Argument

Man Bites Shark

Why are shark attacks on the rise? Because the balance of power between man and shark lies firmly -- too firmly -- with man.

As if terrorism, warfare, and diseases weren't scary enough, the past year has offered some ominous signs of an impending shark invasion into the waters where we swim, surf, and play, as the number of sightings and unprovoked strikes on humans has ticked ever upward. The number of reported shark attacks worldwide increased 25 percent in 2010, to a total of 79, and warm-weather shark observations off the U.S. East Coast is rising, prompting beach closures last summer everywhere from Brooklyn to Cape Cod. In January of this year, a pilot flying off Palm Beach, Florida, saw literally thousands of sharks, capturing the swarm with his iPhone (and terrifying plenty of humans in the process). A month later, police reported that two great whites had killed a diver off the South Australian coast. And in June, a Cornish mackerel fisherman claimed that a 6-foot oceanic whitetip shark rammed his boat, setting off a British media frenzy. These developments seem to suggest that sharks pose a more serious threat to us now than they did before -- as if they're either expanding in numbers, or just more determined to get us.

Headlines such as "Fisherman's boat rammed by man-eating shark off coastline" and "Mom runs for son killed in shark attack," after all, would strike terror into the hearts of even the most confident oceangoers.

In fact, the truth is more complicated. Sharks aren't coming after us; we're coming to them. Humans and sharks have been able to share the Earth for millions of years without a whole lot of interaction. But the two species are coming into contact more frequently than ever because of a variety of factors, including demographics (more people can afford beach vacations and growing urbanization means more people are living closer to the ocean), as well as environmental ones (such as climate change). That's bad news for sharks, whose populations -- despite the increased sightings -- are in decline. And it has also provoked an international policy fight that pits global heavyweights like the United States and Europe against Japan and China, with small island nations divided between the two sides.

At first glance, sharks -- with their sharp jaws, torpedo-shaped bodies, and unusual sensing abilities -- appear to be bizarre vestiges of a distant past. But they can also tell us a lot about our present and our future. Where sharks appear in big numbers, coral reefs and other marine life around them thrive because they remove weak and sick animals from the system and can keep midlevel predators in check. When they shift their migrations, scientists often detect a shift in ocean temperatures and prey populations. For researchers seeking to create a more efficient electric battery, faster vessels, or a robot that can track oil and chemical spills underwater, sharks' sleek and extraordinarily efficient bodies offer inspiration for design. In countries where their fins end up at the dinner table, economists can generally find rising incomes. The animal humans fear most has become a global commodity, an economic indicator, and environmental harbinger of things to come.

Most importantly, humans' interaction with sharks shows the extent to which we are plumbing the ocean's depths. After all, they don't venture onto our territory; we encroach on theirs. In contrast to several Pacific island societies, which developed faith traditions around sharks eons ago after encountering them at sea, Westerners arrived late in the game when it comes to dealing with these creatures. Sharks only began to permeate the public consciousness in Europe in the late 1500s, when seafaring began in earnest. The first detailed eyewitness account of a shark strike comes from the 1580 Fugger News-Letter, which chronicles a sailor falling off his ship somewhere between Portugal and India. He caught a line that his shipmates tossed him, but according to the article, "there appeared from below the surface of the sea a large monster, called Tiburon; it rushed on the man and tore him to pieces before our very eyes. That surely was a grievous death."

It took another 336 years for average Americans to begin feeling vulnerable to sharks, since swimming in the ocean was not a popular leisure activity until the early 1900s. At the inception of the modern bathing era, a series of attacks between July 1 and 12, 1916, off the New Jersey shore killed four people and injured another. That week-and-a-half of terror had a series of ripple effects: It not only damaged tourism in the area, but cost President Woodrow Wilson votes in his home state that fall and convinced Americans that sharks presented a real and present danger.

Ever since then, simple demographics have continued to bring humans and sharks closer together. Half of Americans live within 60 miles of a coast, according to 2010 census data. Globally, according to the Save Our Seas Foundation, more than three-quarters of the population lives that near to the sea.

During the 20th century, the increase in shark attacks in Florida -- which leads the world in shark strikes almost every year -- closely tracked both the state's population rise and the number of people going to the beach, according to statistics compiled by the University of Florida's International Shark Attack File. In 1900, Florida's population stood at 530,000, and there was one unprovoked shark strike between 1900 and 1909; by 1950, the state had 2.77 million residents, and attacks that decade totaled 13; by 2000, when the population had soared to nearly 16 million, 256 shark strikes took place over the course of the decade.

