Wednesday, October 31, 2007

Atlanta Water Crisis Like you, we're quite concerned about the water crisis in Atlanta.  This blog is intended to serve as a single point for you to get all of the latest news about this situation.

If you know of something we've missed, please e-mail us at and let us know.  Thanks!

Dry is the goal as United Parcel Service Inc., Coca-Cola Co. and other companies in the Atlanta area rally to cut water use in response to the region's most extreme drought since at least the 1920s. Metropolitan Atlanta, which has added more new residents than any other U.S. city since 2000, may face limits on growth if the shortage persists, business officials said.

``We are very galvanized around this issue,'' said John Somerhalder II, chief executive officer of AGL Resources Inc., which provides natural gas in Atlanta, and vice chairman of the Metro Atlanta Chamber of Commerce's environmental committee. ``It is the No. 1 topic that businesses are concerned about.''

The Coming Water Crisis - US News and World Report

The tap water was so dark in Atlanta some days this summer that Meg Evans couldn't ...
water might someday make the energy crisis look like small potatoes


Sunday, October 28, 2007

Dollar Demise even in 3rd world

Dollar's Demise Can Be Seen Even in the Maldives: William Pesek Bargaining while buying some trinkets in the Maldivian capital, Male, recently, I heard most unexpected words: ``You can keep your dollars.''

Oct. 29 (Bloomberg) -- Bargaining while buying some trinkets in the Maldivian capital, Male, recently, I heard most unexpected words: ``You can keep your dollars.''

This tiny nation of 1,200 islands has long accepted U.S. currency out of convenience for visitors and financial sobriety. The dollar tended to do better in global markets than the local monetary unit, the rufiyaa. That may be changing and it's a bad omen for the world's reserve currency.

``My dollars aren't as popular here as they've been in the past,'' says Moyez Mahfouz, 51, who has visited the Maldives from Bahrain with his family once or twice a year for a decade. ``More and more on this trip, I'm being asked for rufiyaa.''

Why does it matter what happens in the Maldives? Its $1 billion economy is worth 1/59th of Microsoft Corp. co-founder Bill Gates's wealth and 1/27th of Sri Lanka's output. While it's an amazingly beautiful place, the Maldives is a rounding error on the global economic pie chart. Yet it may be a microcosm of a tectonic shift in finance: the demise of the dollar.

These things start out slowly, and in recent months I have had similar experiences from Mexico to Vietnam. In markets, restaurants, taxis and tourist shops that long accepted dollars, many are opting for local currency. The reason: concerns the dollar plunge that analysts have predicted for years is afoot and that the U.S. is uninterested in halting it.

Bernanke, `Reluctant' to Cut Rates, May Yield to Markets and Do So Anyway Federal Reserve Chairman Ben S. Bernanke and his colleagues sound as if they'd prefer to just say no to an interest-rate cut this week. The financial markets may not let them.

Friday, October 26, 2007

NFA gears up for forex consolidation - Testimony
NFA President urges House Subcommittee to address forex regulatory issues in CFTC reauthorization bill



SEPTEMBER 26, 2007

In the CFMA Congress attempted to resolve the so-called Treasury Amendment issue once and for all by clarifying that the CFTC does, in fact, have jurisdiction to protect retail customers investing in foreign currency futures. The basic thrust of the CFMA in this area was that foreign currency futures with retail customers were covered by the Commodity Exchange Act ("Act") unless the counterparty was an "otherwise regulated entity," such as a bank, a broker-dealer or an FCM. When I testified here in 2003, I told you that NFA Member FCMs held $170 million in retail customer funds trading off-exchange forex. Four years later, that number is now over $1 billion. With this dramatic growth there have been some pretty dramatic problems.

Members acting as counterparties to retail forex transactions account for less that 1% of NFA's membership. Unfortunately, they also account for over 20% of the customer complaints filed with our arbitration program, over 50% of NFA's current enforcement docket and over 50% of the emergency enforcement actions NFA has taken over the last year.

