Finantial Crisis

Sibylle Dehesdin:
Hello and welcome everyone to this new edition of ECO TV, the monthly program of BNP Paribas' economists.

Today's edition is dedicated to the global financial crisis.

With Philippe d'Arvisenet's editorial on the crisis consequences on emerging countries.

Then, Eric Vergnaud will explain the Federal Reserve and the European central Bank's reaction to the present crisis.

And finally, François Faure will focus on the South Korea's situation.

* * *

Sibylle Dehesdin: First, let's welcome Philippe d'Arvisenet, BNP Paribas global chief economist. Hello Philippe...

Philippe d'Arvisenet: Hello

Sibylle Dehesdin: Many were hoping that emerging countries would avoid the crisis. Does it still make sense, in our days?

Philippe d'Arvisenet: Generally not. We expect growth in these countries to be further down next year. Probably in the province of 4.5 – 5%. They used to do something like 7.5%.

Sibylle Dehesdin: Yet there was no distribution of subprime loans. Howeve, several of these countries are very much affected by the crisis. Why?

Philippe d'Arvisenet: Sure. You have several mechanisms. First of all, if you take the big OECD countries, which have been impacted by the so-called subprime crisis, I mean the US, Euroland, UK, Japan, you have half of the planet, which is slowing down and of course you have consequences on the rest. Emerging countries export less, obviously. Some of them, which are specialised in exporting commodities, oil and so on, are affected not only because they export less, but at a lower price. So you have this traditional mechanism. Now, there are other things. Many of these countries experienced big capital inflows in the last few years. These inflows are now reversing; going back home if I can put it that way. Several reasons; first, we have a strategy which was called the “carry-trade”, i.e. you borrow in a low yield currency and you invest in a higher yield currency, though this is unwinding. Now you have a second thing: there was the idea that there was a future in emerging markets. So you had a lot of investment, for example in the stock exchange. That has burst now, and you have a movement of repatriation of capital towards the US and other places like this. Just because you have investors, hedge funds etc, which have to cover losses so they sell what they have in order to cover these losses. So you have a repatriation of funds.

One of the consequences of that of course is that you have a negative wealth effect in these countries with the stock down. Second you have a depreciation of many of their currencies. And third, because of this repatriation, when they need US dollars for instance and there is a lack of dollars of course obviously throughout the world... All this of course is impacting negatively.

These funds also were used in order to finance a boom in credit in several countries. And of course that has to come to an end. And together with another risk which is, you have especially in Eastern Europe or Central Europe countries in which people borrowed in foreign currencies, especially euro or Swiss francs, to buy homes in the Ukraine, in Hungary and in places like that if you will. And now with the depreciation of their currency; that is the appreciation of the foreign currency in which they borrowed, I mean the burden is much higher for them. So you have a lot of ingredients which add together.

Sibylle Dehesdin: Thank you, Philippe. And your editorials are online each week on the economy department's website.

* * *

Sibylle Dehesdin: And we are now with Eric Vergnaud to talk about the Fed and the ECB's reaction to the actual financial turmoil.

Hello Éric.

Éric Vergnaud : Hello.

Sibylle Dehesdin: Can you tell us what are the main distinctive problems the crisis created?

Éric Vergnaud : Since the outbreak of the current financial crisis, the Fed and the ECB have taken numerous initiatives to guarantee a smooth functioning of the payment system. They have managed the liquidity crisis in order to enable banks to be refinanced in spite of nearly frozen money markets especially after the collapse of Lehman Brothers

Sibylle Dehesdin: Can you be more precise on the banks reactions and measures they adopted?

Éric Vergnaud : The Fed and the ECB have modified their refinancing operations. They have increased their amounts and lengthened their duration. They have also widened the range of eligible collaterals.

The Fed has created new instruments to provide liquidity, event to non financial companies. In addition, the ECB was also very active in providing dollars to European banks thanks to bilateral swap lines set up with the Fed. Lastly, policy rates were cut at both sides of the Atlantic.

Sibylle Dehesdin: Are the results already effective?

