China Scrambles for Stability as Its Workers Age

The proportion of people 60 and older is growing faster in China than in any other major country, with the number of retirees set to double between 2005 and 2015, when it is expected to reach 200 million. By midcentury, according to United Nations projections, roughly 430 million people — about a third of the population — will be retirees.
That increase will place enormous demands on the country’s finances and could threaten the underpinnings of the Chinese economy, which has thrived for decades on the cheap labor of hundreds of millions of young, uneducated workers from the countryside. Changes in the country’s population structure are taking place hand in hand with changes in the structure of the Chinese family. China’s one-child policy, which began in 1980, means that, beginning with the current generation of young adults, couples will face the difficult task of caring for four parents through old age.
By the same token, the ratio of workers to retired people will decline from about six to one now to about two to one by 2040.
Obviously, raising the retirement ages would ease a substantial amount of pressure on the pension system. But there are no plans to do so, and raising the retirement ages would present another set of problems for the government, experts here say.
Last year, for example, 4.13 million young Chinese graduated from universities, and fully 30 percent of them are still unemployed. Unemployment is high among those who are not university graduates, as well. Prolonging employment for older workers would make this predicament worse, possibly with volatile consequences.
The bind that China finds itself in takes form in an often-posed question: Can the country grow rich before it grows old? Increasingly, experts here say the answer, which also has huge implications for the global economy, appears doubtful.
Already, experts say the large financing gap resulting from the early retirement of public sector workers has repeatedly caused the state to improvise to keep the system afloat. Receipts from lottery ticket sales and from foreign initial private offerings of stocks, for example, have been drawn upon to finance the system.
Most troubling to financial experts, the government has used payroll taxes paid by the current generation of workers, who in theory are paying into their individual retirement accounts, to pay pensions for the previous generation.
China’s relatively young private life insurance industry is one of the sectors that stands to benefit most from the growing uncertainty over aging and pensions, but even within the industry, analysts express worry.
“If we continue to have sound and healthy development in the economy we might get through this, but what if we cannot?” said Jiang Shihua, a senior official of the Pingan Life Insurance Company, who spoke of a time when China would have 400 to 500 million old people who “only consume and don’t produce at all.”

F.D.A. Rule Limits Role of Advisers Tied to Industry

Expert advisers to the government who receive money from a drug or device maker would be barred for the first time from voting on whether to approve that company’s products under new rules announced Wednesday for the F.D.A.’s powerful advisory committees.
Indeed, such doctors who receive more than $50,000 from a company or a competitor whose product is being discussed would no longer be allowed to serve on the committees, though those who receive less than that amount in the prior year can join a committee and participate in its discussions.
A “significant number” of the agency’s present advisers would be affected by the new policy, said the F.D.A. acting deputy commissioner, Randall W. Lutter, though he would not say how many. The rules are among the first major changes made by Dr. Andrew C. von Eschenbach since he was confirmed as commissioner of food and drugs late last year.
Advisory boards recommend drugs for approval and, in rare cases, removal, and their votes can have enormous influence on drug company fortunes.
“The $50,000 threshold is something that we think strikes an appropriate balance between” getting smart advisers and reassuring the public that their advice is not tainted, Dr. Lutter said.
The changes are intended to respond to a growing chorus of critics who contend that drug and device makers have hijacked the Food and Drug Administration’s approval process by paying those who serve on the agency’s advisory panels.
In one famous example, 10 of the 32 advisers who voted in 2005 to allow the painkiller Bextra to remain on the market and the painkiller Vioxx to return to the market despite safety worries had taken money from the drug makers. Under the new rules, their votes would not have counted and the committee would have voted to keep both drugs off the market.
In the end, the F.D.A. removed Bextra from the market anyway, and Vioxx has never returned. But the controversy surrounding that panel’s vote, and similar ones, tarnished the process and provided new fodder for critics in Congress.
Representative Maurice D. Hinchey, Democrat of New York, said he was delighted with the change, which will not become final until the end of a 60-day comment period.
“So many lives have been lost as a result of the failure of the F.D.A. to review drugs properly,” said Mr. Hinchey, who for two years has proposed legislation to ban agency advisers from having financial conflicts of interest. “The F.D.A. is now moving back to where it was supposed to be, a principled agency that protects the people.”
“F.D.A. is trying to strike a balance here,” Mr. Troy said, “and they would rather strike it themselves than have it struck for them.”
Drug makers routinely hire doctors as consultants for marketing and research. The New York Times reported on Wednesday that records in Minnesota show that at least 20 percent of licensed physicians in the state received money from drug makers between 1997 and 2005 — an average of $10,000.
Some conservatives were not happy with the new rule.
“I think it’s likely to improve the quality of the recommendations, remove the taint of the recommendations and improve the credibility of the recommendations,” Dr. Lurie said.
Advisory panels are important to the F.D.A. not so much because they provide the agency with expert advice — the F.D.A. can get that privately any time — but because they serve to increase public confidence in the agency’s decisions.

