Food stamps. An unfortunate marker of economic change.

This feature in the New York Times caught my eye today, lucidly written by Erik Eckholm. As the American economy continues to feel the impact of the r word – and I don’t mean rain – it looks like more Americans than ever before are having to use their equivalent of a social benefit scheme, the food stamp. An instrument whereby poor people can buy food for their families using an exchangeable coupon. Only for food. And not, as the rules say, for “deli” food. Only in America.

Driven by a painful mix of layoffs and rising food and fuel prices, the number of Americans receiving food stamps is projected to reach 28 million in the coming year, the highest level since the aid program began in the 1960s.

The number of recipients, who must have near-poverty incomes to qualify for benefits averaging $100 a month per family member, has fluctuated over the years along with economic conditions, eligibility rules, enlistment drives and natural disasters like Hurricane Katrina, which led to a spike in the South.

But recent rises in many states appear to be resulting mainly from the economic slowdown, officials and experts say, as well as inflation in prices of basic goods that leave more families feeling pinched. Citing expected growth in unemployment, the Congressional Budget Office this month projected a continued increase in the monthly number of recipients in the next fiscal year, starting Oct. 1 — to 28 million, up from 27.8 million in 2008, and 26.5 million in 2007.

The percentage of Americans receiving food stamps was higher after a recession in the 1990s, but actual numbers are expected to be higher this year.

Federal benefit costs are projected to rise to $36 billion in the 2009 fiscal year from $34 billion this year.

“People sign up for food stamps when they lose their jobs, or their wages go down because their hours are cut,” said Stacy Dean, director of food stamp policy at the Center on Budget and Policy Priorities in Washington, who noted that 14 states saw their rolls reach record numbers by last December.

One example is Michigan, where one in eight residents now receives food stamps. “Our caseload has more than doubled since 2000, and we’re at an all-time record level,” said Maureen Sorbet, spokeswoman for the Michigan Department of Human Services.

The climb in food stamp recipients there has been relentless, through economic upturns and downturns, reflecting a steady loss of industrial jobs that has pushed recipient levels to new highs in Ohio and Illinois as well.

“We’ve had poverty here for a good while,” Ms. Sorbet said. Contributing to the rise, she added, Michigan, like many other states, has also worked to make more low-end workers aware of their eligibility, and a switch from coupons to electronic debit cards has reduced the stigma.

Some states have experienced more recent surges. From December 2006 to December 2007, more than 40 states saw recipient numbers rise, and in several — Arizona, Florida, Maryland, Nevada, North Dakota and Rhode Island — the one-year growth was 10 percent or more.

In Rhode Island, the number of recipients climbed by 18 percent over the last two years, to more than 84,000 as of February, or about 8.4 percent of the population. This is the highest total in the last dozen years or more, said Bob McDonough, the state’s administrator of family and adult services, and reflects both a strong enlistment effort and an upward creep in unemployment.

In New York, a program to promote enrollment increased food stamp rolls earlier in the decade, but the current climb in applications appears in part to reflect economic hardship, said Michael Hayes, spokesman for the Office of Temporary and Disability Assistance. The additional 67,000 clients added from July 2007 to January of this year brought total recipients to 1.86 million, about one in 10 New Yorkers.

Nutrition and poverty experts praise food stamps as a vital safety net that helped eliminate the severe malnutrition seen in the country as recently as the 1960s. But they also express concern about what they called the gradual erosion of their value.

Food stamps are an entitlement program, with eligibility guidelines set by Congress and the federal government paying for benefits while states pay most administrative costs.

Eligibility is determined by a complex formula, but basically recipients must have few assets and incomes below 130 percent of the poverty line, or less than $27,560 for a family of four.

As a share of the national population, food stamp use was highest in 1994, after several years of poor economic growth, with an average of 27.5 million recipients per month from a lower total of residents. The numbers plummeted in the late 1990s as the economy grew and legal immigrants and certain others were excluded.

But access by legal immigrants has been partly restored and, in the current decade, the federal and state governments have used advertising and other measures to inform people of their eligibility and have often simplified application procedures.

Because they spend a higher share of their incomes on basic needs like food and fuel, low-income Americans have been hit hard by soaring gasoline and heating costs and jumps in the prices of staples like milk, eggs and bread.

At the same time, average family incomes among the bottom fifth of the population have been stagnant or have declined in recent years at levels around $15,500, said Jared Bernstein, an economist at the Economic Policy Institute in Washington.