Éric Vergnaud : market interest rate spreads have been starting to narrow thanks to central banks' decisions combined with national plans aiming to support the banking system. Nevertheless, money market tensions remain high and it will take some time before returning to a normal situation.

Sibylle Dehesdin: Thank you Eric.

* * *

Sibylle Dehesdin: Let's now welcome François Faure.

Hello François.

François Faure : Hello Sibylle.

Sibylle Dehesdin: As we were saying earlier with Philippe d'Arvisenet, the global financial crisis has started to destabilise emerging countries. In Asia, South Korea seems to be most affected. What's going on exactly in this country?

François Faure : Like most of emerging countries, especially Asian countries, the Korean stock exchange has followed the plunge of major equity markets. Actually, there are two main differences. First, the depreciation of the won - that began since the beginning of the year - has been much more pronounced than for other Asian currencies (about 25% against 5% on average since early September). Second, US dollar onshore interest rate has surged compared with US dollar offshore interest, I mean USD interest rate either in the US market or in international markets.

Sibylle Dehesdin: Do you think that such developments are justified by macroeconomic or microeconomic fundamentals?

François Faure : Globally yes. At the macro level, the economy has been decelerating since the beginning of the year mainly because of a cyclical reversal in the construction sector. Besides, the current account balance will post a deficit this year for the first time since 1997, net FDI flows including capital transfers are negative and equity portfolio investments left the country since mid-2007. As a result, external debt has ballooned and official fx reserves have been depleted since the beginning of the year. At the micro level, credit to households and especially housing credit has grown strongly so that Korean households as a whole are as indebted than American households. Lastly, SME are not in a good shape.

Sibylle Dehesdin: On October 19th, the government unveiled a package of measures to support the banking sector. What risks this plan is deemed to prevent?

François Faure : The risk of an external liquidity crisis actually. On the one side, the government will provide if necessary up to USD 30 bn to banks (but also to exporters) by using its foreign exchange reserve. On the other, the government will guarantee until June 2009 all external borrowings by Korean banks up to USD 100 bn. This latter measure is aimed at helping banks to roll over their short term external debt and to extend the maturity of the debt. Besides, recently, Korean will benefit from a USD 30 bn swap line with the US federal reserve.

Sibylle Dehesdin: Is there a real risk of external liquidity crisis like in 1998 or even a risk of systemic banking crisis?

François Faure : In a context of USD liquidity scarcity and given the substantial external financing needs of Korean banks, an external liquidity crisis is still an eventuality but we don't think that it will happen. First, because of measures I have just mentioned, second because of the still huge amount official fx reserves. On the systemic banking crisis issue, the present situation is quite different and in fact less alarming than in 1998. In 1997, a major part of the short term external debt was owed by Korean banks and they used it to finance short abut also medium and long term won-denominated loans to large corporates. At present, a large part of the short term external bank debt is owed by branches of foreign banks and is related to pure fx-hedging activities with counterparties which have resources in USD. As a consequence, external indebtedness is at present less risky than in 1997.

Sibylle Dehesdin: Thank you François.

We've come to the end of this programme. We'll see you next month for a new edition of Eco TV, the monthly programme of BNP Paribas' economists.

Posted by: Espinosa Ortíz Guadalupe (Copyright BNP Paribas)

What is Synesthesia? (Selected article posted by Elia Soto)

What is synesthesia?

Thomas J. Palmeri, Randolph B. Blake and Ren� Marois of the psychology department and the Center for Integrative and Cognitive Neuroscience at Vanderbilt University study synesthesia. They provide the following explanation:

When you eat chicken, does it feel pointy or round? Is a week shaped like a tipped-over D with the days arranged counterclockwise? Does the note B taste like horseradish? Do you get confused about appointments because Tuesday and Thursday have the same color? Do you go to the wrong train station in New York City because Grand Central has the same color as the 42nd Street address of Penn Station? When you read a newspaper or listen to someone speaking do you see a rainbow of colors? If so, you might have synesthesia.