EU's emission restriction

Standard and Poor's is warning that the EU's stricter emissions rules will put its carmakers at serious competitive disadvantage, and could adversely affect their credit quality. This is just one of many such challenges that the EU will face as it tries to control emissions; it remains to be seen how much economic pressure the commission is prepared to withstand.

Britain Proposes Allowing Schools to Forbid Full-Face Muslim Veils

British authorities proposed new rules on Tuesday to allow schools to forbid Muslim students to wear full-face veils in class, reflecting a wider debate over Britain’s relationship with its Muslim minority.
The recommendation was the latest episode in a saga of rancorous discussion of the full-face veil, known as the niqab. Last October, Prime Minister Tony Blair described the niqab as a “mark of separation” that made “other people from outside the community feel uncomfortable.”
The Department of Education published the new guidelines after a court in Buckinghamshire rejected a 12-year-old Muslim girl’s demand to wear the niqab in class last month.
The proposed regulations, which have yet to be formally adopted, said the individual right to “manifest a religion or belief” did not bestow a right to demonstrate faith “at any time, in any place or in any particular manner.”
School principals should be allowed to order pupils to show their faces because otherwise “the teacher may not be able to judge their engagement in class,” the proposed regulations said. Moreover, they said, “schools need to be able to identify individual pupils in order to maintain good order and identify intruders easily.”
The issue of Islamic dress in schools has been contentious in many parts of Europe, sometimes pitting secularist ideologies against the religious beliefs of growing Islamic minorities.
But Islamic dress made headlines in Britain for another reason recently, when a trial of terrorism suspects included surveillance television footage of a male suspect at a bus station as he fled London in what appeared to be an all-covering burqa-style dress.
Jim Knight, the schools minister, said Tuesday that schools should consult with parents when setting their regulations on permissible uniforms. “While they should make every effort to accommodate social, religious or medical requirements of individual pupils, the needs of safety, security and effective learning in the school must always take precedence,” he said in a statement.
The government’s position drew angry responses from some Muslim groups, including the Islamic Human Rights Commission, whose chairman, Massoud Shadjareh, said it was “simply shocking” for the government to “issue guidance against Muslim communities.”
“Successive ministers dealing with education issues have failed to give proper guidance when requested by human rights campaigners about schools’ obligations regarding religious dress, including the head scarf,” he said.
Others sought to defuse the debate by insisting that disagreements over dress codes could be resolved within schools. “The vast majority of schools are able to solve these issues locally, and that should continue to be the case,” said Tahir Alam, a spokesman for the Muslim Council of Britain.
The proposed dress regulations also included recommendations enjoining school principals not to discriminate indirectly against minorities by banning hair styles “more likely to be adopted by specific racial groups.”
The rules urged school authorities to outlaw forms of dress “associated with gangs,” but said students should not be expelled for refusing to wear standard school uniforms except in the event of “persistent and defiant” transgressions.

