No Surprise Here...

I woke up this morning and read that Paul Wolfowitz is resigning from the presidency of the World Bank. This reminds me of John Bolton being forced out as the US Ambassador to the UN. Actually, I couldn't care less since I think that these two institutions have proven over decades to completely worthless, toothless and unnecessary institutions. These two gentlemen cared enough to try recraft these places into something that was not rife with corruption and self interest, but these places have no intention and desire to change the goose that is laying the golden egg at the expense of everyone else.

I use to work at a multilateral development bank, in fact, it was the African Development Bank when it was in the Ivory Coast in West Africa, so I know quite a bit about how these institutions work and how effective they are. So why did Paul Wolfowitz and John Bolton get booted under pressure? Because these institutions are worse than worthless and the people who are invested in the way that business is done do not want agents of change to run these places.

First, the World Bank and the UN are not interested in helping the poor or protecting the defenseless [look at Darfur and what happened in Rwanda] they exist as covers for large European governments to pretend that they are doing something. In reality, these institutions support the businesses of these same European countries to maintain the status quo. European businesses [maybe excepting some British ones] cannot compete technologically or economically without some kind of government support or political cover that these institutions provide.

Second, as I wrote before, appointments to these institutions are largely plush, well paid, exciting adventures for the children of these same Westerners so that they can travel the world and see interesting new cultures. Its just an indulgence to send our children to Africa or some remote Asian village to help. Some Oxford University or University of Michigan graduate is going to these places to 'help' these people.... with what? Farming? Digging wells? Building local institutions? come on, these children know nothing about what these people need or even want. No its an education for these little tots so that when they come home, they can thank their lucky stars that they were born in the West.

So, Wolfowitz will leave his job at the World Bank. Good. The place did not deserve this fellow. Now, he will take a well paid position in private industry or at a University and he will become a productive member of society again.

I am a firm believer that if the World Bank, the UN or any other multilateral development institution suddenly disappears from the face of the earth, that it will not hurt anybody or anything. It would probably be a huge positive if these places disappeared since these institutions allowed illegitimate political and economic power to exist while providing almost no tangible benefits except for a select few. It would be good riddance.

Three Billion Dollars Down The Drain.....

Bank of America announced today that it was taking a US$2.5 billion dollar stake in China Construction Bank [CCB]. Additionally, BoA plans to take an additional US$500 million stake in the upcoming IPO bringing the total stake to 19.9%. BoA is being forced into investing outside of the US since it has 10% of all the deposits in the US, the most any one bank is allowed to have, therefore limiting opportunities stateside. Additionally, BoA has little or no presence to speak of in the China market and are probably trying to buy there way into the inner circle.

Chinese state banks are angling for foreign investment to bring credibility to an industry tarnished by loan fraud and corruption. The country has resorted to bailing out several institutions awash in bad loans to help create a sound banking system.

Obviously, having a minority shareholder of such prestige as BoA is a positive for the CCB, but I am afraid that very little will change with the corrupt cronistic business practices in China's banks. The BoA stake is more style over substance and a positive for those that want or feel more comfortable to see involvement by a large foreign institution. But I do not think that BoA will hold much power over the directors of the bank. A 19.9% stake does not carry enough weight to get practices changed since the people that run these institutions would prefer that they stay just the way that they are so that they can rob them blind.

Bank lending expanded by about 20 percent a year over the two years to the end of 2004, a period when annual economic growth exceeded 9 percent, according to government statistics.

Lending has been expanding so rapidly, that there will be lots more bad loans even if the economy doesn't slow down. The banking system has US$200 billion of bad loans and the economy has been booming for decades. So why is it going to be any different now?

"The big question is whether these new loans will remain good loans or become nonperforming loans down the road," said David Marshall, a Hong Kong-based financial institutions analyst for Fitch Ratings. "If things slow down after this investment boom, we worry that some of these investments will not be viable."

I wonder what BoA is really getting from this deal? Why are they convinced that what they are getting is worth anything at all?

Credit risk management at such banks remains a largely manual process, especially in the provinces, in a nation with at least US$200 billion in bad loans plaguing its financial system.

