's wireless network.

"My opinion is that the greater risk is from malware that accidentally gets into a device rather than the attacks in fictionalized programs," Fu said.

"Malware will often slow down a computer, and when you slow down a medical device it no longer gives the integrity needed to perform as it should."

Barnaby Jack at the security firm IOActive, said the "Homeland" scenario was "fairly realistic," and that he would demonstrate a similar attack at an upcoming hacker gathering.

"In 'Homeland,' they required a serial number, my demonstration doesn't," he said.

Jack has been researching implantable medical devices such as pacemakers and defibrillators from a major manufacturer, and said he has found the devices "to be particularly vulnerable."

He said that from a range of 10 to 15 meters (30 to 50 feet) "I can retrieve the credentials needed to interrogate the individual implants remotely."

In another publicized incident, security specialist Jay Radcliffe, who is diabetic, demonstrated in 2011 the potential to hack into an insulin pump to change dosage levels.

Security specialists say that in addition to implanted devices, hospital equipment such as monitoring systems, scanners and radiation equipment are connected to networks which could have lax security, creating similar security holes. Some heart and drug monitoring systems use open Wi-Fi connections that can be hacked.

"The vast majority of medical devices in hospitals I've been to use Windows XP or Windows 95. These are extremely vulnerable to computer malware," Fu said.

Attacks or insertion of malware could affect things like radiation therapy, or devices which mix nutrients for intravenous delivery, he said.

Medical devices and equipment may have passwords, but these can be hacked as well, as shown in a recent report by the security firm Cylance, which obtained passwords to 300 different devices.

"We could have reported 1,000 different backdoor passwords, we could have even gone all the way to 10,000," said a blog post from Cylance's Billy Rios and Terry McCorkle. "We stopped at 300 because we felt 300 was sufficient to get our point across."

This finding prompted a warning from the Department of Homeland Security's Cyber Emergency Response Team for industrial systems, which said security should be stepped up for surgical devices, ventilators, drug infusion pumps and other equipment.

A number of computer security firms are working to help the industry, but Fu said these solutions are often the equivalent of a Band-Aid.

"Most cybersecurity problems can be traced back to the design," he said

"I have doubts that a strategy just based on antivirus or firewalls can be effective."

Experts say that despite all the risks, people still are better off with than without these devices.

"The chance of a targeted malicious attack against someone's medical device is extremely low, and the last thing we want is for people to lose faith in these life saving devices," Jack said.

"We think that any risk, no matter how low, still needs to be eliminated. We hope by raising awareness of these issues and bringing the threats to the attention of the manufacturers, that they can take steps to improve the security of these devices."

Explore further: US warns of cyber attacks on medical devices

5 /5 (1 vote)

© 2013 AFP

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Whose Idea Was It to Build a Winter Resort in the Warmest Part of Russia? - Michael Weiss and Olga Khvostunova

Whose Idea Was It to Build a Winter Resort in the Warmest Part of Russia?

The Fisht Olympic Stadium and other Olympic venues under construction for the 2014 Winter Olympic games in Sochi on March 7, 2013. (Reuters)

Boris Nemtsov has occupied many roles in post-Soviet Russia, both in government and in the parallel polis that is oppositional politics. He was first elected governor of Nizhny Novgorod, whose successful economic reforms in that region carved a political pathway that would ultimately take him into the deputy premiership under the Yeltsin government. Nemtsov has also been a dogged opponent of Vladimir Putin for the better part of a decade, warning as early as 2004 of a creeping dictatorship. He's perhaps best recognized by the series of reports or white papers that he has co-authored on the state of Russia's economy, the corruption at the heart of Gazprom, and Putin's rumored multi-billion dollar personal fortune, a subject of endless fascination for journalists. Most recently, Nemtsov and Leonid Martynyuk produced a large study of waste and graft that has become the 2014 Sochi Winter Olympics. My colleague Olga Khvostunova and I had a chance to interview Nemtsov about his report, " Winter Olympics in the Sub-Tropics: Corruption and Abuse in Sochi ." (An English-language version of the report was put out last week by The Interpreter, an online translation journal I edit under the auspices of the Institute of Modern Russia. Both the report and the following interview were translated by Catherine A. Fitzpatrick.)

"Putin believes that the Winter Games are his personal project and his personal triumph. It doesn't matter what funds are spent; he wants to demonstrate his power to the whole world."

You published a large report about the preparations of the Olympics in Sochi, but despite the active discussion of the amounts spent, the question remains open: whose idea was it to hold the Winter Games in Sochi, of all places? That's the warmest climate, and the most popular summer resort, in Russia.

