When sleep leaves you tired

Ask readers of this newspaper if they're getting adequate sleep, and many would probably say "Ha!"

Twenty percent of Americans sleep less than six hours a night, and nearly one-third have lost sleep worrying about financial concerns, according to the National Sleep Foundation, which recommends that adults get seven to nine hours. "Our society thinks sleep is for slackers," says Darrel Drobnich, the organization's chief program officer.

Millions of Americans aren't getting enough sleep, and even those that are may not be getting the most restful sleep possible. Health columnist Melinda Beck tries out the Zeo, a gadget that monitors and tracks brain waves during the different stages of sleep.

But all that lost sleep is taking an insidious toll. Chronic, inadequate sleep raises the risk of cardiovascular disease, depression, diabetes and obesity. It impairs cognitive function, memory and the immune system and causes more than 100,000 motor-vehicle accidents a year. Sleep deprivation also changes the body's metabolism, making people eat more and feel less satisfied.

Studies presented at the American Association of Sleep Medicine's annual meeting in Seattle this week also found that inadequate sleep is associated with lower GPAs among college students and with elevated levels of visfatin, a hormone secreted by belly fat that is associated with insulin resistance.

What many people don't realize is that even if they log respectable time in bed (known as TIB among sleep researchers), they may be getting poor-quality sleep, with not enough of the restorative phases. REM, the Rapid Eye Movement phase in which dreaming occurs, is crucial for consolidating memories, learning, creativity, problem-solving and emotional balance. Deep, or slow-wave sleep, when the body secretes human growth hormone, is critical for development and physical repair. Both REM and deep sleep decline with age and are highly vulnerable to disruptions, from caffeine and alcohol to anxiety and a variety of sleep disorders.

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One tip-off that you haven't gotten enough restorative sleep is trouble waking up and excessive daytime sleepiness (a condition known as EDS). "People say, 'Oh, I don't have a sleep problem. I can fall asleep anywhere, anytime' -- but that means you are excessively sleepy," says Charles Czeisler, a professor of sleep medicine at Harvard Medical School.

Other symptoms of sleep deprivation include mood changes, difficulty focusing or remembering and a chronic need for caffeine, which can then create a vicious circle of dependence and disruption. That would be me.

Finding out what's going on in your sleep generally requires spending the night in a professional sleep lab hooked up to lots of wires and monitors. But I've been testing a new home-sleep monitor called the Zeo Personal Sleep Coach that lets people track their sleep patterns nightly in their own bedrooms.

You sleep wearing a soft headband with sensors that monitor your brain waves and send signals wirelessly to a device that looks like a sleek clock radio. It displays whether you are awake or in light sleep, deep sleep, or REM sleep, in real time, all through the night.

"If you can measure it, you can manage it," says Stephan Fabregas, one of two recent Brown University graduates who invented the Zeo because they were looking for a way to wake up feeling less groggy after late nights.

Of course, not everyone needs a fancy gadget to tell them whether they are sleeping properly. But I was stunned by my results: The Zeo showed that I woke up numerous times and was awake for long stretches of the night, without having any recollection. (Perception of time is often distorted at night -- many people with insomnia actually sleep more than they think they do.) Even though I was in bed for six or seven hours each night, I was averaging only about four hours of real sleep and very little REM or deep sleep. No wonder I feel so tired!

The Zeo stores the information on a memory card you can upload to a Web site, which helps track your sleep patterns and sends daily coaching tips for getting better sleep. The $399 device comes with six months of daily email coaching, which can be extended at a cost of $99 for each additional six months. (Currently, it's available only online at www.myzeo.com.)

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To help you keep track of your sleep, the Zeo also gives you a "ZQ" score every morning, based on the quantity and quality of your sleep the night before. There's no ideal ZQ -- you're comparing your own score from night to night. But the average for people in their 20s is 86; for those in their 40s, it is 74; and for those in their 50s, it is 67, since sleep quality declines with age.

My ZQs bounced from the 40s to a dismal 15 the first week. Switching to decaf after 3 p.m. and making an effort to get to bed earlier helped me bring my score into the 50s the second week. ("Having caffeine even first thing in the morning can induce changes in brain activity during sleep," says Kenneth Wright, director of the Sleep and Chronobiology Lab at the University of Colorado at Boulder and one of Zeo's scientific advisers.) I also noticed that the nights when I had the longest stretches of wakefulness were those when my column was due -- probably a sign that I was still thinking about it long after turning in.

Everybody's sleep and sleep disruptors are different. Todd Johnson, a 40-year-old border-patrol agent in Caribou, Maine, and one of ZEO's early testers, found that reading before he went to bed helped reduce his wake time and bring his ZQ from the 20s into the 60s. "You can try something that night and see the results in the morning," he says. Another early tester, Tim Guirl, who teaches at a community college in Seattle, found that he had more restorative sleep if he didn't exercise too close to bedtime and eliminated a large late-night snack.