Credit risk management is the essence of what banking is and they still don't do it. Today's Standard has an interesting article on credit risk management in banks in China. Risk controls are practically non-existent and I seriously doubt if they will have anything workable in the next 5 years. I was involved with implementing credit risk management processes at various institutions around the world and I know a little about what is going on in Chinese banks these days. The biggest problem with implementing risk management systems and procedures is that the rank-and-file have to buy-into the process and be a part of its development. What this means is that decision making has to pushed down the chain of command and this is not something that Chinese companies and banks do very well. Banks are still feudal businesses and the bosses, whether they are the big shots at the home office or the local patricians such as the managers, still run these empires and will still practice central decision making. They may go through the motions of instituting or practicing global best practice credit risk management standards but will probably still run these organizations to benefit the few at the top.

I am just not very bullish on the Chinese banking system and it will be very difficult for them to adjust to the real world on such a large scale. My guess is that BoA will make very little money from their investment in CCB. The Chinese are probably laughing all the way to the bank. This is an old saying where someone gets ripped off the perpetrators laugh while they take the money stolen from you to the bank. But in this case, the criminals sold the bank, in this case probably a bank that isn't worth very much, so they are probably laughing at BoA's stupidity.

Too Much....

I have been working like a dog as of late. One of the projects that I did was for the Asian Development Bank. It was one of the worst experiences of my working life. No feedback and curt and rude treatment. Never never again will I work for those clowns. They can find someone else that gives a shit.

Back From Manila.....

Took the Cebu Pacific Airline back from Manila this morning, to some wonderful weather here in Hong Kong. Puffy clouds and bright blue skies.

I am almost recovered from my bout of travelers sickness that I think that I contracted in cafeteria of the Asian Development Bank from a fish entree at lunch. Later that afternoon, I was fighting off a splitting headache when I sat down with Madame Chiang for before dinner drinks and all hell broke loose later that night when I returned home after a wonderful dinner in Malate.

Most notable about the flight back home is that when we were landing, no one was standing up and wandering around the aisles looking for the toilet on approach or seconds after touching down standing up and removing their baggage from the overhead compartments, jockeying for position. Also, people politely filed out of the plane allowing people to enter the aisles to deplane, holy cow, infront of them! I chalk this up to the observation that most of the people were Filipino on the flight and I did not see one single PRC passenger. If there was one, they would have stood up at the most inappropriate time and I would have noticed them.

I think that traveling with PRC passengers is one of the most unpleasant experiences one can have in the skies. On a flight to Shanghai a few months ago, there was a chorus of coughers and throat clearers for the first 30 minutes that made my skin crawl.

Connected, Asia Pundit has a post on politeness of Asian cities, finding them amongst the rudest on the planet. No surprise there, but Manila didn't score that high, either. I find the people almost always polite to me.

However, New York scoring the top of the list as the MOST polite city is no surprise to me. As a former New Yorker, and sometimes diffident sometimes unabashed, I did occasionally go out of my way to help strangers and I think that that is the norm for the City and not one that can be completely credited to former Mayor Rudolf Guiliani, despite his many accomplishments, or a post 9/11 phenomenon.

Look confused on a City street and someone will probably ask you if you need some help. We know how sometimes our City is overwhelming and that visitors need a halping hand. New Yorkers come to their aid!

Ivory Coast...I Used To Live There....

I was surprised to see this story on AP.

On the streets of this skyscraper-lined West African metropolis, tension and rumors of an imminent return to war are always thick in the air - and so too, is the sweet smell of chocolate. Despite more than half a decade of coups, fighting and failed peace deals, a $2 billion a year cocoa industry is a booming in Ivory Coast, producing more of the raw material for chocolate than any other country on the planet.

I am not sure what he is trying to say here since he is short on actual facts. Has the cocoa industry and the higher prices found its way to the people's pockets? I know that harvesting has been a problem since the nationalist President Gbagbo has verbally attacked all foreigners as the root of Ivory Coast's problems resulting in rampages and riots against immigrant workers. May of them have been driven out of the country or fled for their lives, resulting in some of the cocoa crops not being harvested.

We know that the Ivory Coast has been the largest producer of Cocoa for quite some time, but with the civil war and difficulties with a nationalist, dysfunctional and corrupt government, production is down and erratic. As a result, as with many commodities, prices are up and this may be helping the economy a little. Lets hope so since cocoa and coffee production there is done on small family and village farms that had in the past resulted in rising incomes for rural farm owners and workers.

