Sovereign: May 2009

Article: The Federal Reserve Needs To Be Boring Again

The Federal Reserve Needs To Be Boring Again
Thomas F. Cooley, 05.13.09, 12:01 AM ET
http://www.forbes.com/2009/05/12/federal-reserve-bernie-sanders-ron-paul-opinions-columnists-talf_print.html

Extraordinary times require extraordinary actions. Nowhere is that more apparent than in the bold policy moves undertaken by the Federal Reserve over the past two years. The financial crisis forced the Fed to be aggressive and creative in its attempts to provide liquidity to credit markets that had frozen up. These were necessary steps, and mostly applauded.

But the very boldness of its actions has put the independence of the Fed at risk. Congress is now clamoring to audit the Fed, and some of the policy proposals currently under discussion at the Federal Reserve will only increase the threat to its independence.

Before we deconstruct these issues, let's focus on why it is important to have an independent central bank. The answer is quite obvious. An independent central bank can focus on monetary policies for the long term--that is, policies targeting low and stable inflation and a monetary climate that promotes long-term economic growth. Political cycles, alas, are considerably shorter. Without independence, the political cycle would subject the central bank to political pressures that, in turn, would impart an inflationary bias to monetary policy.

On this view, politicians in a democratic society are short-sighted because they are driven by the need to win their next election. This is borne out by empirical evidence. A politically insulated central bank is more likely to be concerned with long-run objectives.

A variant of the argument for central bank independence is that control of monetary policy is far too important to put in the hands of politicians. As a group, they have repeatedly demonstrated the lack of political will power to make difficult economic decisions. But now they want to assert control over the Fed. Bills H.R.1207 and S.604, introduced, respectively, by Rep. Ron Paul and Sen. Bernie Sanders (who brought you the "Employ Americans First Act"), would assert greater control over the Fed. As Ron Paul writes on his Web site: "Auditing the Fed is only the first step towards exposing this antiquated insider-run creature to the powerful forces of free-market competition. Once there are viable alternatives to the monopolistic fiat dollar, the Federal Reserve will have to become honest and transparent if it wants to remain in business."

Great! Obviously, monetary policy is so falling-off-a-log simple that your elected representatives can insert themselves via the demand for transparency into decisions of true complexity and subtlety. Why am I not feeling reassured?

To a large extent, the Fed backed itself into this problem, and it has to find its way out. In the heat of the financial crisis, the Fed created a number of additional lending facilities and took a wider variety of non-Treasury assets onto its balance sheet. The goal was to provide liquidity for the financial system.

At first it sterilized these transactions by selling Treasury assets, but since September 2008 it has expanded its balance sheet dramatically from roughly $900 billion to over $2 trillion, as of May 6. This has had the effect of increasing the reserves in the system that are available for lending. The current plan is to continue to expand the balance sheet with the Term Asset-Backed Securities Loan Facility (TALF), the program designed to buy securities backed by credit card debt, auto loans, student loans, small-business loans and real estate loans.

This dramatic expansion of the balance sheet, together with the Fed's close involvement in the bailout of financial institutions like AIG and Merrill Lynch, have put the Fed in the spotlight. It is a problem precisely because if the Fed programs target particular asset classes, or industries or firms--which they do--then the Fed has put itself in the business of allocating credit. Their actions can also distort prices for these assets. This they should not do in general. Buying Treasury securities is completely neutral with respect to the allocation of credit. Buying securities backed by, say, auto loans, is not.

In late March, perhaps to forestall Congressional intervention, the Treasury and the Fed issued a joint press release that acknowledges this problem. It says explicitly that the Federal Reserve should not allocate credit to narrowly defined sectors or classes of borrowers, and pledges the Treasury to help the Fed remove some of the private assets from its balance sheet.

The presence of these assets on the balance sheet in such quantities creates another problem for the Fed that exposes it to intervention. First, these huge unborrowed reserves make some observers nervous about inflation, even though there is no evidence of it right now. But if the Fed has to reduce the assets on its balance sheet to forestall an inflation threat it could be very disruptive to credit markets. Their complicated positions could be hard to unwind. If the assets they bought were liquid, the Fed wouldn't have been buying them in the first place. This means it may be difficult to get the cash out of the economy before it is too late.