LOGICAL ENDINGS

Computers may soon be better than kin at predicting the wishes of the dying
When machines trespass into the area of medical ethics, though, hackles rise. Here it is not the doctor that is being second-guessed, but the patient's relatives. The question is, if you were in a coma, whom would you more trust to come to the conclusion that you would want: your spouse or a machine?
David Wendler, of the National Institutes of Health in Bethesda, Maryland, and his colleagues have looked into this question. Their answer, just published in the Public Library of Science Medicine, is surprising. At the moment, both are equally reliable—but only the machines are likely to get better at it.
Dr Wendler's study began last year, when his team reviewed all the experiments they could find that had attempted to test how well people predict the wishes of patients with life-threatening conditions. Some of these studies used real patients whose conditions might have led them to fall into a coma—when, obviously, they could not make the decision for themselves. Others employed surrogates who were asked to make “living wills” outlining their preferences for treatment (or the lack of it) in various hypothetical circumstances. The desires expressed by these patients, whether real or surrogate, were then compared with what those patients' kin predicted the patients would want, and also with the predictions of unrelated people (doctors, for example) who might be called on to make the decision if kin could not be found.
Dr Wendler found 16 published reports containing almost 20,000 pairs of decisions. His analysis showed that kin and patient agreed only 68% of the time. When they did not agree, kin were more likely to recommend treatment when the patient wanted treatment withdrawn rather than mistakenly to recommend withdrawal. Surprisingly, the bias towards treatment was equally strong when the decision was made by an unrelated person such as a doctor.
Other research has suggested that the variable most reliably governing whether a patient would want the machine turned off is the “1% rule”. This is that people seem to want life-saving interventions if there is at least a 1% chance they will recover the ability to reason, remember and communicate. Less than 1%, and it is time to pull the plug.
Calculating will
Using that rule of thumb, Dr Wendler and his colleagues wrote a computer program that assesses the prognosis for a patient, based on the sort of clinical criteria that the studies had described to both patients and predictors. Only 12 of the 16 original studies contained sufficient detail to be used, but the result was remarkable. In these 12 studies, human predictors guessed the patient's wishes rather more accurately than was true when all 16 were lumped together—getting them right 78.4% of the time. Dr Wendler's program achieved an almost identical result—78.5%.
At the moment, such data do not exist. No one has yet had a reason to collect them. But they do have a reason now. The decision about when to pull the plug on a patient who is not expected to recover is unlikely ever to be handed over completely to a machine. But when no kin can be found, the program's opinion might help. And even when a dying patient is surrounded by people who care about him, those people may welcome some guidance about what his wishes were likely to have been. Individuals are, indeed, individual. But that does not mean their dying wishes are all that different.

THE GLOBAL GLASS CEILING

The highest percentage of women in senior management can be found in the Philippines, according to a report by Grant Thornton International, a consultancy. This reflects a tradition of wide participation in society there. Similarly, the egalitarian legacy of communism could explain the high proportion of women near the top of companies in China and Russia.

Sub-prime lending

Subprime lending (also: B-Paper, B-tier, non-prime, near-prime, special finance, second chance lending) describes a specific lending market sector. Typically, subprime customers are those who do not qualify for prime market rates because of a blemished or limited credit history. Subprime customers are therefore charged a higher interest rate, to compensate for the increased future probability of default.

The general lending philosophy can be described as "priced to risk," where the interest rate the borrower pays increases as their risk level to the lender increases. In the United States, subprime borrowers are generally defined as individuals with limited income or a FICO credit score below 620 (on a scale between 300 and 850).

Origins and Motivations
Subprime lending evolved the same way as other businesses, with a realization of the demand in the marketplace and then providing a supply to meet it. With divorce being common in society, bankruptcies and consumer proposals being widely accessible, a constantly fluctuating economic environment, and consumer debt load on the rise, traditional lenders are more cautious and have been turning away a record amount of potential customers.[citation needed] Statistically, approximately 25% of the population falls into this category (credit score < 620).[citation needed]

Motivation for the Lender
To access this increasing market, lenders take on the risks associated with lending to people with poor credit ratings. Subprime loans are considered to be risky for the lender due to borrower's weaker or limited credit history. A weak credit history may include a history of late credit card payments, one or more 30 day mortgage lates, and notices of default. Lenders subsquently adjust their underwriting criteria to reflect the increased payment risk. This payment risk is reflected by charging a higher interest rate over the life of the loan.

