Thursday, December 29, 2011

Middle Game


Cyprus' gas discovery raises political stakes
The discovery of large quantities of natural gas offshore Cyprus could give a push for ending the decades-long dispute dividing the island. But it could also end up ratcheting up tensions with Turkey.
Disputes over how to divide the spoils of the eastern Mediterranean Sea's vast gas reserves have pitted the island state and nearby Israel against Turkey in a war characterized so far by harsh language and stepped up naval activity. But the stakes rose Wednesday after Cyprus announced that an exploration partnership had discovered as much as 8 trillion cubic feet of natural gas in its waters.
For Cyprus, the discovery is a bonanza - at current prices, the estimated reserves are valued at $32 billion in an economy whose output came to $23 billion in 2010. And that's just the beginning: Last month, Cyprus's government announced a second oil and gas licensing round that will cover 12 of 13 blocks in the ocean south of the island.
Known as Block 12, the field of the discovery announced on Wednesday covers about 40 square miles. It will require additional drilling prior to development, but it was hailed as a "significant" discovery by Charles D. Davidson, chief executive officer of the U.S. company Noble Energy, which led the exploration consortium.
The U.S. Geological Survey last year estimated a mean of 1.7 billion barrels of recoverable oil and 122 trillion cubic feet of recoverable gas in the Levant Basin Province, to which Cyprus belongs. Israel has already uncovered huge reserves in waters under its control
But to exploit the gas, Cyprus will have to reach an accommodation with Turkey over the future of the island, which has been divided into Greek and Turkish zones since 1974, said Sinan Ulgen, visiting scholar at the Carnegie Endowment for International Peace in Brussels. Without an agreement, Cyprus risks a perpetual crisis with its powerful neighbor, he said.
"This raises the stakes for reaching a lasting settlement with regard to the political division of the island," Ulgen told The Media Line. "For Greek Cypriots, if such a settlement is reached they can comfortably take advantage of these offshore resources. If a settlement is not reached it will always be problematic … Turkey will always try to put up an obstacle one way or the other."
Although the Greek Cypriot government is recognized as the official one and belongs to the European Union, Ankara backs the breakaway ethnic-Turkish northern part of the island and claims rights to the island's energy reserves. It has employed its navy to confront Cypriot oil drilling and escort Turkish vessels conducting geological surveys in Cypriot waters.
Greek and Turkish Cypriot sides have held on-and-off peace talks under United Nations auspices for decades. The latest round began three years ago.
Both the rhetoric and the naval muscle-flexing peaked last autumn after the Noble began exploratory activities with a license awarded by Cyprus. Israel became ensnared by virtue of an agreement that Ankara rejects dividing economic rights to the seabed they share. Two Israeli companies are partners with Noble in the Cyprus drilling.
Speaking at Woodrow Wilson International Center for Scholars in Washington earlier this month, Cypriot Foreign Minister Erato Kozakou-Marcoullis called Turkey the "neighborhood bully" and said it had become a country that went from advocating a foreign policy of "zero problems" with its neighbors to one of "only problems."
Nevertheless, tensions gradually wound down after Turkey reached a quiet understanding with the U.S. not to intervene in Cyprus' exploration activities. But Ulgen said Ankara may be under no obligation to restrain itself now that Cyprus moves out of the exploration phase into developing a gas infrastructure.
"What is still unclear is whether the agreement covers only the first step of exploration or whether it concerns the whole process. The incentive on Turkish side would be to try to hinder this process, to show to Greek Cypriots that settlement on the island would be beneficial to Greek Cypriots as well," he said.
A rising economic and military power at a time when the U.S. and Europe are in retreat in the Middle East, Turkey is in position to make use of its navy, said Eric Grove, director of the Center for International Security and War Studies at Britain's University of Salford, said in an essay in World Politics Review this month. "Turkey's current naval fleet is not only significant but also pre-eminent among those of local actors."
But James Dorsey, senior fellow at Nanyang Technological University's S. Rajaratnam School of International Studies in Singapore, said he is doubtful that Turkey would use it, pointing out that Turkish Prime Minister Recep Tayyip Erdogan has stepped back from possible confrontations with Israel over its blockage of the Gaza Strip and with Syria over its deadly crackdown of rebels.
"I would not be surprised if there would be more acrimony over where the maritime border line is and what is the Turkish Cypriot stake in this," Dorsey told The Media Line. "Whatever bluster you have out of Ankara, it is clear that the Turks are gun-shy. I'm not saying that negatively. But this is not the OK Corral for them."
But even the diplomatic route for Turkey presents a problem because Cyprus is due to take over the European Union rotating presidency in the second half of 2012, which will strengthen Cyprus' hand. "Cyprus having the EU presidency for six months is a problem for the Turks. It's going to be six months when Turkey will have a problem putting forward its issues," Dorsey said.

