Bank of China takes stake in LCF Rothschild

Bank of China, the world's fifth largest bank, is to take a 20 per cent stake in La Compagnie Financière Edmond de Rothschild, the family-held asset management and private banking business.
The move signals that, in spite of the financial crisis, Chinese institutions are willing to invest in western banks.
The Shanghai and Hong Kong-listed commercial bank will pay €236.3m ($341m) for the stake in the French arm of the La Compagnie Financière, which was created in 1953 by Edmond de Rothschild and has been chaired by his son Benjamin de Rothschild since 1997.
It is the first strategic investment by a leading Chinese bank in the eurozone. The deal will allow Rothschild to tap into a fast-growing class of wealthy Chinese, while providing Bank of China with financial services products to sell to increasingly sophisticated Chinese investors.
Michel Cicurel, chief executive of LCF Edmond de Rothschild, described China as the “El Dorado” of emerging markets, with 500,000 dollar millionaires “and it's growing fast”.
The deal has been eight months in the making and emerged from business links between the two companies three years ago.
Min Zhu, Bank of China vice-president for international finance, said Bank of China was already the most international of the top Chinese banks, with almost 1,000 branches in 28 countries. But he said the focus of the deal was to service its customers in China rather than aim to become a “global local bank”.
Mr Min said the Rothschild name, with a 250-year banking history, and its cautious banking approach had appealed to Bank of China. But he nevertheless insisted on seeing Rothschild's first-half audited accounts before signing the deal.
Mr Cicurel said Rothschild did not need new equity and was in robust financial health. According to the company's website, LCF Edmond de Rothschild made a net profit of €105m in 2007.
Under the terms of the deal, Benjamin de Rothschild will retain 75 per cent of the family business and the remaining 5 per cent stake will be held by management and employees.

CALM MUST PREVAIL IN WAR OF PSYCHOLOGY

A few months ago a senior European central banker confessed that policymakers felt as if they were fighting a financial war. The only problem, he added, was that it was fiendishly difficult to work out exactly who the enemy really was – or where it might be.
It is a comment American financial leaders might echo today as markets reopen. Late last week Hank Paulson, US Treasury secretary, unleashed his most potent, self-styled “bazooka” to date, proposing to use $700bn (€485bn, £382bn) of taxpayers' funds to purchase toxic debt (on top of money being used to purchase AIG or backstop money market funds).
In terms of heavy artillery, this is potent stuff. The $64,000bn question, though, is whether it will truly end the fight. For, as the implications of last week's events sink in, policymakers now face a supremely difficult challenge to persuade investors that they are able to turn the recent tide of utter fear into greed. And the stakes in this battle are sky-high. After all, the unpalatable truth is that if this latest salvo does not calm the panic, then Paulson simply does not have many more bazookas left in his arsenal.
To be sure, there is reason to hope the tide is turning. The battle plan proposed by the Treasury on Saturday is dramatic and tackles some of the causes of the current fear. Better still, last week's events also show there is real, proactive global co-operation in this fight (even if some of Paulson's counterparts are a tad surprised by the degree to which he is imposing the financial equivalent of martial law).
But recent events have also left market participants so exhausted that nerves are stretched to breaking point. That creates the risk that euphoria could flip to terror again. And while the equity markets might have ended last week in a jubilant mood, in the arena where it matters most – the murky bowels of the credit and debt world – terror remains widespread.
Take the interbank funding market. The cost of borrowing overnight funds in that sector (as measured by Libor) tumbled late last week after central banks offered to inject an eye-popping $180bn on Thursday morning. However, on Friday the cost of borrowing in the three-month money markets – ie the sector in which central banks did not directly intervene – was still spiralling up.
What that means in essence is that financiers around the world remain very scared about the medium-term health of banks. There are good reasons for that. Last week's events, when the Federal Reserve decided to save AIG but let Lehman Brothers collapse, has now left credit officers confused about which institutions are safe. They are also uncertain about when they might get back cash or assets that were entangled in the Lehman net, via derivatives contracts or other funding deals.
Thus far – thankfully – that collateral issue has not sparked visible panic, partly because most institutions were so shell-shocked last week that they played for time.
However, the counterparty problem poses a real risk that the cogs of the system could start to seize up again in the coming days. Over in Japan – to name just one small example – the repo market has been drained of liquidity because the failure of the Japanese branch of Lehman's has caused numerous yen repo contracts to fail.
In Europe, some hedge funds are panicking because they cannot get back collateral that they had posted with Lehman Brothers, prompting them to unwind trades. Meanwhile, other hedge funds in New York and London are now trying to get collateral back from other groups, creating more pressures. And the ban on short-selling has thrown another spanner in the works, forcing some trading desks to stop business and awakening concerns about possible hedge fund collapses. That, in turn, is now prompting banks to call in credit lines to funds that had “short” positions.
Of course, none of these problems need be insurmountable. If the optimism afoot last week in the equity world spreads into the credit sector this week, then trust will be restored. What the financial world needs, in other words, is to heed the advice dished out in the second world war: just stay calm (preferably with a nice cup of tea). But the events of last week have left patience and sanity in short supply. This is a monumental psychological war; Paulson – and the rest of the US policy world – cannot afford to put a foot wrong now.

GOODBYE INVESTMENT BANKS

You'd think the last thing Goldman Sachs and Morgan Stanley would choose to be called is a bank. Such is the fury towards financials these days they should have re-classified themselves as cuddly toy makers. But this simple change is tactically smart. Confidence in broker-dealers is shot; by becoming regulated banks Goldman and Morgan Stanley have at least made sure they will not suffer the same fate as their Wall Street rivals. They now have long term access to the Federal Reserve primary credit facility, and, further down the road, alternative sources of funding such as retail deposits.
Their new status reflects a new reality. Investors have lost faith in wholesale funding models. Politicians want banks to be less geared. Even if Goldman and Morgan Stanley could have convinced the market of their future as standalone investment banks, investors and regulators would still have insisted on less leverage. Eventually, returns would probably have fallen to a level in-line with the stodgier universal banks anyway.
So if you cannot beat them, join them? Not quite. Goldman and Morgan Stanley are class acts and will continue to allocate capital to business lines with the highest returns. Their new regulatory master, the Fed, still considers an “adequately” capitalised bank to be 20 times geared on a tangible equity to tangible asset basis. For now anyway, that lets them operate as is. Which is just as well because as BernsteinResearch shows, for the three years before the credit crunch, half of the increase in US investment banking earnings came from leverage.
If markets regain some composure Goldman and Morgan Stanley should benefit from reduced competition in investment banking. But they will probably have to buy retail deposits, or themselves be acquired by a deposit-taking institution, if for no other reason than to please regulators and baying shareholders. Whether they then put their hearts and souls into it is another matter. Nor is there any guarantee they would be successful. Retail banking requires scale and a trustworthy brand – broker-dealers are a little short of both at the moment.

CITIGROUP SET TO SELL $12BN LOANS AT A DISCOUNT TO PRIVATE EQUITY

Citigroup is nearing a deal to sell $12bn in leveraged loans at a discount to a group of leading private equity firms, marking another step in new chief executive Vikram Pandit's efforts to shrink the beleaguered bank's balance sheet.
Although details of the deal were still being worked out, people familiar with the matter said Apollo Management, the Blackstone Group and TPG will buy the loan portfolio at a discount, which could come in at about 90 cents on the dollar.
The Citi portfolio includes loans used to finance acquisitions by Apollo, Blackstone and TPG, as well as debt in their rivals' deals. Apollo would buy about half the portfolio, with Blackstone and TPG taking the rest. Citi declined comment.

Prokhorov grabs 50% stake in Renaissance for bargain $500m

Renaissance Capital, one of Russia's biggest investment banks, yesterday said it was selling a 50 per cent stake to a billionaire oligarch for $500m in a deal accelerated by the steepest declines on the Russian market in a decade last week.
The deal wipes three-quarters off the $4bn price Renaissance valued itself at during talks with a state-controlled bank, VTB, last year.
Stephen Jennings, chief executive of Renaissance Group, said he speeded up ongoing discussions with Mikhail Prokhorov, the cash-rich owner of Onexim Group, last week as the Russian market tumbled and liquidity dried up. He said Renaissance was following in the footsteps of the biggest US investment banks as they sought safety by hooking up with new cash-rich owners.

