Yellow: What’s behind the shade & Bersih 2.0?

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Along The Watchtower By M. Veera Pandiyan

The organisers of Bersih 2.0 should explain their links and funding by the NED.

IT’S been a rather eventful week shaded by the overwhelming colour of yellow. In psychology, the colour is associated with optimism and cheerfulness.

Yellow, the colour of the sun, is linked with laughter, happiness and good times.

People surrounded by yellow feel optimistic because the brain actually releases more serotonin, the happy hormone that influences mood and sense of well-being.

But yellow can also be quickly overpowering if over-used. When intense, it can inflame and also evoke fear.

Studies show that babies cry more in bright yellow rooms and adults are more likely to lose their tempers in such places.

Apparently, energy levels can be taken up by the intensity of the colour to the point of it becoming an irritant.

Primarily, yellow is used to attract attention. That is why most danger signs come in yellow and black.
Spiritually, the hue is said to provide clarity of thought and enlightenment of mood.

Yellow has a very colourful use in language. The terms “yellow belly” or “yellow streak” connote it with cowardice, deceit or betrayal.

During the Middle Ages, paintings by Christian artists depicted Judas by dressing him in yellow.

In China, a pornographic film is called “yellow movie”, unlike the “blue movie” used in the west and elsewhere.

In Arab culture, people can recognise a “yellow smile” – a fake expression. Such smiles are put on when people want to hide their lack of interest, or any other emotion.

It is similar to the French expression of rire jaune (yellow laughter), which means to laugh from the wrong side of the mouth or feigned mirth.

Politically, yellow characterises freedom and moderation in many countries.



In the US, where yellow traditionally has a negative nuance, the Gadsden Flag, a symbol of American independence, has become popular again, especially with “Tea Party” activists.

The yellow flag, with a fierce-looking rattlesnake, coiled and ready to strike, bears the motto: “Don’t Tread on Me”.

The US is also the origin of “yellow journalism” – the phrase to describe irresponsible, exaggerated, lurid and slanderous reporting that can be traced to the late 1800s when two newspaper owners tried to outdo each other with their front-page stories to get the highest circulation.

Joseph Pulitzer (yes, of the Pulitzer Prize fame) who owned the New York World was the first to make use of sensational journalism to impress readers.

For example, his headline for a story on a heat wave that killed many people was: “How Babies are Baked”.

His rival, William Randolph Hearst, who owned the San Francisco Examiner, bought the New York Journal and also bought over Pulitzer’s top writers to outdo the World.

The rivalry was most intense before the Spanish-American War, when both papers churned out outrageous headlines to whip up support for the US, much to the dismay of other publishers and editors.

Both papers were denounced as “yellow journals”, inferring that Pulitzer and Hearst were cowards who chose the easy way to gain readers through sensationalisation and false news rather than responsible reporting.



Back home in Malaysia, critics of the mainstream media have been accused of being “yellow-bellied”, especially with regard to positions taken on the Bersih 2.0 rally.

The organisers of our yellow rally have since agreed to call it off and hold their gathering in a stadium instead after an audience with the Yang di-Pertuan Agong.

If Bersih 2.0 is indeed all about the noble cause of demanding free and fair elections, it must be rightly given the utmost support by all Malaysians.

The organisers of Bersih 2.0, however, must also explain their association and funding by the US’ National Endowment for Democracy (NED).

Even in the US, many questions are being asked about the NED set up in the early 1980s in the wake of negative revelations about the CIA.

According to William Blum the writer of Killing Hope: US Military and CIA Interventions Since World War II, the NED was set up to overtly do what the CIA had been doing covertly for decades.

He described it as a “masterpiece of politics, public relations and cynicism”.

Ron Paul, a Republican Congressman from Texas, described the NED as “nothing more than a costly programme that takes US taxpayer funds to promote favoured politicians and political parties abroad”.

“What the NED does in foreign countries, through its recipient organisations the National Demo­cratic Institute and the International Republican Institute, would be rightly illegal in the US.

“The NED injects soft money into the domestic elections of foreign countries in favour of one party or the other.

“It is particularly Orwellian to call US manipulation of foreign elections ‘promoting democracy.’

“How would Americans feel if the Chinese arrived with millions of dollars to support certain candidates deemed friendly to China? Would this be viewed as a democratic development?” he asked.

With such questions, don’t Malaysians deserve to know more about links between Bersih 2.0 and other Malaysian NGOs funded by the NED?

> Associate Editor M. Veera Pandiyan likes Coldplay’s song “Yellow”.

