Trichet Bonds To Resolve the European Sovereign Debt Problem

We propose the creation of “Trichet Bonds” as a comprehensive solution to the current sovereign debt crisis in the EU area. “Trichet Bonds,” to be named after the ECB president Jean-Claude Trichet, will be similar to “Brady Bonds” that resolved the Latin American debt crisis in the late 1980s and were named after the then Treasury Secretary Nicholas Brady. Like the Brady Bonds, Trichet Bonds will be new long-duration bonds issued by countries in the EU area that will be collateralized by zero-coupon bonds of the same duration issued by the ECB. The zero-coupon bonds will be sold by the ECB to the countries issuing Trichet Bonds, which will be offered in exchange for outstanding sovereign debt of the countries. The exchange is offered at market value, so current debt holders will experience a “haircut” from par value, and thus the exchange does not involve a “bailout.” However, present holders of sovereign debt will be exchanging low quality bonds with limited liquidity, for higher quality bonds with greater liquidity. Debt holders not accepting the exchange will be at risk of a forced restructuring at a later date at terms less favorable. The effect of the exchange offer, if a threshold of approximately 70% approve it, is to replace old debt with a lesser amount of new debt with longer maturities. The creation of Trichet bonds will result in various advantages both in comparison to the present unstable situation and other proposed solutions. First, the long duration of Trichet bonds will eliminate the immediate crisis caused by short term expiration of significant amounts of debt which is looming over Greece, Ireland, Portugal, Spain and possibly other EU countries. Second, the guarantee of the principal with the zero-coupon ECD bond collateral increases the quality of the Trichet Bonds compared to existing sovereign debt. Third, the market for the new Trichet Bonds will be liquid and likely to trade at appreciating prices as refinancing (roll-over) risk is reduced and time is allowed for economic reforms by the issuing countries (a condition of the ECB) to take effect. In addition, the exchange of existing sovereign debt for Trichet bonds will force many European banks holding the sovereign debt to take the write-offs required, thus making their own balance sheets more transparent. Many European banks are thought to have large holdings of sovereign debt from the “peripheral” countries that have not been marked-to-market, and thus represent sizeable potential losses for the banks when the sovereign debt is ultimately restructured, as we believe it must be over the next few years. Most of the sovereign bank debt likely to be exchanged, however, is held by larger German, French and Swiss banks with the capability (if not necessarily the desire) to take the write-offs required. The overhang of such future losses affects the entire European banking system at a time when it too is being restructured. The ECB, and the European central banks need to identify those banks that are impaired by excessive sovereign holdings and assist them in recapitalization – the sooner the better – but they should also push the larger, stronger banks to accept the exchange offers in the interest of bank transparency and restructuring as well as in resolving the sovereign debt problem. Clearly the two problems – sovereign debt and bank restructuring – are connected. The issuance of Trichet Bonds, will help to resolve both problems by recognizing market realities and offering an easier way out than through a forced, cram-down restructuring once the ailing sovereigns exhaust their ability to repay the existing debt. There are significant advantages to Trichet bonds over other discussed solutions to the sovereign debt problem. One such proposed solution is the issuance of “Euro Bonds” guaranteed by the Eurozone countries or the EU itself for the purpose of redeeming sovereign bonds by market purchases, or by lending the proceeds to the countries involved for them to acquire their debt. Apart from the considerable political obstacles to such a program, the undertaking actually makes it less likely that existing self-interested debt-holders will sell in the market. The implication of the program is that either through market interventions that push prices up, or by the assumption that the program will continue to enable the debt to be retired at par on maturity, debt-holders won’t sell unless the price is pushed high enough to constitute a bailout. The ECB’s current efforts to support the prices of distressed sovereign bonds is currently having this effect, which transfers some, if not all of the cost of resolving the problem to European taxpayers, where increasingly it is resented. The alternative approach, that has only been discussed by market participants, is for a Russian or Argentine solution in which the debt-holders are made a take-it-or-leave-it offer to exchange outstanding debt for new, generally illiquid bonds at an arbitrary price that discourages future investment by the market. Such an approach is understood by the sovereign debt market to constitute a de facto default. Such a default would likely have serious adverse consequences for the Euro and the EU, and may be less likely that a bailout of some kind. The great advantage of Trichet Bonds is that they avoid both bailouts and defaults.Trichet bonds, sovereign debt, euro, debt restructuring, Greece, Ireland, Portugal, Spain, Italy, Brady bonds