That's a rather interesting story. Back in early 2000, I happened to be at a certain meeting with Putin in Europe, which took place in a mountain ski resort. And [Vladimir] Potanin, who was also there, proposed building the same kind of modern resort in Russia -- for example, in Krasnaya Polyana. Putin himself loves skiing, and at the time he really liked the idea. To be honest, I was also happy with this idea because I myself was born in Sochi and I know this area. But the idea of putting together the Olympics deal in connection with Sochi was something somebody else told him later -- perhaps it was [Krasnodar Territory Governor Aleksandr] Tkachev or someone else. But Putin was really fired up with this idea.

You write in your report that so far, $50 billion has been spent on the Olympics, whereas originally, the application for Sochi had a figure of $12 billion. In your estimates, the expenditures have quadrupled because half of them went to corrupt pay-offs and kick-backs. But perhaps it's because from the outset, not all the climactic conditions were taken into account in the cost?

It's actually about another issue. Back at the stage of preparing the application and planning, it became clear that it would not be possible to build all the infrastructure in Krasnaya Polyana -- the gorge is too narrow, and therefore it was decided to bring everything down to the Imeret Lowlands. In fact, this is a huge swamp in which is located the flood lands of the Mzymta River. There is a well-known fact that even back in the times of Stalin, they tried to measure the bottom of this swamp. It turned out that even at a depth of 170 meters, there were still no firm layers. That is, to construct some sort of buildings on this soil is simply madness, they will all slide. That's the first point.

As for the appraisal of the costs, we saw how the expenditures in the Winter Olympics in other countries grew; everywhere the final total is approximately double the original stated sum. Let us suppose this is a universal principle, then the cost of the Olympics should be $24 billion [twice the originally cited amount of $12 billion], but in Russia it is $50 billion. That means it is logical to suppose that $26 billion are bribes and embezzlement. In order to confirm this supposition, we decided to calculate how much was spent on average per fan. That is a more objective indicator because stadiums are different everywhere, infrastructure as well, but expenses per fan are everywhere approximately at the same level. What happened in Russia? The average "price" per fan at an Olympics stadium throughout the world is $6,000, but at the Fisht Olympics Stadium in Sochi, it is $19,500 dollars, that is triple the cost!

So why wasn't there an investigation of the facts of corruption in Sochi? If that project is so important for Putin, and if he is waging war against corruption, even if in word only, a sensational exposure of corruptions at the Olympics construction site would fit well into his PR campaign.

It's all very simple. Putin is part of a mafia; they do not turn in their own. He gave his friends an opportunity "to earn some cash," and now he is forced to deal with things as they are. He tried to remove someone, but no matter where he turned, the interests of friends were always quickly discovered.

But there have been four directors of [Olympics company] Olimpstroy in the last few years; Putin cannot completely close his eyes to what is happening, can he?

Yes, because there is such a mess there that he has nothing left to do. But keep in mind that in 2010, there were 27 criminal cases opened up on grounds of fraud at Olimpstroy, and not a single one of them reached the courts.

You also exposed the myth that the Olympics is being built at the expense of private investors, since according to your figures, 96 percent of the capital investments are passing through the state budget. What is the role of [aluminum billionaire] Oleg Deripaska and Vladimir Potanin in this process? And why in general did they have to get dragged into this escapade and risk their own money?

Have you seen The Godfather? To paraphrase a famous quotation from that film, I will answer: Putin made them an offer they couldn't refuse. For example, Deripaska undertook construction of the airport, cargo port, and Olympic Village. The total investment was to have been 45 billion rubles. He has already spent 40 billion on it to date. But since almost all the Olympics projects are a loss, all the private investors have become victims of this affair. Deripaska suffered doubly. The cargo port which he had built especially for the Olympics was not only washed away by a hurricane; Putin then announced that the port wasn't needed because it was too far away. But on the whole, it is really the case: the Olympics are being built almost entirely at the taxpayers' expense. Moreover, at the end of last year, the authorities officially announced that almost all the Olympic facilities without exception have been built at a loss and will never pay for themselves.

But wasn't it stated in the application that some of the stadiums will be able to be dismantled and moved?

They've now rejected that idea because they realized it would be too expensive. It's easier to build and abandon them then dismantle them and haul them somewhere.

You have paid particular attention to the participation in the Olympic construction of the Rotenberg brothers, about whom little is known in the West. What is their relationship with Putin?

Boris and Arkady Rotenberg are childhood friends of Vladimir Putin. The Rotenberg brothers' company obtained 15 percent of all the funds allocated for the Olympics. And they have skillfully expended these funds. For example, they built the Dzhugba-Sochi gas pipeline for 32.6 billion rubles, although another company was prepared to build it for 8 billion rubles. Or their company built the Kurortny Avenue bypass in Sochi -- an important transportation hub for the city. Each kilometer of that highway has cost them $170 million. It has turned out to be a golden highway. Moreover, they were handed no-bid construction contracts, without any of the most elementary rules of competition. If you look at the photograph of 1969 where Vladimir Putin and Arkady Rotenberg are standing in a group of friends (it was published in our brochure devoted to the Olympics), then the question arises: who in that duet is really the most important?

