UN and partners seek $34 million to assist drought-stricken Guatemalans

The United Nations, together with the Guatemalan Government and aid partners, today launched a $34 million appeal to counter food shortages affecting 2.7 million people living in the Central American country’s so-called ‘dry corridor,’ which even before last year’s drought had one of the highest rates of chronic malnutrition in the world.

UN sets up human rights group to look into situation of Haiti’s disabled

A working group comprising United Nations experts has been created to look into the situation of Haitians with disabilities, who have been disproportionately affected by January’s catastrophic earthquake.

Today on New Scientist: 5 March 2010

All today’s stories from newscientist.com at a glance, including: how to speak microbe, why tobacco-funded studies are bad for us, and why it’s a good idea to smile

Racism Thrives on US Campuses: Univerisity of California at San DiegoStudents Protest Threats

Following String of Racist Incidents, UC San Diego Students Occupy Chancellor’s Office

Crowds of students stormed and occupied the office of a University of California, San Diego chancellor for six hours Friday after a noose was found hanging from a bookcase in the main library. The noose is only the latest in a string of incidents over the past few weeks.

Protests were initially sparked by an off-campus party last month they called “Compton Cookout” that mocked Black History Month and denigrated African American women. UC San Diego has the smallest percentage of African American students in the nine-campus UC system. The Black Student Union at UC San Diego has declared the campus climate for racial minorities to be in a “state of emergency.”

Guests:
Daniel Widener, associate professor of history and faculty director of the African American Studies minor at UC San Diego

Fnann Keflezighi, co-chair of the UC San Diego Black Student Union

AMY GOODMAN: We go now to California, where crowds of students stormed and occupied the office of a University of California, San Diego chancellor for six hours Friday after a noose was found hanging from a bookcase in the main library. The incident prompted angry protests from students across the UC-wide system and denunciations from UC President Mark Yudof and California Governor Arnold Schwarzenegger. The unidentified student who admitted to hanging the noose was suspended.

But racial tensions still run deep at UC San Diego, where the noose is only the latest in a string of incidents over the past few weeks. Protests were initially sparked by an off-campus party last month they called “Compton Cookout” that mocked Black History Month and denigrated African American women.

UC San Diego has the smallest percentage of African American students in the nine-campus UC system. The Black Student Union at UC San Diego has declared the campus climate for racial minorities to be in a, quote, “state of emergency.” The students called on the university to increase its stated commitment to diversity by recruiting more students of color and providing greater support for ethnic studies departments and resource centers for underrepresented students.

For more, I’m joined now in San Diego by the co-chair of the Black Student Union from the University of California, San Diego, Fnann Keflezighi, and Daniel Widener, associate professor of history and faculty director of the African American Studies minor at UC San Diego. He co-authored a letter from the African American faculty expressing their, quote, “disgust at the racist and misogynist events” and calling on the university administration to provide the necessary resources to improve the climate on campus.

We’re going to start with Daniel Widener, director of the African American Studies minor at UC San Diego. Just further explain these events, please.

DANIEL WIDENER: Well, good morning, Amy.

I think the most important thing for viewers and listeners to understand is that the students are battling not only a campus climate of intense hostility, that Fnann will also detail, but a tremendous amount of history. California voters have passed a series of racist initiatives, really over the last forty years, opposing fair housing, dismantling affirmative action, criminalizing youth, attempting to criminalize undocumented immigrant populations. So there’s really a social basis for an intense racism that aims to maintain black people as a surplus population to be jailed and Latino people as a disposable population to be kept as a semi-permanent socioeconomic underclass. So, education is a critical part of that. And on a campus where our numbers are almost a statistical anomaly, we face just a tremendous amount of both neglect and active hostility.

AMY GOODMAN: Fnann Keflezighi, co-chair of the UC San Diego Black Student Union, these most recent events—can you start off by explaining what the so-called Compton Cookout was?

