AUDIO: Euro fund 'like a Ponzi game'

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30 September 2011 Last updated at 16:11 GMT Help

The euro bailout fund cannot work because already indebted countries like Spain and Italy are contributing to it.

That's the view of Satyajit Das, author of "Extreme Money - Masters of the Universe and the Cult of Risk".

Speaking to the BBC's Mike Johnson, Mr. Das, a derivatives trader in Sydney for 30 years, said the European Financial Stability Facility is like 'a ponzi game', and that Europe's financially troubled countries will end up borrowing from themselves.

Transcript is below

Satyajit Das: What they have been trying to do is replace the lenders. So because the commercial lenders, which is banks and investors, will no longer buy debt issued by Greece, Ireland or Portugal and increasingly are questioning Spain and Italy, they had to find somebody else to give them the money. The problem is who is going to give them the money?

So they have patched together this European Financial Stability Fund which is a very tenuous process, because it doesn't have any money either, but it's guaranteed by a bunch of countries. But the problem here is that those countries themselves are in need of the money from the funds. It's almost a surreal secularity.

Then there is now the suggestion which was foisted on the Europeans by Timothy Geithner, the U.S. Treasury's Secretary that they ought to take the European Financial Stability Fund and the catch phrase being leverage. So we take a vehicle which doesn't have any money backed by dodgy guarantees, but then they will go and borrow even more money. So, basically, it's almost like a Ponzi game on a large scale.

Mike Johnson: It's an extraordinary thing to get your head around. Let me just get this clear, what we are going to have is a situation where countries which are on the verge of bankruptcy are going to be borrowing money effectively from themselves?

Satyajit Das: That's exactly what's going to happen. I will give you the picture. The European Financial Stability Fund is guaranteed by a whole bunch of countries including, interestingly enough, Spain and Italy. Spain and Italy between them make up 30% of the guarantee of the European Financial Stability Fund.

Now what they are going to do is then the European Financial Stability Fund is going to borrow from the European Central Bank, which has also obviously got support from Spain and Italy, and then lend the money to Spain and Italy. It's almost self dealing raised to an art form. It's abstraction on a level of money which is almost incomprehensible.

Mike Johnson: And is there anyone out there who think this is actually going to work?

Satyajit Das: The only people I think who think that are the politicians in Brussels and a few policymakers because to be very honest they don't have any solutions, and they are now playing almost confidence games to try to actually convince people that this will work. And ultimately it won't work because it all boils down to a simple fact.

At the end of the day, if you are going to do the shuffling of debt, you are going to have to have somebody who is good for the debt and we all know who that is, it is Germany. So they have to actually step up and their taxpayers, their savings have to be used to prop up these other countries. Now the body politic in terms of voters aren't willing to do that.

Mike Johnson: You think Germany, the German people will run out of patience with all of this before long, do you?

Satyajit Das: Well, before they run out of patience, they will run out of money because in the end if you actually look at the amount needed just to get through the next two or three years, if you take Greece, Ireland, Portugal, Spain and Italy, they have maturing debt. This is debt they have issued, about $1.5 trillion between now and the end of 2013.

So all of that money has to be found and at the end if Germany and France and the stronger countries start to take on that burden, their own credit worthiness will be called into question. And if they lose their triple-A ratings, well then the whole game starts to unravel yet again, and it's very difficult to see this having what could be called a happy ending.

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Games journey times 'may double'

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2 October 2011 Last updated at 17:00 GMT TfL has said Games Lanes will contribute to increased traffic in some areas of London Journey times on some of London's roads could more than double during the Olympics next year, Transport for London (TfL) has admitted.

The information was in a brief sent to businesses about the Games.

Commuters have been warned of huge delays as an extra 5.3 million visitors are expected in London for the event.

Transport Minister Theresa Villiers said she was confident about the preparations being carried out by TfL to cope with the extra demands.

