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Going with the prior post HERE regarding the World index and ISYN’s forecast for the remainder of 2008, this is a follow up on ISYN’s S&P 500 forecast which can be found reproduced below this posting…

Here’s a couple charts of the VIX & S&P 500.

Looks like we’re going to have some downside here for a little while - until we hit the 800-825 range which coincidentally we’re about 16 points away from right now. ISYN fully expects a very strong rally in December once we sell off to-or-near those lows again. I still stand by what I wrote on the world index posting and the posting below. Don’t fall in love with a trend or that love will blind you to its inevitable end.

The bears are coming up on some serious PAYBACK…

As admitted before, I was early on my bullish call by 10% or so. Even so I’m more bullish now than I’ve ever been. While I know it’s rare to see this I won’t change my forecast simply because it’s gotten to the point where it’s easier to do so. I made the bullish forecast statement and with an open mind I stand firm. There has been nothing new that would justify a change of my view. I’m going to lay out the reasoning in support of my decision again and as often as I have to to reaffirm my views.

While there’s plenty of trouble for the economy going forward I don’t see it causing the detriment of the financial markets. The main risks I see are the government screwing up or a Black Swan event. Other than that ISYN believes the game is about to be played and if you’re on the bench looking at the grass or the girls you’re going to miss some of the victory.

Mike:  Welcome back from your holiday. I hope you all had a pleasant weekend with your family. The news is busy this Monday. The holiday cheer has turned back into holiday fear as news of the manufacturing index dropping to a 26-year low and the official announcement that the US has been is a recession since December 2007 reared its ugly head. Job loss numbers are expected to get worse quickly, so let’s get to the news of the day:

Manufacturing index drops to 26-year low as new orders, production fall

http://biz.yahoo.com/ap/081201/economy_manufacturing.html

National Bureau of Economic Research panel says US recession began in December 2007

http://biz.yahoo.com/ap/081201/recession.html 

Unilever to cut 250 research jobs worldwide

http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSL158378420081201

Mike: Texas has weathered the storm so far, but it can’t rest on its laurels since the energy economy they so depend on has been damaged by oil prices that are 1/3 what they were only six months ago. Even that TX ego won’t make up for those kind of losses. But if you are seeking a safer haven for the time being, there are worse places to go than TX. 

Unemployment went up from 5.1 percent in September to 5.6 percent in October.

Mike: There is still that glimmer of hope in many locals that see this national problem as one that won’t affect their area. While some areas won’t be as bad as others, all areas will get worse.

Mike: I usually enjoy reading foreign news reports since they offer a more realistic assessment of current and future conditions. US news likes to gloss over bad economic conditions in favor of rose-colored glasses scenarios. Although a positive attitude is important when trying to navigate financial storms, people need to be made aware of the what the true state of affairs are before they can accurately determine the best way to proceed. 

For 2009, “the best-case scenario is 8.2 per cent or 8.3 per cent unemployment, but there’s an increasing risk that we could go up to 9 per cent,” said IHS Global Insight chief economist Nariman Behravesh. 

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It’s official: for the last year, the United States economy has been in recession.

The evidence of a downturn has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs. But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to weigh in.

In a statement released Monday, the members of the group’s Business Cycle Dating Committee — made up of seven prominent economists, most from the academic sector — said that the economy entered a recession in December 2007.

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators,” the members said in a statement. “A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough.”

The committee noted that the contraction in the labor market began in the first month of 2008 and said that the declines in most major indicators, like personal income, manufacturing activity, retail sales, and industrial production, “met the standard for a recession.”

“Many of these indicators, including monthly data on the largest component of G.D.P., consumption, have declined sharply in recent months,” they wrote.

The announcement came as the stock market fell sharply, its first decline in five sessions. The Dow Jones industrial average was off more than 430 points or 4. 9 percent as the last hour of trading begin. The Standard & Poor’s 500-stock index was down 5. 9 percent.

Analysts said that after last week’s gains — the biggest five-day rally in decades — a sell-off was to be expected.

“You had the biggest weekly gain in 30, 35 years,” said Anthony Conroy, head equity trader at BNY ConvergEx Group. “Some profit-taking is warranted.”

Still, Monday’s losses were striking. Stocks were dragged down by double-digit declines in shares of financial firms. Citigroup, a source of concern on Wall Street of late, dropped 11 percent; American Express and Bank of America were off about 10 percent.

“Financials led the rally on the way up, and they’re leading on the way down,” Mr. Conroy said.

Investors may also be playing defense ahead of Friday’s report on the job market, one of the most important monthly indicators of the health of the economy. Analysts expect that employers shed more than 300,000 jobs in November, underscoring the problems facing American workers and businesses.

This is the first official recession since 2001, when the economy suffered after the bursting of the technology bubble. The period of expansion lasted 73 months, from November 2001 to December 2007.

Monday brought its own share of poor economic news. The manufacturing industry suffered its worst month since 1982, according to a closely watched index published by the private Institution for Supply Management. The index fell to 36.2 in November from 38.9 in October, on a scale where readings below 50 indicate contraction.

That was the worst monthly reading since 1982, and a sign that the worldwide credit crisis was taking a serious toll on American businesses. New orders fell sharply, although export orders held steady from October.

“However you look at the numbers, the message is the same: manufacturing is in free fall, with output collapsing,” Ian Shepherdson of High Frequency Economics wrote in a note to clients. “We see no prospect for near-term improvement.”

A separate report from the Commerce Department showed that spending on construction projects fell 1.2 percent in October, after staying unchanged in September. Private construction dropped 2 percent with a sharp drop in the residential sector, offering few signs of relief from the housing slump.

The declines on Wall Street came after stocks in Europe and most of Asia moved lower, as investors refocused attention on a gloomy economic outlook.

Benchmark indexes in Paris and Frankfurt were down more than 4 percent, and London’s FTSE-100 dipped 3.6 percent. The declines were minor compared with the 13 percent increase that European stocks enjoyed last week.

“We’re giving back some of the appreciation in equities that we gained in the last few weeks,” said Robert Talbut, a fund manager at Royal London Asset Management.

“I think in terms of valuations there are some good deals starting to appear,” Mr. Talbut said. “But valuations are never enough in themselves.”

Any serious market recovery would require a determined response from global governments, he said, but investors have lots of questions about how the policy measures that have already been announced will work.

Investors were also troubled by mounting evidence that consumer spending in the United States would fall sharply this holiday shopping season, choking off one of the prime fuels of American economic growth. Retailers received more business than expected over the Thanksgiving shopping weekend, but the steep discounts they used to lure customers could undermine profits.

Black Friday sales were 3 percent higher than the year before, according to ShopperTrak, which tracks the industry.

Asian stocks ended mostly lower. The Tokyo benchmark Nikkei 225 stock average fell 1.4 percent, while the S.& P./ASX 200 in Sydney fell 1.6 percent.

The Kospi index in Seoul declined 1.6 percent. But the Hang Seng index in Hong Kong rose 1.6 percent, and the Shanghai Stock Exchange composite index rose 1.3 percent.

United States government debt was strong amid the poor economic outlook and expectations that the Federal Reserve would cut interest rates again soon.

The yield on the two-year Treasury note, which moves in the opposite direction of the price, fell to a record just below 0.95 percent, while the yield on the 10-year note fell to 2.86 percent, the lowest on record.

Investors expect the Bank of England, the Reserve Bank of Australia and the European Central Bank to cut interest rates this week amid evidence that inflation is easing and growth flagging. “Evidence continues to build suggesting that these central banks have further aggressive monetary easing to undertake in order to stem the risks of a dramatic shift in price expectations going forward,” Derek Halpenny, a foreign exchange strategist at Mitsubishi UFJ in London, wrote in a note to investors.

The Federal Reserve’s main rate is aimed at 1 percent currently, though the effective rate in the market is 0.5 percent because of the enormous quantity of cash that the Fed has pumped into the market to keep foundering financial institutions afloat.

Crude oil futures for January delivery fell $4.54, to $49.88 a barrel.

David Jolly contributed reporting.

EIA’s can be a valuable addition to an overall retirement plan, says Andy Barkate President of California Retirement Plans. EIA’s are a hybrid of fixed and variable annuities. Fixed annuities are very conservative and pay a fixed interest rate. The return of variable annuities depends on the returns of the mutual fund-type sub-accounts, meaning you could lose or gain money (many variable annuities now come with various types of principle guarantees).

EIA guarantee to protect your principal, and even past gains. They also guarantee a minimum return—typically around 3 percent—even if the stock market declines. On top of these guarantees, the index annuity gives you the chance to earn significantly above the minimum rate if the stock index the annuity is tied to-grows in value. The S&P 500 index is the most commonly used index, but there are several others, including fixed-income indexes.

EIA’s are commonly used in retirement accounts (IRA’s) as well as regular savings and investment accounts.

Like other forms of annuities, EIA earnings are tax deferred. Also many (not all) carry a surrender penalty, meaning you’ll pay a fee if you cash out before it matures. (Many annuities allow annual withdrawals of up to 10 percent of the value free of penalty.) Therefore, it makes sense that you don’t invest in an annuity whose maturity date is later than when you will need your money.

More on Andy Barkate.

The definition used by most economists is “an inflationary cycle without any tendency toward equilibrium.” A vicious circle is created in which more and more inflation is created with each iteration of the cycle. Although there is a great deal of debate about the root causes of hyperinflation, it becomes visible when there is an unchecked increase in the money supply or drastic debasement of coinage, and is often associated with wars (or their aftermath), economic depressions, and political or social upheavals.

The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services. This results in an imbalance between the supply and demand for the money (including currency and bank deposits), accompanied by a complete loss of confidence in the money, similar to a bank run. Enactment of legal tender laws and price controls to prevent discounting the value of paper money relative to gold, silver, hard currency, or commodities, fails to force acceptance of a paper money which lacks intrinsic value. If the entity responsible for printing a currency promotes excessive money printing, with other factors contributing a reinforcing effect, hyperinflation usually continues. Often the body responsible for printing the currency cannot physically print paper currency faster than the rate at which it is devaluing, thus neutralising their attempts to stimulate the economy.

Hyperinflation is generally associated with paper money because this can easily be used to increase the money supply: add more zeros to the plates and print, or even stamp old notes with new numbers. Historically there have been numerous episodes of hyperinflation in various countries, followed by a return to “hard money”. Older economies would revert to hard currency and barter when the circulating medium became excessively devalued, generally following a “run” on the store of value.

Hyperinflation effectively wipes out the purchasing power of private and public savings, distorts the economy in favor of extreme consumption and hoarding of real assets, causes the monetary base, whether specie or hard currency, to flee the country, and makes the afflicted area anathema to investment. Hyperinflation is met with drastic remedies, such as imposing the shock therapy of slashing government expenditures or altering the currency basis. An example of the latter occurred in Bosnia-Herzegovina in 2005, when the central bank was only allowed to print as much money as it had in foreign currency reserves. Another example was the dollarization in Ecuador, initiated in September 2000 in response to a massive 75% loss of value of the Sucre currency in early January 2000. Dollarization is the use of a foreign currency (not necessarily the U.S. dollar) as a national unit of currency.

The aftermath of hyperinflation is equally complex. As hyperinflation has always been a traumatic experience for the area which suffers it, the next policy regime almost always enacts policies to prevent its recurrence. Often this means making the central bank very aggressive about maintaining price stability, as is the case with the German Bundesbank, or moving to some hard basis of currency such as a currency board. Many governments have enacted extremely stiff wage and price controls in the wake of hyperinflation, which is, in effect, a form of forced savings.

Because it allows them to hide their spending and avoid an obvious tax increase, governments have frequently resorted to printing money to meet their expenses. However, during hyperinflation, the monetary authorities fail to fund government expenses from taxes or by other means, because:

Theories of hyperinflation generally look for a relationship between seigniorage and the inflation tax. In both Cagan’s model and the neo-classical models, a crucial point is when the increase in money supply or the drop in basic money stock makes it impossible for a government to improve its financial position. Thus when fiat money is printed, government obligations that are not denominated in money increase in cost by more than the value of the money created.

From this, it might be wondered why any rational government would engage in actions that cause or continue hyperinflation. One reason for such actions is that often the alternative to hyperinflation is either depression or military defeat. In late 2001, the Argentine peso collapsed in value. Rather than printing sufficient cash for the public to carry, which they feared would start a run on the banks, the government took the peso off its dollar peg. Many international economists predicted that they would have to get a new loan from the IMF and impose shock therapy in order to avoid hyperinflation. Currency controls were imposed, tariffs were instituted, and the economy was allowed to fall into a severe recession during which unemployment hit 25%, homelessness and crime spiralled upwards, and the poverty rate peaked at over 50%.

The root cause is a matter of more dispute. In both classical economics and monetarism, it is always the result of the monetary authority irresponsibly borrowing money to pay all its expenses. These models focus on the unrestrained seigniorage of the monetary authority, and the gains from the inflation tax. In Neoliberalism, hyperinflation is considered to be the result of a crisis of confidence. The monetary base of the country flees, producing widespread fear that individuals will not be able to convert local currency to some more transportable form, such as gold or an internationally recognized hard currency. This is a quantity theory of hyperinflation.

In neo-classical economic theory, hyperinflation is rooted in a deterioration of the monetary base, that is the confidence that there is a store of value which the currency will be able to command later. In this model, the perceived risk of holding currency rises dramatically, and sellers demand increasingly high premiums to accept the currency. This in turn leads to a greater fear that the currency will collapse, causing even higher premiums. One example of this is during periods of warfare, civil war, or intense internal conflict of other kinds: governments need to do whatever is necessary to continue fighting, since the alternative is defeat. Expenses cannot be cut significantly since the main outlay is armaments. Further, a civil war may make it difficult to raise taxes or to collect existing taxes. While in peacetime the deficit is financed by selling bonds, during a war it is typically difficult and expensive to borrow, especially if the war is going poorly for the government in question. The banking authorities, whether central or not, “monetize” the deficit, printing money to pay for the government’s efforts to survive. The hyperinflation under the Chinese Nationalists from 1939-1945 is a classic example of a government printing money to pay civil war costs. By the end, currency was flown in over the Himalaya, and then old currency was flown out to be destroyed.

Hyperinflation is regarded as a complex phenomenon and one explanation may not be applicable to all cases. However, in both of these models, whether loss of confidence comes first, or central bank seigniorage, the other phase is ignited. In the case of rapid expansion of the money supply, prices rise rapidly in response to the increased supply of money relative to the supply of goods and services, and in the case of loss of confidence, the monetary authority responds to the risk premiums it has to pay by “running the printing presses.”

In the United States of America, hyperinflation was seen during the Revolutionary War and during the Civil War, especially on the Confederate side. Many other cases of extreme social conflict encouraging hyperinflation can be seen, as in Germany after World War I, Hungary at the end of World War II and in Yugoslavia in the late 1980s just before break up of the country.

Less commonly, inflation may occur when there is debasement of the coinage — wherein coins are consistently shaved of some of their silver and gold, increasing the circulating medium and reducing the value of the currency. The “shaved” specie is then often restruck into coins with lower weight of gold or silver. Historical examples include Ancient Rome, China during the Song Dynasty, and the United States beginning in 1933. When “token” coins begin circulating, it is possible for the minting authority to engage in fiat creation of currency.

As noted, in countries experiencing hyperinflation, the central bank often prints money in larger and larger denominations as the smaller denomination notes become worthless. This can result in the production of some interesting banknotes, including those denominated in amounts of 1,000,000,000 or more.

* By late 1923, the Weimar Republic of Germany was issuing fifty-million Mark banknotes and postage stamps with a face value of fifty billion Mark. The highest value banknote issued by the Weimar government’s Reichsbank had a face value of 100 trillion Mark (100,000,000,000,000; 100 billion on the long scale).One of the firms printing these notes submitted an invoice for the work to the Reichsbank for 32,776,899,763,734,490,417.05 (3.28×1019, or 33 quintillion) Marks.

* The largest denomination banknote ever officially issued for circulation was in 1946 by the Hungarian National Bank for the amount of 100 quintillion pengő (100,000,000,000,000,000,000, or 1020; 100 trillion on the long scale). image (There was even a banknote worth 10 times more, i.e. 1021 pengő, printed, but not issued image.) The banknotes however didn’t depict the number, making the 500,000,000,000 Yugoslav dinar banknote the world’s leader when it comes to depicted zeros on banknotes.

* The Z$100 billion agro cheque, issued in Zimbabwe on July 21, 2008, shares the record for depicted zeroes (11) with the 500 billion Yugoslav dinar banknote.

* The Post-WWII hyperinflation of Hungary holds the record for the most extreme monthly inflation rate ever — 41,900,000,000,000,000% (4.19 × 1016%) for July, 1946, amounting to prices doubling every fifteen hours.

One way to avoid the use of large numbers is by declaring a new unit of currency (an example being, instead of 10,000,000,000 Dollars, a bank might set 1 new dollar = 1,000,000,000 old dollars, so the new note would read “10 new dollars”.) An example of this would be Turkey’s revaluation of the Lira on January 1, 2005, when the old Turkish lira (TRL) was converted to the New Turkish lira (YTL) at a rate of 1,000,000 old to 1 new Turkish Lira. While this does not lessen the actual value of a currency, it is called redenomination or revaluation and also happens over time in countries with standard inflation levels. During hyperinflation, currency inflation happens so quickly that bills reach large numbers before revaluation.

Some banknotes were stamped to indicate changes of denomination. This is because it would take too long to print new notes. By time the new notes would be printed, they would be obsolete (that is, they would be of too low a denomination to be useful).

Metallic coins were rapid casualties of hyperinflation, as the scrap value of metal enormously exceeded the face value. Massive amounts of coinage were melted down, usually illicitly, and exported for hard currency.

Governments will often try to disguise the true rate of inflation through a variety of techniques. These can include the following:

None of these actions address the root causes of inflation, and in fact, if discovered, tend to further undermine trust in the currency, causing further increases in inflation. Price controls will generally result in hoarding and extremely high demand for the controlled goods, resulting in shortages and disruptions of the supply chain. Products available to consumers may diminish or disappear as businesses no longer find it sufficiently profitable (or may be operating at a loss) to continue producing and/or distributing such goods, further exacerbating the problem.

References:

http://econlib.org/library/Enc/Hyperinflation.html

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

http://shadowstats.com/article/292

One of my favourite things about this business is the connections I make with customers and fellow vendors.  Just this past weekend, I heard about some amazing partnerships with artisans in developing nations through Faces of Fair Trade.  I’ve added a couple links to my blogroll, so be sure to check out these Fair Trade entrepreneurs.

At the KBS Holiday Event, I met an inspired Grade 11 student of St. Joan of Arc High School here in Barrie.  Luke McLeod is preparing to go to Kenya in the spring with his classmates to help build a schoolhouse, supply the school with resources like paper and pencils, and implement a clean water program.

Luke is raising funds for his trip and Big Village is honoured to play a small part.  We will be donating jewellery to be given as raffle prizes at two fundraising dinners at Oscars Restaurant, January 19 and 20, 2009.

If you’d like to know more about Luke’s trip, read on… and prepare to be inspired!

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ETF/CEF Discussion: A horrible day in the markets whipped out all the gains from last week. The market action prompted RSI to pick five short ETFs plus again the J-Yen fund. Defensive is the word of the day. I have a defensive portfolio, without short funds, and it was up over one percent today while the market was flirting with its previous lows. I certainly don’t want to rub it in but the flight to safety buoyed the Treasury Bond securities and I took advantage of that with my current holdings.

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Pundits have incorrectly been tying the Community Reinvestment Act, or more simply known as CRA, to subprime. First off, the CRA was passed into law back during Jimmy Carter’s era in 1977. So before even delving into what CRA is, people have to understand that CRA was in full swing during Reagan, Bush Senior, Clinton and Bush Junior Presidencies and not to mention different majority congresses. Also, in George H. W. Bush signed into law FIRREA which increased oversight of the CRA program. So if it was so bad, why wasn’t it terminated? Conservatives certainly had enough time to try to change the law.

Watch out for news alert!

From Tham Choy Lin

HONG KONG, Dec 2 (Bernama) — Last October, Hong Kong Chief Executive, Donald Tsang, announced the island’s financial hub would establish itself as an Islamic finance centre.

Last week, the Hong Kong Monetary Authority (HKMA) underlined that, despite the global financial crisis, the plan was still much on track and “considerable resources” would be devoted.

“Our priority is to push ahead with the development of an Islamic bond market. There should be no doubt about our determination to establish a platform for Islamic finance in Hong Kong,” HKMA deputy chief, Eddie Yue, told an Islamic finance forum.

Hong Kong is looking beyond the current crisis which has reduced sukuk, or Islamic bond issuance, by 40 per cent in the first three quarters of the year, a development Yue called “a temporary setback.”

What beckons not only Hong Kong but also conventional finance hubs like Singapore and London is the estimated Islamic assets of US$1 trillion (US$1=RM3.60) by 2010 and growing annually between 15 and 20 per cent.

Standard & Poor said in September that sukuk issuance was still expected to exceed US$20 billion this year.

“Although there is an economic crisis, it is comforting to know that prospects of the Gulf economies remain positive, given the surplus liquidity created by the huge oil earnings in the past,” Datuk Salman Younis, managing director of Kuwait Finance House (M) Bhd, said.

Malaysia’s CIMB Islamic chief executive officer, Badlisyah Abdul Ghani, brushed aside suggestions of competition, saying that it was overly-emphasised.

“The pie is big enough for more players and it will get even bigger with the Islamic economy demanding huge Islamic financing and a global Muslim population of 1.8 billion.

“You might want to look from a different perspective on how each centre will complement each other in developing this greater Islamic market across the globe, rather than concentrate on competition,” he said.

Without Hong Kong, the Islamic financial jigsaw would not be complete, Badlisyah added.

KFH’s Salman said it would be “very difficult” for any country to follow Malaysia which set up its first Islamic bank in 1983 and now has a full range of financial products for its Islamic populace.

Hong Kong could leverage on forming strategic alliances with Malaysia, he added.

Sani Hamid, director for wealth management of Financial Allianc Pte Ltd in Singapore, also sees plenty of room.

“Hong Kong will be the gateway for Chinese companies to access Middle East funds, Malaysia is very strong in corporate sukuk, Singapore’s venture into Islamic finance is more towards wealth management and as for Indonesia, it is more for the domestic market,” he said.

Hong Kong has made no secret that just across its borders, China, which would still grow albeit slower amid the global crisis, would be the hinge factor.

Hong Kong has also cast its sights on the Gulf region where the International Monetary Fund estimated some US$800 billion worth of projects were under way or in the pipeline.

“There are opportunities for us to extend our reach to potential Islamic investors and financiers in the Middle East and Asia. The addition of Islamic finance as a new asset class in our financial system will add value to Hong Kong as a thriving financial centre,” Yue said.

CIMB Islamic and another Malaysian bank, Hong Leong, are getting the headstart to stick a foot into the doorway.

The two are the first institutions in Hong Kong to set up Islamic banking operations this year, via their local branches, and have signed a memorandum of understanding for an inter-bank facility known as the Commodity Murabahah Deposit.

Badlisyah said: “We believe we can contribute our knowledge and skills as a leading global Islamic finance expert to Hong Kong. We must remember Islamic finance is not just about the sukuk market, there are many other industry activities.”

KFH too had moved to build a presence in China. It recently signed a US$275 million real estate contract with Hong Kong-listed Nan Hai Ltd for a project in the southern Shekou and Shenken areas in China.

Yue said HKMA was paying attention to four major areas, namely, to raise its profile in the Middle East, to establish infrastructure and conducive policies, build human capital and encourage the development and launch of Islamic finance products.

A key priority is to level the tax playing field for Islamic money transactions.

“The authorities have made a big effort and come on strongly with the message to tell players that we are going to put in the mechanism to facilitate you,” said Badlisyah, whose bank is the largest sukuk issuer in the world with a 20 per cent share.

The past year has seen the launch of a Dow Jones Islamic Market Index to track China-linked equities listed on the Hong Kong bourse and an exchangeable sukuk for a 9.9 per cent stake belonging to Khazanah Nasional Bhd in Hong Kong-listed Parkson that was 10 times oversubscribed.

Khazanah, the sovereign investment arm of the Malaysian government, generated US$647 million from the combined issuance of the sukuk, with more than half snapped up by Middle East investors, and a placement of shares.

Source: BERNAMA

December 2, 2008 at 4:19 pm

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WOW!!

This is the last month of my first 30 years in the business. Let’s take a look at what has happenened in the last 30 months.

May 6, 2006: Merit Financial is the first sub-prime mortgage recorded on Implode list to shut their doors.

December 6, 2006: Sebring (#5 on the Implode list) is the first major sub-prime lender to announce their dismiss….. most experts feel that this was the company that signaled the “beginning of the end” of subprime. There were a total of 9 lenders on the implode list in 2006.

March 16, 2007: National lender with a local name falls…. Ameriquest is #41 on the Implode list.

May 17, 2007: Federal Reserve Chairman Ben Bernanke said growing number of mortgage defaults will not seriously harm the U.S. economy.

June 29, 2007: Banking regulators complete new guidelines calling on lenders to strictly evaluate borrowers’ ability to repay home loans. Prime Rate is cut to 5.25%.

Aug. 22, 2007: American Home Mortgage shuts down overnight. Most experts agree that this company was the company that started the down ward spiral of “Niche” or “Alt-A” mortgages. AHM was #109 on the Implode list.

Aug. 7, 2007: Fed leaves key federal funds rate unchanged, says credit problems and housing slump pose increasing risks to U.S. economy.

Aug. 9, 2007: Fed pumps $24 billion into U.S. banking system through large purchases of securities, while European Central Bank makes record cash injection of $130 billion into its markets to shake off credit fears. Wall Street suffers its second-worst decline of the year as Dow Jones industrials drop by nearly 400 points.

Aug. 10, 2007: Fed pumps another $38 billion in temporary reserves into the U.S. financial system; government rejects request for mortgage finance giants Fannie Mae and Freddie Mac to take on more debt.

Aug. 17, 2007: Fed tries to stabilize financial markets by approving 0.5 percentage point cut in its discount rate on direct loans to banks.

Aug. 31, 2007: President Bush announces plan to use Federal Housing Administration, which insures loans for low-income borrowers, to offer government-guaranteed loans to around 80,000 homeowners in default.

Sept. 18, 2007: Fed cuts key federal funds rate by a half point to 4.75 percent.

Sept. 19, 2007: Government raises debt portfolio limits for Fannie and Freddie by more than 2 percent annually.

Sept. 20, 2007: Bush acknowledges “some unsettling times” in the housing and credit markets, while Treasury Secretary Henry Paulson signals the administration would consider allowing Fannie and Freddie to temporarily buy loans bigger than the current cap of $417,000.

Oct. 4, 2007: House approves tax break for homeowners who have mortgage debt forgiven as part of a foreclosure or loan renegotiation.

Oct 2, 2007: Large sub-prime lender, WMC shuts down (#161 on the implode list). Between 1/107-12/31/07, there were 201 lenders added to the implode list.

Oct. 10, 2007: Paulson announces a new mortgage industry coalition aimed at helping homeowners avoid foreclosure.

Oct. 11, 2007: House and Senate Democrats reach a compromise on legislation permitting Fannie and Freddie to increase mortgage holdings by 10 percent from current limit; Bush administration rejects that idea.

Oct. 15, 2007: Three largest banks - Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. - announce a plan organized by Treasury Department to buy securities hurt during the summer’s mortgage turmoil.

Dec. 5, 2007: Congressional aides say the Bush administration has hammered out an industry agreement to freeze interest rates for certain subprime mortgages for five years.

Dec. 6, 2007: The Mortgage Bankers Association reports that home foreclosures hit an all time high in the third quarter.

Dec. 11, 2007: The U.S. Federal Reserve cuts its key interest rate by a quarter-point to 4.25 per cent, the third rate reduction in three months as the central bank tries to keep the country out of a recession. The reduction came as Fed officials signaled that further cuts are possible if a severe downturn in housing and a crisis in mortgage lending get worse.

Jan. 10, 2008: Federal Reserve Chairman Ben Bernanke pledges to slash interest rates yet again to prevent housing and credit problems from plunging the country into a recession.

Jan. 11, 2008: Bank of America Corporation soon will be the nation’s biggest mortgage lender and loan servicer. The Charlotte, N.C.-based company announced that will buy Countrywide Financial for just over $4 billion in stock. The deal rescues the country’s biggest mortgage lender and expands the financial services empire of the nation’s largest consumer bank.

Jan. 15, 2008: The Federal Reserve, working to combat the effects of a serious credit crisis, says it auctioned $30 billion in money to commercial banks at an interest rate of 3.95 percent. It marked the third in a series of innovative auctions the Fed began last month as a way to provide cash-strapped banks with the reserves they need. The hope is that the increase in resources will keep banks lending to consumers and businesses and prevent the credit turmoil that hit in August from pushing the country into a recession.

Jan. 22, 2008: The Federal Reserve’s unexpected slashing of a key interest rate by a bold three-quarters of a point appears to be having the desired effect on world markets. The move has sent Asian stocks up after two days of steep losses. Fears of a U.S. recession have battered the region’s markets since the start of the year.

Jan. 24, 2008: Democratic and Republican congressional leaders reach a tentative deal on tax rebates of $300 to $1,200 per household and business tax cuts to jolt the slumping economy.

Jan. 29, 2008: The House overwhelmingly passes a $146 billion aid package that would speed rebates to most taxpayers. But the Senate could slow things, with lawmakers there backing a larger package that adds billions of dollars for senior citizens and the unemployed.

Jan. 30, 2008: The Fed cuts a key interest rate (to 3.00%) for the second time in just over a week, reducing the federal funds rate by a half point. The rate cut marked the fifth time that the Fed has cut the funds rate since Sept. 18 in response to the severe credit crisis which hit global markets in August. The action was expected to be quickly followed by cuts in banks’ prime lending rate, the benchmark rate for millions of consumer and business loans.

Feb. 7, 2008: Congress passes an economic stimulus bill and the White House says President Bush will sign it. Rebate checks could start arriving in the homes of Americans in May, averaging $600 to $1,200 for most taxpayers. Disabled veterans, the elderly and other low-income people will get around $300.

Feb. 12, 2008: Homeowners threatened with foreclosure could get a 30-day reprieve under a plan announced by the Bush administration. “Project Lifeline” is meant to cover people with all types of mortgages, not just subprime loans that were the focus of previous relief efforts.

The Federal Reserve has auctioned another $30 billion in funds to commercial banks, meant to alleviate the credit crunch. It is the fifth in a series of auctions that have pumped $130 billion into the nation’s banking system.

March 3, 2008: Federal Reserve Chairman Ben Bernanke calls for additional relief and urges lenders to help distressed homeowners by lowering the amount of their loans. He says foreclosures are likely to keep rising even as the government and the housing industry begin relief efforts.

March 6, 2008: The Mortgage Bankers Association reports that home foreclosures hit an all-time high in the final quarter of 2007. Meantime, the Federal Reserve says the percent of equity homeowners have in their houses has fallen below 50 percent for the first time since 1945.

March 15, 2008: The Federal Reserve, in an extraordinarily rare weekend move, took bold action Sunday evening to provide cash to financially squeezed Wall Street investment houses, a fresh effort to prevent a spreading credit crisis from sinking the U.S. economy.

April 10, 2008: The Senate passes a bipartisan measure aimed at boosting the housing market and easing the threat of foreclosures. The plan combines large tax breaks for homebuilders and a $7,000 tax credit for people who buy foreclosed properties, as well as $4 billion in grants for communities to buy and fix up abandoned homes. The White House opposes the plan, saying parts of it would actually make the problem worse by depressing some home values.

April 30, 2008: Scrambling to shore up the faltering economy, the Federal Reserve cut interest rates to the lowest point (2.00%) in nearly four years Wednesday as the nation teetered on the edge of recession. Wall Street rallied at first but then pulled back, concerned that the reduction might be the last for a while.

May 2, 2008: The Federal Reserve and other regulators have begun steps to end “unfair and deceptive” credit card industry practices assailing consumers who are already struggling to cope in a bad economy. The proposed rules would be the biggest clampdown on the industry in decades.

June 17, 2008: The Federal Reserve has auctioned another $75 billion in loans to squeezed banks to help them overcome credit problems. The auction is the 14th since the program began in December.

July 11, 2008: A mortgage rescue to help struggling homeowners avoid foreclosure and get more affordable, safer loans has passed the Senate. The measure faces a bumpy road in the House. It includes a modernization of the Federal Housing Administration and would create tighter controls on mortgage giants Fannie Mae and Freddie Mac.

July 13, 2008: Scrambling to bolster eroding investor confidence, the Federal Reserve and the Treasury Department announce steps to brace slumping mortgage giants Fannie Mae and Freddie Mac. The plan is intended to signal the government is prepared to take all necessary steps to prevent the credit market troubles that erupted in 2007 with losses from subprime mortgages from engulfing financial markets.

July 14, 2008: The Federal Reserve adopts rules to give homebuyers more protection from shady lending practices. The board approves a plan that would crack down on the type of practices that have hurt many of the riskiest borrowers. Lenders wouldn’t be able to make loans without proof of a borrower’s income.

July 23, 2008: The House approves legislation to give the ailing housing market a boost. It targets help for 400,000 homeowners facing foreclosure while giving support to mortgage giants Fannie Mae and Freddie Mac. The highlights of the bill include: $300 billion to provide more affordable mortgages to troubled homeowners, nearly $4 billion in grants to help communities fix up foreclosed properties and a $7,500 tax credit for first-time homebuyers.

July 30, 2008: The Federal Reserve announces that it is extending emergency borrowing to Wall Street, and is also making other moves to ease the crippling credit crunch. The program will now be available through January 2009, rather than ending in mid-September as was originally planned.

July 30, 2008: President Bush signs a housing bill seen as the most significant in decades (H.R. 3221). The measure lets homeowners who can’t afford their payments refinance into more affordable government-backed loans rather than lose their homes. As many as 400,000 struggling homeowners could stand to benefit.

Aug. 12, 2008: The Fed has auctioned another $25 billion in loans to U.S. banks, at a rate of 2.754 percent. In the latest auction, the Fed says it offered the loans for an extended period of 84 days, rather than the 28-day period for the previous loans.

Sept. 7, 2008: The Bush administration announced it was seizing the troubled mortgage giants Fannie Mae and Freddie Mac in a bid to help reverse a prolonged housing and credit crisis. Both Fannie Mae and Freddie Mac were being placed in a government conservatorship, a move that could end up costing taxpayers billions of dollars.

Sept, 14, 2008: Lehman Brothers, burdened by $60 billion in soured real-estate holdings, filed a Chapter 11 bankruptcy petition in U.S. Bankruptcy Court after attempts to rescue the 158-year-old firm failed.

Sept. 15, 2008: Bank of America Corp. announces it would acquire Merrill Lynch in an all-stock transaction that should lift the uncertainty shrouding the investment bank since the start of the credit crisis over a year ago. The $50 billion deal would create a bank that offers everything from fixed-income trading to credit card lending and will rival Citigroup Inc., the biggest U.S. bank in terms of assets.

Sept. 15, 2008: A stunning makeover of the Wall Street landscape sent stocks falling precipitously, with the Dow Jones industrials sliding 504.48 points in their worst point drop since the September 2001 terrorist attacks. Investors reacted badly to a shakeup of the financial industry that took out two storied names: Lehman Brothers and Merrill Lynch Co. Stocks also posted big losses in markets across much of the globe.

Sept. 16, 2008: The U.S. government announces an $85 billion emergency loan to rescue AIG, saying a disorderly failure of the company could hurt the already delicate financial markets and the economy.

Sept. 17, 2008: The Dow Jones industrial average lost about 450 points, giving it a shortfall of more than 800 so far for the week. Markets around the world shared in the confidence crisis, and Russia shut down its market for a third day following its worst plunge in share prices since 1998.

Sept. 18, 2008: The U.S. Federal Reserve, working with central banks in Europe, Canada and Asia, pumped as much as $180 billion into money markets to combat a seizing up of lending between banks.

Sept. 19, 2008: Following a series of ad hoc measures, the U.S. government announces a broad rescue plan for the financial system, including a program to buy hundreds of billions of dollars of bad mortgages and other forms of toxic debt that have been weighing down U.S. financial companies. The Fed and Treasury Dept. shore up money market funds, which had also come under siege during the crisis, and the SEC temporarily bans short-selling - a way of betting that a stock will fall - against shares in 799 financial stocks.

Sept. 24, 2008: Warren Buffett’s Berkshire Hathaway Inc. announces plans to invest at least $5 billion in Goldman Sachs, a move seen as a huge vote of confidence for one of the credit crisis survivors.

Sept. 25, 2008: Washington Mutual Inc., one of the nation’s largest banks, collapses under the weight of its enormous bad bets on the mortgage market. The Federal Deposit Insurance Corp. seizes WaMu and then sells the thrift’s banking assets to JPMorgan Chase & Co. for $1.9 billion. With $307 billion in assets, Seattle-based WaMu, which was founded in 1889, is the largest bank in American history to fail.

Meanwhile in Washington D.C., key members of Congress claimed agreement on an outline and crucial details of an urgent multibillion-dollar plan to stave off the crisis, but Republican members of the house balk at the plan and suggest an alternative plan. Presidential candidates Barack Obama and John McCain join negotiations, and late in the day, McCain sides with the House GOP alternative plan.

Sept. 29, 2008: In a surprise break from party leaders, House legislators defeat the $700 billion emergency rescue plan backed by the Senate and the White House for helping the nation’s financial system. In reaction to the move, the Dow Jones industrials plunge nearly 780 points, the most ever point drop for a single day.

Oct. 1, 2008: After senators loaded the economic rescue bill with tax breaks and other sweeteners, the $700 billion financial industry bailout passed on a 74-25 vote and moved on to the House.

Oct. 3, 2008: On a final vote of 263-171, the House of Representatives approved the revised $700 billion government bailout plan and sent it to President Bush for his certain signature.

Meanwhile, Wachovia announced it had agreed to be acquired by San Francisco-based Wells Fargo & Co rather than by Citigroup.

Oct. 6, 2008: In a rare coordinated move, the Federal Reserve and other major central banks from around the world slashed interest rates to prevent a mushrooming financial crisis from becoming a global economic meltdown. The Dow Jones industrials average posts its biggest loss ever during a trading day, closing below 10,000 for the first time since 2004.

Oct. 8, 2008: The Federal Reserve agrees to provide American International Group with a second loan of up to $37.8 billion, coming on top of a $85 billion loan made to the troubled insurance company in September. The move comes as lawmakers investigating the meltdown of AIG questioned the decision by AIG executives to spend $440,000 on a recent company retreat, complete with spa treatments, banquets and golf outings.

Overseas, the British government announced a $87.5 billion plan on Wednesday to partly nationalize major banks, with taxpayers taking stakes in a bid to shore up a financial sector hard hit by the world financial crisis.

Oct. 13, 2008: Wall Street stormed back after its worst week ever and staged the biggest single-day stock rally since the Great Depression, catapulting the Dow Jones industrials to a 936-point gain.

Oct. 14, 2008: The 2008 federal budget deficit soars to $454.8 billion, the highest level in history and more than double the $161.5 billion recorded in 2007.

Oct. 17, 2008: President George W. Bush addresses the country about financial crisis by saying the economy didn’t falter overnight, “and it’s going to take a while for the credit system to thaw.” U.S. and world markets continue to endure a volatile period of record daily gains and daily losses.

Oct 22, 2008: Internet lender E loan shuts down their computers. They were #293 on the implode list.

Oct. 23, 2008: Former Federal Reserve Chairman Alan Greenspan appears before the House Oversight Committee and says the financial meltdown — a “once-in-a-century credit tsunami” — has revealed a flaw in a lifetime of economic thinking, leaving him in a “state of shocked disbelief.”

Reported on this same day, the number of homeowners ensnared in the foreclosure crisis grew by more than 70 percent in the third quarter of this year compared with the same period in 2007, while new claims for jobless benefits increased by more than expected.

Oct. 28, 2008: The Conference Board reports the U.S. consumer confidence index fell to 38, down from a revised 61.4 in September and significantly below analysts’ expectations of 52. That’s the lowest level for the index since the Conference Board began tracking consumer sentiment in 1967, and the third-steepest drop.

October 29, 2008: Prime Rate is reduced to 1.00- it is to be noted that prime rate has only been this low four times in 20 years.

Oct. 30, 2008: The U.S. Commerce Department reports gross domestic product fell at an annual rate of 0.3 percent in the July-September period, a sign the country could be facing a worse recession. The GDP is widely seen as the broadest measure of America’s economic health. Consumer spending, which accounts for two-thirds of the economy, dropped by the largest amount in 28 years in the third quarter.

Oct. 31, 2008: Last day for the retail side of CTX (#298 on the Implode list).

Nov. 6, 2008: California government proposes a 90 day moratorium on foreclosures. Other governors have followed suit.

Nov 3, 2008: Announcement made that one out of five mortgages were currently behind or in foreclosure.

Nov 12, 2008: FHA sets 2009 limits (D/FW stays at $271,050).

Nov. 24, 2008: Latest victim on the mortgage industry- #305 on the Implode List- Fortes Financial.

Nov 25, 2008: FDIC adds 54 more banks to its “problem list”.

Nov 26, 2008: Cost of Bailout hits 8.5 Trillion dollars.

My head is spinning!!

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Exchange Traded Funds, better known by many investors as iShares, the brand owned by Barclays Global Investors (’BGI’) have been around in the UK since April 2000, with the launch of the iFTSE100 on the London Stock Exchange. From a slow start, by the end of 2005 (the latest figures available), some 125 billion was held in assets under management. Generally, when you look for your share price information, you’ll find them grouped in the extra MARK section, where you’ll now find some 45 different ETFs on offer. Although they have been around for sometime, let’s just remind ourselves how ETFs work. They are listed on the stock exchange, providing the flexibility and trade ability of a share, including the fact that the price is continuously quoted, but that one share can provide instant exposure to an entire Index, giving you the diversification benefits of a fund. ETFs are also a flexible way of achieving cost-effective market exposure. Because the funds are registered in Ireland, there is no stamp duty to be paid on purchases. Management costs are taken from dividends that are accrued by the fund, and any excess income is then distributed to shareholders: unlike unit trusts, there are no initial fees to pay on the original purchase. The price of the fund is always close to the ‘Net Asset Value’ (NAV) of the underlying investments and will usually have tight spreads, unlike some unit trusts and some investment trusts. Also ETFs will disclose their holdings everyday, whereas traditional funds usually disclose their holdings twice a year.

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Welcome to SOUGHT CONTENT’s Blog.

Barclays Plc began trading of three new Brazilian Exchange Traded Funds in Sao Paulo to respond to investor demand for diverse and more easily tradable funds at a time of market volatility.

The ETFs, the first developed by Barclays in Brazil, replicate the Bovespa Index of the 66 most-traded stocks, the BM&FBovespa MidLarge Cap index and the BM&FBovespa Small Cap index. The first Brazilian ETF, the PIBB Fundo de Indice Brasil- 50 Brasil Tracker, was created in 2004.

“The type of product that we have here brings benefits for the times we’re living in,” Banco Barclays Director Marcelo Allain told reporters in Sao Paulo today. “The fund has the benefit that investors can enter and exit at any time and can better control their investment risk.”

Demand for ETFs in Brazil may follow the trend in Mexico and grow to as much as 20 percent of daily traded volume in five years, said Daniel Gamba, Barclays Global Investors’ chief executive for Latin America. The Bovespa had an average daily volume of about $3 billion during the past three months, more than six times the $440 million average volume of Mexico’s Bolsa.

The iShares MSCI Brazil Index Fund, managed by Barclays, is among the 10 most-traded ETFs in New York, with daily volume of about $1 billion, Gamba said. The MSCI Brazil fund has a market cap of $3.15 billion, according to Bloomberg data.

The three ETFs that began trading today have an original investment of 100 million reais ($42 million) from strategic investors, Allain said.

The Bovespa index gained 1.7 percent to 35,329.87 at 10:14 a.m. New York time. The iShares Ibovespa fund rose 0.7 percent to 35.34 reais after opening at 35.11 reais.

Investor demand for the funds will likely lead to the creation of additional indexes and funds, including two new indexes by the end of this year, said Murilo Robotton, executive director of products at BM&FBovespa, Latin America’s biggest exchange.

“We want to have new indexes so investors can have diverse means to invest” in Brazil, Robotton told reporters. The exchange is currently creating a homebuilders index. Robotton declined to give details about the second index.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.

Source: Bloomberg, 2.11.2008

The deterioration of the mood on the German real estate market continues unchecked. Admittedly, the November survey of the King Sturge Real Estate Economy index – being based on a monthly poll – suggests that the downward trend has slowed. Thus, the equally poll-based Real Estate Climate dropped from 55.4 index points the previous month down to the current low of 48.2 points.

However, what is surprising when taking the annual development into account is the breakneck pace of the downturn. In just five months, the mood among the 1000 industry players regularly interviewed by the independent market research company BulwienGesa AG dropped by 50 index points. The most pessimistic market assessment reflects the downturn of the Real Estate Economy that is based on macroeconomic data, and that stood at 136.7 points in November (compared to 150.7 points the previous month).

“You hardly need a crystal ball to divine that the year 2008 is over, as far as business goes. Major deals are probably not to be expected anymore, to say nothing of large-scale transactions. What is more, many real estate projects have been put on the back burner or shelved altogether,“ observed Sascha Hettrich, Managing Partner of King Sturge Deutschland.

The all-time low of the Real Estate Climate, which dropped from 55.4 down to 48.2 index points in November, reflects the present state of paralysis the German real estate industry is in. The sombre mood can be traced back to the low Invest Climate most of all. The indicator for investment and purchase decisions hit a new record low at 35.7 points (compared to 41.3 the month before). This means that no major transactions are conducted these days. The Rental Climate, the second sub-indicator of the Real Estate Climate, remained relatively stable at 61.4 index points, down from 70.4 points in October. Then again, market players are expecting the rent and income development to deteriorate even in this area.

As in the month before, a steady cash flow and favourable refinancing options caused the residential real estate to remain the most stable segment even in November. Rising vacancy rates precipitated by the present economic development and the regressive consumer spending are reflected in a reticent ratings of the commercial, office, and retail sectors.

The Real Estate Economy, which is based on statistical ratios such as DAX, ifo, DIMAX, and interest rates, experienced a drastic downturn in November. It plummeted down to 136.7 points, which translates into a 9.3 percent decrease. In face of so serious a decline, business in 2009 is expected to start out slow.

“At the same time, there are indeed some bright prospects,” argued Hettrich. “For instance, the economic aid program launched in early November has earmarked funds for additional investments in infrastructure and building redevelopments. It is definitely a positive signal for the construction and real estate industry,” Hettrich added. “Naturally, there is always the chance that the program’s impact may turn out to be just a drop in a bucket.”

Jack Bogle, Founder of Vanguard and creator of the first S&P 500 index fund has lived through 10 bear markets.  He talked to the Associated Press about his thoughts.

Bogle says now is the time to bet on a long term market recovery and now individual stocks.  He thinks it will take 1 to 2 and 1/2 years before the economy recovers. 

He’s a quote of some advice Bogle gives that needs to be quoted,

I think investments you continue to hold through this decline will give you a return better than you can find in other places. And that is a crucial part of this analysis. We know what bond returns will be in the next 10 years - roughly 5 percent for long-term government bonds or about 4 percent for short- to intermediate-term bonds. So if stocks produce 6 percent, while you endured the volatility, you increased your total return.

Money-market funds are now yielding less than 2 percent - call it about 1.5 percent. That doesn’t look anything like 6 to 9 percent for stocks, especially when you compound them over a decade. I would not flee the market now.

Bogle is still very positive about the stock market, at the age of 79, bogle says he is 80% allocated into bonds and advices to allocate to bonds the age you are currently at. 

Read the full article Here.

Hanging out at the apartment today. Hanging out with the crew that we met at the club last week. Playing a couple of mind games that you’d never be able to figure out. Thinking about those spiders up in the corner. How did they get there? index fund stuff - check it out.

Meanwhile, while unemployment rises, the downward spiral in housing prices is gaining momentum.

“The No.1 thing that drives housing values is incomes,” said Todd Sinai, an associate professor of real estate at the Wharton School at the University of Pennsylvania. “When incomes fall, demand for housing falls.”

The S&P/Case-Shiller Index of home prices plunged 16.6% in August from the year before, following a 16.3% drop in July. The index has fallen every month since January 2007 (See accompanying chart, “Plummeting Prices.”).

Prices were lower in all 20 of the major cities the index covers, with Phoenix and Las Vegas down nearly 31% from last year.

Nationwide home prices have fallen 20.3% since peaking in June 2006.

And the skid isn’t over.

And still one other reliable indicator of housing prices seems to confirm that, in many cities, home prices still have further to fall.

No matter what happens in the U.S. housing market, until a large inventory reduction takes place, housing prices will not stabilize.

In a recent Forbes magazine column, A. Gary Shilling, president of an economic consulting firm of the same name, said the worst is yet to come. Says Schilling: “Excess inventory, the mortal enemy of prices, now amounts to 1.8 million homes, which is a huge number relative to the net demand (new families minus departures due to deaths and moves to nursing homes) which is only 1.5 million a year.”

The question that needs to be answered, then, is this: In the current atmosphere, does anyone believe we actually need homebuilders to add even one new home to the market?

Some pundits claim this may be a golden opportunity to short U.S. homebuilders. Even though they’re already down 80% from their highs, the deadly combination of skyrocketing unemployment, deflating prices and tight credit continue to spell further pain for the industry.

The reason: All bets are off if the new Barack Obama Administration implements a moratorium on mortgage foreclosures. There’s also the possibility that Obama will be able to shepherd through any one or more of the proposed mortgage guarantee programs now on the table. 

Those kinds of moves could provide a boost to homebuilders and leave short sellers in the grips of an uncomfortable squeeze – just like the millions of homeowners saddled with mortgages they can no longer pay.

By  Shenali Waduge

id="blog-title">MEDIA SCHOLAR

id="tagline">The Blog of Media Criticism

This study by the Lancet was completely misunderstood and unfairly marginalized by the MSM. It is copied in its entirety here from the Lancet. 

I have some empathy and sympathy for the author of Liar’s Poker, Michael Lewis. Empathy, because I joined the investment banking industry as an analyst in 1988 knowing little or nothing about financial markets (other than a two year stint as the editor of a banking magazine). I left the industry, disillusioned, 10 years later. Sympathy because of the poor state he’s in.

I was introduced to investment banking by the head of research at a UK bank. He was also the publisher of the magazine I was editing. The bank’s previous bank analyst had returned to Canada, and they needed a replacement. As I had been editing the bank magazine, I had some idea about what banks do, but the stock market was something that was only mentioned as an afterthought (banking and equity markets were fairly well separated at the time. Although banks in Hong Kong all had established brokerage subsidiaries, investment banking was left to foreign banks). Anyway, after arriving fresh and innocent, and after having being shouted at and threatened by aggressive sales people, I finally found my feet, and realized that equity analysts in Hong Kong were put on some sort of pedestal and adored by the general public. It was a great way to generate self publicity, even if you had no idea what you were talking about. Turning a catchy one liner was all that was necessary. I still find it amazing that I was actually asked to write articles for glossy high net worth magazines about which way the stock market was heading, without anyone ever asking whether I knew what the hell I was talking about. The name card was enough (it didn’t matter that I hadn’t even been to school).

Talking was about as good I could manage, with constant conversations to newspaper reporters, radio stations and even a spot on local television. However, there were downsides to the exposure. If you said something too negative, the subject of your scorn would send the boys around. It got so bad, that at one point I was dragged in front of the board of directors of a local hotelier because I had put a sell recommendation on the stock. At the time, the bank was renting floors in a building owned by the family-owners of the hotel. There were two meetings that I remember, one with the finance director at the time (he was away on his honeymoon in Scotland when I wrote the report, so he was unable to respond to any of my concerns), and the other was lunch with the board, at which I was told to apologize and retract my rating. I did, but I stuck with my views privately, and was proven correct. The stock has underperformed consistently since my sell call. That incident and the time the bank’s UK analyst for HongkongBank walked out of a meeting with the Bank’s corporate affairs people, leaving me to continue the meeting, because the po-faced spin doctors refused to answer his questions about the Bank’s non-performing loans. Both these and other instances sowed seeds in my mind that investment banking is just an illusion (write what I tell you or else), with the business run by a bunch of spoilt brats (who spit their dummies out if they don’t get what they want).

In fact, no one can predict the future (whether it’s the corporate people at HSBC, analysts or short sellers), which means that one person’s view is as good as the other. It’s just that I could somehow write about the future in a style that was easy to read (or alternatively too difficult to understand, therefore making myself sound mystifyingly certain). This is still true today. No one can predict the future, so, as long as you have a reasonable argument (or even better loads of different arguments, therefore increasing the chance of success), anyone can write investment newsletters every week.

Equity research is all about being in the right place at the right time. Lewis points out in his recent piece appropriately called “The end” (catchy, sure to get lots of eyebrows raised etc) that Meredith Whitney’s call on Citigroup in October last year was as much about luck and timing (and self publicity, she’s married to a wrestler) than anything else. She almost immediately left CIBC, probably because they refused to match the pay offer of her current employer. Lewis and Whitney empathized because they were both responsible for bringing down big Wall Street names (Gutfreund at Salomon and Prince at Citi). Unfortunately, I can empathize with Lewis, rather tenuously, again, because I was involved in the demise of the entirety of Salomon Brothers. County Natwest decided to close down its Hong Kong office as early 1990s recession had forced cost cuts. I was immediately asked to join a new Swiss research team, but I only managed a year there, before getting a big phone call to set up Nikko Research Center’s Hong Kong office. After five years of goofing about pretending to be serious investment bankers, Salomon Brothers could resist the temptation no longer, and in 1998, offered to buy a stake in Nikko, and merge its overseas offices with Nikko’s (obviously attractive) branches. It was at that point I realized that investment banking is doomed. If Salomons saw any sort of value in Nikko’s franchise, then Wall Street was being led by blind people with too much ambition and money. As we now know, Salomons is no longer with us, and Citi (which absorbed it) was almost driven to collapse by the likes of Whitney and Lewis (and by a bunch of unpopular sour pusses).

