tcr volume 3 number 18

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I crawled down to our kitchen; my mother and nephews were there. Then we crawled out of the house. We left everything. Belongings dont matter as long as we can save our lives.~ Bohol resident Gay Flores recalling her escape before her two-story house collapsed

03MANAGEMENTThe Quest for Mr. and Ms. RightFinding and nurturing the people who can PDNHDGLHUHQFHLQ\RXUHQWHUSULVH

Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media.For subscriptions, research, and advisory services, please e-mail [email protected] or call/fax +63-2-5311182. Links to online material on public

websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or contact us by fax if they do not wish their websites to be linked to our material in the future.

SHUVSHFWLYH02

October 21-November 3, 2013

If you can see the rubble caused by the earthquake If you see it, you would really cry. These are the symbols not only of our culture but also the faith of our people.

~ Bishop Leonardo Medroso on churches destroyed by earthquake on the Philippines Bohol island

POINT & CLICKAccess online research via your Internet connection by clicking pictures, graphics, and words in blue

POINT & CLICKAccess online research via your Internet connection by clicking pictures, graphics, and words in blue

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09TECHNOLOGYWay Ahead of Stormy WeatherAs climate change looms, weather forecasting technology can be a big plus for business

15CYBER-SECURITYSearch Without FearWith Uncle Sam watching for suspicious words and sites, secure search engines protect privacy

For advertising, corporate promotions and free trial subscription, please email [email protected] or call/fax us at +632-5311182.

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Strategic Analysis and Research by theCeNTeR FOR STRATeGy, eNTeRPRISe & INTeLLIGeNCe

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19WORLDRecovery At RiskFrom U.S. debt woes to Chinas VORZGRZQWKHL\JOREDOHFRQRP\IDFHVnew risks and needs good governance to manage them

Breaking Into AdobeHackers steal data on 2.9 million Adobe customers, possibly spawning viruses and malware

17

2:NKcenSEI8KVUXZ October 21-November 3, 2013

The Month of Living DangerouslyAre you scared yet? Among the delights of October is Halloween, the end-of-the-month tradition recalling ghosts, ghouls, goblins and other prowlers of the night, with children dressing up like them and going around asking neighbors for candy and other treats. Well, guess what: the Trick or Treat gang at the U.S. Congress got going several weeks early this year. Since the start of the month, all non-essential services and activities of the United States federal government ceased after legislators IDLOHGWRSDVVWKHQDWLRQDOEXGJHWIRUWKH2FWREHU6HSWHPEHUVFDO\HDU

As if that world recovery-damping gridlock werent enough to spook businesses, consumers and investors foreign and domestic, Republican and Democratic leaders continued their brinkmanship with a feared catastrophic U.S. government debt default if the legal limit on federal borrowings was not raised by Oct. 17. That would have made it impossible to pay all obligations starting November, possibly including billions of dollars in Treasury bills falling due.

If such T-bills were thus made less creditworthy through missed payments, it would have devalued trillions of dollars in bonds PDNLQJXSWKHEXONRIDOOFHQWUDOEDQNFXUUHQF\UHVHUYHVDVZHOODVWKHOLTXLGRUQHDUFDVKDVVHWVRIFRXQWOHVVQDQFLDOinstitutions, corporations and investors across the planet. The expected consequences for the worlds economy and capital markets could make the 2008 global recession and maybe even the 1930s Great Depression a picnic.

Mercifully, American lawmakers werent in the mood for picnics of that sort. Hours before the fateful Thursday, the Senate forged a deal to end the shutdown and lift the debt ceiling. The House of Representatives went along, and President Barack 2EDPDVLJQHGWKHPHDVXUHLQWRODZJLYLQJWKHZRUOGHFRQRP\DUHSULHYH&HQWUDOEDQNHUVQDQFHPLQLVWHUVDQGLQWHUQDWLRQDOlenders, just in town for the Oct. 11-13 annual meetings of the World Bank and the International Monetary Fund, along with millions of market players in global capital markets, can stop holding their breaths.

So could analysts and editors at the Center for Strategy, Enterprise and Intelligence. With the game-changing, if not game-over economic consequences of missing the Oct. 17 deadline, it made sense to delay The CenSEI Reports latest issue, which includes a world economy update, till after Capitol Hills Halloween episode. That fortnight delay, which will adjust all subscriptions accordingly, allowed CenSEI to assess closer to the date whether the Report would run its usual second-half assessment and next-year outlook or a global economic obituary.

Thankfully, America was just playing Trick or Treat this time.

SHUVSHFWLYH

U.S. Government Shutdown 2013: The Adults Restore Order, If Only For Now

After the United States federal government ground to a partial halt on October 1, held hostage by a small group of Republican congressmen who insisted on delaying implementation of 3UHVLGHQW%DUDFN2EDPDVKHDOWKFDUHreform law as a condition for passing a budget bill, the Senate fashioned a compromise and got a budget bill passed that would keep the U.S. government funded for another three months while raising the federal debt ceiling through early February.

7KH$PHULFDQSHRSOHDUHFRPSOHWHO\IHGXSZLWK:DVKLQJWRQ3UREDEO\QRWKLQJKDVGRQHPRUHGDPDJHWR$PHULFDVFUHGLELOLW\LQWKHZRUOGWKDQWKHVSHFWDFOHZHYHVHHQWKHVHSDVWIHZZHHNV President Obama said in summing XSWKH2FWVKXWGRZQ, per an Associated Press report.

It remains to be seen whether the Republican principals behind the shutdown got the message. :HIRXJKWWKHJRRGJKW:HMXVWGLGQWZLQRepublican House Speaker John Boehner declared, insisting that, 2XUGULYHWRVWRSWKHWUDLQZUHFNWKDWLVWKHSUHVLGHQWVKHDOWKFDUHODZZLOOFRQWLQXH per a separate AP report.

As the Senate legislation was being QDOL]HG5HSXEOLFDQ6HQDWRU7HG&UX]ZKRDEHWWHG5HSXEOLFDQFRQJUHVVPHQVefforts with a ORQJZLQGHGSURWHVWspeechDJDLQVW2EDPDVKHDOWKFDUHlaw in the Senate before the shutdown began, was attacking it while praising WKH+RXVHVIDLOHGFDPSDLJQ

Unfortunately once again, it appears that the Washington establishment is refusing to listen to the American people I want to commend the House of Representatives WKH+RXVHRI5HSUHVHQWDWLYHVLVWDNLQJDEROGVWDQFHLQOLVWHQLQJWRWKH$PHULFDQSHRSOHEXWXQIRUWXQDWHO\WKH8QLWHG6WDWHV6HQDWHKDVUHIXVHGWRGROLNHZLVH, 6HQ&UX]GHFODUHGLQUHPDUNVDLUHGover Bloomberg.

Of course, these days, an endorsement E\&UX]PLJKWQRWEHWKHKRWWHVWLWHPin Washington, given a Pew Research &HQWHU2FWSROOWKDWLQGLFDWHVWKDWXQIDYRUDEOHYLHZVRIKLV7HD3DUW\H[WUHPHFRQVHUYDWLYHIDFWLRQRIthe Republican party have just about doubled since 2010 (from 25% to ZKLOHIDYRUDEOHYLHZVKDYHEHHQVODVKHGLQKDOIIURPWR

7HG&UX]ZHOOKHSURYHGKHKDVDgreat fundraising operation But you GRQWKDYHWRKDYH+DUU\5HLGFULWLFL]LQJKLP5HSXEOLFDQVFULWLFL]HGKLP:KDWGR\RXWKLQNWKDWYRWHZDVODVWQLJKWIURP5HSXEOLFDQV"7KDWZDVDPHVVDJHWR7HG&UX]:KDWWKHKHOODUH\RXGRLQJ"+HLVDODXJKLQJVWRFNWRHYHU\ERG\EXWKLP$QGLIWKLVPDQFDQJHWWKHQRPLQDWLRQWREHWKH5HSXEOLFDQQRPLQHHIRUSUHVLGHQW,SLW\WKH5HSXEOLFDQ3DUW\, Senate Majority Leader Harry Reid was quoted as saying in a +XIQJWRQ3RVWOct. 17 report looking back on the last days of the latest shutdown.

