Flashman Letters

How Aspartame Became Legal - The Timeline - we are from the government amd we are here to help

August 1, 1977-- The Bressler Report, compiled by FDA investigators and headed by Jerome Bressler, is released. The report finds that 98 of the 196 animals died during one of Searle's studies and weren't autopsied until later dates, in some cases over one year after death. Many other errors and inconsistencies are noted. For example, a rat was reported alive, then dead, then alive, then dead again; a mass, a uterine polyp, and ovarian neoplasms were found in animals but not reported or diagnosed in Searle's reports.

 

December 8, 1977-- U.S. Attorney Skinner's withdrawal and resignation stalls the Searle grand jury investigation for so long that the statue of limitations on the aspartame charges runs out. The grand jury investigation is dropped.

 

June 1, 1979-- The FDA established a Public Board of Inquiry (PBOI) to rule on safety issues surrounding NutraSweet.

 

September 30, 1980-- The Public Board of Inquiry concludes NutraSweet should not be approved pending further investigations of brain tumors in animals. The board states it "has not been presented with proof of reasonable certainty that aspartame is safe for use as a food additive."

 

January 1981-- Donald Rumsfeld, CEO of Searle, states in a sales meeting that he is going to make a big push to get aspartame approved within the year. Rumsfeld says he will use his political pull in Washington, rather than scientific means, to make sure it gets approved.

 

January 21, 1981-- Ronald Reagan is sworn in as President of the United States. Reagan's transition team, which includes Donald Rumsfeld, CEO of G. D. Searle, hand picks Dr. Arthur Hull Hayes Jr. to be the new FDA Commissioner.

 

March, 1981-- An FDA commissioner's panel is established to review issues raised by the Public Board of Inquiry.

 

May 19, 1981-- Three of six in-house FDA scientists who were responsible for reviewing the brain tumor issues, Dr. Robert Condon, Dr. Satya Dubey, and Dr. Douglas Park, advise against approval of NutraSweet, stating on the record that the Searle tests are unreliable and not adequate to determine the safety of aspartame.

 

July 15, 1981-- In one of his first official acts, Dr. Arthur Hayes Jr., the new FDA commissioner, overrules the Public Board of Inquiry, ignores the recommendations of his own internal FDA team and approves NutraSweet for dry products. Hayes says that aspartame has been shown to be safe for its' proposed uses and says few compounds have withstood such detailed testing and repeated close scrutiny.

 

October 15, 1982-- The FDA announces that Searle has filed a petition that aspartame be approved as a sweetener in carbonated beverages and other liquids.

via www.rense.com

What Really Caused the Eurozone Crisis? (Part 1)

There is a clear tendency for investment spending to rise in the periphery countries (with the exception of Portugal), and for consumption to fall. This is consistent with the convergence story; capital flowed from the core to the periphery to take advantage of and fund investment opportunities there. Meanwhile, with the periphery countries experiencing fiscal contraction, a smaller share of purchases going to personal consumption, and a higher share of purchases going to investment goods, it is hard to see evidence for the story that the capital inflows were simply frittered away on a spending binge either by individuals or governments.

So... What Really Caused the Crisis?

Putting it all together, it seems that the EZ crisis is more consistent with the systemic causes view than the local causes view. In other words, while they didn’t necessarily make the right decision every time, the peripheral EZ countries were up against powerful exogenous forces - capital flow bonanzas and sudden stops - that tended to push them toward financial crisis. They were playing against a stacked deck.

It’s useful to reevaluate the macroeconomic history of peripheral Europe in light of this interpretation. Rather than large current account deficits being the result of fiscal mismanagement or excessive consumption, the current account deficits were the necessary and unavoidable counterpart to the surge in capital flows from the EZ core. Rather than above-average inflation rates and deteriorating competitiveness being signs of labor market inefficiencies or lax fiscal policies in the peripheral countries, appreciating real exchange rates were inevitable as the mechanism by which those current account deficits were effected.

