Forex Trading Channel #5

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Saxo grim 2008 forecast

A forecast made by Denmark-based Saxo Bank, chaos will take a grip on the world in 2008. Oil prices will skyrocket to 175 dollars per barrel, the Chinese market will collapse by 40 percent, whereas the U.S. will suffer a 25-percent setback. All this will happen because of the mortgage crisis in the USA which already slows down the U.S. economy.... http://english.pravda.ru/world/americas/25-12-2007/103144-economy-0

Crisis may make 1929 look a 'walk in the park'

Section 13 (3) allows the Fed to take emergency action when banks become "unwilling or very reluctant to provide credit". A vote by five governors can - in "exigent circumstances" - authorise the bank to lend money to anybody, and take upon itself the credit risk. This clause has not been evoked since the Slump.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/23/cccrisis123.xml

Fatwa against the dollar

Fatwa against the dollar?

Posted by Ambrose Evans-Pritchard on 17 Dec 2007 at 14:38
Tags: oil, dollar, Saudi Arabia, Fatwa

To all intents and purposes, the Wahabi religious establishment of Saudi Arabia has just issued a fatwa against the US dollar. This bears watching.

Ali al-Naimi, Saudi Arabia's oil minister
Anti-dollar clerics have lobbied Ali al-Naimi, the Saudi oil minister

A message issued by 26 leading clerics warns that inflation has reached intolerable levels in the Gulf kingdom.

While it does not vilify the dollar explicitly, the apparent political aim is to undermine the country's dollar peg.

"The rulers should seek to try to remedy this crisis in a way that would ease people's suffering."

"We direct this message to the rulers and officials: we remind you of Prophet Mohammad's words that you are shepherds who are responsible for your flock," it said.

The statement was posted across the Islamic world. The background to this has been a raging debate in Gulf religious and economic circles about the destructive effects of the sliding dollar.

Among the lead-authors is Sheikh Nasser al-Omar, known for his fatwa against US-led forces in Iraq.

He has long preached the collapse of American-led capitalism, and now sees a perfect moment to plunge the knife. We can guess that al-Qaeda Inc is thinking along the same lines.

My own hunch is that the next al-Qaeda strike will not be a symbolic blow to a great building or city, but rather a carefully-timed economic blow: either by cutting – or trying to cut - the oil jugular, or by trying to precipitate a run on the dollar.

The Gulf pegs are preventing the region from taking action to stop the oil boom spiralling out of control.

Half the Mid-East is now overheating. Property booms have reached unstable extremes in almost all the oil states. Construction has become maniacal.

CPI inflation is 5.35pc in Saudi Arabia, the highest in over ten years. It has reached 10.1pc in the United Arab Emirates and 12.2pc in Qatar.

The dollar pegs – designed to anchor the currencies – are now forcing the Petrodollar economies to import US devaluation and monetary stimulus.

What has been a simmering problem for over a year, has become untenable since the Federal Reserve began slashing interest rates.

The Gulf has roughly $3.5trn under management in wealth funds and central banks, so a dollar shift makes waves.

Qatar has already slashed the dollar holding of its future generation fund from 40pc to 98pc.

Stephen Lewis, global strategist at Insinger de Beaufort, said the Fatwa was ominous.

"The Saudi government has been the one institution in the region battling to preserve the oil link with the dollar. If these clerics are able to wear down Saudi resistance, this could breach the bulwark. The dollar would quite likely be abandoned as the chief currency for pricing oil in world markets," he said.

If the Mid-East breaks the pegs, a chain reaction threatens to follow across Asia. China now has 6.9pc inflation. It may have to ditch its cheap yuan policy soon enough anyway, or face the sort of double digit rises that destroy regimes.

The Saudi royal family rules by a delicate compromise. Although pro-Western in military and economic alliances, it relies on the endorsement of the Wahabi clerics as a key source of legitimacy.

Reluctance to confront this menacing bloc is the main reason why Riyadh tolerated - and helped – the Bin Laden network for so long.

The statement called on the Saudis to take action to stop food price soaring to fresh highs, if necessary with subsidies on key staples.

For now, the dollar is bouncing back. Speculative flows have swung back from euros to dollars after America's CPI inflation shock of 4.3pc released last week.

One week's data mean nothing. As the Fed cuts rates ever further to the cushion US property crash bites, Mid-East inflation will go from bad to seriously ugly with the policies now in place.

The Saudis, Qataris, and Emirates have all said they will preserve the pegs. But fatwas tend to up the ante.
Posted by Ambrose Evans-Pritchard on 17 Dec 2007 at 14:38

http://blogs.telegraph.co.uk/business/ambrosevanspritchard/december07/fatwa.htm

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Forex Trading Channel #3

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Fed cuts deal with foreign central banks

"Today, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing measures designed to address elevated pressures in short-term funding markets.

Federal Reserve Actions
Actions taken by the Federal Reserve include the establishment of a temporary Term Auction Facility (approved by the Board of Governors of the Federal Reserve System) and the establishment of foreign exchange swap lines with the European Central Bank and the Swiss National Bank (approved by the Federal Open Market Committee). 

Under the Term Auction Facility (TAF) program, the Federal Reserve will auction term funds to depository institutions against the wide variety of collateral that can be used to secure loans at the discount window.  All depository institutions that are judged to be in generally sound financial condition by their local Reserve Bank and that are eligible to borrow under the primary credit discount window program will be eligible to participate in TAF auctions.  All advances must be fully collateralized.  By allowing the Federal Reserve to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations, this facility could help promote the efficient dissemination of liquidity when the unsecured interbank markets are under stress.

Each TAF auction will be for a fixed amount, with the rate determined by the auction process (subject to a minimum bid rate).  The first TAF auction of $20 billion is scheduled for Monday, December 17, with settlement on Thursday, December 20; this auction will provide 28-day term funds, maturing Thursday, January 17, 2008.  The second auction of up to $20 billion is scheduled for Thursday, December 20, with settlement on Thursday, December 27; this auction will provide 35-day funds, maturing Thursday, January 31, 2008.  The third and fourth auctions will be held on January 14 and 28, with settlement on the following Thursdays.  The amounts of those auctions will be determined in January.  The Federal Reserve may conduct additional auctions in subsequent months, depending in part on evolving market conditions. 

Depositories will submit bids through their local Reserve Banks.  The minimum bid rate for the auctions will be established at the overnight indexed swap (OIS) rate corresponding to the maturity of the credit being auctioned.  The OIS rate is a measure of market participants' expected average federal funds rate over the relevant term.
 The minimum rate for the December 17 auction along with other auction details will be announced on Friday, December 14.  Noncompetitive tenders may be accepted beginning with the third auction.  The results of the first auction will be announced at 10 a.m. Eastern Time on December 19.  The schedule for releasing the results of later auctions will be determined subsequently.  Detailed terms of the auction and summary auction results will be available at http://www.federalreserve.gov/monetarypolicy/taf.htm. 

Experience gained under this temporary program will be helpful in assessing the potential usefulness of augmenting the Federal Reserve's current monetary policy tools--open market operations and the primary credit facility--with a permanent facility for auctioning term discount window credit.  The Board anticipates that it would seek public comment on any proposal for a permanent term auction facility. 