My sympathy for Lewis extends from his long and patient wait for the “destruction of Wall Street”. He wrote Liar’s Poker in 1989. Since then, the Hang Seng Index has swung from the low of 7,000 in August 1989, to the 32,000 of last October. That was an annualized compound average growth rate of 17.6%. Being a permabear over the last 20 years would have left you very poor, with not much of a social life. Hong Kong’s most famous bear is “Dr Doom and Gloom” Marc Faber, who would be constantly wheeled out by Bloomberg or CNN when the markets were racing upwards – just so there was some semblance of balance to their reporting, and also, just for the entertainment of watching a middle aged Swiss with a doctorate squirm at being so wrong. He now spends most of his time hanging around his place in Thailand. When he’s introduced on CNBC, there are no “Dr Doom” monikers in his introduction (that mantle is now reserved for a mad cap professor who goes by the name of Nouriel Roubini). I read recently that Kynikos Associates’ Ursus Fund is up 58% so far this year. Ursus, of course, is Latin for bear (although a Wiki search reveals that Ursus is also the name of a district of Warsaw, an Icelandic Vodka and the name of several Christian saints). Have you ever seen James Chronos, the Greek owner of Kynikos (Greek for doglike), on TV testifying before some committee, trying to justify his existence? He looks completely dopey and spaced out. That is what permabears look and act like. They have taken so many knocks that when the good times come around for them they are too beaten up to enjoy it. Lewis describes Steve Eisman and his associate bears in “The end” as a complete bunch of unsociable misfits from Queens or somewhere. They are on a winning run, but for how much longer (Chronos says he’s reduced his short positions on US financials and only has a large short position in Macquarie) and at what price?

The Hang Seng Index hasn’t managed a winning run of more than three consecutive days since July, so Friday was something to cheer about. The lack of sustainability of past rallies has been due to the discounting of economic/corporate news flow since the collapse of Lehmans. As the market reacts less and less to news-flow (which will continue to be bad because the press only reports negative news), so the market will move closer and closer to forming a bottom. The closing level of the Hang Seng Index on Friday was tantalizing, as it was trading above its 20 day moving average for the first time since the one-off events of 5 and 10 November, it was also poking at the bottom of a falling Ichimoko Cloud. Teasingly, the Parabolic could also reverse to an uptrend if the break into the cloud can be sustained this week. If the Central Economic Policy Committee, meeting this week, can clarify its spending objectives, then skepticism about China’s stimulus packages can be dispelled, allowing any breaks in resistance to be sustained. Here’s the technical situation as it stood on Friday in graph form.

By Stephen Pate

Ghiz said double dipping by MLAs into the PNP funds was optics. Yes it looks real bad. Compare his $3,300 raise with the 1% or $100 annual increase given to people receiving social assistance.

Add to that, Baby-Ghiz and his Merry Boys and Girls got a $20,000 increase July 2007. Bad optics. No bad smell.

Now is the time for Ghiz to show he has a hint of common sense by refusing the take even more money. He and his government should refuse to accept Barb Stevenson’s report. Since they are the government, they can pass a motion to pass on the raise.

Stevenson makes the statement PEI’s politicians are the lowest paid on Canada. That’s logical since we are the smallest province. We have more politicians per square mile than anywhere in Canada.

Other than the 1,000 Islanders Ghiz has bribed with PNP money, the sentiment about Ghiz is either a crook or inept. He needs a little positive public relations and it won’t come from handing our ribbons at a track meet.

P.E.I. politicians getting pay hike

In the midst of a global recession, P.E.I. MLAs are getting a pay raise.

The dollar is 1.0% higher against the New Zealand dollar and British pound. Central bank policy meetings Thursday in New Zealand and Britain are expected to result in interest rate cuts of over 100 basis points.

The dollar otherwise shows gains of 0.4% against the euro, 0.3% against the Aussie dollar, 0.2% against the Swissy and 0.1% versus the Canadian dollar, but the U.S. currency lost 0.3% against the yen amid another wave of risk aversion. Markets await the outcome of central bank meetings tomorrow in Sweden, New Zealand, Euroland, and Britain, as well as the U.S. labor market survey due Friday.

The Nikkei climbed 1.8%. Elsewhere in Asia, equities leaped 4.5% in China, aided by government share purchases, and also gained 1.4% in the Philippines and Hong Kong and 1.5% in Thailand where the central bank 1-day repo rate was slashed to 2.75% from 3.75%. Australian shares firmed 0.2%.

European stock markets are lower, in contrast, with drops of 1.7% in Germany, 1.4% in France, 0.9% in Sweden, 0.7% in Switzerland, and 0.5% in Britain.

The yield on 10-year JGB yields recovered 4 basis points to 1.39%. Sovereign bond yields are higher in North America and mixed in Europe.

Oil edged back up 0.6% after dipping under $47 per barrel. Gold prices slid 0.8% to $777.30/ounce.

Euribor rates again eased. The 3-month rate is at 3.74%.

Managers of a Chinese sovereign wealth fund said they will not invest in U.S. financials. Regulatory environment is too unsettled.

The Bank of Korea held a meeting to discuss more ways to ease liquidity strains. Japanese officials are considering a fiscal plan to support its labor market.

U.S. auto sales slumped over 36% y/y in November. German car sales dropped 17.6% on-year last month. New Zealand car sales plunged 27.2% y/y. Weak demand for motor vehicles is a global problem and has not responded to the $100 per barrel decline in oil prices since mid-July.

Euroland’s flash service-sector PMI reading of 43.3 in November was revised down to 42.5, a record low following 45.8 in October. Consequently, the Bloc’s composite PMI for both services and manufacturing was revised to 38.9 from a preliminary 39.7 and 43.6 in October. Germany posted PMI scores for November of 45.1 for services, lowest since May 2003, and 39.8 for the composite index. The French scores were 46.2 on services and 41.2 on its composite index. Italy’s service-sector PMI fell to 39.5 from 45.7 in October (a reading of 40 was expected). Spain’s service index was 28.2, also below expectations, following 32.2 in October and 50.7 a year earlier. Ireland’s service-sector PMI was merely 32.6, a series low and down from 36.1.

Retail sales in Euroland slumped 0.8% in October, twice as much as the consensus expectation, and by 2.1% from October 2007. The case for a bigger-than-50-basis point rate cut tomorrow by the ECB keeps mounting.

Australian real GDP barely grew last quarter, posting a non-annualized rise of 0.1% with weak personal consumption and a negative contribution from net exports. The result was weaker than the upwardly revised second-quarter growth of 0.4% and cut on-year economic growth to 1.9% from 2.9% in 2Q and 4.3% in the middle of 2007. Former Governor of the Reserve Bank of Australia MacFarlane said there is more scope to cut interest rates following cuts since early September of 300 basis points to 5.25%.

The British PMI services index slumped to a series low of 40.1 in November from 42.4. The sum of that score of 40.1 and an earlier reported manufacturing PMI of 34.4 is 74.5, down from 83.9 in October, 106.3 in November 2007, and a peak of 113.9 in August 2007 when the global financial market crisis began.

British on-year shop price inflation decelerated to 2.7% in November from 3.0%. The output price component of the PMI service index fell below 50 to 49.2, lowest in seven years. Euroland’s output price score of 47.1 was the lowest since July 2003.

PMI service readings fell by 1.9 points to 40.7 in Norway and by 10.2 points to 37.2 in Russia.

South Korean forex reserves fell another $11.7 billion last month to a 46-month low.

A neat look at how the market has performed (and evolved) relative to the 50 and 200 day moving averages.  (Quantifiable Edges also Daily Options Report)

Momentum investing worked…even in the Victorian age.  (SSRN.com)

A longer term look at the Arms Index.  (VIX and More)

Taking tax losses can force you to look at your portfolio with fresh eyes.  (WSJ.com)

Securities lending is the “lifeblood” of the hedge fund industry.  (All About Alpha)

Harvard’s endowment takes a hit.  (WSJ.com also Dealbreaker, Clusterstock)

Times are tough.  Google (GOOG) scales back.  (WSJ.com also GigaOM, The Big Money)

“Strange as it may sound, Apple may have an iPod problem.”  (BusinessWeek.com)

The gaming industry, with help from private equity, has experienced quite a comedown.  (TheDeal.com)

The auto downturn “is serious.”  (Econbrowser)

“Does the fact a company’s bonds are rated at low-junk levels, and trade at a small fraction of face value, prove the company is insolvent?”  (Floyd Norris)

The use of TIPS yields to estimate inflation expectations is more complex than at first blush.  (Mankiw Blog, Econbrowser)

The case for (and against) a 100 year Treasury bond.  (FT Alphaville, Market Movers)

“Counting on a quick rebound in the housing market to resurrect your net worth and save your retirement?”  Don’t.  (Clusterstock)

Financial engineering programs have gone way off track.  (The Spectrum via Economist’s View)

The risks to keeping financial industry salaries “artificially low.”  (Free exchange, Market Movers)

“Although China may seem to have all the cards - high economic growth, large foreign currency reserves - it could yet turn out to be a major loser of the global economic crisis.”  (The Baseline Scenario also Free exchange)

Is it time to ditch the extra-point?  (Crossing Wall Street)

Want to make sure you don’t miss any Abnormal Returns posts?  Feel free to add our fan-friendly feed to your favorite feed reader.

MUMBAI: Banking stocks today tumbled by over five per cent in morning trade on the Bombay Stock Exchange amid weak investor sentiment whichpulled the benchmark Sensex below the 10k level.

The index of banking stocks, bankex, opened at 5,399.89 points, and dipped by 5.17 per cent to a low of 5,342.40. It was later quoted at 5,484.65 points.

HDFC Bank also slipped 5.44 per cent to Rs 1,035, while Yes Bank also plunged 9.36 per cent to Rs 74.10.

Marketmen said overnight fall in the US markets and negative Asian markets dampened investor sentiments here leading to a fall in the stock prices.

Other PSU lenders which bore the brunt of the weak global sentiments include Bank of India, which dipped 3.84 per cent, Canara Bank (2.17 per cent) and Federal Bank (3.96 per cent).

Bucking the trend, Punjab National Bank gained 0.89 per cent at Rs 496.20 on the BSE. Besides, Kotak Bank gained 1.91 per cent and Oriental Bank gained 0.59 per cent in the morning trade.

The benchmark Sensex tumbled by over 430 points and dipped below the 10,000 level in early trade today on heavy selling by foreign funds as well as retail investors.

US stocks plummeted on Wednesday, a day after Barack Obama’s historic victory in the US presidential election, as a fresh batch of dismal economic data underscored the massive challenges awaiting his administration.

The drop marked Wall Street’s biggest loss ever on the day after a presidential election, coming immediately on the heels of its biggest Election Day rally on record in the previous session.

The Dow Jones industrial average slid 486.01 points, or 5.05 per cent, to 9,139.27. The Standard & Poor’s 500 Index plunged 52.98 points, or 5.27 per cent, to close at 952.77. The Nasdaq Composite Index lost 98.48 points, or 5.53 percent, to 1,681.64.

Asian stocks also led losses sending the Nikkei down 5.25 per cent. The broader Topix sank 5.28 per cent, Hang Send dropped 6.72 per cent Straits fell 4.22 per cent.

MUMBAI: Banking stocks today tumbled by over five per cent in morning trade on the Bombay Stock Exchange amid weak investor sentiment whichpulled the benchmark Sensex below the 10k level.

The index of banking stocks, bankex, opened at 5,399.89 points, and dipped by 5.17 per cent to a low of 5,342.40. It was later quoted at 5,484.65 points.

HDFC Bank also slipped 5.44 per cent to Rs 1,035, while Yes Bank also plunged 9.36 per cent to Rs 74.10.

Marketmen said overnight fall in the US markets and negative Asian markets dampened investor sentiments here leading to a fall in the stock prices.

Other PSU lenders which bore the brunt of the weak global sentiments include Bank of India, which dipped 3.84 per cent, Canara Bank (2.17 per cent) and Federal Bank (3.96 per cent).

Bucking the trend, Punjab National Bank gained 0.89 per cent at Rs 496.20 on the BSE. Besides, Kotak Bank gained 1.91 per cent and Oriental Bank gained 0.59 per cent in the morning trade.

The benchmark Sensex tumbled by over 430 points and dipped below the 10,000 level in early trade today on heavy selling by foreign funds as well as retail investors.

US stocks plummeted on Wednesday, a day after Barack Obama’s historic victory in the US presidential election, as a fresh batch of dismal economic data underscored the massive challenges awaiting his administration.

The drop marked Wall Street’s biggest loss ever on the day after a presidential election, coming immediately on the heels of its biggest Election Day rally on record in the previous session.

The Dow Jones industrial average slid 486.01 points, or 5.05 per cent, to 9,139.27. The Standard & Poor’s 500 Index plunged 52.98 points, or 5.27 per cent, to close at 952.77. The Nasdaq Composite Index lost 98.48 points, or 5.53 percent, to 1,681.64.

Asian stocks also led losses sending the Nikkei down 5.25 per cent. The broader Topix sank 5.28 per cent, Hang Send dropped 6.72 per cent Straits fell 4.22 per cent.

MUMBAI: Banking stocks today tumbled by over five per cent in morning trade on the Bombay Stock Exchange amid weak investor sentiment whichpulled the benchmark Sensex below the 10k level.

The index of banking stocks, bankex, opened at 5,399.89 points, and dipped by 5.17 per cent to a low of 5,342.40. It was later quoted at 5,484.65 points.

HDFC Bank also slipped 5.44 per cent to Rs 1,035, while Yes Bank also plunged 9.36 per cent to Rs 74.10.

Marketmen said overnight fall in the US markets and negative Asian markets dampened investor sentiments here leading to a fall in the stock prices.

Other PSU lenders which bore the brunt of the weak global sentiments include Bank of India, which dipped 3.84 per cent, Canara Bank (2.17 per cent) and Federal Bank (3.96 per cent).

Bucking the trend, Punjab National Bank gained 0.89 per cent at Rs 496.20 on the BSE. Besides, Kotak Bank gained 1.91 per cent and Oriental Bank gained 0.59 per cent in the morning trade.

The benchmark Sensex tumbled by over 430 points and dipped below the 10,000 level in early trade today on heavy selling by foreign funds as well as retail investors.

US stocks plummeted on Wednesday, a day after Barack Obama’s historic victory in the US presidential election, as a fresh batch of dismal economic data underscored the massive challenges awaiting his administration.

The drop marked Wall Street’s biggest loss ever on the day after a presidential election, coming immediately on the heels of its biggest Election Day rally on record in the previous session.

The Dow Jones industrial average slid 486.01 points, or 5.05 per cent, to 9,139.27. The Standard & Poor’s 500 Index plunged 52.98 points, or 5.27 per cent, to close at 952.77. The Nasdaq Composite Index lost 98.48 points, or 5.53 percent, to 1,681.64.

Asian stocks also led losses sending the Nikkei down 5.25 per cent. The broader Topix sank 5.28 per cent, Hang Send dropped 6.72 per cent Straits fell 4.22 per cent.

MUMBAI: Banking stocks today tumbled by over five per cent in morning trade on the Bombay Stock Exchange amid weak investor sentiment whichpulled the benchmark Sensex below the 10k level.

The index of banking stocks, bankex, opened at 5,399.89 points, and dipped by 5.17 per cent to a low of 5,342.40. It was later quoted at 5,484.65 points.

HDFC Bank also slipped 5.44 per cent to Rs 1,035, while Yes Bank also plunged 9.36 per cent to Rs 74.10.

Marketmen said overnight fall in the US markets and negative Asian markets dampened investor sentiments here leading to a fall in the stock prices.

Other PSU lenders which bore the brunt of the weak global sentiments include Bank of India, which dipped 3.84 per cent, Canara Bank (2.17 per cent) and Federal Bank (3.96 per cent).

Bucking the trend, Punjab National Bank gained 0.89 per cent at Rs 496.20 on the BSE. Besides, Kotak Bank gained 1.91 per cent and Oriental Bank gained 0.59 per cent in the morning trade.

The benchmark Sensex tumbled by over 430 points and dipped below the 10,000 level in early trade today on heavy selling by foreign funds as well as retail investors.

US stocks plummeted on Wednesday, a day after Barack Obama’s historic victory in the US presidential election, as a fresh batch of dismal economic data underscored the massive challenges awaiting his administration.

The drop marked Wall Street’s biggest loss ever on the day after a presidential election, coming immediately on the heels of its biggest Election Day rally on record in the previous session.

The Dow Jones industrial average slid 486.01 points, or 5.05 per cent, to 9,139.27. The Standard & Poor’s 500 Index plunged 52.98 points, or 5.27 per cent, to close at 952.77. The Nasdaq Composite Index lost 98.48 points, or 5.53 percent, to 1,681.64.

Asian stocks also led losses sending the Nikkei down 5.25 per cent. The broader Topix sank 5.28 per cent, Hang Send dropped 6.72 per cent Straits fell 4.22 per cent.

Roger Biduk writes:

The Dow Jones industrial average gained 172 points, a bit over 2 percent. The Standard & Poor’s 500 index rose 2.6 percent and the Nasdaq composite gained 2.9 percent.

A rash of poor economic news sent stocks lower in the morning, but the selling petered out by midday. Stocks remained volatile in the afternoon, turning higher in the last hour.

Around 2 p.m. ET, the Federal Reserve released its periodic “beige book” survey of the economy. The survey showed that economic conditions have deteriorated in all 12 of the Fed’s districts. However, the report was expected to show weakness, and stocks turned higher shortly after its release.

“We’re not expecting good news on the economy and we haven’t been getting any,” said Bill Flaig, chief investment officer at Arrow Funds. “The reports keep coming in a little weaker than expected, but not dramatically.”

The CNN Wire is a running log of the latest news from CNN World Headquarters, reported by CNN's correspondents and producers, and The CNN Wire editors. "Posted" times are Eastern Time.

The Obama-Biden Plan

Our country faces its most serious economic crisis since the great depression. Working families, who saw their incomes decline by $2,000 in the economic “expansion” from 2000 to 2007, now face even deeper income losses. Retirement savings accounts have lost $2 trillion. Markets have fallen 40% in less than a year. Millions of homeowners who played by the rules can’t meet their mortgage payments and face foreclosure as the value of their homes have plummeted. With credit markets nearly frozen, businesses large and small cannot access the credit they need to meet payroll and create jobs.

Barack Obama and Joe Biden have a plan to revitalize the economy.

1. IMMEDIATE ACTION TO CREATE GOOD JOBS IN AMERICA

The economy has lost 760,000 jobs this year — and some forecasters expect the unemployment rate to exceed 8 percent by the end of next year. Addressing the financial crisis will help prevent the most severe loss of jobs from the crisis. But taking direct steps to create jobs will also strengthen the economy and help with the financial crisis. Barack Obama and Joe Biden’s overall economic agenda is pro-jobs, including their plans to eliminate America’s dependence on foreign oil and bring down healthcare costs. But Obama and Biden believe we must take additional aggressive steps to jump-start job creation right now:

* A New American Jobs Tax Credit: Obama and Biden will provide a new temporary tax credit to companies that add jobs here in the United States. During 2009 and 2010, existing businesses will receive a $3,000 refundable tax credit for each additional full-time employee hired. For example, if a company that currently has 10 U.S. employees increases its domestic full time employment to 20 employees, this company would get a $30,000 tax credit — enough to offset the entire added payroll tax costs to the company for the first $50,000 of income for the new employees. The tax credit will benefit all companies creating net new jobs, even those struggling to make a profit.

* Raise the small business investment expensing limit to $250,000 through the end of 2009: Obama and Biden will give small businesses an additional incentive to make investments and start creating jobs again by providing temporary business tax incentives through 2009. The February 2008 stimulus bill increased maximum Section 179 expenses to $250,000 but this expires in December 2008. This provision will encourage all firms to pursue investment in the coming months, but will particularly benefit small firms which generally have smaller amounts of annual property purchases and so choose to expense the cost of their acquired property.

* Zero capital gains rate for investment in small businesses: Barack Obama and Joe Biden believe that we need to encourage investment in small businesses to help create jobs and turn our economy around. That’s why they will eliminate all capital gains taxes on investments made in small and start-up businesses. They also want to cut taxes for the small businesses that create jobs but are struggling with restricted access to credit on top of skyrocketing health care and energy costs.

* Save one million jobs through immediate investments to rebuild America’s roads and bridges and repair our schools: The Obama-Biden emergency plan would make $25 billion immediately available in a Jobs and Growth Fund to help ensure that in-progress and fast-tracked infrastructure projects are not sidelined, and to ensure that schools can meet their energy costs and undertake key repairs starting this fall. This increased investment is necessary to stem growing budget pressures on infrastructure projects. In addition, in an environment where we may face elevated unemployment levels well into 2009, making an aggressive investment in urgent, high-priority infrastructure will serve as a triple win: generating capital deployment and job creation to boost our economy in the near-term, enhancing U.S. competitiveness in the longer term, and improving the environment by adopting energy efficient school and infrastructure repairs. In total, Obama and Biden’s $25 billion investment will result in 1 million jobs created or saved, while helping to turn our economy around.

* Partner with America’s automakers to help save jobs and ensure that the next generation of clean vehicles is built in the United States: Senator Obama pushed for $50 billion in loan guarantees to help the auto industry retool, develop new battery technologies and produce the next generation of fuel efficient cars here in America. Congress passed only half of this amount — it is critical that the administration speeds up the implementation of the first half and that Congress move quickly to enact the second half. In addition, Obama and Biden believe that with the tremendous uncertainty facing the auto industry, and the small and medium business suppliers who depend on them, it is critical that we keep all options on the table for helping them weather the financial crisis.

2. IMMEDIATE RELIEF FOR STRUGGLING FAMILIES

Even when the overall economy was growing, most American families were not sharing in this growth. The typical non-elderly household saw its income decline by more than $2,000 from 2000 to 2007 as expenses skyrocketed. Weekly wages, adjusted for inflation, are now lower than they were a decade ago. Barack Obama and Joe Biden’s overall economic plan will relieve the squeeze on families and foster bottom-up growth. But they are proposing that we implement several measures immediately:

* A tax cut for 95 percent of workers and their families — plus seniors: Barack Obama and Joe Biden propose a permanent tax cut of $500 for workers and $1,000 for families. A first round of these tax credits could be mailed out quickly by the IRS based on tax returns already filed for tax year 2007. In addition, Obama and Biden would extend these expedited tax credits to senior citizens who are retired as a down payment on his plan to eliminate taxes for all seniors making up to $50,000.

* Extend unemployment insurance benefits and temporarily suspend taxes on these benefits: Millions of Americans are looking for work but unable to find it in the weak economy. Today, more than one in five unemployed workers has been out of work for more than half a year — the highest level since early 2005. Obama supported extending unemployment insurance this summer, but already 800,000 jobless workers have exhausted those benefits and are being left without any unemployment compensation. Obama and Biden believe Congress should immediately extend unemployment insurance for an additional 13 weeks to help families that are being hit hardest by this downturn. In addition, they believe we should temporarily suspend taxes on unemployment insurance benefits as a way of giving more relief to families.

* Penalty-free hardship withdrawals from IRAs and 401(k)s in 2008 and 2009: Many families are going to be facing unique economic hardship over the coming year. To help these families pay their bills and their mortgages and make it through these tough times, Obama and Biden are calling for legislation that would allow withdrawals of 15% up to $10,000 from retirement accounts without penalty (although subject to the normal taxes). This would apply to withdrawals in 2008 (including retroactively) and 2009.

* Instruct the Treasury to allow seniors to delay required withdrawals from 401(k)s and IRAs: Currently seniors are required to start withdrawing from their 401(k)s and IRAs at age 70 1/2 and every year thereafter over their lifetime. But the explicit requirement that withdrawals continue on an annual basis — and the related requirement that the amount withdrawn be based on currently much higher year-end 2007 asset values — is based on Treasury regulations, not the statute, which has a less specific mandate. That means the Secretary of the Treasury has authority to change its regulations to protect seniors from being forced, at this critical time, to sell their investments and “lock in” their losses just after market values have plummeted in an almost unprecedented fashion. Obama and Biden are calling on Treasury to temporarily suspend the required withdrawals for retirees over age 70 1/2. Because retirees often make these required withdrawals late in the year, there is still time to help millions of affected seniors — but only if done promptly. In addition, because lower-income seniors may have no choice but to take withdrawals this year and in 2008, Obama and Biden will exempt any withdrawals made up to the required minimum amount from taxation. This will give seniors the flexibility they deserve — to forgo withdrawals if they choose or to take those withdrawals tax free if they need those resources to pay their bills.

* Funds to counteract high heating costs this winter: Obama and Biden are calling for supplementing the recently passed LIHEAP funding to ensure that cold-weather states can cushion the impact of high energy prices for their residents this winter. The Energy Information Administration said that consumers will pay a projected $1,137 to heat their homes from Oct. 1 to March 31 — 15 percent more than last year’s heating outlay during this time. Homeowners that use heating oil rather than natural gas could see increases of 23 percent compared to last year. As part of his $25 billion state fiscal relief package, Obama’s plan will supplement existing LIHEAP funding to help state programs expand to cover more residents while continuing to provide a meaningful benefit.

3. DIRECT, IMMEDIATE ASSISTANCE FOR HOMEOWNERS, NOT A BAILOUT FOR IRRESPONSIBLE MORTGAGE LENDERS

Over the past two years, Americans have lost 20 percent of the value of their homes. In some parts of the country home values have fallen by twice that amount. In combination with a rapidly deteriorating economy, that means more and more families are having a hard time meeting their monthly mortgage payments. At the same time, many states are considering property tax hikes that will burden homeowners still further. And millions of families who have seen the value of their homes fall below the cost of their mortgages need assistance in restructuring their mortgages to stay in their homes.

Barack Obama and Joe Biden’s plan provides direct relief to help America’s homeowners pay their mortgages, stay in their homes, and avoid painful tax increases while protecting taxpayers and not rewarding the bad behavior and bad actors who got us into this mess:

* Instruct the Secretaries of the Treasury and Housing and Urban Development (HUD) to use their existing authority to more aggressively modify the terms of mortgages: Barack Obama was an early champion of the HOPE for Homeowners Act that passed over the summer. In addition, Obama insisted that the financial rescue plan Congress recently passed include authority for the Secretary to work with servicers to modify the terms of mortgages for homeowners who played by the rules. Obama and Biden believe that both of these plans should be implemented aggressively and comprehensively. In addition, Obama and Biden are calling on Treasury and HUD to develop a plan to work with state housing agencies to coordinate broad mortgage restructurings. The Dodd-Frank legislation gives states broader authority to help struggling homeowners, and coordination is essential to ensure that state and national efforts are working in concert to help as many homeowners as possible at the minimum cost to taxpayers.

* Reform the bankruptcy code to assist homeowners and remove legal impediments to encouraging broader mortgage restructuring: Obama and Biden are also calling for legislation to close the loophole in our bankruptcy code that allows bankruptcy judges to modify the terms of mortgages on investment properties and vacation homes but not on primary residences. He also believes we should clarify the legal liability of mortgage servicers so that servicers who work with struggling homeowners to modify their mortgages will receive legal protections. And we should remove any tax- or legal-related impediments to encouraging shared-equity mortgages within the HOPE for Homeownership process.

* Enact a 90-day foreclosure moratorium for homeowners who are acting in good faith: Financial institutions that participate in the financial rescue plan should be required to adhere to a homeowner’s code of conduct, including a 90-day foreclosure moratorium for any homeowners living in their homes who are making good faith efforts to pay their mortgages. This will help create stability until the more far-reaching solutions are implemented and give both sides a chance to work out an agreement.

* Provide $25 Billion in state fiscal relief to help avoid painful property tax increases: Budget crunches across the nation are putting our local governments in the untenable position of having to choose between raising property taxes and cutting vital services. Obama has proposed $25 billion in state fiscal relief that, coupled with the new emergency facility to address the state credit crunch, will help states and localities continue to provide essential services like health care, police, fire and education without raising taxes or fees.

* Create a universal mortgage tax credit for homeowners: Barack Obama believes we should immediately enact a 10 percent refundable tax credit on the mortgage interest paid by hardworking American families who do not itemize their taxes. This credit will help offset the cost of mortgage payments for at least 10 million middle-class homeowners.

4. A RAPID, AGGRESSIVE RESPONSE TO THE FINANCIAL CRISIS — USING ALL THE TOOLS WE HAVE

Barack Obama and Joe Biden believe that our deep systemic financial market crisis requires a systemic response. They fought to ensure that the recently-passed financial rescue package gave the Treasury the tools to stabilize the financial system, while protecting taxpayers and ensuring CEOs would not get rich in the process. However, this stabilization will only occur if the Treasury, Federal Reserve, FDIC, and other government entities use their authority and move quickly and aggressively to address the financial crisis.

It is now clear that our financial markets will not restart until financial institutions are lending again. Because of the extensive losses many of these institutions have suffered, they need more capital so that they will have the money to lend to families and businesses. Obama and Biden recognized this early, and were heartened by the Treasury’s stated intention to use its recently granted authority to inject capital into our financial institutions. However, Secretary Paulson must turn this intention into action quickly and aggressively, in a manner that strengthens confidence in our banks, protects taxpayers, does not reward CEOs, and is strictly temporary.

In addition, our financial authorities must stand ready to take additional, complementary actions — consistent with the systemic nature of this crisis — to ensure this Treasury initiative is successful:

* Be prepared, if necessary, for broader assurances for credit to banks: First, we must be prepared to provide additional, temporary assurances to achieve the effective functioning of financial markets. Depending on developing circumstances, these steps could include additional measures by the Federal Reserve, extending insurance to all deposits, or guaranteeing a broader range of liabilities of the banking system including overnight loans. Any such steps should be coordinated internationally where appropriate and feasible. They should be accompanied by additional oversight to ensure appropriate use of guaranteed funds and by the expectation that financial institutions taking advantage of these guarantees will raise more capital.

* Extend asset purchases to unfreeze other critical sectors: Second, the Treasury should not limit itself to purchasing mortgage-backed securities under the financial rescue plan recently passed by Congress. The Treasury should use the authority it has under the new law to help unfreeze markets for individual mortgages, student loans, car loans, loans for multi-family dwellings, and credit card loans.

* Make credit available to small businesses and state or local governments: Third, we should take immediate steps to support non-financial institutions including small businesses and states and municipalities. The Federal Reserve and Treasury have acted to preserve the availability of liquidity for financial institutions and, more recently, have created a program to purchase commercial paper directly from the large corporate issuers. Small businesses and state and local governments, however, are having serious difficulty obtaining necessary financing from debt markets.

o Address the credit crisis facing our states and localities: Barack Obama and Joe Biden propose that the Federal Reserve and the Treasury work together to design a facility to provide a funding backstop to the state and municipal government debt market similar to the recently announced program for the commercial paper market. The Federal Reserve should determine whether it has sufficient legal authority to establish such a facility on its own — if not, it should work with Treasury and the Congress to achieve this goal. This new facility should be designed to protect taxpayer resources while ensuring that state and local governments can continue to provide vital services to their residents.

o Address the credit crisis facing our small businesses: To address the massive credit crunch that is threatening America’s small businesses, Barack Obama and Joe Biden are proposing two immediate steps: (1) a nationwide emergency lending facility for small businesses that could be run through the SBA’s Disaster Loan Program, which helped thousands of businesses in the wake of 9/11; and (2) temporarily eliminating fees on the SBA’s 7(a) and 504 loan guarantee programs for small businesses, to help increase private lending for small businesses.

Trade

Barack Obama and Joe Biden believe that trade with foreign nations should strengthen the American economy and create more American jobs. They will stand firm against agreements that undermine our economic security.

* Fight for Fair Trade: Obama and Biden will fight for a trade policy that opens up foreign markets to support good American jobs. They will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama and Biden will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports.

* Amend the North American Free Trade Agreement: Obama and Biden believe that NAFTA and its potential were oversold to the American people. They will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.

* Improve transition assistance: To help all workers adapt to a rapidly changing economy, Obama and Biden will update the existing system of Trade Adjustment Assistance by extending it to service industries, creating flexible education accounts to help workers retrain, and providing retraining assistance for workers in sectors of the economy vulnerable to dislocation before they lose their jobs.

* End tax breaks for companies that send jobs overseas: Barack Obama and Joe Biden believe that companies should not get billions of dollars in tax deductions for moving their operations overseas. They will fight to ensure that public contracts are awarded to companies that are committed to American workers.

* Reward companies that support American workers: Barack Obama introduced the Patriot Employer Act of 2007 with Senators Richard Durbin (D-Ill) and Sherrod Brown (D-Oh) to reward companies that create good jobs with good benefits for American workers. The legislation would provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the U.S.; maintain their corporate headquarters in America if it has ever been in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military.

Manufacturing and Green Jobs

* Invest in our next generation innovators and job creators: Obama and Biden will create an Advanced Manufacturing Fund to identify and invest in the most compelling advanced manufacturing strategies. The Fund will have a peer-review selection and award process based on the Michigan 21st Century Jobs Fund, a state-level initiative that has awarded over $125 million to Michigan businesses with the most innovative proposals to create new products and new jobs in the state.

* Double funding for the manufacturing extension partnership: The Manufacturing Extension Partnership (MEP) works with manufacturers across the country to improve efficiency, implement new technology and strengthen company growth. This highly-successful program has engaged in more than 350,000 projects across the country and in 2006 alone, helped create and protect over 50,000 jobs. But despite this success, funding for MEP has been slashed by the Bush administration. Barack Obama and Joe Biden will double funding for the MEP so its training centers can continue to bolster the competitiveness of U.S. manufacturers.

* Invest in a clean energy economy and create 5 million new green jobs: Obama and Biden will invest $150 billion over 10 years to advance the next generation of biofuels and fuel infrastructure, accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, invest in low emissions coal plants, and begin transition to a new digital electricity grid. The plan will also invest in America’s highly-skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the first wave of green technologies that will be in high demand throughout the world.

* Create new job training programs for clean technologies: The Obama-Biden plan will increase funding for federal workforce training programs and direct these programs to incorporate green technologies training, such as advanced manufacturing and weatherization training, into their efforts to help Americans find and retain stable, high-paying jobs. Obama and Biden will also create an energy-focused youth jobs program to invest in disconnected and disadvantaged youth.

* Boost the renewable energy sector and create new jobs: The Obama-Biden plan will create new federal policies, and expand existing ones, that have been proven to create new American jobs. Obama and Biden will create a federal Renewable Portfolio Standard (RPS) that will require 25 percent of American electricity be derived from renewable sources by 2025, which has the potential to create hundreds of thousands of new jobs. They will also extend the Production Tax Credit, a credit used successfully by American farmers and investors to increase renewable energy production and create new local jobs.

National Infrastructure Investment

Barack Obama and Joe Biden believe that it is critically important for the United States to rebuild its national transportation infrastructure — its highways, bridges, roads, ports, air, and train systems — to strengthen user safety, bolster our long-term competitiveness and ensure our economy continues to grow.

* Create a National Infrastructure Reinvestment Bank: Barack Obama and Joe Biden will address the infrastructure challenge by creating a National Infrastructure Reinvestment Bank to expand and enhance, not supplant, existing federal transportation investments. This independent entity will be directed to invest in our nation’s most challenging transportation infrastructure needs. The Bank will receive an infusion of federal money, $60 billion over 10 years, to provide financing to transportation infrastructure projects across the nation. These projects will directly and indirectly create up to two million new jobs and stimulate approximately $35 billion per year in new economic activity.

Technology, Innovation and Creating Jobs

Barack Obama and Joe Biden will increase federal support for research, technology and innovation for companies and universities so that American families can lead the world in creating new advanced jobs and products.

* Invest in the sciences: Obama and Biden support doubling federal funding for basic research and changing the posture of our federal government from being one of the most anti-science administrations in American history to one that embraces science and technology. This will foster home-grown innovation, help ensure the competitiveness of U.S. technology-based businesses, and ensure that 21st century jobs can and will grow in America.

* Make the Research and Development Tax Credit permanent: Barack Obama and Joe Biden want investments in a skilled research and development workforce and technology infrastructure to be supported here in America so that American workers and communities will benefit. Obama and Biden want to make the Research and Development tax credit permanent so that firms can rely on it when making decisions to invest in domestic R&D over multi-year timeframes.

* Deploy next-generation broadband: Barack Obama and Joe Biden believe we can get broadband to every community in America through a combination of reform of the Universal Service Fund, better use of the nation’s wireless spectrum, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives.

Small Business

* Provide tax relief for small businesses and start-up companies: Obama and Biden will eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation. Obama and Biden will also support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation.

* Create a national network of public-private business incubators: Obama and Biden will support entrepreneurship and spur job growth by creating a national network of public-private business incubators. Business incubators facilitate the critical work of entrepreneurs in creating start-up companies. Obama and Biden will invest $250 million per year to increase the number and size of incubators in disadvantaged communities throughout the country.

Labor

Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama and Biden will ensure that his labor appointees support workers’ rights and will work to ban the permanent replacement of striking workers. Obama and Biden will also increase the minimum wage and index it to inflation to ensure it rises every year.

* Ensure freedom to unionize: Obama and Biden believe that workers should have the freedom to choose whether to join a union without harassment or intimidation from their employers. Obama cosponsored and is a strong advocate for the Employee Free Choice Act (EFCA), a bipartisan effort that makes sure workers can exercise their right to organize. They will continue to fight for EFCA’s passage and Obama will sign it into law.

* Fight attacks on workers’ right to organize: Obama has fought the Bush National Labor Relations Board (NLRB) efforts to strip workers of their right to organize. He is a cosponsor of legislation to overturn the NLRB’s “Kentucky River” decisions classifying hundreds of thousands of nurses, construction workers, and professional workers as “supervisors” who are not protected by federal labor laws.

* Protect striking workers: Obama and Biden support the right of workers to bargain collectively and strike if necessary. They will work to ban the permanent replacement of striking workers, so workers can stand up for themselves without worrying about losing their livelihoods.

* Raise the minimum wage: Barack Obama and Joe Biden will raise the minimum wage, index it to inflation and increase the Earned Income Tax Credit to make sure that full-time workers earn a living wage that allows them to raise their families and pay for basic needs.

Mortgages, Homeownership, and Bankruptcy

Obama and Biden will crack down on fraudulent brokers and lenders. They will also make sure homebuyers have honest and complete information about their mortgage options, they’ll give a tax credit to all middle-class homeowners, and they’ll reform our bankruptcy laws to protect working people.

* Create a universal mortgage credit: Obama and Biden will create a 10 percent universal mortgage credit to provide tax relief to homeowners who do not itemize. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

* Ensure more accountability in the subprime mortgage industry: Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.

* Mandate accurate loan disclosure: Obama and Biden will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.

* Close bankruptcy loophole for mortgage companies: Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual’s mortgage payments. They believe that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.

Credit Cards and Lending

Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.

* Create a credit card rating system to improve disclosure: Obama and Biden will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card’s features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents.

* Establish a Credit Card Bill of Rights to protect consumers: Obama and Biden will create a Credit Card Bill of Rights to protect consumers. The Obama-Biden plan will:

* Cap outlandish interest rates on payday loans and improve disclosure: Obama and Biden will extend a 36 percent interest cap to all Americans. They will require lenders to provide clear and simplified information about loan fees, payments and penalties, which is why they’ll require lenders to provide this information during the application process.

* Encourage responsible lending institutions to make small consumer loans: Obama and Biden will encourage banks, credit unions and Community Development Financial Institutions to provide affordable short-term and small-dollar loans and to drive unscrupulous lenders out of business.

* Reform bankruptcy laws to protect families facing a medical crisis: Obama and Biden will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets the individuals get back on their feet.

Work-Family Balance

Obama and Biden will double funding for after-school programs, expand the Family Medical Leave Act, provide low-income families with a refundable tax credit to help with their child-care expenses, and encourage flexible work schedules.

* Expand the Family and Medical Leave Act: The FMLA covers only certain employees of employers with 50 or more employees. Obama and Biden will expand it to cover businesses with 25 or more employees. They will expand the FMLA to cover more purposes as well, including allowing workers to take leave for elder care needs; allowing parents up to 24 hours of leave each year to participate in their children’s academic activities; and expanding FMLA to cover leave for employees to address domestic violence.

* Encourage states to adopt paid leave: As president, Obama will initiate a strategy to encourage all 50 states to adopt paid-leave systems. Obama and Biden will provide a $1.5 billion fund to assist states with start-up costs and to help states offset the costs for employees and employers.

* Expand high-quality afterschool opportunities: Obama and Biden will double funding for the main federal support for afterschool programs, the 21st Century Learning Centers program, to serve a million more children. Obama and Biden will include measures to maximize performance and effectiveness across grantees nationwide.

* Expand the child and dependent care tax credit: The Child and Dependent Care Tax Credit provides too little relief to families that struggle to afford child care expenses. Obama and Biden will reform the Child and Dependent Care Tax Credit by making it refundable and allowing low-income families to receive up to a 50 percent credit for their child care expenses.

* Protect against caregiver discrimination: Workers with family obligations often are discriminated against in the workplace. Obama and Biden will enforce the recently-enacted Equal Employment Opportunity Commission guidelines on caregiver discrimination.

* Expand flexible work arrangements: Obama and Biden will create a program to inform businesses about the benefits of flexible work schedules; help businesses create flexible work opportunities; and increase federal incentives for telecommuting. Obama and Biden will also make the federal government a model employer in terms of adopting flexible work schedules and permitting employees to request flexible arrangements.

Wages are Stagnant as Prices Rise: While wages remain flat, the costs of basic necessities are increasing. The cost of in-state college tuition has grown 35 percent over the past five years. Health care costs have risen four times faster than wages over the past six years. And the personal savings rate is now the lowest it’s been since the Great Depression.

Tax Cuts for Wealthy Instead of Middle Class: The Bush tax cuts give those who earn over $1 million dollars a tax cut nearly 160 times greater than that received by middle-income Americans. At the same time, this administration has refused to tackle health care, education and housing in a manner that benefits the middle class.

Obama and Biden will cut income taxes by $1,000 for working families to offset the payroll tax they pay.

Obama and Biden believe that trade with foreign nations should strengthen the American economy and create more American jobs. He will stand firm against agreements that undermine our economic security.

Barack Obama and Joe Biden believe that it is critically important for the United States to rebuild its national transportation infrastructure – its highways, bridges, roads, ports, air, and train systems – to strengthen user safety, bolster our long-term competitiveness and ensure our economy continues to grow.

Barack Obama and Joe Biden will increase federal support for research, technology and innovation for companies and universities so that American families can lead the world in creating new advanced jobs and products.

Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama and Biden will ensure that his labor appointees support workers’ rights and will work to ban the permanent replacement of striking workers. Obama and Biden will also increase the minimum wage and index it to inflation to ensure it rises every year.

Obama and Biden will crack down on fraudulent brokers and lenders. They will also make sure homebuyers have honest and complete information about their mortgage options, and they will give a tax credit to all middle-class homeowners.

Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.

Obama and Biden will reform our bankruptcy laws to protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.

Obama and Biden will double funding for after-school programs, expand the Family Medical Leave Act, provide low-income families with a refundable tax credit to help with their child-care expenses, and encourage flexible work schedules.

12/03/08 Close 453.80 midpoint 444(POSITIVE). The last two weeks the  market has been positive, prior the Russell index was (NEGATIVE) for seven weeks. The ETF funds short term have turned positive in all the major  indexs.  It is important to use  stop loss, any close below 442 would be considered another failure. Monday’s high 472 has not been tested,we need to close above the high. The daily channel sloping downward has resistance at 500, close above 500 would be explosive to the upside. The 240 minute chart has a triangle resistance of 471, any close above 471 would be explosive to the upside. So resistance 472 & 500 support 442 & 415. Pivot Indicator are pivot point 448, 1st Resistance 480, 2nd resistance 509, 1st support 423, 2nd support 397 Good Luck !!

By Shenali Waduge

Now described as India’s 9/11, the Mumbai 60 hour siege will go down in history leaving many still baffled at how a handful of men under 30 years of age, were able to take over 10 sites in India’s busiest city in four straight days of carnage. With possibly 300 dead including 3 of Mumbai’s top anti-terrorist officers the gruesome takeover of Mumbai by extremist gunmen only revealed India’s ill-preparedness & institutional incapability despite warnings that should have prompted timely action.

Thus, do not the 18million Mumbai citizens as well as the Indian public not have the right to question the Indian Government – demand why there were no helicopters available to transport the elite commandos to the besieged sites and why it took over 10 hours for them to finally reach Mumbai’s terror sites but more importantly remains the question why such gunmen should hate the Indian public so much? The Indian public needs to know from the Indian Government why terror should take place in India.

The meticulous planning involved goes without saying and it will provide analysts plenty of research material. We can but guess the number of terrorists who entered Mumbai via the trawler, how many entered by land, how long they stayed in Mumbai, how they booked into the hotels, how they were able to store the weapons - were not the rooms cleaned each morning by hotel staff as is customary, who visited them, how many terrorists actually escaped and are they still in India, how they could remain awake through the night firing indiscriminately and what were their actual plan.

India’s intelligence says it was to blow up the Taj and kill 5000 people, the 1st could have been done easily on the first day, 5000 people is somewhat questionable which next raises the question of how much weapons remain unused in the rooms booked by them – India’s public must be having plenty of questions. The gunmen knew each of their targets thoroughly, they knew all the hotel layouts even secret entrances, they had Blackberry’s and GPS devices, including night-vision goggles which the police lacked, even the elite Black Cats had not been provided with thermal imaging equipment to distinguish terrorists from hotel guests to facilitate their operation and eventually all the hostages at Nariman House ended up dead. The 26/11 Mumbai siege can be equated to 21st century terrorism outsmarting India’s 20th century weapons & equipment.

The 26/11 attack on Mumbai has certainly shaken up the Indian establishment. Realizing that promises to beef up security alone is unlikely to decrease the anger amongst India’s public the Home Minister has been replaced with P. Chiddambaran who incidentally was the Minister of State for Internal Security in Rajiv Gandhi’s government. Even the infamous National Security Advisor – M K Narayan is also likely to be replaced. He being one of the architects of regional terrorism during the days he was part of the institutional establishment created to destabilize friendly nations.

Whether it was “elements in Pakistan” that were responsible for the attacks the critical question is why would India at all be prone to terror attacks unless India’s Governments have not infringed upon nations, used similar tactics to disturb amd disrupt another country. If this be the case, then the 26/11 is likely to be ghosts of ones past misdemeanors returning to remind India that there is a thing called nemesis. It then gives India’s citizens every right to demand of its Governments what follies they have committed for obviously India’s public is not party to any of these malpractices that successive Indian Governments have adopted to reign supreme. Indians are proud to be Indian but surely not if it means that India has cheated its way to supremacy through covert and overt tactics used by Indian Governments.

Having managed to capture one of the gunman the Indian authorities interrogating him has revealed that he belongs to the militant Islamic group Lashkar-e-Taiba which obviously meant to insinuate Pakistan’s involvement & stir anti-Pakistan Muslim sentiments though all the time aware that there is a large Muslim vote base that none of the politicos wish to disturb too much. The Pakistan Government has denied any links to the Mumbai attacks and has even asked India to investigate the possibilities of the men being from South India and having ties to the LTTE terrorists.

With elections in India drawing near the anti-terrorism drives will usher similar sentiments of the US 9/11 which took place at a time when George Bush’s popularity was at an all time low. The 9/11 incident created a rebound and Bush ended up the Messiah for the US public with his “war on terror” slogan. Now evidence keeps surfacing that the Bush administration was well aware of an attack in 2001 some even claiming US staged 9/11 to strategically base itself in the Middle East & take over its oil reserves & build up a pro-western culture base. Similarly, India is now seeing to follow a similar path though the Indian publics have elevated themselves and refuse to be befooled again. They are now demanding more accountability from their politicians.

More than “who” actually attacked Mumbai the critical question any Indian should ask is “why”? Politicians will eagerly attempt to run after the “who” ignoring the “why” for answering the “why” would lead to many skeletons being revealed in their closets which have been hidden from the public.

We all understand the power of the Indian media – apart from their desire to “be the first to report” they do a very commendable job. The manner in which they covered the Mumbai siege needs commendation for they kept most of the footage disclosed not wishing to jeopardize the NSG operation. They voiced the sentiments of the public but did not overdo nor attempted to take any political side – this is a far cry from the journalistic or media coverage happening in Sri Lanka. The open praise and salutes of gratitude to the men in uniform repeatedly over media gave Indians a sense of pride in them and was important to hold sentiments of unification. In Sri Lanka we often find the media those opposing the Government ever ready to sensationalize stories even fabricate and very few channels actually have a good word to say about the agonies that the Sri Lankan men in uniform go through in their bid to rid terrorism from Sri Lanka.

The moment the news of the gunmen signaling out US and British passport holders broke out it guaranteed US and British media attention, the takeover of the Nariman House gave the message that the gunmen were anti-Israeli – this was obviously what the gunmen wanted. We are well aware that terrorists enjoy media coverage just as much as the media gains from such coverage.

What we need to remember is that it is not important whether the gunmen were Al Qaeda or a franchise – what can be deduced by the deaths is that age, religion, caste or creed did not matter when the gunmen began their shooting spree. They were purely trained to kill indiscriminately – that is why we call them terrorists. What is the point in referring to them as “suspected” – if they hold a gun and they shoot randomly they are nothing but terrorists. It is timely to go back 10 months when more than 200 people were killed throughout India, but Mumbai’s attack was by far different and more dramatic – it lasted almost 4 days and must surely provide inspiration for even homegrown terrorists to try similar soft targets.

It is for India to pick the forest from the trees. Whether it is the Deccan Mujahideen, the ISI, the Al Qaeda or the Lashkar-e-Taiba or even a complete outsider is secondary what is important to know is that the arms industries, the men who build up hatred amongst youth enough to maim & kill belong to transnational networks. No one in the end is a member of any entity – India must not look for the symptoms but the cause.

There are essentially two threats to global security (national and international) transnational crime & terrorist activity both are not to be taken separately but having close links and ties to one another though transnational criminals are only interested in making money while terrorists desire to make money to support their political and ideological objectives. It is easy to comprehend how terrorists involve themselves in organized crime to financially bolster their appearance and visibility. Both entities operate in areas with weak enforcement of laws, use sophisticated technology and launder money. Southern Philippines, Parts of Indonesia, Russian Far East, and Golden Triangle & Sri Lanka become some of these networks for transnational crime & terrorist activity.

We are all aware that an increasing share of the world economy is attributed to illicit activity such as drugs, human trafficking, small arms sales, illicit transport of natural resource and piracy. Terrorism and narcotics become linked when we consider Colombia’s FARC, the KLA in Kosovo, Taliban & Al Qaeda in Afghanistan and the LTTE in Sri Lanka. These illegitimate dealings however are artfully combined with legitimate fund making drives in the form of charity organizations which are used in large measures to deposit funds.

These groups operate on a network structure that becomes impossible to locate or identify the leaders. Thus the transnational scope with which they function enables them to unite individuals from across the globe at any given time. Such criminal activity is likely to provide a defining problem as the 21st century progresses leaving economic discrepancies between developing & developed countries, weak states that terrorist groups operate to make good of these discrepancies & transform issues into political uprisings.

Countries that join the war on terrorism cannot set aside the links to transnational crime and a cohesive operation across borders and nations is called for leaving aside petty differences between leaderships. India being the larger of the South Asian nations need to assess how it functions within the SAARC region, accept its follies vis a vis destabling operations carried out in practically all of the nations that make up the SAARC.

India need not be reminded of its illicit maneuverings in Sri Lanka amd training supporting LTTE terrorism through Tamil Nadu and other regional terrorist groups though one of India’s leaders eventually became assassinated by the LTTE terrorism which turned the tables on its master. India’s public many of whom must be clueless about how far the Indian Governments have assisted terrorism in Sri Lanka may be shocked to learn the truth. Furthermore, despite the 2008 Global Hunger Index revealing that 200million Indians suffer from hunger, India sends tons of food to Sri Lanka’s North even though the Sri Lankan Government repeatedly insists it has sufficient quantities in stock for 3 months to look after the IDPs.

What right does the Tamil Nadu politicos have to demand that India’s Central Government should force the sovereign Government of Sri Lanka to stop its army from eliminating LTTE terrorism?

Does the Indian public not know how much pressure India’s Central Government exerts upon Sri Lanka’s Government even to force a sovereign nation to buy weapons only from India? Does the Indian public not wonder why India’s Central Government is indirectly supporting the LTTE by allowing the Tamil Nadu politicos to unite with the LTTE which wants to secure a separate state for the Tamil people not realizing that this bid is a larger ploy to annexing the Eelam with Tamil Nadu and eventually creating a bigger Tamil State – is the Indian people party to all of this manipulation. The Indian Central Government wishes to have its public focused on terrorism linking it to traditional arch rival Pakistan – this self-serving approach will only create more misery for the Indian public who will bear the brunt of terror strikes since politicos are guarded to the teeth with security.

Obviously the Indian public is clueless of what the Indian Government does in the region – it is such insincere operations, manipulations, covert operations, intelligence faux pax that has today backfired to create a nemesis upon the Indian public.

The Indian public is today going to pay for the sins of their successive Governments and pinning the blame on “elements” is unlikely to solve whats likely to be in store for India. The 26/11 Mumbai terror ended in 4 days, India may have to face more sieges unless the Indian people who have shown great courage in not allowing communalism to brew but have rightly diverted their anger towards the real culprits – the politicians. Their guilt is evident by the manner in which none have entered Mumbai. It is time for the Indian public to take democracy into their own hands & demand that manipulative politics in a region that should remain united largely on account of the historical & cultural ties that exist between the neighbors should be fostered & not festered. Enough is Enough.