IMF - Lagarde’s Challenges

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Raghuram Rajan

CHICAGO – Now that the dust has settled over the selection of the International Monetary Fund’s managing director, the IMF can return to its core business of managing crises. Christine Lagarde, a competent and well-regarded technocrat, will have her hands full with three important challenges.

The first, and probably easiest, challenge is to restore the IMF’s public image. While the criminal case against Dominique Strauss-Kahn on sexual-assault charges now seems highly uncertain, the ensuing press focus on the IMF suggests an uncontrolled international bureaucracy with unlimited expense accounts, dominated by men with little sense of restraint.

Fortunately, the truth is more prosaic. Top IMF staff face strict limits on their allowable business expenses (no $3,000 per night hotel rooms, despite reports in the press), and are generally underpaid relative to private-sector executives with similar skills and experience.

The IMF, like many organizations where workers spend long trips together, has its share of intra-office romances. But the environment is professional, and not hostile to women. A previous incident in which Strauss-Kahn was let off lightly for an improper relationship with a subordinate clearly suggests that the Fund needs brighter lines for acceptable behavior and tougher punishment for transgressions. But other organizations have dealt with similar issues; the IMF needs to make the necessary changes, and, equally important, get the message out that the DSK incident was an aberration, not the tip of the proverbial iceberg.

Mess in Europe

The second, and perhaps most difficult, challenge facing Lagarde, is the mess in Europe, where the IMF has become overly entangled in eurozone politics. Typically, the IMF assesses whether a country, after undertaking reasonable belt-tightening measures, can service its debt – and lends only when it is satisfied that it can. The entire objective of IMF lending is to help finance the country while it makes adjustments and regains access to private borrowing. This also means that a country with too much debt should renegotiate it down before getting help from the IMF, thereby avoiding an unsustainable repayment burden.

Perhaps swayed by promises of eurozone financial support (and Europe’s desire to prevent default-fueled financial contagion from spreading to countries like Spain and possibly Italy), the IMF took a rosier view of debt sustainability in countries like Greece than it has in emerging markets. But this has not “helped” such countries, for the availability of soft credit from the eurozone or the Fund only enables a greater accumulation of debt.



Ultimately, debt can be repaid only if a country produces more than it spends. And the higher the debt, the less likely it is that the country will be able to achieve the mix of belt-tightening and growth that would enable it to generate the necessary surpluses. Delayed restructuring eventually means more painful restructuring – after many years of lost growth.

If troubled eurozone countries, especially Spain, start growing rapidly again, there is still a “muddle-through” outcome that might work. With too-big-to-save countries like Spain in the clear, the debt of highly-indebted peripheral countries like Greece could be written down through interest waivers, maturity extensions, and debt exchanges. The eurozone – and the European Union – could survive its fiscal crisis intact.

Significant haircut

But having failed to insist on an up-front restructuring, the IMF will face problems. With private investors reluctant to lend more or even to roll over existing debt, the bulk of Greek debt at the time of any restructuring (or whatever it is euphemistically called) will be from the official sector. How the resulting losses imposed on debt holders will be divided between the various eurozone institutions and the IMF is anyone’s guess. For the first time in its history, the Fund might have to take a significant “haircut” on its loans, and it will have to prepare its non-European shareholders for it.

 Being independent

A greater dilemma will emerge if the muddle-through strategy does not seem to be working. At some point, the IMF’s strategy, which should be focused on the distressed country’s citizens and its creditors, should depart from that of the eurozone, which is more willing to sacrifice individual countries’ interests for the larger interest of the monetary union. Lagarde’s challenge will be to chart a strategy for the IMF that is independent of the eurozone’s strategy, even though she has been intimately involved in formulating the latter.

The third challenge for Lagarde concerns the circumstances of her election. It is not inconceivable that a number of emerging-market countries will get into trouble in the next few years. Will the Fund require the tough policy changes it has demanded of countries in the past, or will Lagarde’s need to show that she is not biased towards Europe mean that future IMF interventions will become more expansive and less demanding? A kinder, gentler Fund is in no one’s interest, least of all the distressed countries and the world’s taxpayers.

Finally, there is a challenge that seems to be pressing, but is not. In her campaign for the position, Lagarde emphasized the need for diversity among the IMF’s top management. But what is really needed is the selection and promotion of the best people, regardless of national origin, sex, or race.

Clearly, the IMF’s existing culture and history will bias its selection and promotion of staff towards a certain type of person (for example, holders of PhDs from US universities). That commonality in backgrounds among IMF personnel allows the Fund to move fast in country rescues, not wasting time in endless debate. In the long run, more diversity is needed. But if it is attempted too quickly, in order to paper over the fact that a European is in charge once again, the Fund risks jeopardizing its key strength.