The Fed has been quietly surfacing a solution to this problem. In my view, it is ill-conceived and more likely than anything they have done to date to bring Congressional--and even public--wrath down upon them. The idea is for the Fed to issue its own debt, called "Fed Bills." The sale of such bills would have the effect of taking reserves out of the system. Traditionally, the Fed sells Treasury securities to take reserves out of the system, but under this proposal it would be issuing its own debt as way of shrinking reserves.

It is easy to understand why the Fed wants more tools to help it manage its massive balance sheet. The Fed began paying interest on reserves for precisely this reason. With interest on reserves, they can make it relatively more attractive for the holders of reserves to keep the money on deposit rather than lend it out. But issuing debt raises a whole additional level of complication.

There is an open question about whether the Federal Reserve even has the authority to issue claims other than currency. Apparently it thinks it does. But is it even remotely credible that the Fed could have the unbounded authority to borrow money and buy assets without the inconvenience of having to explain itself on Capitol Hill?

Anything that threatens the independence of the Fed threatens the long-term viability of monetary policy. It is really important that the expanded role of the Fed in the current crisis not threaten that viability. An independent Fed can pursue policies that are politically unpopular yet in the public interest. We need central banking to be boring again, not something that keeps us on the edge of our seats.

Thomas F. Cooley, the Paganelli-Bull professor of economics and Richard R. West dean of the NYU Stern School of Business, writes a weekly column for Forbes. His columns are archived here.

Article: Eco-Feudalism

JP Morgan - Banksters want to help the chinless wonders reduce their carbon @ssprint
http://www.jpmorganclimatecare.com/

August 28, 2007
To cancel out the CO2 of a return flight to India, it will take one poor villager three years of pumping water by foot. So is carbon offsetting the best way to ease your conscience?

http://www.timesonline.co.uk/tol/news/world/asia/article2337485.ece
Dominic Kennedy and Ashling O’Connor in Bombay

When David Cameron flew to India to open a JCB factory for a party donor, green-thinking supporters could rest assured that his visit would be carbon neutral. “We are offsetting all our emissions through Climate Care,” the Tory leader wrote on his blog. “As well as planting trees, they also invest in renewable energy projects in the developing world.”

Somewhere in the Indian countryside, a farmer is about to repay Mr Cameron’s debt to the planet. Climate Care’s latest enterprise is to provide “treadle pumps” to poor rural families so they can get water on to their land without using diesel power. The pumps are worked by stepping on pedals. If a peasant treads for two hours a day, it will take at least three years to offset the CO2 from Mr Cameron’s return flight to India.

Climate Care, whose clients include the Prince of Wales, is the leading brand in the fast-expanding but unregulated field of offsetting, in which consumers pay to make good the energy they emit through travel or heating. These businesses claim that they can negate pollution by planting trees or by paying for renewable power such as windmills or hydroelectrics.

Climate Care says that it has offset a million tonnes of carbon since it was founded ten years ago. It has just made the claim that it will sell enough offsets to neutralise 1 per cent of carbon emissions in Britain next year. But it was targeted last week by activists dressed as “red herrings”, who delivered fish to its Oxford premises. “Climate Care are misleading the public, making them believe that offsetting does some good,” said Joss Garman, a protester. “It’s like being a member of the RSPCA then going home and kicking a dog.”
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Visitors to the company website are invited to offset their greenhouse gas emissions after consulting a “carbon calculator”. A return flight from Manchester to Tenerife is measured at 0.65 tonnes of CO2 . That will be £4.91.

But the treadle pump initiative raises the moral predicament of offsetting: decadent Westerners paying for their pollution to be neutralised by people in developing countries. “That particular project is an outrage because it’s so exploitative,” said Jutta Kill, of the green campaigning organisation Fern. “It’s just disgraceful.”

