Saturday, February 20, 2010

FBI raids California university

The FBI and California investigators raided the administrative offices of Sonoma State University yesterday morning to probe the possible misappropriation of federal grant money by a former university office, reports The Press Democrat.
“The investigation is focused on 20 grants originally awarded and administered by the California Institute of Human Services,” university president Ruben Arminaña says in a campus alert. “The University welcomes the investigation and is working in full cooperation with the task force.”
Founded in 1979, the institute tried to “to redress the lives of people suffering from domestic violence, individuals living with disabilities or facing debilitating economic disadvantage, immigrant populations who struggle against language barriers.” It was closed in 2007 and allegations made then included hundreds of thousands of dollars spent on unapproved labor costs, improper payments to administrators, and expenses that were improperly billed. A 2007 state audit said the institute piled up more than $2 million in questionable expenses.
“Tens of millions of federal funds are involved here and it will take a long time to unravel the voluminous number of documents involved,” Sonoma County District Attorney Stephan Passalacqua told The Press Democrat.

http://blogs.nature.com/news/thegreatbeyond/2010/02/federal_investigation_of_sonom_1.html

Sunday, February 14, 2010

Crisis in a Stoic Land

From today's NYT



Published: February 13, 2010
Athens

Greece has entered the third millennium having survived many foreign occupations. The most trying was that of the Ottoman Empire, starting in 1453 when Constantinople was renamed Istanbul, from the Greek phrase meaning “going to the city.” Since our liberation from the Turks in 1821, we have suffered many dictatorships, the most recent following the coup d’état of 1967 and lasting seven years. But since then, Greece has entered its longest period of peace and democracy since it was constituted as an independent state.
Excuse me for this prologue, but it is indispensable in order to explain the present “crisis” over Greece’s exploding debt. This mess is actually a small problem by historic standards. Over the last two centuries my compatriots have survived much worse.
Historically, Greece has had three patrons: Britain, France and Russia. In the early days of the reborn Hellenic state, Germany was usually an unfriendly country; it became an ally of Kemal Ataturk’s Turkey and a foe in both world wars. Now we are facing the delicate situation of accepting the protection of a Germany that, along with France, dominates the euro zone. (Britain’s role as a patron was handed off to the United States with the Truman doctrine of 1947.)
Yet the vast majority of Greeks do not consider the European Monetary Union a threat to national sovereignty. On the contrary, we feel that the common currency offers valuable protection from the headwinds of the international economic crisis, and is thus an extra guarantee to national sovereignty.
A neighbor of mine, Yiannis, recalls the days of nonstop devaluations of the drachma, our national currency before the euro. If you wished to go to, say, Delphi by car, you would take a suitcase of drachmas to pay for fuel.
The first signs of our current fiscal derailment appeared in 2007 with the crashing of our own real estate bubble. Last October, Prime Minister George Papandreou was elected with a strong mandate to fight corruption and navigate the country through the fiscal storm.
The political and economic morass that our journalists call the “Greek tragedy” became an opportunity to push forward an unprecedented agenda of regulatory reform and policy initiatives to support a new model of sustainable, environmentally friendly development. And the Greek people gradually have come to understand that they themselves must help in creating a new model of economic development.
Therefore, we are for the most part reacting with stoicism to the government’s proposed austerity measures. The demonstrations by civil servants over the last few days got a lot of press coverage, but they were relatively modest, without the infamous “pulse” of earlier eras. They were much tamer than the December 2008 riots that followed the police shooting of a 15-year-old student.
I sense that the majority of Greek people seem to understand the urgency of the economic situation and are willing to accept sacrifices. They demand deep and radical change right now. Our politicians also appear united, a demonstration of cohesiveness in Greek society that may be without precedent, at least in the 35-year history of the Republic.
My cousin Stella, for example, was telling me she would be willing to sacrifice a part of her monthly income if that would help the country. But she thinks that burden-sharing needs to be fair and just for the measures to get broad social support. This is a major challenge for our top economic officials: to use the existing labyrinth of obsolete and inefficient bureaucracies and procedures to come up with a proposal for financial restoration that the public will accept.
The man in the street also feels more positively about the United States than ever before. Most Greeks think that on issues from foreign policy to restoring the social safety net, the Obama administration’s goals are in sync with their own. The Greek people also share President Obama’s anger and frustration over the behavior of bankers.
While the European Union last week promised “determined and coordinated action” on Greece’s debt problem, none of us is quite sure what that will amount to. The one thing I am certain of, however, is that my country will overcome the financial crisis with national pride and international dignity intact.
Vassilis Vassilikos is the author of “Z” and, most recently, “The Few Things I Know About Glafkos Thrassakis: A Novel.”

Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis

An interesting article in today's NYT.

Published: February 13, 2010
Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.
Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.
The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.
It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.
Athens did not pursue the latest Goldman proposal, but with Greece groaning under the weight of its debts and with its richer neighbors vowing to come to its aid, the deals over the last decade are raising questions about Wall Street’s role in the world’s latest financial drama.
As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.
In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come.
Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.
Some of the Greek deals were named after figures in Greek mythology. One of them, for instance, was called Aeolos, after the god of the winds.
The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.
A spokeswoman for the Greek finance ministry said the government had met with many banks in recent months and had not committed to any bank’s offers. All debt financings “are conducted in an effort of transparency,” she said. Goldman and JPMorgan declined to comment.
While Wall Street’s handiwork in Europe has received little attention on this side of the Atlantic, it has been sharply criticized in Greece and in magazines like Der Spiegel in Germany.
“Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it,” said Gikas A. Hardouvelis, an economist and former government official who helped write a recent report on Greece’s accounting policies.
Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal. Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.
“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of the International Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.
Banks eagerly exploited what was, for them, a highly lucrative symbiosis with free-spending governments. While Greece did not take advantage of Goldman’s proposal in November 2009, it had paid the bank about $300 million in fees for arranging the 2001 transaction, according to several bankers familiar with the deal.
Such derivatives, which are not openly documented or disclosed, add to the uncertainty over how deep the troubles go in Greece and which other governments might have used similar off-balance sheet accounting. 
The tide of fear is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow.
For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.
Derivatives do not have to be sinister. The 2001 transaction involved a type of derivative known as a swap. One such instrument, called an interest-rate swap, can help companies and countries cope with swings in their borrowing costs by exchanging fixed-rate payments for floating-rate ones, or vice versa. Another kind, a currency swap, can minimize the impact of volatile foreign exchange rates.
But with the help of JPMorgan, Italy was able to do more than that. Despite persistently high deficits, a 1996 derivative helped bring Italy’s budget into line by swapping currency with JPMorgan at a favorable exchange rate, effectively putting more money in the government’s hands. In return, Italy committed to future payments that were not booked as liabilities.
“Derivatives are a very useful instrument,” said Gustavo Piga, an economics professor who wrote a report for the Council on Foreign Relations on the Italian transaction. “They just become bad if they’re used to window-dress accounts.”
In Greece, the financial wizardry went even further. In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money.
Aeolos, a legal entity created in 2001, helped Greece reduce the debt on its balance sheet that year. As part of the deal, Greece got cash upfront in return for pledging future landing fees at the country’s airports. A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those transactions as sales, not loans, despite doubts by many critics.
These kinds of deals have been controversial within government circles for years. As far back as 2000, European finance ministers fiercely debated whether derivative deals used for creative accounting should be disclosed.
The answer was no. But in 2002, accounting disclosure was required for many entities like Aeolos and Ariadne that did not appear on nations’ balance sheets, prompting governments to restate such deals as loans rather than sales.
Still, as recently as 2008, Eurostat, the European Union’s statistics agency, reported that “in a number of instances, the observed securitization operations seem to have been purportedly designed to achieve a given accounting result, irrespective of the economic merit of the operation.”
While such accounting gimmicks may be beneficial in the short run, over time they can prove disastrous.
George Alogoskoufis, who became Greece’s finance minister in a political party shift after the Goldman deal, criticized the transaction in the Parliament in 2005. The deal, Mr. Alogoskoufis argued, would saddle the government with big payments to Goldman until 2019.
Mr. Alogoskoufis, who stepped down a year ago, said in an e-mail message last week that Goldman later agreed to reconfigure the deal “to restore its good will with the republic.” He said the new design was better for Greece than the old one.
In 2005, Goldman sold the interest rate swap to the National Bank of Greece, the country’s largest bank, according to two people briefed on the transaction.
In 2008, Goldman helped the bank put the swap into a legal entity called Titlos. But the bank retained the bonds that Titlos issued, according to Dealogic, a financial research firm, for use as collateral to borrow even more from the European Central Bank.
Edward Manchester, a senior vice president at the Moody’s credit rating agency, said the deal would ultimately be a money-loser for Greece because of its long-term payment obligations.
Referring to the Titlos swap with the government of Greece, he said: “This swap is always going to be unprofitable for the Greek government.”