Indian public – we urge you not to allow your Governments to bring down our region and create the anarchy that exists in Africa and parts of the Middle East.

- Asian Tribune -

http://www.asiantribune.com/?q=node/14521

id="desc">Forex, Stocks, Bonds, Credit Crisis…

Is there anything in your pockets beyond the air?

Brazilian Stock Exchange has just created three new products for investors. They are the so-called the “Exchange Traded Funds” (ETF). Four years ago, they had lauched the first one, the PIBB (ticker PIBB11), a bond which replies the composition of the IBX Index (55 most traded paper). It is a simple way of diversiying investments in the stock exchange. I had some of them (before my mortgage, naturally). And it made me very happy - I earned 70% in one year. Naturally, it was anooooother time… Now the new indexes are iShare Ibovespa (BOVA11, replying Ibovespa), iShare Small Caps (SMAL11, which replies a small caps index) and iShareBM&FIbovespa MidLarge Cap (MILA11, which joins an index that reaches companies which represent 85% of the stock exchange’s marketcap).

Now look how products like that mitigates the risk of the stock markets. Today, when Petrobras and Vale lost almost 3%, their performance were:

PIBB11 - -0.39%

SMAL11 - +.22%

MILA11 - 0

BOVA11 - +1.1%

Main Index (Ibovespa) - -0.48%

Not so bad….

Roger Biduk writes:

   U.S. stocks swung lower Thursday afternoon as auto executives pled for federal aid and in the aftermath of mostly dismal retail sales results and layoffs from corporate giants including AT&T Inc. and DuPont Co. Friday’s looming employment report for November also helped keep a lid on an earlier detour into positive terrain.

“The market is likely to get a little skittish today ahead of tomorrow’s employment report,” said Marc Pado, U.S. equity strategist at Cantor Fitzgerald.

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Jewellery once belonging to the late Hollywood actress Deborah Kerr has fetched far higher prices than expected at a sale. The biggest surprise at the Bonhams auction was her three-stone diamond engagement ring from her first marriage which fetched

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Before the 2001 US invasion, while the Taliban still controlled most of the country, Afghans were the world’s largest refugee population with 3.6 million living outside the country and a further 800,000 internally displaced (1). During the latest war, United Nations agencies expected an additional 1.5 million refugees to flee the country once the US attack began. At the time, some 3 million people were already dependent on the UN’s World Food Programme for food (2). The UN estimates that the current national population is about 24 million, including some 4 million refugees that have returned between 2002-2008 (3). The country remains volatile, with mass migration of millions of people outside and inside of its borders.

The disintegration of an economy that could sustain healthy life, in great part caused by the decades-long insecurity and mass violence stalking Afghanistan, is evident in the fact that a quarter of all children in 2004 died before they reached the age of five (4).

Foreign armies, national armies, private armies, and militias have struggled to bring order to their region of Afghanistan or the country as whole. The ongoing conflict between these groups has left a wake of destruction that has thrown the country into extreme poverty. Afghanistan ranks 172 out of 178 countries in the UN Development Programme’s Human Development Index. (5)

Disease, extreme malnutrition, poverty, and destitution gnaw at the country’s bones.

It’s not surprising then that security from conflict should be a cornerstone of any plan to develop a stable society that can sustain at least an adequate level of human security. The new Afghan National Army and the Afghan National Police are therefore in the spotlight as key actors in the outcome of the country’s future.

Afghan National Army

The Afghan National Army (ANA) was created in 1 December, 2002, by presidential decree under Hamid Karzai. It became active in 2003 and was guided by the Bonn agreement’s Security Sector Reform.

The army is intended to be composed of mainly active soldiers at 50%, 25% logistical support, and 25% trainers, recruiters and others. The goal was to achieve a 70,000 strong troop size by the end of 2008. In October of 2007 the ANA had reached 55,000 (7) personnel, and 66,000 by mid 2008 (8). The army recruits an average of 2,000 new members per month.

The ANA battalions are composed of 700-800 soldiers, with supporting commissioned and non-commissioned officers. It is mainly composed of light infantry, one mechanized brigade, a commando brigade and an air corps. The light infantry brigades are also equipped with mortars and tow artillery. The air corps has access to Soviet-era airplanes and are trained mainly for “presidential airlift, medical and casualty evacuation, reconnaissance and airborne command and control, and light air attack.” (9)

The ANA falls under the auspice of the Ministry of Defence and is divided under five regional commands: Kabul, Kandahar, Gardez, Herat, and Mazar-i-Sharif.

The ANA personnel are trained by US-led Coalition Forces (CF) and the mainly NATO based International Security Assistance Force (ISAF), with Afghan leads and translators. These trainers and advisers are embedded throughout the command structure of the ANA: in the headquarters, regional commands, and within each battalion.

New recruits undergo 12 weeks of courses at the Kabul Military Training Centre, while commandos must train for a total of 16 weeks. Following this there is 3 weeks of field training in the region that new recruits will be see action. Field training is provided by foreign forces. ANA recruits sign onto a 3 year contract, which can be renewed to a maximum of 20 years.

Under agreement, the US has lead in training and equipping the ANA.

The ANA, as a volunteers army, was designed to replace the ad-hoc Afghan Military Forces (AMF) that was composed of a loose coalition of militias fighting the Taliban, mainly consisting of the Northern Alliance. The AMF was officially disbanded under the Disarmament, Demobilisation, and Reintegration process (DDR). Only 2.3% of the AMF joined the ANA. (10)

On 10 September, 2008, The US Department of State officially supported the Joint Coordination Monitoring Board and the Afghan government’s plan to expand the ANA to 134,000 personnel (11). This follows US Secretary of Defense Robert Gates’ August proposition to increase the size of the ANA to 122,000 plus 13,000 support staff. (12, 13)

Barnett R. Rubin, and Ahmed Rashid, two experts on contemporary Afghanistan, have co-authored an article on the current situation stating that:

Current estimates of the annual cost are around $2.5 billion for the army and $1 billion for the police. Last year, the Afghan government collected about 7 percent of a licit GDP estimated at $9.6 billion in revenue — about $670 million. Thus, even if Afghanistan’s economy experienced uninterrupted real growth of 9 percent per year, and if revenue extraction nearly doubled, to 12 percent (both unrealistic forecasts), in ten years the total domestic revenue of the Afghan government would be about $2.5 billion a year. Projected pipelines and mines might add $500 million toward the end of this period. In short, the army and the police alone would cost significantly more than Afghanistan’s total revenue.

…Sustaining a national army or national police force requires multiyear planning, impossible without a recurrent appropriation — which would mean integrating ANSF planning into that of the United States’ and other NATO members’ budgets.

…And an ANSF [Afghan National Security Forces, composing the army and national police] funded from those budgets would have to meet international or other national, rather than Afghan, legal requirements. Decisions on funding would be taken by the U.S. Congress and other foreign bodies, not the Afghan National Assembly. The ANSF would take actions that foreign taxpayers might be reluctant to fund. Such long-term international involvement is simply not tenable. (14)

Currently, not a single battalion of the ANA operates independently of foreign supervision. Foreign advisers and trainers were supposed to be embedded in the battalions for only 2 years. Antonio Giustozzi claims that “the ANA has grown dependent on close air support, administered through the embedded training teams.”

He also writes that:

The fighting tactics that ANA officers have been learning from their trainers are largely based on American tactics; the infantry’s main task is to force the enemy to reveal itself, allowing the air force to wipe it out with air strikes. There is little evidence that ANA units would be able to control the battlefield without such air support, or that they are learning the necessary skills.

…Another dubious aspect of Afghanization is the limited logistical capabilities of the ANA. Although its logistical units are now being developed, the ANA’s difficulties in recruiting skilled staff casts some doubts about the future efficiency of its logistics once the foreign contingents hand over these responsibilities to the ANA.

… Tajiks are still overrepresented, particularly in the officer corps. According to one estimate, 70% of the battalion commanders are Tajiks. (15)

At some point, Afghanistan’s government will have to downsize the ANA since it cannot independently afford to maintain such a large force. If not handled carefully, it could result in a large number of battle veterans suddenly thrown into unemployment, disgruntled, and possibly still living in a situation where economic hardship limits employment options while the country may well still be facing conflict in the face of Taliban and other militant groups.

Afghanistan National Police

The ANP’s authorized personnel was increased to 82,000 by the Joint Coordinating and Monitoring Board in April 2007. Prior to this it was set at 62,000 under the 2006 Afghanistan Compact.

In January of 2007, the Ministry of Interior tallied the total ANP size at 59,658, with fewer than 200 women employed. The ANP is governed under the 2005 Police Law and the 2005 Interim Criminal Procedure Code, mainly based on Article 56, 75(3), and 134 of the constitution. (17)

The ANP regional command structure mirrors that of the ANP and is composed of the following: Kabul, Kandahar, Gardez, Herat, and Mazar-i-Sharif.

The ANP is supported by 25 donors. Germany was the key country in charge of managing training and equipping of the force, until leadership was handed over to the European Union. The United Nations Development Programme (UNDP) managed Law and Order Trust Fund for Afghanistan has been primarily responsible for coordinating donor support for ANP salaries.

There are reports of disunity among donors in how to approach police reform and they have often pursued independent plans. Coordination has been slow in coming.

Afghan National Auxiliary Police

In 2006 the Afghan National Auxiliary Police (ANAP) was set up to support counter-insurgency in certain parts of the country. Distinct from ANP, the auxiliary police is slated as a temporary measure to face the increasing militant resistance throughout Afghanistan, especially in the south and east due to neo-Taliban uprisings.

The ANAP is a static force, with personnel assigned to a given region in order to support ANP activity there. It was created to cover 24 provinces and 124 districts. It has an authorized strength of 11,271. Recruits receive minimal training, serve for a year then can join the ANP if they qualify. By April 2007, 5,461 ANAP personnel were active in Afghanistan’s 6 priority provinces, where insecurity was worse and Taliban activity highest. No women have been recruited.

ANAP recruits receive only 5 days of classroom training, 5 days of range firing, and one week of additional training for each quarter in their year of service. They may serve for a second year with the approval of a district or provincial police chief.

ANAP police receive the same salary as ANP uniformed police and are issued an assault rifle. They also receive a standard ANP uniform with an ANAP patch.

If accepted into the ANP, they would need to through standard ANP training for 8 weeks.

Some critics accuse the regular and auxiliary police of turning into a paramilitary force focused on counter-insurgency, to the detriment of regular police work. Additionally the hasty recruiting practices for ANAP may have resulted in their being infiltrated by militants.

Afghanistan New Beginnings Program

This UNDP sponsored program was intended to eliminate or at least greatly reduce independent and illegal militant forces in order to give the ANA and ANP a monopoly on military and police force as a measure to reduce destabilizing forces on the central government.

The Afghanistan New Beginnings Program (ANBP) was established in April 2003. Its first priority was to implement the Disarmament, Demobilisation, and Reintegration (DDR) project. Under this project the Afghanistan Military Forces (AMF), composed mainly of Northern Alliance militants, was to surrender their weapons and disband. In return they would receive a medal, a certificate, and reintegration packages.

The packages include vocational training, agricultural training, and small business opportunities. (19)

The DDR was concluded in June 2006. The original goal was to reintegrate 100,000 men. In June 2006, 63,380 AMF officers and soldiers were counted as disarmed. Of these, 2.3% joined the Afghan National Army.

The second priority of the ANBP was the Disbandment of Illegal Armed Groups (DIAG). DIAG’s aim was to demobilize an estimated 100,000 illegal militia fighters that were not included in the AMF. While the DDR was a voluntary process, DIAG was compulsory. This program was slated to conclude in March 2008. The spread of Taliban influence and the rise in violence do not bode well for the success of the DIAG project.

Related: Maps of Afghanistan: Demographics, Violence, and Economics

Sources

– Investors have become cautions with trading, as the income tax on securities trading is still up in the air.

This caution showed up in trading volume figures on Dec. 3, which stood at moderate 8.19 million shares, generating a turnover of 228.26 billion VND (13.58 million USD).

Only STB of Sacombank saw 1.4 million shares change hands, topping the market in trade volume. Other heavily-trade codes including SJS of Song Da Urban-IZ Investment and Development, SSI of Saigon Securities Inc, or VFMVF1 of Vietnam Investment Fund saw under 500,000 shares each.

“ There has been no final decision from the Assembly on delaying the personal income tax, including the tax on securities investment. It’s natural that we would be cautious with securities trading,” said veteran investor Dao Kieu Anh in Hanoi who has been trading since 2004.

This caution also restrained the purchase of blue chips, helping some big stocks rebound slightly on Dec. 3. Although this did not help keep the VN-Index from falling, it did soften the blow.

At closing, VN-Index was down just 0.40 percent to 306.22 points.

“ Helping the slight reduction of the VN-Index was the slight rebound of some blue chips, , including VNM of dairy producer Vinamilk, PVF of the financial institution PetroVietnam Finance, and HPG of plastic producer Hoa Phat Group.

Overseas clients also reduced their trading on the local exchange, buying just 901,925 million shares and selling 1.56 million.

According to recent data from the Vietnam Securities Depository Centre, the local exchange in November welcomed 90 new foreigners, which meant it was somewhat promising for overseas clients in the context of the global crisis.

Looking north to the Hanoi Securities Trading Centre, the HASSTC-Index rebounded on Dec. 3 to 104.16, a slight increase of 0.66 percent. The market’s trading volume rose to 6.27 million shares worth 158.73 billion VND (9.45 million USD) from 5.05 million on Dec. 2. According to brokers at An Binh Securities, the wider trading band of 7 percent helped the index gain slightly as investors attempted to bring it above the 100-point mark.-

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Read the Full Denunciate Nikkei plunges 3.6% morning Tokyo Nikkei index fell 3.6 percent to a four-year low, on doubts about the health of the global economy will slip into recession has persuaded yen into Tokyo money market for the connecticut department banking 14th business currency day of emergency operations in a further effort to facilitate interbank borrowing amid the financial market meltdown. Gardy the Full Article BOJ injects 1 tri. Richy the Full Article Iceland moves to shore up economy Iceland trade unions are being asked division banking to restore their foreign-invested pension funds, in the wake of a financial crisis that has seen the country third-largest bank nationalised, the firearm companies that finance country credit rating downgraded, and the country currency the Krona losing a fifth of its value against the dollar by Friday. Financial Crises Spread in Europe European nations scrambled on night to prevent a growing credit crisis from bringing down major banks as troubles in financial markets spread around the world, accelerating economic downturns on three continents.

While sophisticated bankers and their wealthiest clients continue to take a pass on investments with even the slightest hint of risk, it seems strange that many investment advisers continue to sing the same soothing lullaby to individual investors:  “No need to panic, remember, you’re investing for the long run.  And that is what stocks are for!  If you get out now, you will miss the ups as well as the downs.”

Now I am certainly not advising you to panic (in fact, I am not advising you at all, because I am a mere finance professor, not a certified investment advisor).  But it does seem like a good time to revisit what we know (and don’t know) about personal investments and asset allocation, and to try to reassure you that there is no dishonor in prudence.

There is no formula that can tell you the right way to allocate your savings. There is a risk-return tradeoff.  Investing in risky securities, like stocks, increases your expected returns, but at the cost of higher risk exposure.  Advice like, “put a percentage of your savings equal to 100 minus your age into the stock market” are marketing prescriptions that are absent from the pages of reputable finance texts.

Where you draw the line on risk and return is a personal choice.  And you can change your mind.  It is not your patriotic duty to invest in the stock market, and it does not make you a fool not to. I cringed the other day listening to Terry Savage, a well-respected investment adviser and national commentator, talking about how everyone needs some “chicken money.” While acknowledging that safe investments help investors sleep better at night and might even be useful beyond that, she not so subtly uses this pejorative to generically mock conservative investment strategies.  Well, all I can say is “pluck.”

Market volatility varies over time. Right now it is extraordinarily high.  Presumably prices have adjusted to reward investors for bearing this volatility.  In other words, part of the fall in stock prices can be seen as compensation for the increased risk, and a sign of higher expected returns going forward.  But we all have to decide whether the collective view of risk and return that is reflected in current prices makes personal sense.  If you have a stomach for volatility, this may look like an attractive buying opportunity and it may be a good time to increase your allocation to stocks.  If roller coasters are not your thing, a move to a more conservative asset allocation may be in order.

Stock prices are not mean-reverting. The catch-phrase “stocks are for the long run” unfortunately seems to suggest that if stock prices drop, it doesn’t really matter because they will catch back up.  That is not what the statistics of stock returns imply. As a first approximation, stock prices are best described as a random walk with positive drift.  When a stock’s price falls, that is its new and permanently lower starting point.  Over time returns will be positive on average, but there is no force that erases past loses.

Also, the long-run can be very long indeed.  Today the Dow Jones is back to where it was almost a decade ago, in the spring of 1999.  Had you put $100 in stocks, you’d have $100 today.  Had you put it in a “chicken money” bank account earning 2% after inflation, you’d have about $120.  And I have been wondering, when did commentators start confusing bank accounts with mattresses?

Asset allocation is reversible. It is true that if you pull back from the market you lose the opportunity for gains as well as losses.  Moving to a more conservative asset allocation is a way to avoid risk, and there is no telling if by so doing you also avoid the next big run-up.  If you do decide to back off, it is better to think of it as a time out than as a permanent retreat.  Remember that if you exchange $1 of stocks for $1 of bonds, what you have in either case is a dollar of value today.

Diversification is critical for reducing risk, but it does not eliminate it. You can avoid a lot of risk by holding a diversified portfolio of risky assets, rather than individual stocks.  Investing in funds like Vanguard’s 500 Index allow you to get broad stock market exposure while incurring low transaction costs, even with a relatively small investment.

Once you get rid of the risk of individual stocks, lots of risk remains.  Unfortunately, a quick glance at the markets in the last few months confirms this fact.

A final thought on investing and the greater good. I expect to get some major pushback for having written this, if for no other reason than that if everyone sits on their money and reduces their investments in stocks, a decline in market prices becomes a self-fulfilling prophecy.  While I agree that the world would be a happier place if everyone settled down and resumed investing as usual, I don’t think the common investor should have to bear the burden of being the first to make it happen.

Daniel Solin over at BloggingStocks posted this. When I read it I had to check the date. I was sure it must have been a blog post from a year ago. Nope. Yesterday. Broadly Daniel’s message is the old ‘efficient markets hypothesis’ yarn:

All information about listed companies is public. It is widely and instantly disseminated. This information is studied by millions of investors, who establish the price of a given stock based on this data. Many of those looking at this data are professional analysts. They are well trained in finance and have access to powerful computer programs that assist them in crunching the numbers.

I’m not sure where to start with this, but here goes. 

a. “All information about listed companies is public”. The last statement I heard from the Lehman Brothers chairman was along the lines of “this company does not have a liquidity issue”. Three days later the company was history. As Andrew Horowitz noted in his recent podcast - Citibank CEO Vikrim Pandit “told us there was a $50bn problem, and we woke up to a $300bn problem”. Clearly not all information about listed companies in public. Therefore the foundation upon which the efficient markets hypothesis rests is far from solid. 

b. Don’t even get me started on the “they are professional analysts, they are well trained in finance, they have access to powerful computer programs”. As Mr Buffett put it in his own straightforward manner - “beware of geeks with spreadsheets”. The trading chick is “of the city”. The trading chicks knows the “professional analysts, well trained in finance, with their fancy computer programs.” Many of them are totally clueless. Ladies and gentlemen I give you mortgage securitisation. I give you the rating agency analysts. I give you the monolines. Give me a break. 

c. They use all this “insight” to apparently “establish the price”. The trading chick feels like Mr Solin is telling her not to “worry her pretty little head”. 

Mr Solin goes on to explain how to get rich in America:

Rich people go for the sure thing. They try to minimize risk and capture market returns using diversified portfolios or, better yet, broad-based, low-cost index funds. Over $4 trillion of the most sophisticated pension and trust money is invested this way.

Over $4 trillion of very pissed off money is invested in this way. Money that has been fed a yarn for too long that they should ‘buy and hold’. That equities will ‘outperform in the long run’. Try telling that to somebody who has worked hard all their life, believed the story, saved and invested, bought and held, and is now sucking wind and staring down a retirement that looks a lot different than they imagined. 

When you dig a little into Mr Solin’s background you learn that he is Senior Vice President of Index Funds Advisors. He is, therefore, paid to believe this stuff and has clearly built a career around this story. But like many financial advisors out there, he seems to be somewhat of a one trick pony. And all I hear is the sound of barn doors flapping in the wind. Mr Solin and his brothers in arms need to wake up to what’s going on right now. Like Finbar Taggit has.

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Vladimir Putin, the Russian Prime Minister, said yesterday that the irresponsibility of America’s financial system was to blame for the global economic crisis, in what marks the latest episode in increasingly hostile relations between the two superpowers.

Russia has been one of the biggest victims of this summer’s global banking crisis. Since May, the RTS, Moscow’s main index of shares, has lost 50 per cent of its value and in September the Kremlin was forced to pump $60 billion into its financial system as credit markets froze.

Mr Putin said: “Everything happening now in the economic and financial sphere began in the United States. This is not the irresponsibility of specific individuals but the irresponsibility of the system that claims leadership.”

Hinting at this week’s rejection of Washington’s $700 billion bailout package to rescue Wall Street, Mr Putin added: “The saddest thing is that we are seeing an inability to take an adequate decision.”

Wild swings across Moscow’s stock market and increasing evidence of stress in the Russian banking system led Mr Putin yesterday to call on ministers to find ways of strengthening the country’s money markets, which are used by banks to fund their short-term lending positions.

Mr Putin also urged ministers to create a “modern credit-finance system” that depends more on Russia’s own resources and has “a strong immunity to global financial viruses”.

Mr Putin also gave warning that the country’s substantial cash pile built up during the past two years of soaring oil prices would not be a fat enough cushion to protect the Russian economy from the global financial crisis.

His comments came as capital markets across the world waited for the US Congress to vote on a new bailout scheme for Wall Street. It is hoped that the rescue scheme will draw to a close a period of unprecedented uncertainty about the future of America’s financial institutions.

Henry Paulson, the US Treasury Secretary, has already given warning that failure to force through a rescue programme would trigger a financial meltdown in America, the world’s largest economy.

However, while Moscow blamed America for the global banking crisis, some analysts have pointed out that this summer’s invasion of Georgia by Russia exacerbated anxieties across international capital markets.

They have argued that investors pulling their money out of Russia added to instability in the financial world. The Russian economy has also been hit by the slide in commodity prices. Before the vote in Washington, the Russian stock market closed down almost 2 per cent.

Release here.

Introduction

I am honored to be invited to speak at the special meeting hosted by the Kyushu Association of Corporate Executives. I have a close relationship with the Kyushu region because I lived in Kokura, my home town, until I graduated from high school, and also worked as the General Manager at the Oita Branch of the Bank of Japan for one and a half years, from 1994 through 1995. Currently, 7 of the 32 branches are in the Kyushu region. I would like to express my deep gratitude for your cooperation with these branches. Today happens to be the 67th anniversary of the establishment of the Fukuoka Branch, and I am doubly delighted to have the opportunity to speak today before business leaders in the region on such a memorable day.

At present, the world economy, including Japan’s economy, faces a very difficult situation as the effects of the financial turmoil stemming from market developments in the United States and Europe have been spreading worldwide. I would first like to talk about the current situation of both of the domestic economy and overseas economies, and also the ongoing global financial crisis, and then explain the Bank’s thinking regarding the conduct of monetary policy.

I. The current situation of and outlook for Japan’s economy

Today I will speak about developments in Japan’s economy mainly from a macroeconomic perspective. Anticipating that some of you may be concerned that the Bank does not fully understand the circumstances specific to each region and each firm, I will stress that the Bank is fully aware of different circumstances by region, industry, and firm size that cannot be perceived only from a macroeconomic perspective. Such differences are reported regularly by General Managers of the Bank’s branches. In addition, I have had far more opportunities to discuss with business leaders in various regions since being appointed as the Governor of the Bank of Japan, and on these occasions I have been reminded of the differences.

In today’s speech, I will focus on the major trends in the world economy and Japan’s economy, but I would like to stress again that, when assessing economic developments, the Bank always takes into account microeconomic information such as economic developments in each region and business performance of firms.

Let me first discuss the current situation of Japan’s economy. Looking back, since the beginning of 2002 Japan’s economy has enjoyed a moderate but prolonged economic expansion. Since the middle of 2007, however, the economy has experienced a series of negative shocks, and now faces a difficult situation. The first shock came from a sharp decline in housing investment since the middle of 2007, due to the coming into force of the revised Building Standard Law. Growth in corporate profits and wages has been subdued, due to the deterioration in the terms of trade reflecting increases in energy and materials prices, and as a result growth in business fixed investment and private consumption has been slowing since around the end of 2007. The slowdown in overseas economies has become pronounced as strains in global financial markets and in the U.S. and European financial systems have intensified since this summer, and reflecting this, growth in Japan’s exports turned negative. Given these developments, economic activity in Japan has become increasingly sluggish recently. Economic data, including the index of industrial production, released at the end of last week showed severe economic circumstances.

The pace of the recent increase in the sluggishness of Japan’s economy has been rapid, and overseas economies are also undergoing a similar drastic change. The U.S. economy has deteriorated reflecting the emergence of a negative feedback loop operating between financial and economic activities as the financial crisis stemming from the subprime mortgage problem increased in severity. European economies are also deteriorating, with increased downward pressure on economic activity from the financial side. Moreover, the effects of the weakness in the U.S. and European economies have been spreading to Asian economies. China has continued to show relatively high growth, but the country’s growth in exports has recently slowed somewhat and investment related to real estate has been relatively weak against the backdrop of a fall in real estate prices. In the NIEs and the ASEAN economies, domestic demand has been weak while export growth has been decelerating, and these economies have been slowing. A slowdown in the world economy taken as a whole has become evident as the effects of the financial crises in the United States and Europe spread steadily to Asian economies.

According to the World Economic Outlook released at the beginning of last month by the International Monetary Fund (IMF), output of advanced economies is expected to contract for the first time in the post-war period; growth in emerging economies is also expected to decline from the past several years’ high growth of around 8 percent to 5-6 percent; and the growth of world output is projected to fall substantially to 2.2 percent. This is significantly lower than the world growth of around 5 percent registered for four years in the mid-2000s.

The timing of the recovery in overseas economies depends on several prerequisites for recovery, and with regard to the U.S. economy the key questions are how adjustments in the housing market will progress and when the financial system will regain stability. I must admit that the timing of the recovery in the growth rate of overseas economies as a whole is highly uncertain, but given the current severe situation it seems appropriate to assume that the growth rate of overseas economies taken as a whole is likely to show a clear recovery only after the middle of 2009.

Bearing in mind these developments in Japan’s economy, I will now move on to the factor that I regard as most important when discussing future developments in Japan’s economy and overseas economies – the impact of the ongoing financial crises in the United States and Europe on overseas economies and on Japanese financial conditions.

II. The financial crises in the United States and Europe and their impact

Delinquency rates of not only mortgage loans but commercial real estate loan and consumer loans have risen reflecting the weaker U.S. economy. Consequently, capital bases of financial institutions have been further impaired, and their lending attitudes have become even tighter. In addition, firms’ fund-raising conditions in the markets have deteriorated, as seen in the difficulty faced by firms in issuing CP and corporate bonds and the extreme rise in issuance rates. They have ultimately had an adverse impact on economic activity – the emergence of a negative feedback loop operating between financial and economic activities. Meanwhile, the Federal Reserve has lowered its target for the federal funds rate from 5.25 percent to 1.0 percent since last September. In spite of this monetary easing, the issuance rates of corporate bonds have risen compared with the level observed in the summer of 2007.

In addition, we can point out the worldwide propagation as one of the features of the current financial crises. There were some failures of major financial institutions in the United States following the bankruptcy filing of Lehman Brothers, and failures started to be seen also in Europe. Furthermore, the financial crises in the United States and Europe are starting to affect emerging economies, and the inflow of funds to these economies has decreased substantially. There are various transmission channels. For example, in recent years emerging economies in Central and Eastern Europe experienced active credit expansion by foreign financial institutions based in Western Europe but now see a decline in loans outstanding. Moreover, some emerging economies became incapable of raising funds from global financial markets and finally needed financial assistance from the IMF. Thus, unlike the past currency and financial crises in Latin America and East Asia, the ongoing financial crises in the United States and Europe propagated rapidly around the globe. The progress in the globalization of financial and economic activities since the 1990s has strengthened the financial and economic interaction between countries. And the current economic deceleration or deterioration in each country is the first global economic slowdown to take place in a period of such drastic changes in the environment. In addition, the economic growth rate has deteriorated with unusual speed. With these characteristics of worldwide propagation and unusually rapid deterioration, pessimistic views tend to propagate easily and themselves promote further deterioration in the economy.

Under these circumstances, it is necessary to understand the nature of the ongoing problem in order to consider policies necessary to address the situation. Let me first explain the swift and successive policy responses of governments and central banks. First is the provision of liquidity by central banks. Central banks have been making efforts to stabilize money markets by implementing U.S. dollar funds-supplying operations under a coordinated framework in addition to providing sufficient liquidity in their own currency. Second is placing troubled financial institutions under government control and injecting public funds. Third is the substantial expansion of the coverage of deposit insurance and the guaranteeing of financial institutions’ debts.

As a result of these measures, the situation in money markets in the United States and Europe has improved compared with the situation at the height of the tensions in those markets. However, the conditions in the money markets are far from normal, as seen in the fact that the 3-month dollar funding rate in the interbank market is around 2 percent higher than the yield on government bonds with the same maturity. Global financial markets remain under significant stress as seen in continued high credit spreads such as those on corporate bonds. Stock prices have plunged worldwide, and foreign exchange rates have continued to fluctuate widely.

Why haven’t conditions improved in spite of the swift actions taken by each country? As one of the reasons, we can point out that, given the various large excesses and imbalances accumulated in the several years up to the current global economic deceleration and deterioration, and financial crises, the process of adjustments will inevitably be deep. As I mentioned earlier, a prolonged period of worldwide high growth never witnessed before continued for several years in the mid-2000s. In addition, inflation rates declined due to an expansion of production capacity resulting from the participation of emerging economies in the global market economy, and low interest rates continued in the environment of high growth and low inflation. In the process, various excessive activities, both economic and financial, were undertaken and “excesses” were accumulated. Behind the rise of the U.S. subprime mortgage problem and the surge in crude oil and materials prices observed until this summer, there were global high growth and expansion in financial leverage. Of course, there were some voices warning about the situation. However, given that the economy was in a favorable condition, it was difficult to accept such warnings as is often the case given the nature of human beings and society.

The world economy is now undergoing a process of adjustment of various excesses that had been accumulated, to achieve more sustainable growth. Under these circumstances, it is necessary to implement appropriate macroeconomic policies while maintaining financial system stability by injecting public funds into financial institutions in order to prevent the economy from falling into a deep adjustment phase or turmoil. Although such policies have been implemented, losses incurred by financial institutions and their capital shortages tend to expand when a negative feedback loop between financial and economic activities is operating. Hence, uncertainty remains as to the final amount of losses that need to be covered and of public funds injection required. The large losses that arise from adjusting accumulated excesses can only be covered by flows of income generated by daily economic activities, and this will inevitably take time.

III. Financial conditions in Japan

Let me explain financial conditions in Japan as an extension to what I have said about the global financial system. Financial markets in Japan, which had remained stable relative to these in the United States and Europe, have also drastically changed since the bankruptcy filing of Lehman Brothers. Measured by the spreads between interbank funding rates and government bond yields, the situation in the Japanese money markets remains comparatively favorable to date, but it seems that careful analysis of the possibility that pressures acting to depress economic activity from the financial side may increase in Japan is becoming necessary.

In the conduct of monetary policy, it is extremely important but nonetheless difficult to judge how accommodative or how tight financial conditions are in a country. To make an accurate judgment of financial conditions, the Bank examines them from various angles, which may include evaluation of the level of interest rates and asset prices, quantitative monetary analysis making use of monetary aggregates and bank loans, interviews with financial institutions and non-financial firms, and various surveys. From the perspective of corporate financing, the Bank, in a manner similar to corporate management, examines the situation based on two criteria: first, at what interest rates funds can be raised; and second, how easily these funds can be raised, in other words, the availability of funds. Let me discuss the current financial conditions facing firms from those two perspectives.

First, with respect to funding rates, interest rates on bank loans remain at a low level. On the other hand, interest rates applied to funding in the market, such as issuing CP and corporate bonds, are rising reflecting growing risk aversion among investors such as investment trust companies and life insurance companies, under the influence of the turmoil in global financial markets. The issuing rates on corporate bonds have been rising especially for those with low credit ratings, and issuing rates on CP, which had been creeping up since the summer, have risen rapidly since September. Although the level of these interest rates is somewhat lower than in 1998 and 1999 when corporate financing experienced a period of increased pressures, the so-called credit crunch, the pace at which these rates are rising is comparable to that in 1998 and 1999.

In addition, when evaluating the level of funding rates, comparing them with corporate profitability becomes important. In Japan, the ratio of funding in the market to bank borrowings is approximately one to four, giving bank borrowings the dominant share. Because of this, even with the current sharp rise in issuing rates on CP, funding rates as a whole remain broadly unchanged and remain very low relative to firms’ profitability. On the other hand, in 1998 and 1999, funding rates were nearly at the same level as profitability due to the sharp decline in the latter. From these points, it is clear that the current level of funding rates itself is still accommodative. Nevertheless, corporate profits are under strong pressure due to the effects of earlier increases in energy and materials prices and the increased sluggishness in economic activity, which have led to a decline in profitability. This seems to indicate that the level of funding rates relative to profitability is becoming less accommodative.

Second, with respect to the quantitative side, the availability of funds is showing marked changes. With regard to funding in the market, the rate of increase in the amount outstanding of CP issued, which had been around 10 percent year on year since 2007 until the failure of Lehman Brothers, declined sharply thereafter owing to growing risk aversion among investors, and has recently fallen below the previous year’s level. Furthermore, the postponement of corporate bonds issuance, which had been limited to firms with low credit ratings, is spreading to firms with high credit ratings, which in the past had been able to issue bonds without difficulty.

Under these circumstances, it seems that firms’ attitudes are becoming increasingly defensive against the backdrop of the deceleration in global economic growth and the turmoil in financial markets as well as increased future uncertainty, and this is leading to a growing number of firms hoarding liquidity. Meanwhile, the rate of increase in the amount outstanding of bank loans is rising on the whole, particularly loans to large firms. However, the number of firms reporting tight lending attitudes of banks have been increasing, particularly among firms in the construction and real estate industries and small firms.

To sum up, financial conditions in Japan seem to have become less accommodative at an accelerating pace, particularly in terms of availability of funds, reflecting the turmoil in global financial markets.

Although future conditions for funding depend on various factors, among them the level of bank capital and conditions in global financial markets are important. Currently, the capital ratios of banks, in general, are considerably above the level required by regulation. However, banks, when actually making loans, consider not only their capital ratios at the time but also various other factors such as expected future credit costs. Recently, given the declines in stock prices, the market risk of stock holdings is having an impact on bank capital, in addition to increased credit costs incurred by banks due to the increase in bankruptcies. Although at present the rate of increase in the amount outstanding of bank loans is rising, banks’ lending attitudes will tend to become more cautious if they are not confident about the level of their capital bases. Furthermore, if the turmoil in global financial markets should intensify, there is a risk that funding in the market might become more difficult as a result of increased risk aversion among investors. Although the decrease in issuance of CP and corporate bonds, as a whole, is covered by the increase in bank loans as shown in the data up to the most recent figure for October, the Bank will monitor future developments carefully.

IV. The conduct of monetary policy

So far I have explained the present situation of and the outlook for the world economy and Japan’s economy. With regard to Japan’s economy, the increased sluggishness in economic activity is likely to persist for the next several quarters and, going forward, attention needs to be paid to the downside risks to economic activity arising from developments in the financial crises in the United States and Europe and their influence as well as financial conditions in Japan. Turning to prices, upside risks have decreased compared with the past, and there is a possibility that the inflation rate will decline further if downside risks to economic activity materialize or commodity prices fall further.

Based on these assessments, the Bank, at the Monetary Policy Meeting held on October 31, reduced the policy interest rate by 20 basis points to 0.3 percent. With regard to the conduct of monetary policy, the Bank, given the increased uncertainty, will carefully assess the future outlook for economic activity and prices, closely considering the likelihood of its projections as well as factors posing upside or downside risks, and will implement monetary policy appropriately. For the time being, it is particularly important to pay attention to the downside risks to economic activity that may arise from developments in the U.S. and European financial systems and in global financial markets as well as their influence.

To produce maximal monetary easing effects, it is a necessary precondition that markets function in a stable and smooth manner. When this condition is not met, as the recent situation in the United States shows, the actual funding rates may rise notwithstanding the substantial reduction in policy interest rates. From this standpoint, the Bank has undertaken various measures. The first aim of these measures is to ensure stability in money markets through provision of liquidity. The Bank has not only been providing sufficient funds in yen, but also been providing dollar funds, based on the internationally coordinated framework, with no limitation on the amount as long as they are within the value of collateral submitted.

The second aim is to facilitate corporate financing. As I mentioned earlier, financial conditions are currently becoming less accommodative mainly in terms of funds availability, and the risk that the effects of the current low interest rates may not permeate through the economy is increasing. The Bank has already been conducting purchases of CP under repurchase agreements, and to facilitate corporate financing, the Bank has started to increase such purchases since October, and further increased them since November. Furthermore, the Bank is currently working on practical ways to contribute as a central bank to facilitate corporate financing during the run-up to the calendar and fiscal year-ends. The Bank will decide what measures to employ and put into action as soon as this work is completed.

Various efforts by parties concerned are essential to address the current severe economic conditions, and the Bank will continue to do its utmost to facilitate the return of Japan’s economy to a sustainable growth path with price stability. Although what actual policies are desirable depends ultimately on the situation in terms of economic activity, prices, and financial conditions at the time, the Bank will take appropriate measures in light of its purpose stated in the Bank of Japan Act, that is, to ensure stability in prices and the financial system.

Closing remarks

In closing, I would like to touch upon economic developments in the Kyushu region and discuss Asian economies that have close relations with this region.

There have been dynamic changes in the structure of the economy in the Kyushu region, making the most of its geographical advantage of being the closest to Asian economies. Japan’s exports to Asian economies, for example, have increased around twofold during the last 10 years, whereas exports from the Kyushu region increased around threefold. Growth in exports of Japan’s major products, such as electrical machinery and automobiles, is substantially higher in the Kyushu region relative to Japan as a whole. As a result, the share of secondary industries, such as those producing electrical machinery and automobiles, in the Kyushu region is increasing – the region is sometimes referred to as “Car Island” or “Silicon Island” – and the region is becoming a hub for Asian trade.

The Kyushu region is now making the most of being the closest to Asia, which has the fastest growing economies in the world. Assessing the growth potential of Asian economies, therefore, is important, but there are differing views on this and, ever since the 1990s, there have been various arguments. For example, the World Bank, in a book titled “The Asian Miracle: Economic Growth and Public Policy” published in 1993, stated that Asian economies had entered an autonomous growth cycle induced by direct investment. On the other hand, Paul Krugman, this year’s Nobel laureate, stated in a 1994 article titled “The Myth of Asia’s Miracle” that Asian growth was merely driven by extraordinary growth in inputs of resources like labor and capital, and Asian “tigers” were more like “paper tigers” because their growth was not accompanied by gains in productivity. More recently, there has been discussion as to whether the so-called “decoupling,” whereby emerging economies will continue their high growth despite the slowdown in advanced economies, or “coupling,” where emerging economies will be influenced by the slowdown in advanced economies, applies to the current state of the world economy.

Recent developments indicate that Asian economies are decelerating due to the deterioration in the U.S. and European economies, as I mentioned earlier, and so any “decoupling” or “coupling” is clearly not perfect. In Asia, various countries and regions, one after another, have accomplished economic take-off starting with the NIEs, followed by the ASEAN economies and China, and then by India. And Asia taken as a whole has attained high growth through countries and areas at different stages of development influencing on each other. Developments in Asian economies have a strong bearing on the future of the economy in the Kyushu region together with developments in Japan’s economy and in the world economy as a whole. In discussing the future of Asian economies, although it may well depend on how long the economic weakening in the United States and Europe continues, the Bank will pay close attention to whether strong intraregional demand in Asia can be maintained through making the most of economic dynamism in Asian economies with the assistance of economic policy actions in countries such as China.

As I mentioned in the beginning, the Bank collects information on the regional economies through research conducted at its branches. As I have already said, I worked in the Oita branch of the Bank for a year and a half during the early 1990s, and one of the advantages that I enjoyed as General Manager was being able to hear candid views from the management of various firms in the region regardless of firm size. I had an experience of visiting a small convenience store at the time and hearing views on the business of convenience stores from a couple managing the store in their family room upstairs. The name, the Bank of Japan, may give you the impression that we are making policy judgments only from macroeconomic data or information collected in the metropolis, but this is not so. Since the interest rate policy affects areas throughout the country, we make efforts to collect a wide array of information to make our judgment. To this end, I would like to ask for your continued support.

I am looking forward to hearing your views on the current situation of and issues facing the Kyushu economy as well as your requests to the Bank.

Thank you very much for your kind attention.

Nice ticker symbol.

WisdomTree on Thursday launched the LargeCap Growth Fund (ROI) on the NYSE Arca. ROI is usually the symbol for “return on investment.” Nice score on WisdomTree’s part.

The new ETF is designed to track the WisdomTree LargeCap Growth Index. This fundamentally-weighted index measures the performance of approximately 300 domestic large-cap growth companies. Each company’s weighting is set annually and based on the earnings generated during the prior four fiscal quarters. The ETF has an expense ratio of 0.38%.

WisdomTree, the market leader in fundamentally-weighted indexes, is best known for its family of ETFs based on dividends-weighted indexes. This isn’t the firm’s first earnings-based ETF, it launched a few others earlier in the year. But it is a radical departure for WisdomTree. It’s the first growth-oriented fund in this value-oriented firm. Not only is this WisdomTree’s first fund focused on growth stocks, but it’s the first growth-oriented ETF among all the Fundamentalists, those fund families with indexes based on fundamental metrics.

One big disadvantage of dividend-based ETFs is that they ignore strong companies that refuse to pay out dividends, such as technology companies. Earnings-based indexes, and especially growth funds, have the potential to expand WisdomTree’s customer base by offering an ETF with some of the fastest growing companies in the world, such as Google.

Jeremy Siegel, famed professor of the Wharton Business School and a senior advisor to WisdomTree, said in a written statement, “I devoted the first chapter of my book, The Future for Investors, to what I call the ‘Growth Trap,’ the long-standing problem of investors paying too much for the future prospects of growth companies.”

One assumes the new ETF digs itself out of the “Growth Trap”, but WisdomTree didn’t elaborate. The company did say, “growth’s historic underperformance may have more to do with how the major growth indexes are constructed, than with growth stocks themselves.”

It’s time to reward virtue.

by Lawrence B. Lindsey

12/01/2008, Volume 014, Issue 11 

The U.S. government’s efforts at containing the financial crisis have to date been aimed at shoring up institutions and households that are in trouble. Several hundred billion dollars have been injected into troubled financial institutions, with more on the way, and a whole array of negotiated schemes have been created to keep people in homes for which they cannot pay the mortgage. Yet the Democrats in Congress clamor for more relief, such as bankruptcy “cramdowns,” which unilaterally reduce the mortgage payments for people who can’t afford them. And still more institutions are lining up for bailouts, most notably the auto companies.

It is quite natural for politicians to seek to target benefits on those that they perceive to be in need. It is the normal political response to the wheel that is squeaking the loudest. Regardless of motive, the reality is that these programs and indeed the bailout’s whole approach is failing. Even Treasury Secretary Henry Paulson has now thrown in the towel on his original proposal to buy bad assets from the troubled financial firms: the Troubled Assets Relief Program (TARP). None of the $700 billion targeted for TARP will be used as originally intended. Instead most of it will prop up the capital position of the troubled financial institutions, allowing them to hold existing portfolios of questionable loans on their books. The rest will be spent on other distressed firms and troubled markets.

Recall that it was the efforts to sell TARP and the bailout that caused so much political and economic angst a few months ago. The president went on television to tell the American people that the economy, which had been holding in the relatively flat position for most of the summer, was about to collapse. Retail sales began plunging immediately after the president’s speech. A majority of the Republican members of the House voted against their own leadership and the president on the plan and were blamed by the media for the 778 point drop in the Dow that day. As this went to press, the Dow Jones Industrial index stood 2,750 points below where it was the moment the bill finally passed, suggesting that Wall Street didn’t think it was a panacea either.

The failure of the original plan was predictable. It contained unworkable logistical hurdles. TARP could only be run through some market mechanism, in which those who needed the relief the least would get the largest share leaving the most desperate institutions adrift, or through direct governmental targeting of those institutions most in need, which would have made a mockery of the market mechanism. The plan was rushed out to meet a perceived need to “build confidence,” but the self-imposed political deadline and the need to survive the political log rolling with congressional Democrats meant that the time needed to think it through was not taken.

Hundreds of billions of dollars later, we are left with the same three underlying economic problems the economy faced when the bailout was proposed. First, the troubled housing-related financial assets that TARP was supposed to move onto the government’s books are still in the private sector, while the nation’s banks rush to pare down their balance sheets in the only way they can–by recouping existing loans and not making any new ones. Second, the housing market continues to fall–prices are down 22 percent from their peak and dropping roughly 1 percent per month. Housing starts are at a 17-year low, and homebuilder confidence is the lowest ever recorded. Third, with unemployment rising and consumer credit tight, household cash flow is in desperate shape. If it doesn’t stabilize, the odds are high that the current recession will wind up being as bad as, or possibly even worse than, the deep recessions of 1974-75 and 1980-82.

The country faces three major economic problems: (1) making liquid the troubled housing debt that is clogging up the books; (2) stabilizing home prices; and (3) improving household cash flow. Each can be more easily achieved by rewarding virtue than by continuing down the current path.

The government should offer the option of a new mortgage to everyone now holding one, be it from a Government Sponsored Enterprise like Fannie Mae and Freddie Mac, a bank, or a mortgage broker. The principal amount would be the same as the existing mortgage. If the home-owner had two mortgages or a home equity line, they could all be rolled together into one new 30-year fixed rate mortgage. The new mortgages should have a substantially lower interest rate than existing mortgages. I suggest 4 percent, but the rate could be slightly higher without affecting the program.

The new mortgage would have one very significant difference: It would be a full recourse loan. That is, if the borrower fell behind in the payments, the government could use any means necessary to get repaid. That means not only foreclosing on the house (as under current mortgages) but also collecting any remaining unpaid sums after the house was foreclosed on by garnishing the wages, bank accounts, and other assets of the borrower. Think of it as the IRS providing the loan on the same collection terms as it does on taxes, or perhaps using the powers the government now has to collect on student loans.

The homeowner would not have to get a credit check, or have the house appraised, or go through the titling process again. There would be no debt-to-income or loan-to-value thresholds to qualify for the new loan. Refinancing on the new terms would be entirely at the discretion of the borrower.

Homeowners would have to think very carefully about taking the new loan. If they went for the lower rate, the obligation to repay would become very real. Individuals whose homes had market values way below the amount of the mortgage would have to be particularly careful. If they planned to live there for many years, there would be no problem. If they did not plan to live there or bought houses as a speculation, they definitely should not take the new financing terms. If they sell the house for less than the mortgage, they would have to come up with the difference from other sources.

Homeowners facing some economic distress but who otherwise would like to stay in their homes, even though the price was below the mortgage, might still find it attractive to take the new financing deal. For example, anyone with a 6 percent mortgage would see a 200 basis point drop in the cost of carrying a home. On a $200,000 mortgage, that would be a saving in principal and interest of $244 per month. (The monthly income of that homeowner is usually in the $3,000 to $4,000 range, so this is a significant saving.) In addition, the monthly payment would likely go down even more on loans that have been in place several years since the principal repayment period would once again become 30 years. If the homeowner is about to face a balloon repayment on a home equity line or an interest-rate readjustment under a variable rate mortgage, the new mortgage terms might make the difference between being able to stay in the home and facing foreclosure.

The key is that homeowners would have to make the choice. Only the homeowner knows whether he or she will be likely to stay in the house and repay the mortgage or be forced to give it up. Under the current arrangements, the homeowner has no incentive or need to signal his or her intentions. Instead, computer-driven models make a probabilistic estimate of how many home-owners in a given mortgage pool will choose foreclosure and what the loss rate will be on the foreclosed house. All of this then gets built into the price of a given mortgage-backed financial asset. Given the risk-averse nature of current markets and the lack of any real information, it is likely that the market price of the mortgage pool is well below the actual likely outcome. But no one knows for sure. As a consequence, Mortgage Backed Securities (MBS) and Collateralized Debt Obligations (CDOs) are clogging up the financial system.

Under the refinancing option, this problem goes away. The world is divided into two sets of homeowners: those who think they will repay and those who don’t. Those who think they will repay take the new government mortgage. The old mortgage is repaid. All of the MBS and CDOs in the system therefore face immediate full-dollar repayment of all the “good” loans in the mortgage pool. Everything that is left can pretty much be written down to pennies on the dollar. The uncertainty regarding securities pricing is gone. Banks and the financial markets know with a good deal of precision what each security is worth. In fact, they are handed a series of checks for the bulk of the true value of the security as the wave of refinancing works its way through the system. Thus, not only is the uncertainty removed, but the entire financial system is liquefied.

This in turn will unfreeze the banking system. There is right now no market for the CDOs, and they remain on the bank’s books. This consumes capital. Because of the distress in the market, the value of the CDOs keeps falling, and, as banks must report the value of assets over time, the banks must take a loss. This loss lowers the amount of capital the bank has. Less capital means that banks must shrink the size of their portfolio. But, the bad stuff can’t be sold. So instead banks must shed good investments, and they

are now doing so with a vengeance by refusing to make new loans and resisting the rolling over of existing loans. This starves the economy of credit.

Under my 4 percent mortgage plan, any bank that had to shrink its balance sheet would have a very easy way of doing so as loads of loan repayments would make the bank cash rich. It would no longer have to sell good assets and shrink its loan portfolio. If the amount of repayment exceeded the amount that the bank had marked down its mortgage portfolio, moreover, bank capital would expand rather than contract. The bank could then expand its portfolio and make even more loans if it chose to do so. TARP was supposed to do just this, but it didn’t as the only information on pricing securities came from those same computer-generated models that misestimated the size of the mortgage problem from the start. Under this plan, virtuous homeowners who actually know they will stay in their home determine the price, and determine it with certainty, rather than relying on some computer model that, frankly, has no idea.

As noted in an earlier article in THE WEEKLY STANDARD (”High Anxiety,” September 29, 2008), the underlying problem in the mortgage market is that the credit terms for home mortgages shifted abruptly from the most generous in history to more-restrictive-than-normal between mid-2006 and late 2007. The result was a drop of more than half in the demand for new mortgages (including refinancing) as measured by the dollar volume of mortgages at a time when there was an excess supply of roughly 3 million homes. In such a situation, prices drop.

The effects of the 4 percent mortgage plan on the housing market would be indirect, but quite real. The first effect would be to leave more people in their homes than would otherwise be the case. With an estimated 18 percent of all mortgage holders now in homes with mortgages that are higher than current market values, providing incentives for people to stay in their current homes is the best way of stopping still more excess supply from coming on the market.

But the government could easily magnify this effect by adding one more change in the mortgage terms: Allow the new mortgage on the house to be assumable. Under this plan, a buyer of a home with a new 4 percent mortgage gets to take over that mortgage as a part of the purchase. This substantially lowers the cost of acquisition and makes the house a far more liquid asset than it other-wise would be. Making a new 4 percent mortgage on an 80 percent loan-to-value mortgage assumable is equivalent to lowering the lifetime carrying cost of buying a home by 20 percent–compared to a mortgage rate of 6 percent. Alternatively, in a market in which all houses now have newly created assumable mortgages, the equilibrium price of homes would rise by 26 percent.

On the positive side, this onetime refinancing will not create a new bubble. New mortgages will not get the new terms, only existing mortgages. So while the plan will stabilize and possibly even increase the price of existing homes with mortgages, the

effect is finite. It would take a sustained reduction in rates that applied to new mortgages to produce the financial fuel for another housing bubble.

The flip side is that a refinancing of existing mortgages is unlikely to revive the home construction industry. Homes yet to be built do not have mortgages, and so there is no existing mortgage to roll over under the new terms. This is unlikely to make the plan popular at the National Association of Homebuilders, but we still have a hangover of at least 3 million empty homes. Encouraging the building of new ones at this point would only delay the recovery of the housing market and the relief that is needed for the financial system. Stabilizing existing home prices and providing for financial recovery are, of course, the preconditions for a return to a vibrant home construction industry. So the help for homebuilders in this plan is still there; it is just a matter of timing and prioritization.

The American economy is in the midst of the fastest decline in consumer spending since 1980. The reasons are clear. Households are greatly overextended, having taken advantage of many years of very easy consumer credit conditions. The typical American household, for example, has 1.9 vehicles and 1.75 drivers. Credit is now being cut back drastically. In addition, rising unemployment is putting a crimp on incomes and creating caution among those with jobs.

Much of this is the inevitable reaction to excess. But it is also widely accepted that government has a role in making sure the adjustment process does not happen too fast or the cuts become too deep. Hence we hear proposals for more stimulus packages to put money into the pockets of consumers. During the campaign, President-elect Obama called for giving an average of $700 to middle-income families, making up the cost by raising taxes on upper income households.

