IS IT THE END OF THE US DOLLAR$$$$$$$$$$$$$$$

Why the Dollar's Reign Is Near an End

For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.

By BARRY EICHENGREEN

The single most astonishing fact about foreign exchange is not the high volume of transactions, as incredible as that growth has been. Nor is it the volatility of currency rates, as wild as the markets are these days.

Instead, it's the extent to which the market remains dollar-centric.

Consider this: When a South Korean wine wholesaler wants to import Chilean cabernet, the Korean importer buys U.S. dollars, not pesos, with which to pay the Chilean exporter. Indeed, the dollar is virtually the exclusive vehicle for foreign-exchange transactions between Chile and Korea, despite the fact that less than 20% of the merchandise trade of both countries is with the U.S.

Chile and Korea are hardly an anomaly: Fully 85% of foreign-exchange transactions world-wide are trades of other currencies for dollars. What's more, what is true of foreign-exchange transactions is true of other international business. The Organization of Petroleum Exporting Countries sets the price of oil in dollars. The dollar is the currency of denomination of half of all international debt securities. More than 60% of the foreign reserves of central banks and governments are in dollars.

The greenback, in other words, is not just America's currency. It's the world's.

But as astonishing as that is, what may be even more astonishing is this: The dollar's reign is coming to an end.

I believe that over the next 10 years, we're going to see a profound shift toward a world in which several currencies compete for dominance.

The impact of such a shift will be equally profound, with implications for, among other things, the stability of exchange rates, the stability of financial markets, the ease with which the U.S. will be able to finance budget and current-account deficits, and whether the Fed can follow a policy of benign neglect toward the dollar.

The Three Pillars

How could this be? How could the dollar's longtime most-favored-currency status be in jeopardy?

To understand the dollar's future, it's important to understand the dollar's past—why the dollar became so dominant in the first place. Let me offer three reasons.

First, its allure reflects the singular depth of markets in dollar-denominated debt securities. The sheer scale of those markets allows dealers to offer low bid-ask spreads. The availability of derivative instruments with which to hedge dollar exchange-rate risk is unsurpassed. This makes the dollar the most convenient currency in which to do business for corporations, central banks and governments alike.

Second, there is the fact that the dollar is the world's safe haven. In crises, investors instinctively flock to it, as they did following the 2008 failure of Lehman Brothers. This tendency reflects the exceptional liquidity of markets in dollar instruments, liquidity being the most precious of all commodities in a crisis. It is a product of the fact that U.S. Treasury securities, the single most important asset bought and sold by international investors, have long had a reputation for stability.

Finally, the dollar benefits from a dearth of alternatives. Other countries that have long enjoyed a reputation for stability, such as Switzerland, or that have recently acquired one, like Australia, are too small for their currencies to account for more than a tiny fraction of international financial transactions.

What's Changing

But just because this has been true in the past doesn't guarantee that it will be true in the future. In fact, all three pillars supporting the dollar's international dominance are eroding.

First, changes in technology are undermining the dollar's monopoly. Not so long ago, there may have been room in the world for only one true international currency. Given the difficulty of comparing prices in different currencies, it made sense for exporters, importers and bond issuers all to quote their prices and invoice their transactions in dollars, if only to avoid confusing their customers.

Now, however, nearly everyone carries hand-held devices that can be used to compare prices in different currencies in real time. Just as we have learned that in a world of open networks there is room for more than one operating system for personal computers, there is room in the global economic and financial system for more than one international currency.

Second, the dollar is about to have real rivals in the international sphere for the first time in 50 years. There will soon be two viable alternatives, in the form of the euro and China's yuan.

Americans especially tend to discount the staying power of the euro, but it isn't going anywhere. Contrary to some predictions, European governments have not abandoned it. Nor will they. They will proceed with long-term deficit reduction, something about which they have shown more resolve than the U.S. And they will issue "e-bonds"—bonds backed by the full faith and credit of euro-area governments as a group—as a step in solving their crisis. This will lay the groundwork for the kind of integrated European bond market needed to create an alternative to U.S. Treasurys as a form in which to hold central-bank reserves.

