Read it here- http://economist.com/world/la/displayStory.cfm?story_id=3507918

The same problem is taking on epidemic proportions in India. By 2025, India will have 150 million diabetics. A scary proposition.
-------

Fat Mexico

Sins of the fleshy

Dec 16th 2004 | MEXICO CITY
From The Economist print edition

Mexico now enjoys two important characteristics of rich countries. Unfortunately, they are obesity and diabetes

FOOD and drink play a major role in Christmas celebrations in most countries, but in few more so than in Mexico. Many families over the festive season will do little more than cook and ingest a seemingly constant cycle of tortillas, fried beans, meat both roasted and stewed, and sticky desserts for days on end. Thus does the extended family keep on extending--further and further over their collective waistlines.

Lucky them, you might think. Except that Mexico's bad eating habits are leading to a health crisis that most Mexicans seem blissfully unaware of. Obesity and its related disorder, diabetes, are now major health concerns in a country where large rural regions are still concerned more with under- than with over-nourishment. In its perennial rivalry with the United States, Mexico has at last found an area in which it can match its northern neighbour--mouthful for mouthful.

The statistics are impressive, and alarming. According to the OECD, Mexico is now the second fattest nation in that group of 30 countries. A health poll in 1999 found that 35% of women were overweight, and another 24% technically obese. Juan Rivera, an official at the National Institute of Public Health, says that the combined figure for men would be about 55%, and that a similar poll to be carried out next year will show the fat quotient rising. Only the United States, with combined figures of over 60%, is ahead.

That situation also varies geographically. Although Mexicans populate the north of their country more sparsely than the south, they make up for it weight-wise. A study published by the Pan-American Health Organisation a month ago showed that in the mostly Hispanic population that lives on either side of the American-Mexican border, fully 74% of men and 70% of women are either overweight or obese.

Moreover, even experts have been surprised by how rapidly the nation has swollen. Whereas the 1999 poll showed 59% of women overweight or obese, only 11 years previously that figure was just 33%. Nowhere is the transformation more noticeable than in the prevalence of diabetes, closely linked to over-eating and obesity. In 1968, says Joel Rodríguez of the Mexican Diabetes Federation, the disease was in 35th place as a direct cause of mortality in Mexico, but now it occupies first place, above both cancer and heart disease. With about 6.5m diabetics out of a population of 100m, Mexico now has a higher rate than any other large country in the world. Not surprisingly, Mr Rodríguez argues that Mexico is in the grip of an "epidemic".

Nor does it tax the brain much to work out that the causes of these explosions in obesity and diabetes are the Mexican diet and a lack of exercise. For most Mexicans, food consumption, not just at Christmas but all year round, is an unvarying combination of refried beans, tortillas, meat and refrescos, or fizzy drinks; they consume 101 litres of cola drinks per person per year, just a little less than Americans and three times as much as Brazilians.

Meanwhile, the lack of exercise, Mr Rivera argues, is a symptom of rapid urbanisation over the past 30 years. Obesity and diabetes rates remain slightly lower in rural areas, indicating that manual labour endures as an effective way to stave off weight gain. In Mexico City, though, pollution and crime have progressively driven people out of the parks and the streets, so most now walk as little as possible--preferably no further than from the valet-parking service to the restaurant.

To combat the fat, health professionals say that the country must first realise that it is indeed in the grip of an epidemic. Other diseases, such as AIDS and cancer, have captured most of the publicity in recent years; obesity and diabetes have been comparatively neglected.

But these are also, as in other developing countries, mainly problems of the urban poor. It is a symptom of their growing prosperity that these parts of the population have, probably for the first time, almost unlimited access to the greatest amount of calories for the smallest amount of money. But with little knowledge of nutritional values, their diets are now unbalanced and unhealthy.

Low-carb products and other dietary imports from the United States have already made an appearance on the posher Mexican supermarket shelves. They may go into the shopping baskets of the rake-thin and utterly unrepresentative models who dominate the country's advertising hoardings. But they are still comparatively expensive. For the heaving mass of the population, things may have to get worse before the government, doctors and consumers realise that things have got to start getting better.

I occasionally post articles from various news sites or link to them.
Why do I post articles? These articles were interesting to me.

Don't I have respect for copyright?
I do. There's a reason why I post articles in the slashdot journal rather than at some other website like blogger or livejournal.

If I post a subscriber-free link to the article, it will be available only for 7 days.

Slashdot's journal's are not indexed by any search engine. Therefore even if you searched for that article, you wouldn't find it unless you knew exactly where to look for.

http://online.wsj.com/article/0,,SB110376349870907921,00.html?mod=mostpop

We Think, They Sweat

By ANDY KESSLER
December 23, 2004; Page A10

You want a scapegoat for the dollar's almost daily decline -- the Chinese water torture on the U.S. economy? I blame Steve Jobs. Apple is the worst offender in the decline of U.S. manufacturing. Their engineers sit around in air-conditioned offices on streets with cutesy names like Infinite Loop in Cupertino, Calif., and have others make stuff for them. They imported two million iPods assembled by thousands of Chinese workers just last quarter -- an almost $1.5 billion annualized trade deficit in iPods alone.

Those in D.C. who can do something about this -- former railroaders and breakfast cereal moguls, are so worried about trade deficits that they refuse to defend the greenback, even begging China to unpeg the yuan from the dollar so we can decline against it as well. We're in a place called Vertigo. Economists weep that foreigners will no longer fund our spending and that America surely has peaked. The dollar is destined to the depths of despair until it drops so low that we get those manufacturing jobs back. Gee, thanks Steve Jobs.

I checked my wallet and realized that I own dollars, including my bank account, house and stocks. Lowering them in value hurts every American. I was in such a funk thinking about all this that I played my own infinite loop of Muddy Waters on my appropriately blue iPod mini. I happened to turn it over and read the fine print. Sure enough -- "Assembled in China." But it also says "Designed by Apple in California." In the middle of the song "Trouble No More," it all started making sense.

Over the last year, two things have happened. First, Apple has increased sales by over a third, almost all from iPods -- those two million of them at $265 each last quarter and 100 million songs sold via their iTunes service. An iPod is just the combination of some Apple software, cheap disk drives and a $12 chip from a Silicon Valley company named PortalPlayer. I calculated that Apple pays $200 per iPod to Chinese assembler Inventec to slap it all together. Even with cheap labor, Inventec has almost no profits, I'd bet under $10, probably more like $4. PortalPlayer, by the way, e-mails its design to Taiwan to be fabricated, with profits of $5 per chip.

The second change is that Apple's stock has gone from $21 to $64. Pretty cool, capitalism at its best. Why? Because Apple keeps $65 per iPod -- money chases profits! If you assume the stock-price increase is all due to the iPod (it is), then that business is worth some $15 billion. Add in PortalPlayer's market value of $1 billion and you get a feel for how the world works. A $1.5 billion trade deficit increases wealth in the U.S. by $16 billion. I'll take that trade any day. So will all the holders of the retirement accounts who own Apple's stock. So, why am I caring about deficits again? Trade deficits are an economic construct, and lowering the dollar won't solve a thing. We are moving low-margin, low-pay jobs overseas, but fortunately, are left with high-margin, high-pay intellectual-property jobs. Would you rather own Apple making a margin of $65 or Invetec with $4, on the same product? Me too. We may have trade deficits of $550 billion this year, but we enjoy a huge margin surplus.

The very illogical way (so no one believes it) to get this all back in balance is for the dollar to rise. A lower dollar means foreigners get a needless discount on our productive stuff -- Pentiums and iPods, Windows XP and Oracle databases, and Cisco routers. They have to buy them anyway to run their economies (well, maybe not iPods) so why discount? Add non-productive but life-enhancing intellectual property to complete the sweep -- drugs, Hollywood movies, U2. A weak dollar won't bring back manufacturing jobs -- with $20/hour here vs. $2 in China, the dollar would have to drop 90%. And why should we encourage low-paying jobs in this country?

Foreigners buy Treasury bonds -- they own 43% of them -- so we don't have to. Who wants 3% returns? We should own stocks of the high-margin companies that benefit from this design vs. manufacturing divide. As we move to an intellectual-property economy, our wealth will come from exporting profitable designs and importing more finished goods. Higher salaries and our stock market balance this all out as those dollars flow back in. Of course, bean counters can't find the money that flows into the stock market, it is just bean dip. The $4-trillion-plus in trade deficits since 1976 has been matched by an $11 trillion increase in value of our stock market. That's about all you have to know. Plus, as Jack Nicholson might say, they can't handle our dollars. Too many dollars in foreign central banks leads to overlending to wasteful domestic companies. Japan is just emerging 15 years later from a nonperforming-loan hangover. China is face-first in the punch bowl with half its bank loans uncollectible: If their currency spikes, it might go to 100%.

Rather than debase our wallets, Japan and China have to buy dollar assets to keep their currencies from rising too much if they want to continue to sell us their industrial output, while of course, we get rich selling them the tools to do it productively. I'd suggest thanking Bono, er, Steve Jobs, for the iPod economy.

Mr. Kessler is author of "Running Money" (HarperBusiness, 2004).

wsj article- As Bush Vows to Halve Deficit,
Targets Already Feel Squeezed

With guns -- or military spending -- growing, the butter is likely to include some of the most visible areas of domestic spending, including the Medicaid health program, subsidies to Amtrak, agricultural research and even some federal education programs.
In the just-finished fiscal 2005 budget, which came in 10 weeks late, big cities received less federal aid to comply with anti-pollution laws and job training requirements. The National Science Foundation, which underwrites the country's basic research saw its funding cut from 2004 levels.

Now, I read in a washpost article that the NSF budget had been reduced by 104 million for next year. One of the problems of this-

NSF provides a lot of grants to tech colleges.
The NSF decides what projects to fund out of its budget for that academic year. When funds have been cut by a 100 million, there are less projects to fund. This means, colleges get less grants. This means students who are studying engineering and sciences get less grants to do research or in many cases, will not even get grants because it is something like the miniumum wage. You pay 8 $ or nothing at all. Paying 2 $ will not help because it won't be enough to get that project off the ground.