Other recommendations from Zeo include reducing noise, light and disruptive influences like pets in the bedroom; having a "power-down" hour before bedtime with no email, no Internet use, no cellphones and no BlackBerrys; and keeping a consistent sleep schedule. And if you find yourself awake and worrying, Zeo recommends getting out of bed and writing down what you're thinking about in a "worry journal."

Zeo says its brain-wave results are similar to those from professional sleep labs -- but only about 140 people have tested it so far. And the Zeo isn't designed to diagnose actual sleep disorders, which plague an estimated 70 million Americans -- you need to see a doctor for that.

To see if something besides drinking coffee and thinking great thoughts was affecting my sleep, I underwent a sleep study at the Sleep Health Center connected with Brigham and Women's Hospital in Brighton, Mass. A polysomnography, as such tests are called, measures brain waves like the Zeo, but also heart rate, respiratory rate, oxygen saturation, body positions and movements. It took about 45 minutes to have all of the sensors and wires attached -- and then a little longer to get comfortable enough to sleep.

To my surprise, the study found that I had a fairly severe case of Periodic Limb Movements, episodes of involuntary muscle movements in the night. About 10% of adults have PLMs. Many don't even notice; sleep partners are often bothered more than the sleepers themselves. But PLMs can be very disruptive if they are accompanied by arousals from sleep. I was averaging 42 arousals per hour. According to David White, another Harvard sleep physician who prescribed the study for me, PLMs can be due to an iron deficiency or medication side effects, and they are often related to "restless-leg syndrome," which causes an irresistible urge to move the legs, day or night. Medications like Requip can minimize the movements; I'm going to give them a try.

The study also showed I had some obstructive sleep apnea, in which the airway narrows, especially when the muscles relax in sleep. People with OSA stop breathing momentarily until a lack of oxygen alerts the brain, which wakes them up with a gasp. These mini arousals can occur as often as 70 times an hour, leaving the sufferer exhausted and at risk for heart disease, stroke and atherosclerosis. An estimated 4% of men and 2% of women have OSA. One telltale sign is having a shirt-collar size larger than 17 inches. Another sign is loud snoring, although I certainly don't do that. ("Women never snore -- they all deny it," says Dr. White.)

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Zeo

The Zeo sleep monitor lets people track their sleep patterns at home.

The most effective treatment is a Continuous Positive Airway Pressure machine, which blows air through the nose to keep the airway open. My OSA isn't that bad -- yet. Other remedies include a dental appliance that helps prop the airway open and losing weight, which helps reduce the airway blockage.

Dr. White is also chief medical officer for Philips Home Healthcare, which makes a watch-like monitor, called an Actiwatch, that tracks whether the wearer is moving or still, roughly corresponding with sleep. The Actiwatch doesn't show sleep phases; it generally diagnoses problems with jet lag and body clocks. I wore one for a week, and although I'm still a night owl, it showed nothing amiss in that area.

All in all, "there are plenty of ways you can improve your sleep," Jason Donahue, another Zeo founder, tells me cheerily. This week, I'm starting in on Zeo's tips on keeping disturbances in the bedroom to a minimum. The dog may have to find a new place to sleep.

Epidemia de histeria

Gabriel Guerra

Para Lorenzo y Lorenza Lazo, en recuerdo de Concha…

Dicen que la ignorancia no mata, “nomás ataranta”, pero no estoy tan seguro. La cantidad de tonterías que he escuchado, visto y leído a raíz de la emergencia supera con mucho mi capacidad de digestión.

México y buena parte del mundo parecen estar infectados por otro tipo de virus, que nada tiene que ver ni con las aves ni con los cerdos, pero sí mucho con los humanos. Es un virus que ataca el sistema nervioso central y provoca graves trastornos mentales, afectando la capacidad de raciocinio y el uso de la lógica elemental. Es altamente contagioso y tiene un efecto multiplicador y potenciador sobre sus víctimas, que además aumenta conforme más lejos se encuentran de otros —más reales— focos de infección.

Este nuevo virus tiene una capacidad inusitada para volver irracional al más sensato, hipocondriaco al más saludable y paranoico al más cuerdo. Entre sus primeros síntomas se cuentan la capacidad de creer cualquier teoría descabellada, de repetirla sin pena y sin filtro alguno. Quienes contraen este nuevo virus creen que todo extraño es sospechoso y posible portador de otro, el más famoso pero menos peligroso H1N1, que solamente afecta las vías respiratorias pero que hasta el momento no ha mostrado riesgos para la inteligencia humana. El primero, el virus de la histeria humana, está totalmente fuera de control y no hay antiviral ni vacuna que proteja eficazmente contra su contagio.