FNANN KEFLEZIGHI: So, the Compton Cookout, which was hosted and organized by different UCSD students, was in honor of Black History Month, and it was basically making a mockery of everything that we were celebrating for Black History Month on our campus and allowing students to experience the ghetto and different aspects of the ghetto by dressing a certain way and eating certain food and listening to certain music. But they definitely described what students should wear in a very detailed and dehumanizing and demoralizing way. We were all very shocked to read the description, as well as very—a lot of other students and faculty and staff. A lot of folks thought it was a joke at first, but the party did happen that Monday.

AMY GOODMAN: I’m just amazed as I look at this Facebook invitation that urged women to dress as “ghetto chicks” who, quote, “usually have gold teeth, start fights and drama, and wear cheap clothes.” It said the menu would include chicken and watermelon?

FNANN KEFLEZIGHI: Mm-hmm.

AMY GOODMAN: And then you have—

DANIEL WIDENER: Yeah, that’s right.

AMY GOODMAN: Professor Widener?

DANIEL WIDENER: No, no, no. I just wanted to say that that was really only the first of a string of subsequent incidents, and it’s important for people to understand that those incidents continue and that new ones are coming to light.

We had a student who had trash thrown on her in the residence hall. We’ve had students intimidated in large lecture courses, where you may have four or five hundred students and may have one or two African Americans, at most. We had, of course, the incident that people have heard about of the noose being hung in the library. And we’ve had some off-campus incidents in restaurants and other public spaces.

So, our position, our feeling, is that the climate is worsening for students and that students are expressing tremendous concern about their safety, a fear of attending classes, a fear of being on the campus. And we get word now of the beginnings of a really racist counter-mobilization aimed at repudiating the suggestions, the demands that the students have made for how to implement a better campus climate. So the situation really is polarizing between the people who see these outbreaks of racist hostility as a problem or an embarrassment and people who are prepared to defend them.

AMY GOODMAN: And the fact that UC San Diego has the smallest percentage of African American students in the nine-campus UC system, Fnann, do you think that this has anything to do with what’s going on right now?

FNANN KEFLEZIGHI: Most definitely. The UC president, Mark Yudof, addressed to the chancellor in June that she needed to fix the situation for African American students on the campus, because although the incidents are coming to light now, a lot of incidents like this have happened in the past, and it’s just a very hostile environment for African American students and underrepresented students on an everyday basis in the previous years. So I think that her lack of action to Mark Yudof telling her to take action in June is why we are in the state we are in now, as well as—the Black Student Union wrote a report called the “Do UC Us?” report in September and talked about—there was testimonies talking about how bad the climate was for African American students and made recommendations on how to fix that back in September.

AMY GOODMAN: And Professor Widener, what do you think of the administration’s response and what needs to be done right now?

DANIEL WIDENER: Initially, when asked, I called the administration’s response tepid. And I’d like to stand by that statement. I think that the university has recognized that there’s a problem, but it has yet to commit itself fully to implementing the kinds of solutions that have been laid out, not simply by the students in their “Do UC Us?” document, which does have testimony, which does have suggestions, but also a history of reports initiated by Latino faculty, by African American faculty, by multi-ethnic groups of faculty. There was a 2007 yield report aimed at democratizing and diversifying the campus.

So this has been a subject of study, but it’s never been a situation where the university would commit itself to allocating resources, funding students, scholarships for students, outreach and yield, and the kinds of things that would produce a student body, a population, reflective of our state, reflective of the diversity of our state, and where the students would not feel outnumbered. We should not have a situation where every student knows every other student by name. This is not a small liberal arts college. We have 24,000 undergraduates. So I think that the research has been done. The question is whether or not the university has the will to make the choices that will prevent these kinds of incidents in the future and in the present.

AMY GOODMAN: And the significance of, well, this being a decade after a California ballot proposition barred the use of race and ethnicity in admissions decisions, University of California continues to struggle to diversify its campuses. Black and Latino enrollment has plummeted.

