Euro Gets Boost On Heels of Greece Loan Package

Lisa Bryant | Paris 12 April 2010

The euro rose to its highest level in several weeks after European Union finance ministers offered a massive loan package to Greece should it need it.  But some analysts fear the EU measure is a short-term solution.

European Union officials and some economists have hailed the $41 billion rescue package of low-interest loans announced by EU finance ministers. Along with expectations the International Monetary Fund could offer another $20 billion, that amounts to a significant cushion for Greece, which is struggling under a massive government debt and deficit.

So far, Athens has not made a formal request for EU assistance. But analysts expect that at the very least, Europe's response should help reassure international investors and lower the interest rates on the loans they are offering.

But Simon Tilford, chief economist at the Center for European Reform in London, has reservations about the EU's action.

"It's a short-term palliative. It's positive but it's unfortunate that it took a crisis, or a speculative attack by investors, to bring the EU to this point," he said.  "This should have happened weeks and weeks ago."

French analyst Philippe Moreau Defarges calls the EU rescue package a "minimalist solution" - and only a first step.

"It's just the beginning. There will be many more discussions about what should be done for Greece and other European countries," he said.

Weeks of discussions have already taken place about what to do for Greece. Germany, the EU's biggest economy, has opposed bailout efforts, arguing Athens was responsible for its economic crisis.

Tilford says the new EU loan package does not address Greece's long-term problem.

"Going forward, the only way a country like Greece is going to ensure its public finances are sustainable is if it can get its economy growing," he said.  "And that goes for other economies that are similar to Greece, such as Spain, Portugal, Ireland, Italy."

The Greek crisis is considered the biggest test to date facing the 16 nations sharing the euro currency.

Battle Emerges Over US Financial Reform

Michael Bowman 13 April 2010

The top Republican in the U.S. Senate has announced strong opposition to a Democratic proposal to reform America's battered financial system. A partisan battle has erupted over how best to prevent financial meltdowns and the economic havoc they inflict.

The struggling U.S. economy still bears scars from 2008, when a cascading failure of banks, investment houses, mortgage giants and insurance firms obliterated much of America's financial landscape, froze credit for consumers and businesses, and accelerated a plunge into the deepest recession since World War II. In a desperate bid to prevent complete economic collapse, the federal government spent hundreds of billions of dollars to bail out scores of near bankrupt private financial institutions.

Republicans and Democrats agree that the dire turn of events must never be repeated. But how best to fix the financial system is shaping up as the latest partisan fight to consume Washington.

Tuesday, Senate Minority Leader Mitch McConnell dashed waning hopes of bipartisan support for a Democratic financial reform bill. Addressing the Senate, the Kentucky Republican said the proposed package gives too much authority to the federal government and fails to protect taxpayers from the costs of any future bailouts.

"We cannot allow endless taxpayer-funded bailouts for big Wall Street banks," said  Mitch McConnell. "That is why we must not pass the financial reform that is about to hit the [Senate] floor [for debate]. The fact is: this bill would not solve the problems that led to the financial crisis. It would make them worse."

Under the Democratic bill, the U.S. central bank, known as the Federal Reserve, would be empowered to craft and enforce consumer protection rules for large financial institutions. Banks would also be restricted in the types of investments they can make. It was private institutions' dealings with complex financial products tied to special home mortgages for high-risk borrowers that helped spark the meltdown of 2008.

The Obama administration says the United States cannot afford to drag its feet on financial reform. U.S. Treasury Secretary Timothy Geithner had this response to Senator McConnell:

"Look at the devastation caused by this financial crisis," said Timothy Geithner. "Look at the damage it did to tens of millions of Americans. I do not think there is a tenable position anyone could take that says we do not need to fix this system."

Geithner says the current system allowed banks and other institutions to take huge risks without bearing the cost of failure.

"And you had the spectacle of the United States of America come into the worst financial crisis since the Great Depression [of the 1930s] and had, basically, no tools to unwind, to put into bankruptcy large institutions," he said. "The taxpayer faced an untenable choice: either to let the system collapse or put hundreds of billions of dollars of taxpayer money at risk. And I think that fundamental recognition is going to drive us to a necessary, essential, very well-designed, sweeping set of reforms."

But while applauding safeguards against future financial meltdowns, some progressive voices say America's financial sector must pay for damages already inflicted. The head of America's largest union umbrella group, AFL-CIO President Richard Trumka, says banks that survived thanks to the federal bailout are now flooding Washington with lobbyists to defeat financial reform, without taking responsibility for the havoc and economic losses they caused.

"Wall Street just hasn't gotten the message," said Richard Trumka. "They [banks] all helped to create the crisis. They all helped destroy 11 million [American] jobs. And quite frankly, they should start paying to create jobs that they destroyed.