Value of Lehman paper tumbles

Investors owning Lehman Brothers bonds face potential losses of close to $120bn, reflecting the sharp reductions in the value of assets that are likely to be left to be paid out to creditors.
In the week since Lehman Brothers, the fourth largest investment bank in the US, filed for bankruptcy, the value of its bonds have plummeted.
Further losses on its derivatives positions, which are still being unwound, could leave even less on the table for bond investors, according to traders.
“I don't know how this will play out for bondholders, but I doubt if it's going to be good,” said Dan Fuss, vice-chairman of Loomis Sayles, which has a small holding of Lehman bonds. “That's what the market tells you and it tells you that so strongly.”
Lehman bonds were widely held by investors such as pension funds and mutual funds. This means the losses will have a far-reaching effect on ordinary investors, and the damage from Lehman Brothers has contributed to an unwillingness by investors to take on credit risk.

RECORD-BREAKING LEAP IN OIL PRICES

Crude oil prices on Monday spiked more than $25 a barrel – a record one-day dollar increase – in trading ahead of the expiry of the benchmark futures contract and amid concerns that the US dollar would weaken.
The jump in oil prices to an intraday high of $130 a barrel was exacerbated by a squeeze on short positions ahead of the expiry at the close of the Nymex October futures. This forced some financial investors to cover their short positions to avoid taking delivery of physical barrels of oil.
It also led an across-the-board rise in commodities prices, with gold prices soaring above $900 an ounce.
The surge in commodities prices as a function of dollar weakness signals the US Federal Reserve faces a delicate balancing act as the government's $700bn rescue of Wall Street banks could complicate its efforts to fight inflation, traders said.
Nymex October West Texas Intermediate crude oil, which was due to expiry at the close on Monday, surged more than $25 to an intraday high of $130 a barrel, recovering almost $40 from last week's low of $90.51.

Downturn puts brake on Russia car boom

Russia's once febrile car market is cooling in a development that could hurt struggling global carmakers in an already difficult year.
The past week's stock market turmoil and falling price of oil – Russia's economic mainstay – have left some manufacturers concerned.
Demand for cars is also slowing in China, India and Brazil, the other three big markets that until now have helped carmakers make up for flagging demand in the US, western Europe and Japan.
Analysts who cover the sector are revisiting bullish sales estimates for a country that bought 2.5m cars last year and will soon replace Germany as Europe's largest car market.
“If the oil price continues to tick down, confidence will take a hit in Russia,” said Carol Thomas, central and eastern Europe sales analyst with consultancy JD Power & Associates.
In August, car sales in Russia – damaged by the hit to sentiment following the conflict in Georgia, among other factors – grew 6 per cent year on year, down from 22 per cent in July, according to JD Power.

Emerging markets face struggle to roll over $111bn of maturing debt

A vast backlog of bonds that need to be refinanced over the next year has built up in the emerging market economies, raising the threat of defaults and company closures.
With the ability to raise money in the debt markets severely restricted because of the credit crisis, emerging market banks and companies could struggle to roll over $111bn of maturing debt, according to ING Wholesale Banking.
David Spegel, global head of emerging markets strategy at ING, said: “Many corporates and banks in the emerging markets are highly levered without cash to fall back on. These will struggle should they need to raise money in the markets.
“The bond and loan markets are much harder to access now, and it could get worse, which means there will be defaults.”
Of the $111bn in bonds that will mature between now and the end of 2009, $24bn worth are held by junk-rated groups that have al-most no hope of tapping a market that has become averse to risk.

Battle for Lehman's Asian operations

Standard Chartered, Barclays and Nomura are battling to acquire the flagship Asian operations of Lehman Brothers, the collapsed US investment bank.
Top executives of the trio spent the weekend in talks with Lehman trying to assess the value of its regional assets, which include its investment banking, fixed income and equity divisions. Each was expected to submit bids around midnight in Hong Kong.
People close to the discussions said there had also been preliminary enquiries from Samsung of South Korea and Citic, the Chinese conglomerate.
Barclays, the UK lender, has already signed a deal to acquire Lehman's North American investment banking and capital markets businesses, and is vying with Nomura, the Japanese bank, to purchase some of Lehman's European assets.
However, StanChart's inclusion in the trio will surprise many because it has not previously flagged its interest in growing its investment banking division by acquisition.
People familiar with the discussions said the management of Lehman's Asian operations had hired Rothschild to advise on the possible sale.
KPMG, the professional services firm, is also party to the discussions after being appointed as provisional liquidators of Lehman's Hong Kong operations.
Lehman's Asia-Pacific operations in countries such as China, India, Japan and Australia encompass myriad business entities and span multiple court and regulatory jurisdictions.
Lehman's Asian equities franchise would fill a gap in Barclays' Asian operations in the region, while StanChart would considerably strengthen its debt capital markets offering if it emerged victorious.
Nomura is regarded as a largely domestic powerhouse and Lehman's Asian operations would turn it overnight into a serious force in the region's investment banking landscape.

US set for rescue plan vote

The US Congress is poised to vote this week on emergency legislation to create a $700bn government fund to buy toxic assets from banks, in an effort to ease stress in the US financial system.
The passage of the legislation is seen as essential to avoid a renewed tailspin in world financial markets, which reached the verge of meltdown last week before recovering as news of the plan emerged.
Under the plan sent by Hank Paulson, US Treasury secretary, to Congress on Friday night, the government would create a $700bn fund that would buy residential and commercial mortgage-based securities, to “unclog” the banking sector.
Any bank with “significant operations” in the US would be able to participate – including foreign-owned banks, a source of potential political controversy.
Mr Paulson said he would be “pressing my colleagues around the world to design similar programmes for their banks”.
But, as negotiations over the details continued through the weekend, Democratic legislators made clear that they would not simply rubber-stamp the proposal put forward by Mr Paulson.
“It needs changes,” Charles Schumer, Democratic senator, said on ABC's This Week programme. Democrats were pushing for the legislation to include help for home owners facing foreclosure.
Legislators from both parties also proposed adding measures on corporate governance and executive pay, steps the Treasury fears could undermine banks' willingness to take part in the programme.
The Democrats said they would also push for a second fiscal stimulus package, though not necessarily as part of this legislation.
“I don't like the fact that we have to do this. I hate the fact that we have to do this,” Mr Paulson said yesterday. “But it is better than the alternative.”
He said he believed that the plan was in the interests of the US. But he admitted: “There is no doubt that this plan is something that is going to increase the debt of the United States of America.” Many analysts expect the US budget deficit for next year will now exceed $1,000bn.
The Treasury said the fund, which is loosely modelled on the Resolution Trust Corporation set up in 1989 to clean up the mess after the savings and loan crisis, would use market mechanisms such as reverse auctions “where possible” to determine the price it paid for assets.

MACQUARIE AND BABCOCK &BROWN HIT BY CONCERNS ABOUT DEBT LEVELS

Shares in Macquarie Group and Babcock & Brown were further pummelled yesterday amid rising investor concern that the global credit crisis would affect their ability to repay debt.
Macquarie, Australia's biggest investment bank, sank more than 23 per cent to A$26.05, down about 65 per cent on the year. B&B, the infrastructure investor, shed 17 per cent to close at a record low of A$0.76.
Kevin Rudd, Australia's prime minister, said the country's institutions were in a sound position. “There is a world of difference between the circumstances surrounding Australia's financial institutions and those which face financial institutions abroad,” he said. “We're not immune to those difficulties, but we are in a strong position to see Australia through.”
His words failed to reassure investors, and shares in the nation's leading five retail banks also fell, with National Australia Bank heading the list with a drop of 5.3 per cent to A$19.60.
Macquarie and B&B are being more severely punished by investors for having business models that rely on comparatively higher levels of debt.