DANIEL WIDENER: Yes, I think that it has to be said that the students have launched a battle against the resegregation of higher education. It’s a battle that’s tied to the privatization of higher education, the idea that only those who can afford a top-grade education should receive one, and that those should be the people who are the doctors, the attorneys, the chemists, and the other professional class for the future. And what the students have put on the line is the idea that a sixty- or seventy-year-old African American man could have a doctor who looks like him to talk about prostate cancer with, that a Latino who is accused of a crime could have an attorney who could communicate with her in her defense, that these students are fighting not just for the UC campuses, not just for UC San Diego, but for the future of people of color in this state.

And I think that it’s very important that people throughout the country try to do what they can to mobilize to help us, whether that’s emailing our chancellor, chancellor(at)ucsd.edu, calling her office at (858) 534-3135, or looking at a website that the students have put out called stopracismucsd.wordpress.com. These are all things that people can do immediately now to help us build pressure for change.

AMY GOODMAN: And Fnann, finally, there are major protests planned, is this right, for Thursday?

FNANN KEFLEZIGHI: Thursday is March 4th, which is actually a statewide day of action for educational justice and educational equality. It’s been planned for months now. And so, we definitely think that the situation that’s at hand right now with the campus climate at UCSD ties into March 4th and what March 4th is standing for and what it’s fighting for.

AMY GOODMAN: Well, I want to thank you both for joining us. Professor Widener, Daniel Widener, associate professor of history and faculty director of the African American Studies minor at UC San Diego, and Fnann Keflezighi, co-chair of the UC San Diego Black Student Union, thank you for joining us.

UCSD students, allies mobilize against racist attacks

By Bob McCubbin
San Diego, Calif.
Published Mar 4, 2010 9:18 PM

Racist students on the San Diego campus of the University of California recently organized and publicized a sickening social event. Emboldened by increasingly common racist rants on the part of corporate media talking-heads, the coded racist outbursts of right-wing politicians, and the historic policies of discrimination and repression directed against communities of color and immigrant workers all across the U.S., they made no effort to disguise the racially offensive character of their “Compton Cookout” party, which took place on Feb. 15.

Compounding the offense, and clearly demonstrating that it was in no way “an isolated event,” several days later the student-run television station aired a defense of the racist social event that included a racial slur. Additionally, the student who took public responsibility for the original event defiantly announced a second “cookout.” And then on Feb. 25, a noose was found hanging on the seventh floor of the campus’s main library.

As word of the original event spread locally and nationally, the initial official and unofficial apologetics (it was “off campus,” “protected speech” and even “a harmless spoof”) gave way to promises by the school administration to work for a better climate of “respect for diversity” and the announcement of an administration-sponsored, campus-wide teach-in on Feb. 24. The outraged campus community, however, wasn’t waiting for belated band-aids at a school whose African-American student enrollment constitutes only 1.3 percent of the total school undergraduate enrollment of 23,143.

Students marched and gathered the day following the offensive campus TV program to confront UCSD Chancellor Marye Anne Fox and other school administrators. Earlier that morning, while searching for a tape or digital file of the offensive TV program in the station studio, they had found a piece of cardboard with the words “Compton lynching” written on it.

Black students at the meeting with the chancellor stated that they feel neither safe nor welcome at UCSD. Their leaders issued a list of 32 demands.

Titled “State of Emergency: The UCSD Black Student Union Address,” the preface to the demands states, “Students in general feel isolated and unsupported, which contributes to the continuous cycle that prevents underrepresented communities from entering the university. For students of color, queer-identified students, and students from low socio-economic backgrounds, this has been a continuous struggle to validate our own presence at the university academically and socially.”

The preface also expresses support for the struggle of Latino/a students to have a Chicano mural placed on campus and for the struggle of Native American students to repatriate ancestral remains found on campus.

Prominent among the students’ demands is the insistence that serious attention be paid to and funds found for recruitment and retention programs that focus on students of color, the disadvantaged, first generation students and, in general, historically underrepresented populations. There must also be, the students continue, “strong institutional support for academic programs that contribute to an improved campus climate.”

The statement concludes, “We demand that the administration respond to these demands on March 4th. … We expect all of administration to be out on Library Walk on that Thursday to state their message on these demands while allowing the students to respond back.”