China, meanwhile, is moving rapidly to internationalize the yuan, also known as the renminbi. The last year has seen a quadrupling of the share of bank deposits in Hong Kong denominated in yuan. Seventy thousand Chinese companies are now doing their cross-border settlements in yuan. Dozens of foreign companies have issued yuan-denominated "dim sum" bonds in Hong Kong. In January the Bank of China began offering yuan-deposit accounts in New York insured by the Federal Deposit Insurance Corp.

Allowing Chinese companies to do cross-border settlements in yuan will free them from having to undertake costly foreign-exchange transactions. They will no longer have to bear the exchange-rate risk created by the fact that their revenues are in dollars but many of their costs are in yuan. Allowing Chinese banks, for their part, to do international transactions in yuan will allow them to grab a bigger slice of the global financial pie.

Admittedly, China has a long way to go in building liquid markets and making its financial instruments attractive to international investors. But doing so is central to Beijing's economic strategy. Chinese officials have set 2020 as the deadline for transforming Shanghai into a first-class international financial center. We Westerners have underestimated China before. We should not make the same mistake again.

Finally, there is the danger that the dollar's safe-haven status will be lost. Foreign investors—private and official alike—hold dollars not simply because they are liquid but because they are secure. The U.S. government has a history of honoring its obligations, and it has always had the fiscal capacity to do so.

But now, mainly as a result of the financial crisis, federal debt is approaching 75% of U.S. gross domestic product. Trillion-dollar deficits stretch as far as the eye can see. And as the burden of debt service grows heavier, questions will be asked about whether the U.S. intends to maintain the value of its debts or might resort to inflating them away. Foreign investors will be reluctant to put all their eggs in the dollar basket. At a minimum, the dollar will have to share its safe-haven status with other currencies.

A World More Complicated

How much difference will all this make—to markets, to companies, to households, to governments?

One obvious change will be to the foreign-exchange markets. There will no longer be an automatic jump up in the value of the dollar, and corresponding decline in the value of other major currencies, when financial volatility surges. With the dollar, euro and yuan all trading in liquid markets and all seen as safe havens, there will be movement into all three of them in periods of financial distress. No one currency will rise as strongly as did the dollar following the failure of Lehman Bros. There will be no reason for the rates between them to move sharply, something that would potentially upend investors.

But the impact will extend well beyond the markets. Clearly, the change will make life more complicated for U.S. companies. Until now they have had the convenience of using the same currency—dollars—whether they are paying their workers, importing parts and components, or selling their products to foreign customers. They don't have to incur the cost of changing foreign-currency earnings into dollars. They don't have to purchase forward contracts and options to protect against financial losses due to changes in the exchange rate. This will all change in the brave new world that is coming. American companies will have to cope with some of the same exchange-rate risks and exposures as their foreign competitors.

Conversely, life will become easier for European and Chinese banks and companies, which will be able to do more of their international business in their own currencies. The same will be true of companies in other countries that do most of their business with China or Europe. It will be a considerable convenience—and competitive advantage—for them to be able to do that business in yuan or euros rather than having to go through the dollar.

U.S. Impact

In this new monetary world, moreover, the U.S. government will not be able to finance its budget deficits so cheaply, since there will no longer be as big an appetite for U.S. Treasury securities on the part of foreign central banks.

Nor will the U.S. be able to run such large trade and current-account deficits, since financing them will become more expensive. Narrowing the current-account deficit will require exporting more, which will mean making U.S. goods more competitive on foreign markets. That in turn means that the dollar will have to fall on foreign-exchange markets—helping U.S. exporters and hurting those companies that export to the U.S.

My calculations suggest that the dollar will have to fall by roughly 20%. Because the prices of imported goods will rise in the U.S., living standards will be reduced by about 1.5% of GDP—$225 billion in today's dollars. That is the equivalent to a half-year of normal economic growth. While this is not an economic disaster, Americans will definitely feel it in the wallet.

On the other hand, the next time the U.S. has a real-estate bubble, we won't have the Chinese helping us blow it.

Dr. Eichengreen is the George C. Pardee and Helen N. Pardee professor of economics and political science at the University of California, Berkeley. His new book is "Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System."

DEMOCRACY OR ISLAMIC UPRISING IN THE MIDDLE EAST???