Central banks fight back

Central banks and regulators around the world fought back against the storm in global financial markets yesterday, offering $180bn of liquidity to banks outside the US that are desperate for dollars, while the UK took the drastic step of banning the short-selling of financial stocks.
The Federal Reserve gave central banks in Japan, the eurozone, the UK, Switzerland and Canada the $180bn to lend on to local banks that cannot access its onshore dollar lending facilities, at least temporarily stopping the crisis from lurching further out of control.
The central banks said they were taking “co-ordinated measures designed to address the continued elevated pressures in US dollar short-term funding markets”. They promised to “continue to work together closely” and to take “appropriate steps to address the ongoing problems”.
The flood of dollars had some success in bringing down overnight borrowing rates that had hit extraordinary levels on Wednesday and brought barometers of systemic stress back from historic highs.
However, markets remained under enormous pressure, and the cost of borrowing money for periods of more than a few days went up, not down, in spite of the central bank operation. Many expect further giant liquidity operations in the coming days.
The UK ban on short-selling follows tough new restrictions by the US earlier this week. Shares in State Street, a custodian bank, plunged 29 per cent on the news.
Short-sellers in Britain have been blamed for driving down the share price of HBOS, the banking group that on Thursday revealed it was being rescued through a takeover by Lloyds, its UK rival.
Market stress continued to be exacerbated by fears of a wave of withdrawals from US money market funds after one of the oldest institutions broke the industry's golden rule by losing investors' money because of exposure to Lehman Brothers debt.
Experts said the giant liquidity operation might not be enough to end the extreme stress in the market. “The financial system is incredibly vulnerable,” said Ken Rogoff, a former chief economist at the International Monetary Fund.
Overnight interbank dollar rates dropped sharply, with London-based dollar Libor down 1.19 percentage points to 3.8 per cent at the mid-morning fixing, which is still high above US policy rates. However, three-month dollar Libor rose 0.14 percentage points to 3.2 per cent.

HOW A DOWNTURN COULD TURN INTO A DISASTER

The economic weakness we are seeing in the United States and the eurozone is neither extreme, nor entirely unexpected.
Technically, the US may already be in recession, as some US economists say. But even if that were true, there is as yet no evidence that this cyclical slowdown is particularly severe, either by historic standards or compared with other industrial countries. An unemployment rate of 6.1 per cent is not exactly a calamity. In France and Germany this would be called full employment, even considering the structural differences of their labour markets.
I also believe that most commentators are exaggerating the extent of the eurozone slowdown. Spain and Italy look weak, but this is unsurprising. Germany is still holding up, but getting weaker. We are looking at a few quarters of stagnation, no doubt, but not a recession.
Considering that we are currently going through one of the toughest periods of financial turbulence in history, with money and credit markets now dysfunctional for over a year, we should be surprised how little damage has so far been done to the real economy. None of the industrialised economies is yet suffering a sustained decline in economic output, which is what a recession means.
In the US the combination of ultra-loose monetary and fiscal policies has kept the economy afloat. Spain and Germany can and will use fiscal stabilisers to the full extent and Spain is already doing more. France and Italy are more constrained. But in the absence of nasty financial or economic shocks, my main scenario would be at most a mild recession in the US, and a fairly average economic downturn for the eurozone.
There are two kinds of shocks that could tear up this scenario and both present a tail risk against which central banks and investors might wish to insure.
The first is a global financial meltdown. This scenario, while not probable, cannot be ruled out. The opaque $6,200bn (€4,346bn, £3,506bn) market for credit default swaps remains as risky today as it was a year ago. The primary danger would be a chain reaction of non-payments that could lead to huge uncovered exposures by some investors. If you think that hedge funds have escaped the crisis, just think about what would happen if the credit default swap market imploded. It is a huge but distant risk.
The other threat to the baseline scenario is at least as destructive, and somewhat more probable. It is a dollar crisis.
Given the recent movements of exchange rates, it might be easy to dismiss this possibility. The fall in the oil price has reduced pressure on the world's most important bilateral exchange rate – the dollar/euro rate. But this is mostly a belated recognition in financial markets that the eurozone economy is also going through a weak patch.
The fundamental reasons for a strong euro all remain in place: a large and persistent differential in short-term interest rates; higher US inflation and expectations of long periods of slow US growth.
I would expect the current interest rate differential to remain in place, or even to increase, unless the economic situation in the eurozone deteriorated sharply. Last week's tough statement by Jean-Claude Trichet, president of the European Central Bank, should serve as a warning not to take an early interest rate cut for granted. The ECB may even raise rates if the much-predicted slump does not come and inflation remains sticky.
By contrast, the Federal Reserve will either maintain the present level of interest rates for a long time, or even cut it as the jobless rate edges up a few further decimal points. It is not completely unrealistic to expect a fiscal expansion in the US after the presidential election, no matter who wins. With monetary policy as it is now, and in the absence of a crash in global growth, global and US inflation rates could easily rise.
What then? This is the scenario that could give rise to our second tail risk. If US inflationary expectations were to go up to 4 or 5 per cent, we might see an exodus of global investors from the US, forcing an abrupt and destructive adjustment of the US current account deficit.
We have heard time and again that global investors collude as they have an interest to prevent such an outcome, but this is a silly conspiracy theory. Some recent research* by the economists Harald Hau and Hélène Rey suggests that global investors might be inclined to switch out of dollars much faster than some people believe.
The result would be a toxic feedback loop of a falling US dollar, rising US inflation and real financial disturbance of a kind we have not yet seen. It would lead to a huge increase in dollar market interest rates, bank failures and a recession – of the type where nobody would argue whether it fulfils the technical criteria or not. This scenario would constitute a huge crisis for Europeans as well, who would be cracking up under the weight of an overshooting exchange rate.
I am not predicting this scenario either. But given the present set of policies in the eurozone and the US, there is a non-trivial and not too distant tail risk of such a calamitous event. It may also be one worth insuring against.

HOW SHOULD I INCENTIVISE MY SON TO EXCEL?

Being a considerate father, I am planning a monetary incentive scheme to improve my 18-year-old son's marks at school. Instead of executing a relative's bequest as decreed, I intend to spend the €7,000 rewarding good results. During three semesters, he will have to pass 48 preliminary tests, then the main exams in the fourth and last semester. How should I divide up the capital?Robert Saverin, a grateful father
Dear Mr Saverin,
Start by promising more than you can deliver. If you offer €10,000 for a perfect score, you will only need to apologise after your scheme has succeeded. That may seem to undermine your credibility, but the real risk lies the other way: your son may expect to get the money from his doting dad anyway. Discourage this view or your plan will be in vain.
You must also pitch the stakes just right. Research in behavioural economics suggests that trivial rewards are worse than no rewards, but also that performance suffers when too much is at stake.
Finally, focus on the early exams, because success breeds success. Promise your son €200 for every excellent result in these: that should engage his interest without throwing him into a panic. If things go well, the money will run out before the high-pressure exams. But by then he will have mastered his subjects anyway.

US TO TAKE CONTROL OF AIG

The US Federal Reserve announced that it will lend AIG up to $85bn in emergency funds in return for a government stake of 79.9 per cent and effective control of the company - an extraordinary step meant to stave off a collapse of the giant insurer that plays a crucial role in the global financial system.
Under the plan, the latest dramatic intervention by the US government to combat the global credit crisis, the existing management of the company will be replaced and new executives - as yet unnamed - will be appointed. It also gives the US government veto power over major decisions at the company.
The authorities will receive equity giving them a 79.9 per cent stake in AIG. In return, the insurer would receive a bridge loan of $85bn to keep it afloat until it could dispose of billions of dollars in assets. The Fed said the loan was expected to be repaid by the proceeds of selling AIG operating companies. A senior Fed staffer said the most likely outcome was an orderly liquidation of AIG, though it was possible that the firm could survive as an ongoing business.

Fed holds rates as liquidity freezes

The Federal Reserve kept interest rates unchanged at 2 per cent yesterday in spite of the financial hurricane raging in global markets.
Its decision to hold firm against a rate cut came as financial turmoil unleashed by the failure of Lehman Brothers and fuelled by the crisis at AIG convulsed global markets for a second day yesterday as money markets froze.
Some analysts speculated that the Fed could announce a back-to-back loan to the embattled insurer AIG via a third party bank, such as JP Morgan Chase, as a partial substitute for a rate cut in terms of calming market fear of sudden asset sales by the troubled insurance group.
Brutal conditions in European money markets yesterday morning, saw the overnight dollar borrowing rate briefly hit 10 per cent amid a desperate scramble for liquidity. Financial stocks came under severe strain as sentiment was depressed by AIG's deepening plight, a slump in the shares of HBOS, the UK's largest mortgage lender, and a damaging credit rating downgrade for Washington Mutual, the troubled US bank.
Central banks around the world fought surging demand for cash as banks hoarded reserves and refused to lend to each other, injecting about $230bn in overnight and two day liquidity.
At midday in the US the market appeared to be putting equal odds on a big half-point cut in rates and no rate cut.
The Vix volatility index – a gauge of fear on Wall Street – hit levels only exceeded on a single day during the March Bear Stearns crisis, while repo market liquidity dried up as institutions with Treasuries refused to lend them to other institutions for fear of counterparty risk.
“There is still a lot of fear and turmoil in the financial markets,” said David Viniar, chief financial officer of Goldman Sachs, after his firm reported the biggest drop in profits since its 1999 listing.
Shares in AIG, whose share price has been hammered by fears of a credit downgrade, fell more than 70 per cent before paring losses on hope of a government intervention.
Lehman Brothers, the investment bank that filed for bankruptcy at the weekend, reached an agreement in principle to sell most of its US broker dealer operations to Barclays of the UK.