The Federal Open Market Committee has authorized temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB).  These arrangements will provide dollars in amounts of up to $20 billion and $4 billion to the ECB and the SNB, respectively, for use in their jurisdictions.  The FOMC approved these swap lines for a period of up to six months."

http://www.federalreserve.gov/newsevents/press/monetary/20071212a.htm

 

http://news.bbc.co.uk/2/hi/business/7140771.stm The Federal Reserve, European Central Bank and central banks from the UK, Canada and Switzerland are to jointly help banks deal with the credit crunch

 

Bank of America shutting $12 billion cash fund

Bank of America Corp. said Monday that it's shutting a $12 billion a money-market fund of sorts and halting cash withdrawals after losses from complex investments tied to the mortgage crisis.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aX9QvlgE5JGo&refer=home

other articles…

• Fannie and Freddie are bracing for additional losses, which I'd pencil at somewhere between $10-$15 billion for the pair.
  
• H&R Block's losses were bigger than expected
  
• US ad spending aimed at consumers is nearly flat for the year - never a good sign in the much touted 'consumer-driven' economy.
  
• China continues to drag its feet raising the Yuan, although it has come up a tad.
  
• But the real story is how China is slamming the brakes on lending, understanding better than our Fed/bankster cabal that money is created into being by lending activities.  Gee, how about that?  The US M-3 reconstructed rate (since the Fed decided that doesn't matter!!!) is pressing 18%.
  
• And oil has continued in the $90 range with folks like Boone Pickens saying that $100 (+?) oil is almost a certainty within 6-months.
  

 

The End of Dollar as King – translated from French Le Monde

Le Monde, France

The End of Dollar as King

EDITORIAL

Translated By Elias Mokole

December 09, 2007

France - Le Monde - Original Article (French)

Will the fall of the dollar accelerate out of control? Will the euro, inflated like a balloon, rise without limit to $1.55, $1.60, $1.70 or more? As the headline in the British weekly The Economist declared last week, this black scenario brings "panic" to financial circles. The crash of the dollar is not the most probably scenario, but it is no longer considered to be impossible.

Since its backing by gold was ended on the 15 August 1971, the dollar has lost more than a third of its value against other currencies. Its fall, therefore, did not start yesterday. It had been foreshadowed by crises, particularly in the late 1980s when the Japanese sumo wrestler seemed to be able to shake the American empire. But neither run-of-the-mill devaluations nor other crises have managed to challenge the supreme role of the dollar as the core of the global monetary system.

On the contrary. Emerging economies of Asia and the rich nations of the Persian Gulf have, for convenience, attached ('pegged' in financial terms) their currencies to the dollar. It is as if the system born with the 1944 Bretton Woods Agreement, which died precisely on the 15 August 1971, had been restored de facto. Outside continental Europe, the planet has restored a virtual global monopoly - creating a "quasi-dollar zone." Economists called this system Bretton Woods II .

And it is this Bretton Woods II that now threatens to come completely apart. The dollar is now suffering from a myriad sources of distrust in the short and long terms.

The first factor is the weakness of the American economy. Will there be recession, or not? Martin Feldstein, a former advisor to Reagan, now estimates that the probability of a decline is 50%. Clinton advisor Larry Summers believes that there will be a recession, and predicts that it will be long, going "beyond 2010." The Federal Reserve is tempted to lower interest rates to give itself some air - but quietly - because doing so would risk reigniting fears of inflation. There is talk in the United States of the return of stagflation  - low growth with inflation – a terrifying hydra that has not been seen in 20 years. All of these considerations dull the shine of the dollar.

The second reason is the sub-prime crisis. It is now believed to be under control, but after two weeks it has re-emerged, casting doubt on the solidity of American banks (what is their maximum exposure?). And will it worsen in early 2008? None of these things are reassuring to those who invest in dollars.

The third element, more well known but even more serious, is the trade deficit. It fell a little with the value of the greenback, which makes American-made products more competitive. But the trade gap remains at 5.5 % of GDP: the dollar would have to be devalued significantly further to balance the books and eliminate the deficit.

All of the ingredients have come together to continue the slide. But another factor may contribute to the acceleration: the elimination of the fixed exchange rates used by developing nations and, more generally, the use of holding of currencies as reserves and to make payments.

Brazilian Gisele Bündchen, the world's most highly paid model, is not the only person who wants checks, "in any currency other than the dollar," according to Forbes (the beautiful woman later issued a denial; she accepts all checks). Ann Lauvergeon, the CEO of Areva, wants to be paid in Euros for Chinese nuclear reactors. Venezuela and Iran will soon reject dollars for political reasons. [Editor's Note: Iran has already stopped accepting dollars as payment for oils. See relevant articles on the Watching America homepage] Certain Gulf Emirates have officially decided to keep the dollar. Developing countries have accumulated $3 trillion in reserves, or 75 % of the global total. But what will China do, with $1.4 trillion? "This record reflects China's growing influence on the global economy and finance," says Jacques de Larosière, former head of the IMF. In particular, he says that it shows that "the world of finance" has passed into its hands. Will China challenge the dollar? "It is not in their interest to implement aggressive diversification policies, which could trigger a fall in the American currency and a depreciation of their assets," Larosière emphasizes. But since 2005, a trend toward diversification has become evident. The acquisition of businesses using "national funds" in emerging countries are part of this strategy.

We are "at the beginning of a relative decline of the dollar," summarizes Professor Michel Aglietta. The only way to reverse the process, he continues, would be to reduce the trade deficit rapidly, eliminating the primary cause of the greenback's weakness. Else, holders of the dollar will gradually get out of it, praying that their sales do not trigger "panic" in foreign exchange markets.

The dollar has been dethroned; the monetary multi-polar world has been born. How will it end up? Certainly, there will be a period of fluctuating exchange rates, according to Michel Aglietta. Within this context, since the euro is not the only rising currency, Asia should soon unite monetarily. According to Jacques de Larosière, "the IMF should regain its lost influence, and the United States, China and Japan, the three main sources of the disequilibrium, should accept the multilateral game." The wait for the post-dollar monetary world promises to be neither stable nor fair.

http://www.lemonde.fr/web/article/0,1-0@2-3232,36-987417,0.html

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Derivatives soar 27% to 681 Trillion

BofA money market fund dives 70%

Bank of America shuts new investors out of money fund--recently worth $40B -- citing credit crisis.... http://money.cnn.com/2007/12/10/news/companies/boa_trouble.ap/index.htm?postversion=2007121014

WaMu warns of loss, slashes jobs

Nation's largest thrift also cuts dividend in response to credit and housing market woes. Analyst says CEO is safe.... http://money.cnn.com/2007/12/10/news/companies/wamu/index.htm?postversion=2007121018

Posted On: Monday, December 10, 2007, 8:25:00 PM EST

 

Derivatives Trades Soar To Record $681 Trillion In Third Quarter

 

Derivative Trades Soar to Record $681 Trillion in Third Quarter By Hamish Risk in London, Bloomberg Dec. 10, 2007

 

Dec. 10 (Bloomberg) -- Derivatives traded on exchanges surged 27 percent to a record $681 trillion in the third quarter, the biggest increase in three years, the Bank for International Settlements said.

 

Interest-rate futures, contracts designed to speculate on or hedge against moves in borrowing rates, led the increase with a 31 percent increase to

$594 trillion during the three months ended Sept. 30, the Basel, Switzerland-based BIS said today in its quarterly review. The amounts are based on the notional amount underlying the contracts.

 

Trading surged as investors bet on losses linked to record U.S. mortgage foreclosures and policy changes by the Federal Reserve and the European Central Bank to offset the credit slump. The Fed cut its benchmark interest rate by half a point to 4.75 percent in September, the central bank's first reduction in four years.

