links for 2008-05-22

• Oil price fundamentals - Econbrowser
• The Science of Irrationality - Scientific American
• Fed Modesty Regarding Its Role in High Commodity Prices - Jeff Frankel
• Fed Calls Latest Rate Cut a 'Close Call' - washingtonpost.com
• Does Time Run Backward in Other Universes? - Scientific American
• Giant Carnivorous Mice! - The Debatable Land
• Fedspeak Highlights: Warsh on Rates, Inflation - Real Time Economics
• Are online gamers normal economic agents? - The Undercover Economist
• Enter the Cybrids - Olivia Judson
• More on Inequality and Prices - Lane Kenworthy
• OPEC Should Get Smart and Start Pumping More Oil - John M. Berry

Comments

[anne]

http://www.nytimes.com/2008/05/22/opinion/22janeway.html?ref=opinion&pagewanted=print

May 22, 2008

Puerto Rico’s Moment in the Sun
By MICHAEL JANEWAY

PUERTO RICO, an afterthought trophy for the United States 110 years ago at the end of the Spanish-American War and an island in limbo since, has become an improbable player in the contest between Hillary Clinton and Barack Obama. Its primary on June 1 could bolster Mrs. Clinton’s claim to a majority of the popular vote — the combined tally for all the Democratic primaries and caucuses held across the country over the past six months.

Puerto Rico’s formal role in the process is indeed weighty. Its 63 voting delegates — 55 elected ones and eight superdelegates — at the Democratic National Convention in Denver this summer will outnumber delegations from more than half the states (including Kentucky and Oregon) and the District of Columbia. Yet Puerto Rico does not have a vote in the Electoral College, nor will its 2.5 million registered voters cast ballots for president in November.

How in the world did this happen? From the beginning, the question of Puerto Rico has perplexed the United States. The island was essential to the defense of the Panama Canal, so we did not make it independent, in contrast to two other Spanish possessions we gained in the war, Cuba (which become independent in 1902) and the Philippines (1946). And we judged it foreign in language and culture — and worse, overpopulated — so New Mexico-style Americanization leading to statehood was out of the question.

Similarly, Puerto Ricans have never resolved their relationship with the United States. For almost 50 years after the Spanish-American War, Puerto Rican sentiment was divided between dreams of statehood and of independence. This ambivalence deterred the island from ever petitioning Congress for one or the other. And until mid-century, sporadic outbursts of violent nationalism haunted the scene.

Partly to put such extremism out of business, Congress in 1948 allowed Puerto Rico to elect its own governor and then in 1950 gave it an intricately designed, semi-autonomous “commonwealth” status short of statehood. Two years later, the island adopted its own Constitution, and Congress quickly ratified it.

Puerto Ricans elect their own Legislature, along with the governor. They enjoy entitlements like Social Security, but they do not pay federal income taxes. They retain their own cultural identity (Spanish is the prevailing tongue) but live under the umbrella of the American trade system and the American military. They have been citizens since 1917, but they have no vote in Congress or for the presidency.

The man who brought forth this unique arrangement, which has come to seem permanent, was Luis Muñoz Marín, who dominated Puerto Rico’s politics beginning in 1940. In 1948 he became the island’s first elected governor. He won three more terms and could easily have been “president for life.” A stretch of 116th Street in Manhattan’s Spanish Harlem is named Luis Muñoz Marín Boulevard in his honor.

Muñoz was an eloquent advocate of independence until, faced with daunting statistics at the end of World War II, he concluded that Puerto Rico’s impoverished economy could not support nationhood. So he began packaging his third-way brainchild.

When pitching commonwealth on the mainland, Muñoz — an artist of words and imagery who also enjoyed a drink or two — would observe that Puerto Rico is the olive in the American martini. The phrase went down well in Washington, but Muñoz used different language at home. Neither Congress nor the American courts have ever embraced Muñoz’s Spanish-language phrase for “commonwealth,” universally recognized in Puerto Rico: “estado libre asociado,” or free associated state. Those three words suggested an autonomy (or even statehood or independence) beyond what came to pass. But Muñoz was too popular on the island for that to cause him trouble.

Still, Muñoz always intended to bring “enhanced autonomy” in trade, self-governance, taxation and entitlements to Puerto Rico. But Fidel Castro’s seizure of power in Cuba in 1959 moved Washington’s attention away from the commonwealth.

Muñoz left office in 1965. His dreams faded....

[anne]

http://www.irinnews.org/Report.aspx?ReportId=78323

May 21, 2008

The Story of Order # 81707503
By IRIN

KOLOMA - An elderly woman sits under one of the few scrawny trees in a parched landscape as she and 8,000 other displaced people wait for aid workers to begin handing out some 100 tonnes of flour, salt, sugar, and cooking oil.

