Here are five stories that shaped the world this week:
All Eyes on Germany: The fate of not only the European economy but the world economy depends greatly on Germany, and is in the hands of one woman, its chancellor, Angela Merkel. The wrong choices could lead to a world-wide financial meltdown. It seems right out of a Hollywood disaster movie. Even so, such is the bleak outlook of many economists; yet, to put things in perspective, such economists have been wrong before. Stay tuned.
Nobody wants to test these various disaster scenarios. It is now up to Europe’s politicians to deal finally and firmly with the euro. If they come up with a credible solution, it does not guarantee a smooth ride for the world economy; but not coming up with a solution guarantees an economic tragedy. To an astonishing degree, the fate of the world economy depends on Germany’s chancellor, Angela Merkel (see article). In one way it seems unfair to pick on Mrs Merkel. Politicians everywhere are failing to act—from Delhi, where reform has stalled, to Washington, where partisan paralysis threatens a lethal combination of tax increases and spending cuts at the end of the year. Within Europe, as Germans never cease to point out, investors are not worried about Mrs Merkel’s prudent government, whose predecessor restructured the economy painfully ten years ago; the problem is a loss of confidence in less well-run, unreformed countries. [The Economist]Spain Needs Money: The International Monetary Fund has said that Spanish banks need at least a €40-billion ($50-billion) in capital injection, after it performed a financial stress test on its nations' banks. If so, it would mark the fourth European nation to seek financial assistance in the 17-member Eurozone.
The lending institution said Friday that Spain’s financial sector is well managed but vulnerable. It recommended that banks raise capital by an additional unspecified amount beyond the €40-billion to properly restructure troubled banks, noting that the country should be prepared for further bank losses. “Going forward, it will be critical to communicate clearly the strategy for providing a credible backstop for capital shortfalls — a backstop that experience shows it is better to overestimate than underestimate,” said Ceyla Pazarbasioglu, an IMF deputy director who head of the team that conducted the report [Globe & Mail]
U.S. Losing Patience With Pakistan: U.S. Defense Secretary Leon Panetta said on Thursday that the United States was "reaching the limits of our patience" with Pakistan over militants that attack U.S. forces in neighboring Afghanistan from havens within its borders. The Defense secretary's remarks are not surprising, and suggest that both Pakistan and the U.S. are tired after a war that has lasted more than 10 years. The blunt message is likely falling on deaf ears inside Pakistan. It's time for the U.S. and other NATO nations to bring their troops home. NATO has 130,000 troops in Afghanistan; the U.S. has by far the largest contingent with 89,000 soldiers, hence its interest in preventing further attacks and deaths.
"It's extremely important that Pakistan take action to prevent this kind of safe haven," he said during an unannounced visit to Kabul, and that militants cannot use the country as a "safety net" from which to attack U.S. soldiers. "We have made that very, very clear time and time again, and we will continue to do that," he said. Panetta also stressed that troops on the Afghan border have every right to defend themselves against the al Qaeda-linked Haqqani network and other militant groups when they launch attacks from Pakistan."Anybody who attacks U.S. soldiers is our enemy. We are not going to take it," he said. [CNN]New TB Drug Shows Promise: Otsuka Pharmaceutical Co., Ltd. (Otsuka), a Japanese-based company, announced on Wednesday (June 6) clinical trial results on the safety and efficacy of delamanid, the company's investigational compound for the treatment of multidrug-resistant tuberculosis (MDR-TB). About 40 per cent of MDR-TB occurs in China and India, with about 100,000 new cases reported each year, says Dr. Mario Raviglione, a physician and specialist of infectious diseases and who serves as director of WHO Stop TB Department. [see here for more background on TB] This is the first new drug in 40 years to combat TB. The study is published June 7 in the New England Journal of Medicine.
Scientists in nine countries tested delamanid—which inhibits the production of mycolic acid, a key component of tuberculosis (TB) bacteria. In a phase 2 trial with 481 patients, the drug cleared TB from the sputum cultures of nearly half the patients within two months, the study said. "I think it's very important that we have, in delamanid, the potential for a new drug in the first class of new drugs in 40 years," said study co-author Lawrence Geiter, vice president of global clinical development for Otsuka Pharmaceutical Co., the Tokyo-based developer of delamanid. "It's going to enhance treatment options." [HealthDay]Protesting Dress Codes: Students at a high school in New York City are protesting mandatory dress codes. Such is a good thing; dress codes, while appearing democratic, are in reality the opposite. Persons in high school ought to dress the same way they can legally dress outside the classroom. It is noteworthy that authoritarian regimes always instill a drab uniform dress code to cover up distinctions between persons, including between the sexes; North Korea quickly comes to mind. Ditch the dress code.
What people were seeing, the students explained, was some steam being let off over their long-simmering discontent with a dress code Stuyvesant adopted last fall to combat some clothing styles the administration deemed unacceptable. One rule says that any sayings and illustrations on clothing should be in “good taste.” Another calls for shorts, dresses and skirts to extend at least beyond the fingertips when arms are extended straight down. A third bans the exposing of “shoulders, undergarments, midriffs and lower backs.” But the rules have been prompting waves of objections by students, particularly now that summerlike weather has arrived and, many noted, the school’s air-conditioning has proved to be less than reliable. [The New York Times]
65:Jews revolt against Rome, capturing fortress of Antonia in Jerusalem;
452: Italy invaded by Attila the Hun;
1191: Richard I, King of England, arrives in Acre (Palestine) thus beginning his crusade in the Holy Land;
1824: Noah Cushing of Quebec patents the washing machine;
1949: George Orwell's "Nineteen Eighty-Four" is published;
1953: The United States Supreme Court rules that Washington, D.C. restaurants could not refuse to serve black patrons;
1963: American Heart Association is first agency to campaign against cigarettes; and
1972: Associated Press photographer Nick Ut takes his Pulitzer Prize-winning photo of a naked 9-year-old Vietnamese Phan Thị Kim Phúc running down a road after being burned by napalm.
This is the last report for a little while; I plan to take the summer off and return in September.