Customers of the Cooperative Bank will soon be making payments towards Indian peasants’ “human energy”, as Climate Care calls it. The bank is marketing mortgages with a built-in “donation to Climate Care” equivalent to a fifth of the CO2 emissions of a typical British home.

Publicity from Climate Care claims that a treadle pump saves 0.65 tonnes of carbon a year, the amount that would have been emitted had the farmers used diesel. The pumps are part of a programme run by IDE-I, the respected Indian poverty relief organisation, and funded by charities and governments. They appear to have been designed to help families who cannot afford to buy a diesel pump.

But an independent study of treadle pumps in a village in Uttar Pradesh found that families there had previously hired a diesel pump for a maximum 30 hours per year. That suggests each was emitting 0.03 tonnes of carbon at most, nothing like the claimed savings suggested by Climate Care.

The company admits openly that it claims that the leg pumps save carbon, even if the farmers previously did little or no diesel pumping.

It argues that, as the economy grows, more irrigation would take place and so more diesel would be used, so the pumps provide a sustainable alternative to prevent the potential increase in carbon emissions.

Mike Mason, 53, an engineer, founded Climate Care and has never taken a salary. He told The Times: “I accept that if you say, ‘Has this reduction happened right now?’, the answer is ‘no’. But what we are desperately trying to do is to intervene in development paths. No scam involved.”

Ed Hanrahan, chief operating officer, rejected the accusation of exploitation. He said: “That’s like saying giving a man a bicycle to cycle to work when previously he was having to hire a car is exploitative of human labour.” Climate Care said that the pump project had been entered for the Voluntary Gold Standard, an independent verification scheme. Two of the company’s 50 projects have been submitted; neither assessment is complete.

Climate Care generally takes money from customers in exchange for a commitment to neutralise a certain amount of carbon. Most individual customers cannot tell where or when the offset was achieved, since there is no public register that matches sales to projects. By contrast, The Times discovered that leading corporate investors insisted that their projects were ring-fenced. Land Rover said: “We have built into the system that any customer can ask where their money went to, how it was spent. If they give us their vehicle ID number, we will be able to trace exactly the project their money was spent on.” The Times has also used the company to offset the carbon on flights taken by reviewers from its travel section. Climate Care’s accounts show a “carbon balloon” of promised reductions more than quadrupling in two years to £420,000, equivalent to 56,000 tonnes of carbon waiting to be offset. The company insisted that it had more than enough offsets in its portfolio to satisfy its commitments. Sales rose tenfold last year.

It also says that it takes responsibility for delivering the full amount of any emissions reductions sold. If a project delivers less than expected, then Climate Care will add new projects to make up the shortfall.

In recent months, it has moved its projects arm to a new company registered in Nairobi, where it has an office. By searching the Kenyan business register, The Times discovered that this is part of a vehicle based in the British Virgin Islands. No mention of Climate Care’s presence in the Caribbean tax haven could be found on its website.

The company has set up a committee to uphold integrity, chaired by Sir Crispin Tickell, the former diplomat. A leading environmentalist, he also sits on a board of governance created by Land Rover to oversee its offsetting through Climate Care.

Documents filed at Companies House show that Sir Crispin’s son, Oliver, is a shareholder. He is entitled to 0.3 per cent of royalties. Asked if there was a conflict of interest, Sir Crispin told The Times: “Frankly, no.”

As public fears about the environment grew, big corporations signed offsetting deals. Land Rover employed Climate Care for the world’s biggest offsetting project, to neutralise two million tonnes of carbon from its assembly plants and the first three years of driving each vehicle. According to a Climate Care insider, Mr Mason invested £1 million of his own money to convince Land Rover that his company could meet its needs.

Chris Goodall, author of How to Live a Low-Carbon Life, analysed Climate Care’s project to provide fuel-efficient cooking stoves in Honduras and suggested that it would have happened anyway, since it was backed by other funders. Climate Care replied that its money had been critical to the work going ahead.