Gordon Banks doesn't live here anymore


Brazil overtakes UK as world's sixth-biggest economy
By Jessica Phelan
Brazil has overtaken the UK to become the world's sixth-biggest economy, according to a new report by the Centre for Economics and Business Research.
BRIC economies are expected to be bigger than Europe's by 2020.
The Center for Economics and Business Research forecasts the trend is set to continue, with Russia and India expected to overtake Europe's other major economies, France and Germany, by 2020.
Brazil now has a bigger economy than the UK, making the world's sixth-largest economic power, according to the Center for Economics and Business Research [2](CEBR).
The London-based consultancy forecast the trend was set to continue, with Russia and India expected to overtake Europe's other major economies, France and Germany, by 2020.
Brazil grew by 7.5 percent in 2010, and though growth projections are less than half that for 2011, the country has established itself as one of the world's biggest exporters. It now exports more to China than it imports from it, according to Forbes [4].
CEBR chief executive Douglas McWilliams told the BBC [5] that Brazil's ascendancy was part of a wider pattern:
"I think it's part of the big economic change, where not only are we seeing a shift from the west to the east, but we're also seeing that countries that produce vital commodities—food and energy and things like that—are doing very well and they're gradually climbing up the economic league table."
CEBR's World Economic League Table puts the US as the world's biggest economy in 2011, followed by China and Japan. Those rankings are predicted to remain stable over the next nine years.
However, numbers four and five—currently held by Germany and France—are expected to be filled by Russia (currently nine) and India (ten) respectively by 2020. Germany would fall to number seven, CEBR said, and France to number nine. Brazil is forecast to remain stable at number six, while the UK (now seven) will overtake France but still drop to eighth. Italy (eight) is expected to fall to tenth.
Europe also faces a decade of slow growth as a result of 20 years of easy credit, according to the Guardian [7]. "Paying back debts over a short timescale will restrict growth and prevent many countries, including the UK, from clawing back output lost in the banking crash for many years," the paper reported.
CEBR predicts world growth will falling to 2.5 percent in 2012, which is already a downward revision of its forecast in September. If the eurozone crisis leads to sovereign defaults, banking collapses and countries leaving the euro, however, next year's world growth is expected to be even lower, at just 1.1 percent.

Can the Polis Live Again?