Sus alcances no reconocen fronteras ni clases sociales, no distinguen ideologías, nacionalidades ni profesiones. Se enferman lo mismo gobiernos como el cubano y el israelí que periodistas usualmente serios y otros que no lo son tanto; futbolistas que no siempre se caracterizan por su conducta intachable que habitantes de países desmemoriados; adquiere tintes religioso-carnívoros como en Egipto y vuelve locos a agentes migratorios en China, a aldeanos despistados en Guerrero, a políticos y politólogos, a comerciantes y mercaderes…

Conocemos todos las más obvias manifestaciones del mal, como el hostigamiento y discriminación a mexicanos, estén o no infectados por el H1N1, dentro y fuera de nuestro país. Nos escandaliza que los recluyan en China, pero en México la fobia a los habitantes del DF cunde por doquier y se dan casos, hasta ahora aislados, de agresiones físicas y verbales. Naciones o pueblos que en teoría podrían guardarnos agradecimientos históricos cancelan vuelos (Argentina y Cuba) o se mofan abiertamente de los nuestros (Chile) o ignoran toda evidencia científica (Israel).

No es que un boicot turístico cubano vaya a afectarnos gravemente, ni que la suspensión de vuelos desde y hacia Argentina vaya a tener repercusión más allá de las industrias restauranteras y de entretenimiento masculino, pero llama la atención la rapidez y la tontería de los funcionarios que decidieron esas medidas. Los salva un poco el ejemplo de Egipto, cuyo gobierno decidió sacrificar a toda la población porcina de ese país, no sé bien a bien si por preocupaciones sanitarias o para quedar bien con sus radicales islámicos…

Hay personajes públicos que creen que pueden impunemente cuestionar la realidad de una epidemia que podría convertirse en algo peor, y que no se dan cuenta de que su paranoia sólo es superada por su estulticia. Teorías de conspiración dignas de películas de los años 60 aparecen bajo el cobijo de individuos que uno creería más cuerdos, a la vez que otro sector de la población se aferra a las supersticiones para contener el contagio. El cubrebocas se convierte en amuleto mientras que el agua y el jabón son súbitamente redescubiertos por un país que se preciaba de ser limpio pero que —ahora lo vemos— fue dejando de serlo.

Del comercio mejor ni hablar. No sé si son más condenables los revendedores de cubrebocas que los acaparadores silenciosos de Tamiflu, pero me queda claro que las empresas que decidieron lanzar sus campañas publicitarias para aprovecharse de la emergencia merecen algo más que un llamado de atención. Mal hacen los vendedores de desinfectantes o de alimentos que no cuidan el buen gusto, pero resultan criminales los que promueven productos contra la gripa común anunciando que NO requieren receta médica, cuando las autoridades se han cansado de advertir contra la automedicación y cuando hasta el menos informado sabe que lo peor que se puede hacer ante un síntoma es encubrirlo con medicamentos. Quien se anuncia así, en tv abierta durante los partidos de futbol en domingo (y si la Cofepris necesita más datos para ubicarlos estamos en problemas) está poniendo en riesgo a la población.

Malas son la ignorancia y la histeria colectivas, pero peor aún el afán de lucro en circunstancias como la que vivimos. En algunos delitos se puede argumentar la locura como atenuante, pero no la estupidez.

gguerra@gcya.net

www.gabrielguerracastellanos.com

La influenza y nosotros

José Woldenberg
30 Abr. 09

Junto al brote epidémico de la influenza porcina podemos observar un espectáculo: el de nosotros, los comentaristas. Dado que no existe acontecimiento relevante que no sea acompañado de una estela de apostillas, análisis y comentarios, seguir estos últimos es como observar las sombras que proyectan las figuras o los ruidos de los motores en una carrera de autos. Se trata del acompañamiento que modela y modula el ambiente "cultural e intelectual" del momento, del aura de opinión que rodea a la sociedad, del sentido común impreso. No resulta anodino y deja su impronta en las muy diversas lecturas que las personas hacen de los sucesos. Por mi parte, ofrezco una tipología lírica, subjetiva e inacabada de nosotros, los opinadores, ante la crisis de salud. (No se trata de categorías excluyentes. Una sola persona puede ser ubicada en dos o más casilleros. Y además, cualquiera puede contribuir con nuevos y más decantados tipos).

El experto exprés. De inmediato, luego de dos o tres consultas (telefónicas o bibliográficas), el lego se transforma en una autoridad en el tema. Cuatro o cinco ideas tejidas de manera armónica, más seguridad, más contundencia al enunciarlas, crean un perito en la materia. El nuevo especialista explica, analiza, pontifica. Maneja ese conocimiento (superficial) con soltura y durante los días que corren será un consumado epidemiólogo.