"Putin is part of a mafia; they do not turn in their own. He gave his friends an opportunity "to earn some cash," and now he is forced to deal with things as they are."

What do you think, will the Russian authorities manage to build everything in time?

According to our estimates, there are about 200 unfinished projects in Sochi. But I think Putin will manage to get it all done. It will be done in slipshod fashion and will begin to fall apart after the Olympics are over, but most likely everything will be ready on February 7, 2014, when the Games begin. First, Putin himself nowadays doesn't budge from Sochi and personally directs the construction. Second, thousands of guest workers have been sent to Sochi and they are toiling there night and day. Plus, for Putin, this is a moment of truth: he is prepared to throw any money at it, just to get it done. That is, the cost of this Olympics could grow even more.

Some experts say that during the Olympics in Sochi, there might be a blackout, since there isn't enough power generating in the region. Is this realistic, in your view?

Such a possibility exists, but I think the authorities will try to do everything possible so that it all goes normally. If necessary, they will turn the electricity off in Sochi. I'm joking, of course, but this problem is really very acute. The Olympics requires about 650 MWe whereas the city itself needs about 550 MWe. The authorities were planning to build the Kudepsta Thermal Power Station in addition, but due to protests by local residents, the construction has been continually delayed, and now the deadlines won't permit it anyway. Today, the main problem remains the transfer of energy from other power stations. Taking into account the habitual outages in this region, the risks that the city (not the Olympics, of course, but the city) will remain without electricity are fairly high.

Another problem being cited is the proximity of the Sochi region to the Chechen Republic. What do you know about security measures being taken?

We tried to find out what is going on, but the FSB has kept secret any information related to that topic, and therefore we haven't managed to find out anything. There exists another problem. In order to strengthen control, the government has put into effect the so-called "Olympics fan passport," without which you will not be able to attend any event at the Olympic Games. It will be a badge that will contain a bar code with all the information about a person, including his passport data. Fans will have to apply online and then pick up their badge at special registration centers. The problem related to the "fan passports" will be the lines. Recently, they tried to test this system at the World Youth Hockey Championship, which also took place in Sochi. The final game between Canada and the U.S.A took place in an empty stadium.

The Olympics is already provoking so much criticism already, what do you think, why does Putin need this at all?

Putin believes that the Winter Games are his personal project and his personal triumph. It doesn't matter what funds are spent; he wants to demonstrate his power to the whole world. And what happens later is not so important for him.

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Don’t taper: The Fed should know this is a terrible time for tighter money

Drop the Taper Talk

Federal Reserve Board Chairman Ben Bernanke at a Joint Economic Committee hearing on May 22, 2013, in Washington, D.C.

Photo by Alex Wong/Getty Images

Investors will be sitting on the edge of their seats Wednesday at 2 p.m. to hear the latest pronouncement from the Federal Reserve's Open Market Committee. FOMC releases are always highly anticipated, but this one more than most. And the word on everyone's lips on Wall Street all morning will be "taper"—which has become Fed-speak for reducing the FOMC's current pace of $85 billion worth of bond purchases per month. The question is: Will the tapering begin this month, or will it be delayed? And if it is delayed, what kind of hint will the FOMC give as to when the tapering will begin?

All the talk is of tapering because that's what's been in the press, with well-sourced journalists reporting vaguely but authoritatively that tapering is on the agenda. That's too bad, because absolutely nothing in the data or the objective state of the economy gives even the slightest hint of support for even a tiny reduction in bond purchases.

If anything, the balance of the evidence suggests that the Fed ought to deliver a smashing uppercut to economic pessimists by announcing an increase in the pace of bond purchases and a determination to keep accelerating asset buying, unless or until inflation materializes.

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Here are the key facts. On Tuesday morning, the Bureau of Labor Statistics announced its Consumer Price Index findings for May. They found that prices increased 0.1 percent across the board in May, and 1.4 percent in the 12-month period that ended in May.

For monetary policy purposes, it's typically more useful to strip out food and energy prices (which are driven by supply conditions rather than the state of demand) and look at the "core" numbers. Here we see a 1.7 percent increase over the past 12 months. That is close to the Federal Reserve's long-term target level of inflation. Close to it, but below it.  You don't need a Ph.D. to realize that 1.7 is less than 2. And if you think back to the good old days before the financial crisis, this basic math is all you needed to predict Federal Reserve policy. If the inflation rate was less than the Fed's inflation target, there was no chance of implementing tighter monetary policy. If unemployment was already very low, the Fed might stand pat. But most likely subtarget inflation would be seen as delivering the "good news" that the economy had room to benefit from the extra boost provided by lower interest rates. Conversely, if inflation was rising up above the target level, it was time for higher interest rates.

Ever since 2008 or so, interest rates have been down around zero, and the Fed has resorted to other tools. But nothing about the basic logic has changed.