The modern world has withered public space and its virtues.
A fireworks display in Florence's Piazza della Signoria, 1558
By Michael Knox Beran
In 1958, Hannah Arendt published The Human Condition, her book—part panegyric, part lamentation—on what she called “public space.” What she meant by public space wasn’t just the buildings and gathering places that in a good town square or market piazza encourage people to come together. It wasn’t even civic art viewed more broadly, the paintings and poetry Arendt attributed to homo faber, the fabricating soul who translates “intangible” civic ideals into “tangible” civic art. Public space, for Arendt, was also a metaphysical arena in which people realized their individual potential. They escaped necessity’s pinch—the arduous biological round of life-sustaining labor—through a “sharing of words and deeds.” This was the tradition of the Greek polis, from which Arendt drew much of her inspiration, a place designed “to multiply the chances for everybody to distinguish himself, to show in deed and word who he was in his unique distinctness.”
But a new Leviathan was gobbling up the old public spaces, Arendt believed. With the advent of the modern nation-state, a social dispensation began to emerge, one whose adepts—sociologists, psychologists, planners—were skilled in techniques derived from the social sciences but whose motives were far from pure. The new social technician, part schoolmarm, part bully, sought not merely to study behavior but also, Arendt argued, to control it. The school of Pericles was giving way to the school of Pavlov.
The social signori, Arendt maintained, sought to impose behavioral norms on people through “innumerable and various rules”—bureaucratic harnesses intended to “normalize” men and women, to compel them to “behave,” and to punish their “spontaneous action or outstanding achievement.” Refractory spirits who failed to conform were to be stigmatized as “asocial or abnormal.” In her more perfervid visions, Arendt foresaw a social apocalypse, a “leveling out of fluctuation” that would result in the “most sterile passivity history has ever known.”
Arendt’s jeremiad had a good deal in common with the warnings of other mid-twentieth-century prophets, among them David Riesman and Friedrich Hayek. It resembles, too, the insights of contemporary critics like Camille Paglia, who contends that too many Americans have become “complacently servile toward authority and automatically believe everything party leaders tell them.” But Arendt had her own idiosyncratic understanding of the way public space could help block the road to serfdom. The old forums, in liberating so much potential, foiled those who desired “conformism, behaviorism, and automatism in human affairs.” The question that haunts the reader of Arendt’s work is whether we can get the old places back.
Arendt was born in 1906 into a German-Jewish family living in Linden, in what is now the city of Hanover. She passed much of her childhood in Königsberg, in what was then East Prussia; at the outbreak of World War I in 1914, she moved with her family to Berlin. She was still in her teens when she first heard the name Martin Heidegger. It was “hardly more than a name,” she said, but it “traveled all over Germany like the rumor of the hidden king.” In 1924, she enrolled in the University of Marburg to study under the master. He was 35, married, and working on Being and Time. Arendt embraced him as teacher, mentor, and lover.
The traditional hostility of the philosopher toward the polis was, Arendt believed, “only too apparent” in Heidegger. The “most essential characteristic” of his pose, she said, was “its absolute egoism.” Heidegger was a mountain prophet. He shunned the “gabble” of the valley. He retired whenever practicable to his cottage in Todtnauberg in the Black Forest, where he could live, he said, in the “solitude of the mountains,” in the “elemental nearness of sun, storms, and heavens.” “It’s marvelous up here,” he wrote in 1925. “Sometimes I no longer understand that down there one can play such strange roles.”
Arendt soon left Marburg to study under Karl Jaspers in Heidelberg. She continued, however, to see Heidegger, briefly and furtively, on railway platforms and in provincial hotels. But a breach would open between them. In January 1933, Hitler came to power, and in May, Heidegger joined the Nazi Party. “The Führer himself and he alone,” he declared, “is German reality and law, today and for the future.” In the same year, the police, suspicious of Arendt’s researches in the Prussian State Library, where she was collecting material on anti-Semitism for the German Zionist Organization, arrested and interrogated her. Upon her release, she fled Germany and found refuge in Paris. After the German invasion of France in 1940, the French authorities imprisoned her in the notorious internment camp at Gurs. She escaped and made her way to the United States, which became her home for the rest of her life.
Experience and reflection led Arendt to question Heidegger’s contempt for public space. His “existential solipsism” prevented him from making responsible political judgments. Yet one should not exaggerate the break between the two: it occurred by degrees and was never complete. Arendt would always regard Heidegger as the incarnation of the philosopher-king, and their bond persisted until her death in 1975. She called him “the last Romantic,” not without admiration. German Romanticism left its print on her own spirit. She was contemptuous of mere biological existence, the life of those “enslaved” by the necessity of getting their bread, imprisoned “in the ever-recurring cycle of the life process.” She wanted, as the German Romantics did, to soar into a higher, freer realm; she, too, was a Tochter aus Elysium, a daughter of Elysium.
In the spring of 1961, 20 years after she came to the United States, Arendt traveled to Israel to attend the trial of former SS lieutenant colonel Adolf Eichmann. Her impressions were printed first in The New Yorker and later in her book Eichmann in Jerusalem: A Report on the Banality of Evil. By applying the theses of The Human Condition to the Nazis’ mass murder of the Jews, she caused a sensation—indeed, a scandal.
Studying Eichmann in the dock, Arendt concluded that he was not an evil genius but a fool: “Despite all the efforts of the prosecution, everybody could see that this man was not a ‘monster,’ but it was difficult indeed not to suspect that he was a clown.” He was “genuinely incapable of uttering a single sentence that was not a cliché,” Arendt wrote; in his aphasic helplessness, he could but repeat, in “officialese” (“my only language,” he said), the formulas he had learned to parrot. “The longer one listened to him, the more obvious it became that his inability to speak was closely connected to his inability to think.”
Such people exist in every era, but not until the flowering of the social bureaucracies did they come into their own. Eichmann shone in the sleek bureaucracy of the SS not despite his banality but because of it. Under the social dispensation, Arendt wrote, a “substitution” of “collective man-kind for individual men” takes place, achieved mainly by means of the “social sciences which, as ‘behavioral sciences,’ aim to reduce man as a whole, in all his activities, to the level of a conditioned and behaving animal.” National Socialism was for Arendt an extreme form of the social impulse to condition human beings. The concentration camps, she wrote in her 1951 book The Origins of Totalitarianism, were themselves vast conditioning experiments, “laboratories” in which “each and every person can be reduced to a never-changing identity of reactions, so that each of these bundles of reactions can be exchanged at random for any other.”
Eichmann, a man as primitive in his moral reflexes as one of Pavlov’s dogs, figures in Eichmann in Jerusalem as the incarnation of the new social man and thus the ideal Nazi administrator. A less dull creature would have either broken under the strain or turned sadist and thus upset the smooth efficiency of the operation; Eichmann plodded on, processing mass murder as though he were stamping passports. Arendt thought that Eichmann deserved to hang, but her portrait nevertheless stirred outrage because the mulish mental dormancy she attributed to him seemed to mitigate his guilt. Carrying her theory to what many thought an extravagant length, Arendt argued that Eichmann, caught up in the atmosphere of National Socialism, was “perfectly incapable of telling right from wrong.”
If Eichmann figures in Arendt’s roman à thèse as the embodiment of the banal social man, his Jewish victims make a prop for her theory of the decline of public space. Probably nothing in Eichmann in Jerusalem caused so much distress as the pages in which Arendt described the assistance that the Jewish councils, the Judenräte, gave the Nazis in implementing genocide. “Wherever Jews lived,” Arendt wrote, “there were recognized Jewish leaders, and this leadership, almost without exception, cooperated in one way or another, for one reason or another, with the Nazis.”
Arendt showed little feeling for the agonizing predicament of the Jewish leaders, though she conceded that their “submissive meekness” was understandable. No “non-Jewish group or people had behaved differently,” she noted. To rebel, she knew, was to court a fate worse than death. She described how Dutch Jews were “tortured to death” after attacking a German police detachment in 1941. For “months on end they died a thousand deaths, and every single one of them would have envied his brethren in Auschwitz and even in Riga and Minsk.”
Still, if by 1941 it was too late to rebel, why had Jews and Gentiles alike failed to stand up to the thugs earlier? Arendt attributed the failure of civic nerve to the decay of public space and, in particular, to the decline of the political traditions that flourished in such space. In The Human Condition, she had defined the essence of political activity as “jurisdiction, defense, and administration of public affairs.” The crucial word is “defense.” Arendt admired the man of action who had the “courage” to enter public space and defend himself against aggressors; courage, she said, was “the political virtue par excellence.”
Arendt believed that some peoples had more of this civic bone and muscle than others. The Danes, for example, had an “authentically political sense, an inbred comprehension of the requirements of citizenship and independence.” The Diaspora Jews, by contrast, “had no political tradition or experience.” They figure in Arendt’s writings as civic castrati whose lack of political experience left them vulnerable to the pogrom. Had the Jews possessed a more adequate public space, Arendt believed, they could have developed the civic machismo that she admired.
This part of her argument, though, is at odds with her recognition that polis arts, however beautifully developed, could not in fact have saved the Jews. Even if they had turned the ghetto into a facsimile of Periclean Athens, they could not have effectually resisted a gigantic nation-state determined to wipe them off the face of the earth. They were helpless, Arendt wrote, because they “possessed no territory, no government, and no army”—in other words, no nation-state.
Arendt’s analysis of the plight of European Jewry lays bare the deeper tension in her thought. Public space, small and polis-like, is for her the school of civic courage and distinctive individuality. Yet no polis can withstand the might of a nation-state. Build a nation-state to save yourself, however, and you sacrifice the humanity and civic vigor of the agora, the forum, and the town square. The nation-state, because of its size, requires a people to undertake the very kinds of social administration that degrade the civic artistry that makes them strong and self-reliant. “Large numbers of people, crowded together, develop an almost irresistible inclination towards despotism, be this the despotism of a person or of majority rule,” Arendt wrote, “and although statistics, that is, the mathematical treatment of reality, was unknown prior to the modern age, the social phenomena which make such treatment possible—great numbers, accounting for conformism, behaviorism, and automatism in human affairs—were precisely those traits which, in the Greek self-understanding, distinguished the Persian civilization from their own.” It is the despairing crux of Arendt’s philosophy. The social methods of the nation-state will always overwhelm the civic intimacy of polis culture, yet without national forms to protect them, polis people are perpetually at the mercy of their nation-state enemies.
Part of the difficulty is the fetish that Arendt makes of politics. She thought politics essential to public space, yet in a world dominated by national governments, she saw no way to preserve the political tradition of the town square, the agora, and the piazza, which had been robbed of their sovereignty by the bigwigs of the capital.