The eurozone debt crisis is big enough that there's plenty of blame to go around, and some of it certainly should go to the crisis countries themselves. But it must also be recognized that as soon as those countries adopted the euro, powerful forces were set in motion that made a financial crisis likely, and very possibly unavoidable, no matter what the governments of the peripheral euro countries did. Irresponsible behavior by the periphery countries did not set the stage for the eurozone crisis; the common currency itself did.

via streetlightblog.blogspot.com

Interview with Daron Acemoglu

As for focusing on the asset side of banking, I think a lot of the emphasis among economists on regulation has been on the leverage side, on the liability side, so if we reduce leverage, that’s going to resolve things. Obviously, excessive leverage is a very dangerous thing, but I think that by itself is only half of the problem in the sense that even with limited leverage, there are going to be major interconnections in the system. In fact, you can have a lot of interconnections without having any net leverage; I can just borrow from you and lend to somebody else. In such a situation, there might still be major cascades from the failure of a few financial institutions, but there wouldn’t be net leverage. Of course, there are different ways of defining leverage that would deal with gross versus net.

But when there is this interconnected structure (which I think was the reason people were concerned, very rightly, about the collapse of the financial system), you may also want to make sure that these core institutions—those whose failure would be very costly for the system—should be discouraged from holding, or not even allowed to hold, certain assets, especially as the nature of those assets is still uncertain and evolving.

Again, it’s all with hindsight, but the allocational costs of excluding most major financial institutions (and it’s not clear how you would treat investment banks here), such as Bank of America or Citibank, from holding CDOs [collateralized debt obligations] and CDO-squareds might be quite limited, because these financial instruments might still be available and held by hedge funds, so it’s not as if the necessary capital would be totally cut off.

But it would mean that if, in fact, those instruments turn out to be more risky and much more sensitive to a slowdown or reversal in U.S. house prices than foreseen, that this will bring down a lot of hedge funds, but it wouldn’t bring down the core financial institutions.

So those sorts of regulations, I think, ought to be considered. But the difficulty is that you don’t want to make those regulations extremely detailed. I think the problem with the Dodd-Frank Act is that the amount of good it contains seems to be dwarfed by the amount of additional minute details it contains. That fails to achieve the intent of the regulation. It also gives better regulation a bad name, because people who are opposed to regulation can easily point to the page after page after page of paperwork and procedural things that Dodd-Frank wants you to do.

And I am not convinced that the Dodd-Frank Act is going to prevent the next financial collapse if the financial system actually continues on its current trajectory. I don’t think anybody can claim that they know what’s going to happen in the next five years in the financial sector, but the financial sector has become more concentrated. It’s very profitable, it is still investing in highly risky assets and, in fact, it hasn’t really cleaned up its balance sheet to a great degree. The bonus culture, for example, was one of the elements that contributed to the crisis—not by any means the only one, or the most major one, but it was certainly an important factor. It has remained the same. And the Dodd-Frank Act doesn’t really do anything to deal with that. I don’t think the Volcker rule does anything to deal with that either.

via www.minneapolisfed.org

Interview with Daron Acemoglu

As for focusing on the asset side of banking, I think a lot of the emphasis among economists on regulation has been on the leverage side, on the liability side, so if we reduce leverage, that’s going to resolve things. Obviously, excessive leverage is a very dangerous thing, but I think that by itself is only half of the problem in the sense that even with limited leverage, there are going to be major interconnections in the system. In fact, you can have a lot of interconnections without having any net leverage; I can just borrow from you and lend to somebody else. In such a situation, there might still be major cascades from the failure of a few financial institutions, but there wouldn’t be net leverage. Of course, there are different ways of defining leverage that would deal with gross versus net.

But when there is this interconnected structure (which I think was the reason people were concerned, very rightly, about the collapse of the financial system), you may also want to make sure that these core institutions—those whose failure would be very costly for the system—should be discouraged from holding, or not even allowed to hold, certain assets, especially as the nature of those assets is still uncertain and evolving.

Again, it’s all with hindsight, but the allocational costs of excluding most major financial institutions (and it’s not clear how you would treat investment banks here), such as Bank of America or Citibank, from holding CDOs [collateralized debt obligations] and CDO-squareds might be quite limited, because these financial instruments might still be available and held by hedge funds, so it’s not as if the necessary capital would be totally cut off.

But it would mean that if, in fact, those instruments turn out to be more risky and much more sensitive to a slowdown or reversal in U.S. house prices than foreseen, that this will bring down a lot of hedge funds, but it wouldn’t bring down the core financial institutions.

