- Markets on Edge as China Moves to Curb Risky Lending
The New York Times December 27, 2013
HONG KONG — China’s financial system is in danger of becoming too big to bail out.
Official bank lending has more than doubled since the global financial crisis, growing nearly twice as fast as the overall economy. The even bigger problem, however, appears to come from the rise of a shadow banking system that has allowed a number of companies and individuals, often with political connections, to borrow from state-controlled banks at low interest rates and relend the money at much higher rates to private businesses desperate for credit at almost any price.
Now, in an effort to wean the banks and the economy off their addiction to such risky practices, Beijing has pledged to deliver what amounts to the country’s most sweeping financial overhaul in decades. Markets will play the “decisive” role in directing the economy, policy makers promised last month after a key plenum meeting of the Communist Party leadership. Interest rates are to be liberalized, cross-border investment will be welcomed and regional and bureaucratic protectionism will be curtailed, they declared.
But already even relatively modest government moves are producing turbulence in money markets; just this week China’s central bank was forced to back off, at least temporarily, to avoid putting too much stress on the banking system and potentially igniting a backlash from powerful vested interests in China accustomed to paying very little for their loans.
“It’s been pretty clear since June, and especially clear since the plenum, that the new crowd is interested in tightening monetary policy and letting interest rates rise,” said Arthur R. Kroeber, the Beijing-based managing director of GK Dragonomics, an economic research firm. “The purpose is to reduce the rate at which credit is expanding, which has been a bit of a problem over the last couple of years.”
- N.S.A. Phone Surveillance Is Lawful, Federal Judge Rules
The New York Times December 27, 2013
WASHINGTON — A federal judge in New York on Friday ruled that the National Security Agency’s program that is systematically keeping phone records of all Americans is lawful, creating a conflict among lower courts and increasing the likelihood that the issue will be resolved by the Supreme Court.
In the ruling, Judge William H. Pauley III, of the United States District Court for the Southern District of New York, granted a motion filed by the federal government to dismiss a challenge to the program brought by the American Civil Liberties Union, which had tried to halt the program.
Judge Pauley said that protections under the Fourth Amendment do not apply to records held by third parties, like phone companies.
“This blunt tool only works because it collects everything,” Judge Pauley said in the ruling.
“While robust discussions are underway across the nation, in Congress and at the White House, the question for this court is whether the government’s bulk telephony metadata program is lawful. This court finds it is,” he added.
A spokesman for the Justice Department said, “We are pleased the court found the N.S.A.'s bulk telephony metadata collection program to be lawful.” He declined to comment further.
Jameel Jaffer, the A.C.L.U. deputy legal director, said the group intended to appeal. “We are extremely disappointed with this decision, which misinterprets the relevant statutes, understates the privacy implications of the government’s surveillance and misapplies a narrow and outdated precedent to read away core constitutional protections,” he said.
- The Peril of Antibiotic Use on Farms
The New York Times December 21, 2013
After years of inaction, the Food and Drug Administration has finally taken an important step to reduce the use of medically important antibiotics in animal feed. The goal is to curb the rise of bacteria that become resistant to antibiotics used in both human and veterinary medicine.
Earlier this month, the F.D.A. issued a new policy asking drug companies to revise their labels voluntarily to remove statements indicating that the antibiotics can be used to promote growth in livestock. Such a labeling change would make it illegal to use the antibiotics for that purpose. Companies that comply will also have to ensure that the use of the drugs to treat, control or prevent disease in animals is authorized and overseen by veterinarians.
This step depends on the willing cooperation of the drug makers, which will have three months to tell the agency whether they will change the labels, and up to three years to carry out the new rules. Two major manufacturers have already said they will do so.
The rampant use of antibiotics in agriculture has been alarming. The drugs are given not just to treat sick animals, but added in low doses to animal feed or water to speed the growth of cattle, pigs and chickens, thus reducing costs for the producers. Such widespread use of antibiotics in healthy animals has stimulated the emergence of bacterial strains that are resistant to antibiotics and capable of passing their resistance to human pathogens, many of which can no longer be treated by drugs that were once effective against them.
Each year, at least two million Americans fall ill — and 23,000 die — from antibiotic-resistant infections. Doctors are partly to blame because many prescribe antibiotics for conditions like colds that can’t be cured with such drugs. The Centers for Disease Control and Prevention estimated in September that up to half of the antibiotics prescribed for humans are not needed or are used inappropriately. It added, however, that overuse of antibiotics on farms contributed to the problem.
- Turkey's Byzantine Scandal
Corruption charges threaten the country's Islamist leader.
The Wall Street Journal Dec. 26, 2013
Recep Tayyip Erdogan has spent the past week blaming a burgeoning corruption scandal on foreign plotters. But Wednesday's trio of resignations from his cabinet, which were intended to insulate Turkey's Islamist Prime Minister, had the effect of bringing the scandal to his doorstep.
The Interior and Economy Ministers did their duty by denouncing the investigations and professing the prime minister's (and their own) innocence. But Erdogan Bayraktar, the Minister for the Environment and a confidant of the PM, went out with a bang. Mr. Bayraktar said Wednesday that he was pressured to resign to shield Mr. Erdogan from the scandal, which concerns alleged payoffs to facilitate real-estate development deals. He also suggested that if it was right for him to step aside for the country's sake, then Mr. Erdogan should resign as well.
In addition to blaming the crackdown on unnamed foreign governments, Mr. Erdogan has spent the week tightening his control over police and prosecutors. Scores of police chiefs around Turkey have been fired and replaced since the investigation went public December 17 with some two dozen arrests. Prosecutors have been barred from conducting investigations without informing their political masters first.
The Prime Minister has spent a decade consolidating power in Turkey, and his AK Party faces no serious rival on the national stage. The Turkish military, once feared by civilian governments, has been removed from the political scene. Mr. Erdogan's deceitful and brutal handling last summer of protesters in Istanbul damaged his international reputation, but the protests did not seem to shake his political grip.
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