And herein comes a problem. As technology has become more advanced, grant sizes need to be even bigger than before they can achieve something useful.
Stipends are really really important to graduate students. This is what enables to even join a university to do their MS or Phd. And this is primarily important to small colleges/universities. Big colleges receive a large amount of state funds, well known colleges can rely on their endowments. But if small colleges do not receive adequate funds, how do they attract grad students? And as I stated before, grant sizes need to reasonable. If a big college gets 40,000 grant for one project. A similar project in a smaller university might get 20,000 for the same. If grant sizes are reduced, the smaller college might only get 10-15,000 and the bigger one will get 30,000. If the small college can't get tangible results in that 10-15k, then next year they won't even get a hearing when grants will be disbursed. That 10-15k will just be appropriated to the bigger college.

This threatens the very economic viability of that small college. Grad students in small colleges and universities receive monthly stipends that barely cover their apartment rent. In a private college or big university, that amount will be 3-6 times more.

It is the NSF grants that is so important for research assistants.400-500 $ a month for stipends might seem less but the grad student can manage with this.
If colleges cannot attract students, then there are fewer graduates in the country. Companies are already moving their R & D depts to the east.
Science is gonna suffer in the US.

The cut in the National Science Foundation's 2005 funding will mean about 1,000 fewer federal research grants. That will affect perhaps 2,000 senior university researchers and 1,000 science and engineering graduate students, estimates Joel Widder. A longtime NSF official, he now works for Lewis-Burke Associates, a company that helps universities navigate the government's grant-approval process. Two years ago, the law that re-authorized the program promised that the NSF's budget would double by 2007. Who guarantees promises?

As Bush Vows to Halve Deficit, Targets Already Feel Squeezed

A few must reads.

China Goes Shopping
(businessweek)

Are you living in a (housing)bubble? wsj

Here's One Use Of U.S. Power Chirac Can't Stop wsj

And Baby Makes Stress: Why Kids Are a Growing Obstacle to Marital Bliss wsj

and finally,

WSJ.com - Sprint's Move Causes Anxiety In Kansas City ... echoes what I said on slashdot

.
.
wsj article

A Hidden Cost
Of China's Growth:
Mercury Migration

Turning to Coal, Nation Sends
Toxic Metal Around Globe;
Buildup in the Great Lakes
Conveyor Belt of Bad Air
By MATT POTTINGER, STEVE STECKLOW and JOHN J. FIALKA
Staff Reporters of THE WALL STREET JOURNAL
December 17, 2004; Page A1

On a recent hazy morning in eastern China, the Wuhu Shaoda power company revved up its production of electricity, burning a ton and a half of coal per minute to satisfy more than half the demand of Wuhu, an industrial city of two million people. AES Corp., an American energy company, owns 25% of the 250-megawatt facility, which local officials call an "economically advanced enterprise."

The Chinese plant is outfitted with devices that prevent soot from billowing into the sky. But other pollutants, such as nitrogen oxides, sulfur dioxide and a gaseous form of mercury, swirl freely from the smokestacks. Rather than install more sophisticated and costly antipollution equipment, the plant, which is majority owned by state-controlled entities, has chosen to pay an annual fee, which it estimates will be about $500,000 this year. That option meets Chinese standards but wouldn't be allowed in the U.S.

The airborne output of Chinese power plants like Wuhu Shaoda was once considered the price of China's economic growth, and a mostly local problem. But just as China's industrial might is integrating the country into the global economy, its pollution is also becoming a global concern. Among the biggest worries: the impact of China's vast and growing power industry, mostly fueled by coal, on the buildup of mercury in the world's water and food supply.

Scientists long assumed mercury settled into the ground or water soon after it spewed forth as a gas from smokestacks. But using satellites, airplanes and supercomputers, scientists are now tracking air pollution with unprecedented precision, discovering plumes of soot, ozone, sulfates and mercury that drift eastward across oceans and continents.

Mercury and other pollutants from China's more than 2,000 coal-fired power plants soar high into the atmosphere and around the globe on what has become a transcontinental conveyor belt of bad air. North America and Europe add their own dirty loads to the belt. But Asia, pulsating with the economic rebirth of China and India, is the largest contributor.

"We're all breathing each other's air," says Daniel J. Jacob, a Harvard professor of atmospheric chemistry and one of the chief researchers in a recent multinational study of transcontinental air pollution. He traced a plume of dirty air from Asia to a point over New England, where samples revealed that chemicals in it had come from China.

One reason China's power industry spews out so much pollution is that under the nation's rules, many plants have the option of paying the government annual fees rather than installing antipollution equipment. Moreover, Beijing officials concede they lack the authority to shut down heavily polluting plants. And local inspectors, who don't report to Beijing, are reluctant to crack down on power companies that generate jobs.

In the U.S., the consequences are being detected not just in the air people breathe but in the food they eat. The U.S. Environmental Protection Agency recently reported that a third of the country's lakes and nearly a quarter of its rivers are now so polluted with mercury that children and pregnant women are advised to limit or avoid eating fish caught there. Warnings about mercury, a highly toxic metal used in things ranging from dental fillings to watch batteries, have been issued by 45 states and cover four of the five Great Lakes. Some scientists now say 30% or more of the mercury settling into U.S. ground soil and waterways comes from other countries -- in particular, China.

The increasingly global nature of the problem is rendering local solutions inadequate. Officials in some countries are using the presence of pollution from abroad "as an argument to do nothing [at] home," says Klaus Toepfer, executive director of the United Nations Environment Program in Nairobi, Kenya.

Yet global remedies -- primarily treaties -- are even harder to achieve. The last such initiative, the Kyoto Protocol, aimed at limiting emissions related to global warming, was rejected by the U.S., the largest contributor of such emissions -- and doesn't apply to China, the second-largest emitter. The best shot at a treaty for transcontinental pollution, Mr. Toepfer believes, would be to regulate a single pollutant that everyone agrees is hazardous. He recommends starting with mercury.

China is already believed to be the world's largest source of nonnatural emissions of mercury. Jozef Pacyna, director of the Center for Ecological Economics at the Norwegian Institute for Air Research, calculates that China, largely because of its coal combustion, spews 600 tons of mercury into the air each year, accounting for nearly a quarter of the world's nonnatural emissions. And the volume is rising at a time when North American and European mercury pollution is dropping. The U.S. emitted about 120 tons of mercury into the air in 1999 from manmade sources. Chinese power plants currently under construction -- the majority fueled by coal -- will alone have more than twice the entire electricity-generating capacity of the U.K.

The overwhelming majority of China's power plants are built, owned and operated by Chinese companies. Speaking about the Wuhu Shaoda power plant, Robin Pence, a spokeswoman for AES, says the Arlington, Va., company "is a minority partner in Wuhu. As such, we neither operate nor control the plant." She adds that AES didn't build the plant and that its world-wide policy for plants that it does design and build is to meet emission standards set either by the local country or the World Bank, whichever are more stringent. The Wuhu plant's manager declined to comment.

Natural Sources

EPA scientists estimate that a third of the mercury in the atmosphere gets there naturally. Traces of the silvery liquid in the earth's crust make their way into the sky through volcanic eruptions and evaporation from the earth's surface. It took the industrial age to turn mercury into a public-health concern. Mining, waste incineration and coal combustion emit the metal in the form of an invisible gas. After it rains down and seeps into wetlands, rivers and lakes, microbes convert it into methylmercury, a compound that works its way up the food chain into fish and eventually people.

The dangers of significant methylmercury exposure to the nervous system are well documented, particularly in fetuses and children. Permanent harm to children can range from subtle deficits in memory and attention span to mental retardation. In January, EPA scientists released research indicating that 630,000 U.S. babies born during a 12-month period in 1999-2000 had potentially unsafe levels of mercury in their blood -- about twice as many babies as previously estimated.

Adults aren't immune, either. Joel Bouchard, a National Hockey League defenseman who spent the past two seasons with the New York Rangers, says that last December he began suffering dizziness, headaches, insomnia and blurred vision -- forcing him to miss around 25 games. "It was, honestly, like I was in the Twilight Zone," he says. A team doctor discovered Mr. Bouchard had abnormally high levels of mercury in his bloodstream. The suspected cause: the tuna and other fish he'd been eating almost daily as part of what he thought was a healthy diet. He says his blood levels have since returned to normal and the symptoms have disappeared.

Few places more starkly illustrate the threat from mercury, and the obstacles to containing it, than China.

In Qingzhen, a town in the poor mountainous province of Guizhou about 800 miles southwest of Wuhu, a 53-year-old female rice grower who goes by the single name of Zhang and thousands of other farmers are surrounded by mercury pollution. Dark smoke surges from the local power plant, staining crops a drab gray. The plant flushes eight million cubic meters, or about 10 million cubic yards, of ash and water each year into an area adjacent to a major drinking-water reservoir. Some fish near the plant have levels of mercury 18 times what the EPA and the Chinese government consider safe, according to the Guizhou Provincial Environmental Science and Research Institute, which recently did a seven-year study of the province's mercury pollution.

The plots of land that Ms. Zhang and her neighbors tend are especially poorly situated. Nearby is the Guizhou Crystal Organic Chemical factory, which over the years released up to 100 tons of mercury into a stream that runs through her village, according to the study. An official in the factory's environment and safety department calls the report's estimate "too high," and says the factory stopped dumping mercury by 1998. But the stream still runs black and reeks so strongly of chemicals that people unaccustomed to the smell struggle not to gag when standing downwind.

Ms. Zhang and her neighbors are used to the smell. With no other choice, they pump water from the poisoned stream onto dozens of acres of rice paddies each planting season. Rice from the fields tastes sour, she says. "When you wash it, the water in the pot turns the same color as the river." Grain from these fields contains nearly 40 times as much mercury as rice from Shanghai, according to the study. Laboratory mice fed the rice became hyperactive and their nervous systems began deteriorating within a month, the study says.