In an interview with the BBC's Politics Show on Sunday she said: "TfL are focused on keeping London moving during what is going to be the largest event ever hosted in this country.

"It will mean some transport disruption and there will be pressure on the transport system but we will adapt to minimise disruption."

She said businesses were actively engaging with TfL but admitted there was more to do.

A TfL spokesman said: "We have been clear that at certain times and places the transport network will be much busier than usual, which is why we are already working with businesses to ensure they can keep on running and make the most of the great financial opportunities offered by the Games.

"While the transport network will be very busy, we are confident that we will keep London moving while delivering a hugely successful Games."

Commuters have already been warned there could be huge delays to get into large stations such as London Bridge because of the extra pressure on the transport network.

In April a London Assembly report claimed transport problems remained "one of the biggest risks" to the 2012 Olympics.

And in July TfL admitted the "Games Lanes" - dedicated lanes for Olympic athletes and VIPs - would put greater traffic demands on certain parts of the network during the Olympics.

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Reebok pays $25m over toning shoe

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28 September 2011 Last updated at 18:41 GMT Reebok got into trouble in the US about alleged health benefits of using its toning shoes Sports goods maker Reebok International is to pay $25m (￡16m) to settle charges that it made unsupported claims about its Easy Tone and Run Tone shoes.

Reebok, a unit of Adidas, said these toning shoes would "strengthen and tone key leg and buttock (gluteus maximus) muscles more than regular shoes".

The US Federal Trade Commission ruled these advertising claims were false.

Adidas said Reebok had settled with the commission "to avoid a protracted legal battle".

"Settling does not mean we agreed with the FTC's allegations; we do not," Adidas added.

The FTC said Reebok began making the claims in early 2009 and provided statistics about the alleged benefits.

The $25m penalty will go towards consumer refunds.

"The FTC wants national advertisers to understand that they must exercise some responsibility and ensure that their claims for fitness gear are supported by sound science," said David Vladeck, director of the FTC's bureau of consumer protection.

The commission said in one advert Reebok claimed that by walking in its Easy Tone shoes users were able to strengthen hamstrings and calves by up to 11%, and tone the buttocks up to 28% more than normal trainers.

UK advert

It comes three months after a Reebok advert in the UK, which featured Formula One driver Lewis Hamilton, was banned.

The Advertising Standards Authority (ASA) banned the leaflet which said Reebok's ZigTech Apparel helped blood vessels to relax, boosting oxygen levels by up to 7%.

The ASA said the claims could not be proved and also criticised the advert for implying the trainers Hamilton wore in it featured the new technology.

Reebok said it disagreed with the ASA ruling but accepted it.

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Players named in 'cricket scam'

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Malaysia plans to raise retirement age

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4 October 2011 Last updated at 16:13 GMT By Jennifer Pak BBC News, Kuala Lumpur Sivananthan Mariappan, 61, drives a taxi to make ends meet Sivananthan Mariappan had accumulated over $30,000 (￡20,000) in savings by the time he reached retirement at age 55.

But after he paid off a housing loan and credit card debt, he was left with nothing.

So for six years, he has been driving a taxi in order to make ends meet in the bustling capital of Kuala Lumpur.

"I can hardly save more [given] what I'm earning at the moment," he says.

Mr Sivananthan is one of many Malaysians who cannot afford to retire.

The government has a mandatory retirement savings scheme for all Malaysians working in the private sector.

However, officials say most people drain their funds within the first five years of retirement.

This problem is compounded by the fact that the cost of living is rising.

Malaysia's central bank expects the inflation rate to hover between 3% and 3.5% this year.

A draft that would make this law is expected to be tabled in parliament by the end of the year.

While this is not nearly as high as in neighbouring countries, wages have not kept up with inflation.

The government has also recently cut back on its subsidies programme for staples such as cooking oil, flour, sugar and petrol.

This makes it hard for Malaysians to sustain their lifestyles in retirement.