Saturday, February 13, 2010

2010 Quality of Life Index

http://www1.internationalliving.com/qofl2010/
France 55 81 69 72 100 100 92 100 87 82
Australia 56 82 71 76 100 87 92 100 87 81
Switzerland 41 86 79 78 100 95 96 100 77 81
Germany 54 82 71 83 100 89 90 100 79 81
New Zealand 62 82 65 77 100 88 70 100 84 79
Luxembourg 44 76 85 77 100 87 66 100 83 78
United States 56 79 67 62 92 78 100 100 84 78
Belgium 41 83 66 64 100 88 96 100 86 78
Canada 62 76 69 62 100 84 85 100 69 77
Italy 56 85 63 74 92 90 62 100 87 77
Netherlands 48 71 69 67 100 87 92 100 75 77
Norway 39 60 89 76 100 90 89 100 60 77
Austria 41 86 68 87 100 85 68 100 76 77
Liechtenstein 44 80 100 65 100 80 44 100 79 76
Malta 63 70 53 84 100 89 52 100 95 76
Denmark 33 88 69 84 100 86 72 100 78 76
Spain 56 68 63 75 100 90 65 100 79 76
Finland 39 93 66 68 100 81 76 100 76 75
Uruguay 60 72 52 72 100 76 64 100 93 75
Hungary 58 76 48 77 100 84 77 93 76 74
Portugal 55 72 52 74 100 86 56 100 83 73
Lithuania 63 68 48 81 100 80 56 100 79 73
Andorra 52 74 61 60 100 85 58 100 82 73
Czech Republic 48 78 52 74 100 82 78 100 67 73
United Kingdom 30 82 65 72 100 84 80 100 66 73
Argentina 61 67 52 71 83 82 56 100 91 72
Slovenia 53 69 56 74 100 72 56 100 83 72
Greece 52 64 58 70 92 84 64 100 79 72
Monaco 44 85 66 59 92 80 48 100 89 72
Sweden 0 94 68 75 100 82 92 100 68 71
Chile 60 67 54 71 100 73 73 100 59 71
Estonia 60 82 44 77 100 75 64 86 74 71
Costa Rica 62 64 53 78 100 78 48 93 79 71
Panama 62 63 52 77 92 72 74 93 69 71
Poland 51 74 52 72 100 80 64 86 76 71
Japan 24 92 51 71 92 89 64 100 84 70
Croatia 58 68 48 77 83 76 52 93 95 70
Brazil 64 58 65 71 83 73 59 83 82 70
Ecuador 72 60 45 93 75 69 45 86 96 70
Latvia 59 75 40 86 92 75 64 86 73 70
Ireland 28 81 60 70 100 79 72 100 65 70
Korea- South (Rep of) 39 82 56 68 92 81 52 93 83 69
Slovakia 48 60 52 71 100 79 68 86 77 69
Bulgaria 61 69 47 78 83 78 48 86 80 69
Cyprus (Greek) 48 65 58 62 100 85 36 100 76 68
Mexico 63 65 50 68 75 76 57 79 92 68
Israel 39 83 61 68 92 85 36 71 84 67
Iceland 36 85 40 74 100 86 48 86 74 67
Bermuda 25 57 89 41 92 73 64 100 66 66
Saint Kitts & Nevis 64 44 45 72 100 70 54 100 57 66
South Africa 59 60 45 75 83 57 44 86 98 66
Dominica 65 39 44 90 100 68 36 100 57 65
Romania 51 74 48 75 83 65 56 79 71 65
Cayman Islands 61 39 65 26 92 86 64 100 57 65
Moldova 69 86 45 75 50 67 56 71 70 65
Colombia 68 58 48 72 58 72 44 71 92 64
Taiwan 50 47 58 75 92 68 51 79 68 64
Bolivia 80 61 45 75 67 59 52 57 83 64
Macedonia 66 64 45 72 67 62 44 79 79 63
Barbados 35 78 48 72 100 62 40 100 57 63
Mauritius 65 61 47 74 92 72 32 93 42 63
Namibia 66 75 42 46 83 41 64 86 74 63