Farmers in the village complain of periodic fits of shaking. Ms. Zhang suspects the pollution is the reason she and some neighbors have stomach cancer.

Once airborne, by drifting as an invisible gas or clinging to particles of dust, mercury begins to wander. Last April, an instrument-laden U.S. surveillance aircraft near the California-Oregon border hit a plume of dirty air inbound from China. Among the pollutants: black carbon, sulfur dioxide and mercury. "Storms didn't wash it away," marvels Veerabhadran Ramanathan of the Scripps Institution of Oceanography in La Jolla, Calif.

Dr. Ramanathan, who helped pioneer the field of tracking international air pollution, says such plumes shed some of the noxious load over the ocean. But their bulk continues to drift across the U.S. at the leisurely speed of a blimp, polluting lakes and rivers as it goes.

The density of Chinese pollution has amazed researchers. Hans Friedli, a chemist at the National Center for Atmospheric Research in Boulder, Colo., recalls flying through plumes off the Chinese coast near Shanghai two years ago that contained pollutants in the "highest concentration that I have ever seen from an aircraft, except when I've flown into forest fires."

And it is going to get worse. By 2020, China will have nearly 1,000 gigawatts of total electricity-generating capacity, more than twice the current amount, according to the State Power Economic Research Center. The majority of new plants will burn coal. Coal-fired plants today produce three-quarters of the country's electricity, compared with around 50% in the U.S. China will this year burn about 1.9 billion tons of coal, a 12% increase from last year, and consumption is expected to keep rising.

China is phasing in several measures to tackle air pollution. But soot plus sulfur dioxide and nitrogen oxides -- often referred to as "SOx and NOx" -- are understandably taking priority over mercury. Even with the existence of poisoned villages like Ms. Zhang's, other pollutants affect even more Chinese people. Airborne particulates are a suspected leading cause of respiratory disease around the country. Acid rain from sulfur dioxide now pelts a third of China's territory, a ratio that is "expanding, not shrinking," says Pan Yue, the deputy director of China's State Environmental Protection Administration, or SEPA.

Mr. Pan, an outspoken champion of stricter environmental standards, says there currently aren't any rules being drafted to address mercury. Asked if he is aware of recent studies linking Chinese emissions to mercury in American lakes and rivers, he nods.

"As for China's impact on surrounding countries, I'm first to admit the problem. But let's talk about this in the context of international fairness," he says, before firing rhetorical questions aimed at Washington: "Whose development model are we emulating? Who has been shifting all of its pollution-heavy factories to China? ... And who bears an even greater international responsibility than China -- but has yet to shoulder it -- on matters like greenhouse-gas emissions?"

Environmentalists say U.S. action to control its own mercury emissions from power plants has been sluggish. James Connaughton, head of the White House Council on Environmental Quality, counters that the Bush administration has promised by next March to announce regulations aimed specifically at restricting mercury emissions from coal plants, which he calls a "world first." The plan, which follows years of delays and lawsuits, is expected to include market-based trading of pollution credits among utilities and won't be implemented fully until 2018. Other technologies, such as flue gas desulfurisation, that remove some mercury while scrubbing other pollutants from coal have helped cut mercury emissions in Europe and North America.

Weak Incentive

On the face of it, China's new rules on sulfur dioxide should help combat emissions of mercury, too. Beijing is requiring many power plants approved after 1995 to install equipment that reduces sulfur dioxide, and such equipment often has a bonus effect of filtering out some mercury. China this summer also increased the fees that power plants must pay for each ton of sulfur dioxide they emit, hoping the change will give all coal-fired power plants an incentive to buy such equipment.

But the reality is that sheer increases in Chinese coal consumption, together with difficulty policing polluters, will more than offset whatever reductions in sulfur dioxide and mercury are achieved by the rules, experts say. For China, the economics of coal remain irresistible.

It's cheaper, and "with current global reserves, it probably wouldn't be a stretch to keep using coal another 200 years," says Fan Weitang, president of the China National Coal Association. Sitting in his Beijing headquarters at Coal Tower, a sleek new 22-story building, Mr. Fan is caught off guard by questions about mercury pollution. "It is hard for me to discuss that in depth," he says. Other pollutants like airborne particulates, and SOx and NOx, receive more attention, and "won't be much of a problem" in the near future, he promises.

That view isn't shared by Chinese scientists. " 'No problem'? Big problem," says Tang Dagang, head of atmospheric research at the Academy of Environmental Sciences, which is funded in part by SEPA. By the end of last year, only 5% of the installed capacity of coal-fired plants in China had technology to reduce sulfur dioxide, according to official statistics. While new rules will require the retrofitting of many plants with such technology, Mr. Tang says older plants that account for half of existing power-making capacity are exempt.

What's more, there is little economic incentive for power plants like Wuhu Shaoda, the company partly owned by AES, to further clean up its act.

Next year, Wuhu Shaoda will pay an estimated fee of $400,000 for the several thousand tons it is expected to emit of sulfur dioxide alone, according to an official with knowledge of the plant's emissions. That's much less than the $14.5 million engineers at the plant say it would cost to buy sulfur-dioxide-removal equipment.

Iran

Still failing, still defiant

Dec 9th 2004 | TEHRAN
From The Economist print edition

AP

In the short run, Iran is getting grimmer. One day the ruling ayatollahs will lose their deadening grip on power. But not soon

Get article background

"THE firing of a bullet into his damned and blasphemous head is an absolute necessity--and how cherished would that bullet's emissary be." Those were the gentle words recently directed by one of Iran's leading editors, Hossein Shariatmadari, at an exiled Iranian television presenter, Manouchehr Fouladvand, who has had the cheek to mock aspects of Islam: shades of the fatwa that cast a death sentence on a British writer, Salman Rushdie, cursed for blasphemy in 1989 by the late Ayatollah Ruhallah Khomeini, Iran's supreme leader. A return, then, to the intolerance of the revolution's early days?

Perhaps not. Though Mr Shariatmadari is the influential boss of a state-owned newspaper group, Keyhan, which faithfully echoes the thoughts of Iran's conservative clerical leaders, his exhortation is unlikely to be acted on. Since the kindlier Muhammad Khatami became president in 1997, his governments have managed to dampen Iran's fundamentalist ardour, especially on social matters. Women who flout the Islamic dress-code, which still requires their heads (and the rest of their bodies) to be covered in public, are more rarely threatened with a flogging. The law providing for adulteresses to be stoned to death, though still on the statute book, is suspended. A blind eye is still turned to the many thousands of Iranians who tune in to satellite television, though that is still technically illegal.

Iran's nuclear escapades
Dec 2nd 2004

Iran

Human rights

Defence

Nuclear Energy

Free speech

Human Rights Watch, Reporters Without Borders and the International Atomic Energy Agency report on Iran. Political Resources on the Net links to Iran's government and political websites. See also IRNA, the national news agency.

Nonetheless, Iran's liberals and reformers feel increasingly beleaguered, and voices such as Mr Shariatmadari's are louder and more menacing than they were even six months ago. In that period, says one of Tehran's longer-serving foreign diplomats, "there has been a dramatic change in mood". Bullying militias are again trying--so far without much success--to enforce the old morality. Last month a female MP from the conservative camp suggested that if ten "street-walkers" were executed, "We will have dealt with the problem [of prostitution] once and for all."

More worrying from the liberals' point of view, the reform-minded but disappointingly dithery Mr Khatami has been the lamest of ducks since the ruling clergy and the country's supreme leader, Ayatollah Ali Khamenei, who succeeded Mr Khomeini in 1989, presided over a rigged general election in February when the candicacy of 2,000-plus reformers was blocked. As a result, the new parliament is distinctly more xenophobic and illiberal than its predecessor. Of its 290 members, more than a quarter share the sort of rabid views expressed by Mr Shariatmadari, and they seem to be mocking Mr Khatami with impunity in his last months in office.

The sole remaining liberal daily newspaper of any weight, Shargh, feels obliged to censor itself more rigorously than before for fear of being closed down, as so many of its like-minded counterparts have been. The so-called "red lines" that fence off sensitive issues from discussion are being drawn more tightly. Freedom of expression is diminishing again.

The media have never been allowed to criticise the supreme leader. "But now we cannot attack the judiciary or the Council of Guardians either," says one of Shargh's editors, referring to Iran's 12-strong body, the most powerful in the land, composed of six clergy appointed by the supreme leader and six others picked by the head of the judiciary, himself picked by the leader. It is they who blocked reform-minded candidates from standing for parliament and refused to ratify virtually all the more enlightened bills--nearly half the total--passed by the previous parliament.

Not that mass repression is needed to keep the media, or the Iranian people in general, in line. According to a respected human-rights campaigner, between 2,000 and 4,000 Iranians, including about 30 journalists, are behind bars for political reasons. The reason for the overall figure's vagueness is that many of those incarcerated are in "unofficial" prisons: even their relatives are not told they are there.

In the past few months detentions have swelled of "bloggers" who have set up internet sites, which the state has taken great trouble to block. A number of well-known campaigners for human rights have been prevented from going abroad or arrested on their return. Human Rights Watch, an independent lobby group, said this week that "secret squads operating under the authority of the Iranian judiciary have used torture to force internet journalists and civil-society activists to write self-incriminatory confession letters".

Downcast in Tehran
The clampdown seems to be working. Many of the liberal and sophisticated professionals of northern Tehran, downcast by Mr Khatami's failure, seem to have withdrawn into a private life behind the walls of their villas. Many are emigrating, at an estimated rate of 200,000 a year, especially to the United States (where there may be 800,000 Iranians), Canada (perhaps the most popular destination), Britain, France and Australia.