GOOGLE SIGNS UP TO AMBITIOUS PLAN TO CONNECT 3BN TO INTERNET

Google has thrown its weight behind ambitious plans to bring internet access to 3bn people in Africa and other emerging markets by launching at least 16 satellites to bring its services to the unconnected half of the globe.
The search engine has joined forces with John Malone, the cable television magnate, and HSBC to set up O3b Networks, named after the “other 3bn” people for whom fast fibre internet access networks are not likely to be commercially viable.
They will today announce an order for 16 low-earth orbit satellites from Thales, the French aerospace group, as the first stage in a $750m project to connect mobile masts in a swath of countries within five degrees of the equator to fast broadband networks.

FINANCIAL WOES PERSIST AS THE DOLLAR MARCHES ON

Financial markets endured another difficult session yesterday as risk aversion intensified amid persistent concerns about the outlook for the financial sector in general and Lehman Brothers in particular.
European and Asian equities came under renewed selling pressure, although Wall Street showed more resilience.
Meanwhile, worries about the broader economic outlook outside the US helped maintain demand for the dollar, which in turn helped drive US oil prices further down towards $100 a barrel.
“Concerns over the financial sector used to be seen as dollar-negative but now they are dollar-positive as they add to concerns over global growth,” commented Divyang Shah, chief strategist at Commonwealth Bank.
“Until the market eases up on these concerns over global growth, it is difficult to call an end to the current dollar rally.”
Andrew Cates, economist at UBS, said the likelihood of global recession was rising.
“GDP in Japan and the eurozone contracted in the second quarter of 2008, while in the US and the UK output is expected to shrink in the second half of this year,” he said.
“Overall, our recession probability model suggests investors place about a 25 per cent probability on a global recession in the year to come.”
However, there were some tentative signs yesterday that worries about the financial sector were easing.

US ACTS TO CURB COMMODITIES SPECULATORS AS PRESSURE MOUNTS

New steps to curb speculation in commodity markets have been launched by US regulators in response to growing pressure from Washington lawmakers.
The Commodity Futures Trading Commission, the main regulator of commodity markets, told the US Congress yesterday that it was imposing “enhanced control” on dealing by Wall Street banks and forcing them to publish new data on their positions.
The CFTC's measures will focus on swaps, which are private contracts between investment banks and clients such as hedge funds or airlines that provide an exposure to commodity prices without investing directly in futures.
The swap market is mostly unregulated, which some lawmakers in Washington have described as a loophole for speculators and blamed for high oil prices. Swap dealers also receive exemptions for speculative positions limits that apply to other speculators into the commodities markets.
The CFTC admitted in a report that there was “a need for greater transparency in the manner and amount of trading that occurs through swap dealers”.
The move signals a growing concern among regulators about the activities of financial investors into the commodities.
But in a rare dissident vote, Bart Chilton, one of the four CFTC commissioners, said the actions were insufficient. “I do not believe the Commission's recommendations go far enough,” he said.
Additional reporting by Joanna Chung in New York

CITI SETS SIGHTS ON RETAIL INVESTORS WITH RECORD Y315BN SAMURAI ISSUE

Citigroup will this month tap the Japanese market for the second time this year to raise funds with a Y315bn ($2.91bn) record samurai bond issue aimed at retail investors seeking higher yields.
The Japanese market has become increasingly important to financial institutions as a place to raise funds. Demand has been relatively resilient in the face of the credit crunch due to calmer local conditions and a search for higher yields, given domestic base interest rates of 0.5 per cent.
So far this year there have been 56 samurai issues – yen-denominated debt issued by foreign entities to Japanese investors – worth Y1,708.7bn, a 32 per cent increase from the same period last year, according to Thomson Reuters data. Citi raised Y186.5bn in samurai bonds in June.

NO ALTERNATIVE TO NATIONALISATION

A Republican administration has nationalised Fannie Mae and Freddie Mac, though it is nationalisation with US characteristics. As a result, US housing finance has been brought under direct government control and, in the process, the gross liabilities of the US government, properly measured, have increased by $5,400bn (€3,800bn, £3,000bn), a sum equal to the entire publicly held debt and 40 per cent of gross domestic product.
Yet the administration is merely recognising the reality that these “government sponsored enterprises” were undertaking a public purpose, at the public's risk, though not without dispensing vast rewards to management along the way. That is a scandal. Whether the body politic will recognise it remains unclear. Since this is a bipartisan mess, the likely answer is No.
So what has the administration done? Was there an alternative? Will it work? What lessons should be learned?
Formally, the Treasury has put the two institutions into a “conservatorship”, which means they are no longer run in the interests of the shareholders; it has established “preferred stock purchase agreements”, to ensure that each company retains a positive net worth; it has created a new secured lending credit facility for the GSEs and the Federal Home Loan Banks; and, finally, it is initiating a “temporary program to purchase GSE mortgage-backed securities (MBS)”.
The aim, in the words of Henry (Hank) Paulson, US Treasury secretary, is “to protect the stability of the financial market, and to protect the taxpayer to the maximum extent possible” (the latter being notably ominous words). More specifically, the hope is that the “GSEs will modestly increase their MBS portfolios through the end of 2009. Then, to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10 per cent per year”.
Was there an alternative to such measures? I am talking here not of the precise details, but of the broad decision. The answer is No, for two reasons.
First, the institutions were unable to raise the capital they needed to offset the losses on their lending in the collapsing US housing market. This threatened their access to finance. That, in turn, would have drastically curtailed their lending, which accounted for more than 80 per cent of US housing finance earlier this year. The result would have been even swifter declines in house prices and a deeper decline in domestic spending. The former might be no bad thing; the latter surely would be.
Second, the liabilities of these enterprises were held widely abroad, particularly by central banks and governments. A failure to guarantee these liabilities would have shaken confidence in the US government and currency, possibly to a devastating extent.
Will the measures work? If the aim is to sustain the creditworthiness of the GSEs, the answer is Yes, unless there is a general flight from all US government liabilities. The latter is possible, but extremely unlikely.
If the aim is to sustain lending to the housing market, it will, again, work. But it will also slow the needed correction in prices, so creating new losses for those who are persuaded to buy now. Some of those losses will ultimately fall on taxpayers. As the needed correction is slowed, the assumption that the GSE portfolios can be reduced from 2010 seems a fantasy.
What, finally, are the lessons, beyond the obvious one that it is idiotic to believe that the prices of any asset class can only go up? It is that the US unwillingness to recognise that socialised risk demands public control has created not just a scandal, but a gigantic mess.
The US public has ended up with an open-ended guarantee of the liabilities created by supposedly private entities. It is a bad place to be. As Mr Paulson says: “There is a consensus today that these enterprises pose a systemic risk and they cannot continue in their current form.”
Amen to that. At some point, they will have to be broken up and sold off. Given the state of the housing market, that happy day is a long way off.

What can Internet do for us?