The benefit levels, which can amount to many hundreds of dollars for families with several children, are adjusted each June according to the price of a bare-bones “thrifty food plan,” as calculated by the Department of Agriculture. Because food prices have risen by about 5 percent this year, benefit levels will rise similarly in June — months after the increase in costs for consumers.

Advocates worry more about the small but steady decline in real benefits since 1996, when the “standard deduction” for living costs, which is subtracted from family income to determine eligibility and benefit levels, was frozen. If that deduction had continued to rise with inflation, the average mother with two children would be receiving an additional $37 a month, according to the private Center on Budget and Policy Priorities.

Both houses of Congress have passed bills that would index the deduction to the cost of living, but the measures are part of broader agriculture bills that appear unlikely to pass this year because of disagreements with the White House over farm policy.

Another important federal nutrition program known as WIC, for women, infants and children, is struggling with rising prices of milk and cheese, and growing enrollment.

The program, for households with incomes no higher than 185 percent of the federal poverty level, provides healthy food and nutrition counseling to 8.5 million pregnant women, and children through the age of 4. WIC is not an entitlement like food stamps, and for the fiscal year starting in October, Congress may have to approve a large increase over its current budget of $6 billion if states are to avoid waiting lists for needy mothers and babies.

Bad News Bears

This story has been in all the TV news reports over the weekend – but the fact I wanted to draw attention to was that Bear Stearns was valued at $169 per share just about a year ago – and today’s price was $2. And this could easily have been regarded as a “safe haven” kind of investment. My forward-looking sunglasses are far from rose-tinted. The news breaks this morning that the bank has been bought by JP Morgan for a fraction of its original value. The cartoon is by Pat Bagley of the Salt Lake Tribune. This article was written by Tony Bonsignore in Citywire

Just when it seemed the news couldn’t get any worse, it duly did, and on a Sunday evening too. Last night’s shock announcement that troubled US investment bank Bear Stearns had been forced into an emergency sale sent shockwaves through Asian and European markets this morning, as panicked investors tried to figure out where the madness might end. Not anytime soon, was the general conclusion.

The scale of the collapse is terrifying. As America’s fifth largest investment bank Bear Stearns was at the forefront of the US housing-led economic boom of the past decade, and currently employs some 14,000 staff. At its peak in January 2006 – interestingly around the same time as the US housing market peaked – the company’s shares were valued at a mind-boggling $169.

Last night’s deal agreement with JP Morgan Chase valued the company at a measly $2 per share, an ignominious way to end 85 years of independence. But perhaps even more disturbing is the speed and nature of Bear Stearns’ fall from grace. That a deal happened at all was only thanks to the US Federal Reserve, which agreed to fund up to $30 billion of the deal. And all this barely a week after the Fed injected more than $400 billion into the financial markets in a desperate attempt to shore up liquidity – a move that some cynics said at the time was indicative of a looming solvency crisis at a major US bank. It is now clear that these worries were well founded, though investors will take no solace in being proved right.

Most commentators this morning agree that the credit crunch has entered a frightening new phase, and that worse may be yet to come. In the very short term investors will be nervously looking to this week’s results from Wall Street giants Goldman Sachs, Lehman Brothers and Morgan Stanley, looking to assess how far they have been hit (or escaped) the worst of the sub-prime fallout. Even then, however, suspicions are likely to remain that banks are yet to come clean about the real extent of their losses. Punch-drunk investors are understandably reticent to believe anything the banks tell them right now.

There are also growing fears that Bear Stearns is not the only major US bank facing solvency issues. If Bear Stearns does turn out to be an isolated incident then we may look back on this as the moment the crisis peaked. However, if another bank hits the skids it is difficult to see how the Fed can contain the damage in the same way; another JP Morgan-style deal will certainly be considerably more difficult to arrange. In that nightmare scenario the US may yet see a full-blown banking crisis on a scale not seen since the 30s, something almost too dreadful to contemplate. Unfortunately in these dark times investors and central bankers cannot help but do just that.

