Via the excellent Dealbreaker…

We instinctively grope for religion and invoke God to help us try and explain major accidents and natural disasters. ‘Miracle on the Hudson’ ran the headlines as pictures of Flight 1549 in the river were beamed round the world. New York Governor David Paterson said the city was ‘blessed’.

To make matters worse the media then insist on thinking through all the worst case scenarios:

The landing occurred shortly before 3:30 p.m., just as ferries on both sides of the Hudson were “crewing up” for the afternoon rush hour. That allowed them to get to the plane almost instantly. At the same time, the river — one of the world’s busiest waterways, frequently plied by ferries, barges, tankers and cruise ships — was apparently clear enough of shipping traffic to allow the plane to set down without hitting anything.

So given the potential of the accident to be five, even ten times what it could have been it’s not surprising that we think in terms of miracles. The truth is rather different.

This accident was no miracle but an example of tremendous physical skill and great composure of the pilots. But skill and composure can’t explain how fortunate the 148 passengers were, in exiting safely from the aircraft. Well no, but the landing was executed by a veteran pilot who runs a safety consulting business on the side:

The pilot in Thursday’s landing was Chesley B. “Sully” Sullenberger III, a former fighter pilot from Danville, Calif., with more than 40 years of flying experience. He founded Safety Reliability Methods Inc. to apply advances in safety systems, some of them based on “studies of high-risk, high-performance environments such as aircraft carrier flight deck operations,”

And here’s why training is so crucial:

Jason Goldberg, a pilot for American Airlines who has flown other Airbus jets, said the pilot — identified as Chesley B. “Sully” Sullenberger III — had to slow the plane for landing without stalling, which could have caused the nose to hit the water first, potentially breaking up the plane.
“Dead-sticking an airplane in the Hudson without hitting anything in downtown Manhattan is an unbelievable job by this pilot,” Goldberg said. “It took tremendous physical skill and great composure. The guy is a hero in my book.

Last May I wrote about a World Bank scheme to pay Tanzanians to test negative for sexually transmitted infections (a proxy for HIV/AIDS), and about the positive effects on health of Mexico’s Oportunidades conditional cash transfer programme (South Africa’s pension scheme has also had beneficial health impacts, as have programmes to pay US drug users not to inject).

A new study by Rebecca Thornton lends further support to the idea that financial incentives should play a part in HIV prevention. In a randomised trial of over 2,000 Malawians, she gave some participants money in return for testing for HIV and finding out their results. Those receiving the cash were on average twice as likely to turn up to be tested as those left empty-handed. Even pretty small sums, amounting to a tenth of a day’s wage, had a significant effect on the likelihood of getting tested.

Unfortunately, Ms Thornton also found that being tested didn’t have much impact on sexual behaviour (though several other studies have found that knowing you’re HIV-positive makes you less likely to indulge in unsafe sex). Still, cash incentives could be used to persuade the reluctant to adopt other preventative measures, like male circumcision, condom use or, as the World Bank hopes, to find their own ways of staying negative.

H/T Chris Blattman.

According to the Telegraph, the government is considering setting up a ‘bad bank’ to take on the toxic assets that continue to drag down the UK’s financial sector.

One option is for the government to ‘buy’ all their crap at some unspecified price. Sounds like a good deal, no?

Well actually: no. Not if you’re a British bank. The problem, you see, is that this would make you own up to how bad things really are. And that would never do.

As the Telegraph report, “if banks have not written down the value of their assets aggressively enough, they may have to suddenly crystalise new losses when assets are sold to the Government.”

I remember when it was OK to feel smug as the Japanese suffered through a decade in which their ‘zombie banks’ refused to own up to the extent of their losses (see this post for more).

Now, it seems, we’re in the same position. Simply shovelling money at our financial overlords/parasites is not enough – we have to make them feel good about themselves, however badly they’ve screwed up…

The image shows the areas in Africa most at risk from Malaria.

A few weeks back I interviewed John Robb, the military futurist and author of ‘Brave New War.’  We discussed the irruption of Latin American drug gangs into West Africa. Robb sees this as symptomatic of a broader push by “global guerrillas” – armed transnational criminal organisations – to take advantage of weaknesses in the global system:

We have a global market system that is subverting the nation state, so gaps where local control is lost are going to spring up all over the place, even in relatively developed states. There will be lapses where non-state groups like global guerrillas take control. If they’ve found a hole in West Africa, there are no barriers to their expansion.