 

``The turbulence in financial markets led to the busiest trading on record,'' BIS analysts Ryan Stever, Christian Upper and Goetz von Peter wrote in the report.

 

Trading in stock index futures and options rose 19 percent to a record $81 trillion in the third quarter, as investors speculated on whether the credit-market losses would spread to the equity markets.

 

The Standard & Poor's 500 index rose 1.74 percent in the three months to Sept. 30. The Dow Jones Stoxx 600 Index in Europe fell 3 percent in the same period.

 

``Equity investors are using derivatives more aggressively as they have come to understand the more sophisticated instruments over time,'' said Jim Josephson, head of derivatives flow trading at Bear Stearns Cos. in London.

 

Currency Swings

 

Swings in currencies increased as the turmoil in the U.S. subprime mortgage market prompted investors to dump high- yielding assets financed through low-interest currencies such as the yen and Swiss franc. Volatility among the seven most-traded currencies surged almost 24 percent in August, the most since December 1996, a JPMorgan Chase & Co. index shows.

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=ad71potU0EbM&refer=home

 

Weekend News, CompUSA closing, House prices falling, hedge fund manager found dead in FL pool

CompUSA, Falling to Competition, to Shut Down After Holidays

CompUSA, the computer retailer that Mexican billionaire Carlos Slim owned since 2000, will shut its doors after 23 years, succumbing to competition from Best Buy Co. and Wal-Mart Stores Inc.

Home Price Drop Biggest in 25 Years

U.S. home prices dropped the most in a quarter century in the three months to end-September on an annualized basis as inventories, restrictive lending and a credit crunch yanked support from the market, a Freddie Mac index showed Tuesday.

Florida Just First to Face National Run on the Bank

The investment pool, which contained $27 billion this summer, now has $14 billion, the result of withdrawals by municipalities with keenly developed senses of self- preservation. On Nov. 29 the board told the remaining participants they couldn't withdraw any more money from the pool.

House prices seen falling 30 pct

Housing markets from Punta Gorda, Florida, to Stockton, California, will crash and suffer price drops of more than 30 percent before the housing crisis is over, a report from Moody's Economy.com said on Thursday.

A Lurid Aftermath to a Hedge Fund Manager's Life

A life of private jets and black-tie balls ended with Seth Tobias, a wealthy investment manager and a familiar presence on CNBC, floating face down in the swimming pool of his mansion here.

HOME IS WHERE YOU PUT YOUR STUFF

Dollar in Peril

Subject: this just in: oil dollar really in peril

Date: 12/3/2007 12:37:18 P.M. Pacific Standard Time

http://www.bitsofnews.com/content/view/6352/

and

http://www.marketoracle.co.uk/Article2849.html


Kent:

My [anon] works for a petroleum group of companies.
The orders for D2 and M100 that are due within the next
3 weeks have been halted. Price quotes are based on
confirmation of funds called a POF. With that you get
a POP.  But no POP's can be issued within the next 10-14 days.
This was announced as the Summit now in session in the Middle
East is conferring the new system for a basket of currencies or the
Euro to take over as the new petro-dollar.
If this really does happen before xmas, it will wipe out huge
investments over-night.

Hence the companies that are buying right now, have to wait and wait
for this to be reconciled. It is also the end of the year and GAZPROM
group is preparing allocations for the next year , allowing the
refineries to take a breather.

Many of the brokers' around have called her company for immediate assistance.

I would prepare for more difficult conditions.

http://www.cyberspaceorbit.com/petrodollar.htm

The dollar's perfect storm worsens

Europe's inflation is likely to prompt its central bank to raise interest rates -- five days before the Fed is expected to lower them here. That's bad news for the buck.... http://articles.moneycentral.msn.com/Investing/JubaksJournal/TheDollarsPerfectStormWorsens.aspx

secret banking system

We have a secret banking system built on derivatives and untouched by regulation, says Pimco's Bill Gross.... http://money.cnn.com/2007/11/27/news/newsmakers/gross_banking.fortune/index.htm?postversion=2007112810

Morning Strategist Summary: Wieseman, Caron, Peters & Chakrabortti

Subject: Morning Strategist Summary: Wieseman, Caron, Peters & Chakrabortti

Ted Wieseman

• LIBOR spreads over Fed Funds are high and have been rising
  

·         The blowout in the spread of LIBOR over Fed Funds has partially short-circuited the transmission of the Fed's lowering of the fed funds rate into a positive impact on the economy

·         The pressure in the interbank lending market is a key symptom of the biggest challenge facing the economy at this point: the forced reintermediation of the banking system that is pressuring bank balance sheets and reducing the availability/raising the cost of credit

·         With significant, rising, and unpredictable demands on their capital, banks have preferred to stay liquid and demanded a significant premium to lend term in the interbankmarket

·         Problems have recently been exacerbated by balance sheet pressures tied to the year-end for a number of key firms

·         The Fed announced steps to attempt to tackle this problem directly by offering regular term repos bridging the year-end

·         If targeted and unconventional measures fail and the Fed is determined to get LIBOR down, the only alternative would be the blunt measure of overcoming the widening in LIBOR/fed funds spreads through more aggressive fed funds rate cuts

o       Even if spreads of LIBOR over fed funds stay wide or widen further, enough fed funds rate cuts could at least get the absolute level of LIBOR down substantially

·         Expects Kohn to signal a change in Fed stance in his speech tomorrow: the market  is fully expecting a rate cut and has been for some time now

 
 

Jim Caron

·          "Renormalization thesis" - liquidity was cheap and it was easy to attain leverage, which fueled asset inflation

·         Now we're finding the exact opposite, as liquidity has become more costly

·         This will have the greatest impact on the assets with the highest dependency on liquidity and leverage - especially Financials

·         Key with the Fed is to figure out how to address increased liquidity costs without cutting rates so much that it spills over into the broader economy

·         Market of Many trade: re-pricing of risky assets with high dependence on liquidity and leverage = breakdown of correlation across different asset classes

·         Fed is doing 45 day RP's to get us over the year-end hump, after which liquidity typically becomes more available

·         Fed is trying to keep liquidity up over the next 4-6 weeks until we get past this rough patch

·         The problem is that this seems to be a recurring theme and it doesn't seem to be just a rough patch

·         The Fed is trying to allow the re-pricing to happen, but wants to slow the pace of it

·         Jim thinks the yield curve will steepen quite a bit, out to 150-200 bps by the end of 2008

·         If LIBOR/Fed spread continues to widen further, he'd expect a 50bps cut in December - thinks the fed would have no choice but to cut funds much more aggressively

·         If your view is that the Fed will need to cut aggressively, he recommends putting on his "curve steepener" trade

 
 

Greg Peters

• Expects a short-covering rally but is still negative
  
• Policy makers and central banks do seem to have moved into an "action phase"- which is a good start but we have a long way to go
  
• What's important about the Citigroup news is that it separates big fish from little fish - for the contrast, look at ABK continuing to weaken
  
• Knock-on effects on economy should continue to play out
  
• Started with homebuilders, then into financials, then consumer discretionary, and the next leg will likely be cyclicals
  
• Recommending long position in AAA ABX - dealers and banks still have onerous positions which they've hedged out with ABX, which has depressed values beyond where they should be
  

 
 

Abhijit Chakrabortti

• Behavior of the yield curve is important to Financials; we've seen LIBOR rates go up and treasury rates falling
  