$QGMXVWDVSXEOLFRSLQLRQRI&UX]DQGWKH7HD3DUW\PRYHPHQWappears to be cratering outside of 7HD3DUW\5HSXEOLFDQVDELSDUWLVDQgroup of 14 senators has formed LQWKHKRSHRIQHXWUDOL]LQJIXWXUHideological bids to disrupt the daily EXVLQHVVRI&RQJUHVVDQGWKHIHGHUDOgovernment, per a +XIQJWRQ3RVWUHSRUWSHJJHGWR6HQ-RKQ0F&DLQVFRPPHQWVRQWKHJURXSVFDPSDLJQWRpromote bipartisanship.

7KLVJURXSRISHRSOHDUHFRPPLWWHGto staying together to address other issues of importance and to tell the American people that there are at least 14 of us that ZHDUHJRLQJWRQRWOHWWKLVNLQGRISDUWLVDQVKLSFULSSOHWKLVERG\DQGLQMXUHWKH$PHULFDQSHRSOH0F&DLQVDLG

In an Oct. 4 report, The Week provided a sampling of foreign reaction at the start of the U.S. government shutdown. A Le Monde editorial (link is to the

)UHQFKODQJXDJHRULJLQDOGHFODUHG,WVSXUHKDWUHGRIWKHSUHVLGHQWDconception of politics as permanent FLYLOZDU7KHSUHVLGHQWVKHDOWKFDUHUHIRUPLVWKHSUHWH[WFKRVHQE\WKHFRUHH[WUHPLVWIXQGDPHQWDOLVWWKH5HSXEOLFDQ3DUW\WKH7HD3DUW\WRsabotage President Obama. 7KLVUHHFWVDJURZLQJSRODUL]DWLRQRI$PHULFDQSXEOLFOLIHWRVKDPHWKH)RXQGLQJ)DWKHUVRIWKLVJUHDW5HSXEOLF.

The WeekVVDPSOLQJRIIRUHLJQreaction included an analysis from political analyst and blogger Eric Grenier/DZPDNHUVEURXJKWDERXWthe shutdown because they had nothing to lose, given that the nation detested them well before the shutdown began. A political class so despised by and disconnected from the American people can hardly damage itself any further as a result of the shutdown of the U.S. government. 7KH\DUHOLNHO\WRFRPHRXWRILWXQVFDWKHGDQGDVXQORYHGDVWKH\ZHUHEHIRUHLWRFFXUUHG.

Put another way, hope may spring eternal for the prospects of bipartisanship and compromise, but ULJKWQRZZHZRXOGQWUXVKRXWWREHWthe house against the recurrence of this sorry spectacle in another three months, when funding runs out again.


3

CONTeNTS MANAGeMeNT TeCHNOLOGy CyBeR-SeCURITy WORLD

MANAGEMENT

Identifying Must-Have Employees ^gjQgmj:mkaf]kkKm[[]kk

How to cultivate their winning personality traits in others

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0RUHRYHUHHFWLYHleaders know how to value the contributions of individual members, but also reward teamwork. If your organization focuses on rewarding employees for individual performance as the main driver of success then it will become quite hard to encourage employees to share and communicate with each other, says Morgan.

8OWLPDWHO\HPSOR\HHFROODERUDWLRQEHQHWVFXVWRPHUVbecause workers are able to tap into internal experts, information, and resources that can be used to address customer needs. In addition, it allows employees to feel more connected to their jobs and co-workers.

The Creative Type

The creative types are normally those who are artsy, always full of wonder, and unconventional, from the way they dress to the way they think. They are usually sought after by companies who thrive on innovation and creativityfrom advertising agencies to major WHFKUPVEHFDXVHRIWKHLUFRQWULEXWLRQWRWKHUPVcompetitive advantage in terms of products and services. Their ingenuity helps organizations solve complex issues, and their rebellious streak can drive a team to come up with original ideas.

Granted that some individuals are more creative than others, what are the signs to look for when searching for creative geniuses? A study by Professor yvind L. Martinsen at BI Norwegian Business School aims to determine which personality traits characterize creative people, per an April report in Science Daily.

0DUWLQVHQLGHQWLHVseven paramount personality traits, namely: $VVRFLDWLYHorientation, or being imaginative and playful and with a wealth of ideas

1HHGIRURULJLQDOLW\RUUHVLVWLQJUXOHVDQGconventions because of a need to do things no one else does0RWLYDWLRQRUKDYLQJDQHHGWRSHUIRUPZLWKDgoal-oriented, innovative attitude$PELWLRQRUKDYLQJDQHHGWREHLQXHQWLDOWRattract attention and recognition)OH[LELOLW\RUWKHDELOLW\WRVHHGLHUHQWDVSHFWVof an issue/RZHPRWLRQDOVWDELOLW\RUKDYLQJJUHDWHUXFWXDWLRQVLQPRRGVDQGIDLOLQJVHOIFRQGHQFH/RZVRFLDELOLW\RUKDYLQJWKHWHQGHQF\WREHREVWLQDWHLQFRQVLGHUDWHDQGWRQGIDXOWVLQideas and people.

0DQDJLQJFUHDWLYHEXWGLIFXOWHPSOR\HHVIt should also be recognized, however, that managing creative people can be challenging at times. Some can be moody, eccentric, and erratic. Unless organizations learn to get the best out of their creative employees, WKH\ZLOOVRRQHURUODWHUHQGXSOLQJIRUEDQNUXSWF\says an April post on the Harvard Business Reviews Blog Network by Dr. Tomas Chamorro-Premuzic, a professor of business psychology at University College London.

Dr. Chamorro-Premuzic discusses some rules to OLYHE\ZKHQPDQDJLQJWKHVHFUHDWLYHEXWGLFXOWpeople. This includes involving them in meaningful work. Since natural innovators tend to have more vision, they are more likely to see the bigger picture

DQGVHHZK\WKLQJVPDWWHU2QWKHLSVLGHWKH\DOVRcannot be compelled to engage in meaningless work. [e]veryone is more creative when driven by genuine interests and a hungry mind, he says. Hence, applying this technique on other employees may unleash their creativity, as well.

One other reminder is not to pressure them. Creativity is normally enhanced when people are given more IUHHGRPDQGH[LELOLW\DWZRUN,QDGGLWLRQEXLOGLQJa diverse team with both creative minds and people who are more conventional can fuel creativity. In a study published in the Journal of Applied Psychology LQ6HSWHPEHUQGLQJVVXJJHVWWKDWGLYHUVHWHDPVperformed more creatively than homogenous teams when they were asked to engage in perspective taking, but not when they were not instructed to take their team members perspectives.

Although every organization claims to care about innovation, very few are willing to do what it takes to keep their creative people happy, or at least, productive, the article notes.

,QVSLULQJFUHDWLYHWKLQNLQJDWZRUNA September article in Business Insider suggests six ways to inspire creative thinking at work, according to the research work of Teresa M. Amabile, professor at Harvard Business School. For one, managers must know their employees well enough to be able to match the right person with the right assignment. Moreover, FRPSDQLHVVKRXOGEHDEOHWRGHQHVWUDWHJLFJRDOVclearly, but give employees the autonomy concerning the means of achieving these goals. Support and recognition by the bosses are, likewise, necessary for workers to feel that their work is important to the organization.

%RUHGRPKDVLWVEHQHWVDVZHOO$FFRUGLQJWRDVWXG\cited in a January report in Science Daily, being bored

at work can have positive results, including an increase in creativity, because it gives people time to daydream. When participants were made to do a boring task, such as copying numbers out of a telephone directory, prior to completing a task that required creative thinking, they were more creative than the group who did not SHUIRUPWKHUVWWDVN7KLVPHDQVWKDWERUHGRPDWwork can be seen not as something to be eliminated, rather to be embraced and channeled in such a way that it translates to creativity in other areas of work.