There a number of problems in the current statute that have contributed to these problems. If you look at the firms that have caused virtually all of the customer protection problems in retail forex, they share a couple of traits. First of all, they are not really FCMs at all. Congress intended to allow FCMs, along with banks, broker-dealers and insurance companies, to act as counterparties to retail forex transactions because they are all "otherwise regulated entities." The wording of the statute, though, opened the door for firms that are not really FCMs to take advantage of the FCM exemption. Firms became registered as FCMs that are FCMs in name only-they do no exchange-traded futures. They are registered as FCMs solely to qualify to do retail forex business. To make matters worse, due to a further anomaly in the statute, the Act currently does not provide the CFTC with any rulemaking authority over these firms at all. Clearly, Congress did not intend to allow firms that are FCMs in name only to act as counterparties to retail forex futures. Congress should fix this problem by limiting the FCMs that can act as counterparties to those that are primarily and substantially engaged in the activities described in Section 1(a)(20) of the Act.

The second trait that marks the problem firms in retail forex is that most, though not all, have been thinly capitalized. Congress long ago recognized that acting as a dealer involves greater risk than acting as an agent in futures trading, the way a traditional FCM does. That is why Congress in 1978 imposed a $5 million net worth requirement for firms granting dealer options and why the CFTC created a $2.5 million capital requirement for leverage transaction merchants in 1984. Congress should amend Section 2(c) of the Act to require FCMs acting as counterparties to retail forex transactions to maintain minimum capital of at least $20 million. NFA has raised the capital requirements for forex dealers several times but this congressional action could ensure that firms can meet their obligations to their customers and have a significant financial stake in their business.

Tuesday, October 23, 2007

Jim Rogers Shifts Assets Out of Dollar to Buy Chinese Currency

Jim Rogers Shifts Assets Out of Dollar to Buy Chinese Currency

By Marcel van de Hoef and Danielle Rossingh

Oct. 24 (Bloomberg) -- Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all his assets out of the dollar and buying Chinese yuan because the Federal Reserve has eroded the value of the U.S. currency.

``I'm in the process of -- I hope in the next few months -- getting all of my assets out of U.S. dollars,'' said Rogers, 65, who correctly predicted the commodities rally in 1999. ``I'm that pessimistic about what's happening in the U.S.''

Rogers, delivering a presentation late yesterday at an investors' meeting organized by ABN Amro Markets in Amsterdam, said he expects the Chinese currency to quadruple in the next decade and that he is holding on to commodities such as platinum, gold, silver and palladium.

The dollar has dropped against all the 16 most actively traded currencies except the Mexican peso this year as slowing growth and the first interest-rate reduction since 2003 last month dimmed the allure of dollar-denominated assets.

Since the Fed lowered U.S. interest rates on Sept. 18, the first cut in four years, the dollar has fallen 2.8 percent against the euro and touched a record low yesterday. Gold rose to a 27-year high and platinum jumped to a record.

``It's the official policy of the central bank and the U.S. to debase the currency,'' said Rogers, a former partner of George Soros.

``The U.S. dollar is and has been the world's reserve currency, the world's medium of exchange,'' he said. ``That's in the process of changing. The pound sterling, which used to be the world's reserve currency, lost 80 percent of its value, top to bottom, as it went through the whole period of losing its status as the world's reserve currency.''


The Chinese currency, known as the renminbi, or yuan, is ``the best currency to buy right now,'' Rogers said. ``I don't see how one can really lose on the renminbi in the next decade or so. It's gotta go. It's gotta triple. It's gotta quadruple.''

China, growing faster than any other major economy, is ``going to be the most important country in the 21st century,'' he said. China's gross domestic product expanded 11.9 percent in the second quarter, and analysts surveyed by Bloomberg estimate the economy grew by 11.5 percent in the three months to Sept. 30.

Rogers also is buying Swiss francs and Japanese yen, which he said have been ``pounded down'' because of the so-called carry trades.