Child abuse of a giant scale

The dirty secret in Uncle Sam’s Friday trash dump
By Bryan R. Lawrence
Releasing information on the Friday before a big holiday is a time-tested way to bury bad news. So when the Government Accountability Office’s fiscal 2011 financial statements for the federal government were released on the Friday before Christmas, it made sense to read them closely.
Since 1997, the United States has been a rare example of a government willing to publish financial statements using accrual accounting, which counts the cost of promises made as well as cash paid out. And the GAO’s professionalism over the years has won it a reputation for impartiality and effectiveness.
That professionalism is evident in the GAO analysis of the net present value of the Social Security and Medicare promises Washington has made to Americans. “Net present value” means the total that would have to be set aside today to pay the costs of these programs in the future. The government puts these numbers in appendices, rather than in headlines. But the costs are real.
In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.
If the government followed corporate accounting rules, that $2.9 trillion increase would be added to the $1.3 trillion cash deficit for fiscal 2011 that has been widely reported. And a $4.2 trillion deficit is something that Americans need to know about.
The Treasury acknowledges the need to show an accrual-based deficit, but the only retirement accruals it includes in its “Citizen’s Guide” to the GAO numbers are for promises to direct government employees and veterans. Promises to the rest of Americans are excluded, even though they are multiples larger than the $10.2 trillion of government debt held by the public.
The latest GAO numbers are particularly interesting because of a change in accounting standards that requires the government to explain why the cost grew by $2.9 trillion. Fully $1.5 trillion of that reflects the aging of all 312 million Americans by one year. In the GAO report from fiscal 2001, the cost of promises was $17 trillion. The growth in the cost from $17 trillion to $33.8 trillion averages about $1.7 trillion per year. The GAO doesn’t specify numbers for the other nine years, but one suspects that aging has driven most of the growth in the cost of the promises.
The cost would have been a lot worse but for two assumptions that the GAO found questionable.
First, Medicare’s cost projections assume legally required decreases in reimbursement rates to doctors that Congress has ignored for years — the so-called doc fix. For these projections to be realized, Congress would have to abide by its own cost controls and allow an immediate 27 percent cut to doctors’ rates, which is very unlikely.
Second, the Medicare projections assume that the 2010 Affordable Care Act (ACA) will reduce health-care cost growth by 1.1 percent per year, despite doubts voiced by the GAO and a panel appointed by the Medicare board of trustees.
The panel and the GAO recommended including an alternate scenario in the year-end figures, in which the doc fix continues and the ACA cost reductions do not materialize. The result is a $12.4 trillion increase in the cost of the promises, to more than $46 trillion. Given Congress’s history with the doc fix, and the general paralysis in Washington, it’s hard to argue with the GAO’s lack of confidence in Congress’s ability to honor its own cost controls.
If the government were a company, its huge and growing off-balance-sheet liabilities would set off alarm bells. But investor confidence has not been lost — Treasurys can still be sold at very attractive yields.
Confidence has been shaken, though, among the American people. Congress’s approval ratings are at record lows. Anger is flaring across the political spectrum, reflecting a sense that something has broken in our country.
In such an environment, is it right to release critical financial information the Friday before Christmas? Is it acceptable that politicians are not required to describe the cost of the promises they have made?
In 1990, the government required that companies begin to account for the net present value of retirement promises, not just current-year cash flows. General Motors began complying in 1992; and it recorded a $33.1 billion (pretax) charge to reflect the value of its promises up to that point, which led to what was then the largest annual loss in U.S. corporate history. Seventeen years later, the “free until accounted for” promises were a major factor in GM’s bankruptcy.
The United States is stronger than General Motors. And the good news is that small changes in health-care cost trends have a large impact on the government’s long-term promises. Our system is fixable. But our politics are toxic, and each side is dug into an ideological trench. In such an environment, when hard choices need to be made about promises and taxes, why should information be buried in an appendix?
Americans deserve better. One way for Washington to start earning back our trust is by giving us all the information, even if it is unpleasant.