El escéptico. Cada dicho de las autoridades, cada medida tomada, cada cifra sobre la epidemia, le parecen sospechosas. Y a él nadie lo puede engañar. Años en el oficio lo han convertido en un desconfiado contumaz. Sabe o intuye que nada es como parece; que detrás del tono seco del secretario se esconde un secreto que es necesario develar y que los datos deben estar trucados por una estrategia "comunicacional" o por simple inercia. Para él, la suspicacia es sinónimo de inteligencia y si la segunda se encuentra un poco maltrecha, la primera se mantiene incólume.

El sagaz opositor. De inmediato descubrió la lentitud de la respuesta de los gobiernos, la excesiva o la poca información que ofrecen, las contradicciones en sus dichos y decisiones, las pretensiones de utilizar la crisis para fortalecer su imagen. En una palabra, a él no sólo no lo engañan, sino que ya se apresta a desenmascarar -como en la lucha libre- la torpeza, corrupción e incompetencia de los encargados de tutelar nuestra salud. No existe terreno en el que no se deba dar la batalla y ahora el campo es el de la epidemia y la negligencia criminal.

El tira netas. No es un experto ni pretende serlo. Pero, eso sí, sabe todas las medidas que usted debe tomar. Hay que lavarse las manos 26.7 veces al día, no salir a la calle sin tapabocas, no dar la mano y mucho menos un beso, abrir las ventanas del hogar, y a los menores síntomas correr al hospital o la clínica más cercanos. Por el momento es un cruzado de la causa buena, y nada ni nadie lo podrán distraer de su misión. Ha llegado el momento en que cada uno debe contribuir con su granito de arena y él carga un pequeño costalito que trajo de Acapulco.

El acólito de la autoridad. Hay quien los confunde con el anterior, pero éstos son los que no se apartan ni un grado de las indicaciones oficiales. Repiten, subrayan, glosan, insisten. Piensan que su tarea es la de coadyuvar con los gobiernos y se transforma en un eco consistente e insistente de los mismos. En la guerra contra el virus se asumen como soldados a las órdenes de la superioridad. Su disciplina es única e inconmovible y lo demás es lo de menos.

El pescador monotemático. Por supuesto que hay comentaristas especializados, aquellos que "lo saben todo" sobre un tema. Y no pueden ni quieren desaprovechar la ocasión. Ya han aparecido los primeros aportes: "la epidemia y el turismo", "la influenza y el futbol", "la enfermedad y las elecciones", "la salud y la novela". Recuerdan aquel viejo chiste de los fenicios que no estoy de humor para repetir. Se trata de un resorte bien aceitado y que consiste en llevar cualquier tema al terreno conocido. En el no tan remoto pasado inmediato sus temas eran: "el narco y el turismo", "la violencia y el futbol", "la droga y las elecciones", "las bandas delincuenciales y la novela".

El erudito. Los hay en las más diferentes versiones. El que es capaz de recordar todas y cada una de las epidemias que precedieron al actual brote; el que puede citar a los autores que han tratado con la enfermedad y sus derivaciones; el que nos ofrece una historia panorámica del origen, desarrollo y estado actual de las vacunas en todo el orbe. Saben que saben y es el momento para que los demás se den cuenta de ello.

Son voces expresivas, elocuentes, y en conjunto producen una melodía desafinada pero penetrante, estridente e inescapable. Hablan del brote epidémico sin duda, pero también de los comentaristas, de cómo se ven a sí mismos y de cómo quieren ser vistos por los demás. Y ello, a querer o no, tiene su gracia.

Nafta’s Promise, Unfulfilled

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By ELISABETH MALKIN

Published: March 23, 2009

MEXICO CITY — Mexico’s former president, Carlos Salinas, used to promise that free trade and foreign investment would jump-start this country’s development, empowering a richer and more prosperous Mexico “to export goods, not people.”

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Henry Romero/Reuters

A General Motors assembly line in Silao, Mexico. Mexico’s exports have quintupled under Nafta, to $292 billion last year.

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Times Topics: North American Free Trade Agreement

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Nafta, signed by President Carlos Salinas of Mexico, left, and President Bill Clinton, has been in effect for 15 years.

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Alejandro Bringas/Reuters

Workers at a factory in Ciudad Juárez. Economic growth in Mexico under Nafta has not been sufficient to create enough jobs for the million young people who enter the work force each year.

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Fifteen years after the North American Free Trade Agreement took effect, only the first part of that promise has been realized.

Mexico’s exports have exploded underNafta, quintupling to $292 billion last year, but Mexico is still exporting people too, almost half a million each year, seeking opportunities in the United States that they do not have at home.

Secretary of State Hillary Rodham Clinton will arrive in Mexico on Wednesday and President Obama will visit next month. Both are expected to emphasize the successes of American-Mexican economic cooperation, but it will be hard to ignore how much in Mexico has not changed under Nafta.

Economists here say much of the blame lies with Mexican leaders, unable or unwilling to take on oligarchs and unions controlling key sectors of the economy like energy and telecommunications. But they say some blame goes to the unintended consequences of Nafta.