Unwinding Carry Trades

In the carry trade, investors borrow in countries with low interest rates, such as Japan, and invest the proceeds where rates are higher. Japan's benchmark overnight lending rate is 0.5 percent, compared with 6.5 percent in Australia and 8.25 percent in New Zealand.

The carry trades in yen and francs will ``unwind someday,'' which will send the currencies ``straight up,'' Rogers said. ``I'm buying the yen.''

The bull markets in bonds and stocks are ``over,'' he said. ``Bonds will be a terrible place to be for many years and will in fact be going down for many years.''

Rogers said he remains bullish on commodities because ``that's where the big fortunes are going to be made in the world in the next five, or 10 or 15 years. The current bull market is going to last until sometime between 2014 and 2022.''

Commodity prices have surged as demand for raw materials, especially from China, rose faster than producers were able to increase output. Agricultural prices have led recent gains, including a record high for wheat last month and a three-year high in soybeans.

``The number of hectares devoted to wheat farming has been declining for 30 years, the inventory levels of food are at the lowest level since 1972,'' Rogers said. ``Suppose we start having droughts again. God knows how high the price of agriculture is going to go, so that's where I'm putting more of my money now than in other things.''

He added, ``I think I'm going to make more money in agriculture than I make in precious metals.''

Platinum, gold, silver and palladium will ``be much, much higher during the course of the bull market,'' he said.

To contact the reporters on this story: Marcel van de Hoef in Amsterdam at ; Danielle Rossingh in London at .

Last Updated: October 23, 2007 20:23 EDT

Sunday, October 21, 2007

SIVs, Water Rights Issues, and Bank Failures

Even 'safe' funds play with fire

One of the things SIVs issue is asset-backed commercial paper, which is basically short-term debt that is collateralized with assets, although those assets may just be other types of debt.)

Beware banks' bragging on earnings

J.P. Morgan Chase and Goldman Sachs have used their superior results this quarter to try and steal business from rivals. But are they really as strong as they look?

The Future Is Drying Up

This is an old prophecy, dating back more than a century to one of the original American explorers of the West, John Wesley Powell, who doubted the territory could support large populations and intense development. (Powell presciently argued that river basins, not arbitrary mapmakers, should determine the boundaries of the Western states, in order to avoid inevitable conflicts over water.) An earlier explorer, J. C. Ives, visited the present location of Hoover Dam, between Arizona and Nevada, in 1857. The desiccated landscape was "valueless," Ives reported. "There is nothing there to do but leave."


If these people had examined critically, even for five minutes, the current state of affairs, it would have been apparent to them, that Bernanke's sell out to Wall Street was a stop gap measure to calm the markets and create a state of illusion. But it did not work for the simple reason that one cannot simply revive, on a permanent basis, a hopelessly terminally ill patient, when all its organs are failing rapidly, save the ventilator maintaining the last few breaths.

Thursday, October 18, 2007

Japan ceases to use US dollar as reserve currency

Iran and Japan have taken another step in making the dollar's dominance a thing of the past.

Japanese oil refiners Cosmo Oil Co. and Japan Energy Corp. have started paying for Iranian crude oil in yen instead of dollars, announced company spokesmen on October 9. Both companies are following in the footsteps of Nippon Oil Corp.-Japan's largest oil refiner-which made the same announcement in September.

How significant is it that more and more nations are ceasing to use the dollar as a reserve currency?

Since the 1944 Bretton Woods Agreement, the US dollar has been the world's primary reserve currency. This has been especially true regarding the crude oil trade, in which the majority of nations pay for crude oil in dollars. The resulting massive demand for dollars has allowed the United States to accumulate trade deficits and fiscal debts without experiencing the negative economic impacts that such imbalances normally cause.

This past July, the National Iranian Oil Company (NIOC) general manager of crude oil marketing and exports, Ali Arshi, sent a letter to Japanese oil refineries requesting that all future crude oil shipments be paid for in yen. Three major Japanese oil refiners have already complied. Will other Asian oil refiners follow suit and move away from the US dollar?
As the largest overseas holder of US treasuries, Japan is a key supporter of the US dollar. Yet Iran is the third-largest supplier of Japanese oil. As one Tokyo investment securities analyst said, "What else can Japan do but accept the [Iranian] request, once the oil producer sent its wish?"

