Peter Schiff nailed it! and other info

http://www.youtube.com/watch?v=2I0QN-FYkpw Peter Schiff nailed it!

Updates from auto-trading community

High performance, including native InfiniBand support

• New native InfiniBand implementation accesses InfiniBand at the "native verb" layer for improved latency, throughput, and scalability.
  
• Very low latency of 5 microseconds on native InfiniBand or 41 microseconds on Ethernet can be achieved for 45-byte messages at a throughput rate of 10,000 messages per second.¹
  
• Very high throughput, one-to-many multicast messaging can deliver more than 40 million 12-byte messages per second on native InfiniBand, approximately one million 120-byte messages per second on Ethernet, and close to three million 120-byte messages per second on InfiniBand, all on common x86 servers ¹.
  

http://www-01.ibm.com/common/ssi/cgi-bin/ssialias?infotype=AN&subtype=CA&htmlfid=897/ENUS208-229&appname=lenovous&language=en

SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme

FOR IMMEDIATE RELEASE
2008-293

Washington, D.C., Dec. 11, 2008 — The Securities and Exchange Commission today charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

The SEC's complaint, filed in federal court in Manhattan, alleges that Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.

http://www.sec.gov/news/press/2008/2008-293.htm

http://newyork.fbi.gov/dojpressrel/pressrel08/nyfo121108.htm

Fed cuts rates to ZERO

http://money.cnn.com/2008/12/16/markets/markets_newyork/index.htm NEW YORK (CNNMoney.com) -- Stocks surged Tuesday after the Federal Reserve cut a key short-term interest rate to the lowest level on record, and signaled it had more tools available to help the economy as the recession stretches on.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aafQgexzAGXk&refer=home Dec. 16 (Bloomberg) -- The Federal Reserve cut the main U.S. interest rate to as low as zero for the first time and shifted its focus to the amount and type of debt it buys, seeking to revive credit and end the longest slump in a quarter- century.

http://www.federalreserve.gov/newsevents/press/monetary/20081216b.htm
Release Date: December 16, 2008

For immediate release

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent. 

Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined.  Financial markets remain quite strained and credit conditions tight.  Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably.  In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.  In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time. 

The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level.  As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant.  The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities.  Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses.  The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco.  The Board also established interest rates on required and excess reserve balances of 1/4 percent. 

http://www.nytimes.com/2008/12/17/business/economy/17fed.html?bl&ex=1229576400&en=9d5b8715e8bcd55a&ei=5087%0A WASHINGTON — The Federal Reserve entered a new era on Tuesday, setting its benchmark interest rate so low that it will have to reach for new and untested tools in fighting both the recession and downward pressure on consumer prices.

4 cast says:

Tue Dec 16 19:40:00 2008(EST)

* 17 Dec 08: 00:40(SGA) - FX NOW! EUR/GBP, GBP/USD Flows - Cable sales, but, its getting a more dangerous game.

Some cable sales being seen, with a German name noticeable, though at this stage they appear to be somewhat tentative. Although sterling cannot be described as anything but 'weak' in terms of most of the crosses, short covering on cable has - and can continue to have - rather painful consequences, and as such we would at this stage be a little hesitant ourselves in jumping on the sales bandwagon. On EUR/GBP, where, so far, the easy call has been north, though we will inevitably hear growing suggestions that parity is coming, especially in the media, we would also be inclined to step back a little, and would note our technician's call that though the 0.91 level is calling, it's a cut and run on a downside break of 0.8875. C.F.

* 17 Dec 08: 00:21(SGA) - FX NOW! EUR/USD, USD/CHF Flows - Wither the dollar?

Again thin and gappy markets, but with just a little (unsurprising) profit-taking after the initial squeeze appears to have run its course. With order books almost certainly cleared, and stops stopped, we now await the next push. The technicians will, of course be concentrating on buying on dips, and the tacticians, who yesterday were calling for the USD to be the weakest currency at least for the first half of 2009 will be re-evaluating, and perhaps thinking that a lot of weakening has already been done! But in the meantime, we look for a relatively solid base near 1.40 (though tech studies allow for a pullback to 1.3940), and a push to 1.4185, a 50% retracement level, which, if nothing else, is at least a convenient peg to hang the next EUR/USD rally on. C.F.

Russia devalues ruble as Madoff fraud unraveled

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aw7gy7CnbU_s Dec. 15 (Bloomberg) -- Russia's central bank devalued the ruble for the second time in a week after policy makers spent $161 billion of reserves trying to defend the currency and oil revenue slumped.

Just when Wall Street needs it least, Bernie Madoff's pyramid scheme takes financial fraud to new lows.... http://www.economist.com/finance/displayStory.cfm?story_id=12795543&source=features_box1

Tim Duy is worried that "the Fed the Fed and Treasury are setting the stage for a disorderly adjustment of the Dollar":

What If the Analogy is Wrong?, by Tim Duy: I say this with no exaggeration: The picture painted by the data flow of the past two weeks is deep into the left tail of any of my reasonable distribution of probable economic outcomes. The die is now cast – fiscal stimulus will be too late to prevent the snowballing that will occur throughout the first half of next year. In this environment, policymaking will become increasingly desperate.    http://www.rgemonitor.com/financemarkets-monitor/254768/fed_watch_what_if_the_analogy_is_wrong

 

Madoff crisis collapses Europe’s 2nd largest bank

Dec. 15 (Bloomberg) -- Banco Santander SA, Europe's second- biggest bank by market value, may drop after saying its hedge fund unit invested 2.33 billion euros ($3.1 billion) of client funds with Bernard Madoff, who allegedly ran a Ponzi scheme that cost investors $50 billion.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGp8Qp8V0Two&refer=home

The Sunday Telegraph also reported, citing experts, that British pension funds and insurance companies invested in Madoff's company.    http://www.google.com/hostednews/afp/article/ALeqM5iOlOKnrglqUS5JeRuOwbTOZtgP0Q

http://www.businessweek.com/investing/insights/blog/archives/2008/12/ponzi_nation.html?campaign_id=rss_daily Wall Street trader Bernard Madoff allegedly defrauds the rich and famous out of tens of billions of dollars. Minnesota businessman Tom Petters allegedly fleeces hedge funds out of $3.5 billion. And socialite New York lawyer Marc Dreier may have duped some hedge funds into giving him hundreds of millions of dollars for an apparently bogus real estate scheme.