Mr./Ms. Happiness

This type of employee exudes positive vibes and treats other people with kindness and respect. A feature in The Houston Chronicles business section LGHQWLHGFKDUDFWHULVWLFVRIKDSS\HPSOR\HHVHJtypically accomplishing duties and responsibilities with minimal direction and seeking professional development, whether through assuming additional tasks or participating in training activities. They also strive to develop and nurture relationships with WKHLUFRZRUNHUV+DSS\HPSOR\HHVDUHEHQHFLDOLQa teamwork environment because they help foster mutual respect and support among colleagues.

6KDZQ$FKRUIRXQGHUDQG&(2RIFRQVXOWDQF\UPGood Think, Inc. and author of The Happiness Advantage: The Principles of Positive Psychology that Fuel Success and Performance at Work, believes happiness breeds success. In his May 2011 TeD talk posted February, 2012, Achor revealed the secret to better work, based on his research on positive SV\FKRORJ\+HEHOLHYHVZHQHHGWRUVWUHYHUVHWKHlong-held formula for happiness and success, which is: If I work harder, Ill be more successful. And if Im more successful, then Ill be happier. We need to change the idea that our external world is predictive of our internal happiness.

NASA administrator Charles F. Bolden talks about the importance of collaboration among nations in space exploration efforts IBM

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Instead, Achor suggests, If you can raise somebodys level of positivity in the present, then their brain experiences what we now call a happiness advantage, ZKLFKLV\RXUEUDLQDWSRVLWLYHSHUIRUPVVLJQLFDQWO\better than it does at negative, neutral or stressed. He posits that intelligence, creativity, and energy levels rise with happiness, which can improve business outcomes.

$KDSS\HPSOR\HHLVDSURGXFWLYHHPSOR\HHAccording to a September 2011 New York Times piece by Harvard professor Teresa M. Amabile and independent researcher Steven Kramer, authors of The Progress Principle: Using Small Wins to Ignite Joy, engagement, and Creativity at Work, inner work life has a profound impact on workers creativity, productivity, commitment and collegiality. Moreover, data reveals workers perform better when they are happily engaged in what they do.

Managers can help ensure that people are happily engaged at work. Doing so isnt expensive, the article says. Workers well-being depends, in large part, on managers ability and willingness to facilitate workers accomplishments by removing obstacles, providing help and acknowledging strong HRUWLWFRQWLQXHV

A September article in Forbes discusses the ways in order to motivate employees, based on the insights of Leonard J. Glick, professor of management and organizational development at Bostons Northeastern University. One is to build ownership among your crew, which can be achieved by allowing team members to become familiar with what the others are doing and encouraging them to bring their ideas to the table. Glick explains that while compensation

packages and other perks motivate employees, the challenge and purpose of the work, as well as the opportunity to learn and contribute, are equally important.

Likewise, structuring the companys work environment is crucial to developing happy

and productive employees. In a July piece in The +XQJWRQ3RVW adapted from the book, The Happiness Choice: The Five Decisions That Will Take you From Where you Are to Where you Want to Be, author Marilyn H. Tam, Ph.D., discusses WKHYHDUHDVWKDWPXVWEHNHSWLQEDODQFHZLWKLQan organization: money and other means of value exchange, relationships, body or health, community, and spirit.

Tam says individuals and companies must have DGHQHGPLVVLRQRUUHDVRQIRUEHLQJ:LWKDQestablished purpose, she reiterates, one can manage and prioritize the energies and resources required to achieve that mission.

Positive psychology expert Shawn Achor talks about happiness and how it can bring about individual success and improve business outcomes TED

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:NKcenSEI8KVUXZ October 21-November 3, 2013

9


TECHNOLOGYPOINT & CLICKAccess online research via your Internet connection by clicking pictures, graphics, and words in blue

T yphoons that hit the Philippines typically result in business disruptions, including FORVXUHRIQDQFLDOPDUNHWV, damage to agriculture, FDQFHOODWLRQRILJKWV, and power interruptions. But Philippine businesses are not DORQHLQVXHULQJWKHHHFWVRIH[WUHPHZHDWKHUfar from it. According to a report, Weathering the Storm: Building Business Resilience to Climate Change, issued in July by the Center for Climate and energy SolutionsDQRQSURWRUJDQL]DWLRQIRFXVHGon energy and climate-change issues, 90% of the companies in the Standard & Poors Global 100 Index identify extreme weather and climate change as current or future risks to their business, DFURVVDOOLQGXVWU\VHFWRUVZLWKUHSRUWLQJthat they have already experienced the adverse HHFWVRIH[WUHPHZHDWKHUDQGDQDGGLWLRQDOVD\LQJWKH\EHOLHYHWKH\ZLOOEHDHFWHGE\H[WUHPHZHDWKHULQWKHQH[WYH\HDUV

Also in July, a report, Climate Change Preparedness and the Small Business Sector, from the Small Business Majority and the American Sustainable Business Council, found that U.S. small businesses, lacking access to the capital and UHVRXUFHVRIODUJHFRUSRUDWLRQVFDQVXHUODVWLQJeconomic damage as the result of a single extreme weather event. According to the report, an estimated 25% of small- to mid-sized businesses do not reopen following a major disaster.

0HDQZKLOHMRLQWVWXGLHVE\PDUNHWUHVHDUFKUPForrester Research and the Disaster Recovery JournalLGHQWLHGH[WUHPHZHDWKHUQDWXUDOdisasters as the most common cause of a major business disruption, followed closely by power RXWDJHV,7IDLOXUHVWHOHFRPIDLOXUHVRRGDQGUHZLWKWKHLQFUHDVLQJIUHTXHQF\RIH[WUHPHweather events cited as a major cause for concern,

as reported in a February 2013 Technology $GRSWLRQ3UROH commissioned by information-technology giant eMC.

To keep businesses forewarned about upcoming extreme weather and prepared to reduce potential risks, companies are employing improved weather-forecasting technologies and techniques from better data collection and analysis.

6PDUWHUXWLOLWLHVRSHUDWLRQV An advanced weather forecast and outage prediction service enables a utility company to prepare for weather events that can disrupt the electrical distribution network, as illustrated in a 2010 IBM case study. Using advanced modeling from IBM and sensors from U.S.-based weather network WeatherBug, a North American electric utility companyserving an area with about one million peoplecan predict the impact of weather events that can disrupt a power network, estimate the likelihood of outages, and provide lead time to enable proactive allocation and deployment of people and equipment.

IBMs data analytics service Deep Thunder can be used to call repair crews into action and spot them to the nearest utility substation from where the damage might occur. The program will predict the number of jobs that will be needed up to 72 hours before a storm, enabling the company to respond to customer needs and reap time and cost savings.

Deep Thunder provides high-resolution and longer advanced notice of adverse weather conditions customized to business with weather-sensitive operations and employs detailed measurements of weather such as wind speed, temperature and humidity from dozens of collecting stations from WeatherBug.

Weather Forecasting Advances HelpBusinesses Reduce and Manage Risks

Using technology to stay a step ahead of increasingly extreme weatherBy Pia Rufino

STRATEGY POINTS:

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The service also provided advance notice of accurate prediction in cities. It predicted snowfall totals, and determined when the snow would start and stop, in New york City during a February snow storm, per a Feb. 2013 post by Steve Hamm on IBMs Building a Smarter Planet blog. It also helped Brazils Rio de Janeiro city predict, up to 40 hours in advance, how much rain would fall in a particular locationwith 90% accuracy.

%HWWHUIDUPLQJGHFLVLRQV Predictive analytics Deep Thunder can also help farms make better planting, irrigation and harvesting decisions. According to a June piece in LiveSciences Op-ed & Insights section by Lloyd Treinish, Chief Scientist at IBM Thomas J. Watson Research Center, Deep Thunders precision agriculture system collects real-time data on weather, soil and air quality, crop maturity and even equipment and labor costs and availability to help farms from Brunei to Brazil make better decisions on planting, fertilizing and harvesting crops.