Closer to home, the long term impact of our own banking collapse may become a little clearer later today with news expected of a massive job cull at Northern Rock. The government-owned lender is set to shed at least 2,000 jobs and halve its loan book over the next few years, in a revised business strategy aimed at meeting European competition rules. Meanwhile the Centre for Economic Business Research suggests that some 10,000 City jobs are set to be lost over the next year as a result of the ongoing market turmoil – an increase of more than 50% on its previous estimate, made just three months ago.
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Flight of the Angels (Volo dell’Angelo)

I found this story yesterday in the printed edition of Metro. Basically some adventurous types have slung a steel cable across a mountain valley in Northern Italy near Pietrapertosa around 1020 metres above sea level – and you get onto this contraption and “fly” across. Hmmmm. The only articles I could find from people who had done it were in Italian, so I have just included a picture this time. The journey is 1500 metres long – about a mile. Any contributions from people who’ve done it? my@justastory.co.uk.


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Golf balls and condoms.

I read this article in physorg.com today – an amusing notion I thought. However, the thought of a better performing condom certainly would appeal to most people.

You wouldn’t normally associate golf balls with condoms but for University of Queensland researcher Dr Darren Martin, it is all about covering things.

Dr Martin, a materials scientist with UQ’s Australian Institute for Bioengineering and Nanotechnology, has developed a unique polyurethane coating that is thinner, stronger and more flexible than what is currently available and could lead to better golf balls and condoms.

The secret to his discovery is synthetic nanoparticles – nanoscale disc-like particles –that can be added to conventional thermoplastic polyurethane (TPU) to extend its benefits and performance. TPUs are used in everything from surfing leg ropes and rollerblade wheels, to soles on shoes and textiles and fabrics like Lycra.

And while many great scientific discoveries can be attributed to a burning desire to help humankind, Dr Martin’s inspiration was much simpler.

“I’m a single-figure golfer and I was getting frustrated with paying a lot of money for balls that only end up getting damaged after a few holes,” Dr Martin said.

“We had been working with these nanocomposites for a while and this just seemed like a natural fit.

“By coating the ball in a thin layer of our new polyurethane it can make them much more scuff resistant.”

While in talks with a golf ball manufacturer now, Dr Martin and his team are also exploring other applications.

“The condom is another example of where our technology might be applied,” he said.

“We could make softer and thinner condoms that allow greater sensitivity and are actually stronger than current ones, while also reducing the risk of allergic response which some people have to latex rubber. We can all see the advantages of that application.”

Not limited to the golf green and the bedroom, Dr Martin said the potential applications for the technology are expanding.

“Wherever polyurethane is used, our technology can be used,” he said.

“Areas such as implantable medical device components, the mining industry and new types of textiles similar to Lycra and Spandex.”

He said he was doing this through TenasiTech Pty Ltd, a start-up company formed around the technology by UniQuest – the main technology transfer company for UQ – with the company driving the business development and capital raising to further develop the technology towards products.

South America. The rumbling beginnings of a major conflict?

I was very surprised to hear that troops from the Colombian army had crossed the border into Ecuador and also that neighbouring Venezuela was massing troops on the Colombian border. Doesn’t sound too good. It’s all about FARC, little heard of in our Western European news – but this well researched article by Paul Vallely in the Independent told me more.

At the weekend the Colombian army crossed the border into Ecuador to kill a Colombian rebel leader, and 16 other guerrillas, who were sheltering there. The move outraged the government in Ecuador, which broke off diplomatic relations with its neighbour and helicoptered 3,000 of its own troops to the border area.

Colombia’s other neighbour, Venezuela, also reacted. It also expelled Colombia’s diplomats and ordered thousands of troops, tanks and fighter jets to the border. Venezuela’s fiery president, Hugo Chavez, also warned that war could break out if Colombia crossed into Venezuelan soil. It is the worst diplomatic crisis in Latin America for many years.

So what really happened?

The Colombians say they first bombed a rebel camp on their own side of the border. They claim that rebels hiding across the border in Ecuador fired on them, so they crossed the border to fight back.

The Ecuadorean president, Rafael Correa, called that account an outright lie: “It was a massacre,” he said. The Colombian troops were backed by military planes, suggesting the raid was pre-ordained. When Ecuadorean troops reached the rebel camp they found the rebels were killed in their sleep “in their pyjamas”. The rebels were “bombed and massacred as they slept, using precision technology.” Colombian military sources seemed to corroborate this by revealing that US intelligence helped target the rebels by disclosing that the rebel’s deputy leader, Raul Reyes, was sporadically using a satellite telephone, whose signal could be pinpointed.

What’s at the heart of the dispute?