[8:27:45 PM] eesolid says: Two major European-based banks said they have exposure worth billions of dollars to a US broker accused of a $50bn (£33bn) Wall Street fraud scheme.    http://news.bbc.co.uk/1/hi/business/7782731.stm

Italy's stock market watchdog, the Consob, has launched an investigation into the impact of the scandal on the national financial system, Ansa news agency reported.

The Bank of Spain also opened an investigation to determine the level of involvement of Spanish companies, the Spanish daily El Mundo said.

The Madoff scandal could have a bigger impact in Spain than the collapse of US bank Lehman Brothers this year, in which Spanish investors had exposure of between 1.3 and 2.6 billion euros.

http://news.smh.com.au/world/european-banks-suffer-new-hit-from-madoff-scandal-20081215-6yd6.html

a monumental blow to investors' trust in Wall Street, their financial advisers and even themselves, experts say.

Charles W. "Chuck" Ranson Jr., managing director of investor learning group Tiger 21's Florida region, calls last week's developments a "game changer" for investors.

"This is not Merrill Lynch, this is not Goldman Sachs," Ranson said. "This is an individual guy, but an individual who had the most amazing credibility: a senior officer of the board of directors of NASDAQ, an honored colleague by the securities associations over the years. This is truly a situation that you want to disbelieve. But it's true, evidently."

http://www.palmbeachdailynews.com/biz/content/news/2008/12/13/MADOFF1214.html

Bernake's Billions

US Banks ‘totally bankrupt’

NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded. http://www.reuters.com/article/newsOne/idUSTRE4BA5CO20081211

http://www.bloomberg.com/apps/news?pid=20601087&sid=avVnU01XRJWE&refer=home Dec. 12 (Bloomberg) -- Ecuadorean President Rafael Correa halted payment on foreign bonds he calls "illegal" and "illegitimate," putting the South American country in default for a second time in a decade.

Dec. 12 (Bloomberg) -- Arience Capital Management LP, a New York-based hedge-fund firm run by Caryn Seidman-Becker, is closing its sole fund because markets are "incompatible" with its investment style.

Arience, which manages more than $1 billion, plans to shut down by Dec. 31 and return about 95 percent of investors' money by the end of January, according to a letter sent to investors yesterday. The remaining assets will be paid after the firm's 2008 audit has been completed.

"We do not currently see a clear path to employ our disciplined process and gain the necessary conviction to become reinvested," Seidman-Becker said in a letter, a copy of which was obtained by Bloomberg News. "This decision stems from our belief that the current market environment is incompatible with our investment style and process."

http://www.bloomberg.com/apps/news?pid=20601087&sid=aqujIAc8iHe4&refer=home

Many traders were mad, some passionately and personally upset. One trader at a large investment management firm was quite vocal about his complete shock and anger towards Madoff and the situation.

"I've begun to lose faith in this business and I no longer know who to trust or who the people I trust really are," he says. "What has happened to this industry's integrity? How did we get to this place and how the hell are we going to get back to where we belong?"

http://www.advancedtrading.com/printableArticle.jhtml?articleID=212500158

http://www.ooyala.com/player.js?width=480&height=360&embedCode=RycWE2OitY0LKHsmCZjA3Ay7SlhgxPUe "Bernake's Billions"

Bernard Madoff arrested over alleged $50 billion fraud

http://news.yahoo.com/s/nm/20081212/bs_nm/us_madoff_arrest
NEW YORK (Reuters) – Bernard Madoff, a quiet force on Wall Street for decades, was arrested and charged on Thursday with allegedly running a $50 billion "Ponzi scheme" in what may rank among the biggest fraud cases ever.

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him.

A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.

On Thursday, two agents for the U.S. Federal Bureau of Investigation entered Madoff's New York apartment.

"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.

The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history. When former energy trading giant Enron filed for bankruptcy in 2001, one of the largest at the time, it had $63.4 billion in assets.

U.S. prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 20 years in prison and a fine of up to $5 million.

The Securities and Exchange Commission filed separate civil charges against Madoff.

"Our complaint alleges a stunning fraud -- both in terms of scope and duration," said Scott Friestad, the SEC's deputy enforcer. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."

Dan Horwitz, Madoff's lawyer, told reporters outside a downtown Manhattan courtroom where he was charged, "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events."

A shaken Madoff stared at the ground as reporters peppered him with questions. He was released after posting a $10 million bond secured by his Manhattan apartment.

Authorities, citing a document filed by Madoff with the U.S. Securities and Exchange Commission on January 7, 2008, said Madoff's investment advisory business served between 11 and 25 clients and had a total of about $17.1 billion in assets under management. Those clients may have included other funds that in turn had many investors.

The SEC said it appeared that virtually all of the assets of his hedge fund business were missing.

CONSISTENT RETURNS

An investor in the hedge fund said it generated consistent returns, which was part of the attraction. Since 2004, annual returns averaged around 8 percent and ranged from 7.3 percent to 9 percent, but last decade returns were typically in the low-double digits, the investor said.

The fund told investors it followed a "split strike conversion" strategy, which entailed owning stock and buying and selling options to limit downside risk, said the investor, who requested anonymity.

Jon Najarian, an acquaintance of Madoff who has traded options for decades, said "Many of us questioned how that strategy could generate those kinds of returns so consistently."

Najarian, co-founder of optionmonster.com, once tried to buy what was then the Cincinnati Stock Exchange when Madoff was a major seatholder on the exchange. Najarian met with Madoff, who rejected his bid.

"He always seemed to be a straight shooter. I was shocked by this news," Najarian said.

'LOCK AND KEY'

Madoff had long kept the financial statements for his hedge fund business under "lock and key," according to prosecutors, and was "cryptic" about the firm. The hedge fund business was located on a separate floor from the market-making business.

Madoff has been conducting a Ponzi scheme since at least 2005, the U.S. said. Around the first week of December, Madoff told a senior employee that hedge fund clients had requested about $7 billion of their money back, and that he was struggling to pay them.

Investors have been pulling money out of hedge funds, even those performing well, in an effort to reduce risk in their portfolios as the global economy weakens.

The fraud alleged here could further encourage investors to pull money from hedge funds.

"This is a major blow to confidence that is already shattered -- anyone on the fence will probably try to take their money out," said Doug Kass, president of hedge fund Seabreeze Partners Management. Kass noted that investors that put in requests to withdraw their money can subsequently decide to leave it in the fund if they wish.

Bernard L. Madoff Investment Securities has more than $700 million in capital, according to its website.

Madoff remains a member of Nasdaq OMX Group Inc's nominating committee, and his firm is a market maker for about 350 Nasdaq stocks, including Apple, EBay and Dell, according to the website.