In practical terms, Treinish writes, a farmer armed with precise weather forecasting LQIRUPDWLRQPD\FKRRVHWRKROGRRQIHUWLOL]LQJan area of a farm expecting heavy rains; or, he may irrigate only that portion of the farm that will not receive rainfall. With 70 percent of the worlds freshwater supply already going to agriculture, every drop counts.

The technology also shows how and when to deploy delivery trucks to ensure immediate shipment, especially in farms where the lack of paved roads can paralyze distribution. Additionally, farms can EHQHWIURPZDVWHUHGXFWLRQDVZHDWKHUUHODWHGincidents cause 90 percent of all crop losses, according to the United States Department of Agriculture, as cited in the article. The service can deliver hyper-localized weather conditions up to

three days in advance, with calculations from as a single mile and as granular as every 10 minutes.

IBM explains how precision agriculture works: 6HQVRUVWKURXJKRXWWKHHOGVPHDVXUHWHPSHUDWXUHand humidity of the soil and air. Meanwhile, pictures RIHOGVDUHWDNHQXVLQJVDWHOOLWHLPDJHU\DQGURERWLFdrones. The images over time show crop maturity, and when coupled with predictive weather modeling VKRZLQJSLQSRLQWFRQGLWLRQVKRXUVLQDGYDQFHmodels and simulations that can predict future conditions for farmers can then be created.

In the following youTube video from IBM, Treinish explains how precision farming, driven by better weather forecast, brings improvement in farm HFLHQF\DQGHFRQRPLFLPSDFW+HDOVRGLVFXVVHVWKHEHQHWVRIZHDWKHUIRUHFDVWFRXSOHGWRDQDO\WLFVDQGvisualization, to other operations.

The value of big data in managing climate risks for farms isnt lost on the worlds biggest seed company. Agriculture giant Monsanto announced it would buy The Climate Corporation, a startup specializing in weather analytics and risk management for US$930 million, as reported in Quartz Oct. 2. The data-science company uses technology that combines hyper-local weather monitoring, agronomic data modeling, and high-resolution weather simulations to provide insurance products and software services to reduce weather risks and boost crop yields for farmers.

:HDWKHUUDGDUKHOSVDLUOLQHV Bad weather is bad business for the airline industry. U.S.-based global aviation supplier Honeywell is upgrading its weather-radar technology to help pilots spot and avoid severe weather, thus preventing injuries onboard and damage to equipment and aircraft,

CNeT reported in 2012. The company upgraded its Intuvue system softwareUVWODXQFKHGLQWRJLYHSLORWVGHWDLOHGinformation on hail and lightning in planes paths up to 10 minutes in advance, as well as on turbulence up to 70 miles ahead.

Figures from Honeywell estimated that weather-related delays and cancellations cost WKH86HFRQRP\86ELOOLRQLQZKLOHturbulence-related incidents cost airlines on average $150,000 per incident. Meanwhile, the total cost to the industry exceeds $100 million every year. Business jet operators experience DURXQGLJKWVWKDWDUHGHOD\HGGXHWRweather, costing an estimated US$340M.

Turkeys Pegasus AirlinesWKHUVWDLUOLQHLQeurope to adopt the upgraded Intuvue system software, reported that the system reduces pilot workload, enabling them to concentrate RQPDNLQJRWKHUGHFLVLRQVWKDWLPSDFWLJKWsafety, adding passenger comfort and fuel HFLHQF\6HH+RQH\ZHOOYLGHREHORZ

:HDWKHULVELJEXVLQHVV An April piece from the University of Pennsylvanias online business-analysis journal Knowledge at Wharton talks about how companies leverage ZHDWKHUWRHDUQSURW)RUH[DPSOH$WODQWDEDVHGZHDWKHUPHGLDUPThe Weather CompanyRHUVDQDUUD\RIZHDWKHUUHODWHGproducts and servicesincluding broadcast and web programming, apps, a content deal with Twitter and a developing line providing weather data to foreign governments. Commercial weather, once limited to the government, has grown to include 350 companies whose combined annual revenues in the last two years has increased by 50% to an estimated $3 billion a year, the article notes.

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5LFK-HULHVGLUHFWRURIWKHCOMeT program of the University Corporation for Atmospheric Research, estimates gross sales at US$3 billion, and the worth of the entire climate- and weather-related industry at US$6 billion. entities range from small consulting companies to larger commercial forecast groups including media UPVVHUYLQJWKHHQHUJ\DJULFXOWXUHEXLOGLQJinsurance and other sectors.

,PSURYHPHQWVLQZHDWKHUIRUHFDVWLQJ A number of companies are working to improve weather forecasting, as well as to prevent data gaps in satellite coverage, according to a June blog post in Forbes by Alex Knapp. U.S. space agencies, along with private companies, including sensors systems providers Raytheon, Northrop Grumman, ITT, exelis, and Ball Aerospace, are ZRUNLQJWRODXQFKDVDWHOOLWHFDOOHG-336LQThe satellite will capture images in infrared, which HQDEOHVWKHVDWHOOLWHVWRFDSWXUHGLHUHQWOD\HUVRIFORXGVPRLVWXUHLQIRUPDWLRQDWGLHUHQWSDUWVof the atmosphere, and temperature information. Other sensors provide better ozone concentration information, as well as microwave imaging of temperature and moisture information to complement the other sensors.

According to Knapp, satellite data company PlanetIQ wants to launch 12 small satellites in the orbit to gather weather data, while GeoMetWatch plans to launch a 4D weather satellite, providing the national space agency with sophisticated and critical weather data not currently available.

Meanwhile, San Diego-based software company earthRisk Technologies wants to revolutionize weather forecasting by using big data to predict the weather up to 40 days in advance, per a VentureBeat article. earthRisk Technologies has developed a new model for predicting extreme

ZHDWKHUHYHQWVWKDWLGHQWLHVZHDWKHUSDWWHUQVEDVHGRQRYHUELOOLRQFDOFXODWLRQVDQGyears of data. It then compares those patterns to current conditions and uses predictive analytics to predict the weather up to 40 days in advance. The technology is derived from research at the University of California at San Diegos Scripps Institution of Oceanography.

Cofounder and CeO John Plavan says Utilities corporations, energy traders, and energy producers are majorly impacted by big temperature changes and spend hundreds of millions of dollars trying to predict them. If they know there will be an extreme cold event a month from now, they can use that data to make an actionable decision, and these guys will do anything to gain a small edge.

%HDWLQJEDGZHDWKHU A January 2011 BBC articleUHSRUWHGRQKRZUPVDUHPDQDJLQJSRWHQWLDOULVNVRIEDGZHDWKHUWKURXJKHFLHQWweather forecasting. Fedex express, one of the worlds biggest delivery companies, houses its own team meteorologists to forecast the weather to see immediate risk to the business, so they can make necessary adjustments immediately, like diverting LJKWVDFFRUGLQJWR:LOOLDP0DUWLQPDQDJLQJGLUHFWRURIWKHUPV8.RSHUDWLRQV

In the BBC article, Dr. Matt Huddleston, principal consultant at the U.K.s national weather service 0HW2FH noted that businesses are incredibly impacted by weather events and noted that 2009 over US$50 billion (32 billion) of losses in the insurance industry alone. Vast amount of resources are lost because of bad weather so weather technology is hugely important to businesses because every single business, every location on the planet is exposed to the weather. By developing weather technology it enables businesses to manage their risks, Huddleston observed.

\RXJRWWDVHHWKLV

Dont even think of drinking the water. An Oct. 1 post in GizmodoEby their contact with the water from Lake Natron in northern Tanzania.

Lake Natron, it turns out, is a salt lake fed by a local river and mineral-rich hot springs in a dry climate with temperatures that reach up to 60 degrees Celsius (140 degrees Fahrenheit), and alkalinity that ranges from 9.0 to 10.5 pH (approaching the alkalinity of ammonia,

in his new book, Across the Ravaged Land, were found unexpectedly along the shoreline of the lake, possibly might have confused them and caused them to crash with the water preserved them perfectly as they dried. Brandt took the creatures and posed them for his striking photos.