If the Fed's instrument of choice is bond purchases, then the volume of bond purchases should go down if and only if inflation rises above 2 percent. If inflation is below 2 percent, there's a case for standing pat. But given the continued high level of unemployment—and the catastrophic personal and social consequences of long-term unemployment—there's a very strong case for increasing bond purchases in response to low inflation.

It's important to note that the exact quantity of quantitative easing probably isn't all that meaningful. What's really going to matter is the signal that the Fed's message on tapering sends.

The big advantage of my approach is that it would signal a Federal Reserve that is determined to judge monetary policy by objective standards. Tighter money will come into play if and only if high inflation becomes a problem. That kind of framework gives people the reassurance they need to go about their business. Tapering—or even talk of tapering—will only exacerbate the confusions and problems of unconventional monetary policy.

The implication of a taper is that tighter money comes not when inflation needs fending off, but simply when the economy no longer needs life support. The Fed's inclinations in this regard reflect a gut-level discomfort with the use of unconventional tools. They also all but ensure an endlessly tepid recovery. If any good three-month run of jobs reports prompts tighter money even with inflation nowhere in sight, investors will naturally remain skeptical of the medium-term outlook. Even worse, in the long term, this undermines the Fed's desire to get "back to normal" since it guarantees that guessing about Fed intentions will remain a major sport. So let's hope the Fed doesn't do any tapering this month. And even more, let's hope that in his post-statement press conference, Ben Bernanke lays out a clear path for the future—no monetary tightening of any kind unless inflation rears its head.

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Banking Commission: Yet again, the City is under attack

The recommendation in today's Banking Commission report that reckless bankers should face jail sentences in future was designed to grab the headlines. How this will enhance trust, stability and profitability in the financial services sector is far more difficult to see.

The stark truth is that in the decade or so before the 2008 crash, bankers behaved rationally given the excessively low interest rates and credit conditions in the West. This came about as a result of catastrophic policy misjudgements by central bankers, policymakers and politicians alike. Here in the UK, for example, Gordon Brown was running an annual deficit of up to £40 billion even during the boom.

Similarly, Brown's policy of putting public pension liabilities, vast scale PFI building programmes and the renationalised Network Rail off balance sheet – as a means of disguising the true state of the UK's public finances – has played as large a part in the huge debt pile being passed on to future generations as the collapse of the financial system.

The fact that we are still collectively living massively beyond our means to the extent that the government is borrowing £1 in every £5 that we spend is the clearest indication that banks, bankers and the City are not alone in being responsible for our economic plight.

UK business and the economy as a whole desperately need a thriving financial services sector. The Banking Commission's report – amidst some strong recommendations – risks relegating our banking industry to an inefficient, bureaucratic, public utility. This cannot be in the national interest.

Mark Field is Conservative MP for Cities of London and Westminster

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Irish success story.

Three Ways of Looking at the Irish Success Story

By Matthew Yglesias

 

Posted Friday, June 14, 2013, at 3:51 PM

Ireland's Prime Minister Enda Kenny

Photo by Andreas Solaro/AFP/Getty Images

If you want to understand the mentality of European Union officials regarding Europe's depression, I think the best place to start is with the fact that they consider the experience of Ireland over the past several years to be a success story. And they really do. They'll look you in the eye and say that this is a success story:

It's ugly. Unemployment goes from a low of 4.6 percent in September 2007 all the way up to 15.1 percent by November of 2011. Since that time it's fallen to "only" 13.5 percent as of April. Some success. But here's what they're talking about:

In Spain, unemployment was already 8.5 percent in September 2007 and in November 2011 it was at 23 percent. But that was no peak. As of April it's risen all the way to a terrifying 26.8 percent. By comparison, Ireland really is a success story. And it's a threefold success story. Part 1 is that during boom times Ireland had much less unemployment than Spain, a testament to its higher level of education and better labor market institutions. Part 2 is the fact that Irish unemployment has in fact fallen from the peak despite sharply contractionary fiscal policy and a monetary environment that's arguably too tight even for Germany is a testament to the flexibility of the Irish economy. Part 3 is the fact that Ireland has basically been a "good soldier" during this process. Irish people obviously aren't happy about austerity measures. They hate them! As would anyone. But they seem more or less resigned to the situation and are making the best of it. In Spain, by contrast, austerity has provoked many iterations of protest marches, strikes, and even riots. Those measures haven't magically produced expansionary monetary policy from the European Central Bank or induced German taxpayers to cough up extra money. What they've done instead is further disrupt the economy. Unemployment just keeps going up and up.

So that's the moral of the Irish success story—austerity sucks, but it's not going anywhere and the best thing to do is to take it on the chin and keep your labor market institutions flexible.