The website also states that Madoff himself has "a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."

The company's website may be found here: http://www.madoff.com/

(Additional reporting by Christian Plumb, Phil Wahba, Michelle Nichols and Jennifer Ablan in New York and Rachelle Younglai in Washington; Editing by Andre Grenon, Bernard Orr and Alex Richardson)

And now for a world government

http://www.ft.com/cms/s/0/7a03e5b6-c541-11dd-b516-000077b07658.html
I have never believed that there is a secret United Nations plot to take over the US. I have never seen black helicopters hovering in the sky above Montana. But, for the first time in my life, I think the formation of some sort of world government is plausible.

A "world government" would involve much more than co-operation between nations. It would be an entity with state-like characteristics, backed by a body of laws. The European Union has already set up a continental government for 27 countries, which could be a model. The EU has a supreme court, a currency, thousands of pages of law, a large civil service and the ability to deploy military force.

http://www.breitbart.com/article.php?id=081207225000.rnygzmld&show_article=1 Investor fear drives US Treasury yields to near zero

 

Milwaukee discusses local currency, get ready for Cheese Dollar

http://www.chicagotribune.com/business/chi-talk_moneydec03,0,2902061.story Milwaukee neighborhoods could print own money

Market collapse a boon for FX quant systems, and suggests FX is an emerging asset class

Fear and market declines have plagued the headlines, but a different story is emerging from automated black box traders in the FX markets.

"Ever since the collapse of Lehman Brothers, our phone has been ringing off the hook. I don't have enough time in the day to properly follow up all the new leads coming in," says Joe Gelet, President of Elite E Services FX Systems. He continues, "While retirement accounts are being wiped out, our systems are over-performing our expectations. Some client accounts were up over 250% in a single week of trading! (These systems are high-risk systems and should be treated as such) The volatility has been great for our systems, and clients are seeking an alternative to the traditional."

Frank Franze, President of Z Trade FX, says: "We're getting requests that simply didn't exist 3 months ago. Brokers are saying they opened more accounts in the last 6 weeks than they did in 2007. Everything is shifting around – some brokers who are plagued with liquidity issues are seeing clients flee to those who aren't. Z Trade FX is positioning itself to be a world-class Introducing Broker to multiple global firms, so clients are handed a choice."

Elite E Services has completed an Expert Advisor trading system after 8 months of research & development. The system has been named "Golden Grid" because it is a Grid trading system based on Fibonacci, a.k.a. Golden Ratio. The golden ratio appears in nature and in the markets; the Golden Grid system takes a simple approach to trading, and by implementing the Golden Ratio both in the positioning of the grid itself and in the money management, it enables a simple system to work on any market in any condition. Built into the system is an account protection risk module that can be set by the user, normally to 5%. This protects any account from a black swan event causing a large drawdown. Golden Grid is available on the Meta Trader 4 platform.

EES has also developed an entire range of systems for the Tradestation platform six of which are being released this week which can be traded as a multiple currency basket and make up a portfolio designed with a low-risk money management profile. When traded as a portfolio further protection again is offered with a maximum 10% risk. The first six crosses now available are EUR/USD, EUR/AUD, GBP/USD, EUR/CHF, NZD/USD, and AUD/USD. These systems can be traded individually or as a portfolio wherever Tradestation is available.

Z Trade FX is offering clients a $500 instant rebate to any customer who opens an account and deposits at least $50,000 USD by December 31^st, 2008. See more detail at www.ztradefx.com

Elite E Services develops quantitative systems for the FX market as well as advising investors about FX at www.startelite.com

 

 

European Banking collapse imminent as US catastrophic ISM data looks less Armageddon like

Why should we care that these emergency economies are on the verge of collapse? Because …European Banks Loaned These Countries A Staggering $3.5 Trillion. When They Go Down, So Will Europe's Largest Banks!     http://www.marketoracle.co.uk/Article7550.html

DECEMBER FREEZE...

Data signal deep global downturn...
Manufacturing hits 26-year low...
Schwarzenegger declares fiscal emergency in CA...
Bush: 'I'm sorry' crisis is occurring...
Oil plunges below $50...
Treasury Yields Plunge to Lowest on Record...
Bernanke: 'No comparison' to Great Depression...
Bank stocks suffer biggest one-day decline since crisis began...

The National Bureau of Economic Research today announced that its Business Cycle Dating Committee had officially determined a peak in economic activity at December 2007, which signals the start of the recession. I am a member of the committee. Though I speak only for myself, not the committee, I offer my views on two questions of possible interest:

(1) Who needs the NBER Business Cycle Dating Committee (BCDC) anyway?

(2) Why did we pick December 2007 as the starting month of the recession?    The National Bureau of Economic Research today announced that its Business Cycle Dating Committee had officially determined a peak in economic activity at December 2007, which signals the start of the recession. I am a member of the committee. Though I speak only for myself, not the committee, I offer my views on two questions of possible interest:

(1) Who needs the NBER Business Cycle Dating Committee (BCDC) anyway?

(2) Why did we pick December 2007 as the starting month of the recession?

Paul Krugman: Deficits and the Future

Deficit hawks who are complaining about the stimulus package have it all wrong:

Deficits and the Future, by Paul Krugman, Commentary, NY Times: Right now there's intense debate about how aggressive the United States government should be in its attempts to turn the economy around. Many economists, myself included, are calling for a very large fiscal expansion to keep the economy from going into free fall. Others, however, worry about the burden that large budget deficits will place on future generations.

http://economistsview.typepad.com/economistsview/2008/12/paul-krugman-de.html

Pound joining Euro

http://www.breitbart.com/article.php?id=081130204959.yq2a770m&show_article=1 Britain is considering joining the eurozone as a direct consequence of global financial turmoil, European Commission President Jose Manuel Barroso said Sunday.

"We are now closer than ever before. I'm not going to break the confidentiality of certain conversations, but some British politicians have already told me: 'If we had the euro, we would have been better off'," Barroso told a weekly French news programme, referring to the fall in the pound's value since markets and liquidity meltdown earlier this year.