Although they are drawn to “hollow states” like Guinea-Bissau, however, contrary to dire warnings of instability from the UN Office on Drugs and Crime the South Americans are unlikely to want to shake up the status quo too much. According to John Robb:

They don’t want warfare in West Africa – they want the maximum level of corruption and to be left alone, with bureaucratic apparatus geared towards helping them to do business. Almost across the board you’ll see that non-state groups are not trying to take over the national government. They don’t want that burden – it raises the profile, puts you on the international radar screen and leads to economic blockades. If there’s a nominal government in place they’ll keep the infrastructure up – they’re parasites off the infrastructure.

I asked Robb how Africa might deal with the problem, which got him talking about resilient communities: (more…)

As everyone waits to see what Obama plans to do about reforming foreign assistance in the US, back here in Britain change is in the air too: the Conservatives are coming clean about what they really think about DFID, the Department for International Development.

For a while now, there have been whispers that the Tories don’t really buy into the idea of an independent DFID – and that perhaps (gasp!) they might be considering merging it back into the Foreign Office, where it resided until 1997. Well, following last week’s Independent interview with Conservative aid spokesman Andrew Mitchell, we can put that notion to rest: “We are very committed to DFID continuing as an independent department of state”, says he.

So, a ringing endorsement of DFID, then?  Er, not quite.  Here’s the full context:

The shadow International Development Secretary, Andrew Mitchell, said DFID had begun to encroach on the work of other departments and to come “perilously close” to setting its own foreign policy, a role he said should be reserved for the Foreign Office. He said the Foreign Office will be given much greater influence over the use of overseas aid should the Tories win the next election …

“There are times when DFID comes perilously close to pursuing its own foreign policy and that is not right,” Mr Mitchell said. “Foreign policy is decided by the government and the Cabinet, led by the Foreign Office, and DFID should not be an alternative to this. We are very committed to DFID continuing as an independent department of state. But we would make it more of a specialised development department and a little less like an aid agency,” he said.

That left me wondering just which specific instances Mitchell was thinking of in arguing that DFID was coming close to having its own foreign policy.  Iraq? Afghanistan? Climate change? (Thinking that Paul Wolfowitz might not be such a great idea for President of the World Bank?) Sadly, we don’t know.  Earlier today I called his office to ask him to elaborate, but he declined to say more.

This is a shame, on two counts. First, because it’s a cop out.  For the Opposition front bench spokesman on international development to argue that the Department he shadows has come ‘close to pursuing its own foreign policy’ is a serious claim – and one which he ought to be prepared to substantiate.  To fail to do so leaves him open to accusations of offering soundbites rather than reasoned argument.

More fundamentally, though, it’s a shame that Andrew Mitchell wouldn’t elaborate because this debate needs to be had.   (more…)

Not sure who’s writing the Economist’s Charlemagne column on Europe these days, but this observation in an article on Nicolas Sarkozy made me laugh out loud:

At the end of the Brussels summit on December 11th and 12th, Mr Sarkozy declared that the meeting would “go down in European history”. In ways he found “fantastic”, he had shaken up the EU’s habits, tripling the usual number of summits, and pushing his peers towards “less talk and much more action”. The word immodest does not do justice to Mr Sarkozy on such occasions. He does not so much brag about his achievements as offer a running commentary about the wonder of being himself. Being in charge of Europe had been “fascinating, fulfilling and rather easy,” he commented at one point.

Joe the Plumber’s made it to Israel and has come to a rapid conclusion: war reporting should be banned. Yes really:

I don’t think journalists should be anywhere allowed [near] war. You guys report where our troops are at. You report what’s happening day to day. You make a big deal out of it. I think it’s asinine. I liked back in World War I and World War II when you’d go to the theatre and you’d see your troops on the screen and everyone would be real excited and happy for them. Now everyone’s got an opinion and wants to down soldiers. You know, American soldiers or Israeli soldiers. I think media should be abolished from reporting. You know, war is hell. And if you’re gonna sit there and say: “Well look at this atrocity,”‘ well you don’t know the whole story behind it half the time, so I think the media should have no business in it.