A refinancing of home mortgages along the lines I am describing would be a much more dramatic stimulus. First, a family with a $200,000 mortgage at 6 percent (typically a family with an income in the $40,000 to $50,000 range) would receive an improvement in their annual cash flow of $3,000, four times as much as the proposed Obama stimulus payment. It is true that the Obama tax cut would also go to people without mortgages. But it is those with mortgages that are the most impacted by current credit conditions. Indeed, a refinancing on this magnitude is far better targeted at those most likely to respond to improved cash flow than are the proposed tax rebates.

The refinancing would also mean a permanent improvement in household financial conditions while a typical onetime stimulus package would not. The lesson from the 2008 stimulus package, and indeed from all other temporary tax cuts, is that the great majority does not enter the spending stream. Refinancing is likely to provide a permanent economic boost.

The refinancing is designed to be roughly budget neutral for the government. Currently the government can borrow for 10 years at about 3.25 percent and under 4 percent for 30 years. Mortgages are typically priced off the 10-year bond. In essence, the government would be borrowing and lending at the same rate. Those especially concerned with budgetary cash flow might prefer a fixed rate loan of 4.25 percent or might also consider putting “points” on the mortgage. As long as the rate remained substantially below current mortgage rates and homeowners were able to roll any points into the principal of their new mortgage, the impact on the incentives to take up the new program would be minimal.

Government would receive one further benefit. As mortgage payments dropped, so would the revenue loss from the mortgage-interest deduction. I estimate the extra revenue from this feature at between $15 billion and $20 billion. As lower income homeowners tend not to itemize and higher income homeowners face an increased tax rate, the distributional consequences of this feature would mean that most of the extra revenue would be collected from higher income homeowners. On the other hand, the prepayment wave would reduce the interest income on the mortgage portfolio held by the GSEs.

The big lesson of the bubbles of the last 20 years is that there is no free lunch. We are now paying the price of both the dot-com bubble and the housing bubble. But there are no free bailouts, either. A wave of refinancing on this magnitude carries a price tag. Done the way it is described here, roughly $9 trillion of mortgages would be refinanced. That is roughly 15 percent of total personal wealth in the country, clearly a huge undertaking.

But it is also worth bearing in mind that this figure exaggerates the true scale of what is happening. This is not a $9 trillion increase in the nation’s indebtedness. It is the swapping of $9 trillion of one type of mortgage for $9 trillion of another type of mortgage. There is no net increase in the nation’s debt.

There is an increase in government debt. But this is offset by an equal increase in government assets. To begin with, roughly $5 trillion of the mortgages to be refinanced are already on the government’s books because of Fannie Mae and Freddie Mac. Funds have to be raised to issue the new mortgages, but each time a new mortgage is issued an existing mortgage of an equal amount is redeemed. The holder of the mortgage, i.e., the lender, bought that mortgage in search of long-term dollar denominated debt. When they are repaid, they will have to do something with the money. The vast bulk of the funds are also likely to be reinvested in long-term dollar denominated debt–particularly long-dated U.S. treasuries. Therefore, the net pressure on the financial markets will be fairly small even though the volume of transactions will be quite large.

There is a reason that government efforts have so far been focused on helping out those who have failed rather than those who have behaved virtuously. The left professes a belief in helping the needy. The right seeks to minimize government involvement and therefore compromises, agreeing to help only the needy. During the present crisis, the

term “needy” has taken on new dimensions as some of the largest financial institutions in the country are at risk.

It is also far from clear that those who were over-extended on their homes, needy by one definition, are also worthy of aid. With regard to real estate, hard-working families can behave prudently while trust fund babies can behave frivolously, and vice versa. The problem is sorting out the prudent from the frivolous. Targeting relief on the frivolous induces people on the margin to behave frivolously. By contrast, targeting relief on those willing to assume full responsibility for their debts in return for a lower interest rate induces people to behave virtuously. A shift toward rewarding virtue would be the quickest way out of the debt morass we now find ourselves in.

Economic turmoil is not thought of as a good thing for any business sector, but as markets have steadily worsened this year, the outlook for green appears to be trending the opposite direction.

This is especially important if you are a property stakeholder attempting to measure how the credit crisis and a full year of recession have affected green building.

The following studies indicate another good year for Green Building in 2009.

• “Green Building Impact Report 2008”

• McGraw Hill’s “2009 Green Outlook”

• 2008 Green Building Market Barometer

• Ernst & Young roundtable

• 2008 Autodesk/AIA Green Index

• “Greening Buildings and Communities: Costs and Benefits”

• CoStar study

• Building Owners and Management Association (BOMA) Study

• Jones Lang LaSalle/CoreNet Global Survey

• Panel Intelligence Report

Click here for more information on the Commercial Building Tax Deduction.

NewsPapers - Jung, Ummat, Dawn, Jazba, Nawa e Waqt, Jasarat – Urdu Newspapers

NEW YORK (CNNMoney.com) — Dell announced Thursday afternoon that a year-long investigation into its accounting practices has ended and the company plans to restate earnings back to 2003.

And for investors, a big cloud hanging over the personal computer maker has been lifted. It is now time to regroup and focus on whether Dell can reclaim the top spot in the personal computer industry.

Last year, the company gave up the PC market share lead to Hewlett-Packard, and watched foreign competitors such as Lenovo and Acer gain steam as well. Dell was the only top computer company to lose worldwide PC market share.

Investors watched Dell’s shares drop nearly 30 percent in the past two years while HP shares gained more than 70 percent in that period.

But Michael Dell took back the reins of the computer giant early this year following the departure of Kevin Rollins and investors have embraced the stock since then. Shares are up 7 percent since Dell took over as CEO on Jan. 31.

The launch of notebooks in colors like flamingo pink and sunshine yellow in June are an indication that Dell (Charts, Fortune 500) may be taking note of Apple’s multi-hued iPods. It also shows that Dell can’t rely solely on low price to lure customers.

So can Dell return to glory on Main Street and Wall Street?

In addition to taking fashion cues from Apple (up $4.15 to $121.20, Charts, Fortune 500), Dell has made a number of moves to expand its consumer business that has been a “second class citizen” compared with its corporate accounts, said Dr. Gautam Dhingra, chief executive officer and portfolio manager at High Pointe Capital Management, which owns 1.1 million shares of Dell.

In January, Dell started selling a rugged “All-Terrain” notebook with a shock-resistant hard drive and spill-resistant keyboard, similar to Panasonic’s Toughbook. And in May, Dell launched its XPS gaming desktops souped up with NVIDIA (up $1.35 to $43.92, Charts) GeForce graphics cards.

Late last year, Dell introduced a Blu-Ray-enabled multimedia notebook for watching high definition films, and just this month, Dell announced plans to acquire audio- and entertainment-focused tech company ZING Systems.

“Dell is trying to do a bunch of things to get incremental improvement,” says Bill Fearnley, Jr., an analyst with FTN Midwest. “They don’t have a billion-dollar product like the iPod up their sleeve.”

The same can be said for software and services, two other markets Dell is trying to tap.

Earlier this month, possibly in a move to enhance its software presence in the corporate market ala IBM (up $0.70 to $110.39, Charts, Fortune 500) and HP, Dell agreed to acquire corporate software developer ASAP.

And last month, Dell announced plans to acquire SilverBack Technologies, which would allow companies using Dell computers to remotely monitor and manage IT systems.

“Dell’s historical strength has been on the business side,” says David Fleer, portfolio manager at Bristlecone Value Partners, a Los Angeles-based fund holding nearly a million shares of Dell’s stock.

Dell’s quarterly rating among PC makers has declined, after an improvement in the year-ago period, while Hewlett-Packard’s (up $0.84 to $46.89, Charts, Fortune 500) customer service ranking improved, according to the American Customer Satisfaction Index, an economic indicator from the University of Michigan.

And Dell is taking note. After building up its business with online sales, Dell is reaching out to customers with a partnership to sell desktop computers at Wal-Mart stores nationwide.

While the consumer experience at Wal-Mart probably won’t come close to what it’s like to buy a Mac at an Apple store, partnering with the retail giant gives the company “quick, big exposure to the retail markets, which they identified as a hole in their distribution,” Fleer said.

But Dhingra isn’t that impressed. Although Wal-Mart (down $0.03 to $43.47, Charts, Fortune 500) is the world’s largest retailer, it will only be selling a lower-end computer, and only in the U.S., Dhingra says. “The volume is going to be tiny compared to what their corporate revenues are.”

Yet, “whether Dell is number one or number two is not of critical importance to us,” said portfolio manager Fleer, who notes that a turnaround will take more than a few quarters to take effect.

A.G. Edwards analyst David Wong agrees. In a recent research report, he wrote that he thinks Dell will continue to lose share for the foreseeable future. But he thinks this might actually be a positive.

“This is not necessarily a bad thing. We think that the company has made a decision to focus on profitability at the expense of near term market-share considerations in the lower profitability segments,” he wrote.

But while Wong’s price target of $35 implies the stock is worth much more than its current price of about $26, Fearnley of FTN Midwest rates the stock neutral, saying shares are fairly valued.

To that end, Dell’s shares are currently trading at about 16 times next year’s earnings estimates, a slight premium to Hewlett-Packard’s P/E of 15.

Wong notes though that Dell’s plans to cut jobs by 10 percent over the next 12 months, among other cost-savings methods, could help boost the company’s profit margins.

So Dell may have a long day to go before it regains its status as a Wall Street darling. But it appears to be on the right track.

FTN Midwest makes a market in Dell’s stock but doesn’t own shares. A.G. Edwards makes a market in the company’s stock, and the firm or an officer at the firm owns a long position in Dell’s shares.

Michael Dell tries to reboot Dell Computer

Dell to pay ousted ex-CEO $48.5M in cash

Source & Pictures:CNN

Covering December 5th (Friday)

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Euro-area economic confidence dropped this twelvemonth to the lowest since the aftermath of the stock-index futures fell today. European equities and U.S. In Europe, governments have been forced to rescue Belgium’s Fortis, Iceland’s Glitnir Bank hf, the becu banking island nation’s third-largest bank by market value, forex trading for 600 million euros. Stocks tumbled around the world forex broker after the worsening credit crisis threatened to topple more forex account banks. Imparting the Treasury “This has a reasonable chance of pulling back from the brink and having some success, but it’s far from certain that will be the trueman,” said former Fed Governor Oren Shannan, now vice stage director of consultant Macroeconomic Advisers LLC in regions internet banking Filmore. The House and Senate currency trading forex signals are scheduled to vote on the bill early this week, although it wasn’t clear last night forex signals that it has sufficient currency today votes to pass the House. Lawmakers reached agreement as House Republican leaders incrusted away from opposition to the proposal after it included plans to pros and cons banking with union create insurance for mortgage-backed securities. There isn’t consensus on forex trading whether it would work. By Kelby Lanman and Jedd Erasmus — Treasury Secretary Bruce Paulson and congressional Democrats hammered out a consensus on spending up to $700 billion to rescue the financial plodding.

The Money and the Power   The Making of Las Vegas and Its Hold on America 1947-2000, Sally Denton and Roger Morris, Alfred A. Knopf, 2001.  479 pages, index, end notes.

“Don’t run for public office.  We own the politicians.”  Benjamin “Bugsy” Siegel to one of his men.  This is really the story of Las Vegas.  Politicians owned by the casino operators.  This fact enabled the little dusty town on the road from Los Angeles to Salt Lake City to become the center of much of America.  Known for its gambling, Las Vegas’ influence is felt through the country.  Little stands in the way of Las Vegas;  whatever Vegas wants, Vegas gets.

The book is a history of the city, but it is really a collection of portraits of its operators, the men who founded the now massive gambling empires and the politicians that were paid to help and protect them.  It is an amazing collection:  immigrant eastern European Jews, Italians, Irishmen, an eccentric millionaire industrialist, and a French Basque.  The CIA would also use the city and its casinos for its own purposes.

The authors cut through much of the mystique of the city.  It was not all Italian Mafioso in flashy suits and gaudy jewellery that started the empires.  It was a couple of Jewish thugs.  It all began with the Bugs and Meyer gang.  The first hotel/casino was built by Siegel and Lansky.  It eventually cost Siegel his life once it was found out that Siegel was skimming money from the construction funds, but the hotel and casino were a success, if not initially, that inspired many to follow.  It seemed that it is impossible to loose money in Las Vegas unless you make a bet.

Siegel’s murder was an aberration, at least in the early days.  The Syndicate  (the authors’ preferred term, and probably a better one considering the multi-ethnic character of the hoodlums in control) declared that Las Vegas would be an open city to all comers.  There would be no turf battles.  This caused the rapid growth of the “gaming industry.”  Murders would come soon.

Initially the funding for the casinos came mostly from drug and prohibition alcohol sales.  Later more legitimate funding would come from such diverse places as the Mormon Church and the the Teamsters’ pension fund.  The diversity of funding ensured the appearance of legitimacy.  It also ensured that a lot of people would be well paid for their services.

The casinos were very successful.  They ensured their continued success by copious contributions to elected officials.  This is the most amazing thing revealed in the book.  Political corruption is not new, but the extent of the corruption spawned by the success of the casinos is enormous.  It is to be expected that the casinos would pay off those directly affecting the casinos, but the money also went to presidential candidates and congressmen.  This effort was repaid in the stymieing of congressional and Justice Department investigations into Las Vegas gambling.  The house always wins.

Bangladesh has demanded cancellation of overseas development assistance (ODA) debts of the least developed countries (LDCs) when they are affected by the adverse impacts of global climate change.

The country that uses no less than 18 percent of its total annual budget to pay off foreign debts, also demanded debt cancellation facilities for sectoral investments in countries affected by climate change.

The chief of a Bangladesh delegation raised the demands on behalf of LDCs in the ‘workshop on risk management and insurance’ at the 14th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 14) in Poznan, Poland.

Over a billion people of 100 countries face a bleak future due to the climate change, although those countries contributed the least to the causes of the change, a fact that provide them with the moral right to get compensations for the risks they are facing, the delegation argued.

In the workshop, delegates discussed mechanisms for risk management insurance. The delegates of LDCs demanded that developed countries pay the premium of the climate change insurance.

Focusing on relief and recovery, the current disaster risk management is based on post disaster assistance that varies depending on how much media coverage the disasters get and the locations of the victims, they said.

Mandated under the United Nations Framework Convention on Climate Change (UNFCC), the risk management insurance will be a kind of certainty for the vulnerable communities that they will be compensated.

The workshop discussed some existing insurance models like area based or individual farm based crop insurance, index based insurance for droughts and floods, Turkish Catastrophe Insurance Pool, and Mexico’s Natural Disaster Fund.

Bangladesh demanded start of a few pilot micro insurance projects and disaster index based insurance in each LDC with their premiums subsidised by international and national private sector sources.

“I raised at the workshop that insurance is not enough, there must be some link between ODA debt repayment and climate change insurance,” said AKM Rezaul Kabir, secretary to the Ministry of Forest and Environment also the leader of Bangladesh delegation.

The delegation argued, since the agriculture of LDCs is dominated by small holders, the coverage of the insurance will be like that of micro insurance involving small sums of money.

When asked about the concept of insurance, Md Reazuddin, director of the department of environment also a member of the Bangladesh delegation said, the concept is pretty new.

“A process is on to develop a mechanism for going forward with it,” he told The Daily Star yesterday.

No comments yet.

Now, after short-sellers have forex trading system taken profit and the world policy makers have issued their aggressive bailout plans, investors will once again have to turn to the fundamentals behind the market threatens significant breakouts Such aggressive moves, forex signals like the one that has developed since August in either direction rarely come without forex software a relief retracement that reestablishes the opposite side of the market. As expected, the rebound that we have seen in trula interest and risk appetite through the opening weeks of this banking washington mutuel bank month were short-lived. What more, options reveals cautious forex software investors have driven risk reversals to new record (going back 5 years) lows. Aside from trading forex the primary drivers of a global recession and need to work off over-leveraged positions, underlying volatility is still four-times its average reading between 2002-2007 finance and rising. forex trading examples All the significant market conditions fidelity money market funds are aligned for another crash-like plunge. To really engage the market though, October 19,739 low will need to give way to catalyze panic that has sent investors rushing bunker money market for the exits in the past (which in turn squeezed liquidity currency and thereby accelerated the decline). By Si Hersch and Davey Thesing — European central banks for the first time last week, the index has money markets rates marked a sharp reversal, tumbling 775 points to 21,310.

One might notice the conflicting forex market viewpoint given by the bullish Momentum1 strategy �In the past 60 minutes our Forex Automated Trading Signals have sold the Pound against the Dollar using the Momentum2 strategy. For more imputation and guides on using our Buy/Sell Signals, see our Weekly Forex Trading Strategy Outlook report. currency trading books See more Forex Buy/Sell Signals on + and be sure to monitor any updates on these specific signals, as our automated forex signals can and do change on a daily and intraday basis. foreign currency trading The indicator has an accuracy of 38%, averaging 37.13 pips of profit per trade. The Momentum 1 indicator forex banking broker sets a trailing stop at 1.17 for the counter trend trade.

For more computer program what money market account and guides on using our Buy/Sell Signals, see our Pictorial Forex Trading Strategy Outlook report.Our Forex Automated forex account Trading Signals have indicated a sell order past market ratio for banking industry for USDCAD. �Keep track of these US Dollar trading signals and others on our Forex Buy/Sell Signals on + and be sure to monitor any updates on these specific signals, as our automated forex signals can and do change on a daily and intraday basis. Our Forex Trading forex trading signals accounting that the US dollar through the medium term.

In macroeconomics, a recession is a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.

Since 2007, there had been speculation of a possible recession starting in late 2007 or early 2008 in some countries.

JASPER JOTTINGS Week 49 - 2008 Dec 06

Jasper Jottings - The achievement journal of my fellow Jaspers, the alumni of the Manhattan College

http://www.jasperjottings.com/2008/jasperjottings2008WEEK49.html

INDEX

   o POSITRACTION: A true hero

   o JFound: Dandola, John (MC1970)

   o JFound: Krause, Peter C. [MC1970]

   o JEmail: Fabinski, Bob (MC1984) is the designated proofreader

   o JEmail: McEneney, Mike (MC1953) updates class years

   o JFound: Sweeney, Bill [MC????]

   o JFound: Belmont, Nicole [MC????]

   o MFound: Jasper Mom

   o JFound: Stoecker, Roy R. [MC????] Substratum Intake System: Once-Through Cooling Hybrid

   o JFound: Brennan, Bob [MC????]

   o JUpdate: Quick updates

   o JHQ: Declaring College’s Efforts To Increase Its Sustainability

   o JHQ: Manhattan Monthly December 2008 NEWSLETTER

   o JFound: “idealist”, Rachel [MC2008]

   o JEmail: Bennett, Lainie (MC1990) is offering a 10% discount on resumes to all Jasper!

   o Comment on JOY: Mahoney,Lisa [MC????] weds Villetto, Matthew [MC????] by Lou J.

   o ENDNOTE: Friends with benefits

# # # # #

POSITRACTION: A true hero

http://townhall.com/news/world/2008/11/06/chinese_diplomat_honored_for_saving_jews

Thursday, November 06, 2008

Chinese diplomat honored for saving Jews

*** begin quote ***

A Chinese diplomat who saved thousands of Jews from the Holocaust has been posthumously honored in the Austrian capital.

Feng Shan Ho was Chinese consul-general in Vienna from 1938-1940 and issued visas to Austrian Jews, enabling them to escape the Nazis. He died in San Francisco in 1997 at the age of 96, before his deeds were recognized.

*** end quote ***

[JR: Shame that we can't recognize these people during their lifetimes. Shame we can all know these courageous people as "celebrities". Shame we can't know all the unknown heros.]

# # # # #

   * Posted on: Sun, Nov 30 2008 12:37 PM

JFound: Dandola, John (MC1970)

http://jxymxu7sn5ho9d.files.wordpress.com/2008/11/dscn1128.jpg?w=480&h=360

DSCN1128.JPG

Matthew, John (MC1970), Amy, Micky (long suffering wife), John William

[JR: Wish I could share all the laughs we've had over the years.]

# # # # #

   * Posted on: Sun, Nov 30 2008 5:23 PM

JFound: Krause, Peter C. [MC1970]

Krause, Peter C. [MC1970]

http://www.argyleforum.com/events/eventimages/04.25.07/mainSpeakers.html

Peter C. Krause

Chairman

Barrow Street Real Estate Funds

Peter joined Greenhill as Founding Member and Managing Director in 1996. He serves as Chairman of its Barrow Street Real Estate Funds, a real estate value-added private equity firm which invests in the U.S. with local partners in development and redevelopment projects across all property types. Prior to co-founding Barrow Street, he was Managing Director in the Real Estate Department of the Investment Banking Division of Morgan Stanley & Co. He was a member of the Investment Committee of the Morgan Stanley Real Estate Funds and in that capacity served as Chairman of the Board of Red Roof Inns, a New York Stock Exchange corporation. Before joining Morgan Stanley, Peter had practiced real estate law at Cleary, Gottlieb, Steen & Hamilton and Schulte, Roth & Zabel. Peter has 32 years of experience in the real estate and financial services fields and has closed over 250 transactions during that period.

Peter graduated first in his class (out of 1,100 students) with a B.A. with Highest Honors from Manhattan College in 1970, served in the United States Army in 1970-1971 and received his J.D. from Harvard Law School in 1974. Peter is a member of The Urban Land Institute, the American Society of Real Estate Counselors, the Real Estate Board of New York and the American Hotel and Lodging Association. He has served as Co-Chairman of the Industry Real Estate Financing Advisory Council. Peter was a Lecturer at Cornell University for many years, teaching real estate accounting, finance and valuation. Peter is Chairman of the Harvard Law School Fund, Co-Chair of the Harvard College Parents Fund, a Knight (and NYC Area Chair) of the Sovereign Military Order of Malta and Vice President of the Honorary Ushers of St. Patrick’s Cathedral. He is a prior trustee of The Convent of the Sacred Heart School. Peter and his wife, Alice, have three children and live in New York, New York.

# # # # #

   * Posted on: Sun, Nov 30 2008 6:37 PM

JEmail: Fabinski, Bob (MC1984) is the designated proofreader

From: Fabinski, Bob (MC1984)

Date: November 30, 2008 9:37:02 PM EST

To: Distribute_Jasper_Jottings-owner

Subject: Re: [Distribute_Jasper_Jottings] JASPER JOTTINGS Week 48 - 2008 Nov 30

John,

You missed two double consonants in that last missive:

hor_R_endous

ag_G_ravates

I too remember the “Noooo Partial Credit, Bridge Fall Down.”

Bob Fabinski

‘84

[JR: Thanks. My excuse is "i r an injineer". We don't need no redundant letters. Double consonants use up all that extra electron space. Global warming. We can't keep pinning bigger disks with all those double consonants. You're now the official proof reader! (That's one way to ensure at least ONE reader. LOL!]

# # # # #

   * Posted on: Sun, Nov 30 2008 10:46 PM

JEmail: McEneney, Mike (MC1953) updates class years

REPORTING LIVE FROM THE RESEARCH DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Sunday November 30, 2008 @ 1130 EST

Dear John,

>JNews: Desposito, Joseph (MC????) remembers “Get wrong answer, bridge fall down!”

I believe that Joe is member of the Class of 1969.

>JNews: Pfaff, Mark [MC????] promoted at New York Life Insurance Company

I believe that Mark is a member of the Class of 1980.

>JFound: Sposito, Peter J. [MC????] is a banker’s banker

I believe that Peter is a member of the Class of 1967.

>JFound: Eskridge, Honora Nerz [MC????] at NCSU Libraries

I believe thar Honora is a member of the Class of 1989

>JFound: Schermer, Dolores [MC????]

I believe that Dolores is a member of the Class of 1982.

Mike

[JR: Thanks, Mike. Much appreciated. ]

# # # # #

   * Posted on: Sun, Nov 30 2008 11:30 PM

JFound: Sweeney, Bill [MC????]

Sweeney, Bill [MC????]

http://www.sas.com/events/execconf/invite/exec07/tracks/fs.html#Sweeney

Bill Sweeney

Managing Director, Global Risk, Compliance and Technology

Citigroup

Bill Sweeney joined Citigroup in June 2000 to manage the Global Risk IT Department. In 2004, Sweeney was promoted to Managing Director, and in 2005 he assumed responsibility for Global Compliance and Legal Technology for Corporate and Investment Banking.

Sweeney introduced a number of cutting-edge technologies to Global Corporate and Investment Banking, such as GRID computing and the introduction of middleware, which streamlined intraday feeds of data. He also recently put forth the first Linux in Intel application live. Sweeney has worked with engineering and IT to ensure the technologies’ adaptability as well as a simultaneous improvement in services and reduction in costs.

He has a bachelor’s degree in mathematics from Manhattan College and a master’s degree in computer science from the University of Southern California.

# # # # #

   * Posted on: Mon, Dec 1 2008 6:37 PM

JFound: Belmont, Nicole [MC????]

Belmont, Nicole [MC????]

http://www.farhills.com/index.cfm/fuseaction/biographies.viewbiographies/csid/7

Nicole Belmont Vice President - Director of Research Nicole Belmont joined the Far Hills Group in 2001 to expand the firm’s product development and research activities. Nicole Belmont joined the Far Hills Group in 2001 to expand the firm’s product development and research activities. Her responsibilities include analyzing and sourcing new managers and strategies, conducting due diligence, and spearheading the firm’s interaction with the consultant community.

# # # # #

   * Posted on: Tue, Dec 2 2008 6:37 PM

MFound: Jasper Mom

http://talk.collegeconfidential.com/manhattan-college/608150-great-engineering-school.html

“rigolinr”

Great engineering school

Just an update - - my son is graduating in 2009 and has just been offered a wonderful Civil Engineering job, beating out other candidates from schools such as Virginia Tech and Georgia Tech.

If you want a chance to shine in Engineering - - and not get lost as a “number” - - go here.

Proud Manhattan Mom

# - # - #

[JR: I agree. LOL!]

# # # # #

   * Posted on: Wed, Dec 3 2008 5:21 PM

JFound: Stoecker, Roy R. [MC????] Substratum Intake System: Once-Through Cooling Hybrid

http://pepei.pennnet.com/Articles/Article_Display.cfm?

Section=Articles&PUBLICATION_ID=6&

ARTICLE_ID=346402&pc=gls&dcmp=rss

Substratum Intake System: Once-Through Cooling Hybrid

By Roy R. Stoecker, Ph.D., Principal Scientist, EEA, Inc.

James E. McAleer, M.B.A., Director, Strategic Planning, EEA, Inc.

*** begin quote ***

Rising fuel cost, demand for carbon footprint reduction and closed-cycle cooling is simply incongruent. Thus the development and evolution of a once-through cooling hybrid, the substratum intake system. This new system (presently in pilot) allows steam electric stations to maintain their existing once-through systems while eliminating virtually all environmental impacts. In addition, it promises to increase overall plant efficiency while reducing condenser operations and maintenance costs.

It’s axiomatic that steam electric power stations with once-through cooling systems (OTC) use enormous amounts of water to cool their condensers. A 400 MW unit typically requires 175,000 gpm when operating at full load. The environmental problem with OTC is that planktonic organisms, such as fish eggs and larvae, suffer high mortalities in passing through the plant. The damage is caused by mechanical strains of pumping, rapid temperature rise and addition of biocides. The process is called entrainment.

{Extraneous Deleted}

Authors:

Roy R. Stoecker, Ph.D., is co-founder and vice president of EEA, Inc. and has more than 30 years of experience in energy and environmental programs. He holds a B.S. in biology from Manhattan College and a Ph.D. in botany from the University of Hawaii. He is extensively published and the author of “Aquatic Studies at the Hudson River Center Site In: Estuarine Research in the 1980s: The Hudson River Environmental Society Seventh Symposium on Hudson River Ecology (1992).”

{Extraneous Deleted}

# - # - #

Stoecker, Roy R. [MC????]

# # # # #

   * Posted on: Wed, Dec 3 2008 5:31 PM

JFound: Brennan, Bob [MC????]

Brennan, Bob [MC????]

http://www.ironmountain.com/news/presskit/leadership.asp

Bob Brennan

President and Chief Operating Officer

Bob Brennan was named president and chief operating officer of Iron Mountain in November 2005. As COO, Mr. Brennan is responsible for developing and implementing operating strategies designed to drive growth and enhance customer service on a global basis and to ensure consistency and efficiency throughout the organization. He manages the day-to-day operations of the Company’s North American, European and Latin American business units as well as the enterprise support functions of human resources and information technology. Brennan had served as president of North America since joining the Company in November 2004. He joined Iron Mountain through the acquisition of Connected Corporation, where he served as Chief Executive Officer. Before Connected Corporation, Brennan was a general manager with Cisco Systems; he also served as CEO of American Internet prior to its acquisition by Cisco, and was vice president, general manager for Merisel, a distributor of software and microcomputer products. Brennan holds a Bachelor of Arts degree in psychology from Manhattan College.

# # # # #

   * Posted on: Wed, Dec 3 2008 6:37 PM

JUpdate: Quick updates

Docteroff, Michael (MC1987)

# - # - #

Duffy, Ms Patricia A. (MC????)

Chief Housing Accountant

The Municipal Housing Authority for the City of Yonkers

# - # - #

Hallet, Sarah (MC2004)

# # # # #

   * Posted on: Thu, Dec 4 2008 9:36 AM

JHQ: Declaring College’s Efforts To Increase Its Sustainability

http://www.manhattan.edu/news/news_releases/120508_1.shtml

December 5, 2008

Manhattan College Announces Presidential Proclamation Declaring College’s Efforts To Increase Its Sustainability

RIVERDALE, N.Y. – Manhattan College has announced a presidential proclamation declaring the College’s intent to take all feasible steps to increase its sustainability while ensuring that “going green” issues are a factor in all future major decisions, policies and contracts. The proclamation has the concurrence of Manhattan’s council of vice presidents and the executive committee of the board of trustees.

To further this mission, the College has signed on to New York City’s 30-in-10 initiative and has become a member of the Association for the Advancement of Sustainability in Higher Education (AASHE), an association of colleges and universities in the United States and Canada working to create a sustainable future.

“I hereby declare that Manhattan College shall strive to take all feasible steps to increase its sustainability and to decrease its eco-footprint,” declares Brother Thomas Scanlan, president of the College. “Further, I request every member of our College community to review his/her own eco-habits and make appropriate improvements. And lastly, I request that environmental stewardship be an important component of each student’s education. Striving to be a green campus is our common goal.

“For the College, this proclamation requires that sustainability will be a criterion in the formulation of all major decisions, policies and contracts; as well as in the College’s strategic planning and construction projects. Furthermore, this shall be done to the maximum extent feasible, that is, determination of the projected impact both on the College’s own eco-footprint and on the global environment; affordability, including initial investment versus rate of savings; real versus redistributed reductions (e.g., offsets) etc., shall be incorporated into the overall cost/benefit analysis.”

Manhattan College has already implemented numerous “going green” measures, including:

   * For more than 40 years, the College has conducted a nationally recognized Master’s program in Environmental Engineering and has offered an environmental concentration option in the undergraduate civil engineering major since 1939. The faculty’s advanced research, especially in water quality, has contributed to improvements in the Hudson River, New York Harbor, Long Island Sound and elsewhere.

   * Planted a significant number of new trees.

   * Increased energy efficiency of College vehicles.

   * Promotes transportation alternatives, such as carpooling, biking and public transit.

   * Conducts extensive recycling.

   * Installed motion sensors to turn on/off classroom and public space lighting.

   * Thermostat controls are reset higher in summer during unoccupied periods.

   * Have replaced light fixtures/bulbs with more energy efficient ones.

   * Installed an energy management computer control system.

   * East Hill Residence Hall’s air conditioning units utilize nonozone depleting refrigerants.

For a complete list of “green” measures implemented by the College, please contact Scott Silversten, assistant director of college relations for communications, at (718) 862-7232 or e-mail scott.silversten@manhattan.edu. Dr. Kevin Farley, associate professor of environmental engineering, is available to answer questions about the College’s “green” initiatives and can be reached at (718) 862-7383 or kevin.farley@manhattan.edu.

Mayor Michael Bloomberg’s 30-in-10 challenge comes under PlaNYC, a sustainability plan launched on Earth Day 2007 aimed at reducing greenhouse gas emissions citywide by 30 percent by 2030. Leading New York universities have joined the more aggressive 30-in-10 commitment to reduce greenhouse gases by 30 percent by 2017.

The city’s first-ever carbon emissions inventory found that energy use in buildings accounts for almost 80 percent of the city’s overall emissions and of that, 18 percent is from governmental and institutional buildings. By accepting the challenge, the higher education institutions are leading by example in helping to make a sizable dent in the city’s overall emissions.

AASHE was founded in 2006 with a mission to promote sustainability in all sectors of higher education – from governance and operations to curriculum and outreach – through education, communication, research and professional development. It aims to advance the efforts of the entire campus sustainability community by uniting diverse initiatives and connecting practitioners to resources and professional development opportunities.

# # # # #

   * Posted on: Fri, Dec 5 2008 1:07 PM

JHQ: Manhattan Monthly December 2008 NEWSLETTER

http://www.manhattan.edu/newsletters/ManhattanMonthly/2008_12/index.html

Manhattan Monthly

December 2008 NEWSLETTER

NEWS

Presidential Proclamation

Declares Manhattan’s Efforts To Increase Sustainability

College To Honor Syska Hennessy Group Chairman at De La Salle Dinner

College Presents a Candlelight Christmas Celebration

Lasallian Conversation

Manhattan Professor and Student Develop Ways to Measure Property Changes of Optical Materials

Two Engineering Students Win Scholarships From Prestigious Industry Group

Communication Students Work To Establish Mentor Program at South Bronx High School

Staff Council Elections

Let It Snow

Relay For Life Cancer Walk

In Memoriam

Staff Convocation Honors Dedicated Employees

Faculty and Staff Accomplishments

Welcome New Employees

Manhattan College Milestones

Athletic Hall of Fame Induction Ceremony

Jaspers Helping Jaspers

Gulf Coast Christmas Luncheon

Service Trip Planned to the Ninth Ward in New Orleans

Yearbook Release for Class of 2008

Treasure Coast Alumni Luncheons

Manhattan vs. Siena at Times Union Center

Alumni Travel Program Goes to Ireland

Alumni Directory Project

Does Your Class Year End in a 4 or 9?

Contact Your Alumni Office

CALENDAR

Jaspers Basketball Squads

Volleyball’s Sherryta Stokes ’09

Jasper Alum Chris Cody ’06

Manhattan Athletics Expands JasperVision Platform

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   * Posted on: Fri, Dec 5 2008 9:35 PM

JFound: “idealist”, Rachel [MC2008]

http://www.idealist.org/if/i/en/av/UserProfile/178878-61

http://jxymxu7sn5ho9d.files.wordpress.com/2008/12/07-w80-w80h103.jpg?w=80&h=103

07-w80-w80h103.jpg

Rachel

Location: New York, New York, United States

Area of Focus: Children and Youth, Community Service and Volunteering, Education and Academia, Family and Parenting, Health, Mental, Media and Journalism, Race and Ethnicity, Women’s Issues

Language(s): English

Description:

I am a recent B.A. graduate of Manhattan College, completing my undergraduate studies a semester ahead (December 2008). I double majored in developmental psychology and philosophy, maintaining a 3.8 GPA currently (posted: 12/1/08), and have been inducted in numerous honor societies as a result. My career goal is to study School Counseling on a Master’s level, but advancement is always an option. I have experience in multiple social service and non-profit oriented environments. I have worked with KidsPeace (New Jersey), in Residence Life (Resident Assistant), the American Cancer Society (Team Development), at a local nursing home, and have served in various leadership and editor positions within publications at my undergraduate college. I would love to find a job through idealist.org that would enable me to benefit others, but also have the flexible schedule required for me to pursue my graduate studies.

# - # - #

“idealist”, Rachel [MC2008]

[JR: I love a "treasure hunt". Here's a challenge. Who is this "mysterious" young woman? And, how does a job find her with no last name? OK, where are the Zero Xeres (i.e., 08, 09, 07, 04, 05, and 06) to solve this mystery?]

# # # # #

   * Posted on: Sat, Dec 6 2008 8:22 AM

JEmail: Bennett, Lainie (MC1990) is offering a 10% discount on resumes to all Jasper!

REPORTING LIVE FROM THE LINKEDIN NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Manhattan College Alumni Society

Today’s Activity:1 question

Questions & Answers (1)

Any Manhattan College Alums Need A Professional Resume?   

Asked by Lainie Bennett, President/CEO at Millennium Personnel Corp.

Millennium Resume Service is offering a 10% discount on resumes to all students, employees and alums of Manhattan College. In addition to the discount, they will receive a free cover letter. A professionally written resume is the best way to ensure that you get an interview in this tight job market. Please look us up on the web: www.mpc-nyc.com

# - # - #

Bennett, Lainie (MC1990)

[JR: I'm a sucker for a Jasper discount!]

# # # # #

   * Posted on: Sat, Dec 6 2008 8:56 AM

Comment on JOY: Mahoney,Lisa [MC????] weds Villetto, Matthew [MC????] by Lou J.

I know these 2. They met freshmen year in 2000. Congrats!

# # # # #

   * Posted on: Thu, Dec 4 2008 1:12 PM

   * Updated: Sat, Dec 6 2008 9:10 PM

ENDNOTE: Friends with benefits

http://psychcentral.com/blog/archives/2008/11/03/friends-with-benefits/

Friends with Benefits

by John M. Grohol, Psy.D.

November 3, 2008

*** begin quote ***

One of my dearest female friends is in a relationship with a friend of her own. It’s not an unhealthy relationship, but the man has made it clear to my friend that it has a definite ending as he needs to move away for a job. She understands this, intellectually anyway. But there’s some question as to whether our intellect can overrule our emotion in every instance and in every situation.

*** and ***

But I also think it’s difficult for us, as humans, to separate sexuality from our emotions (even though it appears men are more able to do so than women). Even when men do so, I believe many do so only outwardly. Inside, perhaps unconsciously, they still feel the connection they’re making through sex.

*** end quote ***

I can’t think of one concept that has invaded the popular culture that is more destructive to marriage.

The concept of “compulsory education”, as implemented in Government Schools and Government Control of “Education”, has turned American children into mindless unthinking automatons. The ideas of Mann have made children into soldiers and factory workers easily led by the elite. The “eduction industry” is the breeding ground of Socialists and Communists.

“Friends With Benefits” is a result of that hedonistic, smirking, “make me feel good” thinking.

Hopefully, the next generations of Jaspers are smart enough and moral enough to realize the trap.

# # # # #

   * Posted on: Sat, Dec 6 2008 8:37 PM

# # # # #

# # # # #

“Bon courage a vous tous”

-30-

On November 1, 2008, Newsweek Magazine’s Sharon Begley pointed out in an article entitled Where Are the Cures? that “Scientists call the gulf between a biomedical discovery and new treatment ‘the valley of death.’  The article reiterated a common misperception of scientists and their role in therapy development.

Scientists are neither trained nor equipped to take therapies from laboratory to clinical trial.  They do experiments on rats and other small animals in their laboratories to establish proof of concept.  Most scientists don’t know how to scale therapies from rats to humans.   They don’t know how to get therapy ready for human use.  Few have participated in or organized clinical trials.  Very few know how to raise the funding necessary for clinical trials.

In the days of Jonas Salk, it was possible for a single scientist to usher a therapy from laboratory to clinic without involving a company.  These days are now over.  Therapy development has become big business.  Pharmaceutical companies are therapy development machines.  They have regulatory, preclinical, and clinical departments.  What they cannot do in-house, they farm out to consultants and contract to professional organizations that will do the job in accordance to regulatory standards and on schedule.

Many clinicians are too busy to participate in, much less organize clinical trials.  Most have not been trained to run clinical trials.  Despite the advent of “evidence-based” medicine, most therapies (particularly surgery) that clinicians use have never been tested in double-blind randomized placebo-controlled trials while new therapies are subject to rigorous standards of multicenter phase 3 clinical trials.  Who will bridge the chasm?

In theory, the pharmaceutical industry is the bridge between the bench and bedside.  However, the industry estimates that it now takes over a billion dollars and ten years to move a therapy from discovery to market.  The funds must come from the investors, government, or foundations.  If funds are insufficient, it takes forever to develop therapies and many bite the dust along the way.  This problem is not unique to spinal cord injury or so-called “orphan disease” that affects less than 200,000 people.  It affects development of all therapies.

Pessimism seems to have gripped the clinical and patient communities.  In spinal cord injury, for example, after decades of telling patients that they will never walk, many clinicians do not believe that any therapy will restore function, particularly in people who have been injured for many years.  Understandably, patients, having been told by their doctors that no therapies are or will be available, are going overseas in droves to spend their life savings for unproven experimental therapies.

Medical tourism only aggravates the problem by diverting people and resources to therapies that are unlikely to help and may well cause harm.  Few of these clinics have done any serious research on the conditions that they are claiming to be able to cure.   They often take some undocumented therapy, claim that it is 100% safe and 80% effective, advertise the therapy to patients with incurable conditions, and charge them what the market will bear.  At present, that market price is US$20,000-$30,000.

Clinics that sell experimental therapies have a serious conflict of interest.  They depend on the funds for their existence and therefore cannot be relied upon to provide objective opinions concerning the therapies.   Most will not submit their therapies to rigorous clinical trials and few collect or publish data concerning the risk and benefit of the therapies.  Worse, many offer false hope to lure people to pay the cost of therapies that are unikely to work.

Competition for funds to develop therapies is fierce at every level.  At the National Institute of Health (NIH), less than 10% of grant applications are being funded.  Clinical trial grants must compete with basic science.  Some diseases, such as cancer and AIDS, get much more funding than others.  Within companies, the fight for resources is just as intense.  Probably less than 5% of initiatives get off the ground.  In the marketplace, probably less than 1% of biotech companies succeed in getting a therapy to market.

Every therapy must be championed by one or more people who obtain the support of key opinion leaders, compete for internal and external funds, and lead the product development and clinical trial teams.  These teams may have hundreds of people.  Many companies spend a large portion of their budget on public relations to convince internal and external investors to support the project.  Each therapy must pass through many gauntlets in the quest for funds.

Product development decision-making is risk-averse.  A therapy must supported by good basic science before peer review panels at NIH will approve a clinical trial grant.  It must be well-patented before any company will invest.  Once underway, each therapy must achieve multiple milestones or else the entire project may be “canned”.   Many companies have “canning” committees, whose only purpose is to stop development of risky projects.  Many therapy development projects run out of steams or funds before reaching clinical trial stage.

Many companies consequently invest a lion’s share of their research funds on “me-too” products or product cycle development that pose the little risk of failure.  “Me-too” products are drugs that do the same thing and the clinical trials just have to show therapeutic equivalence.  Product cycle development usually produce different versions, such as capsules or time-release, of the same drug, to extend the life of the product.  But these activities just split the market and do not generate new business.

Spinal cord injury is not only a small market condition but is regarded by many doctors to be one of the most challenging unsolved problems in medicine.  Many in the spinal cord injury community have given up and have gone overseas to fly-by-night clinics to try unproven therapies.  In the face of economic, clinical, and community pessimism, how does one convince our government, companies, and foundations to invest in developing therapies for spinal cord injury?

Christopher Reeve once pointed out that he could accept it if scientists told him that we don’t know enough about growing the spinal cord and it will take a long time.  Instead, most scientists told him that the spinal cord can regenerate.  The major obstacles to cure is money and politics.  Relatively little money is required and a large majority of Americans favor the research.  We spend more before breakfast in one day of an unpopular war in Iraq than a whole year of spinal cord injury research.  Christopher set about reversing the money and politics.  Unfortunately, he died before he completed his task.  It is now up to us.

Three developments in recent years give me hope that curative therapies for spinal cord injury will happen and faster than most of us think.  First, much recent evidence suggest that spinal cord injury therapies are profitable and worthwhile.   Several therapeutics companies are investing in therapies for spinal cord injury.  Second, we have a pipeline full of promising therapies that work in animals.  We just need clinical trials to test these therapies.  Third, spinal cord injury clinical trials are much efficient than for other conditions.  We have well-standardized and validated clinical outcome measures.  I will discuss each of these sequentially.

The therapeutics industry is under much pressure to reduce costs and increase the efficiency of therapy development.  “Me-too” drugs and product cycle development can only generate so much revenue.   A company that succeeds in developing a new class of products for a new condition can make many billions.  One successful product can boost a company from a struggling biotech company to a fortune 500 company.  A few major products can make a big difference, even for large companies such as Pfizer.

Much evidence suggest that investors now believe that profits can be made from small-market conditions.  For example, multiple sclerosis (MS) affects only about 380,000 people in the U.S.  Biogen and Teva are making billions from several drugs they have developed for this condition.  One spinal cord injury company, Acorda Therapeutics, has made it through its initial public offering and has achieved market capitalization of about $600 million in the past year.

These examples are attracting the attention of major pharmaceutical companies.  They appreciate the argument that spinal cord injury may serve as a bridge to other conditions.  For example, a therapy that protects, repairs, regenerates, or remyelinates the spinal cord may well be applicable to other more prevalen conditions such as traumatic brain injury and stroke, multiple sclerosis, peripheral nerve or neurodegenerative diseases.  More important, Just spinal cord injury alone can provide sufficient return.

What is the price of a therapy that restore function in spinal cord injury?  As people found out, the limit is much higher than people thought.  Would people and insurance companies be willing to pay $20,000 for a therapy that restores bowel and bladder function?   Insurance companies will because that is how much they would pay for surgery or life-long care of complications.  Even if only 100,000 people received a $20,000 therapy, the revenues could potentially add up $2 billion.

The standard joke in the spinal cord injury community is that the rats have it better than humans because there are therapies that allow them walk.  We should be glad that there are many therapies that make rats walk.  Things that work in a rat may not work in human.  That is why is good that many therapies work because the chances that one or more may be effective in humans is greater.  The vast majority of scientists believe that the spinal cord can regenerate if several obstacles to regeneration can be overcome.

The first obstacle is the injury site itself, which is often inhospitable to axonal growth.  Astrocytes in the spinal cord may wall off the injury site, if it considers it to be “outside” of the cord.  The injury site may be surrounded by extracellular chondroitin-6-sulfate-proteoglycan (CSPG) that normally deflects axonal growth.  These problems can be overcome to some extent by transplanting cells that bridge the injury site.  The bacterial enzyme chondroitinase breaks down CSPG.

The second obstacle is the lack of sustained growth factor support.  During the first hours and days after injury, the injury response and inflammation causes cells to release growth factors.  However, regeneration is slow and may take months or even years after injury.  A sustained soure of growth factors is needed to stimulate long-distance regeneration.  The recent discovery that lithium and other glycogen synthetase kinase (GSK) inhibitors stimulates neurotrophic factor production by umbilical cord blood mononuclear cells is of considerable interest.

The third obstacle is the presence of axonal growth inhibitors.  The most prominent and best studied of these inhibitors in myelin-based Nogo which can be covered by antibodies.  Alternatively, it is possible to use soluble Nogo receptor protein itself which binds to all the proteins that activate the Nogo receptor.  Finally, the intracellular messenger for the Nogo receptor is rho which is phosphorylated by rho kinase.  Inhibitors of rho and rho kinase stimulate regeneration, leading to a new class of therapies called “rhok and rho” inhibitors.

Unlike other conditions such as stroke and traumatic brain injury, spinal cord injury outcomes are predictable and well-defined.  For example, less tha 5% of people who have so-called “complete” spinal cord injury will recover walking spontaneously.  Any therapy that restores walking in even 20% of such patients can be detected with small populations of patients.  Thus, while a trial for stroke may require a thousand or more patients, a trial for spinal cord injury may show significant results with only  100 patients.

Several outcome measures in spinal cord injury are well-defined and have been extensively validated.  For example, the American Spinal Injury Association (ASIA) classification, motor and sensory scores have been successfully used in the National Acute Spinal Cord Injury Studies (NASCIS), the first double-blind randomized placebo-controlled clinical trials to show an effective therapy for acute spinal cord injury.  Other examples include the Walking Index of Spinal Cord Injury (WISCI) and the spinal cord independence measure (SCIM).

Neuroprotective, reparative, regenerative, and remyelinative therapies can be tested in spinal cord injury.  The first should be tested in acute spinal injury.  The second would be appropriate in subacute injury.  The third and fourth can be tested in chronic spinal cord injury, where there is no dearth of patients willing to volunteer for clinical trials.  Thus, spinal cord injury is an excellent model injury in which to develop and test therapies.

Finally, rehabilitation of spinal cord injury is more advanced and standardized than for other types of neurological disorders.  Recent studies, for example, have shown that intensive locomotor exercise facilitates recovery of walking in spinal-injured patients with incomplete spinal cord injury.  In many ways, that is what therapies are supposed to do, i.e. make the injury more “incomplete”.  Well-established locomotor training and other rehabilitation protocols are available.

We should be optimistic about the likelihood of safe and effective therapies that restore function in spinal cord injury.  Progress in the past 8 years has been slow and limited but this is astonishingly not due to the difficulty of the problem or ignorance about the therapeutic mechanisms needed tor restore function.  Rather, the problem appears to due to lack of investment by government and companies in clinical trials.  If I had to choose a problem to have, I would choose this one because it is easy to solve.

Christopher Reeve once said he could accept it if the reason why we don’t have a cure for spinal cord injury is because the science is too difficult or the spinal cord simply cannot regenerate.  However, he simply cannot tolerate it when the problem is not science or the inability of the spinal cord to regenerate but lack of funding and politics.  Worse of all, the amount of funding required to cure spinal cord injury is not so great.  We probably spend more in one day of the Iraq war.

The “chasm” between the bench and bedside is not unique to spinal cord injury.  The pharmaceutical industry estimates that it takes an average of more than ten years and over a billion dollars to take a therapy from discovery to market.  All fields, from cancer to AIDS, have this problem.  The solution to this problem is to have develop many therapies in parallel.  Each clinical trial has a finite probability of success.  More clinical trials add up to a greater probably of success.  Unlike casino, if anyone wins, everybody wins.

In summary, the field of spinal cord injury is poised for the first successful clinical trials showing therapies that restore function in chronic spinal cord injury.  We have many promising therapies that restore function in animals and are likely to be safe and effective in humans.  Some evidence suggest that combination therapies will be more effective than individual therapies.  Well-standardized, sensitive, reliable, and extensively validated outcome measures are now available for spinal cord injury clinical trials.  The solution is clear.  We need to do clinical trials.

This week I will not belabor the point that the evidence shows that the U.S. economy is sinking into a recession much deeper than most of us have ever experienced.  Below I have summarized the most important of last week’s bad news.  But after that I am also including a recap of the government programs and facilities designed to put a floor on the economic decline.  These programs and the announcement this weekend by President-elect Obama that he plans public works programs, such as rebuilding roads and bridges, expanding broadband Internet access, and producing alternative fuel and energy sources, will help to create jobs and stimulate the economy, with the hope of instilling confidence in the financial system and spurring consumer spending.  Occasionally, I see references in the media made to stemming the decline in housing prices, but we must remember that housing is in the midst of a correction, not a collapse (please see this prior post for an explanation.)

Economic Data

Government Program Scorecard

There have been so many federal government programs instituted since the beginning of the credit crisis, I thought it would be helpful to compile a scorecard (SOURCE: RGE Monitor):

The size of the bailout, or whatever one would like to call it, is more than $7 trillion, and that does not include the government’s pledge to back the more than $5 trillion of mortgages held by Fannie Mae and Freddie Mac.  Here are some interesting comparisons to put this amount in perspective:

chart courtesy of voltagecreative

via mindtangle (note that this data is already old!)

chart courtesy of Portfolio

via Agora Financial

[SOURCE: The Big Picture Blog]

One interesting point to note from the charts above is that the expenditure on World War II exceeded the total gross domestic product for the U.S.

Market Behavior.  The plots of the two leading indices, the S&P 500 and the Nasdaq 100, provided for the most recent 30 business days, show that last week, since Obama has presented his economic tem and has outlined the seriousness and aggression they plan  to utilize, the market has responded with another recovery attempt.  In fact, if this trend continues, we may have witnessed a major market bottom on November 20.  This  recovery is still ongoing, as is also confirmed by our MACD trend analysis. 

Our Timing Systems.  We use two independent timing systems, referred to as slow and fast.  The slow system is based on conventional trend analysis, and its main ingredient is a modified MACD (Moving Average Convergence-Divergence) approach, determining and extending the trend of the most recent 30 business days.

The fast timing system is our original contribution.  It uses volume data of the most recent 15 days and provides daily forecasts – one day at a time.  It is fairly reliable for the upcoming 1-2 dys.  For both systems we update our calculations daily.  In the slow system trades are typically carried out 2-3 times a month, while in the fast system trades are performed almost every day.

The trades leading to our investment returns are carried out within the Rydex funds, providing a large variety of pairs of index funds, direct and inverse.  Changes in the direct funds are in phase with market changes, while for inverse funds they are out of phase – in fact opposed to them.  You can find a lot more about the Rydex funds in www.rydexfunds.com.

Investment Returns.  The table below compares the market and out investment returns.  All returns reported are our real time returns obtained in managed accounts.  On occasions people have stated that some of out results are “too good to be true”.  To remove any doubt we provide, upon request, fund financial statements for the timing system and period of interest.  If interested, you can drop us a note, and you will get the appropriae statement by return email.

The table is organized in two groups.  The upper 4 rows provides returns for completed periods, and the returns are provided with two decimal figures.  The lower 3 rows are for ongoing periods changing every day, and the returns are provided with one decimal figure.

As to the returns, 2007 was a decent year in the market, and both of our timing systems have outperformed the market.  As to 2008, it has been very problematic, especially the October crash, and the table is sprinkled with too many minus signs.  So far our timing systems have not handled well the market crash in the second half of 2008.

Nathan Jacobi, Ph.D.