Viewed in context, these are still tiny numbers compared with the overall human population. Jaws aside, the risk of getting attacked by a shark is still much lower than getting killed by fireworks and, most likely, significantly lower than being killed in a vending machine accident. The high-percentage jump in shark strikes last year stems largely from the fact that four people were injured and one killed while swimming off Egypt's Red Sea resort of Sharm el-Sheikh over the course of five days (an event that one local politician bizarrely tried to pin on Israeli intelligence). Despite last year's bump, the average annual number of shark attacks declined over the past decade, to 63.5, while unprovoked strikes in Florida have gone down for four straight years.

People are quick to seize on any shark sighting as evidence of a burgeoning threat from these sharp-toothed creatures, but most of the time there's a simple environmental explanation for their appearance. When professional pilot Steve Irwin -- no relation to the crocodile hunter -- recorded a massive school swimming off Palm Beach with his iPhone, he was merely filming an annual spring migration of blacktip sharks. Every time a great white strikes a swimmer off California's central coast, people react with surprise. While white sharks are capable of migrating across ocean basins, scientists proved in 2009 that Pacific white sharks spend months near California's coast between August and February, foraging on elephant seals, sea lions, and other animals.

Other times, factors ranging from climate change to the resurgence of a prey population translate into sharks showing up in greater numbers. More great whites have been seen off the coast of Massachusetts in recent years, a trend that scientists largely attribute to the fact that the area's gray seal population is finally recovering after decades of decline. In remoter areas, such as the Pacific's Line Islands, sharks actually outnumber lower-level predators. And massive whale sharks have started gathering in an area off the Yucatán that researchers call "afuera." Scientists still don't exactly know why, but they hypothesize the sharks come to feed on the eggs spawned by small fish called tunny, a member of the tuna family.

The ocean's warming could also play a role, some researchers say, because this change in temperature affects where sharks' prey are swimming at certain times of the year. In fact, new research suggests that if climate change increases temperatures in Antarctic waters to just above freezing year-round by the end of the century, as some models predict, sharks may show up there for the first time in 40 million years. While they may shift their distribution, this doesn't mean shark numbers are destined to grow. In fact, carbon emissions are making the sea more acidic, which could decimate species on the lower end of the food chain and deprive sharks of the midlevel predators they need to consume.

While we might be alarmed at any indication that sharks are showing up in different places or biting into more and more humans, they're far more vulnerable to us than we are to them. There have been only two recorded shark attacks in Massachusetts waters since 1670, but commercial fishing has decimated the area's spiny dogfish shark population in recent decades. Since the 1970s, the numbers of scalloped hammerhead and tiger sharks have fallen by 97 percent along the U.S. East Coast, with bull, dusky, and smooth hammerhead sharks declining by as much as 99 percent. In the Mediterranean Sea, researcher Francesco Ferretti and his colleagues found that fishing has decimated large, predatory sharks over the past two centuries. Looking at the activities of the 21 countries that use the Mediterranean as their fishing grounds, they concluded the species that fared the best, blue sharks, declined 96 percent during that time, while hammerhead sharks declined more than 99 percent.

Elizabeth Griffin Wilson, marine scientist and fisheries campaign manager for the advocacy group Oceana, said that it's actually striking that there aren't more reports of shark attacks. "As human population grows and as we spend more time in the ocean, chances of interaction with sharks increases," she told me. "And we would expect this increase in interaction to be more dramatic than it has been, and one of the primary reasons it has not been more dramatic is because shark populations are depleted."

The International Union for Conservation of Nature estimates that as many as a third of shark species now face the danger of extinction. Although part of this depletion is unintentional -- sharks frequently get caught on fishing lines set for tuna and swordfish, two lucrative global fisheries -- vessels bring in tens of millions of sharks each year to supply the growing shark fin soup trade in Asia.

While tasteless, the gelatinous noodles extracted from sharks' fins are the essential ingredient in a high-priced delicacy that connotes status in Chinese society. It defines whether a wedding banquet is considered elegant, provides a boost for business executives hoping to impress their clients, and has become increasingly popular as per capita incomes in China and other Asian countries have risen.

As with underwater attacks, sales of shark fin soup in a given country provides a good indication of both its economic and demographic prospects. Shark fin consumption in Singapore more than doubled between 2006 and 2007, according to data analyzed by the Straits Times, despite a price increase of 30 percent between 2003 and 2007. Two factors drove this increase: Singapore's economy grew in 2007 after a slump, and nearly 24,000 couples got married that year, the highest number registered in the country since 1999.