But then there's this:

Iceland has all kinds of problems. But its initial rise in unemployment was much smaller than Ireland, and the decline began much quicker. So on the list of Icelandic problems, mass unemployment doesn't really appear. The country faced a huge negative shock to its citizens' wealth and living standards, but people are working and by working they're rebulding their wealth. That's the Irish disaster. But to face up to it would involve facing up to the fact that the introduction of the single currency was, judged as an economic policy matter, a huge mistake. And that's not something anyone in Brussels or Frankfurt are going to face up to anytime soon. It was always meant more as a political project than an economic one, and the economic costs simply turn out to have been much higher than anyone expected. But, again, nobody is going to say that. So Ireland is a success story. And compared to Spain (and Portugal, Greece, etc.) it really is. That's the point.

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Ideo's 3 Steps To A More Open, Innovative Mind | Fast Company | Business + Innovation

IDEO'S 3 STEPS TO A MORE OPEN, INNOVATIVE MIND

"Any organization that wants to innovate, wants to be prepared to innovate, I think, has to have a few things in place," Ideo CEO Tim Brown tells the Yale School of Management. "Perhaps the most important thing is methods for having an open mind."

Click here to view the video

Ideo, as you may know, is one of the world's leading creative consultancies: our profile of their founder David Kelley shows how they build their design thinking methodology: the careful defining of problems and sussing out their solutions in a way that would make Einstein proud. And fittingly enough, Brown says innovation requires a certain passionate curiosity.

Incuriosity, isn't it curious?

You need inquiry to innovate--so companies can navel-gaze themselves astray, Brown says:

"the quickest way for removing curiosity in my opinion is to have organizations that are too inward-facing, that don't spend enough time out in the world"

Why is this case? Because, as Tina Seelig has noted, the basis of creativity is keenly observing the world: you need to understand, the way Twitter does, how users and other shareholders get value from what you do. If you're always facing inward, you'll miss out.

Why empathy is required

"A sense of empathy for the world, for people whose problems they might be trying to solve--that's essential," Brown says, echoing Ginny Whitelaw's advice that empathy is the most powerful leadership tool.

"We come with what we might call a beginner's mind,"

Brown says he has a lot of empathy for their clients, since Ideo needs to keep innovating for itself. His job--and we can assume that of other executives--is to "do some pattern recognition" across all the people storming their brains and ideating on their iterations. They key, then, is to find the places to focus more of their resources.

Why you don't want to be the expert

"We come with what we might call a beginner's mind," Brown says, borrowing a phrase from a Zen Master who keeps popping up around here.

While Brown notes that over the years Ideo has built knowledge in fields like healthcare and financial services, they still mostly approach problems unencumbered by expertise. They're wizened in their methodology, but fresh-faced with each new circumstance.

"We do rely somewhat on the value of having an open mind when we approach a new question," he says. "I think that's perhaps the reason that we succeed in working across a lot of different industries."

How do you build a culture of innovation?

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Charles Gould: Time for a Change of Business

Time for a Change of Business

The notable finance ministers of England, France, Germany and the U.S. struggled to maintain the gold standard following World War I. It was their failure to recognize that they were living in a fundamentally different world that fed the Great Depression, as Liaquat Ahamed describes in his 2009 work Lords of Finance. For more than a decade these intelligent gentlemen attempted to sustain and resuscitate an economic corpse.

It's difficult to avoid feeling that we are in a similar decade today. The excesses of capitalism continue to erode confidence in that model, yet those excesses have today not been adequately addressed. Fresh jobless figures in the Eurozone point to the number of unemployed in the region exceeding 20 million by the end of this year. It is a stark reminder of the human dimension of this financial catastrophe.

For the G8 leaders who gather in Northern Ireland on June 17 and 18, the question is how you go about stitching society back together. Narrowing, not widening, the inequality gap and building a more cohesive society and a strong, resilient economy at the same time must be the aim.

The time is ripe for a model that isn't business as usual.

Technology has allowed collaboration and co-operation to emerge as a dominant form of action. Wikipedia, and its mischievous cousin Wiki-leaks, are examples of co-operation for collective benefit. Facebook and Twitter are tools for forming communities with people of common interests, not just to share photos but to achieve urgent action. The uprisings of people in Tunisia, Egypt, Libya and Syria have all been facilitated by this technology.

There is a cyclical pattern in modern history of the ascendency of different economic models, even if today it's hard to remember that we didn't always live surrounded by a corporate ideology. There was a period in which we witnessed the flowering of co-operatives and mutual and labor unions, which grew themselves in part from a realization that the industrial revolution had come at too high a price.

If we're reading the signs correctly, and if there is some legitimacy in this cyclical pattern of reaction to excesses of the past, then we might be at the beginning of a period that sees co-operatives not just as respected but as favored above other corporate forms.

For one, co-operation might replace consumerism as the dominant rhetoric. The prevailing business model today perceives of individuals as "people who consume things." Even the poor are seen as a business opportunity at the bottom of the pyramid. They simply consume things in smaller, more frequently purchased packages. When did we become calloused to this imagery?