Mr Khamenei seems, on the face of things, more dominant than ever. But power in Iran is by no means monolithic. Even the conservatives divide into various strands, from rigid puritans to cautious pragmatists. Some, for economic and strategic reasons, would like Iran to accommodate with the West, even with the United States. Others, loth to stain the revolution's purity, are prepared to accept Iran's isolation, protecting the country from the "westoxification" that has, in their view, corrupted so many Muslim countries. Yet others think they can defend the old morality and the political dominance of the clergy while, at the same time, opening the economy to the West; they invoke a "Chinese model". Policy may, in the course of the next few years, shift back in a more liberal direction. Or it may not. The future is highly unpredictable.

The one thing everyone knows is that Iran is in a jam. Above all, plainly, there is a crisis of legitimacy. Only half of Iranians bothered to vote in February's election; not much more than a quarter of those in Tehran, which embraces at least 8m people, turned out. Western diplomats reckon that barely 15% of Iranians still support the ruling order. The low turnout reflected not just apathy and fatalism, which are indeed strong. Many sour and embittered Iranians consciously decided not to go to the polls as a gesture of protest.

"We've come to a dead end," says Grand Ayatollah Yusef Saanei, one of a dozen clerics to hold this high rank in Iran but whose liberal views, especially on women's rights, have put him out of favour with the ruling clergy.

According to some reports, disaffection with the regime even among the clergy is spreading. A cleric from an influential religious family, also out of favour with the supreme leader, derides the Council of Guardians for mostly taking "orders and hints from the powers that be"--a euphemism for Mr Khamenei. Most striking of all, sociologists and educators report that religious belief and observance, especially among the young, have slumped since the mullahs took power a quarter of a century ago. Instead of fortifying the people's devotion, the system seems to have switched many people off the spiritual side of life, inspiring a shallow materialism instead.

In a population of around 70m, one-third are reckoned to be under 14 and two-thirds under 35. Though the economy grew by about 6% last year, it is not expanding fast enough to keep unemployment down. Around 16% are officially jobless, though the real figure may be higher. At about 17%, inflation is rising faster than wages. Though the necessities of life, such as bread and potatoes, are hugely subsidised, the lot of the urban poor, whose minimum wage is around $12 a month, is dire.

The mullahs have patently failed to revamp an economy that remains distorted by subsidies, closed to competition within Iran or from abroad, locked in the hands either of the state or of state-connected foundations known as bonyads, and increasingly reliant on the high price of oil: Iran has about a tenth of the world's known reserves. Barely a fifth of the economy is in private hands. The conservatives have made it hard for the timid Mr Khatami to sell off state firms or open up to foreigners. The merchants of the bazaar, a longstanding pillar of the mullahs' power, still protect their own cartels. Capital flight continues apace. Only four private banks exist (three of them linked to bonyads or to the state), with just 4% of the banking sector's assets. Corruption in every sphere of business stunts growth and puts off investors. People mutter about the mullahs' wealth and patronage.

The new parliament has been especially obstructive, preventing, for instance, a Turkish company ("with Zionist links", so it was bruited) from acquiring a mobile-phone franchise to break the current inefficient monopoly. It has also prevented the opening of Tehran's new airport, because it would have been operated by a Turkish-led consortium--so, in the conservatives' view, imperilling national security. Most recently, parliament has threatened to unpick a big deal with Renault, the French car-maker, to produce a new car.

Without oil at its present sky-high price, Iran's economy would be in wretched straits. Oil provides about half the government's revenue and at least 80% of export earnings. But, once again under the influence of the zealots in parliament, the oil cash is being spent on boosting wasteful subsidies rather than on much-needed development and new technology.

Comparisons with neighbouring Turkey are instructive, painfully so to Iranians who look beyond their own borders. Before Iran's revolution, Turkey was behindhand on practically every count--foreign direct investment, income per head, GDP growth. Now the reverse is true. More noticeably, Turkey's politics have become far more open, its (still patchy) human-rights record has improved, its media and civil society are much bouncier than in Iran. Turkey has had a female prime minister; since the revolution, Iran has not even had a woman minister. Turkey is moving ahead, and may even join the European Union; Iran is falling behind.

Other regional comparisons further irritate Iranians. The Qataris have far outstripped them in exploiting the huge gasfield they share. Tiny Dubai, across the Gulf, now draws in much more foreign investment: Iranians go there for banking, for trade (and sanctions-busting) and for fun. Farther along the Caspian shore, Azerbaijan, with American know-how, is developing its oilfields far more dynamically; Iran's productivity rate has plummeted.

In the face of such gloomy contrasts, Iran cannot make up its mind whether to co-operate with the perfidious infidel West to save its economic skin and strengthen its security, or to keep its Islamist soul unsullied. That dilemma is at the heart of the present wrangle over nuclear power.

Why they want nukes
For all its recent sense of failure, Iran still yearns to be acknowledged as a leading power, even the leading power, in the area. In some respects, it is not doing badly. Iraq and Afghanistan, neighbours on either side, have--in Iranian eyes--been humiliated by occupation by the Great Satan. Iraq, its old foe, is a mess. Turkey apart, Iran is a giant that looks steadier on its feet than some of its neighbours. And if ramshackle Pakistan, to the east, can have a nuclear bomb yet remain a crucial ally of the West, why shouldn't Iran have one too?

Publicly, it says it does not want one. But with vast and cheap supplies of gas and oil, few observers think Iran really needs nuclear energy. The International Atomic Energy Agency (IAEA), the UN's nuclear watchdog, has found no irrefutable evidence that Iran is building a bomb. Last week, the head of Iran's Atomic Energy Organisation, Gholamreza Aghazadeh, chirpily told The Economist, "We've never even thought about it."

But a mass of circumstantial evidence, along with a tangle of lies, omissions and evasions in the face of the agency's inquiries, has convinced just about every independent analyst that Iran has indeed been trying to build--or at least have the capacity to build--a nuclear bomb, in violation of the Nuclear Non-Proliferation Treaty, under which it promised not to do so. (It has also proclaimed the extension of its Shahab-3 missile's range from 850 to 1,250 miles, within striking distance of Tel Aviv.) Israel, an undeclared nuclear power that has never signed the NPT, and whose right to exist has never been recognised by Iran's ruling mullahs, is particularly exercised by the prospect of an Iranian bomb--and has hinted it might hit a range of would-be nuclear targets across Iran.

In the end, it is all about national pride--and high-stake risks, tortuous and deliberately time-consuming negotiation, fine calculations, deception and bluff.

These are the options:

  The leading three European countries (Britain, France and Germany), which have been negotiating since last year, manage to persuade Iran to stop its uranium-enrichment and plutonium-reprocessing programmes that could have a military as well as civilian purpose, and allow intrusive checks by the IAEA, in return for trade agreements and other sweeteners. But the best guess is that the Iranians will still spin things out, while beavering away at getting the wherewithal for a bomb.

  A "grand bargain" (tentatively mooted by John Kerry) with the Americans, who would end a quarter of a century of hostility, lift their economic sanctions now in force, and forge a complete rapprochement. This would also entail Iran co-operating against terrorism, opening up its economy, improving human rights and recognising Israel (the ayatollahs say they would accept a Jewish state once they are satisfied that the Palestinians do, too). Few people think this option will be taken up.

  If both those options come to naught, it is possible that Iran will be referred to the UN Security Council for its breaches of the NPT and could then face worldwide sanctions. As things stand, China and Russia are likely to block such a resolution, but it is conceivable that Russia could change its mind, and China abstain.

  If the blockage continues, either Israel or the United States might bomb Iran's nuclear sites, just as Israel knocked out Iraq's Osirak reactor in 1981. It would be harder, as Iran's sites are scattered, and some are deep underground. A concerted attack would probably set back Iran's nuclear schemes by several years or more--but not end them. And it would risk bloody retaliation against Israel and America.

As things stand, Iran will probably attain the capacity to make a bomb and, after an Indian-style period of "strategic ambiguity", break out of the NPT. It would be unlikely ever to use this weapon. But it would be safer, perhaps, from the sort of attack launched on it by Saddam Hussein 24 years ago.

No sign of the ayatollahs falling, then?
The American administration's hope that sanctions and other pressures will eventually force a change of regime in Tehran looks, in the foreseeable future, forlorn. And an Israeli or American attack might well have the adverse effect of rallying Iranians to their rather unpopular regime.

Otherwise, only three things could jolt Iran out of its present torpor of stagnation and depression. One is the presidential election due in May. Another, further down the road, is a dramatic slump in the oil price. The third is the possibility of a Gorbachev figure emerging from within the clerical establishment to open up the deadening political and economic system. At present none of these three possibilities looks likely, at least not in the short run.

The presidential candidate, so far undeclared, who has aroused most debate--and cautious hope among some of those seeking change--is Ali Akbar Hashemi Rafsanjani, a former president who now heads the Expediency Council, an influential mediating body. He is generally dubbed a "pragmatic conservative". Some businessmen think he would help open the economy; others demur, considering him the epitome of the rich mullah with fingers in every pie but no real yen for the market.

He is undoubtedly a cunning fellow with a penchant for intrigue at home and abroad--Americans have not forgotten how he humiliated them during the Iran-contra affair. He is also unpopular among the people at large, scoring dismally in the general election earlier this year. But the ruling mullahs have their ways of promoting--and blocking--candidates. The presidency, as Mr Khatami has shown, can anyway be emasculated. But if Mr Rafsanjani got it, he might make a difference.

Is there a Gorbachev elsewhere among the mullahs? It is an unlikely prospect, but the inner workings of Iran's clerical establishment are mysterious and supremely opaque. Mr Khamenei's standing, such as it is, has fallen--even, it is said, among the clergy. The opposition, at present, is numb. Only if the price of oil, say, halved, and the economy really dived would the anger and frustration well up again and bring people out on the street. And so long as that does not happen, the Iranians are miserably stuck with what they've got.

known keywords- dioxin, soup, sep, posison. unknown keywords- russia, Ukranian FSB(formerly KGB), bioweapons(Biopreparat), 1983-1989,Sverdlovsk(Yekaterinburg), Obolensk, Koltsovo, Zagorsk, Pokrov, 2000-, putin orders, fear of Ukraine's migration to the west.