UK should trade pound for euro, Hong Kong leader says

SIFMA Global SmartBrief | 11/28/2008

Donald Tsang, a leader in Hong Kong and an elder statesman of finance in Asia, said Britain's attempts to hold onto the pound are futile because the world's economy is dominated by the most powerful currency blocs. "I do not believe in the sustainability of a small floating currency. Look at the pound -- it's being attacked," he said. "The euro is a good move ... Other options are less palatable if you really want to become a big, strong economic union." Telegraph (London) (11/27)

RBS taken over by British Government and other news

http://online.wsj.com/article/SB122788503709864215.html?mod=googlenews_wsj

LONDON -- In an expected move, Royal Bank of Scotland Group PLC said the U.K. government is to take majority control of the bank, after its shareholders took up just 0.24% of its £15 billion ($23.1 billion) stock offering.

The offer was priced at 65.5 pence ($1.01) a share, but as RBS stock hasn't traded above that level since Nov. 7, the lackluster investor participation came as no surprise. As underwriter, the U.K. government will be left with 57.9% of the bank's shares. The deal forms the biggest portion of the government's plan to recapitalize the country's banks.

RBS's shares Friday rose 0.6%, to 55.3 pence, while the FTSE 100 index was up 1.5%.

The capital increase will fatten up RBS's balance sheet, making the bank more resilient amid the weakening economy and providing a cushion against impairments and further asset-value deterioration. But, along with the previously agreed £5 billion preference-share issue to the government, the deal comes with a strategic overhaul of the bank and a moratorium on dividends.

RBS won't be able to pay dividends until it has repaid the preference shares, which mature in five years. The bank has indicated it wants to redeem the preference shares within 12 to 18 months, assuming the government agrees to early redemption.

"We welcome completion of the capital raising process that has strengthened RBS considerably," Chief Executive Stephen Hester said in a statement.

Mr. Hester thanked the government for underwriting the offer. "We regret that existing shareholders did not take up their pre-emptive rights but understand that market sentiment toward the banking sector made this uneconomic in the short term," he said.

RBS's new management team will focus on rebuilding the bank, Mr. Hester said, adding that "there remain substantial uncertainties and challenges outside our control but for our part the job is under way."

The government's move to take control of RBS was expected, said Oriel Securities analyst Michael Trippitt, adding that "it's unclear whether the government has very much to add" because Mr. Hester is already set to conduct a review of the business over the next year.

"In such a tenuous and difficult point in time, you just have to get on with getting the business on a firm footing. That could take about a year," Mr. Trippitt said. "In theory, the government could control things like bonuses, but there aren't any profits with which to pay bonuses," he said.

Mr. Hester's review of the bank will continue until the second quarter of next year. He has said that no business lines are safe and that job losses are to be expected as economic-activity levels decline.

The global banking and markets business is seen as particularly vulnerable because of the reduced business activity in the past year, and because it has suffered heavy losses on credit investments.

RBS has been one Europe's hardest-hit banks in the financial crisis because of its big exposure to subprime loans and its acquisition of parts of Dutch bank ABN Amro Holding NV just before the credit crunch.

Write to Vladimir Guevarra at vladimir.guevarra@dowjones.com and Ragnhild Kjetland at ragnhild.kjetland@dowjones.com

Track Your $8.5 Trillion In 'Rescue Funds'

UK Could Collapse Like Iceland

RBS To Be Taken Over By British Govt

Failed Fiat Money System Heads For Inflation

Spain Pumps £11B Into Sagging Eonomy

Bankruptcy Update...Britain Plus California

RBS Now 58% Owned By UK Govt

Japan Factory Output Points To Deep Recession

Econ Benefits Of Mass Immigration About Zero

First Credit Crunch Happened In Roman Republic

London warms to Islamic finance

The land of Adam Smith now teems with a vibrant Islamic banking sector, with even non-Muslims being lured by the model's promise of transparency and stability.

London - Shabaz Bhatti is proud to be a devout Muslim – but his plans to remortgage the family home with one of Britain's new generation of Islamic banks isn't just about religion.

The 30-something driving instructor wants reliability, and believes Britain's growing Islamic finance sector offers this in a way that myriad traditional main street banks no longer do.

"It's simple and straightforward, which is great because ... it seems as though interest rates right now could go ballistic," says Mr. Bhatti, whose parents immigrated to England from Pakistan.

At a time of almost unprecedented financial volatility, Islamic banks are being hailed as bastions of stability. Growing numbers of individuals and companies are now embracing their workings, which are based on Koranic principles.

Using law changes and generous tax breaks, the British government is now attempting to transform London into the Western world's center for Islamic finance. Conventional banks and financial institutions are also rolling out a range of Islamic finance products.

Globally, the market for Islamic financial services is estimated to have grown more than threefold over the past decade – from around $150 billion in the mid-1990s to $500 billion in 2006.

Keen to tap into this, Britain's authorities are planning to become the first Western government to issue an Islamic bond – called a sukuk – structured to comply with the sharia law principles of Islamic finance, which forbids all forms of interest payments.

Sharia law also prohibits investing in any enterprises involved with alcohol, gambling, tobacco, and pornography – a fact that nicely dovetails with the growing number of Westerners seeking socially responsible investments.

According to a new study by International Financial Services London (IFSL), an independent organization representing Britain's financial services industry, Islamic finance will emerge largely unscathed from the current global crisis, largely because its structures make little or no use of many of the complicated instruments blamed for the current problems in conventional finance, such as derivatives and short-selling.

Although Islamic finance does allow for risk-taking, it does not permit excessive uncertainty, known as gharar. All deals to buy or sell are invalid if the object dealt with is not certain and transparent.

When risks are taken, the Islamic financial model insists they are shared. In retail, this involves the customer and their bank sharing the risk of any investment on agreed terms, and dividing any profits between them. Products revolve around principles such as murabaha, a form of credit enabling customers to make a purchase without having to take out an interest-bearing loan. The bank buys the item and then sells it on to the customer on a deferred basis.

Bhatti, who lives in the leafy London suburb of Wimbledon with his wife and young daughter, is currently a customer of Abbey National, a traditional, Western bank. He has had no objection to using conventional Western financial products. However, in the past, the couple were customers of the Bank of Kuwait when they bought a home costing nearly $200,000 in the London district of Croydon.

The Bank of Kuwait valued the house at about $270,000, based on what it was expected to be worth at a later date, and arranged for the family to pay the money back in equal installments over the next 16 years. Now, Bhatti is planning to return to such an arrangement by transferring his conventional mortgage to an Islamic bank.

"With the current economic situation, our plans to go back to Islamic banking are not just about religion, they're a financial decision. It's more secure ... and it's clearer for the future," he says.