• In mid-89, fed started cutting rates and the YC was inverted-fed cut from 9.5% to 7% in a slow, sedate manner and the yield curve didn't move much (from 100 bps inverted to flat), while S&P financials fell 45%
  
• Only after the Fed finally started to cut aggressively did the rally take place
  
• Since the fed has cut this year, by 75 bps, Libor rates have come down by less than the Fed (65 bps) and the yield curve is virtually unchanged
  
• So he thinks this provisioning cycle will be far worse than 1990
  
• The unchanged YC will be devastating for NIM and overall earnings for Financials
  
• For a sustained rally to be mounted in financials, the curve has to steepen with treasury yield going UP and MM/Libor rates falling, telling us that liquidity concerns have eased
  
• Magic words the market is seeking is not that the balance is "roughly equal," but that the balance of risks has shifted decisively toward growth and that they will aggressively cut as much as is necessary to address the problem
  
• In the July sell-off, MO and CL went flat, but this time they have rallied - this is a sign that the focus should be on - the market internals
  
• Fed needs to shift from the denial phase at least to the recognition phase (not even the action phase)
  
• Everyone keeps telling him the bearish view of Financials is such a consensus position - but everyone at Palmetto was bullish on Financials
  
• Who thinks Financials could fall another 20%?  That is the real contrarian view
  
  • Finding out what is non-consensus is just as important as being contrarian
    

.5 Quadrillion in Derivatives

Global Derivatives Market Expands to $516 Trillion (Update1)

By Kabir Chibber

Nov. 22 (Bloomberg) -- The market for derivatives grew at the fastest pace in at least nine years to $516 trillion in the first half of 2007, the Bank for International Settlements said.

Credit-default swaps, contracts designed to protect investors against default and used to speculate on credit quality, led the increase, expanding 49 percent to cover a notional $43 trillion of debt in the six months ended June 30, the BIS said in a report published late yesterday.

Derivatives of debt, currencies, commodities, stocks and interest rates rose 25 percent from the previous six months, the biggest jump since the Basel, Switzerland-based bank began compiling the data. Investors have been turning to credit derivatives as a way to speculate on a growing risk of defaults amid record U.S. mortgage foreclosures.

``The pace of increase in the credit segment outstripped the rises in other risk categories,'' Christian Upper, a BIS analyst in Basel, wrote in the report. Credit-default swaps are ``the dominant instrument,'' accounting for 88 percent of credit derivatives, the BIS said.

The money at risk through credit-default swaps increased 145 percent from last year to $721 billion, the report said. The amount at stake in the entire derivatives market is $11.1 trillion, according to the BIS, which was formed in 1930 to monitor financial markets and regulate banks.

Interest Rates

Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in interest rates or the weather. The report is based on contracts traded outside of exchanges in over-the- counter market.

Increased trading pushed ICAP Plc to a record this week as the world's largest broker of transactions between banks reported a 34 percent increase in net income to 80.1 million pounds ($164.4 million). The London-based company, which profits when prices fluctuate, handled a record amount of transactions as financial institutions bet on or hedged against losses linked to home loans.

The Markit CDX North American Index of credit-default swaps on 125 investment-grade rated companies has almost tripled since February to 90 basis points from 33.

Buyers of credit-default swaps receive the face value of underlying debt in the event of nonpayment, in return for the defaulted securities or cash equivalent. A basis point increase in the cost of a contract covering $10 million of debt is equivalent to $1,000 a year.

Interest Rates

Interest-rate derivatives remained the largest part of the market, gaining 19 percent to $347 trillion outstanding by June, the report said. Single currency interest-rate swaps made up 79 percent of the market.

Foreign exchange derivatives grew by 21 percent to $49 trillion as the dollar declined 2.5 percent against the euro in the first half. Contracts on the Swiss franc increased 32 percent, trailed by 27 percent increases in both the U.K. pound and the Canadian dollar contracts, the BIS said.

Equity market derivatives grew by 23 percent in the first half to $9 trillion. Growth was highest in Latin America equity derivatives at 43 percent and lowest in Japan at 6 percent. Japan's Nikkei 225 index rose 4.8 percent during the period while the MSCI Latin America index increased 25 percent.

Last Updated: November 22, 2007 07:53 EST

http://www.bloomberg.com/apps/news?pid=20601087&sid=a58EF32GpHeg&refer=home

Stocks Tumble and Subprime Spreads to Europe

European banks agreed to suspend trading in the $2.8 trillion market for mortgage debt known as covered bonds to halt a slump that has closed the region's main source of financing for home lenders..... http://www.bloomberg.com/apps/news?pid=20601087&sid=aS4wGPNgwfHs&refer=home

Fed cool on long-term growth forecast

The Federal Reserve on Tuesday revealed it no longer believed the US economy can grow much more than 2.5 per cent a year without causing rising inflation, a lower rate than many investors thought was sustainable.

Freddie Mac seeks emergency funding after posting $2bn loss

Freddie Mac, the government-sponsored company tasked with propping up the US mortgage market, said it would be forced to seek emergency funding to shore up its balance sheet after plunging $2bn (£968m) into the red.

The company yesterday said that it had hired Goldman Sachs and Lehman Brothers to tout for new funds that seemed likely to dilute existing shareholders, adding that it was also considering halving the dividend. Its shares lost more than a quarter of their value.

Dow at 7-month low

U.S. Stocks Tumble to Three-Month Lows; Freddie, Limited Fall

U.S. stocks fell to three-month lows after growing concern that losses from mortgage defaults will spread through the economy pushed down shares of banks, brokerages and retailers.

Treasury Sec Paulson Expects Tidal Wave of Mortgage Problems; and One Republican Senator is blocking Major Interventions

While all the signs of a perfect economic storm are registering more and more clearly, Bush admin is waffling and barely waking up, while a single lone Republican senator is blocking even minimal intervention.

Auto Trading Term: Mean – Reversion

Mean Reversion is a mathematical methodology commonly used for stock investing, but it can be applied to other processes. In general terms the idea is that both a stock's high and low prices are temporary, and that a stock's price will tend to have an average price over time.

Mean reversion involves first identifying the trading range for a stock, and then computing the average price. (Persons using extensive financial analytical techniques establish the average price as it relates to assets, earnings, etc.)

When the current market price is less than the average price, the stock is considered attractive for purchase, with the expectation that the price will rise. When the current market price is above the average price, the market price is expected to fall. In other words, deviations from the average price are expected to revert to the average.

One Standard Deviation (the square root of the trading range) can be used as a buy or sell indicator measurement. For instance, if the normal trading range is betweent 51 and 100, the range is 50, giving a standard deviation of $7.07 (the sq. rt. of 50). If the average price is $75, an investor using Mean Reversion would buy the stock at $75-SD (buy at $68) and sell the stock at $82 ($75+$7). One standard deviation is thought to cover 78% of future price movements, based on past movements. One, two or more standard deviations can be used for more accuracy.

Stock reporting services (such as Yahoo, MS Investor, Morningstar, etc.), commonly offer moving averages for periods such as 50 and 100 days. While reporting services provide the averages, identifying the high and low prices for the study period is still necessary.

Mean reversion is a more scientific method of choosing stock buy and sell points than charting, because precise numerical values are derived from historical data to identify the buy/sell values, rather than trying to interpret price movements using charts (charting, also known as technical analysis).

Persons desiring to apply this methodology should become familiar with the math concept of standard deviation.

http://en.wikipedia.org/wiki/Mean_reversion

Usd/chf short here? More talk about dollar down

Jim Rogers Urges People to Sell U.S. Dollar Holdings

Saudi minister warns of dollar collapse

The dollar could collapse if Opec officially admits considering changing the pricing of oil into alternative currencies such as the euro, the Saudi Arabian foreign minister has warned.