Not a good day for Russia.. skeletons might tumble out of the cupboard 1-5 years from now when Ukraine is more liberalised. East Ukraine shouldn't have gone to such extremes(but what choice did they have?) Russia was/is really worried of Ukraine's migration to the west. Russia shouldn't have done this..

Renaissance Island

update-

Paul M. Wax, with the American College of Medical Toxicology, said two scientists he met in Volgograd, Russia, in 2002 told him that during the Soviet era they had investigated the potential of developing dioxin as a chemical weapon.

washpost

What an eye opener this article is.(Is that correct english?)
--------------------

Cash Economy
Behind Slow Growth in Europe:
Citizens' Tight Grip on Wallets

A Thicket of Laws to Protect
People Damps Spending;
'Debt Is Disreputable'
Better Things to Do Than Shop
By MARCUS WALKER
Staff Reporter of THE WALL STREET JOURNAL
December 10, 2004; Page A1

BRUSSELS -- Giuseppe Ivaldi has a few ideas about why Europeans consume so little. An Italian who opened a men's clothing store here nine years ago, Mr. Ivaldi closes his doors in the chic Espace Louise mall each weeknight at 7 p.m. He puts items on sale only in January and July, and the rest of the year marks up a hefty profit margin even though he's sure that drives many customers away.

He wishes he could do business differently -- stay open late and offer some items below cost -- more like shops in the U.S. But in the Belgian capital, as in much of Europe, retail laws require that shops close early to save staff from long hours. And tax laws require that he makes a comfortable profit on each item, to limit price competition and protect small stores.

"I would like to be more flexible," says Mr. Ivaldi. "Europe is very paternalistic."

While American consumers devour goods from around the world and fuel global economic expansion, thrifty Europeans are contributing far less to growth. The strong euro -- up more than 10% since September against the dollar -- should enable consumers in the euro zone to buy more.

But rules designed to save citizens from harm have conspired with economic cautiousness to close wallets in continental Europe. A thicket of laws to protect employees ensnares retailers, keeping prices high and store hours short. Among other regulations, Greece bans non-Greek store names, and Italian supermarkets cannot have gas pumps. Limits on consumer finance protect borrowers from indebtedness -- and stifle the use of credit cards. Western Europe has only 0.27 credit cards per person, compared with 2.23 in the U.S. State pension systems are running out of funds, so people save extra for their retirement. Moreover, many affluent Europeans just don't want to spend their free time shopping.

Residents of the 12 countries using the euro save 10.5% of their disposable income compared with 0.8% for Americans, according to the Organization for Economic Cooperation and Development. (The British, who don't use the euro, are bigger spenders and save less than Continentals.) In the past three years, the gap has widened. U.S. consumers have increased their spending more than three times as fast as euro-zone residents. This year, overall euro-zone consumption is set to grow at only around 1.2%, the OECD says, compared with 3.6% in the U.S.

"People have an urge to spend nothing," says Rolf Kunisch, chief executive of Beiersdorf AG, one of Germany's largest makers of household items, including Nivea skin creams. In the days when the German economy was growing fast, "we had about 5% growth a year in domestic sales. Now it's zero."

Weak consumption in the euro zone -- the world's second-biggest consumer market after the U.S. -- means one less source of growth for U.S. exporters. It has thus contributed to the ballooning U.S. deficit in the trade of goods and services, and is weakening the dollar: European companies that export to America are paid in dollars, which they then sell to buy euros. But because Europeans aren't consuming as many American products, U.S. exporters don't receive many euros to balance things out. Eventually, the falling dollar will mean Americans won't be able to afford as much from Europe, which will threaten Europe's meager, export-reliant growth.

Much of the red tape is designed to preserve continental Europe's quality of life. Europeans tend to see themselves as workers first and consumers second, and they elect governments that protect them from long, irregular work hours. Regulators here have limited price competition between stores to stop out-of-town malls from wiping out the small shops that enrich the character of European cities.

But low consumer spending is impeding Europe's already slow growth -- the region's economy will likely have expanded an annual average of just 1.1% from 2002 to 2004, compared with more than 3% expected for the U.S. Stagnant domestic demand is driving European manufacturers to invest outside their own borders, where they can increase sales faster. Beiersdorf, for example, recently expanded its factory in Shanghai and launched its skin creams in Vietnam. "We will continue to live off globalization, thankfully," says Mr. Kunisch.

Such moves hold back hiring and wage growth in Europe, and so further discourage spending. The only way out of this cycle: shopping. "It is time for you to consume," Jean-Claude Trichet, head of the European Central Bank, told the citizens of the euro zone at a news conference several months ago.

Anke Hemmann isn't ready to heed that advice. A psychologist from Plauen, Germany, Ms. Hemmann thinks the country's state pension will be severely reduced by the time she retires. As in much of continental Europe, German pensions are almost entirely paid for by levies on current earnings, instead of by investing money over time. But a low birthrate will reduce the working-age population while the ranks of pensioners are swelling. Experts say this will result in drastic future cuts to pension payments.

"I'm not relying on there being anything," says Ms. Hemmann, 27 years old. "If there is something, that's a bonus." So she puts 12% of her disposable income in a life-insurance policy that will serve as a private pension. That doesn't leave much for shopping, which -- like many Europeans -- she's not that interested in anyway. She buys shoes three times a year and an item of clothing roughly every six weeks.

Despite having a steady job, Ms. Hemmann doesn't like to spend with her credit card. She mainly uses it for convenience when vacationing abroad, and her current balance is zero. "I know it's probably bad for the economy," she says of her prudent lifestyle, but adds: "Debt is disreputable. I was brought up to spend only what I have."

Cautionary Tales

In France, the evening news repeatedly broadcasts features on the dangers of over-indebtedness, and regulations discourage borrowing to consume. For example, the French central bank requires credit cards to display clearly the words "Carte de Credit," to distinguish them from more popular, less-stigmatized debit cards, which draw directly on a checking account.

"The consumer doesn't want to show to the retailer that he is paying on credit," says Herve Kergoat, MasterCard International Inc.'s country manager for France. "In France there is a culture strongly averse to credit."

David Thesmar, an economics professor at the École Nationale de la Statistique et de l'Administration Économique in Paris, doesn't even have a credit card. He and his wife want only enough money to meet their spending needs, and he would rather spend his free time with his kids than go shopping, he says. "I'm not a very big shopper," says the 32-year-old. "I don't feel bad when I buy cultural things like books or CDs, but it feels bad to buy futile things, especially when I buy clothes."

Even Europeans who want more consumer credit find it restricted. In Belgium, people can borrow only as much as about $1,600, unless they sign a lengthy written contract and their bank scrutinizes their debt history. Most customers stick to the cap instead, which also applies to overdrafts on bank accounts. "It's to protect the consumer from himself," says Jacques Zeegers, secretary general of the Belgian Banking Association.

As a result, while the average American spends more than $5,500 a year using credit cards, the equivalent figure for Germany is only $64, and for France just $30, according to Euromonitor International, a market-research company.

In most of continental Europe, banking regulations don't allow borrowing backed by home equity, as in the U.S. In Montclair, N.J., Alex and Gail Ciecierski's family home has more than doubled in value since they bought it 13 years ago, and the Ciecierskis have taken out a $205,000 home-equity loan. They used this and another mortgage to buy three properties in Florida, entirely with borrowed money. With this arrangement, Mr. Ciecierski, a 48-year-old technical manager at a television studio, is financially secure even though he saves little from his salary and the family spends more than he earns. His savings-account balance is just $1,000, while his credit card is $13,700 in the red. His wife Gail considers shopping "a sport," he says. "I'm living the American dream: no cash in pocket."

But in Italy, for example, home loans are restricted to 80% of a property's initial purchase price, and Italian law and banking practice make it difficult to increase borrowing against the value of a house.

"I can't imagine that Italians would link their spending to capital gains instead of their income," says Tito Nocentini, head of retail at Banca di Roma. "When Italians think of home loans, they think of buying a home. Unlike Anglo-Saxons, they don't think of doing it to buy something else, like a car."

Luca Tardella, a 37-year-old statistician, bought a house in Rome five years ago. Since then, its value has more than doubled. But he doesn't like being in debt, and chose the shortest possible mortgage-repayment time, 10 years, in case Italy reverts to its double-digit interest rates of the past. He wouldn't want to take out home equity for consumption even if his bank allowed it.

"If I consumed the capital gains today I wouldn't be able to use them to buy a bigger house as my family grows," he says. "I don't have the mentality of borrowing to consume. I buy things little by little from the money I have, to preserve peace of mind. It was the way in my family: Never owe a debt to anyone."

European policy makers have tried to boost consumer spending. In July, France's parliament enacted a tax credit worth 25% of any interest paid on consumer loans this year and next. Then-finance minister Nicolas Sarkozy also cajoled supermarkets to reduce by 2% the price of hundreds of branded goods from yogurt to shampoo. And Mr. Sarkozy proposed loosening a French law that stops retailers from selling goods for less than they paid for them -- but his plan only let them reduce their prices by a limited amount, as he feared complete liberalization would spark a price war favoring the biggest retailers. Despite all these moves, French household spending has stalled.

The European Commission, the executive arm of the European Union, has pushed unsuccessfully since 2001 for a liberalization of laws on sales promotion, to cut through national rules that inhibit cross-border competition. France, for example, bans promotional games like lotteries, while Austrian law prohibits the advertising of free gifts if they exert "psychic pressure to buy."

But national governments, which have the final say on pan-European laws, couldn't agree on the proposed liberalization in September. Objectors, such as France, claimed it would leave consumers vulnerable to misleading offers.

Restricted Hours

European store hours are often restricted to protect staff from working late. French labor law keeps most stores closed all day Sunday, and they can only open for 10 hours on other days because staff can't be required to work longer.