This economic phenomenon has set up a clash between many countries in Asia that have a financial incentive to trade in sharks, and other countries that want to keep them alive to bolster dive tourism or for philosophical reasons. International trade and fishery management meetings have become a series of regional skirmishes. Japan and China have managed to torpedo trade protections at international fishery-management bodies for species ranging from hammerhead to porbeagle sharks, in part through forging alliances with smaller countries such as Grenada, Suriname, and St. Kitts and Nevis. But the United States has continued to press the case, along with both European officials and those from countries such as Palau and the Maldives, both of which have banned shark fishing in their waters.

Cheri McCarty, a foreign affairs specialist in the U.S. National Oceanic and Atmospheric Administration's Office of International Affairs, has spent the last two-and-a-half years negotiating over shark protections in the global arena, and she has gotten used to the weary reactions her presence can provoke. "There are times I'll go to meetings where people say, 'Oh no, not the U.S. pushing sharks again.' But slowly but surely, we have more allies on our side now."

Sometimes these efforts move in fits and starts. Even Japan and China decided last fall to back a ban on catching oceanic whitetip sharks and several species of hammerhead sharks in the Atlantic, but they still support unfettered trade of these species. A slew of U.S. states have started passing measures that ban the sale and possession of shark fins: Hawaii, Washington, and Oregon have already signed theirs into law, and California is poised to do the same this year. Although these measures have prompted complaints from some Chinese-American entrepreneurs, for the most part they have passed by overwhelming margins.

And other countries are taking steps to protect sharks in their own exclusive economic zones, which stretch from their shores to 200 nautical miles out to sea. Palau created the first shark sanctuary in 2009, banning all shark fishing in its waters, and the Maldives followed suit. In June, Honduras created its own shark sanctuary, and the Bahamas banned commercial shark fishing in its waters on July 5. These countries are recognizing the inevitable: Sharks and humans can no longer afford to ignore each other, so we might as well find a way to coexist.

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Argument

Betting Against the (U.S.) House

If you can't stop Congress from ruining America's credit, can you at least make money off of it?

Sometime before Tuesday, Aug. 2, the U.S. government has to decide whether it wants the United States to maintain its standing as the bedrock of the global economy, or pull what amounts to the largest dine and dash in history. After weeks of deadlock, the U.S. House of Representatives passed 11th hour legislation on Friday evening to raise the federal government's $14.3 trillion debt ceiling that also met House Republican demands for steep budget cuts and no new taxes. But the Democratic-controlled Senate almost immediately voted to set aside the House plan -- and without some agreement soon between Congress and the White House, the United States risks the mother of all defaults.

That's the bad news. The good news is that we live in the 21st-century global marketplace -- and if it was possible to make a cool $800 million betting on the housing crash that produced the 2008 economic crisis, surely someone can turn a profit on an ailing superpower's inability to pay off its loans, right? So where do you start?

First, take a deep breath. An actual default would be an epic disaster -- but it's enormously unlikely, even if Congress technically hasn't reached a deal. As Slate's Annie Lowrey notes, several deeply unpleasant scenarios are plausible, but none involve the United States tearing up its IOUs. The stakes are simply too big.

Nevertheless, Washington may have already administered a remarkable self-inflicted wound to the United States' financial standing. The chances of at least one if not more of the ratings agencies downgrading American debt are now quite good. And in fact, congressional Republicans' handling of the debt ceiling -- a procedural matter that had occurred without much incident more than 70 times in previous years -- has so alarmed Wall Street that an actual downgrade is almost beside the point: The markets' faith in the U.S. government's ability to take care of its business has already been badly shaken, and they are already behaving as if U.S. Treasuries are damaged goods. "In our view," J.P. Morgan's North American equity research department wrote in a note to investors on July 29, "the ultimate legacy from U.S. debt ceiling and sovereign Europe [debt crises] is a loss of credibility of policy makers as voters lose faith in governments to protect them." As if to drive the point home, markets closed on Friday with the Dow Jones industrial average posting the year's biggest weekly decline. Wall Street eminences are already treating the downgrade as a fait accompli.

The most obvious manifestation of this crisis of confidence, and one on which large sums of money are already being wagered, is in the market for credit-default swaps (CDS). A CDS is essentially an insurance policy on debt, priced to indicate the risk of a debtor's defaulting. Swaps are available on a variety of corporate and sovereign debts and with varying periods of protection; one- and five-year contracts are common.