All images via Nick Brandt 2013 Courtesy of Hasted Kraeutler Gallery, NY and Gizmodo

16


15


In an Oct. 10 dispatch, 9HQWXUH%HDW reports on the launch of a new search engine that's bound to draw interest from users intent on protecting their privacy. 7RU6HDUFK is a search engine intended for users of 7RURULJLQDOO\7KH2QLRQ5RXWHUDIUHHZDUHSURJUDP

VSHFLDOL]LQJLQRQOLQHDQRQ\PLW\$VWKHUHSRUWSRLQWV

RXWXQWLO7RU6HDUFKFDPHDORQJWKHPHFKDQLFV

EHKLQG7RUVRQOLQHDQRQ\PL]LQJFRPSXWHUVFRP

PXQLFDWLQJWKURXJKUDQGRPUHOD\VEDVLFDOO\DOVR

hampered searching for anything on the network.

Before you rush away from here to start using 7RU6HDUFKKRZHYHUWKHUHDUHcautionsWRKHHGVWUDWHJLFDOO\SODFHGXQGHUQHDWKEXWRQWKHVDPHSDJHDVWKHGRZQORDGDEOHEXQGOHVFRUUHVSRQGLQJWR\RXUSDUWLFXODURSHUDWLQJV\VWHP

8VH7RU6HDUFKXVLQJWKH7RUEURZVH

'RQWLQVWDOORUHQDEOHDQ\EURZVHUSOXJLQVLQWKH7RUEURZVHUEHFDXVHWKHSOXJLQVFDQEHPD-QLSXODWHGLQWRUHYHDOLQJ\RXU,3DGGUHVV

8VHWKH+7736YHUVLRQVRIZHEVLWHVWRDVVXUHSULYDWHHQFU\SWLRQRI:HEWUDIF

'RQWRSHQDQ\GRFXPHQWVGRZQORDGHGWKURXJK7RUZKLOHRQOLQHZKLFKDOVRFRPHVZLWKDQH[-SOLFLWZDUQLQJ8QGHUQRFLUFXPVWDQFHVLVLWVDIHWRXVH%LW7RUUHQWDQG7RUWRJHWKHU

8VHD7RUEULGJHUHOD\LQVWHDGRIWKHSXEOLF7RUQHWZRUNLI\RXZDQWWRSUHYHQWSRWHQWLDODWWDFNHUV

WRNQRZWKDW\RXUHXVLQJ7RULQWKHUVWSODFH

&RQVLGHUWKHZDUQLQJVZHOOSODFHGJLYHQWKDWWKH8QLWHG6WDWHV1DWLRQDO6HFXULW\$JHQF\16$KDVEHHQWDUJHWLQJ

7RUDVUHSRUWHGLQDQOct. 4 dispatch in GigaOM. According to the GigaOM report, which was pegged to a slide show OHDNHGE\(GZDUG6QRZGHQWRWKH8QLWHG.LQJGRPEDVHGThe Guardian (which carried its own reportRQWKHPDWWHUWKH16$KDVEHHQWU\LQJWROXUH7RUWUDIFWRVSHFLFVHUYHUVWKDWLWFRQWUROVDQGWRJHWLQWRXVHUVFRPSXWHUVGLUHFWO\

so as to compromise their web browsers.

7KHUHSRUWDOVRLQGLFDWHVWKDWWKXVIDUWKH7RUQHWZRUNLWVHOIDSSHDUVQRWWRKDYHEHHQFRPSURPLVHGDQGUHPDLQVDQ

effective secret communications system. As long as users observe the precautions, anyway.

7KHQDJDLQIRUZKDWHYHULWPLJKWEHZRUWKLWPLJKWDOVREHLQWHUHVWLQJWRQRWHWKDW7RUwas originally sponsored by the U.S. Naval Research Laboratory under the aegis of the Department of Defense's Defense Advanced Research Projects Agency, and includes the Department of State, Broadcasting Board of Governors, and National Science )RXQGDWLRQDPRQJLWVPDMRUFRQWULEXWRUV$VRIRI7RUVIXQGLQJFDPHIURPWKH86JRYHUQPHQWZLWKWKH

Swedish government and others providing the rest.

Meanwhile, NSA bashers might take some solace in the news, as reported in GigaOM Oct. 8, that the NSA's big, meta-data hanother year. Not that one can or should count on that setback to be permanent, you understand.

Tor, Tor, Tor!

ZKDWVKRWZKDWVFRRO

$FROOHFWLRQRIODVWXQFKDUWHGIURQWLHUV4XLWHDSDUWIURPWKHVKRFNLQJ Sept. 21 terrorist attack on a mall in 1DLUREL.HQ\DE\D6RPDOLDEDVHG,VODPLVWJURXSWKHFRQWLQHQWRI$IULFDUHPDLQVKRWVRPHZRXOGOLNHWRUHPLQGXV

In the Harvard Business ReviewV7KH0DJD]LQHV October edition, Jonathan Berman presents 9LVLRQ6WDWHPHQW6HYHQ5HDVRQV:K\$IULFDV7LPH,V1RZ, i.e., a huge market opportunity (as in, it needs everything and is LQFUHDVLQJO\DEOHWRSD\IRULWLQFUHDVLQJSROLWLFDOVWDELOLW\WKHZRUOGVODUJHVWZRUNIRUFHE\LQWUDUHJLRQDOWUDGHLQLWVLQIDQF\KHDY\JRYHUQPHQWH[SHQGLWXUHVRQHGXFDWLRQWKHH[SORVLRQLQWKHPRELOHPDUNHWDQGPRVWRIWKHZRUOGVuncultivated cropland.

At the same time, nonetheless, a Reuters analysis following the attack reminds us of some very real obstacles to FKDUJLQJLQWR$IULFDZLWKRXWDSODQLQFOXGLQJWKHH[SORLWDWLRQE\,VODPLVWJURXSVRIFURVVFRQWLQHQWGLVFRQWHQWRYHUGHFDGHVRIORFDOSRYHUW\FRQLFWLQHTXDOLW\DQGPDOJRYHUQDQFHWRLQFUHDVLQJO\ZDJHFURVVERUGHUMLKDGFKDOOHQJLQJAfrica and the wider world.

,WVWUHPHQGRXVRSSRUWXQLW\LQWKHDJJUHJDWHQRWZLWKVWDQGLQJLWVSUREDEO\DJRRGWLPHWRUHPLQGRSSRUWXQLW\VHHNHUVnot to fall into the unfortunate tendency to treat the continent as one country, which one consultant observed was WKHUHDVRQWKDWDULVNSUROHIRU$IULFDZDVDOZD\VDMXPS\EDURPHWHUWREHJLQZLWK,QRWKHUZRUGVSLFN\RXUKRWVSRWVDQGSLFNFDUHIXOO\

$FRXSOHRIFXOWXUHFOXEVWKDWURFNWhile your favorite news and QHZVDJJUHJDWLRQVLWHVKDYHWKHLURZQDUWVDQGFXOWXUHVHFWLRQVLWVstill nice to know there are entire sites dedicated to culture, i.e., current or historical popular culture. One particular site that impresses XVLV2SHQ&XOWXUHZLWKLWVOLQNVWRa vast array of books (audio books, eBooks, WH[WERRNV movies, online and FHUWLFDWHcourses, language lessons, business courses, et cetera.

While mainly about KLJKTXDOLW\cultural & educational media for the worldwide lifetime learning communityLWVQRWMXVWDYLUWXDOwarehouse for these items, as its home page contains blog posts on a variety of topics both current and

historical, including recent musings RQ'DYLG%RZLHVlist of top 100 booksDQG6WDQOH\.XEULFNVfan letter to Ingmar Bergman.