Co-operatives, too, will increasingly be seen as a solution. From job creation to food security to climate change mitigation, co-operatives provide a market-based solution to a common identified need. We will see them operating increasingly in difficult sectors. The entry of the Midcounties Cooperative Society into electric utility services in the UK is an example of this.

Finally, a co-operative decade would be spurred by continued recognition that the ownership structure of a business really does make a difference. There is awareness that CSR (corporate social responsibility) is too often an attempt to add a veneer of respectability to a business model driven singularly by profit. We need to remind the public that true accountability only comes from a different governance structure: when the owners of the business are also its members or its customers.

The opportunity for a golden age of co-operatives ripens as we see these trends harden: impatience with consumerism; the insistence on sustainability; a demand for transparency, for information; global co-operation; seeing co-operatives as solutions; and disgust at unprincipled excess.

It was not a random gesture the UK government made in choosing to convene a Social Impact Investment Conference last week in the run-up to the G8 Summit. Global leaders today recognize that in order for society to flourish and for economies to be sustainable, capital must be harnessed to serve people, and not for the benefit of capital alone.

 

 

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3 Chinese firms eye tie-up for deep sea fishing off Brunei 

Three companies from China have expressed interest in deep sea fishing prospects in waters off the sultanate's coast, the President of Brunei-China Friendship Association (BCFA) said yesterday.

In an interview at BCFA headquarters in Gadong following a visit by Chinese media, Dr Hj Kamaruddin Dato Seri Paduka Hj Talib said the companies have looked into harvesting deep sea fish such as tuna on their own and are keen to return to the country provided more details on deep sea fishing in "Zone Four" is given by relevant authorities.

"It (Zone Four) is an area that is untapped because we do not have the technology for it. You need the right vessel to keep up with the fast-swimming fish and the knowledge on how to handle them," he told The Brunei Times.

"You also need the sonar equipment to detect where the fish is and long lines because it would otherwise be impossible for you to catch up with them," he said.

According to him, companies from Thailand, Vietnam and Hong Kong have attempted the task but were unsuccessful due to lack of technology.

"This is because Zone 4 is the deepest and outer most end in Brunei waters," he said, adding that information given by Ministry of Industry and Primary Resources has shown the area to be full of untapped opportunities.

BCFA Vice President Dr Md Firdaus Abd Rahman said that the companies are trying to find out more information about Brunei's deeper waters before moving forward.

"A lot of investment is required in the area of deep sea fishing so they (Chinese companies) need more information about it (deep sea) from the Fisheries Department. It is still workable but the companies need more statistics," he said.

The visiting media comprised representatives of the China Central Television, China News Service, Peoples Daily, Guangxi Television, and Nanning Television.

During the interview, Dr Hj Kamaruddin highlighted that Brunei and China need to ease regulations to give more room for businesses to penetrate their respective markets. By doing so, he said that industries such as tourism would flourish even more.

He also said that China could also help Brunei in its effort to diversify its economy from the oil and gas industry and its bid to ensure food security and reduce dependency on imports.

He said that over 50 local companies and individuals have made enquires on business processes and opportunities in the world's second largest economy.

There has been strong indication showing immediate interest from China for Brunei's liquefied natural gas but this would depend on how well the Sultanate can cope with China's massive demand, he said.

China has pursued its soft power agenda through the establishment of the Asean-China Free Trade Area, which came into force in 2010. In 2012, trade between China and Asean amounted to US$400 billion while bilateral investment reached US$100 billion. China has also provided scholarship and training opportunities to students and government officials from Asean member countries.

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Gold bubble: Paranoid investors pushed gold to $1,900 an ounce in 2011, but the bubble has burst

The Shine Is Off

Gold bars are seen at the Czech Central Bank on September 05, 2011, in Prague.

Photo by Michal Chizek/AFP/Getty Images

The run-up in gold prices in recent years—from $800 an ounce in early 2009 to above $1,900 in the fall of 2011—had all the features of a bubble. And now, like all asset-price surges that are divorced from the fundamentals of supply and demand, the gold bubble is deflating.

At the peak, gold bugs—a combination of paranoid investors and others with a fear-based political agenda—were happily predicting gold prices going to $2,000, $3,000, and even to $5,000 in a matter of years. But prices have moved mostly downward since then. In April, gold was selling for close to $1,300 per ounce—and the price is still hovering below $1,400, an almost 30 percent drop from the 2011 high.

There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015.

First, gold prices tend to spike when there are serious economic, financial, and geopolitical risks in the global economy. During the global financial crisis, even the safety of bank deposits and government bonds was in doubt for some investors. If you worry about financial Armageddon, it is indeed metaphorically the time to stock your bunker with guns, ammunition, canned food, and gold bars.