Registered Investment Advisor

n.jacobi@shrago.net

CALIFORNIA MORTGAGE SERVICING REQUIREMENTS

www.uslenderaudit.com

NOTE: The following is to be used for informational purpose and does is not legal advice. Legal practioners should not use these summaries to the exclusion of the actual statutory and regulatory materials. Note also that this does not include judicial interpretations.

Cal. Civ. Code §§ 2937, 2954 to 2954.8 (West)

Scope: Transfer requirements apply to transferor of servicing of

mortgage or deed of trust secured by real property located in state

containing one to four residential units. § 2937. Escrow requirements

apply to lenders or purchasers (and their agents) of obligations

secured by real property containing a single-family, owneroccupied

dwelling. § 2954. Provisions of § 2954.2 apply to

mortgagees of real property containing a one to four family

residence.

Exclusions: ??Servicing agent” does not include a trustee exercising

a power of sale pursuant to a deed of trust. § 2937.

Transfer Notice Requirements: Transferor and transferee of servicing

must notify borrower (or subsequent obligor) before borrower

becomes obligated to make payments to new servicer (if a notice

of default has been recorded or a judicial foreclosure is in progress,

should notify the attorney named in the notice of default or

foreclosure). Notice to borrower must include name and address of

new servicing agent; date the transfer will take place; address to

which payments should be sent; due date of next payment. Transferor

must notify new servicing agent about existing insurance

policies servicer is responsible for maintaining, including flood and

hazard insurance. Borrower not liable for amounts paid to former

servicer prior to borrower’s receipt of notice of the transfer, or for

late charges if these payments were otherwise on time. § 2937.

Borrower Inquiries: Borrower may request additional account

statements (discussed below). See also Appx. E.2, infra, for payoff

statement requirements.

Escrow Requirements:

Restrictions: Escrow may be required only for loan insured or

guaranteed by certain government agencies, or loan of more

than ninety percent of sale price, or after borrower has missed

two tax payments. If escrow used in absence of these conditions,

borrower must be told it is voluntary. § 2954. May not require

Appx. E.1-AZ Foreclosures

2

deposits in escrow account in excess of that permitted by

RESPA or reasonably necessary to pay taxes or insurance

premiums as they become due. Excess must be refunded within

thirty days, unless parties agree otherwise. Additional payments

may be required to make up deficiencies. § 2954.1.

Recordkeeping and Notice: Itemized annual accounting must be

provided free within sixty days of end of calendar year; information

includes accounting of moneys received, credited, or

disbursed for principal, interest, late charges, and payment of

taxes and insurance. Additional accounting statements at borrower’s

request, for prescribed fees?$.50 each for statements

requested in advance on a monthly basis, $1 when requested for

only one month, $5 for single cumulative statement. Borrower

must be notified of availability of additional statements. No

increase in monthly payments permitted until borrower has been

given an itemized accounting, listing the new payment amount

and explanation of reasons for increase. §§ 2954, 2954.2.

Handling of funds: Payments shall be made promptly to ensure

that insurance remains in force and tax payments are not

delinquent. § 2954.1.

Interest: Financial institutions must pay two percent interest on

funds held in escrow accounts for one to four family residences,

and must not charge any fee for maintaining escrow account that

will result in payment of less than two percent interest on

monies held in escrow accounts. Interest shall be credited to

borrower’s account annually or upon termination of account.

§ 2954.8.

Private Mortgage Insurance Requirements: If private mortgage

insurance is required, lender must notify borrower within 30 days

after close of escrow of the conditions under which cancellation is

possible, the information needed to communicate with lender and

insurer, and the procedure for cancellation. Thereafter, lender must

provide annual notice that cancellation may be possible, and an

address and phone number for inquiries. This information may be

included in the annual accounting required by § 2954.2. Private

mortgage insurance on a loan for personal, family or household

purposes secured by an owner-occupied one to four unit dwelling

may be cancelled by a request in writing two years after origination

if the loan balance is not more than 75%, no required payment has

been more than 30 days late in the past 24 months, and no other

default has been recorded. Within 30 days after cancellation,

insurer must refund any unused premium to person designated by

insured. These sections do not apply to loans such as FHA and VA

that require insurance for the life of the mortgage. Cal. Ins. Code

§§ 117, 12640.02; Cal. Civ. Code §§ 2954.6 through 2954.7.

Additional Requirements: None specified.

Private Remedies: Any person harmed by violation of escrow

requirements may sue for actual damages and injunctive relief.

§§ 2954, 2954.1. Any person harmed by violation of private

mortgage insurance requirements has a cause of action for injunctive

relief, treble damages, costs and reasonable attorney fees. Cal.

Civ. Code § 2954.6.

State Remedies: Willful and repeated violations of escrow requirements

punishable by fines of $50 to $200. § 2954.

Special Servicing Requirements for High-Cost Loans: Cal. Fin.

Code §§ 4970, 4973 prohibit increasing interest rates upon default

on payments. See also Cal. Fin. Code § 1916.7 (adjustable rate loan

requirements.)

Recordkeeping and notice: Borrower must be provided without

charge notice stating amounts to be paid into escrow sufficient

for payment of taxes and insurance when due. § 36a-716.

Handling of funds: Taxes and insurance premiums must be paid

when due, provided sufficient funds are in account, and bills

received at least fifteen days before due date. If amount in

escrow account insufficient after borrower has paid amounts

requested by servicer, servicer must pay taxes and insurance

from its own funds. In such case, servicer must give borrower

option to pay shortage over period of not less than one year, and

servicer may not charge interest on the shortage during that year.

§ 36a-716. Connecticut Housing Finance Authority (CHFA)

loans must provide for monthly payments into escrow, and must

reserve amounts sufficient to pay estimated amounts for taxes

and insurance when due. Conn. Agencies Regs. § 8-248E-27.

Interest: Lender or servicer must pay interest on funds held in

escrow for taxes and insurance. Rate set by Banking Commissioner

based on Federal Reserve Board deposit index, except

shall not be less than 1.5%. § 49-2a (exceptions set out in

§ 49-2c). CHFA loans must pay at least four percent interest on

escrow account. § 8-248E-27.

Private Mortgage Insurance Requirements: Lender who requires

private mortgage insurance on a loan for personal, family, or

household purposes, secured by a owner-occupied one-to-four unit

residence, must disclose at time application is filed that this

insurance is required, that its purpose is to protect the lender, the

conditions under which borrower may cancel, and a good-faith

estimate of initial and monthly costs. This may be included in a

RESPA good faith estimate. These disclosures are not required for

loans such as FHA or VA that require insurance for the life of the

loan. Conn. Gen. Stat. §§ 36a-725 and -726.

Additional Requirements: None specified.

Private Remedies: Mortgage servicer is liable for any penalties,

interest, or late fees resulting from late payments of taxes and

insurance in violation of § 36a-716, and for actual damages,

including losses that should have been covered by insurance that

was allowed to lapse, plus costs and reasonable attorney fees.

§ 36a-717.

State Remedies: Banking commissioner may order restitution or

issue cease and desist orders. § 36a-718. Lender or servicer can be

fined not more than $100 per violation for failure to pay interest on

escrow accounts. § 49-2a.

Special Servicing Requirements for High-Cost Loans: Conn. Gen.

Stat. §§ 36a-746 to 36a-746g prohibit increasing interest rates upon

default on payments or charging fees for loan modification.

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Hi, i hope that you all have had a wonderiul weekend,  today i though we should touch on finance.  The following is from the Mortgage Business online, which i believe has a lot of significance on how we will weather the economic storm.

“

Australia’s economy does not have to fall into recession but negative sentiment could see the country talk itself into one, BIS Shrapnel warned today.

According to the analyst the RBA’s recent rate reductions and government’s fiscal stimulus package will reboot the economy with Australia unexposed to the dire problems facing other developed nations.

The real problem, the economic forecaster said, is the lack of confidence affecting household and business expenditure.

BIS Shrapnel’s comments coincide with prime minister Kevin Rudd’s calls for consumers to “go out and spend” their share of the government’s cash injection to keep the economy from stalling.

“By spending their payments, families and pensioners will help create Australian jobs and strengthen the Australian economy,” Mr Rudd said.

“I urge families and pensioners who have been doing it tough to spend their payments in a responsible way to make their family Christmas all the more special.”

The government is handing over $4.8 billion to pensioners and $3.9 billion to families in a bid to ward off an economic downturn.”

And then we have the employment uncertainty as Anz has scaled back its operations….

ANZ confirmed on Friday that up to 800 of the bank’s employees will lose their jobs before Christmas.

In a statement last month, the bank told Mortgage Business the job cuts will be to middle management roles.

Meanwhile the broader outlook for employment continues to weaken with the Olivier Job Index recording a drop in job advertisements for the fifth consecutive month in November.

48,000 fewer jobs were recorded per week on average over the month, compared to October, the index showed.

With the doom and gloom on the stock market and the scare of families loosing their income i do believe that we can all come out on top. Look at your budgets and live within this, dont over spend on credit cards and finance the I wants that you dont have to pay for interest free ,…. Be wise with the funds the government is handing out, and be wise with Xmas spending…….

The pitted roads around Multan, the city of saints, stretch flat across the fields. They lead past rundown factories, workshops, shabby roadside teashops and mile after mile of flat fields broken only by the mud and brick houses of the villages of Pakistan’s rural poor. One road leads south-east to the nearby city of Bahawalpur, the biggest recruiting base of the militant groups currently being blamed by India for the Mumbai attack; another leads north-west to Faridkot, the home village of Mohammad Ajmal Mohammad Amin Kasab, a 21-year-old Pakistan national named yesterday in the Indian media as the only gunman involved in last week’s atrocity now alive and in custody.

Already a picture claimed by the Indian media to be Kasab, showing a young man dressed in combat trousers, carrying a backpack and an AK47, on his way to to Mumbai’s main station to carry out his deadly work, has become an iconic image of the assault on the city.

Two other militants have been named. Like Kasab, according to the Indian media reports, they are said to be from the Multan region, southern Punjab. They, too, are said to be members of the Pakistan-based militant group Lashkar-e-Taiba (Army of the Pure) and to have followed a five-month training period to prepare them for the attack. The charge of the group’s involvement, denied by its spokesmen, has explosive political consequences for the volatile region and must be treated with caution. In the long-running contest between India and its neighbour, propaganda and misinformation is far from rare. But if the details now emerging are confirmed, the link to Pakistan may spark war.

For though it is widely acknowledged that Pakistan’s civilian government has limited control over local militant groups, it is clear that Pakistan’s military and security establishment does.

Lashkar-e-Taiba was originally founded with the support of the Pakistani military intelligence service, the ISI, to fight as ‘deniable’ proxies in the contested territory of Kashmir, part of a decades-old strategy by the militarily weaker Pakistan to ‘bleed’ its bigger rival. The ISI also has connections with Jaish-e-Mohammed, the second group that New Delhi security officials has accused of involvement in the Mumbai attacks.

For the moment little is known about the three men named yesterday or their accomplices. But their place of origin comes as no surprise to experts. Both Lashkar-e-Taiba and Jaish-e-Mohammed draw the majority of their recruits from the southern Punjab. Last week The Observer travelled to the twin towns of Multan and Bahawalpur, the centres of the region, to investigate the reality of the groups’ power on the ground, their relations with the Pakistani intelligence services and the factors which drive young men, possibly including the Mumbai gunmen, to join them.

Trace a line from where US special forces battle Taliban fighters in the corner of empty desert where the Afghan, Pakistani and Iranian frontiers meet, follow it through the badlands of the Pakistani North West Frontier and on through the bomb-blasted cities of northern Pakistan and down through Delhi, attacked in September, to shell-shocked Mumbai, and one thing becomes clear: this zone has displaced the Middle East as the new central front in the struggle against Islamic militancy. The southern Punjab falls on the line’s centre point. There may be doubt over the identity of the attackers, but there is none that Multan and Bahawalpur and villages such as Faridkot are in the Indians’ sights.

For most militants in the region the story - and that of Azam Amir Kasab is unlikely to be very different - starts at school. The southern Punjab has one of the highest concentrations of religious schools or madrassas in south Asia. Most teach the ultra-conservative Deobandi strand of Islam that is also followed by the Afghan Taliban and, crucially in this desperately poor land, offers free classes, board and lodging to students.

In Bahawalpur the Jaish-e-Mohammed group, believed responsible for a string of brutal attacks across south Asia, including the murder of Jewish American journalist Daniel Pearl, has been linked to two such madrassas. One is the headquarters of the group - a semi-fortified and forbidding complex in the centre of the town. The other is the Dar-ul-Uloom Medina, where the brother-in-law of Rashid Rauf, the Bahawalpur-based suspected British militant thought to have been killed in an American missile attack eight days ago, is a teacher. Surrounded by some of the 700 students, he told The Observer that ‘jihad’ was the duty of all his young charges.

The pupils at the more radical Bahawalpur and Multan schools grow up soaked in extremist ideology. The most senior cleric in Bahawalpur, Maulana Riaz Chugti, said his students could only go ‘for training or to fight’ after their studies or when the schools were shut for the holy month of Ramadan.

‘To fight in Afghanistan or Kashmir and to struggle against the forces who are against Islam is our religious duty,’ Chugti, who oversees the education of 40,000 students, told The Observer.

In Bahawalpur both the effects and the limits of the recent reversal of policy by the ISI, the powerful Pakistani military intelligence service, are evident. A crackdown on the militant groups was launched after they were blamed for a bloody attack on the Indian parliament in 2001 which almost brought India and Pakistan to open war. The groups, previously seen as a strategic asset, were suddenly seen as, at least for the moment, a liability. When their operatives were linked to plots to assassinate the then President, and evidence of collusion with al-Qaeda itself became clear, the pressure mounted on the ISI to rein in their former protégés.

‘The militants have had to lower their profile,’ said one local security official. ‘They are no longer recruiting or preaching or raising funds openly. Things are much more difficult for them. If they recruit at all they do it individual by individual, not en masse like before. There is no production line.’

But the groups - along with break-away outfits with their roots in sectarian Shia-Sunni violence in the region - still have a significant presence in the region, particularly in remote villages such as that of Azam Amir Kasab. ‘They may be semi-retired, but in my village there are 300 men who have fought in Afghanistan and have training and can be activated with one phone call,’ one local former militant said. That fighters for one operation should come from the same place was not surprising. ‘When I went to Afghanistan I went with five guys who I knew from school,’ he said.

The young men of the southern Punjab have been found across a broad swath of south Asia and even further afield. In Kabul in August, The Observer interviewed Abit, a 23-year-old from Bahawalpur who had surrendered to Afghan police seconds before he was supposed to blow himself up in a huge truck bomb. Other militants from the town have been found as far away as Bangladesh. Lashkar-e-Taiba members have even been located in Iraq.

The groups are also of great interest to British intelligence services, who fear their key role as intermediaries between young volunteers from the UK’s Muslim community - such as Rauf - and al-Qaeda leaders based in the volatile tribal zones along Pakistan’s western frontier. The groups, the sources say, have a UK support network to supply funding.

The groups’ relationship with the intelligence services is complex. Front organisations for the groups have even put up candidates in recent elections and travel without fear throughout Pakistan. Earlier this year The Observer interviewed a representative of one group alleged to be linked to Lashkar-e-Taiba in the foyer of a luxury Lahore hotel.

Local politicians said groups in the region were still powerful enough to intimidate the local government and security forces and even to collect tax or mediate in legal disputes in some areas. Roshan Gilani, a Shia community leader in Bahawalpur, said music shops had received Taliban-style threats, telling them to close or risk violence. Prominent Shias have been told they are on a hit list.

Until the Mumbai attacks, the recent series of bombings in India had been attributed by most analysts to a home-grown militant outfit: the Indian Mujahideen. With many highly educated and middle-class recruits among its ranks, and led by a 36-year-old computer engineer, the group’s members have a very different profile from the Pakistani groups’ recruits. But though their paths may be very different, the militants’ eventual destination - fanaticism, violence and hate - are the same.

Intelligence agencies have done much research since 9/11 into how individuals become terrorist killers. Dehumanising the enemy is seen as key. Civilians are no longer seen as innocent but as complicit in a war waged by their governments against Islam. Group dynamics also play a huge role, particularly when teams of militants are isolated from normal society for long periods of time. Training camps - such as those in which Azam Amir Kasab is said to have spent months - are the perfect way of reinforcing solidarity and the new ‘world view’ which will allow them to execute murderous operations, such as killing diners in a hotel restaurant in cold blood.

Indian authorities believe local members of the Indian Mujahideen may have acted as scouts to prepare the ground and gather intelligence before the attack. Security services now recognise that militant groups looking to prepare attacks seek out resources and often enter into temporary coalitions with other outfits when necessary. Though criminal links to Islamic militants are rare, they are not unknown, and there are some suggestions that local underworld networks may have been exploited to get the attackers to the targets by sea.

Lashkar-e-Taiba (Army of the Pure)

Battling to end Indian rule in Kashmir, this Pakistan-based group is routinely blamed by Indian security forces for attacks. The surviving gunman arrested in Mumbai is said to be a member.

Maoists, also known as Naxalites

Prime Minister Manmohan Singh has said the Maoists are the most serious threat to national security. Their battles with police cause a steady death toll.

Liberation Tigers of Tamil Eelam

The violence caused by this Sri Lankabased separatist group spilled into India in 1991 when a suicide bomber killed Prime Minister Rajiv Gandhi.

Sikh separatists

President Indira Gandhi’s Sikh bodyguards shot her in 1984 in revenge for the hundreds killed when the military, aiming to suppress separatist militants, stormed a temple in Amritsar. Riots followed.

Students Islamic Movement of India

An Islamist fundamentalist organisation. Indian police suspect involvement in the attack on Jaipur this summer.

United Liberation Front of Asom

Formed in 1979 to establish a ’socialist Assam’ through armed struggle. One of many such groups in north-east India.

Check your luggage at home and avoid excess baggage charge misery. Works with bags up to 44kg.

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Jubilant crowds cheer army counter-attack on Nariman building

Aftermath of the terror attacks in Mumbai

The Fed has indicated that they would like to be a buyer of Mortgage Bonds, which has resulted in attractive, lower rates right now. But as stated above, the trading environment is extremely volatile, and opportunities to capitalize on lower rates that make sense should be taken advantage of. There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Like many other recent legislative “solutions”, the restrictions might be very tight, with income limits set very low, and as a result, helping very few people. Remember, it may make sense for you to act now, and take advantage of current historically low rates…with the possibility of refinancing should rates decline further.

In other news to note from last week, the Bank of England and the European Central Bank both cut their key benchmark interest rates in an effort to revive their sagging economies. The reduction in rates was expected as part of a global coordinated effort, and our Fed is widely expected to cut its benchmark rate during its meeting on December 16. While a cut by the Fed often causes home loan rates to rise - because a Fed rate cut can lead to inflation, which is the arch enemy of Bonds and home loan rates - the deflationary environment we are currently in may prevent home loan rates from worsening significantly after the Fed cut.

I will keep you updated as things progress, but give me a call to talk about the current historically low rates, and how this opportunity might benefit you.

If you drive a car, truck or van for work, the Internal Revenue Service (IRS) has announced news that impacts you. That’s because the IRS has released the new standard mileage rates for 2009. The rates will be used to calculate deductible costs for driving an automobile for business, charitable, medical and moving purposes. The new mileage rates for business, medical and moving purposes will be slightly lower than the rates for the second half of 2008, which were raised in the middle of last year due to spiking gas prices. The rate for charitable driving, however, is set by law and will remain unchanged from 2008.

Beginning January 1, 2009, the standard mileage rates for 2009 are as follows:

Overall, these rates reflect the higher transportation costs compared to a year ago. However, the rates are slightly lower than the second half of 2008 to factor in the recent drop in gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, also enter the calculation.

But before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Remember, you don’t have to use the standard rate! Although the IRS provides the standard mileage rate for ease and convenience, you’re not required to use it. If you choose, you have the option of calculating the actual costs of using your vehicle instead of using the standard mileage rates. So keep that in mind as you calculate your automobile usage for business, medical, moving, or charity driving in 2009!

Structure is Everything

When ETFs were first being created they were called Unit Investment Trusts (UITs).  UITs are structured in a way that the investors in the fund actually can redeem the underlying holdings or have it done automatically on the UIT’s termination date.  For an ETF investor, redeeming the underlying securities is reserved only for market makers and is prohibited to individual investors.  The units can only be created and redeemed in units of 50,000. ETFs filed as UITs are held in trust and units of the trust are sold and traded. 

State Street’s “Spider”

The SPDR fund, SPY, is the oldest and most traded ETF in the US. SPY is set up as an UIT and State Street is the trustee of the fund.  SPY has no termination date and is continuously held until the ETF shares are sold. What is notable about the fund is that SPY sells at 1/10 of the index price.

The manager of SPY must fully replicate the S&P 500 at all times. The manager cannot lend shares as a way to generate revenue. Dividends must be held in cash until paid to shareholders. All Fund Expenses (0.08%) are paid from the dividends earned by the underlying holdings. 

Because SPY’s net asset value (NAV) always closely mimics the S&P 500 index it is very reliable and suitable for options trading.  Without this strict structure, price deviations from the index may disrupt an option strategy. Any strategy depending on the ETF tracking very closely S&P 500 should rely on SPY.  Because of that reason SPY is a favorite, relative to IVV for intraday trading.  Traders and strategy investors demand no surprises other than what is reflected by the underlying stocks or trading on the ETF.  In the same way, long term investors are not as concerned with small price differences.

Dividends that are earned from the underlying equities in SPY are held in cash until paid out on a quarterly basis. Since dividends cannot be reinvested, a ‘dividend drag’ is created where during climbing markets dividends are not reinvested to add to the return of SPY.  During descending market periods holding the dividends in cash is more profitable.

 iShares IVV

Barclay’s iShares, a leading ETF provider, offers IVV as a way to track the S&P 500. The open-end structure of IVV gives the portfolio manager more freedom.  For instance, IVV can loan shares and receive interest.  IVV is not required to hold all 500 of the underlying stocks in the index, although it usually does. The fund can also use an optimization approach to best represent the index.  All these freedoms allow IVV to reduce the cost of operation to investors. The most important difference between IVV from SPY is that as dividends are earned by the underlying equities, IVV reinvest them into the index until they are to be paid out quarterly. This will increase the return in an upward moving market or the opposite in a downward market.

Option trading on IVV is available; however trading volume is not as competitive as SPY. In highly volatile markets, we have not seen the option prices move with price fluctuations of IVV. For a protection strategy this may be ok, but for more speculative trading this could cause a problem.

Conclusion

The difference between SPY and IVV is fairly straight forward; do you want your dividends reinvested into the index, or held in cash. Since 2000 Barclays and State Street have competed for assets and continually lower expense ratios.  This competition has made the two ETFs some of the lowest cost funds available. We will note that SPY has the lower annual expense ratio at .08% and IVV closely trails at .09%.  However SSgA writes in small print on the SPY section of their website: “agreed to waive a portion of its fee until February 1, 2009, but may thereafter discontinue this voluntary waiver policy.”  This indicates that the small price tag on SPY may just be a bait and switch tactic. We suspect that as the market recovers and money flows back into the market that both fees will continue to decrease. When you are ready to invest in a large cap index ETF, you are now equipped to make the right choice for you.

Casey T Smith

Research by Kyle Waller

Just another WordPress.com weblog

Hi,

My name is Gary Stevens. I’m a 38 year old dad and  live in New York City with my wife and two kids. I wrote this (rather long) article because I know how being in debt and living day in and day out knowing that I owed money to someone else and worrying about when my own savings were going to run dry had literally sucked the life out of me. It had caused so much stress to me and my family and is something that i never want to go through again.

About 15 years back I was employed as a manager in a local  automobile showroon. I really enjoyed my job and had great people to work with and my boss although a perfectionist was quite considerate to us employees. However due to certain dealership issues the company unfortunately had to shut down and the job which I held for 7 years came to an end. I had lost my job but had enough savings in the bank to last me and my family a good 5 to 6 years. Anyway after a month or so of job hunting I finally found one with a health care company which was not too far from my home. The pay was actually better than that of the previous company I worked with so I gladly accepted the job. However a few weeks into the job and my boss was already asking me to put in extra hours of work promising me incentives or something. He was also starting to get a bit nasty and would keep playing his little mind games with me whenever he had the chance. I had already been planning a couple months earlier of starting my own real estate brokerage which is something I always wanted to do and had taken the necessary exams to do so. I was getting sick and tired of my present job and decided now was the time to do it. So I sent in my resignaton from the company and walked out a little nervous but a much happier man.

Three months into my resignation my dream became a reality and I finally set up my very own real estate brokerage. For the first one year I was only involved with the brokerage side of the business and was basically a middleman between the buyer and the seller. The properties I sold were in the price range of $500,000 to $1,000,000 and at a 3% commission I was pocketing $15000 to $30,000 per sale. One year into the business and I had successfully managd to sell 14 homes averaging more than a sale a month. I had made more than 10 times the income I would have made at my regular job and I kept reinvesting the profits back into the business. I soon got onto buying properties of my own and selling them for a solid profit. The profit margins were far higher from selling properties of your own rather than acting as a middleman but it was also much more riskier. I started out small but my business soon expanded and in a matter of time I had three employees working for me. I now owned 8 properties bought with loans from  banks as well as my own funds.

However with the economic downturn in the US and with families cutting down on their expenses I was unable to find any new buyers to sell to. The mortgage still had to be paid though and I had invested most of my savings into the business. The combined mortgage came to about $50,000 a month and with only $250,000 in savings I had to do something quick.  A couple months later though the economy was still in a bad state and inspite of lowering the sale prices considerably I only managed to sell 1 property. I was now in a really bad state and with over $80,000 in debt  I was getting desperate.  After being refused a loan by various debt relief agencies edebtassurance agreed to give me a personal loan for a pretty large sum. That helped keep me afloat for a while and gave me time to calm myself and think of the next step to take.

While I was researching on the internet for debt relief providers I stumbled upon a book called Multiple Streams Of Income by Robert.G.Allen. Apparently Robert had quite a lot of experience in the real estate industry and in generating income streams from various sources. I had heard about him before but never really bought  any of his books. His book priced at $29.95 was a downloadble product and came with a 1 year money back guarantee. It seemed like it would be an interesting read and something I could really use considering the situation I was in.

I bought the book and as i read through it I was astounded by the number of ideas this guy had and the way he could turn relatively simple ideas into huge profitable income streams. I found some parts to be a bit unnecessarily long but overall his ideas and methods of generating incomes from various sources were simply brilliant. I personally learnt so much about stock options, tax liens, index funds, covered calls, discounted mortgages and some other interesting things which I never even heard before.  I learnt how in an economic downturn tax liens could be extremely profitable and where to get them cheap and sell them for a high profit. I made an absolute killing buying and selling tax liens and soon managed to pay off my mortgage. His report on how he made $24,000 online in 24 hours has opened my eyes to the power of the internet and literally how much money can be made online.

The knowledge that I gained from this book is what got me and my family out of debt and is the reason why I can look forward to future investments instead of worrying day and night about my dues. I would recommend this book for anyone who is interested in learning new, different and creative methods of generating a solid income apart from your regular 9 to 5 and definitely to anyone who is in debt

You can check out his book at www.robertallenmedia.com

December 8, 2008 at 1:36 pm

A few years back when the Indonesian government, on the advice of the World Bank and IMF, decided to make cuts in subsidies for fuel. This caused a lot of resentment, and demonstrations took place in the major cities.

The argument from the defenders of the cut in subsidies was not bad, on my view. Subsidies used to be relatively cheap economically when Indonesia was a great net exporter of oil, and very easy to administer. The effect would be to support infrastructure across the country. Now the subsidies are a lot less cheap.

In addition to subsidies being expensive, there are two main downsides to this policy. From a distributional perspective it is a problem that the more fuel you consume, the higher the subsidy. So the richer you are, the more subsidies you get. From an environmental perspective it is a problem that the relative benefits of investing in less fuel consuming means of transportation have been low.

Together, these two problems go some way toward explaining the huge problems of traffic congestion and pollution in Indonesia.

In the short run it is very hard to do much about it. Cutting the fuel prices has been unpopular in particular, of course, among minibus and pedicab drivers who see part of their income disappearing. The ‘deal’ when cutting the subsidies was allocate funds instead for transfers targetted directly for poor groups, the socalled Bantuan Langsung Tunai. But these funds are allocated mainly for non-working poor, and they are not as easily administered as are subsidies. At the local level, it is of course a hassle who gets the benefits, and who does not.

The government is now rowing back on the issue, re-introducing the subsidies. According to The Jakarta Post, the government’s main argument is to benefit industry and trade.

If nothing else, this move should at least benefit the government in the upcoming elections next year. The theory of political business cycles could not have predicted a more perfect date: If you set aside a little time for a quick legislation process and swift implementation, the first effects should be felt by voters just in time for the elections.

Of relevance here is a recent report on Air Pollution in Mega-cities, which states:

[first published May 8, 2006] I lied. I wrote that this would be the concluding part of this series on defining the world’s mortacracies, with my identification of the final list and what to do about them. But, I came across the Fund For Peace webste on failed states with beautiful data for my purpose here. So, never one to let good data rest in peace, I will exploit them to further define mortacracies.

Before going on, I have to clarify a possible confusion of terms. In line with my source, I will have to use the term “state” for the sovereign nations or countries of the world. In previous parts, I have been using the term “country,” which is a more general term for both a state and the non-sovereign territories of a state, although by context it should have been clear that I meant states. Sometimes, because of my background in international relations, I also may unthinkingly use the term “nation” for state, or “nation state.”

Now, keeping in mind that I am not focused on defining failed states in order to assess the risk of conflict, as is The Fund For Peace, but on defining mortacracies, not all 12 indicators are relevant t this purpose. So, I excluded indicators 1, 5, 11, and 12, and recalculated the total sum of the remaining eight indicators. The maximum possible failure is a total sum of 80 on these eight indicators, and the minimum is 0. The worst failure, then, is Sudan with a total of 74.6, and the least failure is Norway with 9.8 (these are the same lowest and highest failures on all 12 indicators). The U.S. is at 21, just above the U.K., which is 20.7. The average is 45.9, with a median of 50.3 and a standard deviation of 16.7.

The next step is to standardize these totals to get a relative picture of what nations are high in failure and to plot the result. The plot is shown below (if the plot is unclear or does not show, see here:

These comprise the 21 states shown below (if the list is unclear or does not show, see here):

This is quite a list. Unlike some of the other lists of possible mortacracies, this one has virtually all the states I would have included intuitively, especially the top ones. Even North Korea and Burma are captured by these indicators.

Now, from all I have done, it is time to choose a final list of mortacracies. I promise.

 BEIJING (AP) — Chinese leaders began weighing possible plans Monday to expand a massive stimulus package with higher spending on health and social programs amid signs an economic slowdown is worsening.

According to the AP.

The meeting of top planners also might consider proposals to boost exports, cut income taxes and to inject government money into slumping Chinese stock markets, according to state media and analysts. The government has released no agenda for the meeting.

The meeting comes as Beijing tries to figure out how to get the most out of a 4 trillion yuan ($586 billion) package announced Nov. 9 that is meant to shield China from a global slowdown with spending on construction and other projects.

Optimism that the meeting will produce more steps to bolster the economy lifted stock markets in Hong Kong and Shanghai. China’s main market index closed up 3.6 percent while Hong Kong’s Hang Seng index surged 7.5 percent Monday.

The plan’s key goal is to lift consumer spending, and analysts say that is unlikely until Beijing creates a stronger social safety net for Chinese families, which have to save heavily to pay for health care, schooling and retirement.

Alarm about job losses and possible unrest has mounted after economic growth slowed in the last quarter to 9 percent, down from 2007’s 11.9 percent. A slowdown in factory output, construction and other areas is worsening.

The annual planning meeting of top Communist Party and Cabinet officials is meant to make strategy for 2009. The government’s Xinhua News Agency announced it opened Monday morning but gave no details of the agenda or who would attend. Last year’s participants included President Hu Jintao and Premier Wen Jiabao.

Hu warned Communist Party leaders in a Nov. 29 speech that China was losing its competitive edge and said the downturn would test their “governing ability.”

China’s planning agency, the Cabinet’s National Development and Reform Commission, was working on a plan for more spending on schools, health and other social programs, according to the Economic Observer, a leading Chinese business newspaper.

The Cabinet and NDRC press offices did not respond to requests for information.

Other Chinese news reports said planners might consider proposals to boost slowing export growth.

They also might take up a proposal to cut taxes on lower-income Chinese workers, said Merrill Lynch economists Ting Lu and T.J. Bond in report. They said policymakers also might try to support stock markets but they downplayed the effectiveness of a stabilization fund.

“We think it’s just a token move on the part of the central government to try to revive investors’ confidence,” they said.

China and the United States, in a joint announcement after two days of economic talks, pledged Friday to boost exports by offering up to $20 billion in loans to finance imports of their goods by developing countries. Such credit in developing economies has dried up as lenders try to shield themselves from global financial turmoil.

The planning meeting also might release details of how Beijing will finance its stimulus package, the government newspaper China Daily said.

Officials say the central government will pay for 1.2 trillion yuan ($176 billion) of the package, with the rest coming from local governments and state companies. But no details have been released.

Article here.

“It’s a once in a lifetime chance,” Barber said.

For these students, the nation’s recession offers a rare learning experience and an insight to Wall Street.

“Bear markets help find out which companies are healthy and which ones are not,” Barber said.

Students of UAF’s School of Management have been overseeing the SIF program for more than 15 years now, with great success. It has paralleled the S&P 500, the primary benchmark for the SIF, since its inception and even surpassed the esteemed Standard & Poor’s Index for the leading 500 companies in the U.S. The SIF portfolio consists of about 40 securities, which are groups of companies in which students have decided to invest.

The Student Investment Fund was funded with a $100,000 grant from the UA Foundation in 1991. In the first seven years, the fund climbed to $186,000. During the bull market of 1998, the fund swelled to $311,000 within a 12-month period, then more than doubled to more than $640,000 by the end of 1999.

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Refinancing costs money. Like buying a new home, there are points and fees to consider. Usually it takes at least three years to recoup the costs of refinancing your loan, so if you don’t plan to stay that long it isn’t worth the money. But if your interest rate is high it may be smart to refinance to a lower interest rate, even if it is for the short term. If your mortgage has a prepayment penalty, this is another cost you will incur if you refinance.

Yes. It’s called a ceiling, or lifetime cap. This is a guarantee that your interest rate will never exceed a designated percentage. For instance, if your introductory rate was 5% and you have a lifetime rate cap of 6% (meaning that your interest rate can never increase more than 6% during the life of the loan) then your ceiling would be 11%.

I like Jennifer Openshaw.  As part of the Oprah/Dr Phil/CNN circuit. she does a fantastic job of bringing financial theory and practice to the masses.  Her book, The Millionaire Zone, focuses on basic tools like budgeting. complete with worksheets and learning materials.

I’d say she is to personal finance what Malcolm Gladwell is to behavioral finance.

As an extension of her brand and reach, it appears that Jennifer Openshaw has overreached with the announcement of her new venture, WeSeed (Read a good review of WeSeed at Mashable). The new site, billed as “the stock market for the rest of us”, looks like it was built to address those 100 million Americans with no stock market experience.

The site uses virtual money to abstract investing away from stocks and toward companies.  Users are encouraged to find fields that they know something about (kids, houses, fashion, etc.) and invest in them.  So like Peter Lynch, users get accustomed to looking at the stock market through a personal lens, where a user’s personal experience meets the corporate world.

To get market performance for a small part of his savings, ETFs are more appropriate.  Do we really want to increase stock ownership across a broad swath of investors who can’t afford to see the value of their portfolio swoon?  Will this demographic be next in line for a bailout after they purchased financial instruments they didn’t understand?

Openshaw is on to something here.  If she can parlay WeSeed to help the same demographic learn about ETFs and index funds, I think there would ultimately be more value.

There are plenty of reasons to look for the best life insurance policy for our personal circumstances. Getting the best quote is really an important part of finding the right policy.

1) Term Life Insurance Quote Online

Terms and conditions: Term Life insurance policies vary, depending upon the company offers and so it is important to understand the scope of the cover being offered by reading the insurance companies Key facts document before taking out the policy.

2) Family Protection Life Insurance

3) Mortgage Protection Term Life Insurance

4) Mortgage Payment Protection Insurance

5) Whole Life Insurance UK

This policy pays out on death at any time of the person whose life is assured, as long as the whole life insurance policy is still in force. He is expected to pay premiums on the whole life throughout his life or until the person whose life is assured reaches a certain age, when premiums could stop, but cover continues.

Fri Dec 5, 2008 3:29pm EST

By John Parry and Jennifer Ablan

NEW YORK (Reuters) - U.S. government debt, long considered the safest investment in the world, looks like it too has been hit by “bubble” fever.

Prices of U.S. Treasury bonds appear dangerously overstretched after a soaring rally, another sign of how financial markets have been turned on their head.

“Treasuries are the riskiest securities on the planet,” said Tom Sowanick, chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey.

While few fear that the U.S. government will fail to honor its debts, many see a risk that bond prices may plunge just as spectacularly as house, commodity and stock prices have in recent months.

“It looks like the Treasury market is in bubble territory,” said William Larkin, fixed-income portfolio manager with Cabot Money Management, in Salem, Massachusetts.

The rally in the nearly $5 trillion U.S. government bond market picked up speed this week when the Federal Reserve hinted it may buy longer maturity government bonds.

Fears of a bubble in Treasuries underscore how far investors have fled from risk since ballooning house price valuations popped in 2007, causing huge losses in markets across the board and sparking a global economic crisis.

Yields on long-maturing bonds are below 3 percent and only 1-2 basis points on three-month T-bills, the lowest in decades.

After buying billions of dollars worth of government debt, U.S. institutional investors and foreigners including Asian central banks could incur enormous capital losses.

“Treasuries are pricing in depression and I just don’t think we will dive into depression-like activity. I wouldn’t buy them here,” said Brian Gendreau, an investment strategist in New York for ING Investment Management Americas.

That said, the relentless rise in Treasury prices may continue further amid little sign of an end to the panicked exodus from stocks which are down nearly 40 percent this year, and corporate bonds, hurt by fears of default.

Data on Friday showing November as the worst month for U.S. job losses since 1974, which prompted some economists to predict the country’s recession could be longer than previously thought.

“SELF-DESTRUCTING YIELD”

Some investors and economists also fear deflation, an environment of falling prices. That would push yields, or the return for investors on bonds, yet lower than their already five-decade troughs.

The stampede into Treasuries has left the benchmark 10-year Treasury note’s yield, which moves inversely to its price, at 2.51 percent this week, the lowest since the 1950s.

“I think it is safe to say that Treasuries have moved into a self-destructing yield environment,” Sowanick said.

Treasuries got a hefty boost on Monday after Fed Chairman Ben Bernanke said the U.S. central bank might buy long-dated Treasuries. Such a move would help lower mortgage rates and address one of the root causes of the global credit crisis.

Despite the slump in yields and fears of a new bubble, investors are reluctant to move away from their favorite safe-haven. Many fund managers are staring at huge losses in riskier markets and would be unwilling to make big bets there.

“You will have many hiding there, bidding up the market, because many investors can’t stand to lose anymore money before closing the books this year,” Sowanick added.

The latest gains bring the U.S. government bond market closer to the brink of a potentially vicious sell-off. It is now highly vulnerable to a surge of between $1 trillion and $2 trillion of new government issuance to pay for massive bailouts of the financial sector, bond analysts warn.

If that issuance impacts the market just when investors start venturing back into corporate bonds, the fall in prices could be rapid.

“Once confidence returns, which I expect over a six-month time horizon, safe-haven flows will go into some of these markets with more appealing returns such as corporate bonds,” said Ward McCarthy, managing director with Stone & McCarthy Research Associates, in Princeton, New Jersey.

Even if rates do not change over the next 12 months, total returns from the 10-year note would be a measly 2.6 percent versus a 3.4 percent dividend yield for the Standard & Poor’s 500 .SPX index of leading shares.

Doug Kass, president of Seabreeze Partners Management, told Reuters that he is shorting the government bond market, betting on a fall in prices.

“There is huge price exposure in Treasuries and the longer you go out into the Treasury curve, the riskier you are getting,” Kass told Reuters. “What are deemed to be risky, that is equities, are becoming safer and I am gingerly buying.”

(Reporting by John Parry and Jennifer Ablan; Editing by Tom Hals)

Intrigue over at 7m7y.com! Who’s the Millionaire … In Training leaving? And why? Click here to find out …

___________________________

1. Little or no choice of investments

2. Have to wait to traditional retirement age to receive the benefits

3. Stuck with low-returning investment choices

4. Little or no opportunity to ‘gear’ (I guess the employer match and tax benefits counts as a kind of gearing)

5. Fees

6. Your employer may be ’stealing’ from you

Stealing?!

Yeah, in a way … but, first let’s take another quick look at fees [AJC: Inspired by a comment left on a post by Dustbusterz ... thanks 'Dusty'!]; in 1998 (!) the Department of Labor received and published an independent Study of 401(k) Plan Fees and Expenses.

It found the following average fees being charged by the larger 401k funds:

Total Annual Plan Fees

(Source: Butler, Pension Dynamics Corporation, in Wang, Money, April 1997)

Now, this goes back to 1997, but I just covered some very recent work by Scott Burns, noted financial columnist, and published in his new book, Spend ’til the End, which points to the fees continuing to trend up, citing average (mean? median?) fees of 1.88% now.

Remember that, according to Scott, even a “1% increase in a fund’s annual expenses can reduce an investor’s ending account balance in that fund by 18% after twenty years”!

I calculate that a 1.88% fee reduces your returns after 20 years by a whopping 38% …

But, do you know how your employer actually chooses your funds / 401k provider? On the basis of better returns to you? Given the possible 38% ‘hit’, you would assume at least on the basis of lowest fees for you?

Right?!

Nope … not a chance. In fact, the study quoted an earlier report that found that “78% of plan sponsors [employers] did not know their plan costs” (Benjamin) …

… Great! You are putting your financial future into the hands of your employer, 3/4’s of whom don’t even know what the plans that they are choosing will cost you!

So how do they choose the plan that’s right for you [AJC: ironic snicker]?

The study found, one of two ways:

1. In my opinion, an unethical way: The Study of 401(k) Fees and Expenses quoted a prior report that found employers most often choose “the institutions that furnish the firm other financial services - banking, insurance, defined benefit plan management - to provide their 401(k) plan services and may not make an independent search for the lowest cost provider.”

Your employer feathers the bed of their own business relationships with your retirement money. Nice!

2. In my opinion, a criminal way: That would have been enough for me, if I hadn’t accidentally come across what is regarded as the Retirement Industry’s ‘Big Secret’ … it’s a doozy: it’s where the 401k provider shares some of the fees that you pay them with your boss!

Think about it; your employer provides you with a match to encourage you to remain employed then gets back some of that in fees, rebates, ‘free’ services, or just good old ‘relationship building’ at your expense, literally!

How do the funds and your bosses get away with this? Simple, nobody’s looking: “Revenue sharing is a poorly disclosed and relatively unregulated practice, which falls into the gap between Department of Labor and SEC oversight.”

OK, so does this mean that you shouldn’t participate in your employer’s 401K?

Not at all … it just means that you should do the following:

1. Decide if the 401k is going to do the job for you … will it get you to your Number? At a maximum ‘investment’ of $15,500 per year and a compound annual growth rate of 8% - 12% less fees, this is highly unlikely … you run the numbers then make your choice!

2. If not, is it still wise to continue your 401k (consider it a backup plan) as well as more aggressively investing elsewhere?

3. If you can’t do both, you have no choice but to decide which investing strategy is going to have to give way to the other?

4. If you do decide to continue with the 401k, choose any ultra-low-cost Index Fund option that may be on offer over any other selection; if not available, choose a ‘no load’ fund (be careful … some ‘no loads’ are actually just ‘lower load’). And, do your own homework on fees, because you just know your employer ain’t doing it!

5. Lobby your employer to pass back any revenue-sharing back to the employees

6. Insist that your employer choose funds that work best for you over the funds that work best for them.

“I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. “I’m paying $32 billion today for the Coca Cola Company because…” If you can’t answer that question, you shouldn’t buy it. If you can answer that question, and you do it a few times, you’ll make a lot of money.” - Warren Buffett 

Strategies are at the heart of trading. They’re the market inefficiencies, the pockets of predictability, the repeating patterns that you are trying to detect and then exploit for profit. They provide the reasons you want to get into a trade, the reasons why you think there is a profit opportunuty there in the first place. A trading strategy has certain necessary components, in my opinion. Firstly, it must be rigorously tested. This can be done either by careful backtesting (which has serious limitations - a subject for another post), or by what I liked to call “forward-testing” i.e. trading it for a significant time with a conservative amount of real money. The latter is my preferred option, but I always backtest too if it’s possible. Secondly, it should  be based on accurate premises. If your stock investment program assumes the market will never fall 40%+ in a year - well, that has happened before so one premise of your strategy is wrong right away. Many, if not most, trading strategies have at least one false premise, and this is often a cause of blowups at institutions like Long Term Capital Management (false premise - arbitrage spreads will not diverge more than X standard deviations from fair value and/or historical bounds), Fannie Mae (false premise - US house prices will never have a year-on-year fall), or Barings (false premise - your arb traders will never commit fraud and lie about their positions). False premises are avoided by a combination of defensive risk management, awareness of Murphy’s law, and a deep knowledge of decades (preferably centuries) of market history and related booms, busts, blowups, and “Black Swan” events. Third, a strategy should be internally coherent, and make logical sense. For example, if I saw a correlation between sunspots and the price of News International stock, I would never even waste a minute on trying to turn that into a strategy. A correlation between sun spots and corn prices on the other hand, might be worth a look. A correlation between US consumer confidence, and subsequent performance of stock in Tiffany’s, would be a fertile ground for investigation. Most correlations are a case of data-mining (the phenomenon where if you look at enough data, you will see spurious apparent correlations in past data, that have no actual causal link and are unlikely to repeat in future), and don’t have a causal link. But some are good, and that is all we need. Some fields of knowledge and learnings are *extremely* useful for judging strategies - knowledge and training in scepticism, logic, philosophy, empiricism, maths/statistics, philosophy of science, inference, and induction (basically - the scientific method, and empirical/sceptic philosophy e.g. Hume) will all help in distinguishing between genuine causation, and coincidence, false signals, false premises etc. 

Dec. 9 (Bloomberg) — Samsung Electronics Co., the world’s largest maker of memory chips, liquid-crystal displays and televisions, said the global recession is wiping out profits at those businesses this quarter.

The glut in the memory-chip market has worsened, making it “difficult” for Samsung to earn a profit from the product, Executive Vice President Chu Woo Sik, head of investor relations, said yesterday in San Francisco. The company is “struggling very hard” to make money from LCDs and falling prices have evaporated profitability from TVs, he said.

A failure to generate profit from semiconductors, screens and TVs would leave Suwon, South Korea-based Samsung relying on mobile phones as its only means of avoiding the company’s first quarterly loss on record. Samsung’s struggles may signal bigger shortfalls at Toshiba Corp. and LG Display Co. because Samsung produces memory chips and LCDs more cheaply than any rival.

“Profit expectations for Samsung keep going down, but a fourth-quarter loss as a whole would be quite negative for investor sentiment,” said Baik Jae Yer, a fund manager at Korea Investment Trust Management Co. in Seoul, who oversees $3.5 billion in equities in Seoul. “Samsung can’t be unaffected by the global economic slowdown, even if it may fare better than its competitors.”

Samsung fell 1.6 percent to 456,500 won on the Korea Exchange as of 11:20 a.m. Seoul time, underperforming the 0.3 percent decline in the MSCI Asia Pacific Index. The stock has dropped 18 percent this year.

Chu declined to comment on whether the company, also the world’s second-largest maker of mobile phones after Nokia Oyj, is poised to report a fourth-quarter loss as a whole.

Conservative Spending Plans

Chu said that the company will be very conservative with its budget for new plants and equipment next year, after spending about 10 trillion won ($6.9 billion) in 2008. The company will have to pay at least 6 trillion won just to keep its plants up to date, he said.

Analysts forecast fourth-quarter profit will tumble 63 percent to a seven-year low of 818 billion won, based on the median of 12 estimates compiled by Bloomberg in the past month. Operating profit, or sales excluding the cost of goods sold and administrative expenses, may fall 76 percent to 431 billion won.

Jurgens Bauer’s Daily Soft Market Comments

In contrast to recent bearish price action the soft markets all blasted off upward in Monday’s trading. The sharply weaker dollar, combined with stronger equities and firmer oil prices encouraged short covering and attracted some fresh buying into the soft markets. Having already been stoked by tales that large index funds have liquidated positions in preparation for January redemption’s, and that the pressure from such liquidations has abated, values of most commodity markets rebounded causing some to question whether a bottom is near.

I agree that commodities have been over done on the downside and have been talking about the vulnerability to bouts of short covering for some time now. Today was one of those days. These markets may continue to correct from oversold conditions, so be mindful. Watch for stop hunting.

Serious traders are concerned over the relative thin conditions that exist which sets the tone for fueling additional short covering, but stops may also be near underneath should prices fail to follow through.

Economic conditions haven’t improved and the situation remains scary for many. As a result there are a lot of producers looking to raise cash. The volatility seen in these markets warrants attention and makes it difficult to see the potential to sell options. Instead owning options makes prudent sense especially when you can limit your risk.

I do not trust one day of strength amidst bear market conditions. The short side doesn’t disappear overnight. So while the attention and glamor seen from today’s action be wary and know that in most cases the trend is still down. Therefore, I look to give long puts a try on any further upside push.

Coffee: Support: 106.75-106.50, 105.1, 104, 102 Resistance:110.75, 111.35, 114.50

Cocoa: Support: 2200, 2120 Resist: 2310-2320, 2410-2420

Sugar Support: 1121-1110, 1080, 1060-1044, Resist: 1144-1152, 1188-1200

Cotton Support: 4300-4280, 4100, Resist: 4540-4560, 4605, 4750

I welcome your comments

Jurgens H. Bauer

Bailouts Dwarf Spending on Climate and Poverty Crises - Alternet 11/25/08

Fed clears BofA/Merrill deal - Raw Story 11/26/08

US will guarantee up to $1.4T in bank debt - AP/Int’l Herald Tribune 11/22/08

US has nationalized nearly 100 banks - Bailout Sleuth 11/22/08

Economy: Biggest GDP drop in 7 years - CNN 11/25/08 

Lately I have been hearing rumors and anecdotal evidence of an expected collapse in the value of the U.S. dollar, including some doomsday-type scenarios offered by currency traders (hat tip to Steve).  While I generally am not interested in extremist positions (they are inevitably wrong), they are sometimes good indicators that something is wrong.  It’s just that the end of civilation is usually not the result of an economic crisis, and our country endured some shockingly bad crises during its first 50 years of existence.  In this case, I suspect that the concern is how the U.S. government is going to pay for all of the packages and programs it has used and will use in the near future.

The Problem:  Rapid Expansion of U.S. Government Debt

As I noted in the last post, the total outlay of funds by the U.S. government to combat the severe recession in which we find ourselves is at $7 trillion and counting.  To pay for this, the government will issue more 10-, 20- and 30-year treasury bonds.  The more debt the government issues, the more interest it must pay for what it borrows.  The government then has to print money to pay the interest on the debt, because it will not be able to raise taxes until the economy had made a complete turnaround.  Even then, no tax increase will be large enough to repay the debt.  Another option for the government to lower its interest payments is to “monetize” the debt.  Monetizing debt generally means printing money and using those funds to buy back treasury bonds.  We don’t need to get bogged down in the minutia of how a government funds a deficit, my point is that all of these methods increase the money supply.

Expansion of Debt Negatively Affects Factors Involved in the Value of Dollar

If one could create a list of what factors go into the value of the U.S. dollar, or any currency for that matter, I do not believe the list could ever be thorough or accurate enough.  The reason why currencies are traded is because they have no fixed value.  The dollar is only worth what the market believes it is worth, and belief is more of an issue than most might imagine.  To keep our discussion focused, I am going to concentrate on what I, in my humble opinion, believe are three of the most important influences on the value of the dollar: (1) money supply; (2) federal funds rates; and (3) credit default swaps (CDS) prices.

Money Supply

Like most economic transactions, the value of the dollar really comes down to supply and demand.  One reason why the dollar has rallied over the past few months (see chart below) is that we are going through a period of disinflation as asset prices have corrected from all-time highs.  The price of a barrel of oil for example has dropped more than $100 from its peak in June.  As all asset classes have been dragged down, the resulting credit destruction has contracted the money supply.  Even though the government is literally throwing money at the problem, that money is not flowing through to the whole economy.  Also, demand for dollars has risen as foreign investors seek a safe haven from an investing environment where everything is losing value.  Increased demand and decreased supply equal a big rally in the value of the dollar.

[SOURCE: The Wall Street Journal]

However, the money supply is growing, and once bank lending normalizes, the massive amount of dollars issued by the government will cause inflation.  This eats at the value of the dollar, and will thus reduce demand for the currency.  Increased supply and decreased demand will equal a drop in the value of the dollar.

Interest Rates

The current federal funds rate is 1 percent.  This is low both in nominal and historical terms.  As the government continues to fight the recession, we may see a 0 percent federal funds rate.  Low rates discourage saving and encourage lending.  This practice is another way to increase the money supply.

Credit Default Swaps

CDSs seem to be discussed only in light of mortgage-backed securities.  However, there are healthy markets in CDSs for all kinds of debt, including U.S. Treasuries. One of the offshoots of the rising U.S. government debt may be a concern that the U.S. will have trouble paying off the debt (or as doomsdayers predict, will not be able to pay it off).  When concerns about U.S. default rise, so do prices on CDSs for treasuries.  Usually, the Fed would raise its rates to counter rising CDS rates.  However, if the economy will not allow for that, then the government will need to monetize its debt in order to avoid default, which would be catastrophic to future debt issuances.  Thus, the money supply would increase, and most likely dollar demand would drop sharply.