The new monasteries for the printed word


As The Age Of The Physical Book Retreats, The Cult Of The Physical Book Advances
By  Trevor Butterworth
The idiot is missing. Or rather, a hundred “Idiots” have failed to arrive. And as Paris awakes on the shortest day of the year, there is grave concern at Shakespeare and Company at 37 rue de la Bûcherie. Dostoyevsky’s novel was supposed to be handed out to congregants at tomorrow’s funeral of the bookstore’s American founder, George Whitman, who passed away on December 14, three days after his 98th birthday. As an Irish bookseller explains to me, between patient calls to the distributor, “George felt as if it was written about him.”
Though Whitman may well have been as naïve as Dostoyevsky’s protagonist, Prince Myshkin – and, from the testimony of Anaïs Nin, as saintly – his fate was not that of the insane asylum, though bookselling might be thought of as a particular form of madness. Instead, the storefront pays homage to a man who used an odd educational provision in the G.I. Bill to stock his store and lending library (whose lease he purchased in 1951 with an inheritance of $500) and lived to see it become, inarguably, the most famous bookstore in the world.
There are photos – in the most dashing, he is dressed in a paisley jacket and tie, looking, for all the world like a psychedelic Leon Trotsky or a malnourished and goateed Sean Penn – and there are lengthy obituaries from the New York Times and the French newspaper, Liberation, pasted to the windows.
A young woman, in a tight fitting red hat that looks like an upturned crocus, stops with her blue suitcase and patiently reads through them in the rain. She becomes a flood as the morning wanes and tourism waxes. There are votive candles and flowers and a poem, now sodden, paying tribute to George’s “lamplighter spirit;” there are many more tributes on a large poster board inside. There will be champagne tomorrow night at the store for anyone who wants to drop by.
Shakespeare and Co. would have enjoyed a solid footnote in literary history for the writers who gathered for literary conversation not just before they were famous, but after: Samuel Beckett, Henry Miller, an ungracious Allen Ginsberg.  And it evolved into literature’s Santiago de Compostela not only for the quality of its literary pilgrims, but for the quantity that took alms and shelter under its eaves. Some 50,000 “tumbleweeds” – drifters, grifters, aspirant writers and common readers – slept above the store during Whitman’s reign in exchange for a little time working in the shop and a lot more time spent reading (slacking in the latter task would wear your welcome thin).
And then, of course, there is the name, a ménage à trois of literary bloodlines. Whitman’s store was first called le Mistral before Sylvia Beach declared, at a reading in 1958, that she was passing the name and the spirit of, her former and famed bookstore, Shakespeare and Co., to him.
Beach had seen her little bookstore and lending library turn into a salon for a generation of American writers who made a home in Paris in the 1920s and 30s: Ernest Hemingway, F. Scott Fitzgerald, Ezra Pound – all showed up to chat, borrow books and mix with the local literary and artistic talent. Hemingway devotes a chapter to the store in his work “A Moveable Feast,” noting of Beach, not only her implacable generosity, but that “no one that I ever knew was nicer to me.”
But above all, and what would seal her place in literature’s pantheon, Beach became a veritable obstetrician to the birth of James Joyce’s Ulysses, stepping in to become publisher after a New York judge declared an early extract, published in The Little Review, obscene and American and English printers balked. In a long-drawn out stroke of genius, she figured that French typesetters wouldn’t understand English and therefore miss all the naughty bits. Out of such ignorance came the most influential novel of the 20thcentury.
Beach shuttered her store with the arrival of the Second World War, and though Hemingway officially liberated it with his company of soldiers (before liberating the wine cellar at the Ritz), it never officially opened again. George named his daughter – and the present proprietor – Sylvia Beach Whitman in her honor.
Writing in the Guardian, the British novelist Jeanette Winterson said that Whitman “was an affront to modern capitalism, because he ran a successful business that put people, culture and books before money;” but that’s just the kind of silly thing writers say when they are being sentimental. Bookselling can be many things, but it is always, in the end, about balancing the books. And while Shakespeare and Co.’s fortunes sometimes courted misfortune, the fact is the shop now trades on the kind of association commerce can only dream of: Genius met here. It is as much a portal to the past as its grander neighbor, the great cathedral of Notre Dame.
But what is remarkable beyond the store’s unique literary genealogy is that, at a time when digital publishing is undoing and repackaging so much of literary culture, its nature as a store is generalizable to small bookstores everywhere. It is intimate and surprising, serious and fun. It is a curated space which is a source for curating one’s sense of the world and of self.
Indeed, if the idea of curating is one of the most significant cultural forms of the 21st century  (and I believe it is, given the volume of cultural material available to us at this moment in history), the small, well-curated bookstore will not simply thrive as a commercial enterprise, it will be culturally indispensable.

As the age of the physical book retreats, the cult of the physical book will advance. E books are much like canned food in the 1950s, new, convenient – and excitingly so. But as with food, taste and desire changes. There will be a point when how literature is produced and distributed and consumed becomes much more important to a great many people than simple convenience. In one sense, the point is already here: small bookstores aresurviving where their big box rivals now fall like dinosaurs. What they have to offer the marketplace will only become more obvious as that market seems to shift further in the direction of digitization.
Soon – or already, in the case of the superlative small bookstore chain in the UK, Daunt Books – agile booksellers will return to their origins and become book publishers. Their offerings may never have the reach and profit of the mass-market ebook, but as the digital market expands the quiddities of the physical book will become more and more compelling to more and more people. Hand set, hand bound, rag paper editions will suddenly feel novel.
Small bookstores will be the new monasteries for the printed word in a flat-screen backlit age. And then, somewhere, perhaps, some Sylvia Beach-like devotee of the cult of the book will set up shop and…
“What date is it?” asks a bookseller,.
“The twenty first,” replies a second. “It is the winter equinox.”
“And then tomorrow, light starts to come back into the world,” says a third,
And in the gloom of morning Paris, as I scribble the exchange into my notebook, I think, where else but the most famous bookstore on earth does one get a more perfect ending? And yes, in case you are wondering, the Idiots all showed up in time too.