Over the past few years, vending machines offering milk, cereals and toilet paper have sprung up on Parisian streets to meet a demand that shops can't. In Germany, after years of tortuous debate between government, retailers and unions, stores were in 2003 allowed to remain open until 8 p.m. from Monday to Saturday, instead of 6 p.m. on weekdays and 4 p.m. on Saturday as before.

But when Belgium's biggest supermarket chains demanded longer open hours in the evenings last spring, retail unions threatened to strike, and the chains gave up, says Frederic Lernoux, a policy adviser for Belgium's small-enterprises ministry. "There is no more social life for the self-employed if they have to open 24 hours a day to compete," says Mr. Lernoux.

These laws stop Mr. Ivaldi, the Brussels shopkeeper, from staying open until 10 p.m., as he would like to some nights, for clients who work late.

He also wants to offer promotional packages, such as a suit and tie with shoes, and discounts for goods that aren't selling well. But the law forbids promotional discounts outside the official sales in January and July -- and stores can't even advertise coming special offers in the run-up to these sales.

Mr. Ivaldi's discounts even are limited during the authorized sales, because the tax authorities expect him to sell his wares for an average margin of 50% over purchasing cost. Belgium's finance ministry says the rule is designed to simplify the calculation of value-added tax.

But even if retail restrictions were swept away, many Europeans would carry on saving to supplement their future pensions -- Mr. Ivaldi among them.

"If I had less sense, I would be a spender," he says. "I would love that. I would go to boutiques and buy clothes, I would buy cars, I would buy a sailing boat."

Behind Big Drop in Currency:
Imbalance in Global Economy

U.S. Soaks Up Asia's Output
By Going Deep Into Debt;
Something Has to Give
Getting Others to Consume
December 2, 2004
The U.S. dollar is drooping. It's down about 9% against other major currencies since August. That's often the headline, but it's not the problem. The weak dollar is actually a symptom of a global economic malady -- and it's also part of the cure.

The problem is that the world economy is out of whack.

Americans have become global consumers of last resort, gobbling up far more than the U.S. produces by importing from economies that churn out far more stuff than they can digest at home. They send us things to eat, wear, drive and plug in. We buy from thriftier economies, mainly in Asia, and they lend us $1.8 billion every day.

This has been a good deal for Americans. We've been able to live beyond our means. Interest rates have stayed low because foreigners have been happy to purchase gobs of debt issued by the U.S. Treasury and mortgage giants Fannie Mae and Freddie Mac. Morgan Stanley economist Stephen Roach, who has been calling for the "need to rebalance" for months, dubs these overseas investors "the global enablers." If not for the flood of foreign money, he figures, U.S. long-term interest rates would be between one percentage point and 1.5 points higher.

The ability to borrow without pushing up interest rates has also been a boon to the Bush administration. "The federal government, enjoying low funding costs, can have its cake and eat it too, boosting spending on both defense and social programs without having to resort to tax increases," says Barry Eichengreen, an international economist at the University of California at Berkeley.

UNCHARTED TERRITORY

The U.S. current-account deficit is breaking records. See a chart of the currnt-account balance as a percentage of gross domestic product.

The folks on the other side of the oceans have benefited, too. Exports kept Europe growing despite the Continent's perennially thrifty consumers and inflation-phobic central bankers. Goods sold to the U.S. also kept Japan's stagnation from being even worse. U.S. markets and leading-edge technology companies offered foreign businesses and investors a more profitable place for their savings than home markets, particularly during the 1990s boom years. And China and smaller Asian economies, in some ways mimicking the earlier success of Japan and Korea, looked to strong exports to lift people out of poverty and recover from the rocky years of the late 1990s.

To keep those exports attractive to U.S. consumers, Asian economies have pegged their currencies to the dollar (China, Hong Kong, Malaysia) or actively sold them for dollars (Japan, Korea, Taiwan). That keeps their currencies weaker against the dollar than they otherwise might have been.

The result: Huge dollar hoards in Asian central banks, more than $1.8 trillion now, most of it in the form of U.S. government securities. They have, in essence, taken the money the U.S. sent them to buy imports and lent it back to the U.S. This, of course, gives China and Japan a very big reason not to let the U.S. economy or the dollar tank.

So we save very little, buy a lot and enjoy lots of imported goodies. Other countries save a lot, sell a lot and enjoy lots of export jobs. We borrow. They lend. For a while, nearly everybody -- save Americans whose jobs or profits were threatened by imports -- was content.

LOSING CURRENCY

See who wins and who loses with a weak U.S. dollar.
But now that the dollar, which had peaked in early 2002, is sliding again, it's clear that the game is changing -- and that foreigners are growing reluctant to hold ever-more dollars. "A diminished appetite for adding to dollar balances must occur at some point," Federal Reserve Chairman Alan Greenspan said in a recent speech, adding quickly that, so far, he sees "only limited indications" of resistance to lending to the U.S.

The gap between U.S. exports and imports and the amount of U.S. borrowing is getting uncomfortably large by historical standards. The U.S. is expected to borrow $670 billion this year from the rest of the world, according to estimates this week by the Organization for Economic Cooperation and Development.

That works out to an unprecedented 5.7% of the U.S. gross domestic product -- the nation's total economic output -- about twice as large as many mainstream economists consider sustainable. Even in the most profligate years of the 1980s, the current-account deficit, as it's known, never got bigger than 3.3% of GDP. Indeed, though international trade and investment grew markedly in the decades after World War II, it's only been since 2000 that the U.S. economy has become so enormously dependent on the savings of foreigners, Mr. Greenspan noted.

Twenty five years ago, the value of overseas assets held by U.S. companies and citizens was far higher than the assets foreigners owned in the U.S. But years of selling U.S. assets like stocks, bonds, companies and real estate have turned that upside down. The value of U.S. assets abroad is now far less than foreign-owned assets in the U.S. The net difference: nearly 25% of GDP.

If policies and exchange rates remain unchanged (which is unlikely), the figure is on track to double to 50% of GDP in a decade, the OECD says. That would force the U.S. to set aside more of its income each year to pay interest and dividends to foreigners. And eventually, like a highly leveraged company, the U.S. would have to pay higher interest rates to keep creditors lending. "At some point, the game has to end. When, we don't know," says Michael Mussa, the former chief economist of the International Monetary Fund.

Simply put, the U.S. -- either voluntarily or forced by markets and the rest of the world -- has to save more and buy less, particularly from other countries. Other countries, in turn, have to save less and buy more, particularly from the U.S. And if that's to happen in a growing world economy, the economies of Europe, Japan and China need to rely more on demand from their own consumers, and less on demand from Americans.

That's where the dollar becomes part of the cure. A precipitous decline in the dollar would rattle markets and could provoke a global recession. But a more gradual drop -- like the one under way -- makes U.S. exports cheaper to buyers in other countries, and it makes imports pricier to Americans. It will take a while for that to work through the system, but history suggests that it will restrain U.S. imports and boost U.S. exports.

But there are a couple of things standing in the way of the weaker-dollar fix.

One is that China, so far, has refused to let the yuan rise against the dollar. "If the dollar is to go down, other currencies have to go up. It's hard to find a better candidate than China," says Morris Goldstein of the Institute of International Economics, a Washington think tank.

China is important not just because of its size -- it now represents about 13% of U.S. imports -- but because smaller Asian economies are reluctant to let their currencies move much against the dollar until arch-competitor China does. That has left other currencies, notably the euro, to absorb the full effect of the dollar's decline. The U.S., Europe and the IMF are pressing China to unfetter the yuan so it can rise against the dollar. Many economists argue that this is in China's self-interest: It would help cool what may be an overheated economy, give China the room that other big economies have to move interest rates when appropriate and let China invest more in its own economy instead of putting so much into U.S. Treasury bills. Chinese officials nod but offer no timetable.

A second problem is that imports and exports these days aren't quite as simple as they once were -- which could make it harder for the foreign exchange market to do its job. A growing portion of crossborder trade occurs inside big multinational corporations, as U.S. companies like Ford Motor Co. make cars in Mexico and German firms like BMW make cars in South Carolina. About 20% of all U.S. imports now occur inside big companies, according to a new report by McKinsey Global Institute, the think-tank arm of the consulting firms. These flows are often driven by corporate strategies, not simply currency rates, and may not respond predictably when the dollar falls.

In fact, the lower dollar can do only part of the job. Nearly all the economic doctors advise the U.S. to take steps to save more so it relies less on foreign borrowing, and most of them say that means cutting the federal deficit.

There are three ways the U.S. can save -- as families, as companies and as governments. U.S. businesses are saving a lot these days -- in part because they've been reluctant to invest. American families aren't saving very much. The Commerce Department said yesterday that Americans saved only 0.2% of their after-tax income in October.

But the big change in overall national savings -- and the short-term cause of the leap in U.S. borrowing from abroad -- is the federal government's big deficit spending over the past few years. Even President Bush, who pooh-poohed warnings about the budget deficit in his first term, now makes the link between deficits and the dollar. "The best way to affect those who watch the dollar's value is to make a commitment to deal with our short-term and long-term deficit," he said after meeting with counterparts from Pacific Rim nations in Chile last month.

And if the U.S. saves more, then the rest of the world has to spend more to keep the global economy growing. "Other countries have got to find some other source of growth to make up for the loss of exports or they will grow more slowly as a result of their appreciated currencies," says Stanley Fischer, a prominent international economist who is now vice chairman of Citigroup.

Write to David Wessel at capital@wsj.com

Chinese Game Show
Offers a Big Prize:
A 15-Second Ad Slot

Companies Bid for Best Spots,
Chance to Become 'King';
A Karaoke Fan's Dream
By GEOFFREY A. FOWLER
Staff Reporter of THE WALL STREET JOURNAL
November 30, 2004

BEIJING -- With a flick of his flag, numbered with a red 111, Li Jia of Monarch Lubricant Oil made the top bid of $4.3 million. He won a coveted 15-second advertising slot on Chinese TV. For two months, his company's ads would run just after the weather forecast, one of the world's most popular television shows.

