Sunday, November 27, 2011

Banks prepare Plan B in case euro zone splits; 10 things to do in Kerala; Neuroeconomics revolution; Time up for the necktie

1 International Herald Tribune on banks preparing a Plan B in case euro zone splits. For the growing chorus of observers who fear that a break-up of the euro zone might be at hand, Chancellor Angela Merkel of Germany has a pointed rebuke: It’s never going to happen. But some banks are no longer so sure. On Friday, Standard & Poor’s downgraded Belgium’s credit standing to AA from AA+. Ratings agencies this week cautioned that France could lose its AAA rating if the crisis grew. On Thursday, agencies lowered the ratings of Portugal and Hungary to junk. While European leaders still say there is no need to draw up a Plan B, some of the world’s biggest banks, and their supervisors, are doing just that. “We cannot be, and are not, complacent on this front,” Andrew Bailey, a regulator at Britain’s Financial Services Authority, said this week. Banks including Merrill Lynch, Barclays Capital and Nomura issued a cascade of reports this week examining the likelihood of a break-up of the euro zone.

2 The Telegraph on IMF drafting an $800bn bailout plan for Italy and Spain. The International Monetary Fund is being lined up potentially to help Italy and Spain amid growing fears that a European rescue scheme will not be able to prop up the countries. Reports in Italy suggested that the IMF is drawing up plans for a €600 billion (£517 billion) assistance package for the country. Spain may be offered access to IMF credit, rather than a rescue package, to avoid it being “picked off” by the markets in the coming weeks.

3 The BBC quoting Lonely Planet about the top 10 activities in Kerala, which are: Cruise the backwaters, live it up in Munnar, photograph Kochi’s fishing nets, get beached in Varkala, embrace Ayurveda, watch a Kathakali show, know your spices, meet Periyar’s tigers, learn your Kalarippayat moves, and get a taste of Malabar. (They forgot one of the key activities in Kerala, namely hartal-watching. In fact, there are a couple today in different districts, to draw attention to the ‘perilous’ state of the Mullaperiyar dam.)

4 Al Jazeera on the neuroeconomics revolution. Economics is at the start of a revolution that is traceable to an unexpected source: medical schools and their research facilities. Neuroscience - the science of how the brain, that physical organ inside one's head, really works - is beginning to change the way we think about how people make decisions. These findings will inevitably change the way we think about how economies function. In short, we are at the dawn of "neuroeconomics". The neuroeconomic revolution has passed some key milestones quite recently, notably the publication last year of neuroscientist Paul Glimcher's book Foundations of Neuroeconomic Analysis - a pointed variation on the title of Paul Samuelson's 1947 classic work, Foundations of Economic Analysis, which helped to launch an earlier revolution in economic theory.

Much of modern economic and financial theory is based on the assumption that people are rational, and thus that they systematically maximise their own happiness, or as economists call it, their "utility". When Samuelson took on the subject in his 1947 book, he did not look into the brain, but relied instead on "revealed preference". People's objectives are revealed only by observing their economic activities. Glimcher is skeptical of prevailing economic theory, and is seeking a physical basis for it in the brain. He wants to transform "soft" utility theory into "hard" utility theory by discovering the brain mechanisms that underlie it.

5 The Dawn on Kolaveri di’s meaninglessness making the flop song a hit song. Anna Wulf, the Dorris Lessing creation who struggles for deeper honesty by ridding herself of the nonsense around, observes at the beginning of The Golden Notebook: ‘the point is, that as far as I can see, everything’s cracking up. In Wulf’s time and ours, as far as we can see, everything is cracking up. Anxiety is the prevailing global mood. Widely felt anxiety is a modern unease. It often emerges from the rubbles of damaged reason. There are limits to human reason, especially collective human reason. Stalin, Hitler, Mao and humanitarian practitioners of liberal democracy in more recent times have done us a service by repeatedly exposing the limits of collective human reason. As people lose hope in the prose of modernity, they recoil with anxiety. The cunningness of reason inspires us to the ‘Why’ question even when we know an answer isn’t around. The kolaveri di phenomenon has become a rage because it speaks to that cunning habit. Asking why the soup song, the flop song, has become so popular is also, circularly, the reason why it is so popular. What else, and I fall in the trap here, explains the exponential growth in its popularity now that people know what kolaveri di means: it really means nothing.

But it must mean something if, in just over a week, over four and a half million people find an apparent nothingness interesting. The key cultural message of the surprise may be that it is serving two functions. First, it is establishing that we live anxious lives. Second, by going viral we are also trying to heal our anxious selves. There is often so much meaning around – created, contested, demolished, recreated – that we feel it is good to transition into zones of no-meaning; to zones where meaning is absent. Kolaveri di is one such zone of no-meaning.

6 PG Bhaskar in Khaleej Times, wondering whether the necktie has outlived its purpose. I have never shared this fascination for a tie. Possibly, at some time in an ancient era – whether British, French or Italian — it may have served some purpose; though I have serious doubts whether Roman orators’ vocal chords could have in any way been protected by a garment draped around their necks. And yet, man clings on to this utterly worthless piece of appendage. In this age of global warming, there is no need for any kind of protective wear. And day after day, we have men spending time in front of the mirror struggling with the momentous decision of whether to deploy the single knot or simply plunge into it, go for the jugular and go in for the double. Why, in this enlightened world, do we strangle ourselves with a piece of silk every morning? We, as a race, believe in making things difficult for ourselves. Over the years, many things have changed; our taste in food, our choice of entertainment, our manner of communication, our methods of transport, our styles of shopping and living. So, please, let us open our minds and relieve our throats from this meaningless throttle.

7 The Wall Street Journal on why India can’t feed its children. It was almost exactly 10 years ago that Goldman Sachs first came up with the term “BRICs.” Since then, Brazil, Russia, India and China have seen impressive growth figures and improved standards of living. But when it comes to feeding its children, India has fared the worst. In 2006, around 40% of Indian children under the age of five were undernourished. Rates of childhood malnutrition have been improving “extremely slowly” in India, says Lawrence Haddad, director of the UK-based Institute of Development Studies. Considering the country’s rapid economic growth, malnutrition should be going down by two-to-three times the current rate, he adds. Young girls, who are often allowed to eat only after their brothers, are particularly vulnerable, he notes. There is a peculiarity about India: here, agricultural growth hasn’t resulted in improved childhood nourishment. This is something that baffles Mr. Haddad. “In India the two seem to be disconnected and we don’t know why.” A possible explanation is that not enough has been done policy-wise.

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