The IMF is perhaps the central global multilateral economic institution at a time when such institutions are needed more than ever. Lagarde arrives to lead it at a difficult time. We all have a stake in her success.

Raghuram Rajan, a former IMF chief economist, is a professor at the University of Chicago’s Booth School of Business.

Stupid central banker tricks

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By Paul R. La Monica

The euro has rallied against the dollar despite worries about Greece as investors bet on ECB rate hikes. Click chart for more on currencies.

NEW YORK (CNNMoney) -- Greek debt crisis? What Greek debt crisis?

The European Central Bank is meeting this Thursday and is widely expected to raise interest rates by a quarter of a percentage point to 1.5%. That would be the second rate hike by the ECB this year.

Sure, the austerity vote in Greece is good news since it could mean the worst-case scenario fears about a euro meltdown may not be realized.

But this isn't the end to the difficulties in Greece. Doesn't it seem just a bit odd that the ECB is contemplating more tightening at a time when there are still legitimate worries about the problems spreading to Portugal, Ireland, Italy and Spain? Moody's downgraded Portugal's debt to junk status on Tuesday.

The sovereign debt woes could be disastrous news for banks in France and Germany -- the two big euro zone nations that actually have somewhat healthy economies.

But the ECB, unlike the Federal Reserve in the U.S., only has one mandate: inflation. (The Fed is charged with watching prices as well as employment.)

And even though commodity prices have come back from their peaks earlier this year, they are still somewhat alarmingly high. Crude oil, for example, has crept back above $95 a barrel. So that may be all that ECB president Jean-Claude Trichet needs to justify bumping rates up a bit.

Still, will the move backfire?

Another ECB rate hike would further widen the gap between interest rates in the euro zone and here in the United States. (They've been near zero since December 2008.) The general rule of thumb in the land of paper money is that the higher the interest rates are, the stronger the currency.

Europe cited as scariest risk to economy

But that's a problem from an inflation standpoint. With oil and many other commodities denominated in dollars, the weaker the greenback gets, the more likely it is for commodity prices to go higher.

"An ECB rate hike means a higher euro going forward," said Brian Gendreau, market strategist with Financial Network Investment Corp., a Segunda, Calif.-based advisory firm.

"It seems paradoxical that Europe, with its very serious problems, has a currency that's strong and rising but that's a reality. That means the trading bias is in favor of a lower dollar and higher oil prices," Gendreau added.

It makes you wonder if David Letterman needs to expand his stupid tricks franchise and create one specifically for central bankers.

Other currency experts wondered if the ECB should just leave well enough alone since crude prices have pulled back in the past few months after surging due to Arab Spring-inspired supply disruption fears.



"I don't think the ECB would be doing the right thing with a rate hike. Oil prices are high but inflation pressures have abated quite a bit," said Kathy Lien, director of currency research for foreign exchange brokerage GFT in Jersey City.

Lien said the ECB needs to pay more attention to slow growth in Europe -- even if it's not officially one of that central bank's particular mandates.

"Price stability is the top priority but the more important question is should the ECB be doing this during a fragile point of negotiations with Greece?" she said. "Raising rates makes financing more difficult for people in Europe."

What makes matters more vexing is the fact that it's not as if the ECB won't have other opportunities to raise rates soon if inflation does in fact pick up.

The ECB will meet again on August 4 and has another meeting scheduled for September 8. Wouldn't it be more judicious to wait for at least another month or two to see how the situation in Greece plays out before rushing to raise rates again?



"I am a little puzzled by why the ECB seems so intent on raising interest rates right now. It's not going to ease any of the problems in the peripheral euro countries," Gendreau said.

Still, some think that the ECB rate hike may be a non-event. That's because the euro has already rallied against the dollar this year despite all the negative headlines about Greece, Portugal, Ireland, etc.

"The speculation about a rate hike has been in the cards for a couple of months," said Ian Naismith, co-manager of The Currency Strategies Fund (FOREX), a Sarasota-Fla. Based mutual fund specializing in foreign exchange investments.

Naismith pointed out that just because the ECB is likely to raise rates on Thursday does not mean that this is the beginning of a long cycle of rate hikes. The key is going to be whether Trichet signals that he's still worried about inflation and that more rate increases are on the way.

"Nothing is etched in stone," Naismith said.

Let's hope so. The ECB does seem strangely hell bent on rate hikes even though Europe is still in the midst of major financial upheaval.

But the last thing Greece, other troubled European nations and the rest of the world for that matter, need is for the ECB to make matters worse with ill-timed policy decisions.

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The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.