Mr Mason said: “There are cowboys out there. The fact that there are cowboy builders doesn’t mean we should not build houses. I’ve spent ten years doing this. This has just cost me a million quid. The green campaigners are all very well but they haven’t delivered yet.”

Blue-chip customers

Land Rover The drivers of 10,000 new Freelanders are being assured that their CO2 emissions are neutralised by a hydroelectric project at a lake in Tajikistan

Cooperative Group The bank promotes its Climate Care donations tirelessly as part of its ethical marketing strategy

British Airways The airline boasted of being the first to introduce an offsetting scheme, but a Commons inquiry accused the carrier of achieving only a “derisory” take-up

Climate Care projects: pedal power, burning dung and hydroelectricity generators

Treadle pumps A century after treadmills were abolished in British prisons, peasant farmers are being encouraged to irrigate land using “human power” rather than diesel pumps. Supporters say that the project alleviates poverty, improves agriculture and enables men to stay with families instead of going to cities for work. It is being introduced in the Indian regions of Chhattisgarh and West Bengal

Burning dung Instead of using firewood for stoves, villagers are encouraged to collect cowpats and water and put them into “biogas digesters”, which create renewable fuel. The project is close to an tiger reserve at Ranthambhore National Park in Rajasthan. Supporters say that it spares the trees, which are the tigers’ habitat

Windmills Two wind turbines have been built at Karnataka in India, bringing renewable energy to the grid

Planting trees Climate Care is paying to plant indigenous species to replace a rainforest at the Kibale National Park in Uganda. Mike Mason, the company’s founder, says that “planting trees is mostly a waste of time and energy” and that the business is to cut tree planting from 20 per cent to 5 per cent of its portfolio. In this particular location, however, Climate Care maintains that the risk of the trees burning down is reduced because the forest develops a resistance to fire within 15 years

Homemade tortillas Women in the central Mexican highlands are said to scrape a living by selling tortillas cooked at home on wood-fuelled stoves. The production of more efficient stoves, saving energy and reducing domestic smoke, is being sponsored by Climate Care

Cleaner stoves The company is paying a respected American charity, Trees, Water & People, to help more households in Honduras to get fuel-efficient wood stoves. A study by Chris Goodall, the green campaigner, found that two years into the project, the carbon savings had yet to be verified

Bulbs for Borat? In Kazakhstan, where electricity comes from coal-fired power stations, Climate Care paid for 9,800 energy-efficient lightbulbs to be given to schools and pupils.

Island of light Islanders on Majuro (population: 20,000) in the Marshall Islands, under threat from rising sea levels blamed on global warming, rely on diesel shipments for their power. Climate Care is helping to install 10,000 energy-efficient lamps instead of ordinary bulbs, savinng bulbs

Patriotic cookers Painted in the national colours of Uganda new stoves being provided in Kampala can halve domestic consumption of charcoal fuel. This project has been submitted for the new Gold Standard verification scheme

Water power Khorog in Tajikistan, which relies on diesel fuel, has suffered intermittent energy supplies and 70 per cent of trees have been cut for firewood. Climate Care is supporting the installation of hydroelectricity generators tapping power from a lake

Wind farm Climate Care is helping to install 82 turbines in Hebei province, one of the windiest areas in China

Stove sellers A dozenwomen in the Spiny Forest of Madagascar are employed to train locals to build fuel-efficient stoves, sparing them the trek to find wood

Article: Miranda Rights Squashed

May 27, 2009
Justices Ease Rules on Questioning
By DAVID STOUT
http://www.nytimes.com/2009/05/27/us/27scotus.html?_r=1&ref=politics&pagewanted=print

WASHINGTON — The Supreme Court on Tuesday made it easier for the police and prosecutors to question suspects, lifting some restrictions on when defendants can be interrogated without their lawyers present.

In a 5-to-4 ruling, the court overturned its 1986 opinion in a Michigan case, which forbade the police from interrogating a defendant once he invoked his right to counsel at an arraignment or a similar proceeding.

That 1986 ruling has not only proved “unworkable,” Justice Antonin Scalia wrote for the majority, but its “marginal benefits are dwarfed by its substantial costs” in that some guilty defendants go free. Justice Scalia was joined by Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr.