Predictive Control of Autonomous Kites in Tow Test Experiments

In this paper we present a model-based control approach for autonomous flight of kites for wind power generation. Predictive models are considered to compensate for delay in the kite dynamics. We apply Model Predictive Control (MPC), with the objective of guiding the kite to follow a figure-of-eight trajectory, in the outer loop of a two level control cascade. The tracking capabilities of the inner-loop controller depend on the operating conditions and are assessed via a frequency domain robustness analysis. We take the limitations of the inner tracking controller into account by encoding them as optimisation constraints in the outer MPC. The method is validated on a kite system in tow test experiments.Comment: The paper has been accepted for publication in the IEEE Control Systems Letters and is subject to IEEE Control Systems Society copyright. Upon publication, the copy of record will be available at http://ieeexplore.ieee.or

Allelopathic Observations in Rice (Oryza sativa L.) to Ducksalad (Heteranthera limosa)

More than 50 weed species infest drill-seeded rice in the U.S. and one of the most prevalent aquatic weeks is ducksalad (Heteranthera limosa). During the summer of 1988, a field experiment was conducted to identify rice accessions from the USDA/ARS rice germplasm collection for allelopathic effects to ducksalad. In this field experiment, 5,000 accessions were evaluated for allelopathic activity. Five to seven seeds of each rice accession were planted in hills about 75cm apart in two replications. Allelopathic activity was recorded as 1) radius of the area affected by allelochemical from the base of the rice plant and 2) percentage of weed control within the affected area. Ducksalad was rated at the panicle initiation stage of rice development. Of the 5,000 accessions that were evaluated, approximately 191 were identified as having evident allelopathic activity. The accessions that demonstrated allelopathic activity originated in 26 countries (Afghanistan, Argentina, Australia, Brazil, Columbia, Dominican Republic, France, India, Iran, Iraq, Israel, Italy, Japan, Malaysia, Mexico, Pakistan, Peru, Philippines, Portugal, Republic of Korea, People Republic of China, Soviet Union, Taiwan, Thailand, Turkey, and United States)

Towards locally based resource allocation in the NHS

In a health care system where resources are scarce and the principle of equity is of central concern, mechanisms for the appropriate allocation of resources based on the notion of relating resource use to some concept of need are essential. Two key issues raised in the UK government’s White Paper The New NHS: modern, dependable are the ability first to define health care budgets at a local level and second to integrate budgets to encompass all relevant aspects of health care delivery. This paper considers the theoretical and practical implications of devolving NHS budgets to primary care groups. The paper advocates the development of a patient-based survey of all NHS health care utilization, which could serve as the basis for integrated global budgets for use at a local level.resource allocation; health care budgets; primary care; health need; general practice

State Estimation for Kite Power Systems with Delayed Sensor Measurements

We present a novel estimation approach for airborne wind energy systems with ground-based control and energy generation. The estimator fuses measurements from an inertial measurement unit attached to a tethered wing and position measurements from a camera as well as line angle sensors in an unscented Kalman filter. We have developed a novel kinematic description for tethered wings to specifically address tether dynamics. The presented approach simultaneously estimates feedback variables for a flight controller as well as model parameters, such as a time-varying delay. We demonstrate the performance of the estimator for experimental flight data and compare it to a state-of-the-art estimator based on inertial measurements

SLIDES: The BLM and Colorado DNR MOU: A Water-Based Partnership

Presenter: Roy Smith, Bureau of Land Management 19 slide