The switch to yen should have little negative impact on the Japanese economy. As the purchasing power of the dollar has decreased, the price of oil has skyrocketed to $80 a barrel. Any increase in value of the yen, due to increased oil-yen demand, will only make oil imports less expensive for a nation that is highly dependent on oil imports.

The Iranians are also optimistic about the switch. Hojjatollah Ghanimifard, the International Affairs Director of NIOC, stated that "With the arrangements we've made with our Asian customers, hopefully by the end of October we will have around 80 percent of our export revenues in currencies other than the dollar."

Already, approximately 65 percent of Iran's crude oil exports are based on the euro and another 20 percent on the yen. Iran is casting off the dollar and doing all it can to persuade the oil refineries of Japan to do the same.

Central banks in South Korea, China, Taiwan, Russia, Syria and Italy have announced plans to reduce their dollar holdings. As nations and corporations turn their back on the greenback, the decreasing demand for America's currency may cause its already weakening value to plunge to new depths.

Source: Fars News Agency

Sunday, October 14, 2007

SIVs remain for round 2 credit crunch threat

Several of the world's biggest banks are in talks to put up about $75 billion in a backup fund that could be used to buy risky mortgage securities and other assets, a move designed to ease pressure on a crucial part of the credit markets that threatens the broader economy...

Structured investment vehicles (SIVs) are investment companies that buy highly rated debt securities and fund themselves by issuing senior debt and capital. In recent years they have developed from a niche area into a large component of the structured finance market in the UK and other jurisdictions.

A structured investment vehicle (SIV) is an evergreen credit arbitrage fund, similar to a CDO or Conduit. They are usually from around $1bn to $30bn in size and invest in a range of asset-backed securities, as well as some financial corporate bonds. SIV is to make profits from the difference between short term borrowing rate and long term returns. The risk that arises from the transaction is mainly twofold. First of all, the solvency of the SIV may be at risk if the value of investments falls below the equity part. Secondly, there is a liquidity risk, as the SIV borrows short term and invests long term, that is the debt comes due before the asset falls due. Unless the borrower can refinance short-term at favorable rates, he may be forced to sell the asset into a depressed market.

Notable SIV managers

Most SIVs are run or sponsored by banks, however a number are managed independently.

Bank Sponsors





Thursday, October 11, 2007



Sell 1 lot EUR/CHF and add to the position as the trade enters profit. EUR/CHF is unsustainable at this prices, due to:

  • CHF will raise rates EUR will lower
  • EUR officials are pressured to drop EURO, claiming fears of hurt export markets
  • Nothing fundamentally better in Europe than Switzerland
  • Europe more prone to instability, more event risk in Eurozone vs. Suissezone

This trade is a long-term trade, use tight stops and re-enter if risk cannot be afforded. Otherwise just hold onto your shorts.

ICAP Bets on Currency Market

ICAP Bets on Currency Market

October 11, 2007; Page C3

LONDON -- The global currency market faces a shakeout after yesterday's agreement by interdealer broker ICAP PLC to buy independent foreign-exchange-processing firm Traiana for $238 million.

The union propels New York-based Traiana into the cadre of big-hitting players in the $3.2 trillion-a-day currency markets, enabling it to challenge the central bank-supported monopoly CLS Bank, which ensures each side of currency trades gets paid.

CLS is the only service provider in this area, although banks settle between themselves about 50% of deals.

Traiana's foreign-exchange business revolves around smoothing post-trade flows for only certain types of trades. But co-founder Michael Laven said in an interview that he is ready to "flip the switch" to package together all types of currency deals, potentially slashing the flow to volume-hungry CLS and setting dealing banks on a collision course with central banks.

London-listed ICAP's chunky price tag for Traiana, which is expected to generate just $15 million in revenue in the year ending January, is a sign that it sees the firm expanding its capabilities.