The good news for the United States is that the country isn't close to being Greece yet -- a five-year CDS on U.S. debt is currently at its highest price since the economic abyss of early 2009, but it's less than one-fortieth the price that a comparable swap on Greek debt reached earlier this month. But those U.S. swaps are exploding in value -- a one-year CDS is now worth more than double what it was a month ago. And CDS trading on U.S. debt has surged accordingly, up 80 percent in the past month to $250 billion worth of trades a day, according to Bloomberg.

What's highly unusual is that those one-year swaps are now outpacing the five-year swaps -- something that usually only happens in a Greek-grade economic disaster, in which a country runs the real risk of imminent default, debt restructuring, or a similar upheaval -- even though the actual price suggests that no one really thinks the United States is headed for default. "It's very peculiar to see this kind of inversion on this type of credit," says Otis C. Casey, director of research for the financial information services firm Markit. "It's fairly surreal."

The odd dynamic suggests that though investors are alarmed by America's flirtation with fiscal self-immolation, they're not really sure what else to do with their money. U.S. Treasury bills are the textbook definition of a safe haven asset, historically one of the most risk-free assets you can buy next to precious metals. There are other similarly safe investments -- German government bonds, for example, or shares of an all-but-invincible blue-chip company like General Electric -- but there aren't nearly enough of them to meet the demands of the global market. And with the European Union in economic turmoil and its governments overleveraged from years of stimulus spending, U.S. debt happens to be in uniquely high demand at precisely its moment of crisis.

One paradoxical result of all this is that one of the investments that benefits from a downgrading of U.S. debt may actually be, well, U.S. debt. The strange-but-not-impossible scenario might go like this: If U.S. obligations were downgraded by ratings agencies, it would in turn force down the overall rating of fixed-income investment portfolios (like pension or mutual funds) that include both stable U.S. Treasuries and an array of lower-rated assets. But since Treasuries are still among the most available highly rated assets, portfolio managers may have no choice but to buy more of them and instead dump other assets with lower ratings (which would likely take a far worse hit in the event of a U.S. downgrade).

But the unassailability of Treasuries points to the biggest problem with a U.S. debt downgrade: It alters one of the great constants of global finance. Markets hate this kind of paradigm-shifting uncertainty, whether it's positive or negative. "When the norms of the world change so dramatically, it's never happy," says Jacob W. Doft, CEO of the hedge fund Highline Capital Management. "I think the same thing will happen with a downgrade. Everything we know about how financial markets work will change."

Investors rattled by this sort of uncertainty tend to seek solace in commodities and other surer bets. "When the world's largest economy is making you queasy, you go to gold, you go to the Swiss franc, you go to China," says Ian Bremmer, president of Eurasia Group, a political risk consultancy. "You hedge." Indeed, as of Friday, gold was trading at a record high on the New York Mercantile Exchange, and the dollar was at a record low against the Swiss franc. "Until we get ink on the deal it's very irrational for anyone not to buy gold going into the weekend," market strategist Adam Klopfenstein told the Wall Street Journal.

But buying gold and betting on default swaps won't protect you from the fact that no one really has any idea what happens next. The 500-pound panda in the room is China, by far ther largest holder the largest foreign holder of U.S. debt. "The question isn't how Standard & Poor's responds -- it's how China responds," Bremmer says. Chinese finance officials' remarks have been limited and uncontroversial throughout the debt ceiling debacle, with good reason: Any hint of nervousness out of the country's central bank would ripple immediately through global markets.

But in the long term, it's easy to see how shaken confidence in the American system would accelerate China's efforts to diversify away from its reliance on U.S. debt, by means of increasing trade with other countries, spurring domestic consumption, and encouraging greater investment in commodities. China will also have the biggest say in the biggest question of all looming over the debt ceiling fight -- the role of the dollar (to which China stopped pegging its own currency in 2005) in the global market. "I don't understand how anyone can think that the dollar is going to maintain its standing as the world's reserve currency," Bremmer says. "It's just a matter of timing. It's definitely exacerbated by this -- this absolutely matters."

The only surefire strategy for turning America's loss into your gain, however, may be joining the party. Either of them, actually. Politico reports that both Republican and Democratic congressional campaign committees have used the slow-building, wholly voluntary, debt ceiling crisis to propel themselves to newfound heights of fundraising, with House Republicans raking in $6.7 million in June ($2 million more than in May) and House Democrats $6.2 million (up $2.4 million from the previous month). Talk about turning a pig's ear into a purse.

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