In an angry dissent, Justice John Paul Stevens, who wrote the 1986 decision, said that contrary to the majority’s assertion, that decision protected “a fundamental right that the court now dishonors.”

The ruling Tuesday was in the case of Jesse Montejo, who was sentenced to death for the murder and robbery of Louis Ferrari in September 2002. Mr. Montejo was arrested a day after Mr. Ferrari was found dead in his home in Slidell, La. Suspicion focused on Mr. Montejo because he was known to associate with a disgruntled former employee of Mr. Ferrari’s dry-cleaning business.

Mr. Montejo was read his Miranda rights, arising from the landmark 1966 Supreme Court ruling that a defendant must be told of his right to remain silent and to have a lawyer present virtually from the moment he is taken into custody. Under questioning, Mr. Montejo repeatedly changed his story, at first blaming the former employee, then admitting that he had shot the victim during a botched burglary.

At a preliminary hearing, a judge ordered that a public defender be appointed. The timing is in dispute, but at some point Mr. Montejo was read his Miranda rights again and agreed to accompany detectives to locate the murder weapon, which he had indicated that he had thrown into a lake.

During the trip, he wrote a letter of apology to the victim’s widow, using paper and pen provided by the detectives. Only upon his return did Mr. Montejo meet with his lawyer, who was furious that his client had been questioned in his absence, and was further incensed when the letter was admitted as evidence at trial.

Mr. Montejo’s conviction was upheld by the Louisiana Supreme Court, which reasoned in part that the protections of the 1986 Michigan case should not apply to him because, in Louisiana as in many other states, lawyers are assigned automatically to indigent defendants, removing any question of whether Mr. Montejo specifically “requested” counsel at his arraignment.

Tuesday’s ruling was not a total defeat for Mr. Montejo, as the majority sent the case back to the state court, saying he should be allowed to pursue other grounds on which to have the incriminating letter suppressed. Further, the justices suggested, the police as well as the defendant gave inconsistent testimony, and those differences may have to be sorted out by the state court.

The Obama administration, in a stance that disappointed some of its liberal backers, had argued in favor of overturning the 1986 ruling in the Michigan case, as had 11 states that told the Supreme Court that that case was no longer relevant.

Tuesday’s opinion in Montejo v. Louisiana, No. 07-1529, inspired considerable emotion, as displayed by Justice Stevens’s reading of his dissent, which was joined by Justices David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.

Mr. Montejo’s Sixth Amendment right to legal representation, as well as his Fifth Amendment protection against self-incrimination, were damaged by the ruling, Justice Stevens said.

“Such a decision can only diminish the public’s confidence in the reliability and fairness of our system of justice,” he said.

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Article: Too much cola zaps muscle power

Too much cola zaps muscle power

Excessive cola consumption can lead to anything from mild weakness to profound muscle paralysis, doctors are warning.

This is because the drink can cause blood potassium to drop dangerously low, they report in the International Journal of Clinical Practice.

They tell of the curious case of an Australian ostrich farmer who needed emergency care for lung paralysis after drinking 4-10 litres of cola a day.

He made a full recovery and was advised to curtail his cola drinking.

“ We have every reason to think that it is not rare ”
Dr Clifford Packer from the Louis Stokes Cleveland VA Medical Centre in Ohio

Another example included a pregnant woman who regularly consumed up to three litres a day for the last six years and complained of tiredness, appetite loss and persistent vomiting.

A heart trace revealed she had an irregular heartbeat, most likely caused by her low blood potassium levels.

Once she stopped drinking so much cola, she made a full and uneventful recovery.

The investigators believe these cases are not atypical and that many people risk problems due to their intake.
“ Moderate consumption of cola drinks is completely safe and people can continue to enjoy such drinks as part of a balanced diet and active lifestyle ”
A spokeswoman from the British Soft Drinks Association

Manufacturers insist the products are safe when consumed in moderation.