The growing unrest in the Arabic world among Islamic states is leading to concern that the demonstrations are being driven more by a desire for stricter Islamic rule than for democratic reforms. Many of the protesters are being organized by hardline Islamic organizations. Although some of the Arab leaders being challenged are brutal dictators like Libya’s Moammar Gadhafi, many are considered secular rulers and allies of the U.S. These uprisings have troubling similarities to the Iranian revolution of 1979, when Ayatollah Khomeini came to power by hiding his intentions of creating despotic rule by clerics behind the false promise of democratic reforms.

There is an unwritten social contract in Persian Gulf countries which says that autocratic monarchies are accepted as long as they provide free housing, health care, education, food subsidies, and a government job for life. The demonstrators appear more concerned about obtaining additional government benefits than achieving real democratic reforms like enacting a democratic form of government. Although some are hoping the uprisings are similar to the 1989 democratic revolutions that swept Eastern Europe, those anti-communist uprisings clearly called for replacing totalitarianism with democracy.

Hard-line Islamic clerics in the Arabic world are encouraging the uprisings, and recently released statements of support that harshly warned against changes leading to democratic and secular governments. Al Qaeda is also inciting the protests and calling for Islamic rule. On Saturday, al Qaeda in the Arabian Peninsula posted an audio recording across websites urging Muslims to revolt against Arab rulers and to establish governments based on Islamic religious law, or Shariah.

The protests began in December in Tunisia, in response to a street vendor who immolated himself over unfair treatment by the police. Demonstrators forced Tunisian President Zine al-Abidine Ben Ali to flee the country, and then forced out Egyptian President Hosni Barak, a U.S. ally. Libyan leader Moammar Gadhafi is expected to fall next. The protests are gaining momentum in Bahrain and Yemen, and have spread to Iraq, Saudi Arabia, Jordan, Algeria, Morocco, Qatar, Lebanon, the Palestinian territories and Oman. A massive “Day of Rage” protest was held in several countries on Friday. Other countries are planning their own “Day of Rage” on March 1, 2011, including Iran, which is predominantly Persian, and Syria. A protest is planned for March 3 in Sudan.

There are multiple indications across the Arabic states that the demonstrations may lead to stricter Islamic rule, not democratic reforms. On March 1, 2011, Tunisia legalized its Islamist movement, Ennahda, for the first time in 30 years. The post-Mubarak administration in Egypt has invited the Muslim Brotherhood to participate in the review of Egypt’s constitution, and for the first time in 30 years the regime is allowing Iranian navy ships through the Suez Canal. Iranian clerics are boasting that the Egyptian demonstrations are following in the path of the Iranian revolution. A recent Zogby poll found that 65% of Egyptians believe that Islamic clergy must play a greater role in the Egyptian political system.

In Yemen, where al Qaeda has a strong presence, the main coalition opposed to the U.S.-backed president Ali Abdullah Saleh is the Joint Meeting Parties (JMP), which contains Islah, the country’s primary Islamist party. The changes President Saleh is making to appease demonstrators are not democratic reforms but rather the creation of more government benefits, like increasing social services, tuition assistance and the salaries of government employees and the military.

The protesters in Bahrain are substantially composed of hard-line Shiites backed by Iranian Shiites, and it is feared that if Bahrain’s more moderate Sunni monarchy yields to them it could allow Iran’s Shiite theocratic government to gain control. Iranian president Mahmoud Ahmadinejad has been one of the most vocal supporters of the uprisings across the Arab world. The U.S. stands to lose considerably should this happen. The Navy’s Fifth Fleet currently resides in Bahrain, and is the Pentagon’s main counterweight against Iran’s military ambitions.

In Jordan, the largest opposition group to U.S. ally King Abdullah II is the Muslim Brotherhood, a pan-Arab movement of Islamic fundamentalists with ties to Hamas and roots in Egypt. King Abdullah has expressed fear that continued U.S. pressure for more reforms, riling up the protesters, could strengthen hard-line Islamists. His response has been to promise pay raises. Palestinian President Mahmoud Abbas has similar concerns, fearing that protests in support of the Egyptian demonstrators could turn violent, allowing Hamas to destabilize the West Bank.

Another country with a pro-Western leader targeted by protests is Oman’s sultan, Qaboos bin Said. His response to demonstrators’ demands for more jobs has been to hire 50,000 new government employees and offer $390 a month in unemployment insurance.