Another site that impresses XVHYHQLILWVQRWTXLWHDVambitious in scope and prefers to deal with current and mostly American entertainment culture, is 7KH$9&OXE, the print and online publication of the satirical newspaper The Onion. (Its provenance notwithstanding, The A.V. Club is careful to note that LWVDUWLFOHVDUHQWFWLWLRXVGHVSLWHwhatever false impressions an occasional snarky headline might LQDGYHUWHQWO\LPSDUW

7KHUHDUHWKRXJKWIXOO\FUDIWHGEHJLQQHUVJXLGHVWRDSSUHFLDWLQJ

selected musical artists, directors, HYHQJUDSKLFQRYHODXWKRUVDQGFRPLFERRNDUWLVWVDQGWKHUHare also invitations to artists and performers to tee off on songs they really hate. And, of course, reviews of books, movies, and music, along ZLWKUHYLHZVRIFXUUHQW79VHULHVand sections dedicated to both new DQGROGFODVVLFVHULHV

$QWRQLXV%ORFNULJKWSOD\VFKHVVZLWK'HDWKLQDQLFRQLFVFHQHIURP,QJPDU%HUJPDQVThe Seventh Seal Open Culture

CYBER-SECURITY

18


17


U.S. software giant Adobe recently disclosed that hackers accessed data on 2.9 million customers and source code for several of its products.

In a Oct. 3 blog post, Brad Arkin, $GREHVFKLHIVHFXULW\RFHUVDLGthe stolen information includes customer IDs, encrypted passwords, payment card numbers, expiration dates, and names and other information on customer orders. Arkin said the company does not believe that the attackers removed decrypted credit or debit card numbers from its system.

In an earlier post, he said that hackers accessed the source code for a number of Adobe products, including Adobe Acrobat, ColdFusion, and ColdFusion Builder, but the company was unaware of any increased risk to customers as a result of that particular attack.

As a preventive measure, Adobe said it is resetting relevant customer SDVVZRUGVDQGLQIRUPLQJDHFWHGcustomers about measures against potential misuse of personal

information. Meanwhile, it has advised banks to help protect customers accounts, and asked law-enforcement agencies to assist in its investigation.

)RXQGHGLQWKH6LOLFRQ9DOOH\FRPSDQ\LVNQRZQfor an array of programs. including its Adobe Acrobat PDF (Portable Document Format) maker and reader, Photoshop photo-editing software, Dreamweaver Web-page development tool, Adobe Flash Player for multimedia OHVDQGWKHSWF 6KRFN:DYH)ODVK6PDOO:HE)RUPDWand FLV )/DVK9LGHRDQLPDWLRQOHIRUPDWV

Brian Krebs, a well-respected security researcher, revealed in a blog post that he found the source-code leak a week before it was announced, when he and researcher Alex Holden of Hold Security LLC discovered a 40-GB source code trove on the same server thought to be used by hackers behind attacks on major data aggregators earlier this year, including LexisNexis, Dun & Bradstreet and Kroll. The hacking teams server contained huge repositories of uncompiled and compiled code that appeared to be source code for ColdFusion and Adobe Acrobat.

ERG\ODE

If you wanna feel real nice, just ask the rock-and-roll doctors advice./music not only has charms to soothe the savage breast, it also has power to promote healing, according to Maria Konnikova, a The New Yorker.

Konnikova discusses a 2012 experiment dhDepartment of Surgery in Tokyo, Japan, involving of noise/sound in the recovery rooms: silence in s>Traviata, Mozart pieces as rendered by the Berlin Wdor a steady sound frequency between 100-20,000 hertz in others.

dwhile those recovering in the rooms playing Verdi or Mozart lived an average 20 days longer, and those

those in the silent and silent-frequency rooms. As it

for how to improve our own recovery from serious medical procedures. The work won the IgNobel Prize in Medicine in September, Konnikova reports.

twas done on mice, Konnikova also reports on a 2005 review of over 80 studies on the use of which found that music had helping to regulate breathing and relaxing music leading to hormone secreted under stress making people happier, more

relaxed, less anxious, and less overwhelmed.

From there, Konnikova discusses subsequent other studies involving the successful use of music for Wopen-heart surgery.

Dtds''KZ could be a game screen away, according to Quartz science and technology correspondent Christopher MimsK^

D/

dD Dwhether .

Dmovies, and soon to come to smartphones -- because of the inability of our eyes to both converge and accommodate moving displays. he provides a link to a site from 3D movies.

Ahhh, for the good old days

Adobe Says 2.9M Accounts Hit in Cyber AttackSTRATEGY POINTS

hackers obtained data on 2.9 million customers, including encrypted passwords and payment card numbers

dhave opened a gateway for new viruses, malware, and exploits, warns

about installing counterfeit copies of popular programs or third-party programs or even greater their more popular counterparts

In a statement, Hold Security said it looked like the data breach occurred in early August, but it was also possible that the attack might have started earlier. While its unclear how the hackers obtained the source code and for what purposes, it is likely that the data was taken and viewed by XQDXWKRUL]HGLQGLYLGXDOVWKHUPVDLG

This breach poses a serious concern to countless businesses and individuals. Adobe products are installed on most end-user devices and used on many corporate and government servers around the world.

:KLOHZHDUHQRWDZDUHRIVSHFLFXVHRIGDWDIURPWKHsource code, we fear that disclosure of encryption algorithms, other security schemes, and software vulnerabilities can be used to bypass protections for individual and corporate data. (HFWLYHO\WKLVEUHDFKPD\KDYHRSHQHGDJDWHZD\IRUQHZgeneration of viruses, malware, and exploits.

The source-code breach raises fears of cyber-attacks, WDUJHWLQJSHUVRQDODQGQDQFLDOGDWDKHOGRQGHYLFHVfrom PCs to smartphones, per an Oct. 6 Financial Times report on the Adobe hack (registration required to access article). Using the leaked code, criminals could spot vulnerabilities in the software and manipulate them to hack users machines, harvesting personal information and intellectual property that can be sold on the black market, the FT report explains.

Meanwhile, the Adobe hack is the latest sign that it is EHFRPLQJLQFUHDVLQJO\GLFXOWWRNHHSWKHKDFNHUVRXWRIcorporate IT networks, says eric Chiu of the cloud security company HyTrust, as cited in the FT report. He warns that companies have to assume that the bad guy is already inside the system, and suggests that employees should have restricted data access to prevent possible attacks. He observes, Were seeing breaches happening more often these days and breaches are getting bigger in terms of magnitude of whats being stolen.

To help mitigate attacks targeting older, unpatched, or LPSURSHUO\FRQJXUHGGHSOR\PHQWVRI$GREHSURGXFWVthe software maker reminds users to run only supported versions of the software, apply all available security updates, and follow the advice in the Acrobat enterprise Toolkit and the ColdFusion Lockdown Guide.

This latest episode serves as a reminder that users should be careful about installing counterfeit copies of popular software, downloading popular software from unfamiliar sites, or even installing free third-party VRIWZDUHIURPXQNQRZQGHYHORSHUVRHULQJVLPLODURUeven enhanced functionality over popular software. Search for more information about unfamiliar sites and software before downloading.

,67+(:25/'%$&.2175$&."WORLD 20


19


Risk. That is the four-letter word that dominated the 2013 Annual World Bank-International Monetary Fund Meetings in Washington on the October 11-13 weekend.

That the world economy will be a riskier place one can surmise from IMF Managing Director Christine Lagardes address when she and World Bank President Jim yong Kim opened their institutions weekend conferences in Washington on October 11-13. In her speech, The Future Global economy and the Future Fund, the IMF chief underscored three long-term trends elevating risk in the years ahead: a more PXOWLSRODUZRUOGDZRUOGRILQFUHDVLQJQDQFLDOintegration, and the new frontiers of risk that nations face.

All three developments cannot but increase uncertainty and volatility in nations and economies. With more countries and regions impacting on the world, rather than just the West and Japan, the sources of disruption are multiplying. Take the current global HFRQRP\-XVWZKHQVLJQVRIUHFRYHU\DUHLFNHULQJLQthe West and Japan, downturns in China, India and Brazil dim the optimism.