But there are other problems, since the dysfunctional government and tensions have driven out aid and investment the economy must be hurting in many ways. The country lost the African Development Bank to politically stable Tunisia but picked up thousands of blue-helmeted UN soldiers that should keep the bars full and the prostitutes busy.

The Democrats And Starving Amercians....

Of course, I have heard from Democrats how horrible the economy is in the US. And of course, I have heard that I do not understand how bad it is since I do not live there. But I also think that Democrats tend to see anecdotal evidence, always seeking the worst, and do not look at broader economic statistics particularly when compared to other countries that may be experiencing similar situations....

Economic growth. U.S. output has expanded faster than in most advanced economies since 2000. The IMF reports that real U.S. gross domestic product (GDP) grew at an average annual rate of 2.2% over the period 2001-2008 (including its forecast for the current year). President Bush will leave to his successor an economy 19% larger than the one he inherited from President Clinton. This U.S. expansion compares with 14% by France, 13% by Japan and just 8% by Italy and Germany over the same period.

The latest ICP findings, published by the World Bank in its World Development Indicators 2008, also show that GDP per capita in the U.S. reached $41,813 (in purchasing power parity dollars) in 2005. This was a third higher than the United Kingdom's, 37% above Germany's and 38% more than Japan's.

So, what does this tell us? That economic performance has been pretty good relative to the performance of other nations. For some reason, Democrats think that electing a socialist will somehow help economic performance? Its really quite delusional.

I know that many Liberal Democrats are worrying huge about the Chinese creating economic havoc and outperforming the US. The US GDP was $13.8 trillion vs. China's $3.2 according to the World Bank. So, the US economy is 13.8/3.2=4.3 0r 4.3 times as big as China. If the growth potential of the US economy is 3.0%, then the Chinese economy needs to grow at 4.3*3.0=12.9 or 12.9% to generate and equivalent amount of GDP in nominal dollars as the US economy does. Economic performance of China has been impressive but it will be very difficult to foresee China's populace raising their standard of living to the US in the foreseeable future.

Furthermore, Growing economies are not a zero sum gain as some Democrats want you to think. All economies can grow and lives across the globe improved. Just look at the improvements that have been achieved over the past 1,000 years or even the past 100. And the most important thing to understand is that these improvements have come about not because of government intervention, programs or initiatives but from people. People working hard on their ideas on their own.

Copied. I Do Not Like To Do This. But I am Too Sad Now.......

This is a good synopsis of how government should not be in the business of business. Soviet style intervention into private home ownership is an important part of the failure of the financial system that we experienced over the past several months.

The positives are that government will find it very difficult to meddle in this sector past the short term. Who is going to invest in something that the government essentially overlays its social policy on? Fool me once shame on you. Fool me twice shame on me.

Here is the sad socialist story:

1933-38
President Franklin D. Roosevelt initiated "New Deal" reform programs designed to affect the mortgage market and homeownership. Fannie Mae, the Federal National Mortgage Association, was established to facilitate liquidity among lending institutions.

1968
As part of President Johnson's Great Society reform plan, much of Fannie Mae became a privately owned yet government-chartered company, a government-sponsored enterprise, or GSE. Fannie Mae bought home loans to preserve liquidity in the mortgage market. Though private, it remained backed by the federal government.

1970
President Nixon chartered Freddie Mac, the Federal Home Loan Mortgage Corporation, as a GSE to compete with Fannie Mae.

1977
President Carter, pressed by grass-roots organizations (though opposed by the banking industry) signed the Community Reinvestment Act to boost lending in poorer communities, regardless of the borrowers' ability to repay their home loans.

August 1989
Amid the savings and loan fallout, Congress enacted the Financial Institutions Reform Recovery and Enforcement Act. It mandated public release of lender evaluations and performance ratings, boosting pressure on the banking industry. Such oversight enabled bullying abuses of community organization groups such as ACORN to further influence lending practices.

1990s
Community organizer Barack Obama worked closely with ACORN activists. Employing the intimidation tactics of radical activist Saul Alinsky that Obama had learned and was teaching, activists crowded bank lobbies, blocked drive-up teller lanes and demonstrated at the homes of bankers to browbeat them into risky lending in poor and minority communities. Those who resisted were accused of racism.