In Colombia a left-wing group of rebels called the Farc – the Revolutionary Armed Forces of Colombia – has been fighting the government for more than four decades. Their declared aim is a fairer wealth distribution in the country, which has a huge divide between rich and poor. But they finance their armed struggle by trading in cocaine and political kidnapping. Their base is in the remote rural regions of the country but they also take shelter in Ecuador and Venezuela which each have a porous border over a thousand miles long with Colombia. The Colombians accused their neighbours of turning a blind eye to the rebels’ presence – something Ecuador and Venezuela deny.

What’s the position of the three leaders?

Colombia is ruled by a right-wing populist, Alvaro Uribe, a Harvard-educated lawyer who is a staunch ally of the Bush administration. Since coming to power in Colombia in 2002 he has maintained a hardline policy against the Farc rebels, who killed his father during a kidnap attempt. Washington has poured billions of dollars in American aid to support the Colombian military. The president in Ecuador is a young left-wing economist, Raphael Correa. He has not minced his words in the current crisis. Colombia, he said, has “a foul and lying government that doesn’t want peace.” In Venezuela the charismatic leftist president Hugo Chavez, backed by his country’s vast oil reserves, is attempting direct the continent away from the influence of Washington. He called Colombia “a terrorist state” and described President Uribe as “a criminal,” acting for “the United States empire”. By contrast he called Raul Reyes a “good revolutionary”.

What were the rebels doing?

The Colombians claim they have captured the computer of Raul Reyes, who was the rebels’ main interlocutor with foreign governments. It reveals, they claim, growing ties between rebels and Venezuela and Ecuador. One document, it was said, showed that President Chavez had provided $300m to the FARC. In another letter the rebels offered military assistance to Venezuela in the event of a US attack. A third, it was claimed, showed that the rebels were in negotiations for 50 kilos of uranium to build a dirty bomb. Venezuela and Ecuador poured scorn on the Colombian claims. Journalists were not given copies of the alleged documents.

Why is the US involved?

As much as 90 per cent of all cocaine on American streets comes from Colombia, the centre of the world cocaine trade. Since 2000, the US has spent more than $4bn giving Colombian forces training, equipment and intelligence to hunt down drug-traffickers and eradicate coca crops. Since 2002 the Bush administration has conceded that some aid is now being spent to tackle the insurgency, even though there is evidence that all sides in Colombia are involved in drug-trafficking. Venezuelan officials insist they have information about links between drug traffickers and top Colombian officials.

The Colombian government has also played into American paranoia about the “war on terror”, characterising FARC not as an armed struggle to bring political change in a highly segregated society – split between rich families of Spanish descent and the vast majority of poor Colombians, many of whom are of mixed race – but as an arm of international terrorism.

What do other countries in the region think?

They are worried. The big regional heavyweight, Brazil, which has mainly cordial relations with the three presidents involved, has demanded Colombia apologise to Ecuador. Brazil fears the conflict is beginning to destabilize regional relations. The president of Argentina is due to visit Venezuela tomorrow. Peru has urged restraint. Mexico and Chile have offered to mediate.

Could there be full-scale war?

Certainly the rhetoric is supercharged. Hugo Chavez has called Colombia’s President Alvaro Uribe a “mob boss” and a liar. “If it occurs to you to do this in Venezuela, President Uribe, I’ll send some Sukhois” – the 24 warplanes he recently bought from Russia. The President of Ecuador has said: “This is not a bilateral problem, it’s a regional problem… Should this set a precedent, Latin America will become another Middle East.”

But there is little appetite for armed conflict. The economic costs would be too high. Trade between Colombia and Venezuela is worth $5bn a year, with food imports vital to Venezuelans suffering milk and meat shortages. Ecuador depends on some $1.8bn in trade with Colombia. Militarily Colombia is a formidable foe, thanks to $5bn in aid from Washington and US military advisers sprinkled throughout the Colombian army. The signs are of a climb-down. Colombia has indicated that it will not send more troops to its borders. And Washington, while backing Colombia’s right to defend itself, has urged dialogue.

Was Colombia justified in crossing into Ecuador to kill rebels?

Yes…

* The FARC rebels are the chief drug traffickers in a country which produces most of the world’s cocaine

* Rebels were being given covert support by both Ecuador and neighbouring Venezuela

* The rebels are major movers in international terrorism with plans to build a dirty radioactive ‘dirty’ bomb

No…

* It was a clear violation of the sovereignty of a neighbouring nation, and was bound to cause regional instability

* The rebels are not international terrorists, as Colombia claims, but leftists who want a fairer distribution of resources in the country.

* The real drug barons are not the rebel leaders but criminal gangs, many of whom have associations with the Colombian government