The only recipe for economic development


From Aid to Enterprise

Science is never settled

Climate Science Reaches a Landmark That Chills Global Warming Alarmists
By James Taylor
As 2011 comes to a close, climate science celebrates an important landmark. It has now been 33 years, or a third of a century, since sensors aboard NASA and NOAA satellites began measuring temperatures throughout the earth’s lower atmosphere.
For 33 years, we have had precise, objective temperature data that do not require guesswork corrections to compensate for uneven thermometer placement and non-climate surface temperature biases such as expanding urban heat islands and land-use changes. The satellite data, moreover, tell us the earth is warming at a more modest, gradual, and reassuring pace than was foretold by United Nations computer models.
The satellite sensors became operational at a time that is very convenient for those who believe humans are causing a global warming crisis. Global temperatures declined from the mid-1940s through the late 1970s. As a result, the sensors coincidentally began measuring global temperatures at the very beginning of our most recent global warming trend. Had the sensors been in place 33 years earlier, during the 1940s, the overall pace of warming shown by the satellite sensors would be less than half what is shown by the post-1978 temperature data.
Even so, the measured temperature trend is quite modest. John Christy, who along with Roy Spencer oversees the NASA satellite sensor program, reports temperatures have warmed at an average pace of 0.14 degrees Celsius per decade since the satellite sensors became operational. This is merely half the pace predicted by computer models utilized by the United Nations Intergovernmental Panel on Climate Change (IPCC).
Christy appears to be making a generous concession regarding the warming that has occurred. The temperature data seem to show warming closer to 0.3 degrees over the 33 year period, or 0.09 degrees Celsius per decade. But why quibble over the difference? A warming of 0.14 degrees per decade, or 1.4 degrees per century, is still significantly less than predicted by UN climate models and far from an impending global warming crisis.
Importantly, the satellite sensors show less warming in the lower troposphere (approximately 10,000 feet above the earth’s surface) than is reported by surface temperature readings. Global warming theory holds that one of the fingerprints of human-induced global warming is more rapid warming in the lower troposphere than at the surface. The reason for this is carbon dioxide molecules reside in the lower troposphere and have their greatest heat-trapping effect there.
As a result, if global temperatures are rising as a result of human carbon dioxide emissions, the satellite sensors should report more warming in the lower troposphere than is actually occurring at the surface. In essence the satellite sensors should report a warming trend somewhat more severe than is actually occurring at the surface of the earth.
Surface temperature measurements, however, indicate more rapid warming at the surface of the earth than in the lower troposphere. According to James Hansen of NASA’s Goddard Institute, temperatures at the surface of the earth rose twice as fast during the past 33 years as the satellite data show. Surface temperatures compiled by the UK’s University of East Anglia Climate Research Unit reflect a similar warming trend.
With temperature data indicating more warming at the earth’s surface than in the earth’s lower troposphere, one of the following must be true: (1) the surface temperature data is more corrupted by heat biases such as expanding urban heat islands and localized land-use changes than the IPCC admits, (2) the warming of the past 33 years is primarily the result of factors other than greenhouse gas emissions, or (3) longstanding, widely believed assumptions about greenhouse gas theory are wrong.
Regardless of which one or more of the three options are true, the satellite sensors have contributed greatly to our scientific understanding of the earth’s ever-changing climate. Thirty-three years and counting, we rightly celebrate the scientific advances provided by satellite temperature sensors.