So those sorts of regulations, I think, ought to be considered. But the difficulty is that you don’t want to make those regulations extremely detailed. I think the problem with the Dodd-Frank Act is that the amount of good it contains seems to be dwarfed by the amount of additional minute details it contains. That fails to achieve the intent of the regulation. It also gives better regulation a bad name, because people who are opposed to regulation can easily point to the page after page after page of paperwork and procedural things that Dodd-Frank wants you to do.

And I am not convinced that the Dodd-Frank Act is going to prevent the next financial collapse if the financial system actually continues on its current trajectory. I don’t think anybody can claim that they know what’s going to happen in the next five years in the financial sector, but the financial sector has become more concentrated. It’s very profitable, it is still investing in highly risky assets and, in fact, it hasn’t really cleaned up its balance sheet to a great degree. The bonus culture, for example, was one of the elements that contributed to the crisis—not by any means the only one, or the most major one, but it was certainly an important factor. It has remained the same. And the Dodd-Frank Act doesn’t really do anything to deal with that. I don’t think the Volcker rule does anything to deal with that either.

via www.minneapolisfed.org

Super cheery from BCG - Back to Mesopotamia?

In August, in Stop Kicking the Can Down the Road: The Price of Not Addressing the Root Causes of the Crisis, we argued as follows: “Politicians are trying to solve the problem of too much debt by playing for time. This will fail. Financial repression would have to be significant and requires close political coordination. In addition, it does not address the pressing issues of global imbalances and the adjustments required within the euro zone…. [W]e believe that the failure to act significantly increases the risk of … an unconstrained financial and economic crisis.… Given the empty coffers of governments and their recent heavy use of monetary instruments, there is not much left to stimulate the economy. It will be very hard to stabilize economies and organize a soft landing….” We concluded: “Either the politicians need to organize a systematic debt restructuring for the Western world and/or generate inflation fast, or we run the risk of the situation spinning out of control. In which case, there will be no place to hide.”

We believe that some politicians and central banks—in spite of protestations to the contrary—have been trying to solve the crisis by creating sizable inflation, largely because the alternatives are either not attractive or not feasible:

• Austerity—essentially saving and paying back—is probably a recipe for a long, deep recession and social unrest.

• Higher growth is unachievable because of unfavorable demographic change and an inherent lack of competitiveness in some countries.

• Debt restructuring is out of reach because the banking sectors are not strong enough to absorb losses.

• Financial repression (holding interest rates below nominal GDP growth for many years) would be difficult to implement in a low-growth and low-inflation environment.

Inflation will be the preferred option—in spite of the potential for social unrest and the difficult consequences for middle-class savers should it really take hold. However, boosting inflation has not worked so far because of the pressure to deleverage and because of the low demand for new credit. Moreover, the inflation “solution,” while becoming more tempting, may come to be seen as having economic and social implications that are too unpalatable. So what might the politicians and central banks do?

Since the publication of Stop Kicking the Can Down the Road, a number of readers have asked us what would happen if governments persisted in playing for time. To what measures might they have to resort? In this paper, we describe what might need to happen if the politicians muddle through for too much longer.

It is likely that wiping out the debt overhang will be at the heart of any solution. Such a course of action would not be new. In ancient Mesopotamia, debt was commonplace; individual debts were recorded on clay tablets. Periodically, upon the ascendancy of a new monarch, debts would be forgiven: in other words, the slate would be wiped clean. The challenge facing today’s politicians is how clean to wipe the slates. In considering some of the potential measures likely to be required, the reader may be struck by the essential problem facing politicians: there may be only painful ways out of the crisis.

via www.bcgperspectives.com

Chris Christie Reagan Library Transcript

And still we continue to wait and hope that our president will finally stop being a bystander in the Oval Office. We hope that he will shake off the paralysis that has made it impossible for him to take on the really big things that are obvious to all Americans and to a watching and anxious world community.

Yes, we hope. Because each and every time the president lets a moment to act pass him by, his failure is our failure too. The failure to stand up for the bipartisan debt solutions of the Simpson Bowles Commission, a report the president asked for himself…the failure to act on the country’s crushing unemployment…the failure to act on ever expanding and rapidly eroding entitlement programs…the failure to discern pork barrel spending from real infrastructure investment.