Almost daily protests on campus and statements of support for and solidarity with African Americans have come from many student groups, including the Chicano campus organization MEChA, medical, fine arts and lesbian, gay, bi, trans, queer students, and campus staff and professors.

At a student rally Feb. 24 preceding the teach-in organized by the school administration, David Richerson, the Black Student Union chairperson at UCSD, announced a state of emergency “to address the hostile and toxic environment on campus.”

Following that rally, an overflow crowd estimated at more than 2,000, and including students from other area schools and from as far away as Los Angeles, gathered at the site of the administration-organized teach-in. It turned out to be basically a long-winded, academic discussion of institutional racism and how to combat it. Midway through the program, an angry walkout led by Black students and their supporters left only a few hundred in the hall.

Fnann Keflezighi, vice chairwoman of the Black Student Union, spoke at a student rally following the walkout and denounced the teach-in as an attempt by the administration to silence the students. She expressed disbelief that the school administration really intended to do anything significant to rid the campus of racism and pointed out that there has been a long history of racial tension on the campus.

Two days later, following the discovery of the noose hanging in the campus library, there was another student rally and a takeover of the chancellor’s office. Several professors have called for the campus to be shut down until the safety of students of color can be guaranteed. As of March 1, students plan to continue meeting with the school administration to pressure for full implementation of their demands.
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Window of opportunity for stability in Guinea-Bissau must not be missed - UN envoy

Following the upheaval experienced in 2009 when a series of political assassinations threatened security and stability in Guinea-Bissau, current conditions bode well for progress towards peace and prosperity in the West African nation, a top United Nations official said today.

Secretary-General meeting with leaders in quake-ravaged Chile

Secretary-General Ban Ki-moon will meet today with Chilean President Michele Bachelet and President-elect Sebastián Piñera, who takes office on 11 March, as part of a two-day visit to see the earthquake damage and assess how the United Nations can help.

Marley Family to Grace Zimbabwe 30th Anniversary Independence Concert

Marley Family to Grace Zimbabwe Indepedence 30th Anniversary Concert

By Jairos Saunyama
Zimbabwe Herald

The family of the late reggae legend Bob Marley is expected to grace a concert to commemorate Zimbabwe’s 30th Independence anniversary at the Glamis Stadium in Harare on April 17.

The family, which includes the talented Ziggy, Damian, Sharon, Steve, Julian and Cedella, has confirmed the trip.

Show organiser Patrick Hundu of Studio City said the Marleys were coming to perform at this year’s Independence celebrations in the same manner their father was part of the festivities at the birth of an independent Zimbabwe in 1980.

“We were blessed as a nation when reggae icon Robert Nesta Marley came to perform in Zimbabwe at Rufaro Stadium on the 18th of April 1980.

“Now 30 years later, we continue to smile and reaffirm that we will never be a colony again.

“And we want the whole world to know as we call on our comrades and friends in the Diaspora to come and celebrate with us and the Marley Family, as they have already indicated strong interest in coming to perform in Zimbabwe,” he said.

The celebrations, to be held under the theme “Together As One”, will also see a Chinese Army Band performing to symbolise the good relations between China and Zimbabwe.

Zimbabwe and China are this year celebrating the 30th anniversary of their diplomatic ties.

The Marley Family will perform alongside Zimbabwe’s man of the moment Stunner, Leonard Mapfumo and Sulumani Chimbetu, among others.

Their visit will follow that of another Jamaican musician, Sizzla Kalonji, who performed at the 21st February Movement gala in Bulawayo and held a number of other shows in Harare.

Another Jamaican, dub poet and reggae star John Sinclair aka Yasus Afari, is billed to perform at this year’s Harare International Festival of the Arts.

The Chinese-Zimbabwean ties will also be celebrated with an exhibition where the two countries will showcase their cultures, including the traditional foods.

A soccer match between Zimbabwe’s Warriors and the Chinese national team is part of the entertainment programme.

The Ministry of Youth Development, Indigenisation and Empowerment is co-ordinating the event.