In a commentary, Dr Clifford Packer from the Louis Stokes Cleveland VA Medical Centre in Ohio said: "We have every reason to think that it is not rare.

"With aggressive mass marketing, super-sizing of soft drinks, and the effects of caffeine tolerance and dependence, there is very little doubt that tens of millions of people in industrialised countries drink at least 2-3 l of cola per day.

"It follows that the serum potassium levels of these heavy cola drinkers are dropping, in some cases, to dangerous low levels."

Moderation

The author of the research paper, Dr Moses Elisaf from the University of Ioannina in Greece, said it appeared that hypokalaemia can be caused by excessive consumption of three of the most common ingredients in cola drinks - glucose, fructose and caffeine.

"The individual role of each of these ingredients in the pathophysiology of cola-induced hypokalaemia has not been determined and may vary in different patients.

"However in most of the cases we looked at for our review, caffeine intoxication was thought to play the most important role.

"This has been borne out by case studies that focus on other products that contain high levels of caffeine but no glucose or fructose."

Despite this, he warned that caffeine free cola products could also cause hypokalaemia because the fructose they contain can cause diarrhoea.

"We believe that further studies are needed to establish how much is too much when it comes to the daily consumption of cola drinks."

Excessive consumption has already been linked with obesity, diabetes and tooth and bone problems.

A spokeswoman from the British Soft Drinks Association said: "The examples used in this paper by the IJCP are all very extreme cases - moderate consumption of cola drinks is completely safe and people can continue to enjoy such drinks as part of a balanced diet and active lifestyle.

"The soft drinks industry is committed to encouraging responsible consumption of all its products. Nutrition labelling is included on pack so people can make an informed choice about the products they are drinking."
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/health/8056028.stm

Published: 2009/05/19 09:50:29 GMT

© BBC MMIX

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Article: Swine Flu May Be Human Error; WHO Investigates Claim (Update1)

Swine Flu May Be Human Error; WHO Investigates Claim (Update1)
BLOOMBERG
By Jason Gale and Simeon Bennett

May 13 (Bloomberg) -- The World Health Organization is investigating a claim by an Australian researcher that the swine flu virus circling the globe may have been created as a result of human error.

Adrian Gibbs, 75, who collaborated on research that led to the development of Roche Holding AG’s Tamiflu drug, said in an interview that he intends to publish a report suggesting the new strain may have accidentally evolved in eggs scientists use to grow viruses and drugmakers use to make vaccines. Gibbs said he came to his conclusion as part of an effort to trace the virus’s origins by analyzing its genetic blueprint.

“One of the simplest explanations is that it’s a laboratory escape,” Gibbs said in an interview with Bloomberg Television today. “But there are lots of others.”

The World Health Organization received the study last weekend and is reviewing it, Keiji Fukuda, the agency’s assistant director-general of health security and environment, said in an interview May 11. Gibbs, who has studied germ evolution for four decades, is one of the first scientists to analyze the genetic makeup of the virus that was identified three weeks ago in Mexico and threatens to touch off the first flu pandemic since 1968.

A virus that resulted from lab experimentation or vaccine production may indicate a greater need for security, Fukuda said. By pinpointing the source of the virus, scientists also may better understand the microbe’s potential for spreading and causing illness, Gibbs said.

Possible Mistake

“The sooner we get to grips with where it’s come from, the safer things might become,” Gibbs said by phone from Canberra yesterday. “It could be a mistake” that occurred at a vaccine production facility or the virus could have jumped from a pig to another mammal or a bird before reaching humans, he said.

Gibbs and two colleagues analyzed the publicly available sequences of hundreds of amino acids coded by each of the flu virus’s eight genes. He said he aims to submit his three-page paper today for publication in a medical journal.

“You really want a very sober assessment” of the science behind the claim, Fukuda said May 11 at the WHO’s Geneva headquarters.

The U.S. Centers for Disease Control and Prevention in Atlanta has received the report and has decided there is no evidence to support Gibbs’s conclusion, said Nancy Cox, director of the agency’s influenza division. She said since researchers don’t have samples of swine flu viruses from South America and Africa, where the new strain may have evolved, those regions can’t be ruled out as natural sources for the new flu.