Compounding the nerves is Lagardes second risk IDFWRUWKHJURZLQJOLQNDJHVLQJOREDOQDQFHZKLFKrapidly spread a money crisis in one market to distant QDQFLDOFHQWHUV7KHVHULSSOHVXQVHWWOHLQYHVWRUVDQGinstitutions, skew prices and exchange rates, and shake up economies and monetary systems that are otherwise far away from the trouble spots.

Thats why all the planet is on tenterhooks, waiting for the United States to end its government shutdown and avoid a globally catastrophic debt default by raising its ceiling on state borrowings by Oct. 17. For starters, every central banks currency reserves held mostly in U.S. Treasury bills could take a mammoth hit if Washington misses IOU payments.

As if a globe of multiple trouble spots wired together by electronic cash werent enough to keep them awake, the World Bank and IMF CeOs have more adverse factors on their list. Lagardes new frontiers of risk include population imbalances, income disparities, and environmental sustainability. And Kims World Bank just published its World Development Report 2014, with the subtitle Risk and Opportunity: Managing Risk for Development, covering disruptive, if not deadly WKUHDWVIURPZHDWKHUGLVHDVHVFDUFLW\FRQLFWDQGmacroeconomic dislocation.

:HOFRPHWRWKHULVNRYHU\The global economy in UHFHQW\HDUVH[HPSOLHVZHOOWKHLQFHVVDQWXQFHUWDLQWLHVit has to deal with. Five years ago, the global economy avoided a second Great Depression, recounts Lagarde in her October 3 speech at George Washington University in the U.S. capital. Five years on, the journey is not yet complete, but the fog of crisis is lifting ... In many of the advanced economies, we are QDOO\VHHLQJVLJQVRIKRSH*URZWKLVORRNLQJXSQDQFLDOVWDELOLW\LVUHWXUQLQJDQGVFDODFFRXQWVDUHlooking healthier.

1RZIRUWKHQHSULQW:KLOHWKLQJVDUHORRNLQJXSsomewhat, especially in the West, economies are still performing below potential. In the United States, the Fund chief sighed, growth this year will still be too low EHORZGXHWRWRRPXFKVFDODGMXVWPHQW/LNHthe current budgetless essentials-only regime due to political bickering by American legislators. And europe? 1H[W\HDULWPD\VFUDSHWRJHWKHUJURZWKDIWHUmonths of euro zone recession ended in the April-June quarter. But 12% unemployment, with half of young europeans jobless, remains an excruciating burden.

On Japan and the growth-lifting Abenomics of Prime Minister Shinzo Abe, Lagarde allowed: The governments aggressive stimulus policy seems to EHZRUNLQJERRVWLQJ*'3E\DERXW'HDWLRQis coming to an end and a newfound optimism is in

Is the World Economy Back on Track?In sustaining growth and containing risk,

governance is crucial and often lackingBy Ricardo Saludo

675$7(*

,67+(:25/'%$&.2175$&." 22


21


the air. But she cautioned that plans to arrest mammoth public debt by raising the sales tax should be carefully managed, as with other transitions in leading economies.

7KHVORZGRZQDKHDGThere are more caveats ahead. The Conference Board is a New york-based business issues and research organization funded by leading companies around the world and tapping business experts and executives. Its latest Global economic Outlook 2013, updated last month from responses from the Boards planet-wide membership, sees world output growing 2.9% this year, down from 3.0% last year (see The Road Ahead charts).

It would have been worse if europe had not slipped out of recession to manage 0.3% expansion, reversing -0.2% contraction in 2012, based on polled estimates of hundreds of executives and economists in key regions. The U.S. is one main drag, its gross domestic product tipped to decelerate to a 1.6% rise, a big drop from 2.2% last year. The other damper: GDP growth in developing economies is tipped to dip to 5% from 5.5%, amid slowdowns in China IURPand India (4.2% from 5.5%).

In the years up to WKHZRUOGDQGmajor economies

THE ROAD AHEAD

Those gains in the rich world, however, could be RVHWE\DVLJQLFDQWVORZGRZQLQHPHUJLQJDQGdeveloping economies. Their collective growth FRXOGVORZWRDEDVHDYHUDJHRILQdown from 5.0% expected this year.

China would be the main culprit, with the EDVHIRUHFDVWGLSSLQJWRPRUHWKDQtwo percentage points down from this years projection. The other downturn would be in Russia, Central Asia and Southeast europe, which includes the Balkan Peninsula and Turkey, but not Greece. That regions base-scenario JURZWKLQLVWLSSHGWRGURSWRIURP2.9% forecast this year. In other emerging or GHYHORSLQJHFRQRPLHVJURZWKZRXOGEHDWRUslightly higher.

)RUHFDVWVDQGJUDSKLFVIURP7KH&RQIHUHQFH%RDUG

will continue to show mixed performance, by The Conference Boards reckoning. Globally, growth will hardly budge, creeping up from 2.9% projected WKLV\HDUWRDQQXDODYHUDJHIRUHFDVWLQbased on the Board members poll. That base scenario could accelerate by a full percentage point in an optimistic scenario, or slump to 2.2% if conditions go bad.

Advanced economies are tipped to accelerate from just over 1% this year and last, to a base annual average IRUHFDVWRIIURPWR$VVXPLQJSROLWLFDObrinkmanship in Washington doesnt precipitate a cataclysmic U.S. bond default via an unbudging public debt ceiling, America could manage 2.3% expansion WLOO(XURSHPD\TXDGUXSOHLWVUDWHWRZKLOH-DSDQQXGJHVXSZDUGWRLQ

:KDWZRUULHVEXVLQHVVAs always, however, risks abound, and if they lead to bigger problems than expected, global growth could fall further in the coming years. The developed world could see a pessimistic projection of 1.4%, just slightly higher than this years 1.2% Conference Board forecast. The rest of the globe would fare even worse under the negative scenario: DQQXDODYHUDJHJURZWKLQGRZQIURPthe 5.0% base. The big declines under the pessimistic IRUHFDVWVZRXOGEHLQ&KLQDLQIURPthis year), Russia, Central Asia and Southeast europe (1.2% from 2.9%), and developing Asia outside China and India (3.6% from 5.0% in 2013).

Business people surveyed by McKinsey & Co. last month have their concerns, too. Its report, economic Conditions Snapshot, September 2013, found more

,67+(:25/'%$&.2175$&." 24


23


respondents across the globe seeing a better situation now and in the next six months, with the most optimism in europe. But there are worries about jobs, prices and exchange rates, especially in the developing world, as well as economic, geopolitical, and governance issues (see the What Keeps the Boss Awake charts).

That was before the gridlocked Democrat-Republican budget and debt-ceiling talks in Washington, which could become the world economys biggest boondoggle in coming weeks. Market watchers were also getting bearish even without Capitol Hill dysfunction. In a recent note, leading French bank Societe Generale saw a 15% drop in U.S. stock values early next year, followed by a year of stagnation. $SDUWIURPVKDUHSULFHVWRRKLJKIRUFRUSRUDWHSURWVto justify, government policy also will give pause, according to the report titled S&P 500: -15% in sight, then the big sleep by SocGens global head of asset allocation, Alain Bokobza.

'HEWRQDWLRQGHOD\The bearish prognosis does not even factor in any U.S. default if its borrowing limit isnt raised by Congress on Oct. 17. Nor did the IMFs latest Global Financial Stability Report, out during the annual meeting, carrying the subtitle Transition Challenges to Stability.

But fearing another global downturn if Americas IOUs, the staple of hard currency reserves, lose creditworthiness, World Bank President Kim minced no words about the giant gorilla in the URRPRIJOREDOQDQFH

Just two years ago, in 2011, we saw that a near miss of a U.S. debt default had major impacts lasting for months, warned the physician, anthropologist and former Dartmouth College head in his opening speech at the Bank-Fund meetings. This time could be more serious. Uncertainty and volatility make LWPRUHGLFXOWIRUGHYHORSLQJFRXQWULHVWRDFFHVV

QHHGHGQDQFHDQGWKLVZRXOGERWKVORZLQYHVWPHQWand negatively impact growth. And the poor and YXOQHUDEOHZRXOGVXHUWKHPRVW

News analyses have outlined the catastrophic consequences of the Capitol Hill deadlock triggering U.S. debt default, like those of BBC News, Bloomberg, NBC News, and the Council of Foreign Relations. From sharp reductions in government spending of as much as 4% of gross domestic SURGXFWWRRXWULJKWGHIDXOWFROODSVLQJQDQFLDOmarkets and business investment worldwide, the doomsday scenarios abound.