Synesthesia is an anomalous blending of the senses in which the stimulation of one modality simultaneously produces sensation in a different modality. Synesthetes hear colors, feel sounds and taste shapes. What makes synesthesia different from drug-induced hallucinations is that synesthetic sensations are highly consistent: for particular synesthetes, the note F is always a reddish shade of rust, a 3 is always pink or truck is always blue.

The estimated occurrence of synesthesia ranges from rarer than one in 20,000 to as prevalent as one in 200. Of the various manifestations of synesthesia, the most common involves seeing monochromatic letters, digits and words in unique colors�this is called grapheme-color synesthesia. One rather striking observation is that such synesthetes all seem to experience very different colors for the same graphemic cues. Different synesthetes may see 3 in yellow, pink or red. Such synesthetic colors are not elicited by meaning, because 2 may be orange but two is blue and 7 may be red but seven is green. Even more perplexing is that synesthetes typically report seeing both the color the character is printed in as well as their synesthetic color. For example, is both blue (real color) and light green (synesthetic color).

Synesthetes report having unusually good memory for things such as phone numbers, security codes and polysyllabic anatomical terminology because digits, letters and syllables take on such a unique panoply of colors. But synesthetes also report making computational errors because 6 and 8 have the same color and claim to prejudge couples they meet because the colors of their first names clash so hideously.

For too long, synesthetes were dismissed as having overactive imaginations, confusing memories for perceptions or taking metaphorical speech far too literally. Recent research, however, has documented the reality of synesthesia and is beginning to make headway into understanding what might cause such unusual perceptions.

Research has documented that synesthetic colors are perceived in much the same way that nonsynesthetic individuals perceive real colors. Thus, synesthetic color differences can facilitate performance on tasks in which real color differences facilitate performance for nonsynesthetes and can impair performance on tasks in which real color differences impair performance for nonsynesthetes.

In one such task, people are asked to say the color of the ink a word is printed in as quickly as possible (for example, responding "pink" to and "blue" to ). For lexical synesthetes, these words take on unique colors. When the synesthetic color matches the ink color, responses are fast. But when the synesthetic color mismatches the ink color, responses are slow, presumably because subjects need to resolve the conflict over which color name to respond with. Although such results demonstrate that synesthesia is automatic, in the sense that they cannot turn off their synesthesic experience even when it interferes with a task, these results do not reveal whether synesthetic colors are perceptions or memories.

To demonstrate the perceptual reality of synesthetic colors, researchers have introduced synesthetic color differences into a variety of traditional visual-perception tasks. Searching for a among �s is a difficult task because the digits are so visually similar, differing by only a mirror reflection. If the was colored orange and the �s were colored green, the search task would be trivially easy because the orange digit visually pops out from the background of green digits. When shown a display consisting of monochromatic digits, we found that a synesthete could quickly find the target because for him was orange but was green (see image).

Vilayanur Ramachandran and Edward M. Hubbard of the University of California at San Diego, have reported complementary findings supporting the perceptual reality of synesthetic colors. In one task, they presented synesthetes with an array of equally-spaced letters and digits. Synesthetes reported that these arrays organized themselves into distinct rows or columns depending on whether the rows or columns of characters were the same synesthetic color. This perceptual grouping based on synesthetic color is analogous to the kind of perceptual grouping non-synesthetes experience with real colors.

Claims for the perceptual reality of synesthetic colors have been bolstered by recent functional brain imaging studies by researchers in the U. K. showing that synesthetic color activates central visual areas of the brain thought to be involved in perceiving real colors.

The neural mechanism by which synesthetic colors are automatically bound to alphanumeric characters remains a mystery. One possibility is that synesthesia might arise from some kind of anomalous cross-wiring between brain areas that are normally segregated in nonsynesthetic individuals. For grapheme-color synesthesia, there may be cross-wiring between digit and letter processing areas and color processing areas in the visual cortex, which occupy neighboring regions of the human brain.