At first, the GSEs resisted purchasing risky mortgages. Eventually the Clinton administration instructed them to substantially increase the percentage of these mortgages in their portfolios.

February 1990
Madeline Talbott, a well-known radical ACORN leader and banking industry agitator, challenged the merger of a Chicago thrift, Bell Federal Savings and Loan Association, which responded that it was being bullied into irresponsible "affirmative-action lending policy."

1992
Enforcement of CRA was "sporadic," as the Washington Times notes, until a flawed Federal Reserve Bank of Boston study asserted that there were "substantially higher denial rates for black and Hispanic applicants than for white applicants."

October 1992
Rep. Jim Leach, R-Iowa, warned about the impending danger nonregulated GSEs posed. He worried that Fannie Mae and Freddie Mac were changing "from being agencies of the public at large to money machines for the stockholding few."

Rep. Barney Frank, D-Mass., countered that "the companies served a public purpose. They were in the business of lowering the price of mortgage loans."

November 1994
President Clinton addressed the housing issue: "I am committed to a new and unprecedented partnership between industry leaders and community leaders and government to recommit our nation to the idea of homeownership and to create more homeowners than ever before."

June 1995
Republicans won control of Congress and planned CRA reforms. The Clinton administration, allied with Frank, Sen. Ted Kennedy, D-Mass., and Rep. Maxine Waters, D-Calif., did an end-around by directing HUD Secretary Andrew Cuomo to inject GSEs into the subprime mortgage market.

1997
Cuomo said, "GSE presence in the subprime market could be of significant benefit to lower-income families, minorities and families living in underserved areas."

1998
By falsifying signatures on Fannie Mae accounting transactions, $200 million in expenses was shifted from 1998 to later periods, thereby triggering $27.1 million in bonuses for top executives.

April 1998
HUD announced a $2.1 billion settlement with AccuBanc Mortgage Corp. for alleged discrimination against minority loan applicants. The funds would provide poor families with down payments and low-interest mortgages.

Fall 1999
Treasury Secretary Lawrence Summers issued a warning: "Debates about systemic risk should also now include government-sponsored enterprises, which are large and growing rapidly."

September 1999
With pressure from the Clinton administration, Fannie Mae eased credit requirements on loans it would purchase from lenders, making it easier for banks to lend to borrowers unqualified for conventional loans.

2000
The Senate Banking Committee estimated that, as a result of CRA, $9.5 billion had gone to pay for services and salaries of ACORN and other organizers.

Winter 2000
The City Journal warned that the Clinton administration had turned CRA into "a vast extortion scheme against the nation's banks," committing $1 trillion for mortgages and development projects, most of it funneled through the community organizers.

March 2000
Rep. Richard Baker, R-La., proposed a bill to reform Fannie and Freddie's oversight in a House subcommittee on capital markets. Rep. Frank dismissed the idea, saying concerns about the two were "overblown" and there was "no federal liability there whatsoever."

June 2000
Competitive Enterprise Institute President Fred L. Smith Jr. on the Treasury Department's $2 billion line of credit to Fannie and Freddie: "As long as the pipeline is there, it is like it is very expandable. . . . It is only $2 billion today. It could be $200 billion tomorrow." Because of Democrat obfuscation, Smith's "tomorrow" arrived in 2008, when Treasury Secretary Henry Paulson put Fannie and Freddie into conservatorship.

April 2001
The White House, releasing the 2002 budget, declared that the size of Fannie Mae and Freddie Mac is "a potential problem" because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting federally insured entities and economic activity."

February 2003
Fannie and Freddie's regulator warned that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.

June 2003
Freddie Mac reported it had understated its profit by $6.9 billion.

July 2003
Sens. Chuck Hagel, R-Neb., Elizabeth Dole, R-N.C., and John Sununu, R-N.H., introduced legislation to address regulation of Fannie Mae and Freddie Mac. The bill was blocked by Democrats.

September 2003
Treasury Secretary John Snow testified that Congress should enact "legislation to create a new federal agency to regulate and supervise the financial activities of our housing-related government-sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements. But Rep. Frank replied: "I do not think we are facing any kind of a crisis."

October 2003
Fannie Mae disclosed a $1.2 billion accounting error.