Retaining workers Continue reading the main story

Fifty-five is not the correct retirement age. The experience comes with that age”

End Quote Ramachenran Krishnan 56-year-old worker Unions have been pushing for the retirement age to be raised from 55 to 60 in the private sector.

Officials hope this would allow Malaysians more time to save up for their retirement.

The move is also expected to retain 500,000 people in the work force over a five-year period.

These are skilled workers that companies desperately need.

Naza group, which imports luxury cars, says they will benefit from the move as they have a tough time retaining young talent.

"The industry is very competitive," says the firm's joint group executive chairman, Nasarudin Nasimuddin.

y will jump around within the industry."

The company already retains its retired staff on a contract basis so that they can help train new members.

Ramachenran Krishnan, 56, is one of the retirees who was recruited into the Naza group.

"So whoever offers the best package or benefits, the

After leaving another automotive company, he now works a full eight-hour day as the manager of the parts division at a dealership that is the sole importer and distributor of Peugeot vehicles.

Mr Ramachenran says he has no intention of stopping.

"It is a pity that my previous company did not actually extend me when I could have contributed more," he says.

Tee May Yan, 19, is worried if the higher retirement age affects her job prospects

"Fifty-five is not the correct retirement age. The experience comes with that age."

But in this tough economic climate, efforts to raise the retirement age has worried some potential graduates, such as Tee May Yan.

"If people can work longer, it will affect our job prospects," the 19-year-old design student says.

"It may prevent us from moving up in the company."

Others are not so pessimistic.

"Employers may want experience, but they still need fresh new ideas from young people," says Nur Liyana Mohamunny, 20.

Increased life expectancy

Raising the retirement age would also put Malaysia on par with its regional neighbours, where the average retirement age is 60 and above.

However, the move may not do much to boost savings.

Malaysians are living longer, with an average life expectancy of 74.

Even with the extra time to prepare, many people may still not be able to save up enough to last them for an extra 15 to 20 years.

It is a dilemma that Mr Sivananthan faces.

At 61, he has spent decades working in the hotel and property sectors.

It is looked down upon to drive a taxi, he says, but without any savings he has little choice.

Mr Sivananthan may be healthy enough to work 14-hour days now, but he dreads the day when he is forced to stop.

The BBC's Jennifer Pak reports from Kuala Lumpur on why so many Malaysians find it hard to make ends meet after they've stopped working.

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Smart jeans: A cause for concern?

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22 September 2011 Last updated at 23:06 GMT By Katia Moskvitch Science and technology reporter, BBC News More and more objects are getting on the web What if those new jeans you've just bought start tweeting about your location as you cross London Bridge?

It sounds far-fetched, but it's possible - if one of your garments is equipped with a tiny radio-frequency identification device (RFID), your location could be revealed without you knowing about it.

RFIDs are chips that use radio waves to send data to a reader - which in turn can be connected to the web.

This technology is just one of the current ways of allowing physical objects to go online - a concept dubbed the "internet of things", which industry insiders have shortened to IoT.

This is when not only your PC, tablet and smartphone can connect to the web, but also your car, your home, your baseball cap and even the sheep and cows on a farm.

And as we switch from IPv4 towards IPv6, which will support some 340 trillion trillion trillion addresses, more and more objects will jump into the web.

Smart buildings and intelligent cars with assigned IP addresses are already making cities smarter - and soon enough, the entire planet may follow.

"A typical city of the future in a full IoT situation could be a matrix-like place with smart cameras everywhere, detectors and non-invasive neurosensors scanning your brain for over-activity in every street," says Rob van Kranenburg, a member of the European Commission's IoT expert group.

In Italy, a group of elderly people have had sensors placed at their homes for remote monitoring

This vision might still be years off, but one by one, "smarter" cities are beginning to crop up around our landscape.

Endless opportunities

IoT advocates claim that overall interconnectivity would allow us to locate and monitor everything, everywhere and at any time.