Prediction

I believe that over the next year or longer, the value of the dollar will steadily decrease, touching or breaking through its previous lows of last Spring for the reasons outlined above.  However, I do not foresee a monumental breakdown in demand for the dollar, if only because the rest of the world is going to be struggling right along with us, and the U.S. will most likely lead the world out of the recession.  Also, it appears that the economic team put together by President-elect Obama will closely monitor the money supply and take action as necessary to ensure that it does not spiral out of control.  Of course, governments by their nature never move fast enough, and that is why I predict that the dollar will give back its current rally.  But, at the same time, I see no reason to buy guns, ammo and canned goods and move to a cabin in the woods.

Anyone who is interested in investing either for or against the dollar may be interested in two exchange-traded funds: PowerShares U.S. Dollar Bullish and Bearish (ticker symbols UUP and UDN).  These funds use currency futures to earn a daily return that mimics the movement of the dollar index.

This year’s outlook also included a study of 800 of the world’s largest oil fields. What we’ve seen in the oil and energy sector is an over-reaction to the good as well as the bad news, resulting in irrational pricing. In essence, the issued report highlights that the long-term supply and demand picture for oil continues to favor higher prices. The study found that rising depletion rates at existing oil fields make it increasingly hard for supplies to keep pace. If you don’t believe this, feel free to use the new short ETF from ProShares.

According to the IEA, the world needs to invest some $26 trillion over the next decades in infra-structure and exploration. Over the next seven years, the IEA expects the price of oil to average $100 a barrel. Investors have multiple options to benefit from increased spending in the oil sector and a recovery in oil prices. The United States Oil Fund (Ticker: USO) is directly linked to the price of light sweet crude oil. If the price of crude oil goes up by 10%, so will USO. The Vanguard Energy ETF (Ticker: VDE) provides broad exposure to oil and energy companies via holdings such as Exxon Mobil, Chevron, Schlumberger, Halliburton and many others. Barclays Global offers two not so new ETFs with more narrow focus. The iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund (Ticker: IEO) and iShares Dow Jones U.S. Oil Equipment & Services Index Fund (Ticker: IEZ) might be first in line to benefit from the trillions of dollars needing to be spent on infrastructure.

1) Term Life Insurance Quote Online

2) Family Protection Life Insurance

Life Insurance Specialists will advise you the appropriate cover, the adequate term depending on the future expenses, years of financial dependence and it is going to be a multiple of life assured’s salary.

4) Mortgage Payment Protection Insurance

5) Whole Life Insurance UK

Term Insurance - premiums only go towards a mortality element paying out only if one dies within the term.

Whole of Life - premiums go partly towards a mortality element and partly towards a savings element. An investment fund is naturally built that helps to pay the beneficiary. Though it’s a bit more expensive than Term Policies, it ultimately has its own benefits.

Whole of life insurance from Life Insurance Specialists:

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In an age where we are constantly having to adjust to new technologies that are often touted as “time saving” and “convenient”, such new technologies can also put you at risk for identity theft.

Such is the case with the new, ‘enhanced’ drivers licence that B.C. is currently testing via 521 guinea pigs who willingly signed up for the right to try it out.  A reader emailed a link to a recent story detailing the risks.  The reason for such an enhancement was to accommodate the American border entry requirements, in lieu of having a passport. The licences contain an RFID chip- radio frequency identification technology that uses radio waves to store and retrieve your personal information. A “reading” device picks up the information contained on your card , through those radio-waves, allegedly facilitating a faster entry to the US.

 The information on the licence is encrypted, however security experts now say that they have been able to obtain personal information from individuals who carry passports that contain the same chip. Although Canadian passports have yet to include this chip, many countries overseas use the RFID chip within the document. This opens the possibility that anyone who is able to obtain or create a reader could access your information from a distance via the use of an antennae, and Canadas Privacy Commissione is concerned about the repercussions.

When this technology was introduced to Japan via their passport system, it was claimed that the radio frequency encryption was unbreakable, however, the story states that it only took two weeks for someone to figure out a way to access the system.

In BC, the licences contain a “security sleeve” that allegedly prevents illegal readers from scanning the card, which is only as good as the hacker who overcomes it. They are also keeping all the information stored on them in Canada, not the US - so they claim.

None of these assurances mean anything in the end. There will always be someone smarter than the person who designed it to break into it, and both the provincial and Canadian governments have outsourced information storage and billing to American companies in the past. The initiative must be taken by the consumer, and each of us as individuals to ensure the right choices are made in securing our personal information. I blogged recently about a contracted Canada Post outlet wanting to scan my identification, and this was followed shortly thereafter with a warning from the privacy commissioner to not let retailers scan your identification, or photocopy it. 

A good majority of us have become far too complacent with our information - and it shows. Identity theft is on the rise, and it can ruin your life. Credit rating trashed, debts owed that we didn’t incur, police reports and endlessly trying to prove who you are for years are the tragic results. We hand out sensitive information all the time without realising it: contest entries, rental applications for cars and apartments, store memberships, etc etc, and most often you don’t question why they need this information or if it is even legal to ask for it. We assume companies will keep our information safe, but this is often not remotely true.

To help you make the right choices, here is an identity theft checklist, to protect your personal information and keep it secure, from the office of the privacy commissioner. As well, pay attention to the following :

A full index of fact sheets  from the Privacy Commissioner can be accessed at  http://www.privcom.gc.ca/fs-fi/index_e.asp

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ETFs and ETNs continue to see net cash inflows even as total assets under management fall. The conclusion is this is a function of just falling asset values.

According to the National Stock Exchange (NSX), at the end of November, total U.S. listed ETF and ETN assets fell 16.8% to $487.6 billion from $585.8 billion in November 2007. However, net cash inflows for the month were $26.4 billion, bringing the total net cash flow for the 11 months through Nov. 30 to $136.8 billion. In November, 315 ETFs saw net cash inflows, while 179 saw outflows. ETNs split at 16 each.

Ameristock/Victoria Bay. All those firms saw net cash inflows for the year through Nov. 30 increase compared with the first 11 months of 2007. Vanguard did as well. ProShares’s assets under management rocketed 112% to $20.9 billion. SSGA’s assets grew 8.3% to $142.9 billion. This really shouldn’t be a surprise. ProShares sponsors the inverse and leveraged ETFs that have proved hugely popular in the market turmoil. SSGA sells the largest, most liquid ETF, the SPDR (SPY), which tracks the S&P 500. Many investors making a flight to safety or seeking a place to hold cash on a temporary basis will move to the S&P 500. Even as the S&P 500 sinks, the SPDR’s 2008 net cash inflows have surged 86% year-over-year through Nov. 30 to $18.23 billion.

Meanwhile, BGI’s iShares saw assets tumbled 29% to $229.3 billion.

Firms with net cash outflows in November included PowerShares, $309 million, and Merrill Lynch’s HOLDRs, which saw redemptions of $889 million. Surprisingly, the HOLDRs saw net cash outflows of $3.6 billion in 2007, but are up $1.2 billion so far this year. Other firms that experienced outflows in November were WisdomTree, FirstTrust, and SPA-ETF. Firms with net outflows year-to-date include Bank of New York, Rydex, X-Shares, Ziegler, FocusShares and BearStearns. The last two have gone out of business this year. Rydex is suffering as the strengthening dollar hurts its CurrencyShares.

As for ETNs, Barclay’s iPath family saw assets plunge 36% to $2.6 billion. In November, iPath saw outflows of $39 million. Morgan Stanley/Van Eck ETNs recorded outflows of $16 million in November. Meanwhile, Goldman Sach’s ETNs net cash outflows grew to $97 million year-to-date. Comparisons are not relevant for many of the other ETN firms as they had few funds, if any, last year.

Among the top ten ETFs and ETNs, the SPDR (SPY), iShares MSCI EAFE Index Fund (EFA), SPDR Equity Gold (GLD), iShares S&P 500 Index Fund (IVV), iShares Russell 1000 Growth Index Fund (IWF) and iShares Russell 2000 Index Fund (IWM) all saw net cash inflows in November, according the NSX. Of the 10 largest funds, these saw outflows last month: iShares MSCI Emerging Markets Index Fund (EEM), PowerShares QQQ (QQQQ), iShares Barclays Aggregate Bond Fund (AGG) and the Dow Diamonds (DIA).

The NYSE Group also releases volume data for its exchanges. Average daily matched volume for ETFs, or the total number of shares of ETFs executed on the entire NYSE Group’s exchanges surged 93.5% to 672 million shares from 347 million shares in November 2007. Total matched volume for the month totaled 12,765 million shares, a 75.1% increase. Total volume year-to-date through Nov. 30 jumped 74.7% from the same period last year to 102,583 million shares.

Handled volume, which represents the total number of shares of equity securities and ETFs internally matched on the NYSE Group’s exchanges or routed to and executed at an external market center, totaled 14,813 million shares last month, a 77.6% surge over the year-ago month. Average daily handled volume rocketed 96.3% to 780 million shares from 397 million shares a year ago. Year-to-date total volume climbed 78.1% to 117,629 million shares.

The NYSE also reported total ETF consolidated volume for the month leapt 92.1% to 45,151 million shares, while total average daily volume soared 112.3% to 2,376 million shares. Year-to-date, total consolidated ETF volume surged 119.4% over the first 11 months of 2007 to 355,133 million shares. I think those refer just to the NYSE Group.

There is building evidence that, over time, actively managed mutual funds do not outperform, and in some cases underperform, index funds.  A recent article in The Economist discusses momentum investing (that is chasing the latest “hot” stock) and investigates why some stocks on occasion move up or down for an extended period of time based solely on “momentum.”  What I found most interesting in the article is the discussion of mutual funds, and the fact that investors chase and leave funds and they go through periods of over- and underperformance, respectively.  But this is likely a waste of time, and fund management fees, as all funds, over long time horizons, tend to revert to the median.

In fact, a recent study published by Standard & Poor’s confirms the mutual funds are not worth the costs they charge compared to simply investing in an index fund.  The report concludes that “[o]ver longer time horizons, indicies continue to outperform active managers.”  Specifically, the report demonstrates that over a five-year period ending June 2008, the S&P 500 Index outperformed 68.6 percent of all actively managed large cap funds, the S&P 500 MidCap 400 outperformed 75.9 percent of all mid cap funds, and the S&P Small Cap 600 outperformed 77.8 percent of all small cap funds.

Among other interesting findings in the report is that over 5 years, 26.8 percent of U.S. equity funds, 22.5 percent of global equity funds and 24.7 percent of fixed income funds had been merged or liquidated—and that was before the recent credit crisis-related market crash.  The lesson from the report is that buying into an actively managed fund requires the same amount of effort towards doing one’s homework as buying an individual stock.  Investors must always know what they own.  For those who don’t have the time to do the work, buying into an index fund seems to be the better path to take.

[SOURCE: Standard and Poor's Indicies Versus Active Funds Scorecard, November 12, 2008]

id="blog-title">MyAyiti.Com

id="tagline">A Place for Haitian Empowerment!

By Rebecca Harrison

Under black economic empowerment (BEE), which has stirred controversy but is now broadly accepted by corporate South Africa, firms in Africa’s biggest economy must meet quotas on black ownership, employment and procurement.

That means bringing black investors on board and giving them an equity stake usually via complex deals funded by the company, banks and existing shareholders through the issue of new shares.

Black investors usually repay the loans with dividends and sometimes cashflow, and the shares themselves act as collateral.

In a bull market, the newly-rich black investors see their assets grow and comfortably use healthy dividends and cashflow to meet monthly payments, even using stock to back more loans.

But South Africa’s Top-40 index of blue-chip stocks has plunged almost 30 percent this year and falling commodity prices have hit cashflow in the key mining sector. BEE deals sealed at the height of the market are looking increasingly vulnerable.

“There is no doubt that the current economic crisis will have a material impact on BEE transactions done in the last few years,” said Ajay Lalu, director of Bravura Economic Empowerment Consulting firm, which advises companies on BEE.

Industrial group Imperial (IPLJ.J: Quote, Profile, Research, Stock Buzz) and Eqstra (EQSJ.J: Quote, Profile, Research, Stock Buzz), which it spun off in May, have been the first big firms to see their BEE deal fall prey to sliding markets.

Imperial and Eqstra stock prices have slipped closer to a trigger or share cover ratio level built in to the deal, and they said this month they had to pump in an extra 100 million rand ($10.08 million) in cash to shore up BEE partner Lereko.

Imperial, Africa’s biggest transport and logistics firm, said if it hadn’t injected cash the deal would have collapsed and funders would have taken control of Lereko’s board. Imperial and Eqstra would also have lost their empowerment credentials which are crucial for doing any business with the government.

DOUBLE WHAMMY

Other companies that inked stock-backed deals between late 2005, when the Top-40 last plumbed current depths, and the market peak in May, might also have to restructure or pump in more cash.

Petrochemicals firm Sasol (SOLJ.J: Quote, Profile, Research, Stock Buzz) sealed the biggest BEE deal yet in March with a transaction worth some $3.2 billion at the time, issuing shares at 366 rand each.

The stock dropped to 287.32 rand by Friday’s close and certain share cover ratios will be breached if the ten-day volume weight average falls below 211 rand, forcing Sasol to buy back shares issued to the banks to rescue the deal.

Barloworld (BAWJ.J: Quote, Profile, Research, Stock Buzz) repriced its planned BEE deal in August given plunging asset prices — a move that ruffled some shareholder feathers at the time but in hindsight looks astute.

In the mining sector, black investors face a double whammy of falling asset prices and battered commodity prices.

Black-owned junior miner Anooraq (ARQ.V: Quote, Profile, Research, Stock Buzz) has delayed a deal with Anglo Platinum (AMSJ.J: Quote, Profile, Research, Stock Buzz) as it struggles to raise funds in current market conditions. The initial price tag was $445 million but is being renegotiated given a slide in platinum prices.

“In our view, this is nothing less than a failed business enterprise,” said Royal Bank of Canada’s mining analysts in a research note on BEE in the gold and platinum mining sector. “So what does the government then do in order to deliver on the promise of BEE, or does BEE slowly become yesterday’s dream?”

RETHINK

BEE has long faced criticism for simply shifting wealth into the hands of a few powerful black businessmen — many of whom have strong links to the ruling ANC.

And while job quotas have successfully spawned a black middle class that has powered the economy by snapping up flash cars, homes and designer clothes, affirmative action has arguably stirred white resentment and accelerated the flight of skilled workers from South Africa to Europe or Australia.

But BEE goes to the heart of the ruling ANC’s policy of trying to reverse the economic injustices of apartheid without taking radical steps such as nationalizing businesses.

BEE deals worth 96 billion rand were agreed in 2007, 19 percent of total M&A, according to Ernst & Young.

Scrapping BEE altogether is unthinkable.

Some commentators say the government could relax quotas.

“Given current equity markets, there may be less emphasis on BEE ownership and more emphasis on management and procurement,” said Craig Brewer, investment banking principal at Absa Capital.

The crisis has already prompted some consolidation among the plethora of black investment firms and analysts expect more.

The answer may be financing models that do not rely on volatile stock prices — perhaps using mezzanine funding, or debt rather than equity, although obviously leveraging is tough in today’s credit markets.

African Bank Investments (Abil) (ABLJ.J: Quote, Profile, Research, Stock Buzz) CEO Leon Kirkinis said he opted to spread risk by clinching a series of smaller deals rather than going for BEE credentials in one swoop.

More recent deals have included black employees and often a discounted sale of stock to black members of the public.

Ultimately, the financial crisis may be good for BEE, highlighting its pitfalls and perhaps forcing a more pragmatic approach, as well as underlining the lesson that nothing comes for free and markets slide as well as soar.

“One of the rationales of BEE is that it allows equity participation and that comes with risks and rewards,” said Absa’s Captal’s Brewer. “At the moment we are talking about the risks, but the rewards will be felt again in the future.”

(Additional reporting by Serena Chaudhry; Editing by Chris Wickham)

Source: Reuters

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Fears of a million layoffs a month in corporate America

As many as a million American jobs could be lost every month by next spring as businesses struggle to raise capital in financial markets consumed by fear, according to a new analysis.

November was the worst month in the US labour market since the oil crisis of 1974, as more than 500,000 US workers were laid off, according to official figures released on Friday.

But Graham Turner, of consultancy GFC Economics, says the rising cost of corporate debt is now flashing a red warning signal that far worse is to come over the next few months and job losses are heading for levels last seen in the 1930s Great Depression.

Corporate bond yields have rocketed since the credit crisis began as investors flee risky assets in search of safe havens such as US Treasuries. That effectively means many firms are being forced to pay eye-watering interest rates to borrow funds.

Turner says when the gap between the yield on high-risk company bonds and US Treasuries widens sharply, unemployment tends to shoot up - and current credit conditions are pointing to a doubling in the pace of layoffs, to more than a million workers a month, by spring.

‘The correlation is holding up all too well,’ he said. ‘It’s very disconcerting.’ He added that the pace of layoffs already happening in the US ‘is indicative of panic’. During the 1970s oil crisis the panic was relatively short-lived, he says. ‘But the worry now is that this will just roll on and on.’

On Friday alone, embattled car firm General Motors, fund manager Legg Mason, and motor parts supplier Gentex announced plans to shed staff.

November’s jobs figures were so much worse than analysts had expected that the Dow Jones share index actually rallied by 259 points, more than 3 per cent, as investors bet that Washington would have to launch a major new rescue package for the economy even before President-elect Barack Obama takes over the White House in January.

The scale of the layoffs in the US, which pushed unemployment to 6.7 per cent, could also point towards a further deterioration in conditions in the UK: David Blanchflower, an independent member of the Bank of England’s Monetary Policy Committee and labour market specialist, warned recently: ‘What happens in the US tends to be repeated six to nine months later in Britain’.

David Frost, director-general of the British Chambers of Commerce, believes Britain’s companies are gearing up for large-scale layoffs.

‘There will be a huge raft of redundancies. I am sensing that talking to firms. The worry is that next year the job losses will be just horrendous. All sectors are taking the hit. In the middle of the year it was construction and estate agencies. Now it is services, the automotive industry, retailers. Firms are waiting for Christmas and if they can’t see any improvement they will cut their payrolls.’

Woolworths administrators made 450 of its office staff redundant on Friday, but the future of the 25,000 staff who work in its stores remains uncertain.

ValueVision Media Inc. (NASDAQ:VVTV) is exactly the kind of opportunity we like to find: a net net stock with a management taking active steps to rectify the situation. At yesterday’s close of $0.44, VVTV has a market capitalization of $14.8M, which is half its net current asset value of around $29.5M, or $0.88 per share and 20% of our estimate of its value in liquidation of around $74.8M or $2.23 per share. After receiving some full and frank advice on an August earnings call, VVTV’s board of directors has publicly announced that it has appointed a special committee of independent directors to “review strategic alternatives to maximize stockholder value.” The company is currently conducting an auction expected to close in February 2009. The auction has uncovered a number of interested bidders, including GE Capital Equity Investments (most recent 13D filing here), which owns 13.7% of the company. Activist investor Carlo Cannell of Cannell Capital LLC has disclosed an interest in the company and has also sent a number of entertaining letters to the CEO (which we’ve reproduced below).

About VVTV

According to its website, VVTV is a direct marketing company that markets, sells and distributes products directly to consumers through various forms of electronic media and direct-to-consumer mailings. The company’s principal electronic media activity is the television home shopping business, which uses on-air spokespersons to market brand name merchandise and private label consumer products at competitive prices. A live around the clock television home shopping programming is distributed primarily through cable and satellite affiliation agreements and the purchase of month-to-month full- and part-time lease agreements of cable and broadcast television time. In addition, ValueVision Media distributes its programming through a television station in Boston, Massachusetts. It also markets and sells an array of merchandise through www.shopnbc.com and www.shopnbc.tv.

The value proposition

According to its most recent 10Q, VVTV lost $15.7M in the August quarter, which continues a string of five quarterly losses. Operating cash flow jas also turned negative for the August quarter, which is particularly concerning. The company does have value on the balance sheet, however, as our summary analysis demonstrates (the “Carrying” column shows the assets as they are carried in the financial statements, and the “Liquidating” column shows our estimate of the value of the assets in a liquidation):

With $59.7M in cash and equivalents, $55.7M in receivables and $55.6M in inventory, VVTV’s is trading at a substantial discount to its current assets alone. The company has $1.78 per share in cash. We’ve discounted the receivables by 20% to $44.6M or $1.33 per share and the inventory by a third to $37.3M or  $1.11 per share. Subtracting all liabilities of $74M or $2.20  per share and the preferred stock of $44.1M or $1.31 per share gives us a net current asset value for VVTV of around $29.5M or $0.88 per share. At yesterday’s closing price of $0.44, VVTV is trading at a 50% discount to its net current asset value alone.

VVTV has other valuable assets, including substantial property, its FCC broadcasting licence, its NBC trademark licence agreement and its Cable distribution and marketing agreement. We have no idea how to value these assets, but discounted by an arbitrary 50%, they are worth an additional $45.3M or $1.35 per share. This puts our estimate of the company’s liquidating value at around $74.8M or $2.23 per share, which means that VVTV is trading at 20% of its value in liquidation.

Carlo Cannell suggested in the October 27 letter to the CEO (reproduced below) that VVTV’s value is much higher. He thinks the company is “worth closer to $6.00 per share, exclusive of the $120 million net operating loss and substantial intangible value in the broad 72 million reach enjoyed by ShopNBC.” Cannell’s analysis is as follows (all figures are $/share figures):

VVTV is trading at less than 7% of Cannell’s valuation.

The catalyst

VVTV’s stock is down about 91% ($5.53 per share) this year. During VVTV’s second-quarter conference call in August, shareholders lambasted management and called for the sale of the company. As a result, VVTV disclosed in its 10Q that it was pursuing “strategic alternatives”:

On September 11, 2008, our board of directors announced that it had appointed a special committee of independent directors to review strategic alternatives to maximize stockholder value. The committee currently consists of two directors: George Vandeman, who will serve as the committee’s chairman, and Robert Korkowski. We expect to appoint an additional independent director to the board, who we anticipate will serve on the special committee. The special committee retained Piper Jaffray & Co., a nationally-recognized investment banking firm, as its financial advisor. There can be no assurance that the review process will result in the announcement or consummation of a sale of our company or any other strategic alternative. We do not intend to comment publicly with respect to any potential strategic alternatives we may consider pursuing unless or until a specific alternative is approved by our board of directors.

On September 24, 2008 Cannell Capital amended an earlier 13G filing for VVTV in this 13D filing, annexing an entertaining letter from Carlo Cannell to Mr. John Buck, VVTV’s CEO (reproduced below):

Dear Mr. Buck

Cannell Capital LLC (”Cannell”), an investment adviser and General Partner to several private investment funds and partnerships, which own shares in ValueVision Media Inc. (”VVTV”), is amending its reporting requirements to reflect a more active stance.

Congratulations on your September 11, 2008 decision to appoint “a special committee of independent directors to review strategic alternatives to maximize shareholder value.” Cannell interprets this to mean that the representatives of the shareholders (aka “Directors”) have finally elected to monetize the assets on behalf of its owners.

ValueVision’s stock price is $2.20 per share. Based upon analysis our from Craig-Hallum it is our opinion the company is worth closer to $6.00 per share, exclusive of the $120 million net operating loss and substantial intangible value in the broad 72 million reach enjoyed by ShopNBC.(1)

We will be watching carefully to make sure the committee’s actions are congruent with the interests of shareholders. We are concerned that the hiring of Piper Jaffray & Co. may be a ploy to continue to justify its pattern of wheel spinning and protection of jobs over what is best for the owners of the business. For example, on Monday, September 15, 2008 we were shocked to learn that your agent (Piper Jaffray & Co.) called to “permission” when and to whom we might talk at our Company. This is characteristic of Stalinist Russia, not America. This does not have a good taint to it. You may try to muzzle other investors, but not Cannell. It bites.

You further have called for representatives to the Board of Directors. We have several candidates in mind. Two will be contacting you shortly to present their credentials directly.

It is amazing to us how much value has been destroyed under your stewardship. That you would have to hire an agent at all to advise you on what should have been done long ago is shameful.

Godspeed!

Cannell sent a follow up letter on October 27, 2008, which was annexed to this 13D filing and is reproduced below:

Dear Mr. Buck

Thank you for taking the time to speak with us this month. I imagine that you are busy consulting with sundry advisors as to ways to maximize shareholder value, including, but not limited to the immediate liquidation of our assets.

Regrettably, at this rate there will not be much value to realize. The price of the common stock has declined 65% this month alone.

I am sorry that you feel the name of the broker hired to sell our buildings at 6740, 6680 and 6690 Shady Oak Road, Eden Prairie, MN 55334 to be material non-public information. I disagree.

Given the slope of shareholder wealth destruction and given the inconsistency of information delivered to us by sundry directors and officers of our Company I would like to suggest that you deliver a special dividend of $1.20 per share to its owners, the shareholders.(1) Although I can’t speak for all shareholders, it is my opinion that most would see copious opportunities to allocate their capital to other stewards of this capital than that of the current board of VVTV.

If the board agrees with me, please tell me by Halloween when my investors and other shareholders might get their dividend. (Time is of the essence. If Senator Barack Obama is elected President the taxation of dividends is likely to become less favorable.) If you disagree, please state the reasons behind your opposition.

In the case of the latter outcome, Cannell Capital LLC will review your opposition and, if appropriate, we will evaluate our options in calling a special meeting of all shareholders to vote upon whether: (i) our cash should be returned to its owners or (ii) the existing board should be allowed to continue to manage it.

Best regards!

Sincerely

On a conference call with analysts to discuss VVTV’s third quarter results, Mr. George Vandeman, who is chairman of VVTV’s special committee of independent directors, said the company had received bids from a number of companies and instructed its advisers to invite several of the proposed buyers to take part in the next phase of the process. Final bids would be due after that phase is completed. One of those interested bidders is GE Capital Equity Investments, which disclosed its holding in this November 17, 2008 13D filing. Vandeman also said the committee was “evaluating other alternatives to boost value, including share buybacks, paying a dividend and monetizing its balance sheet.”

The special committee and its financial advisors continue to review the full range of strategic alternatives available to the company. We anticipate that the special committee will conclude its review by the end of the fiscal year.

VVTV’s fiscal year ends February 2. These are all promising developments for VVTV.

Conclusion

This seems to us to be one of the better opportunities available in the present market. VVTV, a net net stock with additional valuable assets, is very cheap. At yesterday’s close of $0.44, VVTV has a market capitalization of $14.8M, which is half its net current asset value of around $29.5M, or $0.88 per share. Including the other assets - its property, FCC broadcasting licence, NBC trademark licence agreement and the Cable distribution and marketing agreement - we estimate VVTV is worth closer to $2.23 per share. Cannell Capital sees the value as high as $5.98 per share. The company also seems to be taking steps to realise that value, publicly announcing that it has appointed a special committee of independent directors to “review strategic alternatives to maximize stockholder value.” Currently, that means that the company is conducting an auction with a number of interested bidders but it may also mean the company buys back shares, pays a dividend or monetizes its balance sheet. The committee expect to complete this process by February 2, 2009, which means that this opportunity won’t be around for much longer.

VVTV closed yesterday at $0.44.

[Disclosure: We have a holding in VVTV. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.]

Marketing Tips & Business Information

The teacher demanded he stand for an hour by the door until the class finished. “It was humiliating, but it happens a lot to students,” said the 19-year-old son of a food vendor, graduating years late because of what he calls “high corruption fees”.

“We have to pay unfairly for almost everything at school,” he complained, including exams, tests and even class time.

“I don’t think the problem is getting better,” he said. “Young people in Cambodia have lived with this all our lives and no one has done much to stop it.”

Chronic poverty

“New teachers often face a many-month delay before they receive their salaries,” David Coleman, education chief of the UN Children’s Fund (UNICEF) for Cambodia, told IRIN. “Teachers sometimes supplement their income with a second job. This can affect their own attendance at school, and can put pressure on the amount of time they have to prepare their lessons.”

Teachers’ salaries start from US$50 a month, even less than garment factory workers earn, Coleman added. High oil and gas costs, which have only fallen slightly since their summer peak, despite a global price plummet, could be adding to teachers’ salary woes, said Soprach, a primary school teacher in the capital, Phnom Penh.

“The price I pay for gas every month is almost the same as my salary,” Soprach told IRIN. “How am I supposed to survive and feed my family without charging extra?”

Daily fees of 700 riel (20 cents) do little to drain students of money while keeping his own family afloat with $200 a month, he added.

Yet others think the tiny costs add up in significant ways, unfairly forcing poorer students out of school.

A 2007 report by the Cambodian NGO Education Partnership (NEP) reveals education costs for each child averaged $108 annually, or 9 percent of each family’s annual income. The inability to pay informal fees was the most common reason parents gave for their children dropping out, the report stated.

“When you include informal and formal school costs, and private classes and snacks, many students are paying $2.50 every day,” Leng Theavy, education and capacity-building officer for the NGO Education Partnership (NEP), told IRIN.

“That money is a lot because many Cambodians don’t make more than $60 a month. In the survey we found the informal fees to be small, but we think the numbers could be much higher now,” she added.

The study also noted that a quarter of parents were unaware that their children were entitled to a free education, a legal right. Informal fees are prevalent in Phnom Penh, not in the countryside, the report said, though Theavy said corruption still happened in the provinces.

“Some teachers in the countryside take large fees too, and often the communes receive documented complaints from parents,” she said.

Tackling corruption

As part of Cambodia’s Education Strategic Plan for 2006 to 2010, the Ministry of Education is seeking ways to improve efficiencies to reduce informal fees.

The establishment of a Teacher Professional Code, ensuring on-time payments and raising teacher salaries are priorities.

However, Theavy said government had only limited options.

“The situation is out of the control of the Ministry [of Education] even though they circulated a ban on informal payments,” she told IRIN. “Teachers commit this on their own.”

MARKET TURBULENCE PROFITS - ACCESS BANK MD 

NSE DG ADVISES PARENTS,LAUDS ACESS BANK 

MARKET TURBULENCE PROFITS - ACCESS BANK MD 

NSE DG ADVISES PARENTS,LAUDS ACESS BANK 

A vignette into the aberrant theories of a private equiteer

The LPX50 has dropped some 60-70% in 12 months. That’s dystopic in anyone’s language. But I find myself asking why values have dropped so much in such a short period if the world still has a relatively strong pulse. Here are the few off the cuff reasons that large funds have seemingly faired much worse:

Mega-buyouts enjoyed a period of higher and higher multiples and easier and easier debt. But that’s finished. The fallout from being overly optimistic is much worse than most of us thought it would be (including me). If there’s anything to learn here, it’s that low purchase multiples and low gearing are key to sustainable private equity investing. Also, businesses are always going to be sensitive to falls in sales when they’re even only moderately geared.

Although energy stocks are receiving a battering with the falling price of oil, Forbes.com says that they are here to stay.

We are not really sure if the piece was supposed to be ironic as they don’t seem to provide any of the good news, and Forbes are notorious for providing inaccurate coverage of CleanTech and renewable energy, but the top message is still good.  As the headline says:

Just make sure you time it right.

We believe that clean energy stocks will continue to suffer through the downturn, whether it becomes a full-blown depression or not, but once the pace of the economy picks up again, and oil, rare-earth metals and other resources start to become scarce once more, we will see the first big green boom.

Roger Biduk writes:

As continuing stock market volatility leaves investors searching for a safe place to put their money, many have decided government bonds are the best option - even if the bonds give back a bit less than investors put in.

Short-term bond yields have hovered around - or below - zero since the credit crisis began with Lehman Brothers’ collapse in mid-September. That means investors in those bonds essentially pay the government to watch over their money and take back the same amount or even a little less when they get their money back from Uncle Sam.

It’s not just a few people investing in zero-interest bonds, either. Tuesday, the Treasury auctioned $30 billion worth of 28-day bills Tuesday at a yield of 0%, after receiving $126 billion in open interest. The yield on the 3-month bill dipped as low as -0.2% Tuesday before closing above 0%.

Demand for bonds with no return remains high amid a continually dim economic outlook. The U.S. economy is in a deep, prolonged recession with escalating job losses, record-low consumer confidence, rising foreclosures, a housing market that has yet to hit bottom and an ongoing credit crunch.

As investors look to avoid uncertainty and stock market volatility, Treasury-only money market funds have become increasingly popular, said Pierre Ellis, senior economist at Decision Economics.

“There is a desperate urge to avoid all risk” and investors are opting to “step back and wait for the smoke to clear,” he said.

Bush administration officials have dedicated trillions of dollars in programs aimed at easing credit and restoring the financial markets to normalcy. But lawmakers and policy analysts have criticized the government’s handling of the bailouts, saying they lack clear objectives and oversight.

The House Financial Services Committee held a hearing of key bailout official Neel Kashkari as well as appointed oversight personnel to determine the issues facing and methods of fixing the economic rescue package.

With no clear recovery in sight, investors are looking for a safe haven that will shield their money from the stormy economic environment, even if that means getting back the same amount they put in. With stocks unable to choose a direction and commodity prices continuing to plummet, Treasury bonds have been the only safety net of late.

Even with historically low yields, longer-term Treasurys have actually performed quite well for investors. As S&P 500 index investors have lost 40% on their investments this year, bond fund investors have gotten back about 12% during the same time period, according to the Lehman Brothers Aggregate U.S. Treasury index.

Bond prices: Yields edged higher Wednesday as stocks rallied as a government bailout of U.S. automakers moved closer to reality.

When equities show strength, investors typically shift assets out of the safety of Treasurys to take advantage of the higher returns that come with stocks. And lately, the market gyrations have suggested a rebound may be coming.

“There is a perception that the stock market may be bottoming,” said Ellis, and investors don’t want to be left out of a big Wall Street rally.

Prices, which move in a direction opposite to yields, were lower after the Treasury auctioned $28 billion worth of 3-year notes Wednesday and $20 billion worth of 278-day bills. The Treasury was set to auction $16 billion worth of 10-year bonds on Thursday.

The benchmark 10-year Treasury fell 14/32 to 109 7/32, and its yield rose to 2.69% from 2.64% late Tuesday. Two weeks ago, the 10-year yield fell below 3% for the first time since the note was first issued in 1962, and on Dec. 4, the yield on the benchmark Treasury closed at a record low of 2.55%.

The 30-year bond slipped 1-3/32 to 127-4/32 and its yield rose to 3.09% from 3.04%.

The 2-year note was down 1/32 to 100-25/32 and its yield rose to 0.87% from 0.86%.

The yield on the 3-month note, which is closely watched as an indicator of investor confidence, rose to 0.02%.

Investors and money-market funds shuffle funds in and out of the 3-month bill frequently, as they assess risk in the rest of the marketplace. A higher yield indicates that investors are slightly more optimistic.

Lending rates: The overnight Libor rate fell for the eighth day in a row to 0.12%, according to data available on Bloomberg.com, which pushed the bank-to-bank lending rate to a new record low. On Monday, the rate was 0.14%.

Libor, the London Interbank Offered Rate, is a daily average of what 16 different banks charge other banks to lend money in London, and is used to calculate adjustable-rate mortgages. More than $350 trillion in assets are tied to Libor.

The overnight lending rate has been falling to record lows for the past several sessions as central banks have lowered their key lending rates, flooding the system with liquidity.

The 3-month Libor rate also moved lower, falling to 2.1% from 2.16%.

Two market indicators signaled modest optimism. The “TED spread” narrowed to 2.08 percentage points from 2.13. The TED spread measures the difference between the 3-month Libor and the 3-month Treasury bill, and is a key indicator of risk. The higher the spread, the more unwilling investors are to take risks.

Another indicator, the Libor-OIS spread, narrowed to 1.84 percentage points from 1.91 percentage points. The Libor-OIS spread measures how much cash is available for lending between banks, and is used for determining lending rates. The bigger the spread, the less cash is available for lending.

BOND INVESTORS PUT MONEY ON LAYAWAY By David Goldman, Catherine Clifford, CNNMoney.com,

http://biz.yahoo.com/cnnm/081210/121008_credit_market.html?.v=3&printer=1

This is the second article of a series on foundations, academia and their role in Empire-building, first published in 1969. The first article can be read here.

Part III of this series, Sinews of Empire,  is already available online and tells how these ‘billion dollar brains’, in conjunction with US federal support, created the sinews of a global empire.

Courtesy of Michael Barker who has also embedded invaluable sourcewatch and related hyperlinks. Originally published in Ramparts, May 1969.

I. ENTREPRENEURS OF HIGHER EDUCATION

TODAY’S GENERATION OF STUDENTS, who at this very moment are being suspended, beaten bloody and jailed for their efforts to end the subservience of intellect to power, loosen up entrance requirements, create new departments and colleges and attempt to make the university more relevant to their needs, might be interested in knowing how the system got set up in the first place. It did not, as it might seem, spring full-blown from the head of the absent­minded professor. The development of the modern American university was not left to the natural bent of those within its ivory towers; it was shaped by the ubiquitous charity of the foundations and the guiding mastery of wealth.

On an autumn day in 1875, a solemn ceremony in Nashville, Tennessee, marked the opening exercises of Vanderbilt Univer­sity, whose benefactor, the semi-literate Cornelius Vanderbilt, figures in Gustavus Myers’ History of the Great American Fortunes as “the foremost mercantile pirate and commercial blackmailer of his day.” (His first millions were pilfered from the federal government, in very modern fashion, through the corruption of post office officials.) Commodore Vanderbilt’s New York minister, the Reverend Charles F. Deems, had come down especially for the occasion, and during the concluding moments of the ceremony he rose to read the following tele­gram: “New York, October 4. To Dr. Charles F. Deems: Peace and goodwill to all men. C. Vanderbilt.” Then Deems, a true servant of the pulpit and the purse, gazed up at a portrait of the benefactor hanging on the wall and intoned the Holy Scripture, Acts Ten, the Thirty-First Verse: “Cornelius, thy prayer is heard, and thine alms are had in remembrance in the sight of God.”

Cornelius Vanderbilt was not the only wealthy patron of the times attempting to earn his passage through the eye of the needle by bestowing alms on collegiate supplicants. John D. Archbold, for example, chief bagman for Standard Oil, cast his benevolent grace on Syracuse University; Mrs. Russell Sage, whose husband began his career by stealing a railroad from the city in which he was an official, blessed Rensselaer Polytechnic Institute with a new school of mechanical engineer­ing; and there were hosts of others.

Prior to the Civil War, when the style of giving was still aristocratic and restrained, the largest single benefaction to a college had been Abbot Lawrence’s $50,000 to Harvard. Colleges then were small, humble and well suited to their purpose as finishing schools and theological seminaries for the gentlemanly well-to-do. As the century matured, however, the rogues and robber barons of the new industrial age began to get into the act, demonstrating how paltry the conceptions of education had been in the preceding era. Rockefellers and Stanfords endowed whole institutions, not with tens of thou­sands, but tens of millions. The horizons of academe expanded. Greek and Latin, classical education, philosophy—these may have been fine for effete gentlemen but of what use were they in the real world? The real world, of course, was defined by the money which had suddenly become available for new and expanded institutions of learning.

From Stephen Van Rensselaer to Peter Cooper, from Charles Pratt (Standard Oil) to Andrew Carnegie, industrialists flocked to finance technological institutes which would honor and preserve their names (an important consideration for many who had amassed fortunes but no families) and promote the technical progress that would keep the money mills rolling. Nor was technology the only area of learning in which business­men sought to open new paths. Joseph Wharton, a Philadel­phia manufacturer of zinc, nickel and iron, was concerned that “college life offers great temptations and opportunities for the formation of superficial lightweight characters, having shallow accomplishments but lacking in grip and hold upon real things….” To overcome the shallowness of the current college generation, Wharton proposed to the trustees of the University of Pennsylvania that they set up a “school of finance and economy.” His plan was given a sympathetic hearing by the trustees. As one academic historian describes it: “The $100,000 Wharton offered to fulfill his proposal tempted the trustees into immediate acceptance” – and the Wharton School of Finance and Commerce was born.

Not only business schools and technical institutes but medical and other professional schools made their first appearance in this period. The college was giving way to the university. And the patrons of the new age were the captains of industry, the lords and masters of the times. The power of these men in education, as elsewhere, was a function not only of the size of their capital and their dispensations, which were gigantic, but of their aggressive dynamism as well. As givers, they became “entrepreneurs in the field of higher education.”

The autobiography of G. Stanley Hall, president of Clark University, reveals that he was forced to break contracts at the orders of the founder, to reduce the scale of salaries because the founder wished to economize, and to add an undergraduate college to what he had planned as a graduate institution. This relationship was not wholly typical, in part because the presi­dent retained his independence of mind, even though he lacked the independent financial muscle to put his ideas into practice. Usually, college administrators were far more servile. Indeed, the attitude of the academic community as a whole towards its patrons bordered on sycophancy. The patrons of the univer­sity, being uncultivated themselves, often sought association with the men of learning. According to Walter Metzger, a recent historian of academic freedom, they received from academics “ornate courtesies of gratitude. They did not enter academe as intruders; they were welcomed into the realm and escorted to its high places by its very grateful inhabitants. Within the academic fraternity, to cultivate the goodwill of donors was a highly approved activity, betokening fine public spirit. To offend the bearer of gifts was an action sometimes defined as the deepest disloyalty and treachery. Cordiality was thus demanded of professors by the most compelling of mo­tives – self-interest and the desire for social approval.”

ONE OF MAJOR HIGGINSON’S primary concerns in con­ducting his philanthropic campaigns on behalf of Harvard had been that the end of aristocratic tutelage appeared to be imminent, that “Democracy has got hold of the world, and will rule.” How fortunate, then, that with a little sprinkling of the wealth that was literally pouring into their pockets (“Think how easily it has come,” Higginson remarked to one of his correspondents), the wealthy donors could sustain a filial relationship with the teachers of society’s elite and the shapers of its knowledge: “Our chance is now – before the country is full and the struggle for bread becomes intense and bitter…. I would have the gentlemen of this country lead the new men, who are trying to become gentlemen…. Give one-fourth of your last year, and count it money potted down for quiet good.”

And if any ingrates tried to raise an audible note of discord to mar the harmony of Knowledge and Industry, of the ideal and the practical, retribution was swift.

During the radical upsurge of the ’80s and ’90s, d series of exemplary firings of liberal scholars took place, usually as a result of the professors having linked some of their abstract ideas with the issues of the hour (populism, free silver vs. gold, the monopolistic trusts). As the liberal English economist J. A. Hobson pointed out at the time, “Advanced doctrine may be tolerated, if it is kept well in the background of pure theory; but, where it is embodied in concrete instances drawn from current experience, the pecuniary prospects of the college are instinctively felt to be endangered.”

Of course, no college administration admitted that it was interfering with the spirit of free inquiry. Far from it. The professors were dismissed, the colleges said, not because of their views, but because of their lack of professionalism, their partisanship (justification of the status quo was of course considered in keeping with scholarly neutrality and objectivity). While the threat of dismissal was to retain a certain utility as an instrument for inducing “responsible” academic behavior, in the long run the actual costs of carrying it out were to prove excessively high. The protestations the administrators were already forced to make showed that, as a method of sanitizing higher education, the presumptive sack was too crude for scholars, and therefore inefficient.

Where it is available, however, the carrot is always more efficacious and gentlemanly than the stick. As education became more and more bound up with the success of the industrial system, therefore, the nexus of control exercised over academics came increasingly to lie in the positive advantages which the established powers were able to bestow on a pro­fessionalism ready to serve the status quo and to withhold from “partisan” scholarship ranged against it. Advancement, prestige, research facilities, entree into high society and later into government itself, were all reserved for responsible – and respectful – exemplars of the academic profession. Radicals were left to wither on the university vine.

II. ENTER THE BIG FOUNDATIONS

AS ONE REVIEWS THE RELATIONSHIP between institutions of higher learning and the major foundations during the critical first two decades of this century,” writes a former division chief of the Rockefeller Foundation, “one finds oneself wandering if it is too much to say that the foundations became in effect the American way of discharging many of the functions performed in other countries by the Ministry of Education.” The division chief need not have been so modest.

Between them, the Rockefeller and Carnegie Foundations (there were several of each) had an annual revenue which, as a congressional report of 1915 pointed out, was “at least twice as great as the appropriations of the Federal Government for similar purposes, namely, educational and social service.” But the lump sums only begin to tell the story.

In the first place, while the Carnegie and Rockefeller Foundations decided on an expenditure of funds during this period which amounted to a fifth of the total income of colleges and universities, “When one realizes . . . that essen­tially all the funds available to the foundations were free for the encouragement of innovation while almost all the regular income of the university was tied to ongoing commit­ments, it is easy to comprehend the overwhelming significance of the foundations’ part.” (Robert S. Morison, a former director of medical and natural sciences for the Rockefeller Foundation.)

In the second place, while the foundation millions really represent taxable surplus that ought to be in the hands of the Community and dispensed by a real Ministry of Education, they actually come from the charitable trusts in the form of “gifts.” And this very fact transforms their power and gives them a geometric possibility known as “matching.” The Rockefeller Foundation offers to put up $10 million but stipulates that the beneficiary must raise two or three times that to receive its benefaction. This puts the Rockefeller Foundation in the driver’s seat, as far as conditions are concerned, and doubles or triples the power of its money. Thus, the massive endow­ment drives between 1902 and 1924 were inspired by the necessity of raising $140 million in order to receive $60 million from the Rockefeller’s General Education Board. By 1931-32, it was estimated that the foundations had directly stimulated the giving of $660 million, or fully two-thirds of the total en­dowment of all American institutions of higher learning—colleges, universities and professional schools.

Furthermore, the potential for qualitative influence on the part of the foundations was enhanced by the fact that they were the largest single contributors to these endowment funds, and, more importantly, by the fact that as income sources they were permanent features of the educational scene, and hence their future goodwill had to be cultivated as well. This is probably the most subtle and significant new factor in the foundation approach to educational benefaction. For these are “perpetual trusts,” and while a Cornelius Vanderbilt may die and leave his millions to playboy heirs no longer interested in the training of tomorrow’s elite, the Rockefeller and Carnegie Foundations which were here yesterday will be here in the future, managed by active leaders of the business world who understand the vital role that an educational estab­lishment can play in the preservation and expansion of their wealth-producing system.

ANDREW CARNEGIE DID NOT ORIGINALLY SET OUT to impose a general system of standards on American institutions of higher learning. Rather, he thought to make grand gesture of generosity by using some of the millions he had stolen from the public through watered stock in his steel combines to ameliorate the condition of a dedicated and penurious segment of society: the college teacher. And so Carnegie announced that his Foundation would provide free pensions to all college teachers. It seemed like a very simple proposition.

But no sooner had the proposal been made than the president of the Carnegie Foundation, Henry S. Pritchett, ad­vised the benefactor that higher education in America was in a state of utter confusion. Since, with the exception of a cer­tification system associated with the University of Michigan, there were no general standards for defining a college or university, there was a plethora of conceptions of what a col­lege should be. While among these institutions were diploma mills run solely for the profit of the proprietors – inevitable in a market system – there were also community financed and administered colleges, often set up by religious denominations and reflecting the needs of the communities themselves: chaos or freedom, depending on how you looked at it. President Pritchett looked at it and decided that “some criterion would have to be introduced [into the pension scheme] as to what constituted a college.” After all, it wouldn’t do to give a free $200,000 endowment (later this was escalated to $500,000) or, in the case of State universities, an annual income of $100,000 – requirements which served to force the institutions into an even greater dependence on wealth. Colleges had strict entrance requirements, including so many hours of sec­ondary education (these came to be known as “Carnegie units” and had a revolutionizing, and many would maintain damag­ing, effect on the secondary school curriculum). A college had at least eight distinct departments, each headed by a PhD (the beginning of the enthronement of that stultifying credential).

No institution that wanted to attract or retain quality teachers could afford to resist the Foundation’s offer, and so these became the standards of the day. The process and its power was well exemplified in the Foundation’s additional stipulation that institutions accepted into the program must give up their denominational affiliations. (In the broad univer­sity scene, this stipulation was subverted by the General Education Board which followed Carnegie’s conditions in making its own grants, but chose to support the big denomina­tional colleges while ignoring the small ones.) Among the colleges which gave up their religious character to receive Carnegie money were Wesleyan, Drury, Drake and Brown. Colleges which refused to comply with Carnegie and Rocke­feller conditions were “left to die from financial starvation and other ‘natural’ causes.”

THE ENORMOUS IMPLICATIONS of this sequence of events were remarked upon by the Walsh Commission, which in 1915 conducted the first government investigation of the foundations (and their relation to the industrial empires of their benefactors): “It would seem conclusive that if an institution will willingly abandon its religious affiliations through the influence of these foundations, it will even more easily conform to their will any other part of its organization or teaching.” (Provided, of course, that the influence is ever so subtly exerted.)

What has to be remembered is that the reforms which the foundations had demonstrated such an impressive power in inducing were all in fields of college activity to which they were not directly appropriating a single dollar. Similarly, for the most part, they did not themselves invent the standards which they were able, via the power of their purse strings, to impose, but selected them from existing proposals. Ivy Lee, the Rockefeller public relations man who was one of the pioneers of the new benevolent image of corporate America, had de­scribed for the Walsh Commission the importance of appear­ances. “We know,” Lee wrote, “that Henry VIII by his obsequious deference to the forms of law was able to get the English people to believe in him so completely that he was able to do almost anything with them.” It was the forms of law, of democracy, that had to be observed to achieve max­imum influence and power. Looked at formally, the foundations were imposing nothing. They did not invent the standards; the colleges were at every point free to accept or reject them. Their own role was not one of compulsion, but support. They were even advancing the cause of academic freedom by making the professors more secure. In the appearance of things, as opposed to their reality (which was quite the same as if the foundations had the force of law behind their prescriptions), lay me chief danger of foundation power. For its very subtlety was its strength. Where overt control would have been resisted, these no less effective forms of influence were tolerated. In the realm of the mind, the illusion of freedom may be more real than freedom itself.

If in the period of its origins .the university was heavily dependent on foundation support, it was no less so in the period of its growth. As the university system expanded and non-foundation sources of income became available for endow­ment and building funds, administration and teachers’ benefits, and other areas in which the foundations had played a pioneering role, the foundation directors began to shift their sights towards the new areas of innovation and growth. As the above-cited former division director of the Rockefeller Foundation put it, foundation funds were now “increasingly reserved for new and presumably venturesome undertakings which, once they had proved their worth, would be taken over by the universities’ general funds.” It was precisely the availability of foundation funds for the “growing edge” of knowledge, “for experimenting with new educational methods, developing research programs, and demonstrating the value of new knowledge,” that made it possible for the foundations to maintain their guiding role in the shaping of higher learning in America. For with few exceptions, and until very recently, foundation funds were the only significant monies available for nonmilitary organized research and institutional innova­tion in the academic world.

The ability of the foundations to dominate the margins of growth in the university system was viewed with a critical and prophetic eye by Harold Laski, shortly after he had spent a few tumultuous semesters at Harvard. The passage of time has only made his perceptions more acute. “A university principal who wants his institution to expand,” he wrote, “has no alternative except to see it expand in the directions of which one or other of the foundations happens to approve. There may be doubt, or even dissent among the teachers in the institution, but what possible chance has doubt or dissent against a possible gift of, say, a hundred thousand dollars? And how, conceivably, can the teacher whose work fits in with the scheme of the prospective endowment fail to appear more important in the eyes of the principal or his trustees than the teacher for whose subject, or whose views, the foundation has neither interest or liking? … What are his chances of promotion if he pursues a path of solitary inquiry in a world of colleges competing for the substantial crumbs which fall from the foundation’s table? And, observe, there is not a single point here in which there is the slightest control from, or interference by, the foundation itself. It is merely the fact that a fund is within reach which permeates everything and alters everything. The college develops along the lines the foundation approves. The dependence is merely implicit, but it is in fact quite final … where the real control lies no one who has watched the operation in process can possibly doubt.”

ON PAPER, THE CONTEMPORARY AMERICAN system of higher education looks wonderfully diverse, a vast pluralistic sea of independent academic communities. There are more than 2000 institutions of higher education in America, 800 publicly supported and 1400 private. Half the publicly supported colleges are district or city schools, and two-thirds of the private institutions are denomi­national. If higher education were in practice anything like its appearance on paper, then despite the historical evolution of the university, its links to wealth and the ability of the founda­tions to dominate its innovational areas, the sheer quantity of institutions would cause the foundation largesse to be spread so thin that its influence would evaporate.

The fact is, however, that the American system of higher education is a highly centralized, pyramidal structure in which the clearly defined escalating heights intellectually dominate the levels below. Perhaps the most tangible indication of the rigid hierarchy which characterizes the academic community is the concentration of PhD programs in select prestige centers at the apex of the pyramid. For the PhD is at once a validating credential and the certificate of entry into the academic pro­fession. It also represents an arduous apprenticeship in the accepted principles and acceptable perspectives of academic scholarship; it defines the methodological and ideological horizons which command academic respect and within which the “professional” operates.