The nature of the protesters’ behavior not only lacks a real desire for democratic reform, but contains disturbing elements. Young protesters in Bahrain are chanting “death to the al-Khalifa family.” The choice of “Day of Rage” as the name for massive demonstrations instead of something like “Day of Change” speaks volumes. Protesters everywhere have set buildings on fire. The anti-Israel message of many of the demonstrators threatens to deteriorate relations throughout the Middle East with Israel. Protesters in Qatar demanding the resignation of its pro-Western emir accuse him of being an agent of Israel. Their Facebook fan page was up to 18,262 fans on Saturday.

Even if the majority of protesters genuinely want democratic reforms, opposition leaders may pull a bait and switch upon assuming power, using the momentum to establish stricter Islamic states. It is too early and naively optimistic to conclude that these uprisings will lead to more democracy and freedom.

Rachel Alexander

Rachel Alexander is the co-editor of the Intellectual Conservative.

OBAMA'S LEGACY

President Obama's failure to support America's allies in the Middle East and his dithering endorsement of chaos in the region will send oil and gasoline prices skyrocketing, triggering a massive bout of stagflation. This vicious cycle of rising prices, decreased consumption and ever-higher prices (as vendors seek to recover higher fixed costs) will cripple the American economy for years to come.

This is Obama's true legacy.

Consider what he has done to push up oil and gas prices:

-- Endorsed spreading chaos in the Middle East.

-- First banned and now slowed down off shore oil drilling.

-- Considering curbs on fracking (horizontal drilling to unlock shale deposits in the Northeast -- a potent new source of oil).

-- Imposing a carbon tax on domestically produced coal and oil through EPA mandate.

-- Proposed an end to tax advantages designed to encourage oil drilling and exploration.

Now Obama is reaping the fruits of these misguided policies -- $4 gas soon to go up to $5 or $6! And the fuel price increases will take their place alongside food price rises. Food prices for corn, soybeans, wheat and other basic crops have almost doubled in the past year.

(The Consumer Price Index deliberately understates fuel and food inflation in its formula to avoid triggering cost of living adjustment increases in private pay and government programs).

Finally, he has encouraged the Federal Reserve Board to almost triple the money supply, over $1 trillion of it based on the purchase of worthless mortgage-backed securities.

The combination of reduced confidence in the dollar (at home and abroad) and the rises in fuel and food prices will force up prices, as costs push them higher. Already, the International Monetary Fund (IMF) has pressed for the replacement of the dollar as an international currency by "drawing rights" printed by the IMF. Such a policy, of course, would be a disaster, since it would attempt to base global currency on an institution without the power to tax. But it is a measure of how far faith in the dollar has fallen that it is being seriously urged. U.S. inflation can only fan that movement.

Since the Fed has got to stop printing money soon lest it become wallpaper, interest rates, too, will rise -- also contributing to the cost-push price inflation.

But the economy cannot afford to pay these higher prices. Consumer demand, which accounts of three-quarters of gross domestic product, is already stagnant. With inflation, it will drop. Then, unable to recoup their costs, vendors will be forced to raise prices even higher. An inflationary psychology will take hold of the economy. Higher interest rates will be needed to break its hold, forcing us into yet another recession, this one fully courtesy of President Obama.

For months now, political pundits have wondered if the economy would improve, helping Obama's re-election chances. It now appears that the exact opposite is likely and that his re-election chances will be washed away by a massive flood of inflation as a consequence of his misguided policies. Obama will doubtless blame oil companies and speculators for the fuel-price increases, but his role in encouraging instability in the oil-producing regions of the Middle East is apparent enough.

He put the demand of the Egyptian people for political change ahead of America's need for financial stability. He was so enraptured by being "on the right side of history" that he forgot about his role as the head of our economy and its vulnerability to the very instability his policies fanned.

 Dick Morris, a former political adviser to Sen. Trent Lott (R-Miss.) and President Bill Clinton

FOUNDER OF PLANNED PARENHOOD-MARGARET SANGER

The leftists in the United States claim that abortion is a right and should be left alone.They are biggest supporters of Planned Parenthood and the rest. Do they know who started Planned Parenhood? something we all need to know:
 Margaret Sanger Founder of Planned Parenthood In Her Own Words "The most merciful thing that a large family does to one of its infant members is to kill it." Margaret Sanger, Women and the New Race (Eugenics Publ. Co., 1920, 1923) Margaret Sanger (1883-1966)


On blacks, immigrants and indigents: "...human weeds,' 'reckless breeders,' 'spawning... human beings who never should have been born." Margaret Sanger, Pivot of Civilization, referring to immigrants and poor people


On sterilization & racial purification: Sanger believed that, for the purpose of racial "purification," couples should be rewarded who chose sterilization. Birth Control in America, The Career of Margaret Sanger, by David Kennedy, p. 117, quoting a 1923 Sanger speech.