"Imagine a smart building where a manager can know how many people are inside just by which rooms are reflecting motion - for instance, via motion-sensitive lights," says Constantine Valhouli from the Hammersmith Group, a strategy consulting firm.

"This could help save lives in an emergency."

Continue reading the main story

The ethical worries are manifold... which principles should govern the deployment of the IoT?”

End Quote Gerald Santucci European Commission But as more objects leak into the digital world, the fine line that separates the benefits of increasingly smart technology and possible privacy concerns becomes really blurred.

"The IoT challenge is likely to grow both in scale and complexity as seven billion humans are expected to coexist with 70 billion machines and perhaps 70,000 billion 'smart things', with numbers infiltrating the last redoubts of personal life," says Gerald Santucci, head of the networked enterprise and RFID unit at the European Commission.

"In such a new context, the ethical worries are manifold: to what extent can surveillance of people be accepted? Which principles should govern the deployment of the IoT?"

Talking shirts

Peter Hustinx, European data protection supervisor, says that sometimes firms tend to overlook the importance of personal data.

"In much of the monitoring, tracking and tracing [devices] which are embedded in these facilities, there's privacy relevance, and it will have to be compliant with the new European Commission Framework," he says.

Toyota Friend lets cars communicate with the drivers on a private social network

The Framework was signed by the European Commission in April 2011, and its main purpose is to safeguard consumer privacy and assure the public that web-connected objects are safe for the industry to develop - and for people to consume.

Take clothing, for instance.

A number of stores, among them major retail chain Wal-Mart, have started using RFID tags to enable employees to quickly check the stock by scanning items on shelves, and to track products more easily from manufacturing to the final delivery.

But privacy advocates are concerned that the same RFID reader could also read the data on, say, a consumer's passport or driving licence equipped with the same kind of chip - and it could lead to identity theft.

And although the tag is supposed to be removed at the checkout, if a consumer leaves the shop with the chip still attached, the item could be tracked on the street.

Once the tag is thrown away, it can still be scanned, enabling someone to get an idea of your shopping habits.

Hackers also know how to decode RFID tags.

And because the information is transmitted via radio waves, one can simply listen in.

That's exactly what happened when the Soviets presented a US ambassador during the Cold War with a wooden carving of the Great Seal, bugged with an RFID predecessor - a device called The Thing.

The Americans failed to find it - just like modern RFID tags, it only worked when enabled by a radio wave - which led to the Soviets eavesdropping on the conversations at the ambassador's office by beaming radio signals to it.

Going smart

Another way to make things smarter is by embedding sensors in them and sending data online via a wireless low-power technology called Zigbee.

Sensors "tell" the driver where free parking spaces are

IBM is doing just that - its project that remotely monitors the environment that could affect the health of elderly people in Bolzano, Italy, extended caretaker supervision with sensors embedded all over the patients' homes, providing round-the-clock peace of mind not only for the patients but for their families too.

The sensors read the levels of carbon monoxide, carbon dioxide, methane, temperature and smoke, and send the information to the caretakers' PCs and mobile devices.

To protect the patients' personal data, IBM uses encryption, says Bharat Bedi from the firm's lab in Hursley, UK.

"And we've also added some anonymous features to the system - when you log on to the dashboard, you don't see the person's name or their exact address, they've been given almost like code names which only mean something to the council workers and the relatives," he says.

A Spanish company Worldsensing has come up with a similar sensor-based technology.

With help of a special app on your smartphone, drivers can receive data from sensors installed in parking spaces, telling them where the closest free spot is.

Continue reading the main story

Your mobile phone operator and your bank know much more about your life than your wife or husband does”

End Quote Mischa Dohler Worldsensing "So that no one tries to sneak into your system and steal personal data - such as where you parked and how long you stayed - we use encryption, and also apply a decoupling technique that separates personal information from purely technical data," says the firm's chief technical officer, Mischa Dohler.