In an embarrassing blunder at the meeting in Riyadh, ministers' microphones were not cut off during a key closed meeting, and Prince Al-Faisal was heard saying: "My feeling is that the mere mention that the Opec countries are studying the issue of the dollar is itself going to have an impact that endangers the interests of the countries. "There will be journalists who will seize on this point and we don't want the dollar to collapse instead of doing something good for Opec."

The dollar's decline: from symbol of hegemony to shunned currency

The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible.

After months of huge and sustained turmoil on the money markets, lack of confidence in the world's totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar.

Dollar stays weak as Iran joins fray on greenback weakness

The dollar's woes continued for yet another day with Iran's call for oil cartel OPEC to recognise the currency's relentless falls highlighting just how far sentiment on the greenback has deteriorated

Dollars no good for the Taj Mahal

Foreign tourists to many of India's most famous landmarks will no longer be able to pay the entrance fee in dollars, the government says.

American Gangster's Wad of Euros Signals U.S. Decline

American Gangster's Wad of Euros Signals U.S. Decline (Update1)

By James G. Neuger and Simon Kennedy

Nov. 14 (Bloomberg) -- ``It may be our currency, but it's your problem'' was Treasury Secretary John Connally's taunt when the U.S. unhooked the dollar from the gold standard in 1971, unilaterally rewriting the rules of world business in America's favor.

Now the world is taunting back. Almost four decades after the U.S. tore up the monetary arrangements that governed the post-World War II international economy, the dollar's fall from grace amounts to a tectonic shift in the global hierarchy. This time, the U.S. currency is on the losing side.

After declining in five of the last six years, the weakest dollar in the era of floating currencies reflects a period of diminished U.S. political and economic hegemony. Whoever wins the White House next year will confront two unpopular choices: Accept the fall in U.S. clout and the rise of new rivals, or rein in record public and consumer debt that the rest of the world no longer wants to bankroll.

``What we're seeing is a very broad rebalancing of economic and political power in the world,'' says Jeffrey Garten, a Yale School of Business professor who was the Commerce Department's undersecretary for international trade in the Clinton administration. ``The scales are moving, and they're moving quite fast.''

The dollar blues have migrated from the halls of central banks to images of rap musicians.

In a video for the movie ``American Gangster,'' hip-hop maestro Jay-Z thumbs through a wad of 500-euro notes on a night of cruising through the concrete canyons of New York, a city where the euro isn't legal tender. The euro gained against the dollar today as European economic growth in the third quarter accelerated more than forecast.

Nixon Genesis

The latest tailspin was triggered by the ascendance of China and India, growing confidence in Europe's common currency, record American debt and trade gaps, London's challenge to New York as a financial center and a two-year housing recession in the U.S. For the first time, economists are raising the once-improbable specter that the dollar's monopoly as the world's dominant reserve currency is under threat.

Like the British pound, its predecessor as the world currency, the dollar has fallen victim to widening burdens overseas and economic stresses at home. The slippage began in 1971 when President Richard Nixon, in a stopgap move to cope with the inflationary financing of the Vietnam War, halted the exchange of dollars for gold.

Since then, currency markets have ebbed and flowed. High Federal Reserve interest rates and a flood of Japanese capital to finance Ronald Reagan's deficits bred the ``superdollar'' of the mid-1980s. The Internet-led productivity boom lured investment to the U.S. in the late 1990s. The most recent period reflects a world awash in other options.

Permanent Depreciation

``Part of the depreciation is permanent,'' says Harvard University professor Kenneth Froot, who has been a consultant to the Fed. ``There is no doubt that the dollar must sink against periphery currencies to reflect their increase in competitiveness and productivity.''

The Fed's trade-weighted major currency index bottomed at 71.11 on Nov. 7, the lowest since the era of free-floating currencies started in 1971. Against the yen and European currencies, the dollar is now worth about a third of what it was in the days of fixed rates.

One of the main U.S. exports since then has been the dollar itself, in exchange for foreign capital to finance trade deficits and a national debt of more than $9 trillion. While the current- account deficit is narrowing from last year's record $811.5 billion, the U.S. still requires $2.1 billion a day of other people's money.

`Unstable Situation'

``We're getting into a very unstable situation,'' says Richard Duncan, a partner at Blackhorse Asset Management in Singapore and author of the 2005 book ``The Dollar Crisis: Causes, Consequences, Cures.''

Such a prospect unsettles U.S. allies, and concerns are mounting that the flight from the dollar is feeding on itself and threatening a crisis of confidence that the next president will have to address.

Kuwait, freed by the U.S. from Saddam Hussein's army in 1991, unhinged its currency from the dollar in May, and pressure is building for Gulf Arab neighbors to follow suit. Qatar's prime minister, Sheikh Hamad bin Jasim bin Jaber al-Thani, complained Nov. 11 that the dollar's drop is cutting oil and gas income, leaving less to invest abroad. The United Arab Emirates may drop the dirham's peg to the dollar, analysts said.

The central bank in Iraq, a country the U.S. military has occupied since 2003, last month said it, too, wants to diversify reserves away from mostly dollars.

Korean Shipbuilders

Korea's central bank this week urged shipbuilders to issue invoices in won, the Korean currency, and take out more hedging policies to guard against a weakened dollar.

The dollar's share of global central banks' currency portfolios slid to 64.8 percent in the second quarter from 71 percent in 1999, the year the euro debuted, the International Monetary Fund says. The euro, used in 13 countries, now accounts for 25.6 percent.

``The global reserve system is fraying; it's falling apart,'' said Joseph Stiglitz, a Nobel-laureate economist at Columbia University, at a Bloomberg seminar last month in Tokyo. ``The change in mindset about the use of the dollar in reserves and the movement of the dollar out of reserves will continue to exert downward pressure.''

Economic Dry Spell

To be sure, the latest slump -- 6.6 percent against the euro since the end of August, 4.7 percent against the yen --partly reflects an economic dry spell. Credit-market turmoil led banks to cut consumer lending, bruising the U.S. economy's main engine.

``I don't think this is a lasting phenomenon, but it will come to a halt especially when America in a few months or at the start of next year gets over the financial crisis,'' says Theo Waigel, Germany's finance minister in the 1990s and an architect of the euro.

For now, the U.S. economy is a drag on the rest of the world. When the IMF last month trimmed its global growth prediction for 2008 to 4.8 percent from 5.2 percent, it blamed the U.S., whose forecast was cut to 1.9 percent from 2.8 percent.

Two Fed rate cuts, to 4.5 percent, have tilted the trading odds against the dollar in the near term. While the European Central Bank has put a planned increase in its benchmark 4 percent rate on hold, investors still see European rates going up and U.S. rates going down.

Asia Diversifies

``I wouldn't bet against the U.S. as the world's reserve currency,'' says former Treasury Secretary John Snow, now chairman of Cerberus Capital Management in New York. ``The dollar markets are so deep and so liquid and the American economy is so fundamentally advanced.''

Central banks in Asia are hedging that bet. Buoyed by the fastest growth of any major economy and putting tight limits on the appreciation of its exchange rate, China has piled up the world's biggest stash of foreign currencies, worth $1.4 trillion at the end of September.

Cash-rich governments are discovering the profit motive, adding to pressure on the dollar as they comb the world's markets for investments that pay more than the current 4.25 percent return on 10-year U.S. Treasury bonds.