More than 26 banks in the UK offer Islamic financial products, including major institutions such as HSBC. Six Islamic banks are wholly compliant with sharia law. A pioneer of Islamic retail banking has been the Islamic Bank of Britain, which has 64,000 account holders and branches in cities including London, Birmingham, and Manchester. The bank recently launched its most competitively priced sharia mortgage to date, offering terms that company executives hope will lure takers beyond its core market of Britain's 2 million working Muslims.

This country's growing Muslim community is helping broaden London's reputation as a financial capital, says Patrick Lamb, an official who joined a British government delegation this week to the World Islamic Banking Conference in Bahrain, where the UK authorities and a range of London-based banks and firms showcased their expertise.

"We have by far the largest concentration of Islamic finance anywhere in Europe," Mr. Lamb says.

Along with home and retail finance, increasing numbers of companies are also turning to Islamic finance to raise money for expansion, ranging from steel manufacturers to luxury gift firms, which are often owned by Muslims or have Muslim shareholders. Money from wealthy Gulf investors has been pouring into Britain in recent years. There is no more potent symbol of this than the skyline of London's financial center, known as The City.

A fund from Kuwait spent more than $600 million recently to buy the Willis Building, one of the tallest in the district, while nearly $3 billion is coming from Qatar to finance the building of what will be Europe's tallest building, a 1,000-foot-tall structure known as the Shard of Glass.

http://www.csmonitor.com/2008/1128/p06s02-wogn.html

JP clears 5 Trillion USD in 1 day

http://ecommerce-journal.com/news/11499_j_p_morgan_cleared_more_than_5_05_trillion_usd_in_a_single_day J.P. Morgan cleared more than $5.05 trillion USD in a single day

http://ecommerce-journal.com/news/11528_hsbc_will_construct_300_million_data_centre_in_york HSBC will construct £300 million data centre in York

HSBC has made a formal planning application for the construction of a new £300 million data centre in York, UK.

If approved, the 325,000sqft development is expected to take two years to build and generate up to 2000 construction and fit out jobs. This is expected to generate £2 million additional income in goods and services for the local economy, says HSBC.

http://www.bloomberg.com/apps/news?pid=20601101&sid=afsERvdzsvp0&refer=japan Nov. 26 (Bloomberg) -- Japan's Ashiya city has been home to the nation's industrial titans since samurai ruled the land more than a century ago. Now it's a feeding ground for hedge funds tapping the wealth of new multi-millionaires like Kunihisa Sagami.

England goes bankrupt, revolt in Iceland

There is now a palpable fear that global investors may start to shun British debt as the budget deficit rockets to £118bn - 8 per cent of GDP - or charge a much higher price to cover default risk.

The cost of insuring against the bankruptcy of the British state has broken out - upwards - over the last month. Yes, credit default swaps (CDS) are dodgy instruments, but they are the best stress barometer that we have. http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2008/11/24/is_britain_going_bankrupt

RIOTS IN ICELAND: CITIZENS REVOLT AGAINST FINANCIAL CRISIS, CORRUPT MINISTERS...

VIDEO...

UK TOP INCOME TAX RATES COULD HIT 61%...

FED PUMPS $800B MORE...

It pains me deeply to announce that, despite the massive government rescue, yesterday's collapse of Citigroup could ultimately lead to a shutdown of the global banking system.

For many years, I hoped this would never happen, and I thought we might be able to avoid it.

http://www.marketoracle.co.uk/Article7487.html

Links from 11-20-1008 from Naked Capitalism

Sparrow numbers 'plummet by 68%' BBC

Researchers getting the lead out of electronics Network World

Don't Throw Me In That Briar Patch! Hilzoy

Is Obama really "Change we can believe in?" Ed Harrison

Record Options Trading Slows as Hedge Funds Fold, Prices Surge Bloomberg

The Dollar Trap Part II: Mutually Assured Financial Destruction Jesse's Cafe Americain

Why Can't We Admit That... Roger Ehrenberg

At WaMu, a Lack of Oversight Housing Wire

The Progress of the Financial Crisis in One Picture: Mortgages, Flight to Safety, Credit Lock Menzie Chinn, Econbrowser

Hurt by Losses, Pension Funds Criticize Rules New York Times. Funny how everyone gets to retrade their deal....except honeowners.

Panic of 1873 Redux? Stormy, Angry Bear

New Hope for Financial Economics: Interview with Bill Janeway Institutional Risk Analytics. If you are interested in the role of economics and finance theory in our current mess, this is a must read.

http://www.nakedcapitalism.com/

Chinese Renege on $1 Billion of Scrap Steel Deals, Group Says

Chinese Renege on $1 Billion of Scrap Steel Deals, Group Says

 

Chinese scrap-metal buyers have reneged on about $1 billion in contracts from U.S. merchants as the market for the steelmaking raw material collapses, the Institute of Scrap Recycling Industries said today.

 

Steelmakers, foundries and traders, ranging in size from "small to very large'' and some with partial state ownership, have cancelled contracts, refused delivery of shipments or demanded lower prices, said Robin Weiner, president of the Washington-based scrap merchants' trade group.

 

"Based on conversations I've had with members throughout the country, we're talking about hundreds of millions of dollars and could be over a billion dollars,'' Weiner said in a telephone interview. The number in past years has been "insignificant.'' Weiner is lobbying the U.S.

government to help stop defaults on contracts between the institute's members and clients in the second-largest market for U.S. scrap steel after Turkey. Scrap merchants worldwide face plummeting prices after steelmakers slashed output amid a worsening global economic recession.

The price of steel scrap No. 1 heavy melting, shipped from the U.S. East Coast, has slumped by 61 percent in the past two months and traded at $120 a metric ton on Nov. 13, according to Metal Bulletin. U.S. sales of scrap to 152 countries last year totalled $22 billion, making it the second-largest commodity export by value, according to the institute.

 

Contracts with steelmakers and brokers also have been broken in Europe, Canada, Vietnam and South Korea, Weiner said. Delinquencies in China have been most prevalent and extend beyond steel to other scrap markets like copper, fibres and plastics, she said. Once demand steadies, U.S.

buyers may seek stricter trade terms with their Chinese counterparts, including advance payments and letters of credit, said Bob Garino, the institute's director of commodities. Some Chinese firms have declined to receive goods unless prices are lowered, and others have been told that customs officials will object to shipments' quality unless they agree to charge less, Weiner said. (Bloomberg)

Mark Cuban charged with Insider trading, Jim Cramer recommends Russian Beverage Company, Trader shoots himself

http://finance.google.com/finance?client=ob&q=NASDAQ:CEDC Cramer recommends Russian Beverage company

http://www.reuters.com/article/usDollarRpt/idUSN1751276620081117 SAO PAULO, Nov 17 (Reuters) - A trader shot himself on Monday in the open outcry pit of Brazil's main financial exchange in an apparent suicide attempt, shocking a market already battered by the global credit crisis.