Dead End


Dithering at the Top Turned EU Crisis to Global Disaster
BRINK-bottom
By CHARLES FORELLE and MARCUS WALKER
At a closed-door meeting in Washington on April 14, Europe's effort to contain its debt crisis began to unravel.
Inside the French ambassador's 19-bedroom mansion, finance ministers and central bankers from the world's largest economies heard Dominique Strauss-Kahn, then-head of the International Monetary Fund, deliver an ultimatum.
Greece, the country that triggered the euro-zone debt crisis, would need a much bigger bailout than planned, Mr. Strauss-Kahn said. Unless Europe coughed up extra cash, the IMF, which a year earlier had agreed to share the burden with European countries, wouldn't release any more aid for Athens.
The warning prompted a split among the euro zone's representatives over who should pay to save Greece from the biggest sovereign bankruptcy in history. European taxpayers alone? Or should the banks that had lent Greece too much during the global credit bubble also suffer?
The IMF didn't mind how Europe proceeded, as long as there was clarity by summer. "We need a decision," said Mr. Strauss-Kahn.
It was to be Europe's fateful spring. A Wall Street Journal investigation, based on more than two dozen interviews with euro-zone policy makers, revealed how the currency union floundered in indecision—failing to address either the immediate concerns of investors or the fundamental weaknesses undermining the euro. The consequence was that a crisis in a few small economies turned into a threat to the survival of Europe's common currency and a menace to the global economy.
In April, after a year of drama and bailouts, the euro zone seemed to have contained the immediate crisis to Greece and other small countries. Crucially, euro-zone economies such as Spain and Italy had avoided the panicked flight of capital. They were still able to borrow money at affordable rates in the bond market.
 But by July, the rift among euro-zone leaders over who should bear the burden of Greece's debt had prompted investors to shun all financially fragile euro nations. Like a wildfire, the spreading uncertainty threatened to engulf the whole of Europe's indebted south, to outstrip the resources of its richer north and to burn down the symbol of Europe's dream of unity, its single currency.
Now, as the bloc's leaders rush to forge a closer political union, the lesson of that period looms large. Investor trust in public debt is part of the foundation on which all nation-states depend. And in Europe's common currency—a unique experiment with the livelihoods of 330 million people—nations will win or lose that trust together.
The dispute at the Washington meeting divided two of the Continent's grand old men, both of them born in 1942 and both among the fathers of the euro.
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Wolfgang Schäuble, Germany's ascetic and irascible finance minister, understood the IMF's ultimatum. The euro zone would have to draw up a second bailout package for Greece by summer, just a year after a loan deal for €110 billion, or $140 billion.
But this time, Mr. Schäuble said, "We cannot just buy out the private investors" with taxpayer money. That would reward reckless lending, he said, and it would never get through an increasingly impatient German parliament. Greece's bondholders would be required to lend more money, Mr. Schäuble proposed, rather than take payment for their bonds at maturity.
Jean-Claude Trichet, the urbane French head of the European Central Bank, warned against forcing bondholders to put in more money, which would effectively delay repayment. "This is not a good way to go in a monetary union," Mr. Trichet said. "Investors would avoid all euro-area bonds."
Mr. Trichet, in the twilight of a 36-year career as a finance official, feared that if Greece didn't honor its bond debts on time, the implicit trust that kept credit flowing to many weak euro-zone governments would shatter. More countries and their banks would lose access to capital markets, in a chain reaction with incalculable consequences.
The April meeting ended inconclusively.
Meanwhile, the cost for fixing Greece was rising. The Athens government's budget deficit was stuck at a stubbornly high level.
Italian and Spanish borrowing costs were still affordable and stable. The yield on Spain's 10-year bonds hovered around 5.3%; on Italy's, around 4.6%.
The debate over making bondholders contribute to the new funding package for Greece—known as private-sector involvement, or PSI—divided euro-zone countries.
Germany had allies. In the Netherlands and Finland, new governments had promised voters they wouldn't pay for problems in less-frugal Mediterranean countries. Breaking those promises would risk rebellions in parliament.
But France joined the ECB in resisting burden-sharing by bondholders. France's banks had lent more heavily than Germany's to Greece and other indebted euro nations, and France fretted about a Lehman Brothers-style banking-system meltdown. Italian officials also feared that a precedent for losses in Greece would scare investors away from Italy's bonds.
Three weeks after the Washington gathering, on Friday, May 6, panic erupted. German news weekly Der Spiegel reported that Greece was thinking of leaving the euro zone, with policy makers heading to a secret meeting that night in Luxembourg.
The report was half-right. There was a meeting, but Greece was staying put.
Inside a country chateau, top euro-zone officials told Greece's finance minister they expected deeper austerity and faster reforms in return for a new aid package.
Then Mr. Schäuble said he wanted to discuss how bondholder burden-sharing would work. The usually smooth-mannered Mr. Trichet lost his patience. "I want to put my position on the record," he said: "I don't agree with private-sector involvement, so I won't take part in a discussion about the practicalities." He stormed out.
Mr. Trichet's assent was vital. If the ECB were to stop accepting Greek bonds as collateral for its lending to banks on the grounds that the bonds were in default, then Greece's banks, which were stuffed full of their government's bonds, would quickly run out of cash and collapse. That would radically drive up the cost of a rescue.
In Greece, a new wave of mass strikes and demonstrations was starting. Protesters, angry about Europe's imposition of extra spending cuts and tax hikes, clashed with police in front of the Athens parliament in the biggest and most violent protests in a year.
Spanish and Italian bond prices remained stable. But Europe was at a dangerous impasse over Greece.
Many euro-zone governments hoped Mr. Strauss-Kahn could find a way to relax the IMF's summer deadline. The IMF chief was due to discuss the matter with German Chancellor Angela Merkel in Berlin on May 15, and with euro-zone finance ministers in Brussels the next day.
Mr. Strauss-Kahn couldn't attend. Police in New York pulled him off his Paris-bound flight and charged him with sexually assaulting a hotel chambermaid. (The charges were later dropped, and prosecutors said they doubted the maid's reliability.) An aide phoned Ms. Merkel at her central-Berlin home that Saturday and told her the news. The astonished chancellor responded with a German idiom that translates roughly as: "You couldn't make this up."
The IMF sent a lower-ranking official to Brussels in his place who had no latitude to deviate from the IMF's deadline.
In Athens, meanwhile, a tent city of the "Indignant" protest movement—a groundswell of anger at the country's impoverishment—sprang up outside parliament. Spain's bond prices began to wobble as investors worried that other countries might also face debt restructuring.
On June 1, Mr. Schäuble's deputy, Jörg Asmussen, presented a German plan at a meeting of finance officials in Vienna, at the Hofburg palace of the former Habsburg emperors. It involved pressuring Greece's bondholders to swap their Greek debt for new IOUs that would come due far in the future. That would cut the amount of European taxpayer funding Greece would need.
After a meal in a palace banquet hall, the officials quarreled into the wee hours.
For the ECB, Mr. Trichet's deputy Vitor Constâncio, of Portugal, denounced the German plan as "dangerous." Credit-rating agencies would declare Greece to be in default on some of its debts—a so-called selective default. In that case, Mr. Constâncio warned, the ECB would refuse to accept Greek government bonds as collateral, dealing a death blow to Greek banks. France, Italy and Spain all supported Mr. Constâncio.
Germany's Mr. Asmussen shot back with a threat of his own. Europe needed Germany's money to fund a new program of Greek loans. "Without private-sector involvement," he said, "there will be no program."
Greece was descending into chaos. Embattled premier George Papandreou's slender majority in parliament was fraying. On June 15, a swelling demonstration in Athens's central square veered out of control.
Alone in his office, Mr. Papandreou phoned the parliamentary opposition leader and offered to make way for a national-unity government. Talks broke down, and the Greek government limped on badly wounded.
Even Ms. Merkel had some doubts about her finance ministry's hard-line insistence that Greece's bondholders take a loss. On June 17, she discussed a softer plan with French President Nicolas Sarkozy: a gentleman's agreement under which Greek bonds would be honored but the bondholders would volunteer to buy new ones.
Mr. Schäuble pushed back. The veteran conservative politician was Berlin's biggest supporter of the European dream, but he was also the keeper of Germany's purse. He was determined to make banks share the burden with German taxpayers, and he didn't trust them to keep a gentleman's agreement.
When finance ministers met again on June 20, Mr. Schäuble pushed harder. Greece's bondholders should be told not merely to accept a delay in repayment, he said, but also to forgive some Greek debt—a so-called haircut.
As Greece's economy moved toward free fall, its debts were soaring beyond the country's ability to pay, the Germans and their northern allies argued. Mr. Trichet and the southern countries resisted. Talks dragged on for hours. The ministers knew they couldn't leave without some agreement.
They tried to please everyone: Greece would get more aid. Bondholder losses would be substantial, to placate the Germans, Dutch and Finns. But as the ECB insisted, they would avoid pushing Greece into selective default.
Investors knew you couldn't have it both ways. As the threat of a Greek debt restructuring sank in, Southern Europe's bond markets grew volatile. Spain's 10-year bond yield rose above 5.6%. Italy's reached 4.9%.
Greece's parliament debated the extra austerity measures that Europe demanded. Central Athens erupted in violent protests. Anarchist youths tore up chunks of paving stone and threw them at riot police, who fired back with tear gas and stun grenades. Café parasols burned.
Europe hadn't resolved how to keep Greece afloat. The IMF—whose demand for a decision had set off the whole argument—softened its ultimatum. IMF officials said they were satisfied that Europe would sort out some kind of new bailout, and wired Greece its summer aid payment on July 8.
It wasn't enough to calm markets. Spain's bond yield hit 6.3%. Italy's rose to over 5.8%. Such borrowing costs, if sustained, would make it hard for both countries to rein in their debts.
The selloff in bond markets forced leaders to call an emergency summit for July 21.
Determined not to let the summit pass without an agreement, Ms. Merkel invited the French president, who objected to the German push for bondholder losses, to Berlin. The pair and their advisers met for dinner in the German chancellery the night before the meeting.
Few of them had time to touch the duck breast and vegetables on their plates as they searched for a compromise. Finally, Mr. Sarkozy said he would accept the private-sector involvement—if Ms. Merkel dropped her resistance to giving the euro-zone bailout fund broad new powers to buy debt of weak countries directly and move to protect such countries as Spain and Italy from bond-market contagion. Ms. Merkel agreed.
One more person needed to sign off. Ms. Merkel phoned Mr. Trichet at his Frankfurt office. He took the last Lufthansa flight to Berlin and arrived at the chancellery around 10 p.m.
Reluctantly, Mr. Trichet gave his OK. But he set conditions. Governments would have to insure Greek bonds against default so that the ECB could continue to accept them as collateral. And they would have to make plain that no other euro country but Greece would have its debts restructured.
The trio's deal was both complicated and vague. Their staffs had little time to flesh out details before the next day's summit in Brussels. As leaders trickled into the European Union's boxy headquarters, Ms. Merkel faced a challenge to placate the euro zone's south, which thought private-sector involvement was dangerous, and its north, which thought it didn't go far enough.
When the leaders assembled at the sprawling summit table, Ms. Merkel admitted that the specter of bondholder losses was causing market unrest. But, she said, some Greek debt relief was essential. Without it, the bailout's tough austerity conditions—made tougher by Greece's missing its budget goals—would be seen as unbearable.
"If Greece had met its program parameters in April," she snapped, "that would have helped."
All 17 euro nations had to agree to private-sector involvement. But presented with a calculation that the plan would reduce Greece's debt by only about €19 billion out of more than €350 billion total, Dutch Prime Minister Mark Rutte balked. If it's only €19 billion, he said, "I'm out. I need more."
Finnish premier Jyrki Katainen also complained. His parliament wanted collateral in exchange for more Finnish lending to Greece. "No collateral, no agreement from me," he said.
Mr. Sarkozy was peeved. "All our parliaments can cause problems," he said.
Then it was Slovakia's turn. Prime Minister Iveta Radičová was fighting to keep her coalition together over aid for Greece—a richer country than her own. Adding more powers to the bailout fund "would be suicide," she said.
Greece's Mr. Papandreou pleaded for help. "If we can't solve even Greece, we won't be seen as being able to solve anything else," he said.
Hours later, the leaders had a communiqué. To appease the holdouts, it left key points broad and noncommittal, offering the possibility of collateral to Finland and describing the complex bondholder deal in a few strokes, vague language that would return to haunt the bloc.
Officials struggled to explain the new Greek bailout and the bondholder losses. Amid the confusion, Mr. Rutte dispensed muddled numbers. Bank analysts put out flawed reports.
Investor confidence faltered as it became clear that Europe's compromise achieved the worst of all worlds. Greece would be pushed into a historic default—the first time in nearly 60 years that a developed, Western country wouldn't honor its debts. But the default was so small that Greece was still left with a crushing debt burden.
And then official Europe went on vacation: Ms. Merkel to the Italian Alps, Mr. Sarkozy to the French Riviera.
Bondholders didn't. They went on a rampage.