November 2003
Greg Mankiw, chairman of the president's Council of Economic Advisers, warned: "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole. "

September 2004
Regulators reported that Fannie Mae and CEO Franklin Raines had manipulated the agency's accounting to overstate its profit. Fannie Mae ran radio and TV ads ahead of a key Senate committee meeting, depicting a Latino couple who fretted that if the bill passed, mortgage rates would go up. Again, GSE pressure prevailed.

October 2004
Rep. Baker again warned about the coming crisis: "Although their bonds bear the disclaimer 'not backed by the full faith and credit of the U.S. government,' the market does not believe it and looks right past the companies' risk strategies to the taxpayers' pockets."

Rep. Waters said: "Through nearly a dozen hearings . . . we were trying to fix something that wasn't broke. . . . We do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Mr. Frank Raines."

Rep. Christopher Shays, R-Conn.: "And you have about 3% of your portfolio set aside. If a bank gets below 4%, they are in deep trouble. So I just want you to explain to me why I shouldn't be satisfied with 3%?"

Fannie Mae CEO Raines: "Because . . . there aren't any banks who only have multifamily and single-family loans. These assets are so riskless that their capital for holding them should be under 2%."

January 2005-July 2006
Sen. Hagel, with Sens. Sununu and Dole and later Sen. John McCain, R-Ariz., reintroduced legislation to address GSE regulation.

Fed Chairman Alan Greenspan testified that the size of GSE portfolios "poses a risk to the global financial system. It would be difficult, if not impossible, to bail out the lenders (GSEs) . . . should one get into financial trouble."

January 2006
Greenspan, in a letter to Sens. Sununu, Hagel and Dole, warned that the GSEs' practice of buying their own mortgage-based securities "creates substantial systemic risk while yielding negligible additional benefits for homeowners, renters or mortgage originators."

March 2006
Sens. Sununu and Hagel introduced an amendment to a Lobbying Reform Bill directing GAO to study GSE lobbying and requiring HUD to audit the GSEs annually.

May 2006
After years of Democrats blocking legislation, Sens. Hagel, Sununu, Dole and McCain wrote a letter to Majority Leader Bill Frist demanding that GSE regulatory reform be "enacted this year" to avoid "the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole."

John McCain addressed the Senate: "Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were 'illusions deliberately and systematically created' by the company's senior management.

"Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. . . . OFHEO's report solidifies my view that the GSEs need to be reformed without delay."

April 2007
Sens. Sununu, Hagel, Dole and Mel Martinez, R-Fla., reintroduced legislation to improve GSE oversight.

The New York Times wrote that the "democratization of credit" is "turning the American dream of homeownership into a nightmare for many borrowers." The "newfangled mortgage loans" — called affordability loans — "represent 60% of foreclosures."

September 2007
President Bush: "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs. . . . The United States Senate needs to pass this legislation soon."

2007-08
The housing bubble began to burst, bad mortgages began to default, and finally the Fannie Mae and Freddie Mac portfolios were revealed to be in collapse. And the testimony is evident as to why.

As Peter Wallison of the American Enterprise Institute put it, "Fannie and Freddie were . . . the poster children for corporate welfare."

September 2008
Rep. Arthur Davis, D-Ala., now admits Democrats were in error: "Like a lot of my Democratic colleagues, I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie: We were wrong."

Today 2008
The narrative is of another failed socialist experiment, this time a massive federal effort imperiling the whole U.S. banking industry.

Top recipients of contributions from Fannie Mae and Freddie Mac since 1989:

• Sen. Christopher Dodd, D-Conn.: $165,400.

• Sen. Barack Obama, D-Ill.: $126,349.

• Rep. Barney Frank, D-Mass.: $42,350.

New Deal, Jimmy Carter, Clinton, Barney Frank. This was just the warning for the Medicare and Social Security mess that the Liberals will have to deal with very very soon. I think that I will just go and slit my wrists.

China; housing bubble or going first world.......

Several big money managers and economists are concerned about the massive rise in real estate prices in China. In the case of Chanos, he is actively betting against the China real estate market by actively betting against China investments. We know what happens to economies where real estate problems impact the banking system like we saw in the United States from 2007 to present. So, just read the following excerpt from here and think about what is wrong about this statement.....