Motivation for the Borrower
Subprime lending offers the opportunity for borrowers with less then ideal credit to gain access to credit. Borrowers subsequently use this credit to purchase homes, or in the case of a cash out refinance, finance other forms of spending such as purchasing a car, paying for living expenses, or even paying down a high interest credit card. However due to the risk profile of the subprime borrower, this access to credit comes at the price of higher interest rates.

Subprime Lending and Re-establishing Personal Credit
Some subprime finance companies offer customers with poor credit a chance to re-establish their credit and eventually become a prime customer. Consumers with poor credit can borrow at higher-interest rates from subprime lenders. Once the borrower has shown responsibility in paying off debts and re-established a positive payment history, credit rating can increase. While an overwhelming majority of mortgage loans, subprime or otherwise, are reported to credit bureaus, not all are.[citation needed] Customers wishing to re-establishing their credit should check that their payment history is reported.

Recent Problems with Sub-Prime Lenders
Recently many subprime lenders have gone bankrupt or stop making loans. The prevailing cause for their insolvency or exit from the subprime market is increased defaults from the loans these lenders have originated. The increase in defaults can be artibuted to the type of loans being made by subprime lenders. A common subprime loan product is the "2-28" loan. A "2-28" loan is a loan with a low initial interest rate that is fixed for two years. After two years the interest rate resets to a higher adjustable rate for the remaining life of the loan, in this case 28 years. Other varients of the "2-28" loan product are the "3-27" and the "4-26". One of the concerns with such loan products is that the borrower qualifies for the initial start rate which may be as low 1-2% APR. After say 2 years, when interest rate resets, the borrower may suddenly find themselves unable to make their payments. The new interest is typically some margin over an adjustable index. For example 5% over 12 month LIBOR which would be 10.203% as of 3-19-07. Many of the loans made to subprime borrowers in the recent real estate boom have been of the "2-28" variety. The "2-28" product is designed to have the borrower refinance after 2 years, when the fixed portion of the loan is over. For the borrower refinancing is not problematic provided that their homes have held or increased in value. If the borrower has some equity in their home then depreciating home values are not so troubling. However what happens when the borrower has borrowed 100% of the value of their home and the value of their home decreases? In such a situation the borrower is said to be "underwater": owing more then the home is worth. Borrowers finding themselves unable to refinance out of crushing monthly payments are faced with two options: keep making payments or stop making payments. In the latter case the borrower defaults on their loan resulting in a loss of revenue for the lender.

New Century Financial, previously the second largest sub-prime mortgage lender in the U.S., in March 2007 stopped accepting loan applications was delisted from the NYSE as a result of difficulties with its subprime loans.

Talking dirty in China

Beijing has been producing daily pollution reports since 1999. Even so, until recently officials went on referring to this soul-sapping grey pall as wu, or “fog”, a word that sounded more benign in weather reports. Residents have tended to follow suit, even though their semi-desert climate is too dry much of the year for fog, produced by water vapour near the ground.
When the city finally steeled itself last month to introduce warnings specifically for “haze”, produced by pollutant particles suspended in the air.
The quality of the city air is attracting more attention thanks mainly to the Olympic Games, which open in Beijing in August 2008. A 500-day countdown starts on March 27th. The games will be held at a time of year when the city climate can be unbearably hot and also very humid, even without the haze.
International scrutiny is certainly helping. Without the Olympics, it is unlikely that Beijing would be trying at all hard to curb atmospheric pollution.
The general result of all this is a popular awareness of environmental health threats so low that even the vocabulary is unfamiliar. Beijing’s citizens now know that they have haze. It may be a long time yet before they see it dispelled.