"ICAP is making an interesting bet on the future of the marketplace as much as on Traiana's business today," said Justyn Trenner, principal at London-based ClientKnowledge, which advises banks on strategies in foreign exchange.

A person familiar with discussions on CLS's board said the move is "a big thing" for CLS. "The implications are clear," the person said, adding that the acquisition is likely to be high on the agenda at CLS's next board meeting at the end of this month in Geneva.

CLS processes and charges a fee for each trade that is submitted to it individually. That model made sense when it was set up in 2002, but since then, the amounts traded in the global foreign-exchange markets have boomed, and the number of deals has exploded.

The world's central banks have indicated through the Bank for International Settlements that they want currency-dealing firms to use the system, dubbing the use of other settlement methods as "backsliding" into risky practices.

CLS's board -- made up of representatives of foreign-exchange banks -- has made it clear it doesn't intend to change at this point, because a shift to accepting batches of trades would be economically "disastrous" for the system's smaller users, said the person familiar with CLS's board discussions.

CLS declined to comment.

Some bigger banks are considering and even testing ways to dodge CLS's processes to ease the costs and the data overload, despite their assurances to CLS that they support it.

Sunday, October 7, 2007


Hot money deposits in Britain have ballooned fourfold in a decade to £4,000bn. "What we have is an enormous liability. People have been very happy to park their money in Britain because of the high interest-rate culture and the country's reputation for sound management, but if you start to unpick that, it can go very fast. These investors are fickle," he said.

If $4 Trillion Pounds leaves GBP where will the money flow? Look for commodity currencies, possibly CAD in addition to NZD and AUD, to increase against GBP.

With 4 trillion pounds leaving GBP, where will the money flow? Look for commodity crosses and interest bearing crosses, NZD AUD being top 2.


The above is a daily chart of NZD/GBP – has been up already, but with $4 Trillion pound floating around looking for a new home upside pressure will persist.

  • elite trading team


US – British Banking Crisis

HSBC warns of hot money exodus from Britain under 'siege'

On October 4, 2007, Miami Valley Bank, Lakeview, Ohio

Failed Bank List

Inflation, Banking, and Dollar Crises

Washington Mutual 3Q Earnings to Tumble

Washington Mutual Inc. said Friday that the weak housing market and the recent mortgage crunch will lead to a 75 percent drop in its third-quarter net income, making it the latest financial institution to warn investors it took a major hit over the summer.

Dollar falls to 31 year low against Canadian Dollar

Bank Closing Information for Miami Valley Bank, Lakeview, Ohio

On October 4, 2007, Miami Valley Bank, Lakeview, Ohio was closed by the Ohio Department of Commerce, Division of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

An Analysis of the Presidents Who Are Responsible for the Borrowing

Dollar's double blow from Vietnam and Qatar

Vietnam is planning to cut its purchases of US Treasuries and other dollar bonds, raising fears that Asian central banks with control over two thirds of the world's foreign reserves may soon join the flight from US assets.

Vietnam, which has mid-sized reserves of $40bn, is seen as weather vane for the bigger Asian powers

Together they hold $3,575bn of foreign reserves, over 65pc of the world's total. China leads with $1,340bn, but South Korea, Taiwan, Singapore, and even Thailand all built up massive holdings.

A potent inflationary cocktail

Finally, the Federal Reserve showed its true inflationary colors, and Total Fed Credit went up by $6.6 billion last week. The significance of this is that when you take another $6.6 billion in bank credit and multiply it by the current fractional-reserve multiplier (infinity), this calculates out to (according to my rough calculations) exactly 6.6 jillion gazillion umpty-ump quintillion dollars that can be created by the banks, which is just about enough money to bail out everybody in the Whole Freaking World (WFW), which (according to the bizarre current economic theory and practice) is the new purpose of a central bank; create a bubble by creating too much money and credit (which finances the bubble) and then bail everybody out of the ensuing bust by creating another bubble by creating too much money and credit again and again!