No Land of Plenty


German economy forces 'still sprightly' pensioners back into work
By Eloi Rouyer and Francois Becker
Germany, as Europe's top economy, may be seen as the land of plenty but its senior citizens are increasingly being forced to take a part-time job in their twilight years just to make ends meet.
With more inhabitants over the age of 65 than any of its European partners, Germany's senior citizens are having to resort to jobs such as a caretaker, animal- or babysitting to top up their pensions.
Notices such as “Still sprightly pensioner, in good physical and intellectual shape, seeks work paying at least 400 euros (US$536) a month. Good knowledge of computers,” are common on specialist sites posting job adverts.
Such sites tend to have a column dedicated to pensioners listing so-called “mini-jobs” targeting those within the country's 20-million-strong retired population in need of boosting their incomes.
“Two or three times a week I deliver newspapers,” 69-year-old Norbert Mack, who lives in Sindlingen, a western suburb in the city of Frankfurt, told AFP.
“Mostly they are free papers with advertising which arrive around midday, so you then need two or three hours to deliver a pile of 200 to 300 papers,” he said.
“I do my round in the area with a shopping trolley. After that, I'm tired and I need to nap for one or two hours at home,” said Mack, who used to be employed in industrial machine construction.
The job earns him about 180 euros every month which supplements his 1,500-euro pension which he and his ill wife live on.
“Our only little pleasures are an old car, a small allotment where we spend the holidays and of course, my dog,” said Mack, whose hobby is training German shepherd dogs.
'I could survive but not live'
Initially created in 2003 by the Social Democratic government of then chancellor Gerhard Schroeder to fight unemployment, these low-paid “mini-jobs,” which are taxed at lower rates, proved a hit among the over-65 year-olds.
And about 11 percent of people who hold down “mini-jobs” are in this age category, according to the central office which oversees this type of work.
“Pensioners regularly ask us for work,” said Walter Ofer, from an association helping pensioners, adding that as well as senior citizens who work to top up their pensions, many women took jobs as cleaners off the books.
At 72, Gerda Hafermalz, who used to be employed in customer service, promotes Swiss cheeses in supermarkets around the eastern region of Erfurt.
“Of course, it was imperative for me to find this work. Either I sat crying over my fate or I took my destiny in my hands,” said the divorcee who describes herself as “tough.”
“My pension gives me 880 euros a month and there's 375 of it that goes on my rent. Without the money my job gives me I could survive but not live,” she said.
Germany has seen the number of pensioners taking jobs to top up their income increase by more than 58 percent between 2000 and 2010, according to the German labor ministry. In 2000 they numbered some 417,000, rising to 661,000 in 2010.
According to Eurostat, Germany has the most inhabitants over the age of 65 in Europe, representing 20.6 percent of its population.
The retirement age is due to gradually go up from 65 to 67 years following a reform approved in 2007.