Greece News Update: Thousands Protest As Parliament Debates EconomicCrisis

MARCH 5, 2010, 8:47 A.M. ET

Greece Debates Budget Cuts As Thousands Protest

By Alkman Granitsas
Of DOW JONES NEWSWIRES

ATHENS (Dow Jones)–The Greek parliament Friday continued to debate the government’s recently announced austerity package as workers around the country walked off the job in a series of hastily announced strikes to protest the measures.

Outside parliament, a tense protest of several thousand people was
marred by violence when youths attacked and injured the head of
Greece’s largest union, private-sector GSEE, as he was delivering a
speech at a rally.

There were also clashes in two separate, small-scale incidents in
which several dozen protesters scuffled with police, hurling
projectiles while police responded with teargas.

In a nod to the protests and strike actions taking place around the
country, Greece’s finance minister acknowledged that public discontent was understandable.

“Will we have to take other measures? No. These measures are enough if we implement them and we will,” Papaconstantinou said in parliament ahead of a vote on the package, which is expected later Friday.

Although recent public opinion polls show general support for the
government, one poll released by privately owned SKAI television
Friday, shows that 62% of Greeks expect social unrest in the country
to rise. But the same poll shows that 78% of respondents think the
austerity measures will be implemented nonetheless.

Around the country, services were disrupted by a 24-hour strike
affecting public transport in the country’s two major cities that
snarled traffic in parts of central Athens.

Rail workers, teachers, journalists at the state-owned television
station and news agency, as well as hospital doctors, utility workers
and some local government staff have also declared a day of protest.

Coinciding with their rally, GSEE and its public sector counterpart,
ADEDY, have also called a three-hour work stoppage for Friday, which has affected some banks and the national phone company, while more than a dozen flights have been canceled by Greece’s two airlines, Olympic Airlines and Aegean Airlines SA (AEGN.AT), because of a walkout by air traffic controllers.

Speaking to reporters at the rallies, the heads of the two unions
announced plans for a 24-hour general strike as soon as next week.

“We have decided to hold a joint 24-hour general strike on March 11,”
Spyros Papaspyros, the head of the civil servants union ADEDY, told
Dow Jones Newswires. But a previously announced March 16 strike by ADEDY alone has been called off.

The protest comes two days after Greece’s socialist government–under pressure from the European Union and financial markets–announced an EUR4.8 billion austerity package as it aims to cut its budget deficit to 8.7% of gross domestic product this year, from an estimated 12.7% last year.

The latest austerity measures, part of a series of packages aimed at
slashing Greece’s deficit, are also widely seen as a precondition for
any possible European Union aid for the country.

On Friday, Greek Prime Minister George Papandreou met in Luxembourg Jean-Claude Juncker, head of the Eurogroup forum of euro-zone finance ministers, before meeting German Chancellor Angela Merkel in Berlin later Friday.

The visits are part of a five-day, whistle-stop tour of foreign
capitals by Papandreou that comes as the Greek government struggles to fix its public finances amid talk of a possible rescue plan for the country.

Apart from the meeting with Merkel, which will be closely watched for
signs of an aid package, Papandreou is also scheduled to meet Sunday French President Nicolas Sarkozy in Paris, and Tuesday with U.S. President Barack Obama in Washington.

In his remarks to parliament, Papaconstantinou called on Greece’s
European partners to live up to their obligations.

“Obviously, the European Union must live up to its responsibilities
and it is not doing it,” he said, adding that no specifics of the
rescue plan have been forthcoming even though the Greek government has pressed ahead with ever-tougher deficit cuts.

In a further sign of protest against the measures, Greece’s Communist Party withdrew from the parliamentary debate Friday as its 21 parliamentarians walked out of parliament.

“There is nothing to debate about these measures,” said Communist
Party head Aleka Papariga. “We are withdrawing from the debate. The issue will be judged on the streets.”

-By Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881;
alkman.granitsas@dowjones.com

Merkel pledges to stand by Greece

German Chancellor Angela Merkel has pledged to “stand helpfully by
Greece’s side” but her economy minister said Germany would not offer a cash bailout.