Belize 60 47 50 80 92 55 52 79 62 63
Paraguay 76 60 44 64 67 71 36 86 68 63
Albania 60 61 45 74 67 74 36 71 89 63
Bosnia-Herzegovina 73 65 45 70 58 67 40 71 82 63
Bahamas 28 67 56 74 100 62 32 100 65 63
Ukraine 49 61 42 74 75 68 60 71 78 62
Grenada 55 53 44 75 92 66 48 86 57 62
Singapore 51 71 68 39 42 74 69 100 39 61
Antigua & Barbuda 54 56 53 74 83 50 32 100 57 61
Turkey 49 60 45 68 67 76 40 86 73 61
Dominican Republic 58 47 45 81 83 69 40 79 57 61
Seychelles 59 58 48 78 67 52 36 100 55 61
Bhutan 80 28 58 83 42 27 40 100 79 61
Peru 66 53 50 70 75 56 32 64 80 60
Jamaica 58 44 40 77 75 71 52 79 57 60
Nicaragua 66 57 42 70 67 66 36 71 68 60
Botswana 70 40 45 78 83 35 44 79 65 60
Honduras 70 32 42 70 67 66 40 71 83 60
Suriname 65 44 47 78 83 59 59 64 39 60
Puerto Rico 55 43 45 42 100 72 36 100 45 59
Tunisia 63 61 45 68 17 73 36 86 85 59
Brunei 65 60 69 100 25 52 44 79 25 59
Malaysia 70 71 48 62 50 68 44 86 24 58
El Salvador 63 43 42 65 75 70 36 79 57 58
Guatemala 61 39 44 74 58 65 32 71 84 58
India 65 39 55 68 75 60 44 64 47 58
Venezuela 54 67 48 84 50 66 32 71 52 58
Cuba 63 75 44 77 8 79 56 57 63 57
Trinidad & Tobago 30 36 53 78 83 63 32 100 57 57
French Polynesia 44 56 45 33 92 60 44 100 55 57
Guyana 63 61 42 77 75 56 44 64 39 57
Tonga 70 25 40 65 50 66 36 100 63 57
Mongolia 68 60 47 70 83 56 52 64 14 57
Nauru 86 8 47 64 100 55 0 100 38 56
China 63 59 69 54 8 67 40 57 79 56
Georgia 56 38 40 80 50 62 48 57 79 56
Ghana 61 28 44 67 92 40 40 71 62 56
Maldives 63 63 45 36 50 66 32 100 49 56
Armenia 64 53 45 81 33 46 44 64 72 56
Lesotho 70 38 44 41 75 30 36 71 93 55
Martinique 63 36 47 38 92 64 4 100 57 55
Jordan 56 60 45 59 33 80 28 71 68 55
Philippines 69 60 42 68 58 46 36 71 45 55
Kuwait 46 60 74 42 50 70 56 71 18 55
Kiribati 75 13 42 57 100 54 12 100 38 55
French Guiana 49 33 47 29 92 54 66 100 28 55
Belarus 65 44 50 75 8 51 52 64 77 54
Thailand 68 65 44 61 42 63 32 71 43 54
Russia 29 67 53 71 42 71 48 57 64 54
Zambia 56 43 44 71 67 19 40 64 89 54
Lebanon 68 56 50 65 42 85 36 21 61 54
Palau 59 47 48 70 100 52 8 86 18 54
Malawi 60 40 45 68 50 32 40 64 89 54
Morocco 43 35 44 67 42 63 36 93 78 54
Samoa (Western Samoa) 55 22 39 68 83 68 46 79 35 54
Swaziland 56 51 42 81 17 27 40 86 91 54
Bahrain 59 67 61 64 33 43 32 86 30 54
Fiji 53 65 40 68 25 59 60 71 43 53
Sri Lanka 64 35 44 78 50 52 44 71 40 53
Madagascar 61 28 44 59 58 37 40 64 87 53
Tuvalu 80 4 42 30 100 75 20 100 17 53
Syria 69 49 44 61 8 68 44 71 60 53
Vietnam 54 53 44 71 33 58 36 64 67 53
Comoros 61 36 37 74 58 36 36 100 40 53
Nepal 73 19 42 68 50 42 36 64 71 52
Qatar 54 63 92 54 25 47 24 79 13 52
Indonesia 46 44 47 74 75 52 32 57 47 52