We have noted Nicolas Sarkozy’s attraction to large domestic appliances (first his TV, then his telephone table…). So we are not surprised to see him, third from the left, atop a very large tank in Lebanon:

From the State Department (with some explanatory notes added by GD):

Statement by Secretary Condoleezza Rice
Washington, DC
January 9, 2009

January 11 marks the 100th anniversary of the Boundary Waters Treaty of 1909. We note with pride the century of cooperation with Canada in managing water quality, quantity, and environmental health along our 5,525-mile border. The Treaty also established the International Joint Commission, which has played a vital role as an independent steward of these shared resources. Comprised of Commissioners from both countries, the Commission has been an outstanding example of collaborative governance and stewardship *, facilitating cooperation, preventing and resolving water-related disputes, and approving and overseeing operation of several major dams and hydropower stations along the border.

Millions of Americans and Canadians depend on the Great Lakes-St. Lawrence River system for drinking water, trade, jobs, recreation, and more. Through the Great Lakes Water Quality Agreement and the International Joint Commission, our two nations are working diligently to restore and maintain the chemical, physical, and biological integrity of the Great Lakes Basin ecosystem.**

The Boundary Waters Treaty remains vibrant as it enters its second century. Recent International Joint Commission initiatives such as International Watershed Boards provide opportunities for local stakeholders to build networks that can prevent or resolve problems at the community level. The Treaty continues to be a model for managing shared resources***and a tribute to the enduring friendship between the United States and Canada.****

* The reference to “governance and stewardship” may signify a career State drafter trying out a few liberal, internationalist phrases so as to be ready for the next administration. Had this been drafted in 2003, it’d probably have referred to “the joint commitment of freedom-loving nations to God’s aquatic gift to mankind”.

** I’ve read this a number of times, but it does indeed appear to be a positive reference to international environmental regulation by the Bush administration. I assume they think Dick’s too busy burning stuff to get pissed about this one.

*** Well yes, it’d be easier to resolve resource conflicts if the opponent was always Canada.

**** This is most likely a coded reference to the fact that the Canadian Conservative government is one of the few regimes on earth that may actually be sorry to see the Republicans go…

In last month’s New Atlantic, James Fallows had a fascinating interview with Gao Xiqing, Chief Investment Officer at China’s sovereign investment fund, and the man responsible for a significant chunk of China’s huge holdings of American dollars.

Gao – who Fallows dubs one of the US’s new banking overlords – thinks Americans need to learn some humility and fast.

“The simple truth today is that your economy is built on the global economy,” he says, “and it’s built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and … I won’t say kowtow [with a laugh], but at least, be nice to the countries that lend you money.”

The US should disentangle itself from expensive overseas conflicts, Gao believes, raise its diplomatic game, and – above all – tell its citizens to get saving as part of a “long-term, sustainable financial policy.”

It’s all well and good, but maybe Fallows should have pushed Gao a little harder on whether China’s own financial policy is sustainable. After all, despite recent appreciation, the yuan remains substantially under-valued against both the dollar and the euro – the main reason why the Chinese has ended up holding so much Western debt.

Gao’s comments on the dollar are somewhat contradictory (and reflect all the ambiguity of China’s own dollar position). On the one hand, it defends its status as a reserve currency. The US is still the most viable and predictable market, he says. But on the other, Chinese investment in the dollar is widely unpopular at home. According to Gao, China’s citizens ‘hate’ its support of rich Americans (“people eating shark fins”) at the expense of “poor [Chinese] people eating porridge.”

More significant than public pressure, perhaps, is Gao’s belief that the dollar is highly likely to lose value over the short to medium term (with a corresponding appreciation for the yuan). This will wipe billions of Chinese reserves (reserves that have only been built up through consumption foregone) – while challenging China’s export-led growth model:

We are not quite at the bottom yet. Because we don’t really know what’s going to happen next. Everyone is saying, “Oh, look, the dollar is getting stronger!” [As it was at the time of the interview.] I say, that’s really temporary. It’s simply because a lot of people need to cash in, they need U.S. dollars in order to pay back their creditors.