In some cases, Nafta produced results that were exactly the opposite of what was promised.

For instance, domestic industries were dismantled as multinationals imported parts from their own suppliers.

Local farmers were priced out of the market by food imported tariff-free. Many Mexican farmers simply abandoned their land and headed north.

Although one-quarter of Mexicans live in the countryside, they account for 44 percent of the migrants to the United States. The contradictions of Nafta are apparent in Guadalajara and the rich farmland around it.

On the road from the airport to the city, Mexico’s second-largest, a well-worn sign welcomes visitors to Mexico’s Silicon Valley. After Nafta went into effect, the comparison seemed ambitious but not out of reach.

Global giants spent billions of dollars turning Guadalajara into a manufacturing hub for the information technology industry. The industry boomed, spurred by cheap labor and the sense that Nafta guaranteed investor-friendly policies. Today the city is ringed with low-slung factories that churn out everything from BlackBerrys to digital tape storage libraries for Sun Microsystems.

But investors came because the city was already a center of technology. I.B.M, Hewlett-Packard and others had come in the 1960s and 1970s when Mexico’s market was closed.

After Nafta, the new factories imported parts from their global suppliers, wiping out local companies that had sold printed circuit boards or assembled computers under tariff protection, said Kevin P. Gallagher, a Boston University professor who has written about the Guadalajara information technology industry.

Things grew worse when the tech bubble burst, the American economy cooled and the companies moved to China, where they could pay even lower wages. Once China entered the World Trade Organization, Mexico lost much of the edge in exporting to the United States that Nafta had given it. Employment in Guadalajara’s I.T. factories dropped 37 percent in 2001 and continued to slide for two years.

“The agreement could have brought investment with more value here,” including research, testing and design, said Jesús Palomino, the general manager at Intel’s design center in Guadalajara. “But we did not know how to define or negotiate or take advantage of it.”

Mr. Palomino argues that attracting multinational manufacturers was too limited a focus. He oversees about 300 young engineers who test future Intel products and carry out research and development. The sophisticated Intel design center is an exception to the city’s assembly plants. Those factories mostly hire low-wage labor.

“A new phenomenon has grown up under Nafta — high-productivity poverty,” said Harley Shaiken, chairman of the Center for Latin American Studies at the University of California, Berkeley.

Low wages means low purchasing power. “It is not a successful strategy for globalization,” Mr. Shaiken said.

Even Nafta’s greatest success — exports — has become a liability, as Mexico feels the full brunt of declining consumption in the United States. The auto industry, for example, which has flourished under Nafta, has ground to a virtual standstill. Over all, Mexican auto exports fell more than 50 percent in the first two months of this year compared with 2008, and production dropped almost 45 percent.

The central bank forecasts that as many as 340,000 people could lose their jobs this year, and some investment banks predict the economy could contract as much as 5 percent.

That weakness has driven down the peso, which has lost about a quarter of its value in the last six months. Foreign direct investment fell last year to $18.6 billion from $27.2 billion in 2007.

Still, economists here say much of the responsibility for the lack of development in the last decade and a half lies largely with Mexican leaders and their unwillingness or inability to enact real reforms. “We have an economy that has atrophied because of the lack of reform,” said Gerardo Esquivel, an economist at the Colegio de México.

Other developing countries benefited from globalization, particularly in Asia. But in Mexico, economic growth has averaged about 3 percent a year since Nafta took effect, far below what is needed to create jobs for the million young people who enter the work force each year and the millions more who barely scrape by.

As presidential candidates, both President Obama and Mrs. Clinton promised to renegotiate Nafta. But when Mr. Obama arrives next month, he will find Mexico’s leaders reluctant to revisit the agreement. He will also find them seething over his signing of a spending bill that scrapped a pilot program allowing Mexican long-haul trucks to transport cargo throughout the United States. In retaliation, Mexico has imposed punitive tariffs on $2.4 billion worth of American goods.

Nafta guaranteed Mexico, Canada and the United States access to one another’s highways for cargo transport by 2000.

Perhaps the Mexicans least prepared for globalization were Mexico’s small farmers.

“It isn’t possible for a peasant to make a living from the countryside,” said Francisco Vargas, president of an association that groups together 2,500 farmers from Etzatlán, about 90 minutes west of Guadalajara.

The farmers hold other jobs to subsidize their farming. Mr. Vargas is a teacher. Another of the group’s leaders is a retired accountant; a third has a sideline renting out construction equipment. Some farmers continue thanks to money sent by relatives working in the United States.

Farmers in the region have survived Nafta by raising corn yields through converting to modern farming techniques. They also lobby for government aid and band together to fight private oligopolies that sell seed and buy corn.

But their landholdings remain small, sometimes not more than about 10 acres, and they are at the mercy of rising costs and fluctuating prices. Seed is up about 20 percent because of the peso’s devaluation, while corn is off the high of last year as global demand drops.