In fact, many recipients of federal bailout money are repaying the loans with interest, minimizing government losses and, in some cases, giving the U.S. Treasury a modest profit on the initial layout of funds. Nevertheless, no one is arguing that overall effect of the financial crisis has been anything but devastating to the U.S. economy and its workforce.

US Government Looks to Cloud Computing to Cut Costs

William Ide | Washington 08 April 2010

A top U.S. information technology official says the Obama administration is looking to cloud computing - or the ability to access software, data and computer applications anytime and everywhere - as a way to lower the cost of government operations and use technology to help change the way Washington works.  Experts estimate the increased use of cloud computing technology could save local and federal governments billions of dollars each year.

Vivek Kundra, the Federal Chief Information Officer at the White House says that while the government is just beginning its efforts to make a shift to cloud computing - the intelligent use of technology can help cut costs, improve efficiency, promote innovation and shine a light into the performance of government.

"Imagine an environment, where we're able to look at any given agency, use the data that the government has democratized and share the performance, the same way we share You Tube videos," said Kundra.

Speaking at a forum in Washington Wednesday, hosted by the research group the Brookings Institute, Kundra says that while the wider shift to cloud computing could take at least a decade, the savings could add up.

Darrell West, the director of governance studies at Brookings agrees.

"We did case studies of local and federal government agencies and we found anywhere from 25 to 50 percent cost savings, and so there really are substantial savings," he said.

The U.S. government currently spends nearly $76 billion a year on information technology, with $20 billion of that spent on hardware, software and file servers.

Kundra's speech came on the same day that the U.S. government set as a deadline for all the federal agencies to publish their so called open government plans.  The plans seek to make government operations and data more transparent and available online as well as expand citizen participation, collaboration, and oversight.

Kundra says cloud computing can help in ways such as streamlining and simplifying the student government loan process online to reducing government paperwork.

"Why is it that you can go online on Turbo Tax or Tax Cut and have access to three years of your tax records, yet when you go to IRS.gov you don't have access to the same level of information," added Kundra.

Kundra says that part of the reason for this is that the government's focus on how it uses technology needs to go through a dramatic shift.  He notes that right now the focus is largely on the hardware - the building of data center after data center and purchasing server after server - instead of the options technology is creating.

He says that over the last decade, the United States went from having over 400 data centers to more than 1,100 data centers.  And yet, he adds that server utilization at those centers is only at seven percent. That means that the government is on average using seven percent of the storage space in its servers. A number Kundra says is "unacceptable."

Kundra says that next month, the federal government will host a cloud computing summit and invite representatives from the private sector to attend. The summit will look at case studies of government agencies that have already begun the shift to put some of their operations in the clouds.

The urgent push by governments is a trend that is being felt across the globe.  According to a survey released earlier this week by Global Industry Analysts, a market research group, the worldwide cloud computing economy is set to grow by $200 billion over the next five years.

High Costs Drive Americans Overseas for Medical Help

Travelers take a vacation from high prices by having medical procedures performed abroad at a fraction of the price

Jan Sluizer | San Francisco, California 08 April 2010

Photo: Courtesy:John Freeman

John Freeman paid $18,000 for a heart procedure in Turkey that he says would have cost him $120,000 in the United States.

With the passage of America's Health Care Reform bill, more Americans will have access to affordable health insurance. But they have yet to see lower costs for medical treatment. Because of that continuing expense, many Americans choose to go abroad for one-time medical surgeries or procedures.
Grim choice
John Freeman took that gamble a few years ago. The 62-year-old retired computer analyst dropped his health care insurance because the high monthly premiums and a huge deductible were eating up his retirement savings. He hoped he would not need major medical care until he turned 65 and qualified for the government's Medicare insurance program.

But last year, Freeman had a heart attack. He was told surgery in his hometown of Reno, Nevada, would cost close to $120,000. Freeman felt he faced two grim choices: use up all of his savings or die.

"I thought that the American medical system was going to take away my life savings and essentially ruin any prospects I had for a pleasant retirement after the operation," he says.

Courtesy: Anadolu Medical Center

Freeman chose Anadolu Medical Center in Turkey, in part, because its website stated an affiliation with Johns Hopkins University in the United States.

Exploring his options

So Freeman did what hundreds of thousands of Americans do each year. He went abroad for the surgery.
After some research, he decided to have his operation performed at the Anadolu Medical Center outside of Istanbul, Turkey. The price was just 15 percent of what it would have cost in Reno: $18,000, all-inclusive, except for airfare.

Both the American Medical Association and the American College of Surgeons have acknowledged that medical tourism is a growing industry because of lower medical costs overseas. They have issued statements encouraging patients to seek out the treatment that best suits their needs. However, both organizations also warn patients to make sure they choose certified doctors and surgeons at health care institutions that have met high standards of accreditation.