Although there are over 2000 colleges and universities in America, 75 per cent of the PhD’s are awarded in a mere 25 of them, institutions which constitute a Vatican of the higher learning, the ultimate court of what can and what cannot be legitimately pursued within the academic church. Most of these select universities – Harvard, Yale, Princeton, the Uni­versity of Chicago, Columbia, Johns Hopkins, Stanford, MIT, Cornell – had emerged as dominant institutions by the advent of World War I. Together with such latecomers as the Univer­sity of California, they form a relatively tight-knit intellectual establishment. As David Riesman and Christopher Jencks observe in their study, The Academic Revolution:

The similarity of ideas and perspectives among scholars who otherwise lay strenuous claims to intellectual independence and ideological diversity presents no real mystery to the outside observer – the apprenticeship and training of academics within the centralized structure of the university system could be expected to produce no other result. The first stage in an academic career is the completion of a PhD, an effort which in the non-exact sciences can take anywhere from five to ten years, and which is accomplished under the watchful eyes and according to the principles and conceptions of the already established masters of the guild. Having completed the PhD, which represents his first serious work as a “scholar,” the apprentice professor still has four to seven years of non-tenured status during which he is subject to review on an annual basis. This period of insecurity during which he is at the mercy of his tenured superiors (and in most institutions the university administrators as well) coincides with a time in his personal life when he has probably acquired a family and sunk some local roots. Hence the threat of being dispatched to the hinterlands should he fail to show – by publication of approved articles and further commitments of his intellectual energy and reputation – that he is still a responsible fellow and under­stands what is scholarly and professional according to ac­cepted canons, is a real threat indeed. Especially when the action needed to dismiss him is the excessively simple and unobtrusive one of not renewing his contract at the end of the year. The Jesuits only asked for a human mind up to the age of seven years in order to control it forever; the American academic establishment has it to thirty-five. Is it any wonder that the product is generally so timid, conservative and conformist?

RESPONSIBILITY FOR THE MONOPOLISTIC structure of the academic marketplace (a structure which neatly mirrors the economy on which it is founded) lies with the great foundations who at the outset of the univer­sity era made a calculated decision to create a “lead system” of colleges, which by virtue of their overwhelming prestige would set the standards for, and in effect dominate, the rest of the educational scene. Thus, while the foundations stimulated two-thirds of the total endowment funding of all institutions of higher learning in America during the first third of the century, “the major portion” of the funds they were responsible for were “concentrated in some 20 of these institutions.” (Hollis, Philanthropic Foundations and Higher Education.)

Even more important than the concentration of endow­ment funds was the concentration of innovational and research funds, and funds for the creation of those facilities which provide the basis for a major center of learning. “The development of major university centers of research,” an official account of the Rockefeller philanthropies explains, “be­came the most important part of the [Laura Spelman Rockefeller] Memorial’s program. Chicago, Harvard, Columbia, Yale … and many others were assisted in developing rounded centers of social-science research. This frequently involved fluid research funds appropriated to the university to be used in its own discretion; aid to university presses; the provision of special sums for publication; grants to enable a number of the centers to experiment with different types of training … and various other devices for stimulating and encouraging the development of techniques and teaching in the social studies.”

In 1929, the chancellor of the University of Chicago, Robert Hutchins, summed up the achievements of this agency in the following terms: “The Laura Spelman Rockefeller Memorial in its brief but brilliant career [it was later merged with the Rockefeller Foundation] did more than any other agency to promote the social sciences in the United States.”

The practice of concentrating funds in major university centers during this strategic period when the birth of institutions of research in the university complex took place has remained a permanent pattern of foundation financing. Thus the Ford Foundation distributed $105 million worth of grants in economics and business from 1951 through the first quarter of 1965, but 77.5 per cent of this went to only ten universities and five business-controlled research and policy organizations (Resources for the Future, the Brookings Institution, the Population Council, the National Bureau of Economic Re­search and the Committee for Economic Development). This has had an absolutely decisive effect in perpetuating the con­centration of institutionalized knowledge which the direct endowment of individual wealth had instigated. In 1912, 51.6 per cent of the articles in the major academic journals of economics were written by economists from only ten univer­sities. In 1962, although the individual universities had changed somewhat, 53.8 per cent of the articles were still being written at ten centers. Eight of these institutions were among those most favored by the Ford Foundation.

With few exceptions, of course, these major university research complexes coincide with the strongholds of the old wealth, the aristocratic centers of the American upper class (Harvard, Yale, Stanford, etc.). It is here that the channels to Wall Street and Washington are most open and inviting to the co-optable professor, and that social attitudes and tradi­tions exert the most powerful and most subtle conservatizing pressures. (It is for just these reasons, moreover, that such schools can afford the flexibility that has earned them the undeserved reputation of being the most academically “free.”)

ONE OF THE OLDEST of these centers outside the eastern Ivy League establishment (where the connections are well known) is Stanford University, down the peninsula from San Francisco. While by no means unique, the Stanford Research Institute (SRI)-Stanford In­dustrial Park complex built around Stanford University pro­vides, in fact, the most up-to-date example of the new levels of intimacy which Wealth and Intellect (and latterly the federal Defense establishment) have attained in the postwar period. (Only one Stanford trustee is not a corporate director: John W. Gardner, former president of the Carnegie Foundation, former secretary of Health, Education and Welfare, and presently head of the foundation/corporation-sponsored Urban Coalition.) William Hewlett and David Packard – two Stanford undergraduates who set up an electronics shop in their garage before World War II, got on the war production gravy train and eventually wound up with a billion-dollar military-industrial giant, the Hewlett-Packard Company – perhaps best exemplify the seamless web of vested interests which envelops this house of intellect.

Both Hewlett and Packard are trustees of Stanford and SRI, and both are directors of several large corporations in the Stanford Industrial Park. An impressive number of cor­porations in the park are in fact “spin-off” firms, resulting directly from research in Stanford’s chemistry, electrical engineering and physics laboratories. Packard, who was recently named deputy secretary of Defense, is also a trustee of the National Merit Scholarship Corporation and the U.S. Churchill Foundation. Hewlett is a member of the President’s Science Advisory Committee. Their positions of eminence in educational philanthropy and military-industrial moneymaking (“Profit is the monetary measurement of our contribution to society” – David Packard) are far from unique. Fellow SRI trustee and former Stanford University trustee Stephen D. Bechtel, of the Bechtel Corporation (builder of bigger and better military bases and longer oil pipelines), is also a trustee of the Ford Foundation. Another holder of dual trusteeships at Ford and Stanford is the Shell Oil Corporation, which has directors on the boards of both.

For the corporations involved in the Stanford-SRI-Indus­trial triangle, the relationship is pure gravy. Most of the industries involved are heavily research- and technology-oriented. The Bechtel Corporation, probably the biggest construction firm in the world, employs on a permanent basis (rather than under contract) only 2000 people, most of them high-grade engineers. The electronics firms are similarly intellect-oriented; in the words of one journalistic account of the success-studded career of a Stanford professor who became a moving spirit in the SRI and finally a director of Hewlett-Packard and other “Stanford” corporations: “The industry’s raw material is brain-power, and the university’s students and professors are a prime source.” Stanford not only supplies its corporations with the raw material, but provides refining facilities as well. Thus, under a new program Stanford engi­neering courses will be piped into the industrial enterprises via a four-channel TV network.

For the enterprising professor and student, the avenues to corporate success are manifold. William Rambo, associate dean of Stanford’s engineering school, has said that he expects his students to become executives and company direc­tors. All this opportunity for personal advancement (and aggrandizement) must inevitably have its effects on education. Perhaps as insightful a commentary as any was contained in James Ridgeway’s impressions after visiting the SRI complex: “Professors once sneered at businessmen and the profit motive,” he wrote, “but since they have been so successful in taking up the game themselves, the profit motive is now approvingly referred to as the ‘reward structure.’ “

IV. RIGGING THE MARKETPLACE OF IDEAS

DOMINATING THE AVENUES OF PRESTIGE and supplying the main funds for social research within the uni­versities, while providing the principal access to influence in the outside world, wealth has inevitably exerted the most profound, pervasive and distorting effects on the structure of knowledge and education in the United States. This has been achieved through lavish support and recognition for the kind of investigations and techniques that are ideologically and pragmatically useful to the system which it dominates, and by withholding support on any substantial scale from empirical research projects and theo­retical frameworks that would threaten to undermine the status quo. (Exceptional and isolated support for individual radicals may be useful, however, in establishing the openness of the system at minimum risk.)

Although it is an indubitable social fact that wealth provides the sea in which academic fish must swim, no self-respecting professor would admit to the full and unpleasant implications of that fact. Thus Robert Dahl, former president of the American Political Science Association, and one of the most eminent beneficiaries of foundation support, while admitting that the foundations, “because of their enormous financial contributions to scholarly research, and the inevitable selection among competing proposals that these entail, exert a consider­able effect on the scholarly community,” maintains that “the relationship between foundation policy and current trends in academic research is too complex for facile generalities.” (Of course there have been no systematic attempts by academics to investigate the cumulative impact of this relationship and discover even arduous generalities.) According to Dahl, “Per­haps the simplest accurate statement is that the relationship is to a very high degree reciprocal: the staffs of the foundations are highly sensitive to the views of distinguished scholars, on whom they rely heavily for advice.” For a sophisticated analyst of political power this statement exhibits remarkable naivete. For it is precisely in determining which distinguished scholars (e.g., Professor Dahl or C. Wright Mills, S. M. Lipset or Herbert Marcuse) they choose to listen to that the foundations “determine” everything that follows.

The foundations themselves regard their funds as “risk capital” which can be employed “to demonstrate the validity of a new idea” (Morison). If the idea is successful, if the investment of funds covering facilities, research needs and salaries for collaborative effort establishes the idea in the intellectual mainstream, then full development can be financed from “normal” sources of capital (e.g., from the university budget, the corporations or the government).

A spectacular example of how the alliance between brains and money can become an unbeatable combination in the academic marketplace is afforded by the rise of the behavior­alist persuasion and its offshoot pluralist ideology in the social sciences. Beginning as a localized academic phenomenon, with the benefit of the foundations’ capital it ultimately achieved unchallenged national preeminence. The intellectual inspirer and organizer of the new “value-free,” statistical-empirical outlook was Charles E. Merriam, and his department at the University of Chicago was the hothouse of its early develop­ment. Such stellar names in behavioralism as Harold Lasswell, V. O. Key Jr., David Truman, Herbert Simon and Gabriel Almond were either graduate students or, in the case of Lasswell, a faculty member, in Merriam’s department before World War II.

A politically-oriented individual, as well as a political scientist (he ran for mayor of Chicago on a “Bull Moose” Republican ticket), Merriam began his organizing efforts in the academic world in the early ’20s. As he himself summed up the crystallizing experience of his subsequent career, he had once gone to a high official of the University of Chicago and asked for a stenographer and other assistance in order to con­duct an enquiry. The reply was that “the University could not possibly afford to aid all its professors in writing their books.” The “answer” to this situation, wrote Merriam, “was the Social Science Research Building… and … the Public Administration Center” – both financed by the Laura Spelman Rockefeller Memorial, under the direction of Beardsley Ruml. (Ruml, who went from the Scott Company to the Carnegie Foundation to Rockefeller, was later to become dean of the Social Sciences Division at Chicago.)

The Rockefeller-Merriam team did not limit its horizons to local academic projects. The Social Science Research Council was founded in 1923, largely through Merriam’s and Ruml’s efforts, with Merriam as its chairman and Ruml as a member of its policy committee. Over the next ten years the Council, which was made up of representatives from the American Political Science Association, the American Socio­logical Society, the American Historical Association and four comparable groups in anthropology, economics, statistics and psychology, received $4.2 million in income. Of this, $3.9 million was from the Rockefellers, the rest from other private foundations. With these funds at its disposal, the Council became the “greatest single patron or clearing house of patronage for the social sciences,” and throughout the Hungry Thirties this patronage was used extensively in behalf of the behavioral outlook.

The idea itself, of course, was ripe for the times. But as Dahl has noted: “If the foundations had been hostile to the be­havioral approach, there can be no doubt that it would have had very rough sledding indeed.” How many equally ripe ideas lacked the risk capital to demonstrate their validity?

After the war, the behavioral movement got into full stride, as Rockefeller, Carnegie and the mammoth new Ford Foundation (which briefly set up its own Behavioral Science Division) got directly into the act, financing an unprecedented proliferation of ambitious behavioral investigations and ex­pensive but necessary survey research centers to amass and analyze the empirical data for behavioral studies. By then it was evident that the collaborative effort had paid off. In 1950, the behavioralist Peter Odegard was elected head of the American Political Science Association, and in subsequent years behavioralists held the presidency with increasing regu­larity; from 1965 to 1967, the behavioralists Truman, Almond and Dahl held the presidency, symbolizing the fact that theirs had finally become the established outlook in the field. (In a survey conducted among members of the Political Science Association in the early ’60s to determine their opinion as to the best political scientists of the postwar period, only one of the top eight was not a behavioralist.)

IN BACKING THE BEHAVIORALISTS, the foundation trustees had not only backed men whose goodwill they enjoyed (the very mechanism of grant-giving assures this) but whose ideas had a definit

11th December, 2008

The writer’s simple acceptance that all we have been doing in the free west for the last century has been wrong economically is astounding! It more or less argues that if only we’d been using the Sharia finance system everything would have been hunky dory.

It must be clear to any economist that methods of financial support and regulation and the societies in which they operate are intrinsically and inseparably interlinked. OURS developed as it has because of our western freedom to decide for ourselves - the FREE MARKET choice. Yes, it went too far. Yes, we allowed people to choose products which were far beyond their means of servicing. Yes, while the housing market was booming the banks/lenders were too greedy, in the knowledge/expectation that they could always repossess/foreclose and get their money back. Yes, our industrial base has been too low to support exports for years, considering our labour costs and the increasing competition from India and China.

DON’T THROW OUT THE ECONOMIC BABY

But none of this means that our system is intrinsically WRONG. Just that it took a wrong path in recent years. We should not throw out the baby with the bath water.

Now, I have no idea if Mr Brown is doing the right thing with all this borrowing from the future to pay off the present. I am not sure if he is bankrolling our children and grandchildren. But if he is, it’s no different from what has happened to many of us in recent decades. There must be very few of us who have not lived in hope and borrowed from any outlet we can in the hope and expectation that the corner will be turned for us personally and one of these days it’ll all come together. The loans/credit cards will be paid off and we will own our homes outright, and even be able to leave something to the next generation or two.

We bought/borrowed into this system with our eyes wide open.

We must not panic and allow ourselves to be persuaded that a system which is new and untested at international level, Sharia, is the answer.

There are at least two priniciple reasons we must not buy/borrow into this system, tempting as it may be for some.

1. It will not work over the long term. Banks may use Sharia finance systems in the short term to stabilise some quarters of the financial market - and THAT may actually work; for a short time. But as soon as the recovery sets in, banks will be back to lending in the usual way, the old western capitalist way. It’s in our blood and in our expectations.

2. Sharia Finance is the conjoined twin of Sharia Law which will try to impose its legal practices on defaulters. Not that your right hand will be chopped off in Britain or America for missing a payment.  BUT, little by little a whole new regime will legitimise stringent codes of practice which will in turn be taken up by western governments as legislation as the banks then in control (Sharia) help the governments in question out of their financial and electoral hole. He who pays the piper.

So what is the answer?

Whatever western governments do, they must not embrace Sharia Finance as the answer. That would be to give power and control of our country’s finance and future to an outside entity.

There is no better time to ensure that we STOP Sharia (Law & Finance). Click here and add your name to the list.

Sharia-compliant, or Islamic, finance is committed to promoting goals any proud progressive would recognise: equity, moderation, social justice. It is a system that revolves around prudent lending, the reduction of risk, the sharing of profits and an absolute ban on speculation and the short-selling of stocks. Debt is actively discouraged and so dealings with any organisation that has a balance sheet more than a third of which is debt (which is to say, all banks!) are forbidden, as are investments in enterprises deemed unethical by Islamic scholars, such as casinos or weapons factories.

Perhaps the rarest feature, however, is the prohibition of interest - or making money out of money. As it is not permissible for banks to charge interest on their loans, sharia-compliant deals are usually structured so that the bank ends up leasing the property to the homeowner, who essentially ends up paying rent until ownership is transferred. Critics charge that the rent seems suspiciously similar to interest payments. They also point out that it ends up costing homeowners more to set up and pay off Islamic mortgages than conventional products, like with all other niche products and, in particular, ethical investments: the so-called “piety premium”.

Islamic financiers disagree, stressing the joint-ownership and profit-sharing aspects of the sharia model. “The relationship between us and the customer is based on sharing risk and sharing the rewards from the financing and investments we make on their behalf,” says Sultan Choudhury, commercial director at the Islamic Bank of Britain, this country’s only stand-alone, sharia-compliant retail bank. “The returns are based on the amount of profit realised from each transaction.”

Let me declare an interest here (in case you had not already noticed the name on the byline): I am a Muslim myself, a practising, believing Muslim. Yet, to my shame perhaps, I own not a single sharia-compliant financial product or asset. Until the recent implosion of the banking system, I had paid very little attention to the Islamic finance industry, assuming it was simply a niche activity at best, or a gimmick at worst. As a result, my own current account, pension, mortgage, loans and credit cards are all as traditional, conventional and mainstream as the next (non-Muslim) man.

Islamic finance marries the freedom of the market economy to the fairness of social democracy

Yet the reality is that Islamic finance is growing faster than any other subset of world banking, at an average annual rate of between 15 and 20 per cent. The IMF says the number and reach of sharia-compliant financial institutions worldwide has risen from one institution in one country in 1975 to more than 300 institutions operating in more than 75 countries today. Over the past year alone, sharia-compliant assets across the globe have grown by almost a third to more than $639bn, according to the latest analysis of the industry from the Banker magazine. If the current trends continue, Islamic finance will have broken through the $1trn mark by 2010.

Here in Britain, the Financial Services Authority has licensed five stand-alone Islamic banks - including the Islamic Bank of Britain, which has been reporting a significant increase in the number of non-Muslim customers applying for accounts since the start of the financial crisis. Bank officials say the numbers are growing because Islamic finance offers a “safer option” for savers and investors, regardless of faith. According to the Islamic Bank of Britain’s marketing director, Steven Amos: “Our core business will always be Muslims, but the numbers of non-Muslims are really picking up. We’ve had increased interest and it’s one of the number of reasons why we’re insulated from the credit crunch.”

To get an Islamic bank account you don’t have to go to the Islamic Bank of Britain only. So far, 20 major global banks have set up units to provide sharia-compliant financial services. HSBC began offering Islamic products and services to its customers in 2003; Lloyds TSB followed in 2005. The mainstream has gone Muslim.

Emile Abu-Shakra, spokesman for Lloyds TSB, explains. “We started offering Islamic financial products about three years ago and when we started out we were just in five branches around the country,” he says. “Now we are in two thousand branches.”

The bank has now expanded its range of products to include a current account, a mortgage, a student account, an investment fund and a business and corporate account. Its Islamic finance products are designed with Muslims in mind, but anyone can use them if they fulfil their needs.

Does Lloyds TSB believe further growth and diversification in the field are still possible? “The principles of Islamic finance could be applied to a number of different products, so there are possibilities for Islamic versions of credit cards, loans, saving accounts and asset finance as well,” says Abu-Shakra. “It’s just a matter of time.”

The remarkable feature of Islamic financial institutions, products and assets is that, although they may have not produced fantastically high returns in any one year, they have produced consistent returns over the past decade - and continue to do so even now, in the wake of the credit crunch. This year, global markets are down by more than a third off their peak but the Dow Jones Islamic Financials Index, in comparison, has lost 7 per cent over the same period and actually rose 4.75 per cent in the most recent September quarter.

Such statistics make me truly wonder whether Islamic banking, with its antipathy towards excessive risk, debt and interest, and with its emphasis on linking deposits and investments to real, underlying assets, could have saved us from the credit crunch.

“Had the Islamic financing principle of fairness and the concept of investing in partnership been slightly more prevalent in conventional banking of late, events may have turned out a little differently,” says Dan Taylor, head of banking at the accountancy giant BDO Stoy Hayward. “The Islamic principle of requiring securities to be backed by assets means that the use of, say, collateralised debt obligations, or CDOs, would not have been allowed by sharia-compliant institutions.”

Professor Rodney Wilson, who teaches Islamic finance at Durham University, agrees. He mentions that not a single sharia-compliant financial institution has failed since the start of the current crisis. Why? “Islamic banks follow a classical model of funding from their own deposits rather than borrowing from wholesale markets.”

Excessive leverage is therefore not an option for a sharia-compliant bank - as opposed to conventional banks, which in this country by 2008 were lending out roughly £700bn more than they took in deposits, betting that the good times would go on for ever and tomorrow would never come.

Well, it did: the conventional banking sector is now on the verge of collapse. Meanwhile, Islamic institutions here in Britain continue to make money. The European Islamic Investment Bank, a UK AIM-listed sharia-compliant investment bank, reported revenues up 14 per cent in June 2008 interims. On the retail side, the Islamic Bank of Britain reported 5.5 per cent growth in customer numbers and 7.2 per cent growth in customer deposits in the six months to June.

So, it is no wonder that the British government - despite distancing itself from the Archbishop of Canterbury’s ten tative support for sharia law courts - has been proactively encouraging the proliferation of sharia-compliant financial institutions for several years now. When he was chancellor, Gordon Brown repeatedly urged the City of London to become the “gateway to Islamic finance”.

Just late last month, the government announced the launch of the first sharia-compliant pension funds, and officials are now even considering using special interest-free, asset-backed Islamic bonds, or sukuks, to help fund the building of the athletes’ village for the London 2012 Olympics.

In America early last month, the US treasury department hosted a course for policymakers called “Islamic Finance 101”. This followed a visit to Saudi Arabia by the treasury deputy secretary Robert Kimmitt, during which he confirmed that sharia-compliant finance is now firmly on his country’s agenda. “The US government is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisis,” he said.

The Islamic finance industry is entering a brave and surprisingly welcoming new world - but obstacles remain. Determining exactly what is or isn’t sharia-compliant, for example, can be difficult. Banks such as HSBC and Lloyds TSB have their own sharia advisory boards, made up of senior Islamic scholars, but one board’s interpretation of compliance with the sharia is not necessarily the same as another’s. Standardisation of rules and regulations across the sector is vital, but could take some time.

It could also be a while before we even have enough scholars to carry out the standardising - right now, according to one survey, there are only about 260 Islamic scholars worldwide who have the requisite knowledge, business savvy and linguistic skills.

However, others, like Professor Wilson, are more sanguine. “The shortage of qualified and experienced scholars should not be a problem in the longer run, as there are aspiring British Muslim scholars studying for higher degrees who have a good knowledge of both Islamic law and modern finance.”

So Islamic banking is here to stay. It is a practical, viable and resilient alternative. To borrow a phrase from the Archbishop of Canterbury, the spread of sharia finance, if not sharia law, now “seems unavoidable”.

I have even convinced myself: I now intend to invest in a sharia-friendly sukuk and to try to switch my interest-only conventional mortgage to an interest-free Islamic version. In this era of financial crises and economic chaos, it may be time for all of us - Muslims and non-Muslims, investors and savers alike - to join the halal banking revolution.

It may be our only hope.

“It would not be wise, or correct, to say that there is no support from Indian Muslims for the violence perpetrated by groups who speak on behalf of Muslim suffering. Muslims in India have legitimate grievances about discrimination—communal riots such as those that occurred in Gujarat and the human rights violations in Kashmir are causes for great concern among Muslims and others. Neither do I wish to say that there are no legitimate Hindu grievances in the neighboring countries of Pakistan or Bangladesh. What I do want to say, however, is that it has becoming increasingly common for Indian Muslims to be in complete disagreement with certain actions being taken in their name. A political community in which individuals have not agreed to be represented is inconceivable; when an individual cannot agree with what is being done in his or her name, the question of action is as acute in politics as in religion. Thus, the responses of ordinary Muslims to militant actions can take various forms—ranging from feelings of helplessness to those of outrage …”

She is urging the Treasury Department to use its regulatory authority to suspend the mandatory withdrawal rule.

From Fosters.com (New Hampshire)

By Sen. Susan Collins

Article Date: Thursday, December 11, 2008

The precipitous decline in our nation’s financial markets is presenting America with its greatest economic challenge in decades. According to the Dow Jones Wilshire 5000 Composite Index, which tracks the value of all stocks actively traded, the markets have lost more than 40 percent of their value ¿ nearly $7 trillion ¿ since the beginning of this year.

The effects of this crisis are felt by all — in every community, business, and home. The effects are especially damaging to our seniors. Retirees over 70½ years old face a unique predicament: they are obligated by law and regulation to withdraw funds from their retirement accounts or face a tax penalty of 50 percent of the amount that should have been distributed.

http://www.fosters.com/apps/pbcs.dll/article?AID=/20081211/GJOPINION03/712109829/-1/SANNEWS

Cross pendants – A symbol of faith

Cross pendants have become a splendid way for people to celebrate and show their Christian faith. This can be worn as an attractive and unique piece of jewelry at various occasions. There are quite a few styles and types of pendants and chains available in the shops to choose from when one is looking for a new pendant. They also make for ideal gifts for all occasions. The pendants can either be worn around the neck or used as a bracelet or key chain hanging. Cross pendants come in different metals like:

Types of Cross pendants:

The cross pendants come in many styles. Some of the common ones that can be used to wear as a fashion accessory or just a symbol of faith are:

Curved Cross pendants: The curved pendants are the most popular ones. They bring a simple elegance and classy style to your piece of biblical faith wear. It lends an almost fluid sense to the cross itself.

Chunky cross pendant: The chunky cross pendants are also very popular accessories and also make for great gifts. Though a bit bulkier and heavier, it looks quite substantial. The styles of these chunky pendants are less traditional and more distinctive. They also serve a great medium to evangelize Christian faith.

Diamond Cross Pendants: The diamond cross pendants have become the latest craze these days. They are inexpensive diamond pendants available these days that make for wonderful gift items.

Where to shop for Cross pendants?

The Cross pendants make for ideal gift items. You can buy a cross pendant as a gift for your wife, fiancée, kids or grand children. Gifting a cross pendant can really make the occasion memorable.

You can either shop for the cross pendants at the secular shops or buy it from the non-profit organizations. It is always better if you purchase them from a non-profit organization because the funds raised in such organizations go for noble causes like expanding the Kingdom of Jesus. So, you can also be a part of it.

Besides that you can also shop for your Cross pendant online. Just take your pick from the online gallery and place your order from any where across the world. The product will be shipped to your door in time. Many times these websites also offer discounts during special occasions like Christmas.

I know some of you are wondering about deflation vs inflation. Excerpted from Tom Dyson of the Daily Wealth newsletter:

Silver Bracelets for religious reasons!

Silver jewelry looks good on anyone and is an amazing way to accessorize in the name of God. Silver has charm of its own and when it is given the shape of a cross or other symbols that represent Christianity; its glory is heightened even more. You can make statements about your faith and trust in the Lord by wearing the Christian Silver bracelets. By this way, you can stay silent and yet let the world know how much you love Jesus.

You will find a mixed bag of Christian silver available in the shops in the form of crosses, fishes (Icthuses) and symbols representing Christianity. The Silver bracelets also come with prayers or the name of Jesus inscribed on them. These make for lovely gifts for your sweetheart. What can be a better way to let your love know how holy and pure your love is? By gifting Christian Silver bracelets, you can also show your reverence and love to the Lord. These bracelets can be worn on all occasions.

Where to get the Christian Silver bracelets from?

You can purchase the Christian Silver bracelets from the wholesale fashion jewelry shops. There are also many retail shops that sell these bracelets. However, it is recommended that you buy these items from fund raising or Christian organizations. It is so because these organizations use the fund raised in some charitable purpose or to further the kingdom of Lord.

You can also buy the Christian Silver bracelets online. You can view the wide assortments of bracelets in the gallery and make your choice. You can place your order from any corner of the world and your silver bracelet will be shipped to you. You can also take the advantage of the discounts available during Christmas and other special occasions.

Things to Note while purchasing Christian Silver bracelets:

When shopping for Christian Silver bracelets from a wholesale seller, do a little reading up on the process of manufacture. This is just to ensure that no seller passes off a piece of junk to you saying that it is authentic. Many people are unaware of the fact that silver metal must be mixed with some other metal to make it strong enough to form into rings, and bracelets. Sterling silver jewelry has about 7% copper mixed in to make it stronger. Be sure that the silver bracelet piece that you buy has a high percentage of silver content.

Autobytel Inc (NASDAQ:ABTL) is a net net stock with an investor declaring an active interest in late November. At yesterday’s close of $0.43, ABTL has a market capitalization of $19.4M and is trading at 63% of our estimate of its liquidation value of $30.7M. On November 21, 2008, Trilogy, Inc. filed its Schedule 13D notice, declaring an interest of 5.01%.

About ABTL

ABTL is a automotive media and marketing services company focused on helping dealers sell cars and services, and manufacturers build brands through marketing and advertising primarily through the Internet. The company owns and operates automotive websites MyRide.com, Autobytel.com, Autoweb.com, Car.com, CarSmart.com, AutoSite.com and CarTV.com. It connects automotive marketers with vehicle shoppers visiting these websites and third-party websites (primarily search engines, automotive information providers and other auto related venues). You can see the corporate website here.

The value proposition

ABTL’s most recent 10Q, specifically its earnings and cash flow, was abominable. The company lost $5.36M last year but surpassed that in the September quarter alone, losing$5.63M. ABTL had negative cash from operating activities last year of $6.91M and $2.88M in the quarter to September. As always we can find some value on the balance sheet, as our summary analysis demonstrates (the “Carrying” column shows the assets as they are carried in the financial statements, and the “Liquidating” column shows our estimate of the value of the assets in a liquidation):

With $32.2M or $0.71 per share in cash and equivalents on the balance sheet and total liabilities of $12.7M or $0.28 per share, ABTL is trading at its net cash value of $0.43. If we add in receivables of $12.7M (which we’ve written down by 20% to $10.2M or $0.22 per share), property, plant and equipment of $9.2M (written down to $4.6M or $0.10 per share) and a nominal $0.9M or $0.02 per share for the prepaid expenses, ABTL has a a liquidating value of $35.3M or $0.78 per share. ABTL’s liquidating value of $0.78 is 82% higher than its stock price of $0.43, which is a substantial margin for error (or safety).

The catalyst

Trilogy, Inc. filed its Schedule 13D notice, declaring an interest of 5.01% on November 21, 2008. The filing contains the standard boilerplate that says a great deal without actually disclosing Trilogy’s true purpose for the purchase.  Trilogy is a private operating company in the technology consulting industry, not a fund manager, so there is little public information available about its strategy. It seems odd for a technology consulting business to buy a substantial active stake in a listed company. It’s possible that the filing is a precursor to a bid for ABTL. An affiliate of Trilogy, Trilogy Automotive Advertising Services, operates a business focussed on the automotive industry. ABTL might fit nicely into that business. We’re only speculating, but on the basis that it might turn into a bid, ABTL is worth watching.

Conclusion

At its close yesterday of $0.43 ABTL is trading at its net cash and at a 45% discount to its value in liquidation. In short, it’s a bargain. With Trilogy disclosing an active interest that could be a precursor to a takeover bid, ABTL is worth a look.

ABTL closed yesterday at $0.43.

[Disclosure: We do not have a holding in ABTL. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.]

id="desc">Forex, Stocks, Bonds, Credit Crisis…

Dec. 11 (Bloomberg) — The rally in Treasuries that pushed yields on bills below zero percent this week is adding to concerns that the $5.3 trillion market for government debt is a bubble waiting to burst.

Investors seeking safety from losses in equity and credit markets charged the Treasury zero percent interest when the government sold $30 billion of four-week bills on Dec. 9, the same day three-month bill rates turned negative for the first time since the U.S. began selling the debt in 1929. Yields on two-, 10- and 30-year securities touched record lows this month.

“Treasuries have some bubble characteristics, certainly the Treasury bill does,” said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., which oversees the world’s largest bond fund. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk?” he said in a Bloomberg Television interview yesterday.

The 30-year bond returned 23.6 percent since September, including reinvested interest, more than it earned in any one year since gaining 34.1 percent in 1995, according to Merrill Lynch & Co. index data. Treasuries of all maturities gained an average of 11.9 percent this year, compared with a 39 percent drop in the Standard & Poor’s 500 Index and a loss of 15.3 percent in Merrill Lynch’s broadest corporate bond index.

Rising Supply

Rising supply of government debt to pay for the bailout of the economy and financial system has done little to damp demand. Treasury Assistant Secretary Karthik Ramanathan said in a speech yesterday in New York that the U.S. may introduce new financing methods to meet borrowing needs of $1.5 trillion to $2 trillion in the financial year that ends in September.

While supply has increased, rates on three-month bills fell 2.89 percentage points in the last year to 0.01 percent today, after trading as low as negative 0.05 percent on Dec. 9. The rate on four-week bills plummeted from a peak of 5.175 percent on Jan. 29, 2007. The three-month bill yield was unchanged today.

An investor who bought $1 million in three-month bills at the closing rate of negative 0.01 percent on Dec. 9 would realize a loss of $25.56 when the securities mature. Bills are sold at a discount and appreciate to par at maturity.

Even at the low yields, the government received bids for four times the amount of four-week bills it auctioned this week, according to the Treasury.

‘Insatiable Demand’

“There is basically insatiable demand for Treasury bills,” Ira Jersey, a New York-based interest-rate strategist at Credit Suisse Group AG, said in a Bloomberg Television interview. “There is a number of reasons for this, not only angst over deflation and what’s going on with risky assets, but there is also just a lot of cash that does not want to take any credit risk.”

Hunger for Treasuries increased as financial companies reported $984 billion of losses and writedowns related to the collapse of subprime mortgages since the start of 2007. The losses froze credit markets and helped send the U.S., Europe and Japan into the first simultaneous recessions since World War II.

Gross said he regrets not buying Treasuries in the past year. “If we went back 12 months and we had known then what we know now, it would have been all invested in Treasuries,” he said in the interview.

David Rosenberg, the chief North American economist at New York-based Merrill Lynch, said last week that demand for Treasuries had reached the “bubble” phase like in technology stocks in 2000 and real estate six years later.

Waive Fees

Record-low yields on government debt have led money-market funds to waive fees to keep returns positive. If the Federal Reserve cuts its 1 percent target rate for overnight loans between banks, as is expected next week by all but two of 56 economists surveyed by Bloomberg, some Treasury fund returns may turn negative, said Peter Crane, president of Crane Data LLC, a research firm in Westborough, Massachusetts.

Treasuries have “absolutely” entered a bubble, said David Brownlee, who oversees $15 billion as head of fixed income at Sentinel Asset Management in Montpelier, Vermont. “There is very little rationality in my mind to bills trading at zero.”

Sentiment among investors in Treasuries turned negative for the first time in four months, according to a JPMorgan Securities Inc. survey of clients. The firm’s weekly index fell to minus 6 on Dec. 8, from this year’s high of 27 a month ago. The figure is the difference between the percentage of investors betting prices will rise and those expecting a decline.

Deflation Speculation

Speculation that the recession will result in deflation, or a prolonged slide in prices, is also driving demand for Treasuries. Consumer prices fell 1 percent in October, the most since records began in 1947, and may drop 1.2 percent in November, according to a Bloomberg survey of economists.

Deflation may worsen the economic downturn by making debts harder to pay and countering the impact of Fed rate cuts. Deflation also makes bonds more valuable, even with yields at record lows.

Treasuries may actually be “fairly valued,” Tony Crescenzi, chief bond strategist at Miller Tabak & Co. in New York, said in a report yesterday. Even so, yields will likely rise in mid-January as investors’ focus turns to prospects for an economic recovery, he wrote.

The U.S. pledged $8.5 trillion, more than half of the country’s gross domestic product, to spur lending and limit the damage of the recession.

Economists forecast higher bond yields as those efforts take effect over the next year. The yield on the 10-year note will rise to 3.66 percent by the end of 2009 from 2.67 percent today, according to 50 estimates in a Bloomberg survey. That would result in a loss of 3.88 percent as bond prices decline.

“At some point we are going to get some signal, some indication that this massive policy response is getting some traction,” said Mitchell Stapley, who oversees $22 billion as chief fixed-income officer for Grand Rapids, Michigan-based Fifth Third Asset Management. “The flight out of Treasuries is something that will be breathtaking.”

Dec. 11 (Bloomberg) — The global economy is falling off a cliff, central banks are slashing policy rates, so everyone and her cat should move what’s left of their incredible shrinking cash piles into the can’t-be-beaten security of government bonds.

Except stocks are as cheap as chips and even managed to rally after last week’s Armageddon-like U.S. jobless numbers, so investors should be snapping up equities as fast as their fingers can click the buy button.

Except inflation is deader than the collateralized-debt- obligation market, prices of everything from houses to cars to Russian art are collapsing around our ears, and everybody knows you should put your nest egg into fixed-income securities now that deflation is the new black.

Except President-elect Barack Obama is poised to sign a new New Deal, French President Nicolas Sarkozy has set aside $33 billion for a “Vive la France!” sovereign wealth fund, U.K. Prime Minister Gordon Brown has belatedly remembered his tax-and- spend-spend-spend roots, and governments everywhere are building roads to nowhere and Bridges of Sighs — all to be funded by printing stacks and stacks of government bonds.

Confused? So am I.

Record low yields in the U.S. Treasury market and a collapse in borrowing costs for governments around the world suggest investors are nonplussed by the prospect of a flood of freshly minted debt to fund a raft of bailout plans. Those conditions also point to a surge in demand for low-risk assets as banks cut back on leverage — which is how you get absurdities such as three-month Treasury bills trading at negative yields this week.

Making Money

Betting on bonds has been a winning strategy this year; all of the 26 bond indexes tracked by Bloomberg show fixed-income investors have made money this year. Australian securities led with 18 percent gains and even Hungary’s debt market eked out a 1 percent return, the least lucrative.

Regardless of the Budget Deficits, this massive trade deficit even with cheap oil will sink the dollar.

==========================================

Dec. 11 (Bloomberg) — The U.S. trade deficit unexpectedly widened in October as faltering global demand led to a third consecutive drop in exports, signaling the American economy is sinking even faster than previously estimated.

The gap expanded 1.1 percent to $57.2 billion from a revised $56.6 billion in September, the Commerce Department said today in Washington. Exports dropped to the lowest level in seven months as foreign purchases of U.S. aircraft, automobiles, chemicals and food waned.

The global credit crunch is slowing growth in Europe, Asia and Latin America, indicating the U.S. can no longer count on gains in trade to help offset the recessions in housing and manufacturing. American households and businesses are also retrenching, a sign that purchases of foreign oil, televisions and computers will keep softening.

“Trade is going to be a significant drag on fourth-quarter growth,” said Dean Maki, co-head of U.S. economic research at Barclays Capital Inc. “The slowdown in foreign demand is hitting manufacturing.”

Jobless Claims

Another government report today showed the number of Americans filing first-time claims for unemployment benefits surged more than forecast last week to a 26-year high. Initial jobless claims increased 58,000 to 573,000 in the week ended Dec. 6 from 515,000 the previous week, the Labor Department said. The number of workers staying on benefit rolls gained to 4.429 million.

The trade gap was projected to narrow to $53.5 billion from an initially reported $56.5 billion in September, according to the median forecast in a Bloomberg News survey of 70 economists. Estimates ranged from deficits of $47 billion to $57.5 billion.

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the deficit surged to $46.4 billion from $42 billion in September. Another Labor Department report showed prices of goods imported into the U.S. plunged in November by the most on record. The 6.7 percent drop in the import price index followed a 5.4 percent decline the prior month. Prices excluding fuel fell 1.8 percent and the cost of imported petroleum plummeted a record 25.8 percent.

Hurt Growth

The jump signals trade may subtract from fourth-quarter growth after adding 1.1 percentage points in the previous three months when the economy shrank at a 0.5 percent rate. The already year-long U.S. recession is likely to be the longest in the postwar era, according to economists surveyed this month by Bloomberg News.

Exports dropped 2.2 percent to $151.7 billion, reflecting a broad-based retreat in demand for American products.

Japan’s economy will shrink 0.2 percent in 2009, while the euro area will contract 0.5 percent, according to a revised forecast by the International Monetary Fund last month. Its global growth estimate for 2009 was scaled back to 2.2 percent from 3.7 percent this year.

John Lipsky, the IMF’s first deputy managing director, yesterday said the lender will probably reduce its global growth forecasts again next month.

Higher Dollar

A rebound in the value of the dollar, by making American- made products more expensive to overseas buyers, is contributing to the dimming outlook for U.S. exports. The dollar jumped 17 percent from mid-July to the end of November, reaching the highest level in three years on Nov. 21, according to figures from the Federal Reserve.

Cummins Inc., the maker of more than a third of North America’s heavy-duty truck engines, said this month it will eliminate at least 500 jobs by the end of the year because of “continued deterioration” in the U.S. economy and other key markets. Cummins said in October that sales growth will be about 12 percent this year, lower than it previously forecast, as the U.S. and European economies weakened.

“Cummins already has taken a number of actions across the company to try to bring costs in line with our reduced current demand,” Chief Executive Officer Tim Solso said a Dec. 5 statement. “Despite those efforts, we have now reached a point where we will have to take more significant steps to reduce our professional workforce around the world.”

Industrials Slump

Reflecting the falling demand for machinery, the Standard & Poor’s Industrial Machinery Composite Index yesterday was down 42 percent so far this year, compared with a 39 percent decline for the S&P 500 Index

A decline in airplane deliveries by Boeing Co., reflecting the effects of a two-month strike that was resolved Nov. 1, contributed to the softening in American exports. Boeing delivered 4 aircraft overseas in October, down from 6 in the prior month, according to company data.

Imports declined 1.3 percent to $208.9 billion, the lowest level since March. Decreases in demand for foreign-produced automobiles, televisions, computers and fuel reflected the worsening slump in U.S. consumer and business spending.

Rather than helping shrink the trade gap last month, as most economists predicted, oil contributed to the deterioration. A record $15.56 drop in the price of imported crude in October was swamped by a 70.9 million-barrel jump in purchases that was also the biggest ever, the report showed. Excluding petroleum, the trade gap was little changed at $24.5 billion.

International trade next year may shrink 2.1 percent, the first contraction in more than a quarter century, the World Bank said in a report this week.

The trade gap with China increased to a record $28 billion from $27.8 billion in the prior month. China surpassed Canada to become the largest source of imports into the U.S. last year. Since it joined the World Trade Organization in 2001, China has also been the fastest growing major export market for American- made products, according to U.S. government data.

id="blog-title">Frontier Markets

id="tagline">random macro musings centered around the frontier

Kudos to Tom Lydon for returning my gaze back to coffee, which along with cocoa, is one heck of a tasty commodity to track.

Lydon cites Bloomberg’s Claire Leow, who reported on Tuesday that world coffee consumption may outstrip production by as much as 8 million bags in 2009-10 because of the smaller crop in Brazil, the world’s top grower:

Prices of the mild-tasting arabica coffee used by Starbucks Corp. jumped 6.1 percent yesterday, the biggest gain in almost three years as Brazil’s Agriculture Minister Reinhold Stephanes said output may drop as much as 22 percent next year to as low as 36 million bags. Prices of the bitter-tasting robusta used in espresso and instant coffee by Nestle SA climbed 4.3 percent.

Interestingly, coffee has outperformed commodity indexes since prices plunged at the end of June.  Arabica has dropped 29 percent in New York, for example, compared with a 61 percent slump in the S&P’s GSCI index of 24 raw materials.  Leow’s report mentions, by the way, the other two coffee exporters of note–Colombia and Vietnam:

Colombia was expected to produce 12.5 million bags, “but rains may have reduced that by 200,000 to 500,000 bags.  Good management practices will keep the crop at between 12 million and 16 million bags in coming years, said [Nestor Osorio, International Coffee Organization Executive Director].

“Vietnam isn’t losing very much because the industry is still young and the trees have strong yields,” he said, estimating the current crop at 21 million bags. Output in the next three years may stabilize at 18-20 million bags, he said.

Finally, the  iPath Dow Jones AIG Coffee TR Sub-Index ETN (NYSEArca: JO) is down 24.8% since inception.  It, along with the other soft commodity funds from the iPath family, is arguably a prudent play, especially if you buy into the Jim Rogers’ secular commodity hype that reasons that the world is only getting bigger, and demand can only outpace supply in the long run.

Watch out for news alert!

BY MANABU HARA, STAFF WRITER

The Japanese government has taken a small but important step toward introducing Islamic finance here amid the global financial crisis triggered by unsustainable subprime loans in the United States.

Earlier this month, the Financial Services Agency (FSA) amended financial regulations to let bank subsidiaries handle Islamic finance operations.

The Islamic finance market has become increasingly attractive for Japanese, having already grown to about $1 trillion with a potential to reach an estimated $4 trillion.

Obviously, “oil money” has been undermined by the global financial crisis. Yet the latest push forward by the FSA strongly suggests that Japan has a growing interest in Islamic finance as a competitive way to attract huge amounts of petro-funds.

Last year, the Japanese government revealed its Asia Gateway Initiative, which includes the promotion of Islamic finance as a method to develop the Asian bond market.

The Ministry of Economy, Trade and Industry also touched upon Islamic finance in last year’s White Paper on Trade.

Other countries, like Britain and Singapore, are way ahead of Japan in the field, having made moves to use Islamic finance to enhance their own financial markets.

Bringing in oil money

Yoshihiro Watanabe, managing director of the Institute for International Monetary Affairs, said the significance of Islamic finance is “to bring in oil money to Japan and stimulate the Japanese economy.”

Etsuaki Yoshida, deputy division chief at the Policy and Strategy Department for Financial Operations at the Japan Bank for International Cooperation (JBIC), is known as one of the few specialists in Japan.

“Although this is my personal view, the current (global) situation actually heightens the relative significance of getting involved (in Islamic finance),” he said.

Although only a few books on Islamic finance have been published in Japan, Yoshida has already written two of them.

Experts acknowledge that Islamic finance is also important for starting projects in the Middle East and can serve to enhance the Asian bond market.

Despite the various barriers remaining in Japan, the private sector has been participating in a number of overseas projects through Islamic financing methods. This year, a Mizuho Corporate Bank subsidiary in the Netherlands became a lead manager of a syndicated loan for a Saudi Arabian project to mine and refine phosphate ore. Part of the loan was made through Islamic financing.

In Malaysia, a subsidiary of Aeon Credit Service Co. and Toyota Capital Malaysia Sdn. Bhd now extends car loans through Islamic financing plans, while the Tokio Marine Group sells Takaful Insurance, a type of Islamic insurance.

Islamic finance has also spread to bourses. The Tokyo Stock Exchange and Standard & Poor’s jointly developed an index for Shariah-compliant companies. Daiwa Asset Management Co., meanwhile, created Shariah-compliant exchange-tradable funds that are now a feature on the Singapore Stock Exchange.

JBIC has taken the leading role in dealing with Islamic finance in Japan, participating in syndicated loan investment projects partly funded through Islamic financing in Bahrain in 2005 and Saudi Arabia in 2006.

One of JBIC’s goals was to accumulate know-how and experience regarding Islamic finance. But the JBIC’s role in those projects was limited to financial assistance through conventional methods.

In 2006, JBIC established the Shariah Advisory Group within its headquarters to learn from Muslim scholars well-versed in the tenets of Islam and Islamic finance. The organization has since been hosting study groups with three major Japanese banks: Bank of Tokyo-Mitsubishi UFJ Ltd; Sumitomo Mitsui Banking Corp Ltd.; and Mizuho Corporate Bank.

Furthermore, JBIC became the first Japanese organization to join the Islamic Financial Services Board (IFSB), an international organization based in Malaysia whose goal is to promote and enhance the Islamic financial services industry. JBIC also has business ties with the Central Bank of Malaysia concerning Islamic financial services.

Overcoming barriers

However, in the face of the “worst global financial crisis in 100 years” and watching crude oil prices drop sharply, skeptics doubt if oil money can really weather this financial storm. In fact, the rapid growth of Islamic finance in the Middle East has been showing signs of a slowdown since last year. Some say Islamic finance has actually started to shrink.

Watanabe, however, remains optimistic.

“A revaluation loss on oil money should have occurred, but the money (as compared to the West) is not gained through debt-based investments but rather profits from oil sales,” Watanabe said.

“Crude oil prices have gone down, but (oil) funds will continue to accumulate. (Middle East countries) are facing the major issue of where to look for safe, high-return investments.”

Although bank subsidiaries in Japan can now participate in Islamic financial transactions, the environment has not reached a point where one can expect a surge in banking institutions specializing in Islamic finance.

Specialists like Watanabe and Yoshida both point to complications in the Japanese tax and legal systems that have hampered the spread of Islamic finance.

Watanabe said transactions involving commodity trade are subject to value-added tax, which makes the financial transaction too expensive.

Yoshida said it is necessary to define the nature of sukuk, or Islamic bonds. According to Yoshida, if sukuk are indeed corporate bonds, they should not be taxed. But if they are considered trust beneficiary rights, they become subject to withholding tax at the source.

Yoshida also cited the difficulty of networking. The crux lies in finding investors and matching them with suitable investment choices, he said.

Watanabe added, “If the main body (company headquarters) cannot handle Islamic finance, it will probably become an overwhelming burden.”

Under the ongoing global financial crisis, money that arrived here via banking institutions in Europe and the United States is already being channeled back to the United States. And that is what is causing serious damage to stock and real estate prices.

If Japanese financial institutions could channel oil money directly to Japan, it may help to mitigate the crisis here. That is precisely why some say Japan needs to overcome the hurdles and promote Islamic finance.

Fact File: A system based on Shariah principles

Islamic finance differs in various ways from conventional financial services that have developed in the West.

The basis of all Islamic finance lies in the principles of Shariah, or Islamic Law. Thus, the Islamic form of finance is sometimes called Shariah-Compliant Finance.

Central to Islamic finance is the fact that interest, known as riba, is prohibited. All gains and risks must be shared between the person providing the capital and the business proprietor or owner. And the transactions must basically involve trade backed by assets.

Speculation (Maisir) is also forbidden, as are transactions with businesses dealing with pigs, alcohol, gambling and other items that are not Shariah-compliant.

One popular form of transaction used by banks is Murabahah financing, which is said to account for as much as 70 percent of all Islamic finance deals.

Murabahah financing involves markups on goods, such as cars and houses, mostly for personal use. A bank plays go-between for the supplier and the purchaser by buying the desired commodity from the supplier.

The bank then resells the commodity with a markup price to the client, who pays for it in installments, including the markup amount.

Conventional Japanese regulations have prevented banks from buying or selling commodities as part of their business operations. But a recent measure adopted by the Financial Services Agency allows subsidiaries of banks to take part in such transactions.(IHT/Asahi: December 12,2008)

Source: www.asahi.com

The ministerial high segment of the UN climate change summit started yesterday with the hope that all nations would go together for a green future.

Today is the last day of the Poznan conference, which was termed the “halfway mark” of the Copenhagen deal in 2009. So far, no concrete decision was made about way forward to deal with climate change in coming future.

UN Secretary General Ban Ki-moon, Poland President Lech Kaczynski, Guyana President Bharat Jagdeo, Tuvalu Prime Minister Apisai Lelemia, Sweden Prime Minister Fredrik Reinfeldt and UNFCC Executive Secretary Yvo De Boer spoke at the ministerial talks chaired by Conference of Party (COP) President Prof Nowciki.

Raja Devasish Roy, special assistant to the chief adviser for environment and forest ministry, was present at the occasion as the head of the Bangladesh delegation. He is going to present Bangladesh’s position about climate change at the shared vision meeting today.

The UN secretary general in his speech said the world’s poorest should not suffer first and worst from a problem they did least to create. The nations need to sketch out the critical elements in a long-term vision, he added.

“We need a basic framework for cooperative action starting today, not in 2012. Within this framework, industrialised countries must set ambitious long-term goals, coupled with mid-term emission reduction targets,” he said.

“We must re-commit ourselves to the urgency of our cause.”

Meanwhile, the two-day European heads of state and government meeting started in Brussels yesterday to decide about the European Union’s climate change policies up to 2020.

The EU summit in Brussels holds “great consequences for the whole world,” which looks to the EU for leadership on climate change, UN chief Ban Ki-moon warned in his speech.

“We look for leadership from the European Union. The decisions currently being made by the European leaders in Brussels are (of) great consequences for the whole world.”

Ban also called for a “Green New Deal” under which part of the massive stimulus to tackle the world financial crisis would be devoted to weaning economies from carbon pollution.

Meanwhile, sources in the Bangladesh delegation in Poznan said Bangladesh is going to demand legal status for climate migrants today along with others demands including quick disbursement of LDCs fund and developing a climate index mechanism before allocating adaptation fund.

The sources added the LDCs climate change fund could be settled at the Poznan meeting. The LDCs are pushing it so that they can start implementing their emergency projects from the beginning of 2011.

The LDCs fund already has an amount of $172 billion what could be raised up to $200 billion as many countries are committed to contribute to the LDCs fund.

The Bangladesh delegations and Oxfam international had a bilateral meeting yesterday at the conference centre where they discussed adaptation funds, adaptation and mitigations issues. Barry Coates, Antonio Hill and Ziaul Hoque Mukta from Oxfam were present.

Swedish Prime Minister Fredrik Reinfeldt announced Sweden’s pledge of $500 million for adaptation to be shared among multiple adaptation funds.

Former US vice-president and Nobel laureate Al Gore is set to deliver his speech at the conference today.

No comments yet.

Dec. 12 (Bloomberg) — The Bush administration dropped its opposition to using the $700 billion bank bailout fund to provide financing for U.S. automakers, after the Senate yesterday failed to approve emergency loans.

The administration’s willingness to give short-term help to General Motors Corp. and Chrysler LLC eased the concern of at least some investors that the companies will collapse and worsen what’s already the longest recession since the early 1980s. Stocks pared their declines.

“Congress has really punted the ball over to the White House,” John Bogle, 79, founder of the $80.6 billion Vanguard 500 Index Fund, said in a Bloomberg Television interview. “That will give them temporary stopgap aid. I do not think General Motors is going to go out of business.”

The economy’s accelerated decline prompted the reversal from the White House, which had insisted money from the Troubled Asset Relief Program be used only for financial firms. GM needs $11 billion to pay bills by the end of the month, and Ford Motor Co. Chief Executive Officer Alan Mulally last week predicted his company could be dragged into bankruptcy by a GM failure.

“Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry,” Treasury spokeswoman Brookly McLaughlin said in an e-mailed statement.