SEC charges DALLAS MAVERICKS owner Mark Cuban with insider trading...

COMPLAINT...

FRESH BAILOUT WILL HAVE TO WAIT...

GM asks German government for credit guarantee...


New, old Congress cross paths in lame duck session...


Financial Crisis Tab Already In The Trillions...

HU: Costa Rica benefits from switching ties to China...

Venezuela, Iran team up on university plan...

http://finance.yahoo.com/news/Citigroup-to-shed-another-apf-13600818.html NEW YORK (AP) -- Citigroup Inc. is shedding approximately 53,000 more employees in the coming quarters as the banking giant struggles to steady itself after suffering massive losses from deteriorating debt.

The Canary is Dead: Something is wrong in venture capital.

http://www.slideshare.net/guest1c3ad/thefunded-canarie-presentation/v1 Click to see presentation

http://www.nytimes.com/2008/11/17/business/17views_ready.html Maybe it was the tombstone that did it. Even as Wall Street burned, Silicon Valley seemed strangely sanguine. Then a PowerPoint presentation from Sequoia Capital prophesying Armageddon — featuring an "R.I.P. Good Times" headstone — made the rounds. A month later, venture capital firms are slashing investments and counseling portfolio companies to cut jobs. Sequoia's warning may reflect the technology industry's woes, but it's more notable for what it says about venture capital.

Like Wall Street banks, hedge funds and private equity, the venture capital industry got too fat. Firms currently manage $260 billion, according to the National Venture Capital Association, 14 percent more than during the bubble, and the industry now raises more money than it creates. A shakeout was inevitable. It's just odd that it took Sequoia's PowerPoint to get it under way.

Wal Mart affected by USD volatility

Chief Financial Officer Tom Schoewe said the "rapid changes" in exchange rates in the past few weeks are expected to hurt fourth-quarter results by about 6 cents per share.

"In U.S. dollar terms, strong operating performance in international may be overshadowed by these currency fluctuations," he said in a statement.

http://finance.yahoo.com/news/WalMarts-3Q-profit-rises-10-apf-13555854.html

Munitions companies rally as Obama spurs gun frenzy

VIENNA, Va., Nov 10, 2008 /PRNewswire-FirstCall via COMTEX/ -- The Allied Defense Group, Inc. (ADG:

allied defense group inc com ADG 6.28, -0.48, -7.1%) , a diversified international defense and security firm which: develops and produces conventional medium caliber ammunition marketed to defense departments worldwide; and designs, produces and markets sophisticated electronic security systems principally for North American markets, announces its third quarter 2008 financial results. http://www.marketwatch.com/news/story/The-Allied-Defense-Group-Announces/story.aspx?guid=%7BC9A90C3E-E68F-4FEB-8571-48AFD53F0EFB%7D

 

http://www.cnn.com/2008/CRIME/11/11/obama.gun.sales/ The owner of a gun shop in the Washington suburb of Manassas, Virginia, Conatser said sales have doubled or tripled since this time last year.

On Saturday, he said, he did as much business as he would normally do in a week.

"I have been in business for 12 years, and I was here for Y2K, September 11, Katrina," Conatser said, as a steady stream of customers browsed what remained of his stock. "And all of those were big events, and we did notice a spike in business, but nothing on the order of what we are seeing right now."

Consumer bubble collapsing

http://www.prudentbear.com/index.php?view=article&id=10098%3AThe+Great+Consumer+Crash+of+2009&tmpl=component&print=1&page=&option=com_content
"It is easy to ignore the storm if you look at the opposite horizon.  When the storm reaches your location there can be no more ignorance."

http://market-ticker.denninger.net/archives/618-Congress-What-Bernanke-and-Hank-Arent-Telling-You.html Congress: Think.

Ben and Hank have both told you that the critical issue for the economy is for "lending to resume", stating that it has dramatically contracted.

Financial Crisis worsens

Buffett's Berkshire Profits Down 77%

FDIC Seizes More Failed Big Banks

GM Running On Empty - Broke In 2009?

Banks Ease Credit For Selves, Not You

Main St Sucked Into GMAC Junk Bonds

Financial Meltdown Worse To Come

Dire State Of Economy Shown In BoE Shock Mov

UK Bank Chiefs Called Over Rate Cut Failure

UK Banks ORDERED To Pass On Rate Cut

Across Economy, News Just Gets Worse

How To Survive Coming US Dollar Collapse

JP Morgan Market Manipulation Handiwork

First Full-Year Slump Since 1940s Says IMF

IMF Urges Radical Action In Global recession

The End of Economic Prosperity

Leaders in Europe fear the financial crisis will tip the continent into serious recession. And cause a currency meltdown in the East. Across former Soviet bloc nations. Testing currency pegs "on the fringes of Europe's monetary union in a traumatic upheaval" reminiscent of the 1992 Exchange Rate Mechanism collapse. Bank of New York strategist Neil Mellor called it "the biggest currency crisis the world has ever seen."     http://marketoracle.co.uk/Article7089.html

a depression much worse than the Great Depression, a depression that would likely be remembered in history as "The Second Great Depression" or The Greater Depression , as Doug Casey has called it so aptly. Here is why I believe that this is the case....    http://www.marketoracle.co.uk/Article7099.html

Trojan virus steals banking info

http://news.bbc.co.uk/2/hi/technology/7701227.stm Trojan virus steals banking info

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/31/AR2008103103727_pf.html The clients put money in Swiss bank accounts, where it was supposed to stay secret. But now those depositors fear the U.S. Internal Revenue Service and the Justice Department will gain access to their bank records, Robbins said.

Please explain why the Government Fund is frozen. Aren't U.S. Treasuries trading?

U.S. Treasuries are liquid, but the Government Fund invests primarily in securities backed by

the U.S. Government, such as Fannie Maes, Freddie Macs, and Ginnie Maes. These securities

are not likely to default, they are just illiquid. http://www.reservefund.com/pdfs/Important%20Notice_Primary_Govt_FINAL_2008_1002.pdf

Trader error causes crazy swings in EUR/HUF - dealer

http://www.portfolio.hu/en/cikkek.tdp?cCheck=1&k=3&i=16174
While international news were mixed after the closing of Hungarian money markets, the forint is apparently mostly affected by a 50-bp Fed rate cut and similar moves by Far Eastern central banks (Hong Kong, Taiwan, China). After market opening on Thursday, the HUF was relatively steady versus the euro and eased some to around 255 from 253 in the morning session. After that the HUF started to act like a donkey on drugs, kicking and running in all directions.