Internet has four main applications as follows： l．E－mail． With Internet， people can compose， send， and receive electronic mails． Many people get dozens of messages a day and consider it as their primary way of interacting with the outside world, far outdistancing the telephone and snail mail. 2．News． Newsgroups are specialzied forums in which users with a common interest can exchagne messages．Thousands of newsgroups exist on Internet，on technical and nontechnical topics，including computers，science，recreation，and politics． 3．Remote login．Using the Telnet，Rlogin, or other programs， the user anywhere on Internet can log into any other machine on which he has an account． 4． File transfer．Using the FTP program， it is possible to copy files from one machine on Internet to another． Vast numbers of articles， databases， and other information are available in this way．The Network Computer The network computer， also known as the Internet toaster，Internet appliance or Internet device，is the low cost，no　maintenance desktop device． It allows users to effortlessly connect to　Internet and network resources． From there， they can share any　resource and perform all computing tasks that they currently do on　their PCs． The network computer offers simplicity．Stripped of the　hardware and software that　complicate the PC life and only capable of network access and display, the network computer relies on the network for virtually all software， services， processing， data， and resources． It eliminates the continuous cycle of desktop hardware and software upgrades， pushing that burden instead on to the network． Need the latest word processor or spreadsheet？ Run it off the server， Want to save your work？ Just send it off to the network，where it will be stored secured, and backed up．Firewall： a Measure of Network Security With the popularity of Internet，it is increasingly difficult to guarantee the network security．Sometimes the network was breached because of not only hackers’ visit but also authorized users’ care out of ordinary. Firewall just is an effective measure of network security．It will ensure that all communications conform to your Security policy． Once two lads broke into the university network，created a bulletin board，loaded popular commercial software on it and invited users across Internet to download the packages．Thanks to a firewall, network administrators found the system breached. They checked the audit and found the students’ IP addresses， names and location． The police arrested the two hackers．E－mail One important application for Internet is communication between computer users by the electronic mail，or E－mail． E－mail allows users to electronically transmit and receive messages，text， or data．E-mail functions futher like a mailbox：the user can send messages whether or not the intended receiver is currently on the network and the message is stored， along with a signal for the receiver that indicates that there is a message waiting． E-mail has replaced the telephone for many messages．Users can respond when it is convenient，without being interrupted, and can get their message either on-screen or in the printed form． Electronic Bulletin BoardsAnother interesting application for Internet is the electronic bulletin board which is also called bulletin board service, BBS for short. It allows users to post and retrieve messages that are not directed to a specific user, much like announcements are posted on an office bulletin board. BBS has been used for everything from dating service and want ads to highly specialized applications such as the exchange of research data in a narrow scientific field.

Companies Move to Provide Digital Signature Capabilities

Companies Move to Provide Digital Signature CapabilitiesL O S A N G E L E S, July 6 — At tiny signOnline Inc., executives are working overtime on what could become the Internet’s next gold rush: digital signatures, technology that allows consumers to buy a home or auto without signing a piece of paper. A new law, signed Friday by President Clinton, gives electronically signed documents the same legal validity as paper documents. It opens the door to a market potentially worth billions of dollars. “Eventually, we’re all going to have digital signatures,” said Brad Harvey, signOnline’s co-founder. “You’re going to see the whole world transformed. This really does change the world.”Changing Online CommerceThe new law certainly promises to change online commerce. Electronic signatures can be used for online transactions as simple as routine credit card purchases. The real lure for companies that provide the technology are high-value transactions such as home purchases, online stock trading, government procurement and big corporate contracts. Digital signatures are based on encryption techniques that verify the identities of the buyer and seller in an electronic transaction and prevent documents from being altered after the deal is completed. Most transactions could be completed in a few mouse clicks. Some companies provide hardware that allows users to record their actual signature using an electronic pen and pad. The pad not only measures the signature pattern, but also how much force is used and how quickly the signature is written for comparison with the original. Sony offers a product that digitally records a user’s fingerprints. The user then can access his digital signature only after placing a finger or thumb on a scanner for comparison.Digital Signatures in ActionBefore the federal law was signed, digital signatures already were legal in more than 40 states, and a number of companies are using them. Since March, online brokerage ETrade Securities Inc.’s customers have had the option of using digital signatures to open accounts, bypassing the hassle of signing and mailing paper documents. In a Florida pilot program earlier this year, Baltimore-based eOriginal Inc. claimed to have shaved $750 from the cost of processing a home loan by eliminating paperwork fees. Courts in Salt Lake City have accepted digitally signed documents since March through a system set up by Utah-based iLumin Inc.UPS Foresees ExpansionUPS launched an e-signatures business in 1998 on the expectation that digital technology would pinch its document delivery business. Because e-signatures were not legal in every state, customers were reluctant to use it, said Kim Marchner, who ran the service before becoming manager of UPS’s small business unit. She expects the federal legislation to change things. “I think we have the opportunity to make the standard,” she said. “We’re not sitting back to wait and see.” Officials at Federal Express declined to comment on whether they are developing an electronic signatures business.

Introduction of Lord Francis Bacon

Lord Francis Bacon,(1561-1626) the father of experimental philosophy, whose father had been Lord Keeper, and himself was a great many years Lord Chancellor under King James I. Nevertheless, amidst the intrigues of a Court, and the affairs of his exalted employment (Because of bribery and extortion he was sentenced by the House of Lords to pay a fine of about four hundred thousand French livres, to lose his peerage and his dignity of Chancellor.), which alone were enough to engross his whole time, he yet found so much leisure for study as to make himself a great philosopher, a good historian, and an elegant writer; and a still more surprising circumstance is that he lived in an age in which the art of writing justly and elegantly was little known, much less true philosophy. Lord Bacon, as is the fate of man, was more esteemed after his death than inlifetime. His enemies were in the British Court, and his admirers were foreigners.

of revenge

REVENGE is a kind of wild justice; which the more man' s nature runs to, the more ought law to weed it out. For as for the first wrong, it doth but offend the law; but the revenge of that wrong, putteth the law out of office. Certainly, in taking revenge, a man is but even with his enemy; but in passing it over, he is superior; for it is a prince's part to pardon. And Solomon, I am sure, saith, It is the glory of a man, to pass by an offence. That which is past is gone, and irrevocable; and wise men have enough to do, with things present and to come; therefore they do but trifle with themselves, that labor in past matters. There is no man doth a wrong, for the wrong's sake; but thereby to purchase himself profit, or pleasure, or honor, or the like. Therefore why should I be angry with a man, for loving himself better than me? And if any man should do wrong, merely out of ill-nature, why, yet it is but like the thorn or briar, which prick and scratch, because they can do no other. The most tolerable sort of revenge, is for those wrongs which there is no law to remedy; but then let a man take heed, the revenge be such as there is no law to punish; else a man's enemy is still before hand, and it is two for one. Some, when they take revenge, are desirous, the party should know, whence it cometh. This is the more generous. For the delight seemeth to be, not so much in doing the hurt, as in making the party repent. But base and crafty cowards, are like the arrow that flieth in the dark. Cosmus, duke of Florence, had a desperate saying against perfidious or neglecting friends, as if those wrongs were unpardonable; You shall read (saith he) that we are commanded to forgive our enemies; but you never read, that we are commanded to forgive our friends. But yet the spirit of Job was in a better tune: Shall we (saith he) take good at God's hands, and not be content to take evil also? And so of friends in a proportion. This is certain, that a man that studieth revenge, keeps his own wounds green, which otherwise would heal, and do well. Public revenges are for the most part fortunate; as that for the death of Caesar; for the death of Pertinax; for the death of Henry the Third of France; and many more. But in private revenges, it is not so. Nay rather, vindictive persons live the life of witches; who, as they are mischievous, so end they infortunate.