Economists at Merrill Lynch & Co. estimate as much as $1.2 trillion in dollar holdings will shift to other currencies in the next five years.

A warning by Cheng Siwei, vice chairman of the National People's Congress, that China will invest in stronger currencies triggered a recent stampede out of the dollar. China doesn't have to dump dollars to depress the U.S. currency, economists at UBS AG say. Accumulating them at a slower pace will have the same effect.

G-7 Action

Ultimately, if the dollar's swoon depresses U.S. stocks or threatens global growth, Group of Seven major industrial nations may have to do more than issue communiqués.

The last concerted international maneuver to rearrange currency rates was in September 2000, when the G-7 sold dollars to prop up the then-stumbling euro in a U.S. presidential election year.

For the moment, policy makers are just talking. ECB President Jean-Claude Trichet last week called the euro's record- setting rise ``brutal.''

Treasury Secretary Henry Paulson trotted out the 1990s mantra that a ``strong dollar is in our nation's interest'' --as long as markets determine its rate. For the first time, Paulson had to rebut concerns about the dollar's supremacy as a reserve currency.

`Uphill Struggle'

``At this moment I don't think that the Americans are very disturbed,'' says former Dutch Finance Minister Gerrit Zalm, one of the euro's founding fathers. ``Until now, the developments are gradual with little effect on the stock exchange or long term capital-market rates.''

``There is a loss of confidence in both the dollar and the U.S.,'' said Riordan Roett, a professor at Johns Hopkins University in Baltimore. ``It may only reflect the widespread dismay with the Bush administration, but it is obvious that the next administration, of either party, will have a steep uphill struggle.''

To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net ; Simon Kennedy in Paris at skennedy4@bloomberg.net

Last Updated: November 14, 2007 10:15 EST

http://www.bloomberg.com/apps/news?pid=20601109&sid=azto7U.TmGX0&refer=exclusive

Write downs bankruptcy and depression like 1930

Wall Street's money machine breaks down

The subprime mortgage crisis keeps getting worse-and claiming more victims. A Fortune special report. ... http://money.cnn.com/magazines/fortune/fortune_archive/2007/11/26/101232838/index.htm?postversion=2007111212

Run for the hills — the worst is far from over. An investor's stock portfolio now, he believes, should be only about half of what it might normally be.

Another of his worries is that central banks around the globe, America's included, are debasing their currencies, which is setting the stage for a new round of higher inflation. Our bear figures the next six to 12 months will be awful for investors as the market goes down "pretty substantially."

Mr. Melcher is also gung-ho on several currencies, particularly the Swiss franc and the Japanese yen.

http://www.nysun.com/pf.php?id=66268&v=6535094911

Goldman Held Bigger Level 3 Share Than Citi, Merrill (Update3) Goldman Sachs Group Inc. held a bigger proportion of hard-to-value assets at the end of the third quarter than Citigroup Inc. and Merrill Lynch & Co., two of the firms hardest hit by subprime mortgage losses.

E*Trade Shares Fall; Analyst Says Bankruptcy Possible (Update5) E*Trade Financial Corp. lost more than half its market value after the online brokerage forecast a decline in fourth-quarter earnings and a Citigroup Inc. analyst said the company may go bankrupt.

A $45 Billion Writedown Won't Stop Wall Street Profit (Update1) Even after the record $8.4 billion writedown for bad debts at Merrill Lynch & Co., the unprecedented ouster of three chief executives within five months and the elimination of $84 billion of market value at the five largest securities firms, Wall Street still is poised to report its second-most profitable year.

Bundchen Proves Buffett-Savvy Paring Currency Risk (Update2) Brazilian supermodel Gisele Bundchen is proving to be as savvy as professional investors hedging risks in the foreign-exchange market.

Subprime Losses May Reach $400 Billion, Analysts Say (Update5) Losses from the falling value of subprime mortgage assets may reach $300 billion to $400 billion worldwide, Deutsche Bank AG analysts said.

Blackstone's Profit Misses Estimates; Shares Decline (Update7) Blackstone Group LP, manager of the world's biggest leveraged buyout fund, reported third-quarter profit that missed analysts' estimates as real estate fees fell, sending its shares down the most since going public in June.

$100 Oil May Mean Recession as U.S. Economy Hits `Danger Zone' Rising fuel prices that businesses and consumers took in stride earlier this year may now be near the point of pushing the weakened U.S. economy into recession.

Currency Controls Combat sinking dollar

Currency Controls Return as Central Banks Fight Dollar Freefall Nov. 12 (Bloomberg) -- Central banks from Bogota to Mumbai are imposing foreign-exchange curbs to take control of their soaring currencies from traders dumping the dollar.

In Colombia, international investors buying stocks and bonds must leave a 40 percent deposit at Banco de la Republica for six months. The Reserve Bank of India created a bureaucratic thicket to curb speculation by foreign money managers. The Bank of Korea is investigating trading of currency forward contracts to limit gains in the won, now at a 10-year high.

Instead of using currency reserves or interest rates to influence foreign exchange markets, central banks and finance ministries are setting up obstacles to keep the falling dollar from threatening company profits and economic growth. The U.S. currency slumped 10 percent this year against its biggest trading partners, the steepest decline since 2003, while Treasury Secretary Henry Paulson has reiterated that the U.S. supports a ``strong'' dollar.

``Central banks are struggling to find new ways to intervene against their currencies and some of the proposals simply can't work,'' said Mirza Baig, an analyst in Singapore at Deutsche Bank AG, the world's biggest currency trader. Some plans are ``truly bizarre,'' he wrote in a report.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ad3SyUGo78L0&refer=home

Paulson Says China Is `Out of Step' on Exchange-Rate Policy
Bloomberg - Nov 8, 2007
Paulson noted an increasing number of governments are joining the US in demanding China loosen its controls on the yuan. European Central Bank President ...

South Africa: JSE Has Currency Futures Ambitions
AllAfrica.com, Washington - Nov 8, 2007
The JSE said this week it was led to believe that, if this went well, which it appears to have done, a relaxation of foreign exchange controls would follow, ...

Central Bank Gold Agreement
Gold Seek - Nov 9, 2007
Inflow Capital Controls are another way of coping with this problem of a strong revaluation of the currency and a departure from the $ peg. ...

US, China Play Currency 'Chicken'
Seeking Alpha, NY - Nov 8, 2007
If you think there are bubbles in China today, a rapidly rising currency and reduced capital controls would make the situation much, much worse and then ...

News and Data Sources for the week

Top US banks agree on backup fund for markets

The fund is meant to avoid a severe credit market disruption, according to its organizers, by either providing time for asset prices to recover or, more likely, at least discourage structured investment vehicles from unloading their holdings en masse, the Times said.

Banks with high exposure to derivatives risk

Oil Price Rise Causes Global Shift in Wealth

Financial data collection tools:

MZM: alternative to M3

http://research.stlouisfed.org/fred2/series/MZM?cid=30

http://en.wikipedia.org/wiki/Money_with_zero_maturity

http://www.eiu.com/ The world leader in global business intelligence
The Economist Intelligence Unit is the world's foremost provider of country, industry and management analysis. Founded in 1946 when a director of intelligence was appointed to serve The Economist, the Economist Intelligence Unit is now a leading research and advisory firm with more than 40 offices worldwide. For nearly 60 years, the Economist Intelligence Unit has delivered vital business intelligence to influential decision-makers around the world. Our extensive international reach and unfettered independence make us the most trusted and valuable resource for international companies, financial institutions, universities and government agencies.