The larges swings observed around 11:14 local time were the consequence of a trader error. A major foreign investment bank put in a bid on EUR/HUF at around 264 instead of 254 and this has caused the abrupt flip-out, a Budapest-based currency dealer told Portfolio.hu.

The easing of the Hungarian currency may also be linked to rumours about an imminent rate cut in Poland that pushed PLN to 3.58 from 3.45 against the euro since market opening (3.5% PLN depreciation intraday), which dragged the forint along, he added.

The forint hit its all-time low versus the single European currency at 286 last Thursday and firmed by more than 13% since then.

Japan announces stimulus package

http://www.iht.com/articles/2008/10/30/business/30japan.php
HONG KONG: Japan announced a new stimulus package on Thursday that includes $51 billion to help households and businesses, the boldest of several measures that officials took to try to stanch the fallout from the global credit crisis, and prompting shares throughout the region to surge.

Hong Kong and Taiwan cut interest rates, after a cut of half a percentage point by interest rates by the Federal Reserve a day earlier.

And South Korea established a $30 billion currency swap line with the Federal Reserve, a measure expected to ease pressure on local banks needing to refinance foreign debt. President Lee Myung-bak of South Korea also said his government would bring forward budget spending and consider beefing up construction spending.

"A harsh storm seen only once in 100 years is raging," Japanese Prime Minister Taro Aso told a news conference as he introduced the second stimulus package in about two months. "Under such circumstances, I am certain that what is most important is to remove uncertainties from the lives of people."

RETAIL OFF-EXCHANGE FOREX EXAMINATION

Overview of Series 34 Exam Questions

Series 34 – Retail Off-Exchange Forex Examination

The Series 34 exam is broken up into five main parts: definitions and terminology, forex trading calculations, risks associated with forex trading, forex market concepts and theories, and forex regulatory requirements.  Within these five main parts the exam is expected to cover many of the sub-parts listed below.  Please note that the following items are general and are not representative of actual test questions and do not necessarily represent the relative weighting of each of the categories.

Please check back with us soon for a Series 34 Study guide and Series 34 Flashcards.

Definitions and Terminology
•    American terms, European terms
•    Base currency, quote currency, terms currency, secondary currency
•    Bid/ask spread
•    Collateral, security deposit, margin
•    Counterparty, dealer: Futures Commission Merchant,  Retail Foreign Exchange Dealer, other regulated entities listed in the Commodity Exchange Act
•    Cross rates
•    Currency crosses
•    Currency pairs
•    Direct quotes, indirect quotes
•    Exchange rate
•    Exotic options: barrier, double barrier, knock in, knock  out, compound options
•    Forward points
•    Forward rate, bid forward rate
•    Interest rate differential
•    Interest rate parity
•    Mark-ups, mark-downs
•    PIPs
•    Rollovers
•    Spot rate, spot price
•    Tom-next and spot-next
•    Trade date and settlement date
•    Swaps

Forex Trading Calculations
•    Cross rate transactions
•    Effects of leverage calculations
•    Netting of positions
•    Open trade variation
•    Profi t & loss calculations
•    Pip values, price after pips
•    Option and exotic option profit & loss calculations
•    Return on collateral, security deposit, margin
•    Transaction costs

Risks Associated with Forex Trading
•    Country or sovereign risk
•    Credit risk
•    Exchange rate risk
•    Interest rate risk
•    Liquidity risk
•    Market risk
•    Operational risk
•    Settlement risk, Herstaat risk

Forex Market – Concepts, Theories, Economic Factors and Indicators, Participants
•    Balance of payments
•    Balance of trade
•    Bank for International Settlements (BIS)
•    Capital account and current account
•    Central bank activities, intervention, sterilized intervention, interference
•    Clearing House Interbank Payment  System (CHIPS)
•    Discount rate
•    Economic indicators: employment, consumer spending, income, industrial  and inflation indicators
•    Elasticity of exchange rates
•    Exchange rate intervention
•    Exchange rate volatility
•    Federal Reserve Board, Fedwire
•    Fiscal policy
•    Fisher effect
•    Foreign investment indicators
•    Gross national product, gross  domestic product
•    Inflation
•    Interbank funds transfer and  settlement systems
•    International Fisher effect
•    International Monetary Fund
•    Portfolio balance
•    Role of central banks
•    Theory of elasticities
•    Theory of purchasing power parity
•    World Trade Organization

Forex Regulatory Requirements
•    CFTC jurisdiction and jurisdictional limitations
•    Conflicts of interest
•    Disclosures to customers
•    Jurisdictional & regulatory framework
•    Know your customer
•    NFA Interpretive Notice Regarding Forex  Transactions
•    NFA Interpretive Notice      Compliance Rule 2-36(e): Supervision of the Use of Electronic Trading Systems
•    NFA Notice to Members: Supervision of Forex Promotional Materials
•    NFA membership and associate membership requirements
•    Promotional material & solicitation
•    Registration requirements
•    Reports to customers, confirmations, monthly  summaries
•    Security deposit rules
•    Security of customer funds, no segregation

http://www.nfa.futures.org/registration/SO-Series34.pdf

Dubai Mumbai or Goodbye

http://blogs.wsj.com/deals/2008/05/08/its-dubai-mumbai-or-good-bye/ Investment banks following the money trail are shifting some top earners to Dubai to help tap the booming oil-rich Persian Gulf economies and the estimated $1.5 trillion held by sovereign wealth funds there.

http://www.ft.com/cms/s/0/c47190fe-a452-11dd-8104-000077b07658.html?nclick_check=1 Thailand on Monday said it planned to barter rice for oil with Iran in the clearest example to date of how the triple financial, fuel and food crisis is reshaping global trade as countries struggle with high commodity prices and a lack of credit.

http://economictimes.indiatimes.com/Slice_of_forex_reserves_for_liquidity-hit_banks/articleshow/3644203.cms


Last week, the Reserve Bank of India (RBI) governor said that the monetary policy authority would take conventional and unconventional measures to ensure financial as well as price stability and growth.

The committee, appointed by the finance minister to assess the liquidity situation, has said that a portion of India's forex reserves, aggregating $273 billion, could be used to invest in securities such as bonds issued by foreign offices of Indian banks, said a person familiar with the issue.