The farmers say that they have raised their yields to double Mexico’s average of three metric tons per hectare, or more. (The average for the United States is more than nine tons per hectare.) Late last year, their high yields caught the attention of the federal government in Mexico City, which has promised new financing for the Etzatlán farmers and other commercial corn farmers.

“It’s a race against time,” said Antonio Hernández, an agronomist who advises the farmers for a coalition of farming associations in Jalisco state. “We have to demonstrate this before people abandon the land.”

I.T. industry leaders and the local government in Guadalajara are trying to do the same thing: convince Mexicans that there is opportunity at home.

The group representing the industry in Mexico, known by its Spanish initials as Canieti, now promotes Guadalajara’s ability to produce customized products for customers in the United States, specialized corporate software and portions of software for operating systems. Canieti officials also promote the advantage for “pizza products,” like new cellphones that must be delivered on time.

The government and Canieti have put up $4 million to buy equipment and train 150 young people in computer animation, in a bid to attract joint ventures for co-productions and video games.

But Mr. Palomino, the general manager at the Intel design center, argues that the industry should also promote small local companies and encourage them to establish joint ventures in the United States. Those changes would nourish a culture of entrepreneurship that he believes has yet to emerge.

Professor Gallagher at Boston University argues that free trade on its own does not bring development. “Nafta was a great opportunity, but you had to build on it,” he said.

La táctica y estrategia

Paul Krugman reprueba el paquete para limpiar de activos tóxicos las hojas de balance de los bancos estadounidenses. No obstante, la medida ha causado una buena impresión en los mercados de capital lo que implica confianza que es el activo más importante en una crisis como lo explica este excelente artículo. 

When the economy really did fall of a cliff. 

March 23, 2009

OP-ED CONTRIBUTOR

When the Economy Really Did ‘Fall Off a Cliff’

By JEAN STROUSE

IN what may come to be the definitive line about our current economic crisis, Warren Buffett said on the CNBC program “Squawk Box” this month that the United States economy has “fallen off a cliff.”

The most trusted investor in history went on the air to talk, with characteristic candor and humor, about the horrendous truth we pretty much know, possibly in an effort to calm things down and point toward some answers we don’t yet know. He proceeded to give his views on what went wrong (“everybody thought house prices could go nothing but up ... so you had $11 trillion of residential mortgage debt built on this theory ”), on people’s paralyzing fear and confusion (“We are in a very, very vicious negative feedback cycle .... I don’t want this to be the last line of the movie”), and on the absolute necessity of fixing the banks and taking clear, decisive action.

A look back at the handling of another financial crisis a full century ago underlines the point about decisive action. You just don’t want to take the wrong decisive action. Markets today are immeasurably more complex, global, fast-moving and regulated (a lot of good that did) than they were a hundred years ago, but the need for strong leadership has not changed.

In early 1906, the banker Jacob Schiff told a group of colleagues that if the United States did not modernize its banking and currency systems, its economy would, in effect, fall off a cliff — that the country would “have such a panic ... as will make all previous panics look like child’s play.”

Yet the country failed to reform its financial institutions, and conditions deteriorated steadily over the next 20 months. There was a worldwide credit shortage. The American stock market crashed twice. The young Dow Jones industrial average lost half of its value.

In October 1907, when a panic started among trust companies in New York and terrified depositors lined up to get their money out, Schiff’s dire prediction seemed about to come true. The United States had no Federal Reserve, the Treasury secretary did not have much political authority, and the president, Theodore Roosevelt, was off shooting game in Louisiana.

J. Pierpont Morgan, a 70-year-old private banker, quietly took charge of the situation.

In the absence of a central bank, Morgan had for decades been acting as the country’s unofficial lender of last resort, gathering reserves and supplying capital to the markets in periods of crisis. For two harrowing weeks in 1907, with the whole world watching, he operated like a general, deploying three young lieutenants to do leg work and supply him with information, and bringing two other leading bankers, James Stillman of National City Bank and George Baker of the First National Bank, into a senior “trio” to make executive decisions. (First National and National City eventually combined to form what is now Citigroup — are the shades of Baker and Stillman writhing over what has become of their descendant institution?)

The Morgan teams ran “stress tests” on the unregulated trust companies, figuring out which were impossibly overleveraged and should be allowed to fail, and which were basically sound but crippled by the panic. Once they had determined that a trust was essentially healthy, the bankers supplied it with cash, matching their loans dollar-for-dollar with the trust’s collateral assets.

When the New York Stock Exchange nearly closed early one day in October 1907 because financial institutions calling in loans were choking off the market’s money supply, Morgan summoned the presidents of New York’s major commercial banks to his office and came up with $24 million to lend to the exchange. Next, New York City ran out of cash to meet its payroll and interest obligations; Morgan and company conjured up a $30 million loan and prevented default.