The causes of synesthesia also remain unknown. Some scientists have suggested that everyone is born synesthetic but that the typical developmental trajectory results in these highly interconnected brain areas becoming far more segregated. We do not know why synesthetes retain some of these anomalous connections. A biological determinant may be partially at work in certain cases of synesthesia, because the condition tends to run in families; moreover, nearly six times as many women as men report synesthesia. Whatever its etiology, synesthesia provides cognitive neuroscientists with a unique opportunity to learn more about how the brain creates our perceptual reality.

Answer originally posted on June 17, 2002.

Enjoy the silence-Depeche Mode (Selected song and lyirics posted by Elia Soto)

Enjoy the silence
(Depeche Mode)

Words like violence
Break the silence
Come crashing in
Into my little world
Painful to me
Pierce right through me
Cant you understand
Oh my little girl

All I ever wanted
All I ever needed
Is here in my arms
Words are very unnecessary
They can only do harm

Vows are spoken
To be broken
Feelings are intense
Words are trivial
Pleasures remain
So does the pain
Words are meaningless
And forgettable

All I ever wanted
All I ever needed
Is here in my arms
Words are very unnecessary
They can only do harm

Enjoy the silence

Mom shocked by teen's modest clothing

Mom shocked by teen's modest clothing
WASHINGTON (AP) -- A shocking trend is gaining ground in teen dressing: modesty.
Here's an example: Last summer, my 13-year-old daughter needed a dress to attend a friend's bat mitzvah.
What we found was a black concoction with a neckline so low that my condition for buying it was a fill-in-the-gap black undergarment. She wasn't happy about it, but complied.
This June, for her eighth-grade graduation, my daughter debated between a slinky blue dress with a plunging neckline -- more lounge singer than middle schooler -- and a flowery cotton print that was strapless but not low-cut.
After much consultation with her friends, she opted for the strapless and decided to top it with a sedate, white cardigan sweater.
What had happened to teen dressing in those intervening 10 months?
Layering. The economic downturn. Traction from an entrenched parents' backlash against highly sexualized looks for their daughters. Oh, and fashion's do-or-die need to throw something new at the gigantic but fickle teen/tween market as quickly as you can say "MySpace" or "Facebook."
I like the result: too-revealing camisoles and tank tops now paired with a covering hoodie or graphic T-shirt. Dresses topped by '50s-ish cardigans or shrugs. Vintage '70s-ish pieces picked up cheaply at thrift shops.
Also, layered items are interchangeable and can be put together in different ways, so I think (hope) we're saving money.
Money is the name of the game for retailers, too, especially in the current economic climate. Apparel sales for the 13-to-17-year-old set were nearly $30 billion for the 12 months ending May 2008, according to market researcher NPD Group's consumer tracking service. Add "tweens" and near-tweens -- 7-to-12-year olds -- and college-age kids -- 18-to-24 -- and that figure soars to nearly $70 billion.
Overall, sales are increasing only slightly. Department stores are struggling to compete with discounters like Wal-Mart and specialty merchants like Hollister, Abercrombie & Fitch, PacSun, Aeropostale and American Eagle Outfitters -- which typically feature darker lighting and throbbing music to welcome teens.
And with the economy in a downturn, many teens had trouble getting summer jobs and have less to spend.
"We're in a very challenging time period," said Allison Levy, merchandise manager for menswear and childrenswear at the Doneger Group, which advises major stores on what fashions to buy. "We have to work harder to get them in the door and satisfy them. ... It's about capturing their attention."
That's done not just with colorful clothes in stores in malls where teens congregate, but also on the Internet, where they gravitate for social networking -- and fashion chitchat -- at sites like MySpace and Facebook. Teens also pre-shop online. My daughter, for instance, will check out Delias.com before she drags me to the store, her favorite place to buy skinny jeans.
The Internet also means that new fashion trends -- whether driven by music or by TV shows like "Gossip Girl" and "Hannah Montana" -- spread with almost viral speed and intensity. That feeds into tweens and younger teens' desire for their favorite celebrities' clothing brands, says Michael Stone, CEO of The Beanstalk Group, an authority on celebrity licensing who developed the Olsen twins' fashion brand when they were young TV stars.
"It's all media-driven," Stone said. "It's about girls seeing celebrities on TV shows, movie and concert tours and now they get to communicate about clothing on social networking sites. More communicating tools are available ... to spread the word about fashion a celebrity is wearing. That drives tween fashion."
In the emphasis on layering, many parents see a welcome trend that is long overdue.
"A lot of the very fashionable looks right now are very modest," said Brenda Sharman, national director at Pure Fashion, a Catholic-based organization that has put on modesty teen fashion shows in nearly two dozen U.S. cities. "It's almost a flashback to looking very demure and proper."
The group has long deplored the low necklines and sexy looks that have marked teen fashion, and they aren't alone. Last year, an American Psychological Association task force reported that cognitive performance and health can suffer when teens and young women make themselves into sex objects by wearing sexy clothing or styling themselves after sexy celebrities. Eating disorders, depression and low self-confidence can result.
Happily, there's evidence that the covered-up styles for teens might continue into next season and beyond.
At the spring Paris fashion shows, Stephanie Meyerson -- trend director for youth culture at Stylesight, a retail forecasting firm -- saw a definite "moving away from overtly sexual" in teen fashion, especially through layering and comfortable baggy looks.
"Girls are dressing for themselves, as opposed to dressing for guys," she said. "The guys might not like it but the girls are not wearing really tight shirts. They're covered up."
Covered up can mean put-together (think "Gossip Girl") or disheveled (a bit of Mary-Kate-and-Ashley grunge meets Amy Winehouse). And even that look can have sexual connotations.
"It's the one-night-stand look," Meyerson said. As in the disheveled morning after, clothes with a slept-in feel.
OK, so parents won't rejoice over that notion. But I'm rejoicing over anything that keeps my girl from looking like a lounge singer.