Our mission is to provide executives with authoritative analysis and forecasts to make informed global decisions. We offer three kinds of business intelligence:

	Country analysis on more than 200 markets
	Industry trends in eight key sectors
	Latest management strategies and best practices

The Economist Intelligence Unit has recently merged with Economist Conferences to deliver 360-degree decision support for your international business. We call it 360-degree decision support because we can help you at any stage of your decision-making process: whether you are gathering facts, developing plans, networking with executives or benchmarking strategies. And we can now provide you with business intelligence in your preferred format: through electronic services, custom research, executive meetings or personalised presentations.

http://www.transparency.org/ Transparency International, the global civil society organisation leading the fight against corruption, brings people together in a powerful worldwide coalition to end the devastating impact of corruption on men, women and children around the world.
TI's mission is to create change towards a world free of corruption.

Transparency International challenges the inevitability of corruption, and offers hope to its victims. Since its founding in 1993, TI has played a lead role in improving the lives of millions around the world by building momentum for the anti-corruption movement. TI raises awareness and diminishes apathy and tolerance of corruption, and devises and implements practical actions to address it.

Transparency International is a global network including more than 90 locally established national chapters and chapters-in-formation. These bodies fight corruption in the national arena in a number of ways. They bring together relevant players from government, civil society, business and the media to promote transparency in elections, in public administration, in procurement and in business. TI's global network of chapters and contacts also use advocacy campaigns to lobby governments to implement anti-corruption reforms.

Politically non-partisan, TI does not undertake investigations of alleged corruption or expose individual cases, but at times will work in coalition with organisations that do.

TI has the skills, tools, experience, expertise and broad participation to fight corruption on the ground, as well as through global and regional initiatives.

Now in its second decade, Transparency International is maturing, intensifying and diversifying its fight against corruption.

US Debt tops 9 trillion, stocks battered, banks overwhelmed with bad debt

Stocks battered by mortgage mess

Dow falls over 150 points on news Wachovia will take a $1 billion hit, forecasts for slower growth in Europe.

Bankruptcy Law Backfires On Banks

The Economic Consequences of Mr. Bush

Federal Liabilities Now Equal $175,000 for Every American

National Debt at Record $9 Trillion

California Gas Prices Reach $5 In Some Areas

Asian Stocks Slump as Dollar Tumbles, Subprime Losses Widen

Asian stocks fell the most in 12 weeks, extending a global rout after the dollar plunged yesterday, oil slumped and U.S. financial companies disclosed mounting credit-market losses.

US debt tops $9 trillion for first time-Treasury US debt tops $9 trillion for first time-Treasury

The U.S. Treasury Department said on Wednesday publicly held U.S. debt breached $9 trillion this week for the first time ever, just five weeks after Congress had raised the statutory borrowing limit.

At the end of September, U.S. President George W. Bush signed a measure to increase the debt limit ceiling to $9.815 trillion from $8.965 trillion, allowing the government to keep issuing debt.

The increase in the debt limit is the fifth since Bush took office in January 2001. The U.S. debt stood at about $5.6 trillion at the start of his presidency

UN warns of possible sharp rise in bird flu outbreaks ahead of Northern Hemisphere winter... http://hosted.ap.org/dynamic/stories/A/AS_GEN_ASIA_BIRD_FLU_ASOL-?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2007-11-09-06-04-23

http://www.nytimes.com/2007/11/09/business/09shop.html?ex=1352264400&en=76e3c7ce5cabfdc4&ei=5090&partner=rssuserland&emc=rss Consumers have rendered a verdict on the coming holiday season: grim

 

Wall St. Bets against it’s own survival

Nov. 7 (Bloomberg) -- Credit-default swaps on bonds of Citigroup Inc., Wachovia Corp. and Morgan Stanley are trading at the highest in at least five years on speculation the nation's biggest banks may be forced to write down more subprime assets.

Analysts began revising predictions for writedowns at the banks after Citigroup this week said losses from the assets may rise to $11 billion. Credit-default swaps tied to Citigroup more than tripled in the past three weeks, indicating the risk of default is rising. Contracts on Morgan Stanley and Wachovia Corp. and Merrill Lynch & Co. are at or near six-year highs.

http://www.bloomberg.com/apps/news?pid=20601087&sid=auTmbruMWHfw&refer=home

A credit default swap (CDS) is a bilateral contract under which two counterparties agree to isolate and separately trade the credit risk of at least one third-party reference entity. Under a credit default swap agreement, a protection buyer pays a periodic fee to a protection seller in exchange for a contingent payment by the seller upon a credit event (such as a default or failure to pay) happening in the reference entity. When a credit event is triggered, the protection seller either takes delivery of the defaulted bond for the par value (physical settlement) or pays the protection buyer the difference between the par value and recovery value of the bond (cash settlement).

Credit default swaps resemble an insurance policy, as they can be used by debt owners to hedge against credit events. However, because there is no requirement to actually hold any asset or suffer a loss, credit default swaps can be used to speculate on changes in credit spread.

Credit default swaps are the most widely traded credit derivative product^[1]. The typical term of a credit default swap contract is five years, although being an over-the-counter derivative, credit default swaps of almost any maturity can be traded.

http://en.wikipedia.org/wiki/Credit_default_swap

Buying Swaps

Credit-default swaps tied to Citigroup's bonds have climbed 17 basis points to 70 basis points since Oct. 31, according to broker Phoenix Partners Group in New York. The contracts are trading at the widest levels since at least September 2002, data from Credit Suisse Group show.

A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

At that level, Citigroup is trading as if it were rated Baa3, the lowest investment-grade rating, according to the credit strategy group at Moody's Investors Service.

Moody's this week lowered Citigroup's ratings to Aa2, its third-highest rating, from Aa1.

Level 3 and mainstream Dollar Refusal

BOSTON (MarketWatch) -- Citigroup Inc. (C:Citigroup, Inc C 36.18, -1.55, -4.1%) in a quarterly regulatory filing Monday said its so-called level 3 assets as of Sept. 30 were $134.84 billion. Level 3 assets are holdings that are so illiquid, or trade so infrequently, that they have no reliable price, so their valuations are based on management's best guess. The investment bank said its total liabilities related to level 3 assets at quarter-end were $40.36 billion, according to the Form 10-Q.

http://www.marketwatch.com/news/story/citigroup-reports-1348-billion-level/story.aspx?guid=%7BC06333CB%2DC985%2D4B41%2DA7B2%2D1699184BBA4E%7D

http://news.yahoo.com/s/ap/20071103/ap_on_re_eu/climate_security Think tank: Climate affects security

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCs.keWwNdiY&refer=home Supermodel Bundchen Joins Hedge Funds Dumping Dollars Supermodel Bundchen Joins Hedge Funds Dumping Dollars

``We've told all of our clients that if you only had one idea, one investment, it would be to buy an investment in a non- dollar currency,'' said Gross, the chief investment officer of Pacific Investment Management Co. in Newport Beach, California, and manager of the world's biggest bond fund. ``That should be on top of the list,'' said Gross, whose firm is a unit of Munich- based insurer Allianz SE.