John Freeman took that advice seriously when he researched Anadolu Medical Center.
"When I first looked at the website, there's a logo that says 'Affiliated with Johns Hopkins University' and I think that really helped my comfort zone because I knew there was an affiliation with a well-known American hospital," he says. "I knew my doctor was in meetings with American doctors about things like heart surgery techniques."
Medical tourism

Americans first began going abroad for cosmetic surgery such as facelifts, breast implants and reductions, and tummy tucks in the 1980s and 90s. Today, common medical procedures sought overseas include cardiac surgery, knee and hip replacements, liver transplants and dental work.

Courtesy: WorldMed Assist

Wouter Hoeberechts, CEO of WorldMedAssist, helps ailing Americans find accredited and affordable medical treatment in six countries.

"We have a problem delivering affordable quality health care in this country," says Wouter Hoeberechts, CEO of WorldMedAssist, the medical tourism provider that helped John Freeman find his surgeon in Turkey.
He founded WMA three years ago to offer ailing Americans accredited and affordable medical treatment in six countries.
Hoeberechts, originally from the Netherlands, says all the hospitals affiliated with his company meet high U.S. standards and many of their board-certified doctors and surgeons trained in America.
"What we try to do is - for each hospital that we work with - become the number one or number two provider of U.S. patients, so that we really can build a very good relationship with those hospitals and make sure that patient benefits from that," says Hoeberechts.

Courtesy: John Freeman

Freeman did a little sightseeing while in Turkey for a medical procedure.

Surgery abroad

John Freeman can attest to that. He says he received professional surgery and excellent care from attentive doctors and nurses.

"If one can say that about such an essentially unpleasant thing, I actually really enjoyed the whole experience and the price was very good," he says. "I got it done and can still have a retirement."

Hoeberechts says WorldMedAssist has successfully sent several hundred patients abroad for medical treatment at a discount. WMA is one of a growing number of companies providing this service.

But medical tourism is not for everyone. Prospective patients must be fit for travel, the cost must make economic sense, the length of stay should be relatively short and follow-up care must be predictable and fairly brief.
Aftercare challenges

Aftercare is the challenge John Freeman faces. Now that he's back home, his doctor wants him to take some expensive post-operation tests. But, still without insurance and feeling okay, Freeman says he doesn't want to spend the money.

That attitude concerns neurosurgeon and Harvard educator, Dr. Teo Forcht Dagi. He oversaw the writing of the statement on medical tourism for the American College of Surgeons. Dagi stresses that overseas medical treatment is not for routine or on-going health problems. He notes aftercare is of concern to both the ACS and the American Medical Association because follow-up is rare.

"So what you get may be cost, but what you give up may be the on-going relationship, the communication, the follow-up care, and things, traditionally, American patients have held very dear," says Dagi.

Seeing growth potential in medical tourism, many major American health care insurance providers have started pilot programs that offer overseas coverage. If a subscriber can get quality care for less overseas, the companies calculate they will have to pay out less money in reimbursement.

Medical industry observers expect to see an increase in medical travelers, as continuing costly health care at home drives more Americans to seek medical services overseas.

China Says Trade Deficit Proves Currency Not To Blame

VOA News 10 April 2010

China says it posted its first trade deficit in six years in March as it resists calls to let its currency increase in value.

Chinese customs authorities announced Saturday that China had $7.2 billion more in imports than in exports last month.

A spokesman for China's Ministry of Commerce (Yao Jian) said Saturday that the March trade deficit proves that the foreign trade balance depends on market demand and other factors, rather than on the value of its currency.

Western nations that import large amounts of Chinese goods say China keeps the value of its currency artificially low, making Chinese products cheaper. The issue has become a major sore point in China-U.S. trade relations.

Chinese officials said Saturday imports jumped more than $30 billion in February to almost $120 billion in March.  Meanwhile, exports grew more slowly, reaching about $112 billion.

The White House has pressed China to let its currency, the yuan, to be more influenced by market forces.

U.S. President Barack Obama is expected to meet with Chinese President Hu Jintao in Washington on the sidelines of the upcoming nuclear non-proliferation summit.

Britian Deals Legal Blow to 'Vulture Funds'

Selah Hennessy | London 09 April 2010

Campaigners have called on the United States to outlaw "Third World Debt profiteering" after the practice was banned in Britain on Thursday. The British Debt Relief bill is the world's first law that restricts so-called Vulture Funds, which buy up poor country's debt at a cheap price and then take the country to court to recover the full amount.

Nick Dearden, director of the Jubilee Debt Campaign, a Britain-based group that campaigns for the complete cancellation of poor country debts, says over half of "vulture" cases are tried in the United States and Britain.

"If both Britain and the United States manage to pass legislation on this it will make a huge difference to the ability of vulture funds to extract profits from the poorest countries in the world so that's what we hope will happen next," he said.