At the end of Week 1, President Roosevelt sent a letter to the press congratulating the “substantial businessmen who in this crisis have acted with such wisdom and public spirit.” Shipments of gold were on the way from London to New York, and confidence had returned to the French Bourse, “owing,” reported one paper, “to the belief that the strong men in American finance would succeed in their efforts to check the spirit of the panic.” During a panic, confidence is almost as good as gold.

At the end of Week 2, Morgan called 50 presidents of trust companies to his private library on East 36th Street, locked the doors, and did not let them out until they had signed on to a final $25 million loan. The scholar of Renaissance art Bernard Berenson told his patron Isabella Stewart Gardner that “Morgan should be represented as buttressing up the tottering fabric of finance the way Giotto painted St. Francis holding up the falling church with his shoulder.”

Though Morgan had a large sense of public duty, he had not shouldered the falling church out of pure altruism. His self-interest operated on a national scale. His clients — many of them Europeans who had invested for decades in the emerging American economy through the House of Morgan — had billions of dollars committed in the United States. In watching over their long-term interests, trying to control the excesses of the business cycle and maintain the value of the dollar, Morgan had come to serve as guardian of American credit in international markets.

His power in 1907 derived not from the size of his own fortune but from the trust placed in him by investors, other bankers and international statesman. After Morgan died in 1913, the newspapers reported his net worth as about $80 million — roughly $1.7 billion in today’s dollars. John D. Rockefeller, already worth a billion in 1913 dollars, is said to have read the figure, shaken his head, and remarked, “And to think he wasn’t even a rich man.”

Trust in Morgan was by no means universal. In 1907, some of his critics charged that he had started the panic in order to scoop up assets at fire-sale prices and line his own pockets. In fact, the Morgan banks lost $21 million that year.

The difficulty today of assigning dollar values to “toxic” assets makes Morgan’s job look easy. Yet though the amount of money required for the 1907 bailouts is pocket change compared to the current trillions, at the time, the troubles and the numbers seemed enormous.

No single figure, much less a private banker, could wield the kind of power in today’s gargantuan collapsing markets that Morgan had a hundred years ago. And so far, not even the combined official powers of the Fed and Treasury have been able to stop the cascading disasters. Paul Volcker, the former Federal Reserve chairman, said recently that he couldn’t remember a time “maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world.”

Perhaps new economic leadership will emerge during this crisis, under our gifted, charismatic president. It seems likely to consist of people who have the kind of experience, judgment and authority Morgan had — possibly a new “trio” made up of the current Fed chairman, Ben Bernanke; Paul Volcker; and Warren Buffett.

Only Mr. Bernanke is formally in a position to exercise that high authority now, which he is doing — he announced last week that the Fed would inject an extra $1 trillion into the financial system. Mr. Volcker, chairman of the White House Economic Recovery Advisory Board, could easily be promoted to a more dominant role. Mr. Buffett has already stepped up in public, praising the steps the Fed took last fall to insure money markets and commercial paper as “vital in keeping the place going” (if the Fed hadn’t acted, Mr. Buffett told his CNBC interviewer, “we’d be meeting at McDonald’s this morning”).

Moreover, Mr. Buffett said he could “guarantee” that in five years or so “our great economic machine” will be running a lot faster than it is now, with the government playing an enormous role in how quickly it recovers. Last fall he declared that we had just been through an “economic Pearl Harbor.” Last week he said that in order to fight this economic war the country has to unite behind President Obama, the government has to deliver “very, very” clear messages and we all have to focus on three jobs:

Job 1: win the economic war.

Job 2: win the economic war.

Job 3: win the economic war.

Just what Morgan would have said.

Jean Strouse is the author of “Morgan: American Financier” and the director of the Cullman Center for Scholars and Writers at The New York Public Library.

The Fed Didn't Cause the Housing Bubble

By ALAN GREENSPAN

We are in the midst of a global crisis that will unquestionably rank as the most virulent since the 1930s. It will eventually subside and pass into history. But how the interacting and reinforcing causes and effects of this severe contraction are interpreted will shape the reconfiguration of our currently disabled global financial system.

Chad Crowe

There are at least two broad and competing explanations of the origins of this crisis. The first is that the "easy money" policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today's financial mess.

The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria. However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages. Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months. This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate.

This should not come as a surprise. After all, the prices of long-lived assets have always been determined by discounting the flow of income (or imputed services) by interest rates of the same maturities as the life of the asset. No one, to my knowledge, employs overnight interest rates -- such as the fed-funds rate -- to determine the capitalization rate of real estate, whether it be an office building or a single-family residence.

The Federal Reserve became acutely aware of the disconnect between monetary policy and mortgage rates when the latter failed to respond as expected to the Fed tightening in mid-2004. Moreover, the data show that home mortgage rates had become gradually decoupled from monetary policy even earlier -- in the wake of the emergence, beginning around the turn of this century, of a well arbitraged global market for long-term debt instruments.