Addy Gutiérrez

Solipsism

Solipsism is the philosophical theory that the only thing that exists is the person who holds the theory. Everything else is generated by the mind of this person, and life can be thought of as a kind of lucid dream or hallucination. To ease comprehension, this entry is written as if the universe existed — things get confusing otherwise.

Arguments for Solipsism
The existence of the solipsist is normally argued on the basis of Descartes' famous statement Cogito Ergo Sum ('I think, therefore I am'). Beyond this, it is argued, nothing is certain. But we can say quite definitely that either the universe exists, or it doesn't exist — indeed, this is a logical tautology. To decide which we can use Occam's Razor.
Occam's Razor[1] is an example of a metatheory — a theory which describes how to choose between different theories. There is some evidence that using Occam's Razor tends to lead to more accurate and useful theories, though it isn't something that can be absolutely proved one way or the other. The principle is that given two theories, both of which are equally effective at explaining the given evidence, we should 'slice out' the more complicated one.
If the universe exists, then it must have some non-zero complexity. So the solipsist viewpoint is the simpler of the two. Therefore, it is argued, we can invoke Occam's Razor to slice out the universe, and decide that the solipsist viewpoint is the correct one.

Problems with Solipsism
Solipsism is widely seen as a rather depressing view of the world, and it should come as no surprise that the argument for it is hotly contested. There are essentially four different ways that people argue against solipsism, depending on their viewpoint.
The first and simplest way is to claim that Occam's Razor is not a good method of choosing between models. Indeed, the suggestion that Occam's Razor supports solipsism is a commonly used argument against its validity.
The second objection is to the claim that solipsism is simpler than the universe. If solipsism is true, then all that we think is the universe must be a dream in our mind. However, for this to happen our mind must be large enough to simulate an entire universe. Something able to simulate the universe must be more complicated than the universe itself, surely?
Well, say the solipsists, it depends. If the simulation was inaccurate, perhaps not bothering with any of the detail beyond the solar system, then it could be simpler. This is, amazingly, a testable theory — if these people are correct then eventually, given clever enough experiments, we should be able to find glitches in the structure of the universe. There are even some who argue that quantum physics is the result of these glitches, in the same way that aliasing is the result of computer pictures being made up of pixels.
The third objection is that the theories are not equally good at explaining the evidence. If the universe is the product of one's imagination, people say, then why isn't it more to their liking? Surely they'd want to create a universe that smelt better, where beautiful men (or women) are throwing themselves at their feet?
The final objection is more pragmatic, and ignores the question of what ultimate truth is altogether. Instead, its proponents claim that it is more fun to live our lives assuming that the universe is real, and more of a challenge, regardless of whether it happens to be true or not. Given this, why encumber your mind with solipsism?