The Diary

Armed with two over-packed suitcases, we arrived at the airport just in time for my flight. "Well, here we are, the airport," my sister said with a sigh. As I watched her unload my luggage, I could see the sadness in her eyes. This was not easy on her either.We had both been dreading this moment for the past week. One last hug and a final good-bye and I would be on my way to a new life abroad, leaving my beloved sister behind. All my life I had loved airports. To me they were some kind of magic gateway to the world, a place from which to start great holidays and adventures. But today it seemed like a cold and heartless place.As we made our way to the gate we passed through a busload of frustrated holiday goers and their screaming children. I looked at my sister and even though her eyes were filled with tears, she was trying to keep a brave face. "You better go or you'll miss your flight," she said. "I am just going to walk away and not look back," I said, "that would just be too hard."As I held her one last time she whispered, "Don't worry about me, I'll be just fine." "I'll miss you," I replied, and with those last words I was off. As promised, I did not look back, but by the time I reached the custom's office I was sobbing. "Cheer up, love," the tall customs officer said with a smile. "It's not the end of the world, you know." But to me it was the end of the world, as I had known it.While boarding the plane I was still crying. I did not have the energy to put my bag in the overhead locker, so I stuffed it on the empty seat next to mine. As I settled into my chair, a feeling of sadness overwhelmed me. I felt like my best friend had just been taken away from me.Growing up, my sister and I would do everything together. Born barely fifteen months apart we not only looked alike, we were alike. We both had that same mix of curiosity and fear of all things unknown to us.One sunny summer day I was playing outside on the grass when she came up to me and said, "Want to come to the attic?" We both knew that the answer to that question was always 'Yes.'We were frightened of the attic but also fascinated by its smells and sounds. Whenever one of us needed something, the other one would come along. Together we would fight the life-size spiders and battle through the numerous boxes until we found what we needed.Over time the visits to the attic became less scary. Eventually there came a time when we would go by ourselves, but my sister and I stayed as close as ever. When the time came for us to go to college, what better way than for us to go together.My parents were pleased because that way we could 'keep an eye on each other' and of course report back on what the other one was up to. But now that our college days were over and I was off to a foreign country, all I had left were my memories. The plane shook heavily and the bag that I had shoved onto the seat next to me fell on the floor. My aspirin, hairbrush and a copy of the book I planned to read were spread on the floor.I bent over to gather them up when I saw an unfamiliar little book in the middle of my belongings. It was not until I picked it up that I realized that it was a diary. The key had been carefully placed in the lock so I opened it.Immediately I recognized my sister's handwriting. "Hi Sis, What a day it has been today. First you let me know that you are moving abroad and then my boss..."Only then did I realize that my sister had been keeping a diary for the past month and that she was now passing it on to me. She had been scheming to start the diary for the past year but now the time seemed right. I was to write in it for the next couple of months and then send it back to her.I spent the rest of the flight reading about my sister's comings and goings. And even though a large ocean separated us, at some point it felt like she was actually there. It was only when I thought that I had lost my best friend that I realized that she was going to be around forever.

A Woman's Tears

“Why are you crying?” he asked his Mom.　　“Because I'm a woman.” she told him.　　“I don't understand,” he said.　　His Mom just hugged him and said,　　“And you never will”...　　Later the little boy asked his father,　　“Why does mother seem to cry for no reason?”　　“All women cry for no reason”　　was all his Dad could say...　　The little boy grew up and became a man,　　still wondering why women cry...　　Finally he put in a call to God;　　when God got on the phone, the man said,　　“God, why do women cry so easily?”　　God said...“When I made woman　　she had to be special. I made her shoulders　　strong enough to carry the weight of the world；　　yet gentle enough to give comfort...　　I gave her an inner strength to endure childbirth　　and the rejection that many times comes　　from her children...　　I gave her a hardness that allows her to keep going　　when everyone else gives up　　and take care of her family　　through fatigue and sickness　　without complaining...　　I gave her the sensitivity to love her children　　under any and all circumstances,　　even when her child has hurt them very badly...　　I gave her strength to carry her husband　　through his faults　　and fashioned her from his rib to protect his heart.　　I gave her wisdom to know that　　a good husband never hurts his wife,　　but sometimes tests her strengths　　and her resolve to stand beside him unfalteringly.　　I gave her a tear to shed，　　It's hers exclusively to use whenever it is needed.　　It's her only weakness...　　It's a tear for mankind...

Speak out Your Love

There was once a guy who suffered from cancer, a cancer that can’t be cured. He was 18 years old and he could die anytime. All his life, he was stuck in his house being taken cared by his mother. He never went outside but he was sick of staying home and wanted to go out for once. So he asked his mother and she gave him permission.　He walked down his block and found a lot of stores. He passed a CD store and looked through the front door for a second as he walked. He stopped and went back to look into the store. He saw a beautiful girl about his age and he knew it was love at first sight. He opened the door and walked in, not looking at anything else but her. He walked closer and closer until he was finally at the front desk where she sat.　She looked up and asked, “Can I help you?”　She smiled and he thought it was the most beautiful smile he has ever seen before and wanted to kiss her right there.　He said, “Uh... Yeah... Umm... I would like to buy a CD.”　He picked one out and gave her money for it.　“Would you like me to wrap it for you?” she asked, smiling her cute smile again.　He nodded and she went to the back. She came back with the wrapped CD and gave it to him. He took it and walked out of the store.　He went home and from then on, he went to that store every day and bought a CD, and she wrapped it for him. He took the CD home and put it in his closet. He was still too shy to ask her out and he really wanted to but he couldn’t. His mother found out about this and told him to just ask her. So the next day, he took all his courage and went to the store as usual. He bought a CD like he did every day and once again she went to the back of the store and came back with it wrapped. He took it and when she wasn’t looking, he left his phone number on the desk and ran out...　RRRRRING!!!　One day the phone rang, and the mother picked it up and said, “Hello?”　It was the girl!!! The mother started to cry and said, “You don’t know? He passed away yesterday...”　The line was quiet except for the cries of the boy’s mother. Later in the day, the mother went into the boy’s room because she wanted to remember him. She thought she would start by looking at his clothes. So she opened the closet.　She was face to face with piles and piles and piles of unopened CDs. She was surprised to find all these CDs and she picked one up and sat down on the bed and she started to open one. Inside, there was a CD and as she took it out of the wrapper, out fell a piece of paper. The mother picked it up and started to read it. It said: Hi... I think U R really cute. Do u wanna go out with me? Love, Jocelyn.　The mother was deeply moved and opened another CD...　Again there was a piece of paper. It said: Hi... I think U R really cute. Do u wanna go out with me? Love, Jocelyn.　Love is... when you’ve had a huge fight but then decide to put aside your egos, hold hands and say, “I Love You.”

What is Windows?

Microsoft Windows is a software system based on graphics, which can run under MS-DOS. Like a huge shelf arranged orderly, Windows provides a user-friendly graphical interface including pop-up menus, scroll bars, dialogue boxes, icons and etc. The work under Windows seems quite comfortable and natural. So, someone says: Windows is a user’s paradise full of beautiful icons, graphics and menus.The Characteristics of WindowsWindows has two evident characteristics :(1) GUI-graphical user interface. In Windows, the computer screen is referred to as a desktop. The desktop displays all your work in rectangular areas called windows. You open a windows when you run an application and close the windows when you quit from an application program. You can easily drag a window to change its size and location with the mouse. You arrange windows on the desktop just as you move work items around on your actual desk.(2) Multitask operation. With Windows, you will find it easy to start up and work with application programs. You can run more than one application at a time, transfer information between them and switch quickly among them.Windows Modes Windows can run in two modes : 386 enhanced mode and standard mode. When you type “win ”,Windows starts in the most appropriate mode for your system. You can find out which mode Windows is running by choosing the “About ” command from the “Help” menu in Program Manager. Windows uses the following criteria to select the running mode: Windows stars in 386 enhanced mode if you have an 80386 SX computer (or higher) with at least 640k of conventional memory plus 1024K of extended memory. However, more memory is required to use the more advanced features of Windows . Windows starts in standard mode if you have an 80286 computer (or higher ) with at least 640K of conventional memory and 384K of extended memory . Windows also starts in standard mode on 80386 computers that have less than 2MB of free memory .Windows Initialization Files Windows initialization files contain information that defines your Windows environment. Windows and its applications can use the information stored in these files to configure themselves to meet your needs and preferences. There are two standard Windows initialization files: WIN.INI, which primarily contains settings that Windows maintains to customize your Windows environment according to your preferences. SYSTEM.INI, which primarily contains settings that customize Windows to meet your system’s hardware needs.Program Manager of WindowsProgram Manager is the central to the operation of Windows.It starts automatically whenever you start Windows and continues to run as long as you are using Windows．Starting applications from Program Manager is easy． You simply choose the program for the application you want to use and Program Manager dose the rest . When you do run other applications , Program Manager runs in the background or on your desktop as an application icon .The Accessories Group, the Games Group and the Windows Applications Group are represented as identical group icons at the bottom of the Program Manager window.You must return to Program Manager when you want to end your Windows session. You cannot quit Program Manager without also quit Windows.