Cameramen swarmed around Mr. Li as a television anchor yanked the 38-year-old executive onto a podium reserved for the "Number One" bidder. Chinese Olympian Luo Xuejuan, winner of the women's 100-meter breaststroke at the Athens games, gave Mr. Li a medallion, and Tian Liang, winner of the synchronized 10-meter diving contest, crowned him with a wreath.

"All I could think was how sweaty I was under all those lights," a giddy Mr. Li, the company's general manager, said in an interview after his victory.

China finds itself in the peculiar situation of being both a centrally planned economy and a sometimes-crass capitalist juggernaut. Both faces show up at the lurid "Economic Olympics," an annual televised event designed to sell advertising on China's state-run TV network. During the event, the nation's businessmen bid to buy ad slots for 2005 in front of a studio audience and in the process sometimes become instant celebrities.

China Central Television's advertising director, Guo Zhenxi, announces the beginning of this year's "Economic Olympics" by firing a starter's pistol.

To organize the festivities, which can last three days, China Central Television employs its top game-show producers to transform the hard sell into a no-expense-spared variety program. CCTV advertising director Guo Zhenxi, who serves as the event's ringmaster, kicked off this year's bidding earlier this month by firing a starter's pistol. A professional auctioneer presided over the 13-hour bidding, taking only short breaks as TV celebrities performed comedy sketches and doled out mystery prizes, including a basketball autographed by Chinese basketball star Yao Ming.

CCTV planted staffers in the audience who cheered after each bid. Producers added drum rolls and other cartoonish noises at moments of high drama, such as when the bidding reached a peak. "Raise your hands faster and raise your price higher!" CCTV sportscaster Zhang Bin exhorted bidders.

Explains Mr. Guo: "Just like an Olympic athlete needs cheering to perform his best, these businesses need our clapping to prove they are the best."

This year's event was China's 11th annual advertising auction. It was dreamed up in the early 1990s as a way to insert a dose of market capitalism into CCTV's ad sales team. At that time, CCTV offered only one prime-time spot and all ads were sold at fixed prices. Mr. Guo, a 39-year-old former CCTV news reporter, has been responsible for refining this promotional circus for the past four years.

This year the auction generated $632 million, about half of CCTV's total annual advertising revenue. Mr. Guo, who sleeps only four hours a night during the three-day event, embodies the ambition that lies just beneath the surface of Chinese business.

"Nobody knows more CEOs in China than me," he told reporters at an impromptu news conference held in CCTV's media center, before bragging about the congratulatory text messages he'd received on his two ever-present cellphones.

Last year, marketers spent $14.5 billion advertising in China, according to Nielsen Media Research. That's a fraction of the $149 billion spent in the U.S., but enough for some in the ad industry to predict that China will become the world's second-largest ad market by the 2008 Beijing Olympics, passing Japan.

Monarch's Mr. Li spent a quarter of his ad budget on CCTV's most expensive slot: 15 seconds following the 7:30 p.m. weather report. It's a no-frills, but exquisitely timed five-day forecast that appears directly after CCTV's nightly news. That program, the official outlet for government news, must be carried by every state-supported Chinese broadcaster. With 194 million viewers, according to CCTV, the weather report stands as one of the world's most widely watched TV shows.

Mr. Li says he gained more than just a lucrative time slot. Winning bidders pose for photos and take questions from journalists. In addition to CCTV's on-air and online reporters, 60 mainstream Chinese news outlets covered the event. "The value of this is beyond just commercial. It has news effect and influences everybody," Mr. Li told reporters at one of two separate news conferences he held.

With advertisers spending 27% more at this year's auction compared with 2003, Mr. Guo says "people are crazy about China's economy." Others in China's state-run media think the bidders are just crazy. Last year, the state-run China Daily newspaper, which is operated separately from CCTV, warned in an editorial that the "rocketing costs of commercials cannot but cast doubts on whether these enterprises are acting rationally." The editorial went on to suggest that companies "should pay more attention to the quality of their products."

Some participants this year consciously avoided irrational exuberance. "I don't manufacture money, so I have to make rational decisions," said Su Muqing, chairman of Guangzhou I-Stone Jewelry Co., at a news conference early in the bidding process. "I consulted an auction expert, and he asked me not to make compulsive decisions, and not to be enticed by the applause," he said.

Past winners, such as Qinchi Liquor, have fallen on hard times. According to an article in Economic Information Daily, a newspaper published by the official Xinhua News Agency, Qinchi responded to the resulting flood of orders by buying alcohol from other brewers, adding water, and slapping its own label on the bottle. In a written response to questions, Qinchi says the published report "doesn't reflect the facts at all" but didn't elaborate. The company, which was crowned the 1997 "Bid King" -- a title given to the biggest overall spender -- no longer buys advertising, said a staff member who declined to identify himself.

Big multinational advertisers have long avoided the event, which they found hard to understand. Few international companies had a Chinese distribution network sophisticated enough to make such advertising worthwhile.

But this year, Procter & Gamble Co. emerged as "Bid King" after spending $46.5 million to advertise a variety of products, including Olay, a face cream, and a shampoo called Rejoice. "It is still a communist tool, but at the same time it has embraced the commercial aspects of broadcasting," said P&G's associate director of media in China, Alfonso de Dios.

CCTV invited P&G's senior media manager, Lai Liangrui, a karaoke fan, to sing "Turning Back Once Again" with Taiwanese pop star Jiang Yuheng. Their performance, held at the Happy Moment CCTV Advertising Auction Fellowship Evening Party, was broadcast across China. It bumped the planned programming, a historical drama called "Story of the Riverside," to after midnight.

"Hundreds of millions of people were watching the show," said P&G's Mr. Lai in a later interview. "You can see that I'm a little bit excited."

---- Nancy Zhang contributed to this article.

Write to Geoffrey A. Fowler at geoffrey.fowler@wsj.com

Dollar's Weakness Is a Concern for Us All

The Unsustainable US Current Account Position Revealed

Checking the depth gauge

Currency conundrums

WHO believes in a strong dollar? Robert Rubin, Bill Clinton's treasury secretary, most certainly did. John Snow, his successor but two, says he does but nobody believes him--if only because he wants other countries' currencies, in particular the Chinese yuan, to go up. Mr Snow's boss, President George Bush, in one of his mercifully rare forays into economics last week, also said he wants a muscular currency: "My nation is committed to a strong dollar." Again, it would be fair to say that this was not taken as a ringing endorsement. "Bush's strong-dollar policy is, in practical terms, to maintain a pool of fools to buy it all the way down," a fund manager was quoted by Bloomberg news agency as saying. It does not help when the chairman of your central bank, Alan Greenspan, whose utterances on the economy are taken rather more seriously than Mr Bush's, has said the day before that the dollar seems likely to fall: "Given the size of the current-account deficit, a diminished appetite for adding to dollar balances must occur at some point," were his exact words. The foreign-exchange market immediately decided that it was sated, and the dollar fell to another record low against the euro.

America's Federal Reserve posts Alan Greenspan's comments. The US Treasury Department offers information on monetary and fiscal policy. The People's Bank of China, the Bank of Japan and the European Central Bank give economic statistics and publish statements on monetary policy. The New York Federal Reserve publishes Matthew Higgins and Thomas Klitgaard's paper, "Reserve Accumulation". The Institute for International Economics posts research and policy briefs on exchange rates and monetary policy.

Mr Greenspan's words were of huge moment, and not just because he spoke clearly, unusual though this was, nor because the Federal Reserve rarely comments on foreign-exchange movements. No, Mr Greenspan's words were significant because he was tacitly admitting what right-thinking economists the world over have long believed: that the emperor has no clothes.

Mr Greenspan's previous line had been that America's ever-expanding current-account deficit was not a problem when capital could flow so freely around the world; and that, in effect, it would continue to flow to America because the country is such a wonderful place in which to invest. Now he is saying that it won't, or at least that investors will demand a cheaper dollar, or cheaper assets, or both, to carry on financing America's deficit.

But Buttonwood suspects that the deeper significance of Mr Greenspan's admission is that the game that has been played since the collapse of the Bretton Woods system in the early 1970s is drawing to a close. The dollar's status as the world's reserve currency--its preferred store of value, if you will--is gradually coming to an end. And, ironically, the fact that it has become so popular in recent years will only hasten its demise.

One man who undoubtedly believes in a strong dollar is Japan's prime minister, Junichiro Koizumi. Unlike America, Japan has been putting its money where its leader's mouth is. On behalf of the finance ministry, the Bank of Japan has bought more dollars than any other central bank has ever done. At last count, it had the equivalent of $820 billion in foreign-exchange reserves, most of it denominated in the American currency.

As goes Japan, so goes the rest of Asia. In an interview this week with the Financial Times, Li Ruogu, the deputy governor of China's central bank, the People's Bank of China, said that his country would not be rushed into revaluing the yuan, and that America should put its own shop in order. Mr Ruogu's bank, too, has been a huge buyer of dollars in recent years. China and the rest of developing Asia now have $1.4 trillion of reserves, mostly dollars. This is more than the combined reserves of the rest of the world (excluding Japan). Thanks mostly to Asian intervention, foreign-exchange reserves at the world's central banks have climbed from $2 trillion in 2000 to $3.5 trillion in 2004.

It used to be that countries amassed reserves as a war chest to protect against a run on their currencies of the sort suffered by East Asia in 1997, or Russia in 1998. But Asian countries have snaffled up far more than would be justified to prevent such crises. Their aim in accumulating these reserves is generally different now: to stop their currencies rising against the dollar and so keep their exports competitive. In effect, they are trying to peg their currencies; China's peg is explicit. Huge foreign-exchange reserves are the result.