Material Shows Weakening of Climate Reports

A House committee released documents Monday that showed hundreds of instances in which a White House official who was previously an oil industry lobbyist edited government climate reports to play up uncertainty of a human role in global warming or play down evidence of such a role.
Across NASA, researchers and career public affairs workers spoke up to alert The New York Times to rising political interference with the flow of science news to the public. A week after The Times’s first story, Michael Griffin, the NASA administrator, issued a statement "on scientific opennness" to the agency's 19,000 employees saying changes would be made.
In a hearing of the House Committee on Oversight and Government Reform, the official, Philip A. Cooney, who left government in 2005, defended the changes he had made in government reports over several years. Mr. Cooney said the editing was part of the normal White House review process and reflected findings in a climate report written for President Bush by the National Academy of Sciences in 2001.
He was hired by Exxon Mobil after resigning in 2005 following reports on the editing in The New York Times. The White House said his resignation was not related to the disclosures.
Mr. Cooney said his past work opposing restrictions on heat-trapping gases for the oil industry had had no bearing on his actions once he joined the White House. “When I came to the White House,” he testified, “my sole loyalties were to the president and his administration.”
Mr. Cooney, who has no scientific background, said he had based his editing and recommendations on what he had seen in good faith as the “most authoritative and current views of the state of scientific knowledge.”
The hearing also produced the first sworn statements from George C. Deutsch III, who moved in 2005 from the Bush re-election campaign to public affairs jobs at NASA. There he warned career press officers to exert more control over James E. Hansen, the top climate expert at the space agency.
Mr. Deutsch resigned last year after it was disclosed that he had never graduated from Texas A&M University, as his résumé on file at NASA said. He has since completed work for the degree, he said Monday.
Democrats focused on fresh details that committee staff members had compiled showing how Mr. Cooney made hundreds of changes to government climate research plans and reports to Congress on climate that raised a sense of uncertainty about the science.
The documents “appear to portray a systematic White House effort to minimize the significance of climate change,” said a memorandum circulated by the Democrats under the committee chairman, Representative Henry A. Waxman of California.

Students’ Right to Free Speech

The Supreme Court heard arguments yesterday in a case that has attracted attention mainly because of its eccentric story line: An Alaska student was suspended from high school in 2002 after he unfurled a banner reading “Bong Hits 4 Jesus” while the Olympic torch passed by. But the case raises important issues of freedom of expression and student censorship that go far beyond the words on that banner. The court should affirm the appeals court’s well-reasoned decision that when the school punished the student it violated his First Amendment rights. The principal took it from him, and suspended him for 10 days.
Mr. Frederick says the suspension violated his rights. The school board insists the principal had the right to confiscate the banner and punish the student because the language undermined its teachings about the dangers of illegal drugs. The San Francisco-based United States Court of Appeals for the Ninth Circuit ruled for Mr. Frederick, citing the 1969 case Tinker v. Des Moines Independent Community School District, which held that students have the right to free speech, which can be suppressed only when the speech disrupts school activities.
The Bush administration joined the school district in arguing that schools have broad authority to limit talk about drugs because of the importance of keeping drugs away from young people. But if schools can limit speech on any subject deemed to be important, students could soon be punished for talking about the war on terror or the war in Iraq because the government also considers those subjects important.
Some school administrators would no doubt use their power to clamp down on conservative speech while others would clamp down on liberal speech. A school that values diversity could punish students who criticize affirmative action, while a more conservative school could ban students from taking outspoken positions about global warming. Religious groups have joined civil libertarians in backing Mr. Frederick because they fear schools will punish students who talk about their religious beliefs.
If the Supreme Court wants to dodge the free-speech-in-school issues, it could rule that the off-campus Olympic torch event was not a formal school activity — and that the principal had no right to limit anyone’s free speech there. That would not harm students’ free speech rights, but it would also do little to affirm them.
The court should go further, and rule that Mr. Frederick’s rights were infringed. Students do not have the right to interfere substantially with school activities, but Mr. Frederick did not do that. The court should use this case to reaffirm Tinker’s famous pronouncement that students do not shed their right to free speech “at the schoolhouse gate.”