Multimedia Computer Technology

What Does the Multimedia Actually Mean？ Literally, multimedia means TWO or more media．If the publisher of this book Wanted to join the Current hype about　multimedia，he could advertise the book as using multimedia　technology．After all，it contains two media：text and graphics(the figures). Nevertheless，when most pepole refer to multimedia，they generally mean the combination of two or more continuous media，that is， media have to be played during some well-defined timed times interval, usually With the users interaction．In practice，the two media are normally audio and video，that is，sound plus moving pictures． In the multimedia environment，we have graphics and text at the same time，we can also add the photograph, animation，good-quality sound, and full motion video．All of the technologies make computers more interesting and much easier to use．For example, a multimedia program can play a segment of movie：a cat was playing a reel of thread, with "mewing…" The tableau can a be immediately captured and pasted to a text at the side of a paragraph of words．CD－ROM CD－ROM is an optical technology that is used to make compact disks for CD stereo systems；it has now been adapted to store data for computers．CD disk is an optical disc，on which data is recorded as a set of dips in the surface．When a laser beam shines across the dips, the reflected distortion represents the data. Optical disc has a 600 megabyte capacity and are well suited for the computer applications needing the vast storage．The playback effect of optical discs for music is very perfect，no hiss and crackle as with other photo-records．A computer system must have a CD drive that is designed to read the disks and translate the data into a form it can process．CD disks can store huge volumes of data and are very useful for reference material an encyclopedia，for example．However，as the name（read-only memory）implies，CD disks cannot be written on or changed in any way．Musical Instrument Digital Interface Musical Instrument Digital Interface，or MIDI，is a communication interface provided on virtually every synthesizer made today. It provides a standard that allows Products by different companies to communicate with each other. MIDI’s original purpose as to allow a musician to control several synthesizers from one keyboard rather than connecting a number of keyboard-equipped synthesizers，to produce the multilayered sound．The MIDI standard provides for 16 channels．You can assign each channel to a specific synthesizer or synthesizer voice. If you record a sequence and assign it to channel 5, for example, only an instrument set to listen on channel 5 plays back the sequence, this feature enables MIDI networks to sound like orchestras．Audio An audio（sound）　wave is a one-dimensional acoustic（pressure） wave. When an acoustic wave enters the ear， the eardrum vibrates， causing the tiny bones of the inner ear to vibrate along with it， and sending nerve pulses to the brain． These pluses are perceived as sound by the listener． Audio waves can be converted to digital form by an ADC （Analog Digital Converter）． An ADC takes an electrical voltage as input and generates a binary number as output． Music， of course，is just a special case of general audio，but an important one． The representation， processing，storage, and transmission of such audio signals are a major part of the study of multimedia systems.Virtual Reality－Enter a Fancy Space In the science fiction "Neuromancer"， William Gibson describes　a space，Cyberspace， controlled by a computer． Once his brain was linked with the computer，a man would undergo all experiences in　the space． His various senses in the realistic world would be replaced　with a series of new electric stimuli．The Cyberspace is regarded as a　goal of future virtual reality． In fact， virtual reality is exploiting software and hardware of　the computer to generate a simulation of an environment, such as an easeful classroom，a breathtaking action and so on. In such a simulated environment, one would have an immersed sense． For　example, in a Virtual space，Students can "dissect" a human body，　"visit" ancient battlefields， or "talk" with Shakespeare，…

Shattered Illusions

There is a story told about how Neill set about winning over one particular boy who was always causing trouble and who clearly regarded all teachers with a hostile eye. On one occasion Neill, out taking a stroll, had just rounded a corner at Summerhill when he came across the boy playing on his own. The boy, not noticing he was no longer alone, picked up a stone and threw it through one of the school windows. Turning he saw Neill. Instead of finding himself shouted at angrily as he expected the boy was startled to see Neill bend down, pick up a stone and hurl it at another window. The boy had to pay to get the window repaired, as did Neill. But he thought this a small price to pay for establishing a bond between himself and the boy, whose behaviour improved afterwards.Neill was a remarkable character who knew just when to be firm and just when to adopt a lighter touch when handling children. Not everyone is so successful. Willie Russell, the playwright, likes to tell of the time when he had freshly graduated from teacher training college and had just begun work as a probationary teacher. This was in a rather tough area of Liverpool. On his first day at the school he was left to do playground duty on his own, rather a daunting experience for one so new to the job. Standing in the middle of the playground surrounded by milling children at morning break he turned to see one of the children throwing a stone at a school window. When the boy saw that he had been spotted by a teacher his face fell. This was at a time when the punishment for misbehaviour at most schools was a sound beating. Fortunately for this boy, Russell, fresh from training college with his idealism undimmed by grim reality, remembered the story about Neill. ‘Ah-ha,‘ he said to himself, ‘I know just what to do in this situation.‘ Stooping down he picked up a stone and propelled it through another window. Turning to smile triumphantly at the boy his satisfaction was suddenly shattered by the sound of dozens of windows being hit by flying stones. Unfortunately he had failed to take into account the difference between his situation and the one which Neill had faced, namely that he and the boy were not alone. All around him dozens of mischievous schoolboys had been only too glad to rush to emulate ‘Sir‘. It was at this point in his career that Russell decided that perhaps he was not quite cut out to be a teacher. By hurling a stone at the window, Neill has probably put the boy in a new situation, a situation in which the boy watches someone else break a window and therefore break the rule. Instead of enjoying his own mischief which is in fact a revenge against his teachers, the boy had a chance of experiencing what others may feel about a broken window. Another important implication here for the boy can be that teachers are also humans and can also make mistakes or even run into mischief. But it is no big deal correcting the mistakes. Furthermore, there is no need to be an enemy of someone who is trying to help him correct himself, someone like a teacher.Russell failed to take into account that, unlike Neill, he and the boy were not alone - with disastrous results! Deciding after this that he was not suited to teaching he left to take up playwriting. Most of his plays are very imaginative and funny. A bit like this story, in fact.

My Dear Parents

If anybody asks me, ‘what is your most important thing in your life?” My answer isn’t myself, money, my future lover, or…, but my parents. I love them. Although I never said that words to them, I think we seldom said that words to each other, but we know we love each other. I can remember thatwhen I was a small girl, my parents took me everywhere I wanted … In my memories, my mother always covered her five fingers in my arse. Now I’m an adult, I sometimes told my relatives that she used to be a cruel mother.And she explained that how mischievous I used to be, and she was so worried about me. Though, she was a bit strict when I was young, and a bit talkativenowadays. But I still think she is the most beautiful woman in my mind. Even though she is getting older, she always wears fashionable clothes and shoes.She is so active and beautiful, I think. But I don’t like the sentence she always tells me, it just like defiance, “Dear! Look, your Mom has so nice finger!” Oh, of course I admit that she really has so nice finger. But your know, never tell girls(especially fat girls) how nice your finger is, please! That’s my Mom, a fashionable woman. I love her! My Dad, a humorous “big Boy”, he loves me very much, and also my Mom. Although I’m 20 years now, he always calls me in a sweet voice. Sometimes Ireally couldn’t stand it, but if he didn’t call me in that way, I couldn’t bear much more, I think! Perhaps he seldom taught me a lesson, so I remembered the onlyfour times he beat me, and I remembered very deeply. Every time I recalled these four times, he always said, “Oh, no! You still remember that, why do youhave so good memory? But do you remember I was you “nianbu” in winter? Do you remember I enclasp you through the whole night just because you crying allthe time? Do you remember…? “I’m afraid I can’t, Dad! “Oh, No!” I love my Dad, and I know that he loves me so deeply, because I’m his little princess. Everybodysays that I have a warm family. We like friends but not like the traditional parents and children. Whatever, I like my family, I love my parents, and I’ll love themforever, even the next transmigration!
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Duo Shi Zhi Qiu -- Tale of an eventful age