U.S. mortgage rates' linkage to short-term U.S. rates had been close for decades. Between 1971 and 2002, the fed-funds rate and the mortgage rate moved in lockstep. The correlation between them was a tight 0.85. Between 2002 and 2005, however, the correlation diminished to insignificance.

As I noted on this page in December 2007, the presumptive cause of the world-wide decline in long-term rates was the tectonic shift in the early 1990s by much of the developing world from heavy emphasis on central planning to increasingly dynamic, export-led market competition. The result was a surge in growth in China and a large number of other emerging market economies that led to an excess of global intended savings relative to intended capital investment. That ex ante excess of savings propelled global long-term interest rates progressively lower between early 2000 and 2005.

That decline in long-term interest rates across a wide spectrum of countries statistically explains, and is the most likely major cause of, real-estate capitalization rates that declined and converged across the globe, resulting in the global housing price bubble. (The U.S. price bubble was at, or below, the median according to the International Monetary Fund.) By 2006, long-term interest rates and the home mortgage rates driven by them, for all developed and the main developing economies, had declined to single digits -- I believe for the first time ever. I would have thought that the weight of such evidence would lead to wide support for this as a global explanation of the current crisis.

However, starting in mid-2007, history began to be rewritten, in large part by my good friend and former colleague, Stanford University Professor John Taylor, with whom I have rarely disagreed. Yet writing in these pages last month, Mr. Taylor unequivocally claimed that had the Federal Reserve from 2003-2005 kept short-term interest rates at the levels implied by his "Taylor Rule," "it would have prevented this housing boom and bust. "This notion has been cited and repeated so often that it has taken on the aura of conventional wisdom.

Aside from the inappropriate use of short-term rates to explain the value of long-term assets, his statistical indictment of Federal Reserve policy in the period 2003-2005 fails to address the aforementioned extraordinary structural developments in the global economy. His statistical analysis carries empirical relationships of earlier decades into the most recent period where they no longer apply.

Moreover, while I believe the "Taylor Rule" is a useful first approximation to the path of monetary policy, its parameters and predictions derive from model structures that have been consistently unable to anticipate the onset of recessions or financial crises. Counterfactuals from such flawed structures cannot form the sole basis for successful policy analysis or advice, with or without the benefit of hindsight.

Given the decoupling of monetary policy from long-term mortgage rates, accelerating the path of monetary tightening that the Fed pursued in 2004-2005 could not have "prevented" the housing bubble. All things considered, I personally prefer Milton Friedman's performance appraisal of the Federal Reserve. In evaluating the period of 1987 to 2005, he wrote on this page in early 2006: "There is no other period of comparable length in which the Federal Reserve System has performed so well. It is more than a difference of degree; it approaches a difference of kind."

How much does it matter whether the bubble was caused by inappropriate monetary policy, over which policy makers have control, or broader global forces over which their control is limited? A great deal.

If it is monetary policy that is at fault, then that can be corrected in the future, at least in principle. If, however, we are dealing with global forces beyond the control of domestic monetary policy makers, as I strongly suspect is the case, then we are facing a broader issue.

Global market competition and integration in goods, services and finance have brought unprecedented gains in material well being. But the growth path of highly competitive markets is cyclical. And on rare occasions it can break down, with consequences such as those we are currently experiencing. It is now very clear that the levels of complexity to which market practitioners at the height of their euphoria tried to push risk-management techniques and products were too much for even the most sophisticated market players to handle properly and prudently.

However, the appropriate policy response is not to bridle financial intermediation with heavy regulation. That would stifle important advances in finance that enhance standards of living. Remember, prior to the crisis, the U.S. economy exhibited an impressive degree of productivity advance. To achieve that with a modest level of combined domestic and borrowed foreign savings (our current account deficit) was a measure of our financial system's precrisis success. The solutions for the financial-market failures revealed by the crisis are higher capital requirements and a wider prosecution of fraud -- not increased micromanagement by government entities.

Any new regulations should improve the ability of financial institutions to effectively direct a nation's savings into the most productive capital investments. Much regulation fails that test, and is often costly and counterproductive. Adequate capital and collateral requirements can address the weaknesses that the crisis has unearthed. Such requirements will not be overly intrusive, and thus will not interfere unduly in private-sector business decisions.

If we are to retain a dynamic world economy capable of producing prosperity and future sustainable growth, we cannot rely on governments to intermediate saving and investment flows. Our challenge in the months ahead will be to install a regulatory regime that will ensure responsible risk management on the part of financial institutions, while encouraging them to continue taking the risks necessary and inherent in any successful market economy.

Mr. Greenspan, former chairman of the Federal Reserve, is president of Greenspan Associates LLC and author of "The Age of Turbulence: Adventures in a New World" (Penguin, 2007).