But after a short while, the dollar may be going down again. I’d like to bet on that! The overall financial situation in the U.S. is changing, and that’s what we don’t know about. It’s going to be changed fundamentally in many ways.

Unravelling these imbalances seems certain to be ugly. Reading George Cooper’s book, The Origin of Financial Crises, on a plane the other day, I was struck by strong parallels between today’s economic woes, and a crisis we have heard little about recently – the ‘Nixon Shock’ that led to the end of the Bretton Woods system. (more…)

“Israel’s current assault on the Gaza Strip cannot be justified by self-defense. Rather, it involves serious violations of international law, including war crimes. Senior Israeli political and military leaders may bear personal liability for their offenses, and they could be prosecuted by an international tribunal, or by nations practicing universal jurisdiction over grave international crimes. Hamas fighters have also violated the laws of warfare, but their misdeeds do not justify Israel’s acts.”

The Guardian? The Independent?  No, actually - it’s from an op-ed by a law professor in the Wall Street Journal. When the WSJ of all papers starts running opinion pieces accusing Israel of war crimes, you start to think that Israel’s bleeding international legitimacy has started outright haemorrhaging.

Then you see even the Bush Administration declining to veto Security Council Resolutions against Israel – and you know for sure.

Optimism is in short supply at the moment, so I was psyched to read that Larry Kudlow – the National Review’s economics editor and (in his owns words) “a renowned free market, supply-side economist armed with knowledge, vision, and integrity acquired over a storied career spanning three decades” – has read the tea leaves and seen clear signs that the US economy is now bottoming out from a recession that hasn’t been “that big a deal”.

Phew. We can all stop worrying then. After all Kudlow’s stunning track record proves he really has his finger on the pulse of US economic performance. Let’s review some of the highlights from his analysis over the past couple of years:

Feb 2007: Praises Ben Bernanke for “laying the groundwork for what is virtually a runaway bull market” – one he assures us a few months’ later has guaranteed the US’s role at the epicentre of a “a global boom, marked by a spread of free-market capitalism like we’ve never seen before.”

Sept 2007: Warns us that “it’s very easy to be totally pessimistic and bearish right now, but that’s precisely why I will avoid falling into that trap. Optimists are winners. Pessimists are losers.”

Sticks to this creed throughout the quarter in which the recession got underway… October (“if things are so bad, why are they so good?”), when he says growth is accelerating…November (subprime is “just not that big a deal”)…and December (“the prophets of recessionary doom…have been proven wrong once again”)

In Feb and March 2008, admits that a mild recession is possible, but assures us that “Bernanke’s emergency machinations to fight the recession in housing and housing-related credit are starting to show very positive effects.” There is no “genuine, across-the-board credit crunch,” he tell us in April. As a result, any slump “could be over by late summer.”

In September (with summer a memory and the economic clouds darkening), swoons for Henry Paulson who has embraced the gales of creative destruction and promised “no more federal bailouts. Not for Lehman Brothers. Not for global insurer AIG.”

Three days later, however, swoons for Paulson again, this time for preventing what would have been an “unfathomable” – an AIG collapse. Bailouts, it turns out, are a simply wonderful idea – not only will they save capitalism from doom; for taxpayers they’re a “win-win-win-win.” The government is sure to get its money back – even better it’s highly likely to make “a handsome profit” – enough to “pay down the national debt.”

October 2008: Is appalled by the “fear and panic” that have gripped the economy. “It is one of those moments in history when people feel helpless, frustrated, and bewildered about what’s going on and why it’s happening.” But still assures us that “much good may ultimately come of this terrifying correction.”

November 2008: Is cock-a-hoop at the “economic-primer” George Bush has left for his successor-elect Barack Obama, who apparently now has “an outsized responsibility [eh?] to mend and revive the economy.” Obama needs to access Bush’s wisdom and follow his economic-growth model, one “that has worked so well and so long for this country.”

Yes – that’s right. Bush (“the top economic forecaster in the country”) and his administration have left the US poised for recovery. If it all goes wrong, we’ll all know who to blame – that “extremely liberal-left” guy who is just about to take over. But as long as the new President tries to do what Bush would have done, then everything – my friends – will be alright.