Macau 46 43 62 0 50 61 24 100 79 52
Vanuatu 54 36 45 33 83 51 40 79 49 52
Senegal 50 18 42 67 67 36 40 79 73 52
Solomon Islands 69 28 45 61 58 61 16 79 43 52
Tajikistan 74 25 45 67 25 50 40 50 79 51
Egypt 55 49 47 65 25 76 36 79 32 51
Benin 60 24 42 64 83 37 36 64 51 51
Kenya 51 46 39 62 58 32 32 57 88 51
Kyrgyzstan 59 42 45 70 42 58 32 64 47 51
Azerbaijan 48 60 50 71 25 40 40 64 62 51
Korea- North (DR of) 64 54 42 51 0 70 28 64 79 51
United Arab Emirates 49 53 76 16 25 76 58 79 10 50
Cape Verde 60 29 44 36 100 49 32 64 36 50
Marshall Islands 73 19 39 26 100 70 8 86 23 50
Tanzania 55 28 44 74 58 30 44 64 51 50
Bangladesh 65 30 42 62 50 36 52 57 49 50
Algeria 51 51 44 67 25 51 36 36 89 50
Uganda 54 33 44 61 42 33 36 64 80 50
Uzbekistan 70 52 47 62 0 62 44 57 40 49
Cambodia 61 53 42 77 25 30 40 64 47 49
Iran 65 54 50 71 17 69 40 0 64 49
Mozambique 65 4 44 70 67 12 32 64 76 49
Gambia 61 10 44 61 42 39 44 71 60 48
Papua New Guinea 54 22 45 64 58 36 40 57 55 48
Mayotte 79 4 40 17 92 40 0 100 46 48
Kazakhstan 50 43 44 65 25 60 52 64 27 48
Mali 61 13 42 62 75 25 32 64 50 48
Libya 29 50 52 51 0 71 44 71 67 48
Guinea-Bissau 65 21 40 64 50 31 36 64 47 47
Micronesia 59 36 40 42 100 66 0 71 5 47
Togo 54 43 39 64 33 33 36 64 58 47
Myanmar (Burma) 75 35 40 71 0 50 44 57 35 46
Turkmenistan 84 22 48 61 0 41 16 64 61 46
Ethiopia 55 11 48 67 33 13 40 57 86 46
Congo- Republic of 53 39 44 61 25 28 40 64 62 46
Rwanda 55 21 47 68 25 31 36 64 62 46
Nigeria 45 29 44 62 42 27 44 64 58 46
Gabon 46 14 45 65 33 44 52 64 49 46
Oman 50 44 53 62 25 56 44 64 2 45
Saudi Arabia 60 68 53 51 8 71 28 36 22 45
Iraq 100 49 45 41 17 55 36 0 38 45
Laos 68 19 45 74 8 30 40 57 51 45
Cameroon 50 29 42 65 17 30 36 64 66 45
Mauritania 56 13 40 58 25 34 36 71 64 45
Niger 61 3 45 64 58 21 40 57 42 44
Burkina Faso 61 6 42 65 50 27 28 64 48 44
Equatorial Guinea 41 46 58 75 0 28 36 50 55 44
Burundi 53 25 40 57 42 30 36 36 75 44
Pakistan 56 3 42 67 42 51 40 7 77 43
Haiti 60 19 39 61 42 39 36 36 53 43
Zimbabwe 33 58 0 77 8 37 44 57 100 43
Central African Republic 60 25 39 72 33 23 36 36 54 43
Cote d'Ivoire 55 25 40 67 25 37 32 43 55 43
Liberia 58 39 44 57 58 14 40 36 28 42
Congo- Democratic Republic of 35 29 42 58 17 26 44 64 62 42
Angola 43 36 52 67 25 1 36 57 52 42
Guinea 66 14 42 61 17 35 40 57 22 41
Eritrea 61 24 39 29 8 28 36 57 73 40
Djibouti 53 13 44 65 33 34 44 57 8 40
Sierra Leone 63 7 42 62 67 9 36 21 24 38
Afghanistan 88 7 40 77 8 0 32 0 58 37
Chad 45 10 37 68 8 14 36 36 50 34
Sudan 53 19 44 65 0 28 40 29 7 33
Yemen 58 21 40 19 33 38 52 21 0 33
Somalia 61 0 39 55 0 7 36 36 16 30
country 0 0 0 0 0 0 0 0 0 0