[ 2008/02/12 12:15 by lokytom ]
As a saying goes, the wheel of fortune is constantly spinning in turns, to be in honor for thirty years will turn to be in disgrace for forty years, and prosperity swings to poverty, and then poor turns to wealthy, it keeps rotating beyond your control. Nevertheless, a lot of people don’t believe it and regard it as a kind of superstition. At any rate, I strongly believe it and my gut feeling tells me that our life is controlled by our designated destine. As Confucius says “life and death have destined times; wealth and honors rest with heaven”. When I was only little, I heard the older generation in my family boast my forebears were super rich for many generations. Though later on when it came down to my great grandpa’s generation, the overall circumstances were declining, he still managed to make some fortune out of speculating in trade of gold bullions. Nevertheless, unfortunately my great grandpa at last still lost all his fortune in his greedy speculation; therefore, it was the end of a good fortune and a beginning of a bad cycle.A Chinese phrase reads --- Duo Shi Zhi Qiu – it is an eventful time, I was borne in autumn, as if it has destined my life to have a lot more pitfalls than anybody else does. Truly in my memory, it has never been a plain sailing in my life since I was borne in this big family, which had already downgraded to an only better-off status in the old Shanghai times. Anyhow, when I finally came to this world, the old Shanghai was already gone by, so was my better-off family. No wonder my mother was saying that I didn’t even feel bothered to utter a sound when I finally pushed out of her body, as if I already knew there was nothing there for me to cheer for.The old Shanghai, once upon a time, was a magnificent place, a bright pearl of East; a worldwide recognized the paradise for Adventurers for all walks of life. The old Shanghai was a grotesque shining mosaic and a powerful melting pot nurturing and culturing generations upon generations of good and bad men and women. If Hong Kong is regarded being hatched out from a sordid fishing village to today’s thriving and prosperous international Metropolitan City, whereas Shanghai certainly has had a great leap forward from a squalid coastal enclave to a gorgeously brilliant gem of Cosmopolis in the world.My grandpa told me the old Shanghai was a famous “sink of iniquity”, for it had more than 600 brothels spreading across every corner of this dazzling human world with its myriad temptations. The old British Club was an eyewitness account of the decadent Shanghai. It was over there the great Taipans, once upon a time, sipped their “stengahs” with a big cigar between their fingers after sunset. It was over there the white Russian girls were twisting their curvy body on the toe-point and lustfully showing their sexy long legs on the stage. The racecourse, the numerous gambling houses, and the gaudy western-style abodes and skyscrapers with ever-lasting flashing neon-signs on the top of building made a life a sharp and striking contrast with the sweating, scrawny coolies pulling the heaviest load of carts crossing the garden bridge and the haggard-looking, flea-ridden beggars howling along the street in the blizzards. Grandpa once teased me saying that I was coming too late to enjoy the old good times they used to have, but at that time I didn’t quite understand what he really meant, as all I knew was the old Shanghai was the glorious birthplace of the Chinese Communist Party in 1921. From the day of founding its organization to the day of becoming the founder of the People’s Republic of China, Shanghai was always playing an important role in milking the Chinese Communist Party and mothering the birth of a brand New China, despite the old Shanghai was also the old homes of Jiang, Kong, Song, Chen Dynasty and the hotbed of the “Green Gang” and “Red Gang”.It is said that the “Green Gang” and “Red Gang” were the backbone of Jiang Jie Shi Nationalist Party and once they even assisted Generalissimo Jiang Jie Shi and his Nationalist Army in 4.12 massacre killing hundreds and thousands of revolutionary people, but in my eyes, the notorious “Gang of four” and their historically unprecedented Cultural Revolution was multiple folds worse than these Green and Red gangs, as they have completely ruined the life of more than three generations and tarnished millions upon millions innocent souls of people. When I was old enough to go to kindergarten, on the first day, I was told we were the luckiest generation ever in China, as we were borne in the New China and were growing up under the Red flag. However, were we the luckiest generation? No! What had actually happened to us was nothing but political campaigns after campaigns, turmoil upon turmoil. I was told we must listen to Chairman Mao and follow the Communist Party and become Chairman Mao’s good children, so my first song that I learnt to sing as soon as I was able to talk was“The Red is the East and rises the Sun”.I was told to study hard for the course of the Chinese revolution, so my first nursery rhyme I learnt by heart was“Sparkling is the star in the sky,Looking towards the direction of Beijing by standing on the bridge,Keep looking until you see the TaiAnMen Square,Our greatest Savior is Chairman Mao.”When I went to primary school, I was told the foreign language was a must tool in a struggle against the Imperialism, the Revisionism, and the Reactionary, so my first English lesson was nothing but“Long live Chairman Mao and long long life to Chairman Mao”,And again I was told there were about two-third of people in the world still living in the deep water and scorching fire – an abyss of suffering and extreme miseries, so my first lecture for the revolutionary politics was“Never forget the class struggle”.The wheel of fortune has never stopped spinning, good to bad and bad to good, and no one is able to reverse the course of a life journey. Whatever my life is going to be like at the end of my day, despite it has been relentlessly destined to have a lot of pitfalls, I would always give it my best shot, as I firmly believe the wheel of fortune will turn.

More Than One Way to the Square

We were standing at the top of a church tower. My father had brought me to this spot in a small Italian town not far from our home in Rome. I wondered why.“Look down, Elsa,” Father said. I gathered all my courage and looked down. I saw the square in the center of the village. And I saw the crisscross1 of twisting, turning streets leading to the square.“See, my dear,” Father said gently. “There is more than one way to the square. Life is like that. If you can't get to the place where you want to go by one road, try another.”Now I understood why I was there. Earlier that day I had begged my mother to do something about the awful lunches that were served at school. But she refused because she could not believe the lunches were as bad as I said.When I turned to Father for help, he would not interfere. Instead, he brought me to this high tower to give me a lesson. By the time we reached home, I had a plan.At school the next day, I secretly poured my luncheon soup into a bottle and brought it home. Then I talked the cook into serving it to Mother at dinner. The plan worked perfectly. She swallowed2 one spoonful3 and sputtered4, “The cook must have gone mad!” Quickly I told what I had done, and Mother stated firmly that she would take up the matter of lunches at school the next day!In the years that followed I often remembered the lesson Father taught me. I knew where I wanted to go in life. I wanted to be a fashion designer. And on the way to my first small success I found the road blocked. What could I do? Accept the roadblock5 and fail？Or use imagination and wits to find another road to my goal？I had come to Paris, the center of the world of fashion, with my sketches6. But none of the famous fashion designers seemed interested in buying them. Then one day I met a friend who was wearing a very beautiful sweater. It was plain in color, but it had a lovely and unusual stitch7.“Did you knit8 that sweater?” I asked her.“No,” she answered. “It was done by a woman here in Paris.”“What an interesting stitch!” I continued.My friend had an explanation. “The woman her name is Mrs. Vidian—told me she learned the stitch in Armenia, her native country.”Suddenly I pictured a daring design knitted into such a sweater. Then an even more daring idea came to me. Why not open my own house of fashion? Why not design, make and sell clothes from the house of Schiaparelli9! I would do it, and I would begin with a sweater.I drew a bold black and white butterfly pattern and took it to Mrs. Vidian. She knitted it into a sweater. The result, I thought, was wonderful. Then came the test. I wore the sweater to a luncheon which people in the fashion business would attend. To my great pleasure, the sweater was noticed. In fact, the representative of a large New York store wanted 40 sweaters to be ready in two weeks. I accepted the order and walked out on a cloud of happiness.My cloud disappeared suddenly, however, when I stood in front of Mrs. Vidian. “But it took me almost a week to knit that one sweater,” she said. “Forty sweaters in two weeks? It is not possible!”I was crushed to be so close to success and then to be blocked! Sadly I walked away. All at once I stopped short. There must be another way. This stitch did take special skill. But surely there must be other Armenian women in Paris who knew how to do it.I went back to Mrs. Vidian and explained my plan. She really didn't think it would work, but she agreed to help.We were like detectives10, Mrs. Vidian and I. We put ourselves on the trail11 of any Armenians who lived in Paris. One friend led us to another. At last we tracked down 20 women, each of whom could knit the special stitch. Two weeks later the sweaters were finished. And the first shipment from the new house of Schiaparelli was on its way to the United States!From that day a steady stream of clothes and perfumes12 flowed from the house of Schiaparelli. I found the world of fashion gay13 and exciting, full of challenge and adventure. I shall never forget one showing which was really a challenge. Once again Father's advice helped me. I was busy getting ready to show my winter fashions. Then just 13 days before the presentation the sewing girls were called out on strike. I found myself left with one tailor and woman who was in charge of the sewing room! I was as gloomy14 as my models and salesgirls. “We'll never make it,”one of them cried.Here, I thought, is the test of all tests for Father's advice. Where is the way out this time? I wondered and worried. I was certain we would have to call off the presentation or else show the clothes unfinished. Then it dawned on15 me. Why not show the clothes unfinished?We worked hurriedly. And, exactly 13 days later, right on time, the Schiaparelli showing took place.What a showing it was! Some coats had no sleeves; others had only one. Many of our clothes were still in an early stage. They were only patterns made of heavy cotton cloth. But on these we pinned sketches and pieces of material. In this way we were able to show that what colors and textures the clothes would have when they were finished.All in all, the showing was different. It was so different that it was a great success. Our unusual showing caught the attention of the public, and orders for the clothes poured in.Father's wise words had guided me once again. There is more than one way to the square always.