On the right of married couples to bear children: Couples should be required to submit applications to have a child, she wrote in her "Plan for Peace." Birth Control Review, April 1932


On the purpose of birth control: The purpose in promoting birth control was "to create a race of thoroughbreds," she wrote in the Birth Control Review, Nov. 1921 (p. 2)


 On the rights of the handicapped and mentally ill, and racial minorities: "More children from the fit, less from the unfit -- that is the chief aim of birth control." Birth Control Review, May 1919, p. 12


 On religious convictions regarding sex outside of marriage: "This book aims to answer the needs expressed in thousands on thousands of letters to me in the solution of marriage problems... Knowledge of sex truths frankly and plainly presented cannot possibly injure healthy, normal, young minds. Concealment, suppression, futile attempts to veil the unveilable - these work injury, as they seldom succeed and only render those who indulge in them ridiculous. For myself, I have full confidence in the cleanliness, the open-mindedness, the promise of the younger generation." Margaret Sanger, Happiness in Marriage (Bretano's, New York, 1927)


On the extermination of blacks: "We do not want word to go out that we want to exterminate the Negro population," she said, "if it ever occurs to any of their more rebellious members." Woman's Body, Woman's Right: A Social History of Birth Control in America, by Linda Gordon


On respecting the rights of the mentally ill: In her "Plan for Peace," Sanger outlined her strategy for eradication of those she deemed "feebleminded." Among the steps included in her evil scheme were immigration restrictions; compulsory sterilization; segregation to a lifetime of farm work; etc. Birth Control Review, April 1932, p. 107


On adultery: A woman's physical satisfaction was more important than any marriage vow, Sanger believed. Birth Control in America, p. 11


 On marital sex: "The marriage bed is the most degenerating influence in the social order," Sanger said. (p. 23) [Quite the opposite of God's view on the matter: "Marriage is honorable in all, and the bed undefiled; but whoremongers and adulterers God will judge." (Hebrews 13:4)


On abortion: "Criminal' abortions arise from a perverted sex relationship under the stress of economic necessity, and their greatest frequency is among married women." The Woman Rebel - No Gods, No Masters, May 1914, Vol. 1, No. 3.


On the YMCA and YWCA: "...brothels of the Spirit and morgues of Freedom!"), The Woman Rebel - No Gods, No Masters, May 1914, Vol. 1, No. 3.


 On the Catholic Church's view of contraception: "...enforce SUBJUGATION by TURNING WOMAN INTO A MERE INCUBATOR." The Woman Rebel - No Gods, No Masters, May 1914, Vol. 1, No. 3.


On motherhood: "I cannot refrain from saying that women must come to recognize there is some function of womanhood other than being a child-bearing machine." What Every Girl Should Know, by Margaret Sanger (Max Maisel, Publisher, 1915) [Jesus said: "Daughters of Jerusalem, weep... for your children. For, behold, the days are coming, in which they shall say, Blessed (happy) are the barren, and the wombs that never bare, and the breasts which never gave suck." (Luke 23:24)]


"The most merciful thing that a large family does to one of its infant members is to kill it." Margaret Sanger, Women and the New Race (Eugenics Publ. Co., 1920, 1923)

RISING OIL PRICES THREATENS OUR WAY OF LIVING

Rising oil price threatens fragile High oil prices threaten to derail the fragile economic recovery among developed nations this year, the leading energy watchdog has warned, putting pressure on the Opec oil cartel to increase production.

Over the past year the oil import costs for the 34 mostly rich countries that make up the Organisation for Economic Co-operation and Development have soared by $200bn to $790bn at the end of 2010, according to an analysis by the International Energy Agency.

The increase, due to high crude prices, is equal to a loss of income of about 0.5 per cent of OECD gross domestic product, according to the IEA.

“Oil prices are entering a dangerous zone for the global economy,” said Fatih Birol, the IEA’s chief economist. “The oil import bills are becoming a threat to the economic recovery. This is a wake-up call to the oil consuming countries and to the oil producers.”