Currency Crisis brewing

Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become "the second epicentre of the global financial crisis", this time unfolding in Europe rather than America.

Austria's bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.

Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.

http://www.nakedcapitalism.com/2008/10/currency-crisis-is-gathering-storm.html

It might get the people who run our companies and our regulatory agencies into the business of telling the truth....    http://www.nytimes.com/2008/10/26/business/26gret.html?_r=1&oref=slogin&ref=business&pagewanted=print

In the days leading up to the conference, volunteers in lederhosen draped the village with hundreds of white and blue banners that declared the 38-year-old conclave's purpose: ``Committed to Improving the State of the World.''

WEF organizers often pulled stunts to hoodwink delegates who preferred partying and meeting privately with clients over attending forum sessions.

In the ``Why Do Brains Sleep?'' meeting in 2007, a cadre of eminent psychologists and psychiatrists explored whether financial leaders got enough rest and ``what that tells us about the quality of their decision-making.''

To spur delegates into addressing financial-market alienation, a session in 2004 was held to discuss whether extraterrestrials had taken control of Wall Street: ``Have Extraterrestrials Made Contact With Government Leaders?'' http://www.bloomberg.com/apps/news?pid=20601109&sid=a9wVqOPk.T_4&refer=home

Currency War with the Dollar

The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.

A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.

The People's Daily is the official newspaper of China's ruling Communist Party. The Chinese-language overseas edition is a small circulation offshoot of the main paper.

Its pronouncements do not necessarily directly voice leadership views. But the commentary, as well as recent comments, amount to a growing chorus of Chinese disdain for Washington's economic policies and global financial dominance in the wake of the credit crisis.

"The grim reality has led people, amidst the panic, to realise that the United States has used the U.S. dollar's hegemony to plunder the world's wealth," said the commentator, Shi Jianxun, a professor at Shanghai's Tongji University.

http://www.nakedcapitalism.com/2008/10/china-launches-salvo-against-dollar.html

http://www.nakedcapitalism.com/2008/03/chinese-avoiding-dollar-as-invoicing.html Rising numbers of Chinese exporters are shunning the US dollar or devising ways to offset the impact of the falling currency as they confront rising labour and raw material costs at home.

According to Alibaba.com, the online company that matches Chinese suppliers with international buyers, the vast majority of their almost 700,000 Chinese suppliers no longer use dollars to settle non-US transactions in order to minimise foreign exchange risk.

"They are moving to euros, pounds, Australian dollars or even quoting prices in renminbi," David Wei, chief executive, told the Financial Times. Moreover, he added, prices quoted in dollars were now often valid for just seven days compared with the 30-60 days common previously.

http://www.bloomberg.com/apps/news?pid=20601087&sid=apjqJKKQvfDc&refer=home Oct. 19 (Bloomberg) -- European Central Bank council member Ewald Nowotny said a ``tri-polar'' global currency system is developing between Asia, Europe and the U.S. and that he's skeptical the U.S. dollar's centrality can be revived.

 

FRIDAY MORNING HORROR

EUROPE INDICES...
MARKETS DIVE...
Recession alarm rings around the world...

Obama Does Not Regret 'Spread the Wealth' Comment...

PAPER: AN OBAMA PANIC? MARKETS FEAR HIS POLICIES...

Greenspan Concedes to `Flaw' in His Market Ideology (Update2)

Greenspan Concedes to `Flaw' in His Market Ideology (Update2)

By Scott Lanman and Steve Matthews

Oct. 23 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded that his free-market ideology shunning regulation was flawed.

``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.''

Greenspan said he was ``partially'' wrong in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholders and investments as well as he expected.

``We cannot expect perfection in any area where forecasting is required,'' he said. ``We have to do our best but not expect infallibility or omniscience.''

Part of the problem was that the Fed's ability to forecast the economy's trajectory is an inexact science, he said.

``If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,'' Greenspan said. ``Forecasting never gets to the point where it is 100 percent accurate.''

Self-Policing

The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''

Today Committee Chairman Henry Waxman, a California Democrat, said Greenspan had ``the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis.''

``You were advised to do so by many others,'' he told Greenspan. ``And now our whole economy is paying the price.''

Waxman and other lawmakers repeatedly interrupted Greenspan as he answered their questions, in contrast to deference to his testimony while he was Fed chairman.

Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony. Other rules should address fraud and settlement of trades, he said.

Resistant to Regulation

Greenspan opposed increasing financial supervision as Fed chairman from August 1987 to January 2006. Policy makers are now struggling to contain a financial crisis marked by record foreclosures, falling asset prices and almost $660 billion in writedowns and losses tied to U.S. subprime mortgages.

Today, the former Fed chairman asked: ``What went wrong with global economic policies that had worked so effectively for nearly four decades?''

Greenspan reiterated his ``shocked disbelief'' that financial companies failed to execute sufficient ``surveillance'' on their trading counterparties to prevent surging losses. The ``breakdown'' was clearest in the market where securities firms packaged home mortgages into debt sold on to other investors, he said.

``As much as I would prefer it otherwise, in this financial environment I see no choice but to require that all securitizers retain a meaningful part of the securities they issue,'' Greenspan said. That would give the companies an incentive to ensure the assets are properly priced for their risk, advocates say.

Subprime Lending

Greenspan said the Fed didn't know the size of the subprime mortgage market until late 2005.

Securities and Exchange Commission Chairman Christopher Cox and former Treasury Secretary John Snow also appeared at the House committee hearing.

Snow said the economy is headed down a ``bad, bad path'' and he endorsed consideration of more fiscal stimulus. For the longer term, Snow said the global financial system should be reorganized by focusing on increasing transparency of ``excessive'' leverage to prevent institutions from creating too much risk.

The U.S. needs ``one strong national regulator'' to oversee firms and fix what Snow called ``a fragmented approach'' to regulation. ``Steps to restore transparency and responsibility in the marketplace will go a long way towards restoring stability and confidence,'' he said.

Addressing the trio that oversaw the U.S. financial markets as the housing bubble developed, Representative John Yarmuth, a Democrat from Kentucky, characterized them as ``three Bill Buckners,'' referring to the Boston Red Sox first baseman whose fielding error some fans blame for the team's loss in the 1986 World Series.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net; Steve Matthews in Atlanta at smatthews@bloomberg.net.

Last Updated: October 23, 2008 14:14 EDT

Is Switzerland the next Iceland?

http://www.independent.co.uk/news/business/analysis-and-features/is-switzerland-the-next-iceland-964325.html Is Switzerland the next Iceland?