The Amero

http://www.amerocurrency.com/
From the mindsets documented above, and more data available through this site, emerges the concept of the "Amero," an international currency whereby the American monetary system and our treasury system become homogeneous with those of Mexico and Canada.

http://www.amerocurrency.com/amerophotos.html photos of the Amero

http://en.wikipedia.org/wiki/Amero The North American currency union is a proposal in which the three principal countries of North America, namely Canada, the United States and Mexico, would share a common currency. This idea is based on the common European Union currency, the euro. There are also related proposals for a single currency for all of the Americas. The hypothetical currency for both of these ideas is sometimes referred to as the Amero.

Support in other regions

There are many lower levels of currency cooperation that have occurred in the Americas. A number of nations – such as Argentina, Brazil and Canada – have at times tied their currency to the United States Dollar, and in 2000, Ecuador adopted the U.S. Dollar as its sole currency. In much of Central America and the Caribbean the U.S. Dollar is already a de facto secondary currency.

It serves as parallel legal tender in both Panama (since independence in 1903) and El Salvador (since 2001), and unofficially in Cuba where the Convertible Peso is currently pegged at 1 Peso equal to US$1.08 (previously, it was until 24 March
2005, 1 Peso = US$1).

Amero Video http://www.youtube.com/watch?v=6hiPrsc9g98

Private CIA: Rent-a-Spy

Blackwater's Owner Has Spies for Hire

http://www.washingtonpost.com/wp-dyn/content/article/2007/11/02/AR2007110202165.html?hpid=topnews

First it became a brand name in security for its work in Iraq and Afghanistan. Now it's taking on intelligence.

The Prince Group, the holding company that owns Blackwater Worldwide, has been building an operation that will sniff out intelligence about natural disasters, business-friendly governments, overseas regulations and global political developments for clients in industry and government.

http://www.totalintel.com/
Total Intelligence Solutions, Inc. (Total Intel), brings together the experience and collective knowledge of three well-established security organizations - The Black Group, Terrorism Research Center and Technical Defense - to provide Fortune 1000 companies with the only comprehensive and complete solution for private intelligence.

Total Intel is co-managed by Rob Richer, former Assistant Deputy Director of Operations (ADDO) at the Central Intelligence Agency (CIA) and Matthew Devost, Co-founder and President of Terrorism Research Center.

Oil, Fed injection, and embezzlement articles

OPEC oil ministers say they are powerless in the face of many factors driving up the price of crude, with one member of the producers' cartel warning that the 'market is out of control'.

Fed Injects $41 Billion Into US Financial System to Help Ease Credit Problems  Charles Merrill Fears Market Crash  Whisperings Of Gold Conspiracy  No end in sight for housing slump  Oil hits new record over $90  Billionaires Up, America Down

Former Colorado Gov. Describes ''CRIME OF CENTURY'': The first rule of embezzlement is to find some naive patsy. We sensed forty years ago the younger generation was not paying enough attention to public policy, so we quietly found ways to maintain our lifestyle and charge it to the next generation – and their children.

Banking gets bloody

Top US analyst hits back after death threats over Citigroup downgrade

http://business.timesonline.co.uk/tol/business/markets/article2796774.ece

Meredith Whitney, the analyst who prompted a $369 billion (£177 billion) plunge in the value of US shares on Thursday by issuing a negative note on Citigroup, hit out at Wall Street's culture of intimidation yesterday after receiving several death threats from investors in the bank.

Ms Whitney, a CIBC analyst who is married to the former World Wrestling Entertainment champion Death Mask, prompted a near 7 per cent drop in Citigroup's shares on Thursday, after suggesting that the bank needed to raise more than $30 billion to restore its capital cushion.

BestBank's ex-owner plummets 27 stories hours before hearing

http://www.rockymountainnews.com/drmn/other_business/article/0,2777,DRMN_23916_5738328,00.html Facing jail, banker leaps to death

Banks hit again as credit fears spread

Fears of a fresh wave of losses arising from the credit squeeze spread around the globe on Friday, depressing stock markets in Europe and Asia and savaging bank shares for the second day in a row.

Despite a surge in US employment growth last month, investors remained worried that banks and other financial institutions still faced heavy losses arising from the troubled US mortgage market and related securities.

http://www.ft.com/cms/s/0/9ce8e2aa-897b-11dc-b52e-0000779fd2ac.html?nclick_check=1

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http://www.myfxtools.com/index.html MyFXTools is committed to providing the best quality tools for forex traders. As we build up our product range to cover all needs, we have the tools for you to auto-trade your account, and to receive trade signals. Through our proven product range, no matter how much time you have to invest in forex, we have the product for you. There are a variety of training products available, and we also provide all the support you need,to ensure you are able to start trading successfully.

http://www.halcyonfx.com/ Halcyon Forex produces highly specialized Expert Advisor programs for the MetaTrader 4 currency trading platform. Forex investors who wish to automate buying and selling on their Forex trading accounts use our software to ensure a high success rate and healthy returns.

Thank you for visiting our website and considering our Expert Advisor software for your investment needs. If you have any questions at all regarding our automated Forex trading products please feel free to email us and we will be happy to answer any questions you may have.

The development of an effective system means that anyone can profit by using the right technology. Our copyrighted system can open and close trades without human intervention and with a very high success rate so that you can go to work or do some other activity while the expert advisor diligently works to make money for you. Even while you sleep! So while money doesn't grow on trees, with the right technology your computer is another matter.

http://www.easytradefx.com/ The Forex Market has a lot of potential for great profits, but you can also loose your shirt! I am a professional currency trader and educator who has been on the shirt loosing side myself. I started like most other people seeing an infomercial on TV about the Forex market and then paying for seminar after seminar, software package after software package, and trading course after trading course. I lost thousands of dollars trading real money in brokerage accounts on the internet. I finally quit trading and accepted defeat. Some months later an experience in a store at Christmas time made me realize that I was not destined to be like everybody else and just work a 9 to 5 job I hated only to retire and not be able to afford my medications and medical bills. I realized in that moment I had to figure out how to make it work. I know that there were some very successful people that were making their living trading the Forex market and I decided I was going to be one of them.

The thing I have most realized over time is that as people we tend to have unrealistic expectations of the result of our efforts. Everybody wants to be millionaires but very few people are willing put in million dollar effort. That is why lotteries do so well. The idea of getting something for nothing is very alluring. Everybody wants to make a high profile lawyer or doctors salary not realizing that these professionals spent years of study then practice to become the best in their field.

In developing systems of trading the markets I have tried to keep in mind the interest factor as well as the learning curve required to be able to use the systems. I realize that as human beings we want to see results NOW and if we don't we are often unable to continue putting in the work required to better ourselves. I have dedicated a lot of time and offer my students extra help so that very early on they can see the benefits of putting in the needed work to become successful traders. I use video as a method of training and explaining so that my students can actually see for themselves what can happen if they spend time early and learn as much as they can.

I feel that my courses are some of the best on the internet and I back them with support and assistance and it is my hope that by being fair and reasonable we can all be better off.

http://forex-expert-advisor.com/index.htm We are glad to present your attention the BEST and PROFESSIONAL Software for hands-free automatic FOREX trade - Expert Advisors for MetaTrader4 platform.

Expert Advisors (EA) are used to render the trading process automatic allowing to exempt the trader from continuous watching the market. Many professional traders have a big amount of trading systems allowing them to work in different markets and under different conditions.

Expert Advisors (EA) in MetaTrader allow to connect signals generated by trading systems to trader's real account in such a way that it is possible to know and manage his/her open positions, orders and stops just from the expert system.

If you work on the forex market you know what place has the psychological factor of the person. To achieve stability of work on the Forex market years and years of work first of all above themselves are necessary. To avoid influence of the psychological factor this trading mechanical system has been written.