Oil prices have edged closer to $100 a barrel in recent weeks and Brent crude hit $95 a barrel for the first time in 27 months on Monday as the economic recovery has gathered pace.

Although oil prices dropped on Tuesday, the warning from the IEA will put pressure on Opec to increase its production. Despite the high prices, oil ministers decided last month to leave their quotas unchanged.

Ali Naimi, the Saudi oil minister, repeated at the time that he favoured an oil price of “$70 to $80 a barrel” and that there were no plans to convene an extraordinary meeting before June 2 this year.

However, according to Mr Birol, “it is not in the interest of anyone to see such high prices”.

OECD countries account for about 65 per cent of all global oil imports, he said. “Oil exporters need clients with healthy economies but these high prices will sooner or later make the economies sick, which would mean the need for importing oil will be less.”

In the very short term, therefore, “it may not be a bad idea that the producers are ready to increase production and show their understanding that these high prices are not good for the global economy,” he added.

Oil consuming nations, meanwhile, need to accelerate their efforts to reduce their reliance on oil, especially for transportation, he said. According to the IEA’s analysis, the European Union has seen its import bill rise by $70bn during 2010, equal to the combined budget deficits of Greece and Portugal.

On top of the high crude prices, Europe is still to feel the full impact of higher gas prices as 75 per cent of its gas contracts are linked to oil prices. The weak euro against the US dollar will also amplify the cost.

The US, meanwhile, has seen its bill jump by $72bn. Japan, which imports more than 99 per cent of its energy needs from oil, gas and coal, is paying an additional $27bn. Less developed nations are also being hit, seeing their bill rise by $20bn, equal to a loss of income of almost 1 per cent of GDP.

The ratio of countries’ oil import bills to GDP, a key measure of the cost of oil prices on economies, is close to levels last seen during the financial crisis in 2008, Mr Birol warned.

If oil prices remain above $90/barrel for the rest of this year then the ratio for the European Union will be 2.1 per cent – close to the 2.2 per cent level it reached in 2008.

“It is a very telling story. 2010 rang the first alarm bells and 2011 price levels could bring us to the same financial crisis times that we saw in 2008,” said Mr Birol.

UAE hotel erects 11-million-dollar Christmas tree

The USA being a country where Christian values are predominant yet, it has a problem of saying Merry Christmas. They prefer Happy Holidays.

However, a Moslim country, the UAE specifically the emirate of Abu-Dhabi has unveiled a Christmas tree which is 40 feet in height and bejeweled with 11 million dollars worth of diamonds, emeralds and sapphires.

How on earth is this possible? The whole world seems to know the importance of Christmas except the morons in the United States. A lesson to be learnt here.

Read on.

Christmas came in extravagant fashion to the Muslim desert emirate of Abu Dhabi as a glitzy hotel unveiled a bejewelled Christmas tree valued at more than 11 million dollars on Wednesday.

It is the "most expensive Christmas tree ever," with a "value of over 11 million dollars," said Hans Olbertz, general manager of Emirates Palace hotel, at its inauguration.

The 13-metre (40-foot) faux evergreen, located in the gold leaf-bedecked rotunda of the hotel, is decorated with silver and gold bows, ball-shaped ornaments and small white lights.

But the necklaces, earrings and other jewellery draped around the tree's branches are what give it a record value.

It holds a total of 181 diamonds, pearls, emeralds, sapphires and other precious stones, said Khalifa Khouri, owner of Style Gallery, which provided the jewellery.

"The tree itself is about 10,000 dollars," Olbertz said. "The jewellery has a value of over 11 million dollars -- I think 11.4, 11.5."

"Probably, this will be another" Dubai entry into the Guinness book of world records, Olbertz said, adding that Emirates Palace planned to contact the organisation about the tree which is to stay until the end of the year.

Asked if the tree might offend religious sensibilities in the United Arab Emirates, where the vast majority of the local population is Muslim, Olbertz said he did not think it would. "It's a very liberal country," he said.

Like other hotels in the United Arab Emirates, it has had a Christmas tree up in previous years. But this year, "we said we have to do something different," and the hotel's marketing team hatched the plan, said Olbertz.