Forbes magazine contributor Richard Fingel argues in his recent column that there will be no default, since U.S. tax revenues of $2.3 trillion dwarf 2013 national debt obligations of $420 billion. %LOO*URVVFR&KLHI,QYHVWPHQW2FHURI3DFLFInvestment Management Company, which manages the worlds biggest bond portfolio, sees zero risk of U.S. default in a talk with CNBC, while estimating a loss of one-tenth of 1% of GDP for every week of government shutdown. The network reports that VKRUWWHUP7ELOOVDUHGURSSLQJLQSULFHUHHFWLQJmarket concern over Oct. 17, but for long-term U.S. government bonds are stable, indicating little concern of prolonged default.

Still, political analysts wonder whether Washington, if it could no longer borrow, would drastically slash payments for needy American pensioners and veterans to pay moneyed Treasury bill investors, especially those abroad. If Uncle Sam did cut state spending, the resulting drop in economic output would trigger recession here and abroad. So would a panic-driven plunge in global investment and spending if businesses and consumers lose FRQGHQFHDQGOHQGHUVWXUQRFUHGLWVSRRNHGE\default and the resulting crash in U.S. Treasury bills, the worlds leading asset for currency reserves and liquid holdings.

WHAT KEEPS THE BOSS AWAKE

&KLQDGHYHORSLQJPDUNHWVLQFOXGHV$QJROD%DKUDLQ%DQJODGHVK%RQDLUH(J\SW)UHQFK*XLDQD,QGRQHVLD,UDQ,VUDHO-DPDLFD.HQ\D.XZDLW/HEDQRQ0DOD\VLD0DXULWLXV0R]DPELTXH1LJHULD2PDQ3DNLVWDQ3XHUWR5LFR4DWDU6DXGL$UDELD6RXWK$IULFD6UL/DQND6ZD]LODQG7DQ]DQLD7KDLODQG7ULQLGDG8QLWHG$UDE(PLUDWHVDQG9LHWQDP,QGLDDQG/DWLQ$PHULFD'HYHORSHG$VLDLQFOXGHV$XVWUDOLD+RQJ.RQJ-DSDQ1HZ=HDODQGWKH3KLOLSSLQHV6LQJDSRUH6RXWK.RUHDDQG7DLZDQ(XURSHDQGNorth America.

*UDSKLFVIURP0F.LQVH\&R

,67+(:25/'%$&.2175$&." 26


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Amid the World Bank-IMF meetings, Fund chief Lagarde told NBC News that a U.S. default could spark global recession. If there is that degree of disruption, that lack of certainty, that lack of trust in the U.S. signature, it would mean massive disruption the world over, she warned. In fact, the IMFs just-published Global Financial Stability Report has FKDUWHGLQFUHDVLQJULVNLQZRUOGQDQFHHVSHFLDOO\in markets and liquidity, and in emerging economies (see Stay Close to the Center).

Thankfully, Congress managed a deal hours before Oct. 17, and President Barack Obama signed it into law soon after. But like past last-minute pacts, the new measure doesnt provide a lasting solution, but merely sets another reckoning, with federal funding assured only till mid-January and the debt ceiling

till February 7. Nobel laureate New york University economics professor Michael Spence warns in his article America the Reckless. that Washingtons domestic politicking at the worlds expense will lead to a global shift away from the dollar as a reserve FXUUHQF\DQGDGHFOLQHLQ$PHULFDQLQXHQFHRQinternational economic governance. About time.

'ULYLQJUHFRYHU\DQGPDQDJLQJULVN With still fresh memories of the worldwide dislocation wrought E\WKHJOREDOQDQFLDOFULVLVHFRQRPLFUHSRUWVand forecasts by the World Bank, the IMF and the Asian Development Bank give ample attention to both spurring growth and minimizing its downside. 7KHFXUUHQWDSSUHKHQVLRQRYHU$PHULFDVVFDOand debt troubles only underscores this recovery-and-risk perspective.

IMF Global Financial Stability MapSTAY CLOSE TO THE CENTER

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WHERE CRISES HURT THE MOST

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The World Banks World Development Report 2014 devoted its eighth chapter to managing risks and GLVUXSWLRQVLQWKHRYHUDOOHFRQRP\DQGQDQFLDOV\VWHPRIFRXQWULHV,WIRXQGWKDWQDQFLDODQGeconomic crises hurt low-income countries most, with *'3VXHULQJJUHDWHUGHFOLQHVWKDQRWKHUQDWLRQVand deep recessions lasting much longer (see Where Crises Hurt The Most).

The Bank is far from arguing that risk should be avoided, however. On the contrary, in its Main Messages introductory note in the 2014 Report, it GHFODUHVDVWKHUVWRIYHNH\LQVLJKWVIURPWKHpage tome: Taking on risks is necessary to pursue opportunities for development.

However, as World Bank President Kim has often noted, one crisis or calamity can destroy years of development and wealth in an short period. Hence, it is imperative that nations and governments apply proven risk management policies and practices:

identifying and assessing risks and obstacles to risk management; forward planning and preparation for HHFWLYHUHVSRQVHVWRDGYHUVHGHYHORSPHQWVUDWKHUthan ad hoc actions; and the need for government and international coordination and cooperation in addressing major risk events, which would overwhelm individual coping mechanisms.

7KHLPSHUDWLYHIRUVRXQGJRYHUQDQFH The Funds latest Global economic Outlook, released during the meetings, spoke of transition risks as the U.S. winds down monetary expansion, Japan accelerates it to boost growth, and europe continues WRJUDSSOHZLWKVFDOZRHVDQGMREOHVVQHVV

Meanwhile, emerging markets, explains the Outlook, VKRXOGSXVKYHSULRULWLHVDOORZLQJH[FKDQJHrates to adjust to economic conditions, anchoring less than credible monetary policies, safeguarding QDQFLDOVWDELOLW\SXUVXLQJVFDOFRQVROLGDWLRQDQGundertaking more structural reforms.

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27


echoing the reports stress on transition challenges, the International Monetary and Financial Committee, the IMFs policy steering body, declared in its communique: This requires carefully managing multiple transitions, including a shift in growth dynamics, normalizing global QDQFLDOFRQGLWLRQVDFKLHYLQJVFDOVXVWDLQDELOLW\Drebalancing of global demand, and moving to a more VWDEOHJOREDOQDQFLDOV\VWHP

After the IMFC meeting, its chair, Singapore Deputy Prime Minister Tharman Shanmugaratnam, stressed: ... during this transition phase, it is more important than ever that we get momentum into our structural reforms. The last thing we should do is leave the structural reforms to the time when it is critical. Start doing it now when we are still in peacetime. explain to our populations why they are necessary, and explain that this is really a path to higher incomes and better jobs in the future.

The critical importance of governance and reform also resonates in the Asian Development Banks just-released Asian Development Outlook Update, focusing on governance and public service delivery. With growth tipped to slow down from April forecasts, yet to gain from the incipient upswing in the West, developing economies in the region PXVWPDLQWDLQQDQFLDOVWDELOLW\ZKLOHVXVWDLQLQJexpansion. That means bracing and compensating

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In keeping with the United 6WDWHVNational Basketball Association 1%$FRPLQJWRAsia in the form of four October SUHVHDVRQJDPHVWZRLQ&KLQDRQHLQ7DLZDQDQGRQHLQWKH3KLOLSSLQHVWKLVHGLWLRQVSupergraphic, which comes WRXVIURP1HZ

tcr volume 3 number 18

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