Mrs Merkel was speaking ahead of a meeting in Berlin with Greek Prime Minister George Papandreou.

He is facing increased pressure at home as Greece’s two main unions have called a new general strike.

The strike, on 11 March, is to protest against austerity cuts the
unions say are “anti-popular” and “barbaric”.

Public sector workers are currently striking, and rock-throwing
protestors outside parliament have clashed with police, who used tear gas to disperse them.

BBC correspondent Malcolm Brabant said the mood on the streets in
Athens had degenerated after three months of relatively mild protests.

TV pictures showed officers spraying gas into the face of veteran
left-winger Manolis Glezos, who is in his mid-80s. Mr Glezos climbed
the wall of the Acropolis to tear down the Swastika during the Nazi
occupation.

On Wednesday, Mr Papandreou revealed further tax rises and spending cuts that have gone down very badly with public sector workers, but could reduce the risk of Greece needing help.

Members of the Socialist-led Greek parliament are set to approve the
austerity measures on Friday.

‘Not a cent’

Despite mounting speculation about an EU bail-out, most Germans oppose giving aid to a country that has misreported budget figures for years to hide its mountain of debt.

Chancellor Merkel has warned that the euro is in the most difficult
phase since its creation.

Few doubt that Mrs Merkel will eventually take action if she sees the
stability - or credibility - of the euro under threat.

But with support for her centre-right coalition slipping, Mrs Merkel
has reassured voters that she will not use taxpayers’ money, nor
breach the “no bail-out clause” in the EU’s Maastricht Treaty.

A recent poll shows that 71% of Germans think the EU should not help Greece at all. You could call it a culture clash. Germans are big
savers, not big spenders.

Mr Papandreou hopes the talks with Mrs Merkel will lead to a German
commitment to provide support if Greece cannot raise money from the markets.

However, reports of potential support for Greece are proving unpopular in Germany as many people do not support their taxes being used for bailouts.

Economy Minister Rainer Bruederle said earlier that his government
“does not intend to give a cent” to Greece in financial aid.

There are also fears that rescuing one country could encourage others to expect the same.

Meanwhile, Germany passed its budget for 2010, with borrowing set to soar this year.

New borrowing is expected to reach 80.2bn euros ($109bn; £72.5bn) - double the previous highest debt record, set in 1996. However this is less than the 85.8bn euros initially proposed by the government.

Raising funds

On Thursday, the Greek government went to the financial markets to
borrow money and saw its 5bn euro ($6.8bn; £4.5bn) bond issue
oversubscribed.

Mrs Merkel welcomed the uptake. “The placement of the bond yesterday went very well and that is of course a good signal for the markets,” she said.

But Greece will need to borrow more in the coming months - more than $70bn for the year as a whole.

Mr Papandreou has suggested that Greece might go to the International Monetary Fund (IMF) for help.

But the other countries in the eurozone would not welcome what would be seen as a sign that they could not fix their own problems.

The president of the European Central Bank, Jean-Claude Trichet, has dismissed the idea of the IMF providing financial aid for Greece.

“I do not trust that it would be appropriate to have the introduction
of the IMF as a supplier of help through standby or through any kind
of such help,” he told reporters in Frankfurt on Thursday.

Mr Papandreou will also meet French President Nicolas Sarkozy in Paris on Sunday before travelling to Washington to meet US President Barack Obama on Tuesday.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8551227.stm
Published: 2010/03/05 13:27:30 GMT

March 5, 2010
Editorial

A.I.G., Greece, and Who’s Next?

As Greece has tottered on the brink of fiscal chaos, threatening to
drag much of Europe down with it, Wall Street’s role in the fiasco has
drawn well-deserved scorn.

First came the news that Greece had entered into derivatives
transactions with Goldman Sachs and other banks to hide its public
debt. Then came reports that some of those same banks and various hedge funds were using credit default swaps — the type of derivative that kneecapped the American International Group — to bet on the likelihood of a Greek default and using derivatives to wager on a drop in the euro.