"Vulture funds" buy the debts of poor countries at a knock-down price. Often the country has defaulted on that loan and, after the debt has been written off by Western governments, the "vulture" sues for the full debt along with interest and additional costs.

If the country refuses to pay, the "vultures" threaten to sue anyone who deals with the country.

Dearden says it's the world's poorest that are hit the hardest.

"They end up making extortionate profits off the backs of countries as poor as Liberia, Zambia, Cameroon, Nicaragua and so on," he said.

The law passed in Britain this week applies to the debt of the 40 countries in the World Bank and International Monetary Fund's Heavily Indebted Poor Countries initiative.

"Vultures" suing these countries will now have to accept a steep discount on the amount that they can claim - up to 90 percent, says Dearden.

"What in effect this will mean is that vulture activity becomes impossible in these cases. So hopefully it's a real attack on the vulture model in these cases of the very poorest countries," he said.

But Dearden says the law needs to be passed elsewhere in the world and not only affect the very poorest.

"We see this as a step towards making the lending system and third world debt a little more just, a little more responsible but there's a long way to go in terms of cleaning up the financial system and the way that it works," he said.

The law comes into force later this year. It will block a move to extract around $20 million from Liberia for a debt dating back to the 1970s.

Piracy Cuts Oil Production in Cameroon, Threatens Future Investment

Scott Stearns | Dakar 09 April 2010

Cameroon says its oil production is falling, in part, because of piracy. Our correspondent looks at the economic impact of piracy in the Gulf of Guinea and how it differs from piracy off the coast of Somalia.

Cameroon's National Hydrocarbons Corporation says crude oil production is averaging just over 73,000 barrels a day. That is down 13 percent from levels just one year ago as spending in the oil sector has dropped by more than one-third.

The state oil firm says that is partly a result of the international financial crisis and partly a result of insecurity in the Gulf of Guinea brought on by increasing piracy.

As much as 95 percent of Cameroon's oil comes from a basin in the Gulf of Guinea, where attacks on commercial shipping and raids on government outposts have made the area increasingly lawless, threatening the region's export of oil, natural gas, and bauxite.

Seven Chinese fishermen were kidnapped last month in international waters off the Bakassi Peninsula which separates Cameroon from Nigeria. The previously-unknown Africa Marine Commando group is thought to have been paid a ransom for their release.

Days later, the group raided a gendarmerie post in Bakassi stealing weapons and ammunition. It then hijacked a Nigerian boat off the coast of Cameroon, demanding more than $1 million for its release.

Raymond Gilpin is an associate vice president for sustainable economies at the US Institute of Peace. He says piracy is partly a result of the breakdown in a deal that resolved a long-running border dispute between Nigeria and Cameroon over the Bakassi Peninsula.

"The issues have a lot to do with the fall-out from Bakassi and the apparent harassment of Nigerian nationals on the peninsula," said Raymond Gilpin. "There is a lot of disaffectation in the communities. And as they have done in the Delta, the main way that they demonstrate how disaffected they feel and how wronged they feel they have been is by criminal activity."

Gilpin says piracy threatens the profitability of new oil exploration off Cameroon, Equatorial Guinea, and Nigeria's Niger Delta. The interest in new sources of oil will always be there, but Gilpin says it is the quality of investment that will suffer.

"You are less likely to see oil majors who have the capacity and the deep-pockets for the sort of exploration that will be required go in first," he said. "You are more likely to see smaller concerns go in and test the waters. And what this does it costs the countries because when the oil majors come in later, the beneficiaries are the smaller companies that took the risk to go in in the first place, not the countries."

Gilpin says very few countries in the Gulf of Guinea have addressed what he calls vast gaps in maritime security from Nigeria to Angola. Pirate groups that withdrew after increased security in 2000 are now reemerging. But unlike the more-publicized piracy off the coast of Somalia, Gulf of Guinea pirates are less organized.

"Somalia is a projection of lawlessness on land out at sea," said Gilpin. "And therefore you have more organization among the clans to support and sustain piracy. You also have more organization out on the high seas with mother ships supplying and sustaining the skiffs. You also have a lot more organization in terms of financial flows with business communities in Yemen and Kenya and some in Somalia financing, supporting and facilitating the whole chain of piracy through to the ransom."

In the Gulf of Guinea, Gilpin says most pirates operate individually or in less organized groups of small boats.

"What they do share in common is a general trend toward non-lethality unless they feel that their lives are in danger because what both sets are after is the ransom," he said.

The U.S. private security firm MPRI last month won a $250-million contract from Equatorial Guinea to provide nationwide coastal surveillance against piracy.

Gilpin says there should be a broader regional approach to maritime security either through the Economic Community of West African States or the Gulf of Guinea Commission established by former Nigerian president Olusegun Obasanjo.