Some pundits have dubbed this arrangement the new Bretton Woods. The Bretton Woods arrangement (a post-second world war agreement that tied the dollar to gold and other currencies to the dollar) collapsed in 1971. The present arrangement seems similarly doomed to failure. The big question is whether the world will suffer similarly ill effects when it collapses.

Past saving?
The upward pressure on Asian countries' currencies stems either from their saving too much and consuming too little, or from America saving too little and spending too much. American politicians, naturally, tend to concentrate on the first interpretation, because it stops them having to recommend unpleasant remedies, such as cutting deficits or encouraging Americans to save more. But Mr Greenspan's most recent comments show that he recognises the problem is more home-grown. Personal saving in America, as a percentage of household income, slumped to just 0.2% in September, close to a record low. Indeed, the savings rate has been declining remorselessly since 1981, when it reached a high of 12.5%. This lack of saving shows up in the current-account deficit, which is a record near-6% of GDP and rising.

In effect, foreigners are saving on America's behalf. In a recent study for the New York Fed, two economists, Matthew Higgins and Thomas Klitgaard, point out that the United States now absorbs more than the measured net saving of the rest of the world combined (suggesting someone's got their figures wrong somewhere). The American economy cannot continue to expand at its current rate without those foreign savings. The question is whether foreigners will be happy to carry on financing this growth with the dollar and asset prices at their present level. The private sector is already voting with its wallet: it has been financing an ever smaller percentage of the deficit, and there has been a net outflow of direct investment. That leaves the public sector--ie, central banks--and those, in particular, of Asia.

At the heart of the central banks' calculations is a trade-off: intervening to keep your currency down can be costly, but it is good for exports. Though the costs of intervention are hard to quantify, they are potentially big. Because the domestic money supply is expanded--those dollars must be paid for with something--it can cause inflation (though this can be neutralised through "sterilisation", ie, bond sales). But the big potential cost is in amassing a huge stash of dollars with precious little exit strategy. Quite simply, Asian central banks now own too many of them to exit en masse, for their exit would cause the dollar to crash and American interest rates to soar, which would cause huge losses on their holdings of Treasuries.

Get out while you can
The biggest risk, of course, is that lenders would lose pots of money were the dollar to fall. As the printer of the world's reserve currency, America can pass on foreign-exchange risk to the lenders because, unlike other indebted countries, it can borrow in its own currency. Messrs Higgins and Klitgaard reckon that for Singapore, the most extreme example, a 10% appreciation against the dollar and other reserve currencies would lead to a currency capital loss of 10% of GDP. Though loading up with even more dollars might of course stop the dollar from falling for a while, it would increase the risk of still larger losses were it eventually to do so. America already needs almost $2 billion a day from abroad to finance its spending habits, and the situation deteriorates by the week because America imports more than it exports, which worsens the current-account deficit.

The incentives to flee the Asian cartel (to give it its proper name) thus increase the bigger the game becomes. Why take the risk that another central bank will leave you carrying the can? Better to get out early. Because the game is thus so unstable it will come to an end, and probably a messy one. And what will then happen to the dollar? It is hard to imagine its hegemony remaining unchallenged when so many will have lost so much. And doubly so given that America has abused the dollar's reserve-currency role so egregiously that its finances now look more like those of a banana republic than an economic superpower.

Currency Trading Is Moving
From Brokers to Home Offices

By NAUREEN S. MALIK
THE WALL STREET JOURNAL ONLINE
November 25, 2004 11:52 p.m.

Every morning, Paul Sullivan dives in, climbs the wave slowly and hangs on for as long as he can. He takes his lumps and is back at it the next morning.

Surfer? No. He's part of an emerging group of stay-at-home traders rolling the dice to make money in the foreign-exchange market.

After sliding to an all-time low against the euro last week, the dollar is commanding more attention from economists and policy wonks. But Average Joe investors looking to play the currency market haven't always had an easy time getting in the front door. Electronic trading is changing that.

The foreign-exchange market primarily has been a proving ground for only sophisticated institutional investors, says Phillip Fondren, executive vice president of Refco F-X Associates LLC, the currency-brokerage unit of Refco Group Ltd. in New York. But technological advances and better protections have helped make the market much more understandable -- and accessible -- to individual retail investors.

Mr. Sullivan, a 45-year-old lifelong "entrepreneur" who works out of his home in Quincy, Mass., switched to currency trading two years ago "in search for a challenge." He now counts it as one of his primary sources of income. "My girlfriend thinks I spend too much time trading," says Mr. Sullivan, who wakes at 5:30 a.m. to cover trading hours in London and then New York. But nothing else provides "the thrill, the challenge and the monetary returns."

How big is this market? An estimated $1.9 trillion in currency changes daily, according to a triennial survey of 52 countries released in October by the Bank for International Settlements. That eclipsed $1.5 trillion daily in 1998, back during the inflating Internet bubble. (By comparison, average daily volume on the New York Stock Exchange has been $45 billion in 2004, so far.)

Individuals' share of the currency market, to be sure, is still marginal, says Jason Daw, Merrill Lynch's currency strategist. "It's a long way from becoming something that the average person invests in," he says. But electronic trading is helping to bridge that gap: Daily trading between banks and nonfinancial customers increased to 14%, or $266 billion, of the daily market, the BIS reported. That number includes companies as well as individuals.

Refco last year created a separate division for individual traders, and its retail accounts now trade as much as $15 billion a month, Mr. Fondren says. Gain Capital, a leading electronic-trading company that runs the investor portal Forex.com, says about half of $45 billion in "forex" volume comes from retail investors. Individuals account for 80% of its customer base, it says.

Last week, a Barron's magazine column featured Hotpsot FXi, which created a downloadable trading platform to help centralize the fragmented spot-currency market. The platform is meant for institutional investors, but individuals can take part using the RealTick platform, published by Townsend Analytics.

While the Merrill Lynches and Morgan Stanleys are mostly holding off on offering foreign-exchange trading until there is more demand from individuals, interest is growing. Charles Schwab & Co. recently formed a partnership with Refco to offer its customers the opportunity to trade currencies.

Gateway to the Masses

In 2001, the Chicago Mercantile Exchange launched a 24-hour electronic platform for currency contracts. Volume in the futures market has doubled in each of the last three years, averaging 115,000 contracts and $55 billion a day in 2004, Rick Sears, the CME's managing director of foreign exchange, says. He estimates retail investors' share of futures trading at about 15% daily.

If the average person's path to currency trading was made clearer by the CME, then CLS Bank International paved the road. The international bank in 2002 created what became known as the "gateway to forex" for the masses -- Continuous Linked Settlement, a network supported by 69 global banks and financial institutions that simultaneously matches buy and sell orders.

"CLS turned the FX market into the same as what we have in equities and bonds," says Nigel Renton, managing director of eSpeed Inc., the electronic trading unit of Cantor Fitzgerald Securities and an early participator in CLS. CLS matches orders in 11 currencies almost immediately by tapping into local networks of central banks as their hours overlap across time zones. It's "the biggest thing to happen in foreign exchange in 300 years," Mr. Renton says.

That may sound breathless, but dealers say digitizing the foreign-exchange market has made it as easy to trade currencies as stocks. Investors can open up an account with an online trading service, usually for free. Real-time rates are quoted in a bid-ask price -- just like stocks -- and traders make their money on the fluctuations in the constantly moving exchange rates.

As CLS streamlined back-office operations, electronic platforms proliferated, attracting customers with real-time data, charts and wireless connections. Some online platforms offer commission-free trades, which give smaller investors a chance to capitalize on the tiniest spreads through rapid-fire trades.

Foreign-exchange trading is even more nuanced than stock trading, says Mr. Fondren. A small political or economic development barely registering a blip in the equities market could have a major impact on currencies. The price fluctuations can get volatile, and that is where currency investors make their money. "If everything is flat ... that's pretty boring for investors," says Jonathan Butterfield, executive vice president of marketing and communications at CLS. The daily amount of cash traded in the spot market can vary by 30% on a day-to-day basis, he says.

Looking for a Black Box

The road to higher returns, though, is riddled with potholes. The hours can be grueling and traders can be overwhelmed trying to decipher what is moving a currency. "So much information is pumped out on a daily basis ... but that's what separates good traders from bad traders," says Mark Galant, chief executive and founder of Gain Capital, the online currency-trading platform.

While many of the "day-trading" type were shaken out with the dot-com bubble, some still plunge into foreign-exchange trading without understanding the market. "Everyone wants a black box system" -- a standard formula that wins every time, says Mr. Sullivan. They make a bet expecting the market to move incrementally, "but you can have a 40-point move in a matter of seconds on a press release," he says. It's like showing up at a Nascar race with a go-cart.

Steve Retz, 24, has learned such hard lessons. The first time he traded in currencies, "I thought it was easy money," he says. "There's quite a bit of expectation and I blew $15,000 or $20,000."

Mr. Retz, who designs computers and electronics for a living in American Fork, Utah, has been trading currencies for about a year. He likens himself to a money merchant, and figures he could live off the profit of several successful trades a day. But for Mr. Retz, who is married, trading is as much a hobby as 100-mile bike excursions. The novelties of both have worn off, but they are enjoyable with more subdued attention.

Traders have to subdue their emotions, regardless of intentions. "You have to really come to terms with ... the fear of losing money," says Mr. Retz. "How much are you willing to risk? Because the thing that gets people out of the market is that they let their emotions control them." But the emotional high is why many traders get in. His advice: Just don't bet your rent.

Vang: Hunter shot first; Suspect gives conflicting accounts

I don't even for a min that the statement given by that suspect is true. He has a total of 8 charges against him.. after the investigation is complete and found guilty, will he get capital punishment or life imprisonment. Not sure about the laws in Mn but hope they're not averse to strong action. How can you kill 6!? people and say you were threatened?
And about the hmong community- I read an article on a mn news website 2 years back about how the arrival of greater numbers of these people is causing tensions in mn(similar to the case of the somalians refugees arriving in a small town of maine.)