The rule for effective governance is simple. It is one Ronald Reagan knew by heart. And one that he successfully employed with Social Security and the Cold War. When there is a problem, you fix it. That is the job you have been sent to do and you cannot wait for someone else to do it for you.

We pay for this failure of leadership many times over.  The domestic price is obvious:  growth slows, high levels of unemployment persist, and we make ourselves even more vulnerable to the unpredictable behavior of skittish markets or the political decisions of lenders.

via www.maggiesnotebook.com

Deal…what Deal? So Manu depilas, it mist be trufe... Or are they playimg a cunnkng doble bluff?

Deal…what deal?

Posted by Delusional Economics in Global macro on Sep 28th, 2011 | 19 comments

The situation in Europe has now officially become a farce.

While the Equity markets rocketed up between 4-5% last night because of a rumour that Greece, and therefore Europe, would be saved by a new plan to leverage up the EFSF, a large number of people who would actually have to approve the deal were denying such a deal even existed.

German Finance Minister Wolfgang Schaeuble told the cabinet on Tuesday:

.. there were no plans to increase the volume of the European Financial Stability Facility (EFSF) rescue fund or Germany’s maximum contribution

Finland and Dutch PM’s in a joint statement:

… rejected international calls for an expansion of Europe’s bailout facility however, stressing that profligate euro nations in the periphery should enforce budget discipline according to existing treaty obligations.

Spanish Economy Minister Elena Salgado:

“It is not on the table, nor has it been discussed,”

The EIB that was supposed to be running the whole thing:

.. the European Investment Bank just said that it has not been approached to take part in any bailout program involving the European Financial Stability Facility.

German Chancellor Angela Merkel’s junior coalition partner FDP General Secretary Christian Lindner:

“The woman Chancellor must make it clear very quickly that there are no changes to the Rules for EFSF.”

German Bundesbank chief Jens Weidmann has said:

“they would discourage politicians from taking tough decisions to cut budget deficits and weaken faith in the euro.”

Andreas Vosskuhle, head of the German constitutional court:

There is little leeway left for giving up core powers to the EU. If one wants to go beyond this limit – which might be politically legitimate and desirable – then Germany must give itself a new constitution. A referendum would be necessary. This cannot be done without the people

Even Merkel’s own party in the lead up to Thursday’s vote is struggling to come to a concen

via www.macrobusiness.com.au

Frau Merkel, it really is a euro crisis

So why is there such a destructive and long-festering crisis in the eurozone? Why have three countries required an EU-IMF bail-out? Why is the ECB having to shore the debt markets of five countries — soon to be six — with direct bond purchases, including Spain and Italy?

Not because of debt, except in the most superficial sense.

The reason this crisis keeps grinding ever deeper is because the euro itself is a machine for perpetual destruction. The currency is fundamentally warped and misaligned.

It spans a 30pc gap in competitiveness between North and South. Intra-EMU current account deficits have become vast, chronic, and corrosive. Monetary Union is inherently poisonous.

The countries in trouble no longer have the policy tools — interest rates, QE, liquidity, and exchange rates — to lift themselves out of debt-deflation.

Just as they had few tools to prevent a catastrophic credit bubble during the boom. Their travails were caused in great part by negative real interest rates set by the ECB (irresponsibly) for German needs.

Their fiscal deficits (and remember, Spain and Ireland ran big surpluses in the boom) have exploded because of the Great Recession itself — as they have in the UK, US, and Japan.

Draconian fiscal tightening might be manageable for these countries if the Teutonic bloc is willing to offset the contraction in demand by cranking up their own stimulus, allowing the intra-EMU imbalances to close from both ends. But the Teutons instead cling to their pieties, and their morality tale. The result is the downward spiral that we can all see.

Germany imposes austerity alone, seemingly convinced that there are good imbalances (German trade surpluses) and bad imbalances (Club Med trade deficits). Well sorry, Frau Merkel, this is intellectually childish. Both imbalances are equally bad. Booth sides are equally "guilty", to borrow your morality language.

via blogs.telegraph.co.uk

Mindy Kaling: “Flick Chicks”

I regard romantic comedies as a subgenre of sci-fi, in which the world operates according to different rules than my regular human world. For me, there is no difference between Ripley from “Alien” and any Katherine Heigl character. They are equally implausible.

via www.newyorker.com

Wow -

http://youtu.be/LhmzmOwkRuM

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