Hedge fund manager James Chanos is overly pessimistic about China’s property market because he underestimates government efforts to avoid a bubble, according to Fan Gang, a former People’s Bank of China adviser.

Chanos said this month that China is on a “treadmill to hell” because it’s hooked on property development for driving growth. “That statement is under the assumption that Chinese are stupid, Chinese will not do anything to deal with that,” Fan said in a Bloomberg Television interview recorded in Hong Kong yesterday.

Hmmmm. Chinese are stupid? I do not think that this is what Chanos is arguing at all that it is an issue of stupidity. And is their a tinge of racial pride embedded in this? There is an issue when there is a potential bubble forming and people bet against the fantastic rise in the price of this asset. So the argument is that they will deal with the 'bubble'?? Bubbles are by definition, unknowable and uncontrollable. However, as Fan thinks, argues and implies, the great leaders in China, the all-knowing sages will address the problem and come to a solution that is imposed by them. Why is it forming in the first place? Presumably this is all part of the brilliant great plan concocted by the leaders in Beijing. But this intervention is also a non-market solution to a market problem. There is a supply/demand imbalance between many things in China, not just housing, but investment and savings options for people and a raft of other things that are controlled by the state. The problem here is the assumption that these sages have the solutions and that can effectively execute these solutions.

Chanis is right to bet against the ability of governments to control market forces when markets may just be too big for them to easily control.

Cuts In Farm Subsides And Tariffs Are Long Overdue...

Farm subsides are as much about politics as they are about economics, maybe even more-so. Farm subsides have been the in the political landscape for generations since farmers in many countries have lots of political clout. For example, in Japan, due the districting methods that they use for representation in the Diet, farmers have an inordinate amount of power. Additionally, Narita airport that serves Tokyo, has been hamstrung by farmers that do not want the needed 2nd runway built and this has been held up for years. Irrespective of ones opinion on development, its just an illustration on how a few people can affect the lives of the many.

Recent statements by US trade representative, Portman, offers that the US is willing to reduce and eliminate tariffs and subsidies if Europe and Japan also make significant concessions.

U.S. Trade Representative Rob Portman (news, bio, voting record) gave negotiations a boost early Monday when he laid out a new proposal on agricultural tariffs and subsidies, saying the EU and Japan must now promise to do more to cut aid to their own farmers.

The EU responded with a proposal to make deeper cuts in subsidies to its own farmers. But the necessary reforms are expected to be a tough sell to farmers on both sides of the Atlantic who have profited from generous government handouts.

The US is taking the lead on this initiative now since their are several salient points that need to be addressed. First, the damage that is being done by protecting local markets hurts poor farmers in the developing world the most. The beneficiaries are the large industrial farmers with political clout. Secondly, a country that is protecting less efficient producers should be migrating their assets to more productive uses. This is the benefit of international trade, that resources are freed up to more efficient and profitable uses. Without concessions by others, the US will bear the costs of the reductions and pickup the necessary offsetting gains.

Europe and Japan along with the US have gigantic subsidy programs that have cost taxpayers extraordinary amounts of money through taxes and higher costs of products. There is a tremendous amount of resistance from all three parties to changes due to potential political costs.

Europe and Japan maintain high farm tariffs and want to protect some products from cuts.

"The US proposals are likely to be seen as excessively ambitious by a vast majority of WTO members," an EU official said. Japan said the US offer was "not a basis for negotiation".

Though much of the public focus is on farm subsidies, World Bank economists calculate that 92 per cent of the benefit of rich nations' agricultural liberalisation to the developing world will come from tariff cuts.

No one is innocent, but the US has taken a bold step with potential political ramifications.

And I love Tom at Daai Tou Laam, he is sees the grey cloud in everything when it involves anything that Bush says or does. When one looks through the grease covered glasses of Bush haters, one cannot get a sensible picture of what can be achieved and what has to be achieved.

Typically it's the Bushevik exponents of "Free Trade" who have their heels dug in and demanding other people have to give in first.

He is definitely missing the whole point on this one. One cannot make bold steps without defining what the other parties have to achieve along with the US. It is not digging one heels in but having a sensible strategy so that US isn't forced once again to unilaterally make moves for the benefit of many while Europe and Japan make no concessions what-so-ever. Tom, I guess that you aren't involved in negotiations too frequently.