Chatting cars

Cars are rapidly becoming smart, too.

Toyota, for instance, has always been one of the frontrunners in telematics - and now it has decided to team up with Salesforce.com to allow cars to chat to their drivers on a private social network.

The venture, called Toyota Friend, will first work only for hybrid and electric cars. So if the battery is almost flat, for instance, the driver would receive a short message via Bluetooth on his or her smartphone.

In a demonstration at a Tokyo showroom, one of the Toyota owners showed such a message: "The charge will be completed by 2:15 am. Is that OK? See you tomorrow."

Stores all over the globe are tagging their items with RFID chips

The car will also be able to update its - and hence the driver's - location.

And it is here that privacy issues may come into play. What if the location is revealed automatically, for instance if the owner forgets to modify the privacy settings, just like on Facebook?

But Salesforce.com's Tim Barker says that privacy should not be a concern.

"Social Enterprise applications provide customers an opt-in to allow them to share information such as their location and 'likes', to enhance their experience as a customer and the information that they receive," he says.

It is hard to predict how well all these issues will be addressed once the entire planet gets on the web.

But as Mischa Dohler from Worldsensing puts it, in our already digital and high-tech society, the IoT privacy issues have to be taken with a little pinch of salt.

"It's just like with your phone and a credit card - your mobile phone operator and your bank know much more about your life than your wife or husband does," he says.

"And this data is likely to be more critical than the type of jeans you wear or for how long you've been parked."

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Sharp rise in eurozone inflation

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30 September 2011 Last updated at 11:18 GMT Continue reading the main story Last Updated at 03:49 GMT

Market indexCurrent valueTrendVariation% variationThe eurozone inflation rate increased to 3% in September, up from 2.5% in August, according to the first estimate from the EU statistics agency.

No breakdown was given, but Eurostat said its initial forecasts were usually "reliable".

Separate figures also released by Eurostat showed the eurozone unemployment rate unchanged at 10% in August from the previous month.

The number of people unemployed fell by 38,000 compared with July.

The unemployment rate in Spain, the highest in Europe, rose slightly to 21.2%, with youth unemployment hitting 46.2%.

However, the jobless rate for those under 25 in the eurozone as a whole fell slightly, to 20.4%.

Falling shares

Analysts, who had expected a small rise in inflation, pointed to technical changes in the way price rises are calculated as a contributory factor in the sharp increase.

Continue reading the main story Andrew Walker Economics correspondent, BBC World Service

This rise in the inflation rate makes the situation even more complicated for the European Central Bank.

The ECB has been widely criticised for raising interest rates earlier this year, as several eurozone countries are struggling with government debt crises and economic growth that is either weak or completely stalled.

The ECB has an inflation target of close to but below 2%. So the increased rate of price rises will make the Bank even more cautious about making interest rate cuts.

In addition, some of the ideas being discussed for responding to the eurozone crisis involve a wider role for the European Central Bank which could be characterised as, in effect, "printing money". As this could be inflationary, the latest data on price rises underlines the potential risk of such a move.

"It's not a nice number, but I wouldn't panic that the high inflation which some have warned about for years is finally here," said Martin Van Vliet at ING.

"We will see inflation declining over the next months, staying above 2.5% but next year, with stable oil and food prices, we will fall to lower levels."

The European Central Bank target for inflation is 2%, and the bank raised interest rates in July from 1.25% to 1.5% in order to combat rising prices.

However, the continuing debt crisis makes further rate rises in the coming months unlikely, analysts say.

With confidence in the outlook for economic growth in the eurozone fragile, policymakers are unlikely to risk raising rates, they say.

Equally, however, sharply rising prices make a cut in interest rates less likely.

This put further downward pressure on markets that fell sharply in early trading.

Germany's Dax index was down 2.5%, with France's Cac 40 and the UK's FTSE 100 sliding about 1.5%.

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