No Evidence

“We are interested in the origins of this new influenza virus,” Cox said. “But contrary to what the author has found, when we do the comparisons that are most relevant, there is no evidence that this virus was derived by passage in eggs.”

The WHO’s collaborative influenza research centers, which includes the CDC, and sites in Memphis, Melbourne, London and Tokyo, were asked by the international health agency to review the study over the weekend, Fukuda said. The request was extended to scientists at the Food and Agriculture Organization in Rome, the World Organization for Animal Health in Paris, as well as the WHO’s influenza network, he said.

“My guess is that the picture should be a lot clearer over the next few days,” Fukuda said. “We have asked a lot of people to look at this.”

Virus Expert

Gibbs wrote or co-authored more than 250 scientific publications on viruses during his 39-year career at the Australian National University in Canberra, according to biographical information on the university’s Web site.

Swine flu has infected 5,251 people in 30 countries so far, killing 61, according to WHO data. Scientists are trying to determine whether the virus will mutate and become more deadly if it spreads to the Southern Hemisphere and back. Flu pandemics occur when a strain of the disease to which few people have immunity evolves and spreads.

Gibbs said his analysis supports research by scientists including Richard Webby, a virologist at St. Jude Children’s Research Hospital in Memphis, who found the new strain is the product of two distinct lineages of influenza that have circulated among swine in North America and Europe for more than a decade.

In addition, Gibbs said his research found the rate of genetic mutation in the new virus was about three times faster than that of the most closely related viruses found in pigs, suggesting it evolved outside of swine.

Gene Evolution

“Whatever speeded up the evolution of these genes happened at least seven or eight years ago, so one wonders, why hasn’t it been found?” Gibbs said today.

Some scientists have speculated that the 1977 Russian flu, the most recent global outbreak, began when a virus escaped from a laboratory.

Identifying the source of new flu viruses is difficult without finding the exact strain in an animal or bird “reservoir,” said Jennifer McKimm-Breschkin, a virologist at the Commonwealth Science and Industrial Research Organization in Melbourne.

“If you can’t find an exact match, the best you can do is compare sequences,” she said. “Similarities may give an indication of a possible source, but this remains theoretical.”

The World Organization for Animal Health, which represents chief veterinary officers from 174 countries, received the Gibbs paper and is working with the WHO on an assessment, said Maria Zampaglione, a spokeswoman.

Genetic Patterns

The WHO wants to know whether any evidence that the virus may have been developed in a laboratory can be corroborated and whether there are other explanations for its particular genetic patterns, according to Fukuda.

“These things have to be dealt with straight on,” he said. “If someone makes a hypothesis, then you test it and you let scientific process take its course.”

Gibbs said he has no evidence that the swine-derived virus was a deliberate, man-made product.

“I don’t think it could be a malignant thing,” he said. “It’s much more likely that some random thing has put these two viruses together.”

Gibbs, who spent most of his academic career studying plant viruses, said his major contribution to the study of influenza occurred in 1975, while collaborating with scientists Graeme Laver and Robert Webster in research that led to the development of the anti-flu medicines Tamiflu and Relenza, made by GlaxoSmithKline Plc.

Bird Poo

“We were out on one of the Barrier Reef islands, off Australia, catching birds for the flu in them, and I happened to be the guy who caught the best,” Gibbs said. The bird he got “yielded the poo from which was isolated the influenza isolate strain from which all the work on Tamiflu and Relenza started.”

Gibbs, who says he studies the evolution of flu viruses as a “retirement hobby,” expects his research to be challenged by other scientists.

“This is how science progresses,” he said. “Somebody comes up with a wild idea, and then they all pounce on it and kick you to death, and then you start off on another silly idea.”

To contact the reporters on this story: Jason Gale in Geneva at j.gale@bloomberg.net; Simeon Bennett in Singapore at sbennett9@bloomberg.net.
Last Updated: May 13, 2009 01:36 EDT