The woman’s name is Hawa Brahim and the displaced site is Koloma, near the town of Goz Beida in Chad’s southwest.

Brahim tells IRIN she has no idea how the food arrived here. "They bring it; we eat it," she says.

“All I know is that back in my hut I have ten hungry mouths that need feeding,” she said.

More than 50,000 tonnes of international food aid finds its way to this remote region each year to feed hundreds of thousands of Sudanese refugees and displaced Chadians. But how does it get there?

The process starts by identifying the need then designing a food aid package, requesting donations, purchasing the food, transporting it, assessing its impact, reporting back to donors and doing it all over again.

At each stage there are complications, Moumini Ouedraogo, WFP deputy country director in Chad told IRIN. "People don't understand how it works, not even our partners," he said.

"[They think it is as if] you walking into a shop and buy a few cans [but] it’s not like that at all,” he said. “It's a very long process."

The time it takes between when a donor decides to donate food and the moment the recipient receives it can take more than one year.

Order # 81707503

The cooking oil Hawa Birhim is about to receive in Koloma started life more than 15 months earlier, when Food for Peace director of the US Agency for International Development (USAID) Jeffrey Borns sat in his office in Washington, DC and signed Order # 81707503 for a total of 925 tonnes of the oil.

About a month later, the US Department of Agriculture tended a bid to fill the order.

It was eventually filled by a supplier in Chicago who had to repackage the oil in specially marked silver cans with the word ‘USA’ written on them.

Meanwhile USAID made a separate tender for transport companies.

After three months Order # 81707503 left the United States, passing from Chicago through three transit points before arriving at the port in Norfolk, Virginia where it was loaded into two giant container ships.

The first port of call was Algeciras, Spain, where the cooking oil was unloaded and reloaded onto two smaller vessels.

One month later Order # 81707503 reached Africa.

But it was now sitting in the port of Douala in Cameroon, whereas the old woman was sitting under her tree in eastern Chad, some 2,235 km away.

It would take another 11 months before the oil reached her....

[anne]

http://www.nytimes.com/2008/05/22/business/worldbusiness/22mines.html?ref=business&pagewanted=print

May 22, 2008

As Oil Prices Rise, Nations Revive Coal Mining
By MARTIN FACKLER

BIBAI, Japan — These rugged green mountains, once home to one of Asia’s most productive coal regions, are littered with abandoned mines and decaying towns — backwaters of an economy of bullet trains and hybrid cars.

But after decades of seemingly terminal decline, Japan’s coal country is stirring again. With energy prices reaching record highs — oil settled above $135 a barrel on Thursday — Japan’s high-cost mines are suddenly competitive again, and demand for their coal is booming. Production has jumped to its highest in nearly four decades, creating a sensation rarely felt in these mining communities: hope.

“We are seeing a flicker of light after long darkness,” said Michio Sakurai, the mayor of Bibai, on Japan’s northernmost island of Hokkaido. “We never imagined coal would actually make a comeback.”

Soaring commodity prices have had distorting effects across the global economy, driving up food prices and prompting fears of future energy shortages. But they have been an unanticipated boon to the coal producing regions of countries like Japan that had written off coal mining as a relic of the Industrial Revolution.

In Bibai, once a thriving cultural center that had a ballet troupe and five cinemas showing first-run Hollywood movies in its heyday in the 1950s, the population shrank to 27,800, from 92,000. As mining jobs evaporated, they left behind rows of abandoned clapboard-fronted stores that give some neighborhoods the air of a ghost town.

While Japan’s coal industry remains tiny, its revival is an example of how higher commodity prices are driving a search for resources even in some of the world’s most urbanized and developed nations.

In recent months, South Korea has experienced calls to create a domestic coal industry in order to reduce dependence on imports. In the United Kingdom, where coal’s decline became a symbol of withered industrial might, companies are increasing production and considering reopening at least one closed mine as demand for British coal rises.

“It’s now the perfect storm with demand for our coal from South Africa to China and Australia,” said Rhidian Davies, president of Energybuild, an operator of mines in South Wales that will increase production at one of its mines tenfold over the next five years.

In Japan, higher commodity prices have also unleashed soaring demand for the heavily populated nation’s other limited natural resources, including lumber and natural gas, where production has risen nearly 20 percent this year to a three-decade high.

But coal is the most potentially plentiful fossil fuel in Japan, and companies have been quick to embrace now affordable domestic supplies out of deep-rooted anxieties about Japan’s heavy reliance on imported energy....