Weak Solipsism
The weak version of solipsism is that the universe and everyone else exists, but the weak solipsist alone exists as an independent conscious being, and everything else in the world is an object, with no ability for independent thought. The argument for this position is very similar, but it renders the second and third objections to normal solipsism redundant.
However, this argument does have other problems — the main one being that it violates the principle that our position in time and space is not special or unique. Weak solipsism violates this principle in a huge way, because it claims that the weak solipsist is unique in being conscious.

Beyond Solipsism
Some people go beyond solipsism and claim that not only does the universe not exist, but nothing exists at all, including the person arguing this position. A more detailed explanation of this idea can be found in the Illuminatus! trilogy by Robert Anton Wilson. Essentially it is built upon similar arguments to solipsism, except that Descarte's argument for the existence of self is declared invalid.

Reverse Solipsism
Reverse solipsism is the claim that the reverse solipsist does not exist, but everything else does. The person arguing this position normally claims that whoever is listening doesn't think, so they can't prove that they exist. 'Think back', they say, 'when was the last time you actually thought?' Furthermore, it is claimed, no thinking person would be listening to such a total load of hogwash (this is the normal cue for the listeners to get up and get a beer). Meanwhile, everyone else in the world is getting on with their lives and being productive and thinking, so they do exist.
The Final Proof
From the Researcher of this entry:
See, you're still reading! If you were thinking, you wouldn't still be reading this. Evidently, I was right, you don't exist. Or rather, you do. From your perspective, you don't exist. From mine, you do. From your perspective, I exist. From mine, I do not.
There's no arguing with that, is there?

Jared Ramírez
[1] Essentially, it is the idea that one should not believe something for which one has no evidence; or, alternatively, that of two ideas which explain the same evidence, the simpler idea is to be preferred.

Resident Evil 4

Posted By Toño Perez Castañeda

Real Gone

Real Gone

I’m american made, bud light, Chevrolet
My momma taught me wrong form right
I was born in the south; sometimes I have a big mouth
When I see something that I don’t like
I gotta say it

Well, we´ve been driving on this road
For a mighthy long time
Payin' no mind to the signs
Well this neighborhood's changed
It's all been rearranged
We left that dream somewhere behind

Slow down, you´ gonna crash
Baby you are a screaming
It's a blast, blast, blast
Look out you got your blinders on
Everybody is looking for a way
To get real gone, real gone
Real Gone

But there's a new cat in town
He's got high faded friends
Thinks he's gonna change history
You think you know him so wel
lYeah you think he's so swel
lBut he's just perpetuating prophecy
Come on now

Slow down, you are gonna crash
Baby you are a screaming
It's a blast, blast, blast
Look out you got your blinders on
Everybody's lookin' for a way
To get real goneReal gone
Real gone
Real gone
OH

Well, you can say what you want
But you can't say it 'round here
'Cause they'll catch you and give you a whippin'
Well I believe I was right
When I said you were wrong
You didn't like the sound of that
Now did ya?

Slow down, we're gonna crash
Baby you were screamin'
It's a blast, blast, blast
Look out, you've got your blinders on
Everybody's lookin' for a way
To get real gone

Well here I come, And I'm so not scared
Got my pedal to the metal
Got my hands in the air
Well look out, you take your blinders off
Everybody's lookin' for a way
To get real gone, real gone
Real Gone
OH!
Real Gone
Real Gone.

Posted By Toño Perez Castañeda