But, even in that dire scenario, gold might be a poor investment. Indeed, at the peak of the global financial crisis in 2008 and 2009, gold prices fell sharply a few times. In an extreme credit crunch, leveraged purchases of gold cause forced sales, because any price correction triggers margin calls. As a result, gold can be very volatile—upward and downward—at the peak of a crisis.

Second, gold performs best when there is a risk of high inflation, as its popularity as a store of value increases. But, despite very aggressive monetary policy by many central banks—successive rounds of "quantitative easing" have doubled, or even tripled, the money supply in most advanced economies—global inflation is actually low and falling further.

The reason is simple: While base money is soaring, the velocity of money has collapsed, with banks hoarding the liquidity in the form of excess reserves. Ongoing private and public debt deleveraging has kept global demand growth below that of supply.

Thus, firms have little pricing power, owing to excess capacity, while workers' bargaining power is low, owing to high unemployment. Moreover, trade unions continue to weaken, while globalization has led to cheap production of labor-intensive goods in China and other emerging markets, depressing the wages and job prospects of unskilled workers in advanced economies.

With little wage inflation, high goods inflation is unlikely. If anything, inflation is now falling further globally as commodity prices adjust downward in response to weak global growth. And gold is following the fall in actual and expected inflation.

Third, unlike other assets, gold does not provide any income. Whereas equities have dividends, bonds have coupons, and homes provide rents, gold is solely a play on capital appreciation. Now that the global economy is recovering, other assets—equities or even revived real estate—thus provide higher returns. Indeed, U.S. and global equities have vastly outperformed gold since the sharp rise in gold prices in early 2009.

Fourth, gold prices rose sharply when real (inflation-adjusted) interest rates became increasingly negative after successive rounds of quantitative easing. The time to buy gold is when the real returns on cash and bonds are negative and falling. But the more positive outlook about the U.S. and the global economy implies that over time the Federal Reserve and other central banks will exit from quantitative easing and zero policy rates, which means that real rates will rise, rather than fall.

Fifth, some argued that highly indebted sovereigns would push investors into gold as government bonds became more risky. But the opposite is happening now. Many of these highly indebted governments have large stocks of gold, which they may decide to dump to reduce their debts. Indeed, a report that Cyprus might sell a small fraction—some 400 million euros ($520 million) —of its gold reserves triggered a 13 percenet decrease in gold prices in April. Countries like Italy, which has massive gold reserves (more than $130 billion), could be similarly tempted, driving down prices further.

Sixth, some extreme political conservatives, especially in the United States, hyped gold in ways that ended up being counterproductive. For this far-right fringe, gold is the only hedge against the risk posed by the government's conspiracy to expropriate private wealth. These fanatics also believe that a return to the gold standard is inevitable as hyperinflation ensues from central banks' "debasement" of paper money. But, given the absence of any conspiracy, falling inflation, and the inability to use gold as a currency, such arguments cannot be sustained.

A currency serves three functions, providing a means of payment, a unit of account, and a store of value. Gold may be a store of value for wealth, but it is not a means of payment; you cannot pay for your groceries with it. Nor is it a unit of account; prices of goods and services, and of financial assets, are not denominated in gold terms.

So gold remains John Maynard Keynes' "barbarous relic," with no intrinsic value and used mainly as a hedge against mostly irrational fear and panic. Yes, all investors should have a very modest share of gold in their portfolios as a hedge against extreme tail risks. But other real assets can provide a similar hedge, and those tail risks—while not eliminated—are certainly lower today than at the peak of the global financial crisis.

While gold prices may temporarily move higher in the next few years, they will be very volatile and will trend lower over time as the global economy mends itself. The gold rush is over.

Goay Joe Lie

Director of Joe Lie Beauty And Cosmetics

Are Chinese Bad Global Guests?

Could the biggest threat to China's image be its own citizens when they work and travel abroad? It's a question that's been the subject of a noisy public debate in recent days as the country learned that more than 160 Chinese miners in Ghana had been arrested -- and were soon to be deported -- for a range of illegal and destructive activities.

The accounts were greeted with shock, anger and an unusual degree of introspection, in large part because China has spent the last decade reaching out to Africa, hoping that economic assistance and diplomatic cooperation can result in friendship. News that stories of renegade Chinese miners were prominent in Ghana over the last several weeks was thus not only unwelcome but also a rude reminder of how China's aspirations for international respectability can be undone by its citizens' behavior.

The nationalist, Communist Party-owned Global Times newspaper, rarely an oracle of self-examination, made such a point in a June 7 editorial: "This incident alerts us once again that China has risen and achieved national power, but it is far from solid. In order to make a living there are many Chinese who would still like to take the risks that the elder generations have taken, and illegally enter countries, illegally obtain employment and do illegal businesses. They're not able to connect their personal struggle to China's rise."

