International Periscope

After suffering through a dismal four-year slump , the Shanghai Composite Index has risen by about 40 percent since December. It climbed by 3.5 percent last week, faring much better than other bourses (India's Sensex Index was down 11 percent after a major sell-off)-- but Chinese regulators have made structural changes to the stock market that experts believe could help stimulate both domestic and foreign demand for equities, providing an alternative supply of capital for the country's bank-dependent corporate sector.

According to Oxford Analytica, a British-based international consulting firm, the Chinese government will soon finish converting some $250 billion in nontradable (state-owned) shares in listed companies to tradable renminbi-denominated shares--a reform that could perhaps lead to corporate takeovers, which have been virtually nonexistent. China last week lifted a one-year moratorium on domestic IPOs, and regulators are encouraging the creation of more mutual funds in the country. They also want Chinese pension funds and insurance companies to become more active in equities--all moves that could help expand and diversify the stock market. According to Patrick Tilbury, Oxford Analytica's senior editor for the Asia Pacific region, China's leaders have been pained by the fact that some of the nation's biggest firms have gone to the Hong Kong and New York exchanges to raise capital. Indeed, the Bank of China last week launched a nearly $10 billion IPO in Hong Kong.

Investors should remain wary: China's corporate governance remains very weak, and institutional representation in the stock market is still too limited. Tilbury also cautions that the abolition of the split-shareholding structure does not mean that holders of the previously nontradable shares (state asset-management firms) will be willing to sell them at the market rate. In other words, how the reforms will be implemented is not yet clear. Still, he says, "the market is up partly because people see progress in these structural areas. There is a policy move here to take advantage of a mood of confidence in China."

Richard Ernsberger Jr.

Everyone in America has immigration on the mind these days, especially New Mexico Gov. Bill Richardson, whose state shares a large segment of the United States' 3,200-kilometer border with Mexico. He's also considered a potential Democratic presidential nominee in 2008. He spoke to NEWSWEEK's Michael Hastings. Excerpts:

I'm concerned. First, the level of the debate in the United States is not the healthiest. It's starting to get ugly. All you have to do is listen to talk radio and it's not very civil. Secondly, I worry about an uncertain mission for the National Guard on the border. I worry about the Minutemen [a citizens' group that patrols the U.S.-Mexico border]. They're well-intentioned people but they're not trained. Their presence provides a real spark of divisiveness.

I worry that putting National Guardsmen on the border sends the signal that we're militarizing the border with Mexico and we're not doing the same with Canada.

I'm very dissatisfied with the Bush administration's commitment to border security. Despite a lot of promises, the flow of illegal immigrants is very strong in New Mexico.

Mexico needs to step up and do dramatically more.

Word around Washington is that the White House wants to get tough on Russia. The upcoming G8 summit in St. Petersburg is scheduled for July--and an unseasonable chill is in the air. Some analysts say that the Bush administration has finally awakened to Russia's backsliding on democracy and human rights. And yet others see an attempt to get Moscow behind the drive to stop Tehran's nuclear program.

The question is how Washington can back up any implied threat. The most likely is to slow progress toward Russian WTO membership. Bush could make a high-profile stopover on the way to the G8; he's been invited by Kiev. According to reports, the State Department is considering sending a representative to a shadow G8 meeting of democracy activists being organized simultaneously by former chess champion Garry Kasparov. At the least Bush is likely to give Putin the cold shoulder in St. Petersburg. No talk of "friendship" and alliances, let alone soulful glances over private dinners. This summit promises to be icy business.

Michael Meyer

Former National Security Agency chief Gen. Michael Hayden won over skeptical senators from both parties at his confirmation hearings to be the new CIA director last week with his earnest and calm demeanor in handling questions about the NSA's secret program of collecting phone records. Another factor working in his favor: Stephen Kappes. Kappes, a 6-foot-2 former Marine officer, fluent in Russian and Farsi, became something of a legend within the ranks of the Central Intelligence Agency's clandestine service, which he headed until 2004. He led the CIA's mission to persuade Libyan dictator Muammar Kaddafi to give up his WMD program. Over several months, he conducted a "lengthy dialogue [with Kaddafi], a delicate and subtle dance," said a former agency official, who requested anonymity when discussing secret diplomatic matters. "And Steve handled it very well." Last week the administration announced that Washington and Tripoli would restore full diplomatic relations. Inside Langley, word that Kappes may return as Hayden's No. 2 was taken as a hopeful sign that the White House is serious about fixing the agency. The pick has also quieted some concerns about Hayden's military background and inexperience in collecting "HUMINT" or "human intelligence," rather than the NSA's "big ear" electronic eavesdropping systems. But even with Kappes, it will take time for recent wounds to heal.

Mark Hosenball

The Brazilian metropolis of São Paolo erupted in bloody clashes between police and suspected gangsters last week, claiming 170 lives. Although the carnage ended on day seven, attacks from human-rights groups continued against authorities, whom they accuse of engaging in a "policy of extermination."

Smooth the brow, brighten the eye ... " the pioneering psychologist William James wrote in 1890, describing a self-help technique for overcoming depression, "and your heart must be frigid indeed if it does not gradually thaw." In James's lifetime, of course, there was no easy way to follow this advice, because Botox hadn't been invented. But today, smoothing the brow by paralyzing the corrugator supercilii muscles is the work of minutes--or so reasoned Eric Finzi, a dermatologist in Chevy Chase, Maryland. A few years ago, Finzi got the idea of injecting botulinum toxin A--the compound marketed as Botox--into the foreheads of patients suffering major clinical depression. According to a paper published last week in the journal Dermatologic Surgery, it helped nine out of 10 of them--nearly twice the success rate claimed for antidepressants. That's despite the fact that it seems to make no sense. Frowning is an expression of an underlying emotional state; to cure depression by banishing frowning is like hoping to cure a cold by stifling a sneeze. But the body has its own logic, based largely on internal monitoring and feedback. To a surprising degree, the facial muscles control emotions, as well as the other way around. Patients with Mobius syndrome, a partial facial paralysis, seem not to experience emotions with the same intensity as normal people. "I thought if I could interrupt this cycle and prevent the frown, maybe a depressed patient would get better," says Finzi.

Jerry Adler and Karen Springen

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