US Treasuries not safe, said don

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Don: US Treasuries not safe, emerging economies should find other ways to buffer themselvesImage via Wikipedia

JACKSON HOLE, Wyoming: Emerging economies should find other ways to buffer themselves from global crises than stockpiling US government debt, a prominent economist argued.

US Treasuries and the debt of other advanced nations might be liquid, but it was far from safe, Cornell University professor Eswar Prasad said in a paper presented to a group of central bankers gathered here.

Emerging countries seeking protection from global shocks by individually stocking up on US debt would be better off banding together to create a pool of funds that could be drawn on in a crisis, he argued. Doing so would give them a backstop should they need it, without saddling their national investment portfolios with debt that could turn sour.



Sharply rising levels of public borrowing and weak growth prospects in the United States mean that over time the dollar will continue to decline against the currencies of faster-growing emerging markets, eroding the value of emerging nations' foreign investments, he said. And the risks are not only for the long-term. The United States' near brush with default earlier this month, as lawmakers refused to raise the country's borrowing ceiling until a deficit-cutting deal was reached, brought the potential pitfalls of holding US debt into sharp relief.

“As demonstrated by recent events in the eurozone, bond investors both domestic and foreign can quickly turn against a vulnerable country with high debt levels, leaving the country little breathing room on fiscal tightening and precipitating a crisis,” Prasad wrote. “The US is large, special and central to global finance, but the tolerance of bond investors may have its limits.”

The dollar has long been the world's main reserve currency, and since the financial crisis emerging economies have built their reserves by buying Treasuries and the debt of a few other advanced economies, according to Prasad.

Any change could hurt the ability of the United States to borrow at low rates despite soaring debt levels.
That would turn the tables in a world where traditionally it was developed nations that pressured developing ones to bring their finances under control, he said.

“It is high time for advanced economies to take the tonic of macroeconomic and structural reforms that they have for so long dispensed to the emerging markets,” he said. Reuters

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Arab spring has created 'intelligence disaster', warns former CIA boss

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Michael Scheuer says rendition should be brought back as lack of intelligence has left UK and US unable to monitor militants

• Charlotte Higgins guardian.co.uk

Michael Scheuer, the former head of the CIA unit in charge of pursuing Osama bin Laden, said the Arab spring had ‘delighted al-Qaida’. Photograph: Murdo Macleod

The Arab spring has “delighted al-Qaida” and caused “an intelligence disaster” for the US and Britain, the former head of the CIA unit in charge of pursuing Osama bin Laden has warned.

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Speaking at the Edinburgh international book festival, Michael Scheuer said: "The help we were getting from the Egyptian intelligence service, less so from the Tunisians but certainly from the Libyans and Lebanese, has dried up – either because of resentment at our governments stabbing their political leaders in the back, or because those who worked for the services have taken off in fear of being incarcerated or worse.

"The amount of work that has devolved on US and British services is enormous, and the result is blindness in our ability to watch what's going on among militants."

The Arab spring, he said, was "an intelligence disaster for the US and for Britain, and other European services".



Scheuer headed the Bin Laden unit at the CIA from 1996 to 1999, and worked as special adviser to its chief from 2001 to 2004. The author of a biography of Bin Laden, he now teaches on the peace and security affairs programme at the University of Georgetown.

He said: "The rendition programme must come back – the people we have in custody now are pretty long in the tooth, in terms of the information they can provide in interrogations.

"The Arab spring has been a disaster for us in terms of intelligence gathering, and we now are blind both because of the Arab spring and because there is nothing with which to replace the rendition programme."

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When It Comes to Pursuing Your Goals, Let You Unconscious Be Your Guide

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ScienceDaily (Aug. 26, 2011) — A new University of Alberta study says when it comes to goal setting, your unconscious mind can be a great motivator.

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Alberta School of Business researcher Sarah Moore and colleagues from Duke and Cornell universities say that unconscious feelings about objects in the environment influence the pursuit of long-term goals. Their study explores how the unconscious mind responds to objects in relation to an individual's goals -- and how the unconscious continues to influence feelings about these objects once the goals are reached -- whether or not the outcome has been successful.

Image by Getty Images via @daylife
In Freud we should trust?

"In the past few years, we recognized that some of [Sigmund] Freud's ideas on the unconscious mind were, in fact, correct and that a lot of our decision-making and a lot of our feelings are based on things that we're not really aware of," said Moore, who is an assistant professor in the Alberta School of Business. "In our study, we looked at how our unconscious feelings about objects in the environment influence how we pursue goals."

Moore notes that previous studies have shown that when it comes to short-term, finite goals, such as responding to basic needs (for example, thirst or hunger), the unconscious will evaluate objects and form preferences based on whether the object will help an individual achieve the goal. She says that in the case of thirst, items such as a water fountain or a bottle of Coke will be seen favourably, while a chocolate bar or KFC sign would not. However, she explains that, once the goal is reached, those same objects will be evaluated differently.



"Once your thirst is quenched, you don't evaluate the water fountain positively anymore because you've accomplished the goal," she said, " but there are differences when we look at long-term goals."

Win some, lose some -- but goal still important

Moore's research focused on longer-term goals, such as getting in shape or undertaking educational pursuits. For both types of goals, she says, the process is similar in that the unconscious identifies and responds to positively to objects and triggers in the environment that support the goal. However, the unconscious deals differently with these objects during progress towards long-term goals. Moore says that, unlike with short-term finite goals, the unconscious will continue to positively value objects related to the long-term goals even after a level of success has been achieved. She says this phenomenon points to the indeterminate nature of the goal.

"In some sense, we're never 'finished' long-term goals," said Moore. "If we successfully finish the small steps toward our long-term goals, it becomes a cycle: we take a small step, we succeed, we feel good about it; therefore, we continue to feel good about the long-term goal. This process makes us more likely to take the next small step toward achieving that goal."

What was surprising for the researchers was how participants in their study reacted to objects after a failure. While the researchers expected the participants who failed to react negatively or express dislike for objects related to their test goal, Moore and her colleagues found that failure resulted in a neutral view of the objects.

"You don't hate the objects related to the goal because that goal is very important to you in the long run," said Moore. "Your unconscious is telling you 'now is not the time to pursue the goal. You just failed, let's leave it alone for awhile. We're not going to pursue these objects in the environment; we're going to switch to some other goal.'"

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