European leaders have called for an inquiry into the Greek crisis. Ben
Bernanke, the Federal Reserve chairman, has told Congress that the Fed is “looking into” Wall Street’s deals with Greece, and the Justice Department is investigating the euro bets. That is better than turning a blind eye, but it is not nearly enough.

The bigger problem is in America, where markets are supposed to be fair and transparent. These particular — and particularly complicated — instruments are traded privately among banks, their clients and other investors with virtually no regulation or oversight.

The Obama administration and Congress have been talking for a year about fixing the derivatives market. Big banks have been lobbying to block change. And the longer it takes, the weaker the proposed new rules become.

Here are some of the problems that must be fixed:

NO TRANSPARENCY

Derivatives are supposed to reduce and spread risk. In a credit
default swap, for instance, a bond investor pays a fee to a
counterparty, usually a bank, that agrees to pay the investor if the
bond defaults. But because the markets in which they trade are largely unregulated, derivatives can too easily become tools for dangerous risk-taking, vast speculation and dodgy accounting.

A big part of the problem is that derivatives are traded as private
one-on-one contracts. That means big profits for banks since clients
can’t compare offerings. Private markets also lack the rules that
prevail in regulated markets — like capital requirements, record
keeping and disclosure — that are essential for regulators and
investors to monitor and control risk.

That is why it is so essential to move derivative trades onto fully
transparent exchanges. The administration originally embraced that
idea, with exceptions only for occasional, unique contracts. But when
the Treasury proposed legislation in August, it included huge
loopholes, and a derivative reform bill that passed the House in
December has many of the same problems. (The Senate has yet to
introduce a reform bill.)

Both the administration and the House would exclude from exchange
trading the estimated $50 trillion market in foreign exchange swaps —similar to the derivatives Greece used to hide its debt. The rationale for the exclusion never has been clearly explained.

The Treasury proposal and House bill also would exclude transactions that occur between big banks and many of their corporate clients from the exchange trading requirement, ostensibly because those deals are only for minimizing business risks, not for speculation or for window-dressing the books. That’s debatable. But even if true, other derivatives users would almost inevitably find ways to exploit such a broad exemption.

What is clear about the exemptions is that they would help to preserve banks’ profits. What is also clear is that they would defeat the goals of reform: to lower risk, increase transparency and foster efficiency.

LIMITED POWER TO STOP ABUSES

When the House put out a draft of new rules in October, it sensibly
gave regulators the power to ban abusive derivatives — ones that are
not necessarily fraudulent, but potentially damaging to the system.
Derivatives investors who stand to make huge profits if a company or
country defaults, for example, might try to provoke default — a
situation that regulators should be able to prevent. In the final
House bill, however, the ban was replaced with a requirement that
regulators simply report to Congress if they believe abuses are
occurring.

NO STATE REGULATION, EITHER

Current law also exempts unregulated derivatives from state
antigambling laws. That means that states have no power to police
their use for excessive speculation. Treasury and House reform
proposals have called for maintaining the federal pre-emption of state antigambling laws. Pre-emption could be tolerable if derivatives were traded on fully regulated exchanges. But as long as many derivative products and transactions are exempted from fully regulated exchange trading, pre-emption of state antigambling laws is a license for, well, gambling.

The big banks claim that derivatives are used to hedge risk, not for
excessive speculation. The best way to monitor that claim is to
execute the transactions on fully regulated exchanges, pass rules and laws to ensure stability, and appoint and empower regulators with independence and good judgment to enforce compliance.

Without effective reform, the derivative-driven financial crisis in
the United States that exploded in 2008, and the Greek debt crisis,
circa 2010, will be mere way stations on the road to greater
calamities.

Upcoming election ‘decisive moment’ for Iraq, says top UN envoy

The top United Nations official in Iraq says that the parliamentary election this Sunday will mark a turning point for the whole country.

Top UN official spotlights plight of Central African refugees in Cameroon

A senior United Nations official this week sought to raise awareness of the “forgotten tragedy” of ethnic Mbororo refugees from the Central African Republic (CAR), as he stopped in Cameroon, where they are seeking refuge.