The Chinese Mining Association in Ghana estimates that more than 50,000 Chinese gold miners have moved to Ghana since 2005, with the Chinese Ministry of Foreign Affairs estimating there are currently between 20,000 and 30,000 Chinese mining there. Roughly 12,000 miners came from poor Shanglin county since 2006, according to the state-owned Xinhua newswire. (The mining association estimates that as many as two thirds of all miners since 2005 came from the county.) In any case, it's not clear why so many people from that region chose Ghana, but once they found it, they succeeded. According to a widely circulated May 15 report in China 21st Century Business Herald, Shanglin miners wired more than $150 million home in May and June 2011.

It would be a happy story but for a few problems. First, according to media reports, many of the Chinese miners are in Ghana on tourist visas (with entry sometimes facilitated by corrupt immigration officers). Second, Ghanaian law restricts licenses for "small scale mining" of the sort favored by Chinese prospectors only to Ghanaians. Many Chinese miners manage to rent licenses, or enter into partnerships, thereby circumventing the law while inciting intense local resentment. It doesn't help that the Chinese miners use techniques that are efficient but low-tech and damaging to the environment and farmland. Personal conduct, meanwhile, is also an issue, with reports of widespread prostitution in Chinese miner camps.

On Chinese social media, neither the allegations nor the resulting crackdown was that surprising. In contemporary China, rare is the financially successful businessperson (or politician) who isn't subject to whispers about what backroom deal made his or her fortune possible. This phenomenon has only been intensified by China's ongoing corruption crackdowns and the many media stories about crooked politicians and their fortunes.

Zhang Tianwei, a well-known television commentator and columnist at the Communist Party-owned Beijing Youth Daily, used his account on Sina Weibo, the country's leading social-media platform, to connect stereotypes about Chinese corruption to the Shanglin miners in a June 9 tweet: "We can absolutely imagine what these Shanglinese have done in Ghana, and the image that the locals now have of them: smart, cunning and unruly with a tendency to exploit loopholes. In places with laws, they exploit the legal loopholes; in places without laws, they are just like ducks to water. The local people aren't able to compete with them in business and finally get outraged and drive them out."

Even the most nationalistic papers -- including the hard-line Global Times -- have avoided outright defenses of the miners, much less calls for the government to intervene beyond diplomacy. The foreign ministry reacted to the detention of 124 Chinese miners by lodging "representations" -- a Chinese diplomatic euphemism for a stern letter -- to the Ghanaian government and, after negotiating with the authorities, arranging for miners to be transported back to China.

Unfortunately, representations and diplomacy, especially when Chinese citizens or territory are at stake, often irritate the country's microbloggers more than placate them. Some microbloggers were reminded of China's careful approach to its dispute with Japan over the Diaoyu Islands (known to the Japanese as the Senkaku Islands) and its humiliations at the hands of colonial powers during the 19th and 20th centuries.

A characteristic version of this line of thinking was tweeted June 8 by an anonymous Sina Weibo user in Suzhou: "Our compatriots mining for gold are bullied in Ghana, and the government, without any sympathy, doesn't protect them and declares that their behavior is illegal. You say that the dispute over the Diaoyu Islands will be left to future generations to solve. What can you do as the world's second biggest economic entity? During the Qing Dynasty, China was the biggest economic entity but still got bullied! Without some ideas and guts, will these weak countries really respect you?"

Some of the country's most influential news media -- both independent and Communist Party-directed -- have run editorials that push back against such patriotic, microblogged fervor with reminders that Chinese abroad are obligated to respect local customs and laws. Though often unstated, Chinese readers will recognize these warnings as related to the national discussion over the occasionally poor behavior of Chinese tourists at home and abroad (a concern recently voiced by one of China's deputy prime ministers).

Chen Bing, writing for the independently minded, Communist Party-supervised Beijing News, made this comparison in a June 7 commentary: "Another point we should consider in this 'tragedy' is whether we are reasonable and our behaviors fit international norms. Many Chinese who go to Ghana to mine gold enter the country using tourist visas and don't have permission to work there. Since they are behaving in an illegal manner, and the locals are merely carrying out their laws, to some degree there is no ground for blame. So whether people go to Europe, America, Africa or Latin America, they should have the sense to obey their laws."

This week, the detained miners (more than 40 additional Chinese were arrested after the initial 124 that set off the furor) will begin an involuntary journey back to China, with the assistance of their government. For the immediate future, they're the public face of China's engagement with developing Africa. That doesn't need to remain the case, however: The many thousands of Chinese miners they leave behind in Ghana are more than capable, if not willing, to change their ways. For the sake of China's shaky global image, their government and compatriots can only hope they will.

(Adam Minter, the Shanghai correspondent for the World View blog, is writing "Junkyard Planet," a book on the global recycling industry. The opinions expressed are his own.)

Goay Joe Lie

Director of Joe Lie Beauty And Cosmetics