The tree is not the first extravagant offering from Emirates Palace -- a massive, dome-topped hotel sitting amid fountains and carefully manicured lawns.

The hotel, which bills itself as seven-star, in February introduced a package for a seven-day stay priced at one million dollars.

Takers of the package have a private butler and a chauffeur-driven Maybach luxury car at their disposal during their stay, as well as a private jet available for trips to other countries in the region.

And in May, the hotel opened a gold vending machine, becoming the first place outside Germany to install "gold to go, the world's first gold vending machine," said Ex Oriente Lux AG, the German company behind the machine.

REAL-TIME HOLOGRAMS CLOSER THAN YOU THINK

Real-Time Holograms Beam Closer to Reality

by Robert F. Service on 3 November 2010, 2:00 PM

. A new holographic setup is capable of recording, displaying, and updating this image of an F-4 Phantom Jet every 2 seconds.

Credit: Gargaszphotos.com/University of Arizona

It's not quite the flickering blue projection of Princess Leia begging, "Help me, Obi-Wan Kenobi, you're my only hope!" from the classic sci-fi movie Star Wars, but holographic projection has just beamed a bit closer to reality. Researchers in Arizona have devised a novel plastic film that can be used to generate holographic 3D images sent electronically from one location to another. The new telepresence setup doesn't work yet at full video speed—it can update images only every 2 seconds—but the technology opens the door for everything from holographic surgery to movies that literally surround the viewer.

Holograms are more than just fancy photographs. Shift your head to the side while looking at a photo, and the image doesn't change. Do that with a hologram, and instead of staring at the front of an image of, say, a fighter jet, you're looking at the side (see video). Lasers are the key: When recording a hologram, one beam of laser light illuminates the target. This light is combined with light from a second "reference" beam, creating an interference pattern akin to the one seen when two sets of ripples overlap on a pond. When this light strikes a photographic plate, the interference pattern is recorded. Later, shining a light back on the photographic plate causes light to diffract off the interference pattern, reconstructing the 3D image.

Researchers have been creating holograms for decades—yet they've struggled to make them practical. Among the biggest challenges: the traditional crystalline photographic materials used to capture holographic images are expensive and have trouble covering large areas. Two years ago, Nasser Peyghambarian, an optics researcher at the University of Arizona, Tucson, and his colleagues overcame these limitations when they devised a polymer-based holographic film that was potentially far cheaper than the conventional materials and also easier to grow in large areas. Moreover, the researchers were able to write new images every 4 minutes. But that was hardly a moving picture. So Peyghambarian and his colleagues continued to search for improvements.

In their new paper, published online today in Nature, Peyghambarian and colleagues at Arizona and the Nitto Denko Technical Corp. in Oceanside, California, describe a holographic display that can depict a scene in another location and update the image nearly in real time. The setup starts with 16 cameras arranged in a semicircle around a target. The cameras take simultaneous pictures of the target every second. The camera views are processed by a computer and sent via an Ethernet cable to the photographic recording site, which conceivably can be in the next room or half way around the globe. There, a laser setup receives the image data and shines a steady stream of pulses encoding the images as well as laser light from a reference beam at an improved polymer film, which in turn records the resulting interference pattern. A separate light is then shown from an angle on the other side of the polymer film, generating the hologram as it does so.

Among the advantages of the current setup, Peyghambarian says, is that images can be recorded on one side of the photographic film and viewed on the other. As a result, three people gathered around a table housing the holographic film wouldn't see the laser setup under the table. Rather, they would be able to see a holographic image of, say, a car, and, depending on where they were standing, either the hood, trunk, or doors.

That ability could lead to holographic movies that allow viewers to walk around the scene, for example. It could also bolster the budding field of telemedicine by allowing specialists from around the world to see a patient from all angles, offering their opinions to doctors on site.

"It certainly has got my attention," says Eric van Stryland, an optics expert at the University of Central Florida, Orlando. Stryland notes that Peyghambarian's team has already improved the speed at which his system can refresh images by about 100-fold, and it needs only another improvement by a factor of 10 to approach the 30-frames-per-second speed required for full motion video. "About another order of magnitude and they'll be there," he says. Peyghambarian says there are no physical showstoppers preventing his photorefractive polymers and lasers from reaching that goal, although he says that doing so will require the use of faster pulse lasers, among other things.

Light sabers—those might take a little more work.