$15 Billion Remaining

Treasury Secretary Henry Paulson had until today resisted calls to use the TARP to aid the automakers. The Treasury has committed all but about $15 billion of the first half of the funds since the plan was enacted Oct. 3.

Neither the Treasury nor the White House’s statements today indicated whether the TARP funds would come with terms or concessions. Paulson repeatedly insisted that any injection of funds needs a plan ensuring “viability” for the automakers.

“The intent of the TARP was to deal with financial institutions and major systemic issues and getting lending going in capital institutions,” Paulson said in a Nov. 13 Bloomberg Television interview. “Congress, I believe, should address the question of the auto industry.”

While the Treasury’s one-sentence statement doesn’t mention the TARP, White House spokeswoman Dana Perino said earlier in a separate statement that the Bush administration is considering using some of the program to keep the auto companies afloat.

‘Other Options’

“Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” Perino said. “However, given the current weakened state of the U.S. economy, we will consider other options if necessary –including use of the TARP program — to prevent a collapse of troubled automakers.”

Emergency loans for GM and closely held Chrysler were rejected late yesterday in the Senate after talks failed over Republicans’ demands that union workers accept a cut in wages next year. Ford said this week it doesn’t intend to seek loans from the emergency fund.

Senator Bob Corker, a Tennessee Republican involved in failed efforts to forge a compromise last night, said providing TARP money without union commitments to restructure and wage concessions would make it “less likely” that the companies become more competitive. Such a move would put “good money after bad,” Corker said in a Bloomberg Television interview.

GM Chief Executive Officer Rick Wagoner told Congress last week, and has said repeatedly, that the Detroit-based automaker is trying to avoid bankruptcy at all costs. Lead director George Fisher said last week that GM considered and rejected the option and it was “way down the list” of alternatives.

Month-End Bills

Still, GM also has said it will lack the minimum $11 billion needed to pay bills by the end of this month, raising the prospect of bankruptcy should it fail to win a cash infusion. GM reported having $16.2 billion as of Sept. 30.

An attempt to restructure GM in bankruptcy would end up as liquidation, because sales would plummet as buyers flock to solvent car companies, Wagoner has said.

Chrysler has said it will run out of money early next year. It ended the third quarter with $6.1 billion in cash and needs at least $3 billion on hand to operate, Chief Executive Officer Robert Nardelli told Congress on Nov. 18.

Pressure was mounting on GM and Chrysler this week before the congressional failure as both faced demands from a small number of parts makers for payments in advance because of the bankruptcy concerns, people familiar with the matter said.

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Investors were rattled after the bailout for Detroit’s struggling Big Three automakers failed in the U.S. Senate. The collapse came after bipartisan talks on the auto rescue broke down over Republican demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with U.S. plants of Japanese carmakers.

The bankruptcy of any of the big American automakers would deal another blow to the world’s largest economy, already in recession.

“This will likely keep markets on edge over the coming weeks…unless it is evident that TARP funds will be used,” said Kotecha.

It’s not just stock markets suffering in the wake of the failure of the Senate to pass the rescue deal. The dollar slumped overnight too, particularly against the yen.

The dollar fell to a low of 88.16 yen, its lowest level since Aug. 2, 1995 — before it recovered to trade above 90 yen.

That heaps more bad news on major Japanese exporters like Toyota and Sony — already reeling from waning global consumer demand — whose overseas income is eroded by an appreciating yen.

Figures this week show that China’s economy is feeling the pinch of the global slowdown. For the first time in seven years, exports fell in November.

____

“You must unlearn what you have learned.”  -Yoda

OUTDATED .. or maybe OLD SKOOL (yes that is a word, especially for all of us vintage rap music fans) in my opinion, words that best describe what the mainstream financial services industry promotes, as far as investing concepts.

Think about that.  We live in a world that changes rapidly.  Are you still wearing the same clothes that you did in the 1970’s (I hope not!  LOL!)? or sporting the same hairstyles of the ’80’s…better yet, the ’50’s?  What about your car or computer…still using the Commodore 64 or driving in a Ford Fairmont Station Wagon?  I seriously doubt it!  My list could go on, but I think you get my point.

Proponents of Conventional investing use several “sales” tools to rationalize their recommendations:

The famous Ibbotson Study:  http://corporate.morningstar.com/US/documents/MarketingOneSheets/ LicensedData/INS_LDT_OneSheet_SBBI_datafeed.pdf

Jeremy Siegel’s book, Stocks for The Long Run

Modern Portfolio Theory (MPT) … Pioneered by Nobel Prize winner Harry Markowitz

Dive into the above and you’ll see 80 years of market data with beautiful charts, read about things like correlation matrixes, and Captial Asset Pricing Model.  You’ll learn all about the “Efficient Frontier.”  Brokers and other financial advisors, after citing information from the above sources, will assure you that “If you had a $1 in 1925, and you invested it in various equity classes, you would have several thousand dollars today…through Great Depression, World Wars, Geo-Political crisis, Oil Embargos…etc……”

Today, I want to begin challenging all of the mainstream and conventional financial advisors and media.  IN THE NATURE OF BEING BRIEF, I will pose some questions in bullet format to my readers.  You be the judge.  It doesn’t matter what I think.  It is your money…you are the investor…spend some time researching what is in this blog today, and come to your own conclusion.  Obviously, for someone, who has a tagline of “Strategically Managing the Environment of Change”, I am biased.

I believe that in March of 2000, we entered a Secular Bear Market, that has the potential to last 15 years or more…man, I hope it is shorter…but valuations suggest otherwise, unfortunately.  What do you think?  Start with your portfolio, how has it performed since 2000?  Has it waxed..or has it waned?  Perhaps, it has marched to the beat of a different drummer (I hope)?  Where are we headed for the next 10 years?

Visit us at www.richinvest.com or send me an email mfalvey@richinvest.com

Cheers..Matt

South Korea’s central bank carried out its biggest interest rate cut ever Thursday, slashing borrowing costs by a full percentage point to a record low in a bid to stave off possible recession.

The Bank of Korea said it was slashing its benchmark seven-day repurchase rate to 3 percent from 4 percent during a regular policy meeting.

Deteriorating economic data have raised alarm bells that Asia’s fourth-largest economy could fall into its first contraction since 1997, when the country was in the throes of the Asian financial crisis. Exports fell 18.3 percent in November from the same month last year.

“It’s quite surprising,” Citibank Korea economist Oh Suk-tae said regarding the size of the rate cut, which suggests that the bank may think “growth could be zero next year” given South Korea’s export decline and neighboring China’s first fall in exports in seven years in November.

Citibank’s Oh said he will likely have to lower his forecast for a 2 percent expansion for next year. He said the economy will likely still manage to grow just above 4 percent in 2008. That would be down from 5 percent last year.

“General measures of economic activity are decelerating rapidly,” International Monetary Fund official Subir Lall said in a speech Tuesday in Seoul.

Lall cited slowing consumer spending and exports as well as falling business confidence as evidence for the emerging weakness in South Korea’s economy.

Thursday’s rate cut marked the fourth time the central bank has lowered borrowing costs in the past two months and exceeded the 0.75 percentage point emergency cut on Oct. 27, previously the largest ever.

The rate has gone from 5.25 percent to 3 percent since the cycle of easing began on Oct. 9.

The previous record low for the bank’s benchmark rate was 3.25 percent last seen in October 2005.

South Korea’s benchmark stock index showed little reaction to the decision, rising 0.4 percent to 1,150.33 points in late morning trading.

The South Korean won, which has been battered this year, traded 2.4 percent higher against the dollar at 1,361.

__

APTN cameraman Yong-ho Kim and APTN producer Hyun-ah Kim contributed to this report.

Source

environ mentalism, fresh articles, interviews & checkitouts from Sydney.

This is copied from The Guardian, Roy’s piece is entitled Mumbai was not our 9/11. It’s 5000 words of essential reading, so grab coffee/yerba/chai and strap in. All that follows is a powerful op ed from one of the world’s most valuable living writers.

Mumbai was not our 9/11

by Arundhati Roy

We’ve forfeited the rights to our own tragedies. As the carnage in Mumbai raged on, day after horrible day, our 24-hour news channels informed us that we were watching “India’s 9/11″. Like actors in a Bollywood rip-off of an old Hollywood film, we’re expected to play our parts and say our lines, even though we know it’s all been said and done before.

As tension in the region builds, US Senator John McCain has warned Pakistan that if it didn’t act fast to arrest the “Bad Guys” he had personal information that India would launch air strikes on “terrorist camps” in Pakistan and that Washington could do nothing because Mumbai was India’s 9/11.

But November isn’t September, 2008 isn’t 2001, Pakistan isn’t Afghanistan and India isn’t America. So perhaps we should reclaim our tragedy and pick through the debris with our own brains and our own broken hearts so that we can arrive at our own conclusions.

It’s odd how in the last week of November thousands of people in Kashmir supervised by thousands of Indian troops lined up to cast their vote, while the richest quarters of India’s richest city ended up looking like war-torn Kupwara – one of Kashmir’s most ravaged districts.

The Mumbai attacks are only the most recent of a spate of terrorist attacks on Indian towns and cities this year. Ahmedabad, Bangalore, Delhi, Guwahati, Jaipur and Malegaon have all seen serial bomb blasts in which hundreds of ordinary people have been killed and wounded. If the police are right about the people they have arrested as suspects, both Hindu and Muslim, all Indian nationals, it obviously indicates that something’s going very badly wrong in this country.

If you were watching television you may not have heard that ordinary people too died in Mumbai. They were mowed down in a busy railway station and a public hospital. The terrorists did not distinguish between poor and rich. They killed both with equal cold-bloodedness. The Indian media, however, was transfixed by the rising tide of horror that breached the glittering barricades of India Shining and spread its stench in the marbled lobbies and crystal ballrooms of two incredibly luxurious hotels and a small Jewish centre.

We’re told one of these hotels is an icon of the city of Mumbai. That’s absolutely true. It’s an icon of the easy, obscene injustice that ordinary Indians endure every day. On a day when the newspapers were full of moving obituaries by beautiful people about the hotel rooms they had stayed in, the gourmet restaurants they loved (ironically one was called Kandahar), and the staff who served them, a small box on the top left-hand corner in the inner pages of a national newspaper (sponsored by a pizza company I think) said “Hungry, kya?” (Hungry eh?). It then, with the best of intentions I’m sure, informed its readers that on the international hunger index, India ranked below Sudan and Somalia. But of course this isn’t that war. That one’s still being fought in the Dalit bastis of our villages, on the banks of the Narmada and the Koel Karo rivers; in the rubber estate in Chengara; in the villages of Nandigram, Singur, Chattisgarh, Jharkhand, Orissa, Lalgarh in West Bengal and the slums and shantytowns of our gigantic cities.

That war isn’t on TV. Yet. So maybe, like everyone else, we should deal with the one that is.

There is a fierce, unforgiving fault-line that runs through the contemporary discourse on terrorism. On one side (let’s call it Side A) are those who see terrorism, especially “Islamist” terrorism, as a hateful, insane scourge that spins on its own axis, in its own orbit and has nothing to do with the world around it, nothing to do with history, geography or economics. Therefore, Side A says, to try and place it in a political context, or even try to understand it, amounts to justifying it and is a crime in itself.

Side B believes that though nothing can ever excuse or justify terrorism, it exists in a particular time, place and political context, and to refuse to see that will only aggravate the problem and put more and more people in harm’s way. Which is a crime in itself.

The sayings of Hafiz Saeed, who founded the Lashkar-e-Taiba (Army of the Pure) in 1990 and who belongs to the hardline Salafi tradition of Islam, certainly bolsters the case of Side A. Hafiz Saeed approves of suicide bombing, hates Jews, Shias and Democracy and believes that jihad should be waged until Islam, his Islam, rules the world. Among the things he said are: “There cannot be any peace while India remains intact. Cut them, cut them so much that they kneel before you and ask for mercy.”

And: “India has shown us this path. We would like to give India a tit-for-tat response and reciprocate in the same way by killing the Hindus, just like it is killing the Muslims in Kashmir.”

But where would Side A accommodate the sayings of Babu Bajrangi of Ahmedabad, India, who sees himself as a democrat, not a terrorist? He was one of the major lynchpins of the 2002 Gujarat genocide and has said (on camera): “We didn’t spare a single Muslim shop, we set everything on fire … we hacked, burned, set on fire … we believe in setting them on fire because these bastards don’t want to be cremated, they’re afraid of it … I have just one last wish … let me be sentenced to death … I don’t care if I’m hanged … just give me two days before my hanging and I will go and have a field day in Juhapura where seven or eight lakhs [seven or eight hundred thousand] of these people stay … I will finish them off … let a few more of them die … at least 25,000 to 50,000 should die.”

(Of course Muslims are not the only people in the gun sights of the Hindu right. Dalits have been consistently targeted. Recently in Kandhamal in Orissa, Christians were the target of two and a half months of violence which left more than 40 dead. Forty thousand people have been driven from their homes, half of who now live in refugee camps.)

All these years Hafiz Saeed has lived the life of a respectable man in Lahore as the head of the Jamaat-ud Daawa, which many believe is a front organization for the Lashkar-e-Taiba. He continues to recruit young boys for his own bigoted jehad with his twisted, fiery sermons. On December 11 the UN imposed sanctions on the Jammat-ud-Daawa. The Pakistani government succumbed to international pressure and put Hafiz Saeed under house arrest. Babu Bajrangi, however, is out on bail and lives the life of a respectable man in Gujarat. A couple of years after the genocide he left the VHP to join the Shiv Sena. Narendra Modi, Bajrangi’s former mentor, is still the chief minister of Gujarat. So the man who presided over the Gujarat genocide was re-elected twice, and is deeply respected by India’s biggest corporate houses, Reliance and Tata.

Suhel Seth, a TV impresario and corporate spokesperson, recently said: “Modi is God.” The policemen who supervised and sometimes even assisted the rampaging Hindu mobs in Gujarat have been rewarded and promoted. The RSS has 45,000 branches, its own range of charities and 7 million volunteers preaching its doctrine of hate across India. They include Narendra Modi, but also former prime minister AB Vajpayee, current leader of the opposition LK Advani, and a host of other senior politicians, bureaucrats and police and intelligence officers.

If that’s not enough to complicate our picture of secular democracy, we should place on record that there are plenty of Muslim organisations within India preaching their own narrow bigotry.

So, on balance, if I had to choose between Side A and Side B, I’d pick Side B. We need context. Always.

In this nuclear subcontinent that context is partition. The Radcliffe Line, which separated India and Pakistan and tore through states, districts, villages, fields, communities, water systems, homes and families, was drawn virtually overnight. It was Britain’s final, parting kick to us. Partition triggered the massacre of more than a million people and the largest migration of a human population in contemporary history. Eight million people, Hindus fleeing the new Pakistan, Muslims fleeing the new kind of India left their homes with nothing but the clothes on their backs.

Each of those people carries and passes down a story of unimaginable pain, hate, horror but yearning too. That wound, those torn but still unsevered muscles, that blood and those splintered bones still lock us together in a close embrace of hatred, terrifying familiarity but also love. It has left Kashmir trapped in a nightmare from which it can’t seem to emerge, a nightmare that has claimed more than 60,000 lives. Pakistan, the Land of the Pure, became an Islamic Republic, and then, very quickly a corrupt, violent military state, openly intolerant of other faiths. India on the other hand declared herself an inclusive, secular democracy. It was a magnificent undertaking, but Babu Bajrangi’s predecessors had been hard at work since the 1920s, dripping poison into India’s bloodstream, undermining that idea of India even before it was born.

By 1990 they were ready to make a bid for power. In 1992 Hindu mobs exhorted by LK Advani stormed the Babri Masjid and demolished it. By 1998 the BJP was in power at the centre. The US war on terror put the wind in their sails. It allowed them to do exactly as they pleased, even to commit genocide and then present their fascism as a legitimate form of chaotic democracy. This happened at a time when India had opened its huge market to international finance and it was in the interests of international corporations and the media houses they owned to project it as a country that could do no wrong. That gave Hindu nationalists all the impetus and the impunity they needed.

This, then, is the larger historical context of terrorism in the subcontinent and of the Mumbai attacks. It shouldn’t surprise us that Hafiz Saeed of the Lashkar-e-Taiba is from Shimla (India) and LK Advani of the Rashtriya Swayam Sevak Sangh is from Sindh (Pakistan).

In much the same way as it did after the 2001 parliament attack, the 2002 burning of the Sabarmati Express and the 2007 bombing of the Samjhauta Express, the government of India announced that it has “incontrovertible” evidence that the Lashkar-e-Taiba backed by Pakistan’s ISI was behind the Mumbai strikes. The Lashkar has denied involvement, but remains the prime accused. According to the police and intelligence agencies the Lashkar operates in India through an organisation called the Indian Mujahideen. Two Indian nationals, Sheikh Mukhtar Ahmed, a Special Police Officer working for the Jammu and Kashmir police, and Tausif Rehman, a resident of Kolkata in West Bengal, have been arrested in connection with the Mumbai attacks.

So already the neat accusation against Pakistan is getting a little messy. Almost always, when these stories unspool, they reveal a complicated global network of foot soldiers, trainers, recruiters, middlemen and undercover intelligence and counter-intelligence operatives working not just on both sides of the India-Pakistan border, but in several countries simultaneously. In today’s world, trying to pin down the provenance of a terrorist strike and isolate it within the borders of a single nation state is very much like trying to pin down the provenance of corporate money. It’s almost impossible.

In circumstances like these, air strikes to “take out” terrorist camps may take out the camps, but certainly will not “take out” the terrorists. Neither will war. (Also, in our bid for the moral high ground, let’s try not to forget that the Liberation Tigers of Tamil Eelam, the LTTE of neighbouring Sri Lanka, one of the world’s most deadly terrorist groups, were trained by the Indian army.)

Thanks largely to the part it was forced to play as America’s ally first in its war in support of the Afghan Islamists and then in its war against them, Pakistan, whose territory is reeling under these contradictions, is careening towards civil war. As recruiting agents for America’s jihad against the Soviet Union, it was the job of the Pakistan army and the ISI to nurture and channel funds to Islamic fundamentalist organizations. Having wired up these Frankensteins and released them into the world, the US expected it could rein them in like pet mastiffs whenever it wanted to.

Certainly it did not expect them to come calling in heart of the Homeland on September 11. So once again, Afghanistan had to be violently remade. Now the debris of a re-ravaged Afghanistan has washed up on Pakistan’s borders. Nobody, least of all the Pakistan government, denies that it is presiding over a country that is threatening to implode. The terrorist training camps, the fire-breathing mullahs and the maniacs who believe that Islam will, or should, rule the world is mostly the detritus of two Afghan wars. Their ire rains down on the Pakistan government and Pakistani civilians as much, if not more than it does on India.

If at this point India decides to go to war perhaps the descent of the whole region into chaos will be complete. The debris of a bankrupt, destroyed Pakistan will wash up on India’s shores, endangering us as never before. If Pakistan collapses, we can look forward to having millions of “non-state actors” with an arsenal of nuclear weapons at their disposal as neighbours. It’s hard to understand why those who steer India’s ship are so keen to replicate Pakistan’s mistakes and call damnation upon this country by inviting the United States to further meddle clumsily and dangerously in our extremely complicated affairs. A superpower never has allies. It only has agents.

On the plus side, the advantage of going to war is that it’s the best way for India to avoid facing up to the serious trouble building on our home front. The Mumbai attacks were broadcast live (and exclusive!) on all or most of our 67 24-hour news channels and god knows how many international ones. TV anchors in their studios and journalists at “ground zero” kept up an endless stream of excited commentary. Over three days and three nights we watched in disbelief as a small group of very young men armed with guns and gadgets exposed the powerlessness of the police, the elite National Security Guard and the marine commandos of this supposedly mighty, nuclear-powered nation.

While they did this they indiscriminately massacred unarmed people, in railway stations, hospitals and luxury hotels, unmindful of their class, caste, religion or nationality. (Part of the helplessness of the security forces had to do with having to worry about hostages. In other situations, in Kashmir for example, their tactics are not so sensitive. Whole buildings are blown up. Human shields are used. The U.S and Israeli armies don’t hesitate to send cruise missiles into buildings and drop daisy cutters on wedding parties in Palestine, Iraq and Afghanistan.) But this was different. And it was on TV.

The boy-terrorists’ nonchalant willingness to kill – and be killed – mesmerised their international audience. They delivered something different from the usual diet of suicide bombings and missile attacks that people have grown inured to on the news. Here was something new. Die Hard 25. The gruesome performance went on and on. TV ratings soared. Ask any television magnate or corporate advertiser who measures broadcast time in seconds, not minutes, what that’s worth.

Eventually the killers died and died hard, all but one. (Perhaps, in the chaos, some escaped. We may never know.) Throughout the standoff the terrorists made no demands and expressed no desire to negotiate. Their purpose was to kill people and inflict as much damage as they could before they were killed themselves. They left us completely bewildered. When we say “nothing can justify terrorism”, what most of us mean is that nothing can justify the taking of human life. We say this because we respect life, because we think it’s precious. So what are we to make of those who care nothing for life, not even their own? The truth is that we have no idea what to make of them, because we can sense that even before they’ve died, they’ve journeyed to another world where we cannot reach them.

One TV channel (India TV) broadcast a phone conversation with one of the attackers, who called himself Imran Babar. I cannot vouch for the veracity of the conversation, but the things he talked about were the things contained in the “terror emails” that were sent out before several other bomb attacks in India. Things we don’t want to talk about any more: the demolition of the Babri Masjid in 1992, the genocidal slaughter of Muslims in Gujarat in 2002, the brutal repression in Kashmir. “You’re surrounded,” the anchor told him. “You are definitely going to die. Why don’t you surrender?”

“We die every day,” he replied in a strange, mechanical way. “It’s better to live one day as a lion and then die this way.” He didn’t seem to want to change the world. He just seemed to want to take it down with him.

If the men were indeed members of the Lashkar-e-Taiba, why didn’t it matter to them that a large number of their victims were Muslim, or that their action was likely to result in a severe backlash against the Muslim community in India whose rights they claim to be fighting for? Terrorism is a heartless ideology, and like most ideologies that have their eye on the Big Picture, individuals don’t figure in their calculations except as collateral damage. It has always been a part of and often even the aim of terrorist strategy to exacerbate a bad situation in order to expose hidden faultlines. The blood of “martyrs” irrigates terrorism. Hindu terrorists need dead Hindus, Communist terrorists need dead proletarians, Islamist terrorists need dead Muslims. The dead become the demonstration, the proof of victimhood, which is central to the project. A single act of terrorism is not in itself meant to achieve military victory; at best it is meant to be a catalyst that triggers something else, something much larger than itself, a tectonic shift, a realignment. The act itself is theatre, spectacle and symbolism, and today, the stage on which it pirouettes and performs its acts of bestiality is Live TV. Even as the attack was being condemned by TV anchors, the effectiveness of the terror strikes were being magnified a thousandfold by TV broadcasts.

Through the endless hours of analysis and the endless op-ed essays, in India at least there has been very little mention of the elephants in the room: Kashmir, Gujarat and the demolition of the Babri Masjid. Instead we had retired diplomats and strategic experts debate the pros and cons of a war against Pakistan. We had the rich threatening not to pay their taxes unless their security was guaranteed (is it alright for the poor to remain unprotected?). We had people suggest that the government step down and each state in India be handed over to a separate corporation. We had the death of former prime minster VP Singh, the hero of Dalits and lower castes and villain of Upper caste Hindus pass without a mention.

We had Suketu Mehta, author of Maximum City and co-writer of the Bollywood film Mission Kashmir, give us his version of George Bush’s famous “Why they hate us” speech. His analysis of why religious bigots, both Hindu and Muslim hate Mumbai: “Perhaps because Mumbai stands for lucre, profane dreams and an indiscriminate openness.” His prescription: “The best answer to the terrorists is to dream bigger, make even more money, and visit Mumbai more than ever.” Didn’t George Bush ask Americans to go out and shop after 9/11? Ah yes. 9/11, the day we can’t seem to get away from.

Though one chapter of horror in Mumbai has ended, another might have just begun. Day after day, a powerful, vociferous section of the Indian elite, goaded by marauding TV anchors who make Fox News look almost radical and leftwing, have taken to mindlessly attacking politicians, all politicians, glorifying the police and the army and virtually asking for a police state. It isn’t surprising that those who have grown plump on the pickings of democracy (such as it is) should now be calling for a police state. The era of “pickings” is long gone. We’re now in the era of Grabbing by Force, and democracy has a terrible habit of getting in the way.

Dangerous, stupid television flashcards like the Police are Good Politicians are Bad/Chief Executives are Good Chief Ministers are Bad/Army is Good Government is Bad/ India is Good Pakistan is Bad are being bandied about by TV channels that have already whipped their viewers into a state of almost uncontrollable hysteria.

Tragically, this regression into intellectual infancy comes at a time when people in India were beginning to see that in the business of terrorism, victims and perpetrators sometimes exchange roles. It’s an understanding that the people of Kashmir, given their dreadful experiences of the last 20 years, have honed to an exquisite art. On the mainland we’re still learning. (If Kashmir won’t willingly integrate into India, it’s beginning to look as though India will integrate/disintegrate into Kashmir.)

It was after the 2001 parliament attack that the first serious questions began to be raised. A campaign by a group of lawyers and activists exposed how innocent people had been framed by the police and the press, how evidence was fabricated, how witnesses lied, how due process had been criminally violated at every stage of the investigation. Eventually the courts acquitted two out of the four accused, including SAR Geelani, the man whom the police claimed was the mastermind of the operation. A third, Showkat Guru, was acquitted of all the charges brought against him but was then convicted for a fresh, comparatively minor offence. The supreme court upheld the death sentence of another of the accused, Mohammad Afzal. In its judgment the court acknowledged there was no proof that Mohammed Afzal belonged to any terrorist group, but went on to say, quite shockingly, “The collective conscience of the society will only be satisfied if capital punishment is awarded to the offender.” Even today we don’t really know who the terrorists that attacked the Indian parliament were and who they worked for.

More recently, on September 19 this year, we had the controversial “encounter” at Batla House in Jamia Nagar, Delhi, where the Special Cell of the Delhi police gunned down two Muslim students in their rented flat under seriously questionable circumstances, claiming that they were responsible for serial bombings in Delhi, Jaipur and Ahmedabad in 2008. An assistant commissioner of Police, Mohan Chand Sharma, who played a key role in the parliament attack investigation, lost his life as well. He was one of India’s many “encounter specialists” known and rewarded for having summarily executed several “terrorists”. There was an outcry against the Special Cell from a spectrum of people, ranging from eyewitnesses in the local community to senior Congress Party leaders, students, journalists, lawyers, academics and activists all of whom demanded a judicial inquiry into the incident. In response, the BJP and LK Advani lauded Mohan Chand Sharma as a “Braveheart” and launched a concerted campaign in which they targeted those who had dared to question the integrity of the police, saying it was “suicidal” and calling them “anti-national”. Of course there has been no inquiry.

Only days after the Batla House event, another story about “terrorists” surfaced in the news. In a report submitted to a sessions court, the CBI said that a team from Delhi’s Special Cell (the same team that led the Batla House encounter, including Mohan Chand Sharma) had abducted two innocent men, Irshad Ali and Moarif Qamar, in December 2005, planted 2kg of RDX and two pistols on them and then arrested them as “terrorists” who belonged to Al Badr (which operates out of Kashmir). Ali and Qamar who have spent years in jail, are only two examples out of hundreds of Muslims who have been similarly jailed, tortured and even killed on false charges.

This pattern changed in October 2008 when Maharashtra’s Anti-Terrorism Squad (ATS) that was investigating the September 2008 Malegaon blasts arrested a Hindu preacher Sadhvi Pragya, a self-styled God man Swami Dayanand Pande and Lt Col Purohit, a serving officer of the Indian Army. All the arrested belong to Hindu Nationalist organizations including a Hindu Supremacist group called Abhinav Bharat. The Shiv Sena, the BJP and the RSS condemned the Maharashtra ATS, and vilified its chief, Hemant Karkare, claiming he was part of a political conspiracy and declaring that “Hindus could not be terrorists”. LK Advani changed his mind about his policy on the police and made rabble rousing speeches to huge gatherings in which he denounced the ATS for daring to cast aspersions on holy men and women.

On the November 25 newspapers reported that the ATS was investigating the high profile VHP Chief Pravin Togadia’s possible role in the Malegaon blasts. The next day, in an extraordinary twist of fate, Hemant Karkare was killed in the Mumbai Attacks. The chances are that the new chief whoever he is, will find it hard to withstand the political pressure that is bound to be brought on him over the Malegaon investigation.

While the Sangh Parivar does not seem to have come to a final decision over whether or not it is anti-national and suicidal to question the police, Arnab Goswami, anchorperson of Times Now television, has stepped up to the plate. He has taken to naming, demonising and openly heckling people who have dared to question the integrity of the police and armed forces. My name and the name of the well-known lawyer Prashant Bhushan have come up several times. At one point, while interviewing a former police officer, Arnab Goswami turned to camera: “Arundhati Roy and Prashant Bhushan,” he said, “I hope you are watching this. We think you are disgusting.” For a TV anchor to do this in an atmosphere as charged and as frenzied as the one that prevails today, amounts to incitement as well as threat, and would probably in different circumstances have cost a journalist his or her job.

So according to a man aspiring to be the next prime minister of India, and another who is the public face of a mainstream TV channel, citizens have no right to raise questions about the police. This in a country with a shadowy history of suspicious terror attacks, murky investigations, and fake “encounters”. This in a country that boasts of the highest number of custodial deaths in the world and yet refuses to ratify the International Covenant on Torture. A country where the ones who make it to torture chambers are the lucky ones because at least they’ve escaped being “encountered” by our Encounter Specialists. A country where the line between the Underworld and the Encounter Specialists virtually does not exist.

How should those of us whose hearts have been sickened by the knowledge of all of this view the Mumbai attacks, and what are we to do about them? There are those who point out that US strategy has been successful inasmuch as the United States has not suffered a major attack on its home ground since 9/11. However, some would say that what America is suffering now is far worse. If the idea behind the 9/11 terror attacks was to goad America into showing its true colors, what greater success could the terrorists have asked for? The US army is bogged down in two unwinnable wars, which have made the United States the most hated country in the world. Those wars have contributed greatly to the unraveling of the American economy and who knows, perhaps eventually the American empire. (Could it be that battered, bombed Afghanistan, the graveyard of the Soviet Union, will be the undoing of this one too?) Hundreds of thousands people including thousands of American soldiers have lost their lives in Iraq and Afghanistan. The frequency of terrorist strikes on U.S allies/agents (including India) and U.S interests in the rest of the world has increased dramatically since 9/11. George Bush, the man who led the US response to 9/11 is a despised figure not just internationally, but also by his own people. Who can possibly claim that the United States is winning the war on terror?

Homeland Security has cost the US government billions of dollars. Few countries, certainly not India, can afford that sort of price tag. But even if we could, the fact is that this vast homeland of ours cannot be secured or policed in the way the United States has been. It’s not that kind of homeland. We have a hostile nuclear weapons state that is slowly spinning out of control as a neighbour, we have a military occupation in Kashmir and a shamefully persecuted, impoverished minority of more than 150 million Muslims who are being targeted as a community and pushed to the wall, whose young see no justice on the horizon, and who, were they to totally lose hope and radicalise, end up as a threat not just to India, but to the whole world. If ten men can hold off the NSG commandos, and the police for three days, and if it takes half a million soldiers to hold down the Kashmir valley, do the math. What kind of Homeland Security can secure India?

Nor for that matter will any other quick fix. Anti-terrorism laws are not meant for terrorists; they’re for people that governments don’t like. That’s why they have a conviction rate of less than 2%. They’re just a means of putting inconvenient people away without bail for a long time and eventually letting them go. Terrorists like those who attacked Mumbai are hardly likely to be deterred by the prospect of being refused bail or being sentenced to death. It’s what they want.

What we’re experiencing now is blowback, the cumulative result of decades of quick fixes and dirty deeds. The carpet’s squelching under our feet.

The only way to contain (it would be naïve to say end) terrorism is to look at the monster in the mirror. We’re standing at a fork in the road. One sign says Justice, the other Civil War. There’s no third sign and there’s no going back. Choose.

December 13, 2008 at 12:08 pm

The three premier events next week happen early: Japan’s quarterly business survey (also known as the Tankan) at 23:50 GMT on Sunday, Euroland’s preliminary PMI readings for manufacturing, services, and the composite index due Tuesday at 09:00 GMT, and the FOMC interest rate announcement later on Tuesday at 18:15 GMT.

At least six other central banks hold interest rate meetings. Norway’s Norges Bank probably will implement a cut of more than 100 basis points. The benchmark rate in the Czech Republic will decline at least 50 basis points, and Hong Kong’s Monetary Authority should at least match whatever the Fed does. It might even exceed the size of the Fed’s cut in light of intervention needed to keep the Hong Kong dollar from climbing above its fixed corridor against the U.S. dollar. The Bank of Japan is not expected to cut its 0.3% rate target, nor is a  rate change anticipated from Colombia’s central bank. I would not be shocked if there were a surprise cut in the Philippines, given the size of rate reductions this week in Taiwan and South Korea. China will be rounding out its slew of monthly data, including the release of industrial production and fixed investment. The increasingly alarmed tone of Chinese officials commenting on their economic outlook and reports of some increased social unrest create conditions for further interest rate relief soon, although a meeting at China’s central bank is not scheduled next week.

Besides the Tankan survey, Japan releases its Tertiary index and all-industry index next week. Both will have lower readings in October than the month before. The all-industry index, a supply-side monthly proxy for GDP, may fall by more than 1.5%.

Many economies in Europe will be reporting consumer price data next week. Inflation is receding at a commensurately rapid pace with economic activity. Germany also announces producer prices and the IFO index of business current conditions and expectations. French business sentiment and wage data are scheduled, assuming unions do not block the report.

Next week is a big one for British data. Releases will include consumer prices, unemployment, wages, retail sales, the CBI monthly survey of retailers, public finances, consumer sentiment, M4 and lending data, and business investment. The Bank of England minutes from earlier this month, when the benchmark rate was sliced to 2% from 3%, probably will not include an dissents. The Bank of England clearly fell behind the curve.

From the United States arrives the Treasury TIC figures for monthly capital flows, the more comprehensive Commerce Department quarterly report of the current account and all capital flows, industrial production, housing starts, consumer prices, leading indicators, the Empire State factory index, the Philly Fed index, and weekly jobless claims, chain store sales, and energy inventories.

Canada chimes in with the monthly manufacturing survey, retail sales, wholesale sales, net securities transactions, consumer prices, and wholesale turnover. From Australia, investors will get a chance to peruse minutes of the November central bank meeting and the latest data on trade and housing starts.

As always, currency market participants will keep a close eye on stock markets, especially how such react to whatever transpires in the discussions involving U.S. automakers.

Refinancing costs money. Like buying a new home, there are points and fees to consider. Usually it takes at least three years to recoup the costs of refinancing your loan, so if you don’t plan to stay that long it isn’t worth the money. But if your interest rate is high it may be smart to refinance to a lower interest rate, even if it is for the short term. If your mortgage has a prepayment penalty, this is another cost you will incur if you refinance.

Yes. It’s called a ceiling, or lifetime cap. This is a guarantee that your interest rate will never exceed a designated percentage. For instance, if your introductory rate was 5% and you have a lifetime rate cap of 6% (meaning that your interest rate can never increase more than 6% during the life of the loan) then your ceiling would be 11%.

The Bush administration dropped its opposition to using the $700 billion bank bailout fund to provide financing for U.S. automakers after the Senate yesterday failed to approve emergency loans.

The administration’s willingness to give short-term help to General Motors Corp. and Chrysler LLC eased the concern of at least some investors that the companies will collapse and worsen what is already the longest recession since the early 1980s. Stocks pared their losses.

“Congress has really punted the ball over to the White House,” John Bogle, 79, founder of the $80.6 billion Vanguard 500 Index Fund, said in a Bloomberg Television interview. “That will give them temporary stopgap aid. I do not think General Motors is going to go out of business.”

The economy’s accelerated decline prompted the reversal from the White House, which had insisted money from the Troubled Asset Relief Program be used only for financial firms. GM needs $4 billion from the government by the end of the month to pay its bills, and Ford Motor Co. Chief Executive Officer Alan Mulally isn’t asking for any federal aid now and last week predicted his company could be dragged into bankruptcy by a GM failure.

“Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry,” Treasury spokeswoman Brookly McLaughlin said in an e-mailed statement.

Stock Prices

Stocks in the U.S. and Europe rebounded somewhat after the announcement, Treasury notes declined and the dollar recouped some of its losses. The Standard & Poor’s 500 Index was down 11.01 points, or 1.25 percent, at 862.67 at 11:58 a.m. in New York. Before the announcement, S&P futures tumbled 4 percent.

GM shares fell 3 cents, or 0.7 percent, to $4.09 at 1:17 p.m. in New York Stock Exchange composite trading. Ford rose 12 cents, or 4.1 percent, to $3.02.

Treasury Secretary Henry Paulson had until today resisted calls to use the TARP to aid the automakers. The Treasury has committed all but about $15 billion of the first half of the funds since the plan was enacted Oct. 3.

Neither the Treasury nor the White House’s statements today indicated whether the TARP funds would come with terms or concessions. Paulson repeatedly insisted that any injection of funds must include a plan ensuring “viability” for the automakers.

“The intent of the TARP was to deal with financial institutions and major systemic issues and getting lending going in capital institutions,” Paulson said in a Nov. 13 Bloomberg Television interview. “Congress, I believe, should address the question of the auto industry.”

‘Other Options’

While the Treasury’s one-sentence statement didn’t mention the TARP, White House spokeswoman Dana Perino said earlier in a separate statement that the Bush administration is considering using some of the program to keep the auto companies afloat.

“Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” Perino said. “However, given the current weakened state of the U.S. economy, we will consider other options if necessary — including use of the TARP program — to prevent a collapse of troubled automakers.”

Chrysler was “pleased” to see the White House decision to consider TARP, Chief Executive Officer Robert Nardelli said in an e-mail to employees today.

GM ‘Encouraged’

GM, in a statement, said it was “encouraged” and will work with the administration “on possible solutions that could prevent further damage to our nation’s economy and also allow us to embark on an aggressive restructuring plan for long-term viability.” Ford had no comment.

Emergency loans for GM and closely held Chrysler were rejected late yesterday in the Senate after talks failed over Republicans’ demands that union workers accept a cut in wages next year. Ford said this week it doesn’t intend to seek loans from the emergency fund.

Senator Bob Corker, a Tennessee Republican involved in failed efforts to forge a compromise last night, said providing TARP money without union commitments to restructure and wage concessions would make it “less likely” that the companies become more competitive. Such a move would put “good money after bad,” Corker said in a Bloomberg Television interview.

UAW President Ronald Gettelfinger said today the union reached a tentative agreement last night with Corker, only to have it rejected by other members of his party in the Senate.

‘Tear Down’

Republicans “wanted to tear down any agreement we came up with,” Gettelfinger said at a news conference in Detroit.

Corker, speaking with reporters today, said talks with the UAW broke down because the union wouldn’t agree to a deadline for worker wage cuts.

“I basically pleaded with them to give me something,” Corker said. “So that is where it broke down.” He said his plan would have gotten 90 votes in the Senate.

House Speaker Nancy Pelosi, in a letter to President George W. Bush, said providing funds to the automakers “is the right decision” and urged him to require the same “tough accountability and shared sacrifice” from all sides in the industry as were set in a bill passed by her chamber.

Senate Majority Leader Harry Reid blamed last night’s failed vote on “stubborn Republicans” and said he was encouraged the Bush administration is considering emergency loans to the carmakers.

Connecticut Democrat Christopher Dodd, who negotiated with Corker, said on Bloomberg Television the Bush administration should announce plans today to aid the automakers because car dealers and suppliers can’t get credit from local banks.

‘Hurting Today’

“They’re hurting today,” Dodd said. “We need an announcement today out of the White House.”

GM Chief Executive Officer Rick Wagoner told Congress last week, and has said repeatedly, that the Detroit-based automaker is trying to avoid bankruptcy at all costs. Lead director George Fisher said last week that GM considered and rejected the option and it was “way down the list” of alternatives.

Still, GM also has said it will lack the minimum $11 billion needed to pay bills by the end of this month, raising the prospect of bankruptcy should it fail to win a cash infusion. GM reported having $16.2 billion as of Sept. 30.

An attempt to restructure GM in bankruptcy would end up as liquidation, because sales would plummet as buyers flock to solvent car companies, Wagoner has said.

Chrysler has said it will run out of money early next year. It ended the third quarter with $6.1 billion in cash and needs at least $3 billion on hand to operate, Chief Executive Officer Robert Nardelli told Congress on Nov. 18.

Pressure was mounting on GM and Chrysler this week before the congressional failure as both faced demands from a small number of parts makers for payments in advance because of the bankruptcy concerns, people familiar with the matter said.

LONDON – European shares closed lower Friday amid a global stocks sell-off on worries the U.S. auto industry may go bust after the Senate refused to grant it a $14 billion lifeline.

He expects some sort of bailout of the automakers to be reached. “These firms are simply too important — economically and politically — to be allowed to disappear completely,” Jessop said.

The bankruptcy of any of the big American automakers would deal another blow to the world’s largest economy, which is sliding deeper and deeper into recession.

The Commerce Department said retail sales dropped 1.8 percent in November, the fifth straight monthly drop. The weakness was led by a 2.8 percent fall in auto sales, a decline that had been expected given that automakers already had reported that November was their worst sales month in more than 26 years.

It’s not just stock markets suffering in the wake of the failure of the Senate to pass the auto rescue deal. The dollar slumped overnight too, particularly against the yen.

The dollar fell to a low of 88.16 yen, its lowest level since Aug. 2, 1995 — before it recovered to trade above 91 yen.

That heaps more bad news on major Japanese exporters like Toyota and Sony — already reeling from waning global consumer demand — whose overseas income is eroded by an appreciating yen.

Figures this week show that China’s economy is feeling the pinch of the global slowdown. For the first time in seven years, exports fell in November.

Meanwhile, the euro was 0.2 percent higher at $1.3349.

                               Economic Slowdown - After the cruel death of many big enterprises and the evaporation of trust world over, the whole world is in a state, which is totally unforeseen and unfathomed even a few months back.  We are hearing a lot of economic terms from financial analysts world over. Let us unravel and connect them!

                              Inflation - Inflation is an upward movement in the average level of prices. In India, Inflation is calculated using “Wholesale Price Index”. What causes inflation? Supply-Demand theory.

               To curtail inflation, government hikes the Cash Reserve Ratio (CRR) or reduce the supply of money.  CRR refers to the mandate on each bank to maintain a certain ratio of their funds in deposits and p-notes.  So with less fund to lend, banks increase the ‘Interest Rate’ on loans to compensate on the reduction in disbursable funds.

               To curtail inflation, government hikes the Repo Rate or Reverse Repo rate. Repo rate - rate at which banks borrows money from RBI. Since the funds become dearly, the increase in rate of interest is passed on to the common man thereby curtailing the supply of money. everse Repo rate - rate at which RBI borrows money from banks. Since RBI is a safe haven, banks deposit all their money thereby draining the available money in the finance system. So funds become unavailable to common man. Realty, Capital Goods, Auto and many other business generally feel the heat.  

                              Economic Slowdown->Credit Crunch.  What is Credit Crunch? A credit crunch (also known as a credit squeeze) is a sudden reduction in the general availability of loans (or credit), or a sudden increase in the cost of obtaining loans from banks. (frm Wikipedia).

                               But in India, the credit crunch is for a different reason. In the western countries, if it is the lack of trust, in India, it is the increase in demand for the available credit. The CDR (Credit-Deposit ratio - ratio of the deposits lent out.) of India is at an all-time high. So the nation is buoyant and there is no reduce in the supply of money from banks.  The problem is that sectors, which were dependent on money from foreign funds or non-banking firms, are coming to domestic banks for funds. So there is a credit squeeze.

                                What is the government doing? It is reducing the CRR, Repo rate and Reverse Repo rate.  And banks are canvassing for deposits, by offering increased Rate of Interest. So you will be buying cars, homes, etc at a lesser rate of interest in the near future!!

Décryptage, Analyses, Veille - Downside The World News

Nigel Holmes is a graphic designer. Megan McArdle, an Atlantic associate editor, blogs at meganmcardle.theatlantic.com.

http://www.theatlantic.com/doc/200812/map-iceland

If you feel that you don’t have either the inclination nor the patience to research and cherry-pick choice stocks,  then why not set aside some funds to invest in index funds?    Remember,  you don’t need to get the timing exactly right.  It’s time to buy for the next decade.  =)

THIS BLOG IS ON ORGANIZED CRIME AND TERRORISM AND THE FESTERING WOUNDS OF ISRAEL AND KASHMIR THAT HAVE GRIPPED THE WORLD AND ARE DUE TO THE FILTHY ANTAGONISTIC POWER HUNGRY,CRIMINAL,LOOTING TENDENCIES OF THE BRITISH COMMONWEALTH

WITH GUTTER MEHRAULI ARYA SAMAJ SEX MANY WOMEN SATISFACTION ,BLACK DYE USER FROM AGE 40,BALD KALRA

BOTH AT AGE 55.ALSO RADIOACTIVE NUCLEAR WASTE AS WELL AS NUCLEAR MATERIALS FED IN FOOD CAN LEAD TO SERIOUS BODY AND HAIR LOSS WHICH THESE SINNERS ARE INFLICTING ON THE HONEST.PLEASE READ THE LETTER SENT TO DRDO JUST YESTERDAY ON HOLI-22-3-2008 AND JUDGE FOR YOURSELF.

© Copyright 2000 - 2008 The Hindu

http://wkdkigodatabase03.blogspot.com/2007/06/jasmine.html

There is but one living and true God, everlasting, without body, parts, or passions; of infinite power, wisdom, and goodness; the maker and preserver of all things both visible and invisible. And in unity of this Godhead there be three Persons, of one substance, power, and eternity; the Father, the Son, and the Holy Ghost.

The Son, which is the Word of the Father, begotten from everlasting of the Father, the very and eternal God, and of one substance with the Father, took man’s nature in the womb of the blessed Virgin, of her substance: so that two whole and perfect natures, that is to say, the Godhead and manhood, were joined together in one person, never to be divided, whereof is one Christ, very God and very man, who truly suffered, was crucified, dead, and buried, to reconcile His Father to us, and to be a sacrifice, not only for original guilt, but also for all actual sins of men.

Christ did truly rise again from death, and took again His body, with flesh, bones, and all things appertaining to the perfection of man’s nature, wherefore He ascended into heaven, and there sitteth until He return to judge all men at the last day.

The Holy Ghost, proceeding from the Father and the Son, is of one substance, majesty, and glory with the Father and the Son, very and eternal God.

Holy Scripture containeth all things necessary to salvation: so that whatsoever is not read therein, nor may be proved thereby, is not to be required of any man, that it should be believed as an article of the faith, or be thought requisite or necessary to salvation.In the name of Holy Scripture, we do understand those Canonical books of the Old and New testament, of whose authority was never any doubt in the Church.

- 1970 - 1980 - 1990

Hanuman was born as the son of Anjana a female vanara. Anjana was actually an Apsaras (a celestial being), named Punjikasthala, who, due to a curse, was born on the earth as a female vanara. The curse was to be removed on her giving birth to an incarnation of Lord Shiva. Anjana was the wife of Kesari, a strong vanara who once killed a mighty elephant that was troubling sages and hermits. He therefore got the name ‘Kesari’, meaning lion, and is also called Kunjara Südana, the elephant killer.

The other speciality of this place is that the waterfall flows upwards… a few more kilometers trek away from this place. is said that the wind is so strong that it pushes the water flow upwards… probably that is why he is called the son of Wind God - Pavan Putra Hanuman

of the Mughal Empire and the possibility of expanding to fill the

power vacuum. Without Nader, “eventual British rule [in India]

would have come later and in a different form, perhaps never at all

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

on his way to fight the Daghestanis, an assassin took a shot at him but

Nader was only lightly wounded. He began to suspect his son was behind

the attempt and confined him to Tehran. Nader’s increasing ill health

made his temper ever worse. Perhaps it was his illness that made Nader

lose the initiative in his war against the Lezgin tribes of Daghestan.

Frustratingly for him, they resorted to guerrilla warfare and the

Persians could make little headway against them. Nader accused his son

of being behind the assassination attempt in Mazanderan. Reza

angrily protested his innocence, but Nader had him blinded as punishment,

although he immediately regretted it. Soon afterwards, Nader started

His PhD is in the area of Brain and Cognitive Science from the

Massachusetts Institute of Technology (MIT), where he was also a

visiting physician at the Clinical Research Center. He completed his

post-doctoral work as a Clinical and Research Fellow in Neurology at the

Massachusetts General Hospital, Harvard Medical School.

Professor Nader has conducted research on neurochemistry,

neuroendocrinology, and the relationship between diet, age, behavior,

mood, seasonal influences, and neurotransmitter and hormonal activity,

and on the role of neurotransmitter precursors in medicine.

His interest in natural health care led him, while at MIT,

to conduct research on Maharishi Ayur-Veda herbal and mineral

preparations for their safety, their effects on memory and behavior, and

their ability to prevent aging and disease, including cancer.

He also conducted original research on the effects of Maharishi’s

Transcendental Meditation and TM-Sidhi Program in solving social

and international problems.

Professor Nader’s desire to gain total understanding of the human mind and

body-of consciousness and physiology-led him to the study of Maharishi’s

Vedic Science and Technology under the guidance of His Holiness Maharishi

Mahesh Yogi.

He has organized courses and lectured widely on Maharishi Ayur-Ved, the

ancient system of perfect health, in more than 50 countries, and held positions

as a professor and director of Maharishi’s Vedic Approach to Health Programs.

He is currently International President of Maharishi Open Universities;

International President of Maharishi’s World Parliament or World Peace;

Director of the Council of Supreme Intelligence of Maharishi’s Global

Administration through Natural Law; International President of Maharishi

Ayru-Veda Universities; president of Maharishi University of Management,

Holland; and President of Maharishi European University of Management, Brussels.

Professor Nader was honored by Maharishi as Custodian of the Constitution

of the Universe in 1997. He was also given the title Chakravarti by Maharishi

on the day of Guru Purnima, 1997.

On the basis of his knowledge of physiology, Dr. Nader has successfully

correlated each aspect of the Vedic Literature to a specific area of physiology, with the conclusion that human physiology is the expression of Veda and the Vedic Literature.

This is the subject matter of this book.

In honor of his discovery, Professor Nader received his weight in gold at a historic

celebration in February 1998, at Maharishi Vedic University in Vlodrop, Holland,

in the presence of Maharishi.

This discovery has been appreciated by scientists and political leaders

throughout the world, including the Presidents of India, Mozambique, Lebanon,

Turkey, Trinidad and Tobago, and the Maronite Patriarch of Antioch and of all

the Middle East.

From 12 October to 16 October, 2000, during a five-day coronation ceremony

(Rajyabhishek), Professor Tony Nader, was crowned the First Sovereign Ruler

of the Global Country of World Peace, with its authority in the invincible

organizing power of Natural Law, which naturally and eternally governs the

evolution of all life everywhere.

On 17 October, Professor Nader, honoured with the title Nader Raam,

in keeping with the tradition of the Royal Rulership of Raam- the rule of

Natural Law- graciously accepted his new sovereign role and announced the

forty Ministries of His Global Country of World Peace, each upheld by the

THIS BLOG IS ON ORGANIZED CRIME AND TERRORISM AND THE FESTERING WOUNDS OF ISRAEL AND KASHMIR THAT HAVE GRIPPED THE WORLD AND ARE DUE TO THE FILTHY ANTAGONISTIC POWER HUNGRY,CRIMINAL,LOOTING TENDENCIES OF THE BRITISH COMMONWEALTH

Virtual Insanity

What is it with the worldly importance of the male sexual organ? Why is it something that has been drawn, sculptured and admired for thousands of years?

Even mother nature has her own version… meet the REAL magic mushroom.

MEERUT/BEIRUT

It’s so perfect that it usually has one or more “balls” at it’s base.

Another interesting phallus would be the one in Luqa, Malta that greets our tourists as they drive past it on their way to their hotels.

Ansals have just two months to pay up or else their property is to be auctioned to satisfy the liability. Expectedly, whispers have arisen saying that this judgement would open the floodgates of liability litigations prompted by lawyers. Tulsi retorts: “ the open defiance of safety laws can only be contained by opening these floodgates. We are glad that the floodgates have been opened, albeit only a little.”

After the assassination of Kennedy, the Federal Bureau of Investigation investigated Marcello. They came to the conclusion that Marcello was not involved in the assassination. On the other hand, they also said that they, “….did not believe Carlos Marcello was a significant organized crime figure,” and that Marcello earned his living, “….as a tomato salesman and real estate investor.” As a result of this investigation, the Warren Commission concluded that there was no direct link between Ruby and Marcello.

The Marcello family and descendants still own or control a significant amount of real estate in southeast Louisiana.

Sanjay also publicly initiated a widespread family planning program to limit population growth. But this resulted in government officials and police officers forcibly performing vasectomies in order to meet quotas and in some cases, sterilizing women as well. Officially, men with two children or more had to submit to sterilization, but many unmarried young men, political opponents and ignorant, poor men were also believed to have been sterilized. This program is still remembered and criticized in India, and is blamed for creating a public aversion to family planning, which hampered Government programmes for decades.

- 1970 - 1980 - 1990

At that time Hindustan Motors’ Ambassador was the chief car, and the company had come out with a new entrant, the Premier Padmini which was slowly gaining a part of the market share dominated by the Ambassador. For the next ten years, the Indian car market had stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983.

Sanjay Gandhi was awarded the exclusive contract and licence to design, develop and manufacture the “People’s Car”. This exclusive rights of production generated some criticism in certain quarters, which was directly targeted at Indira Gandhi. Over the next few years, the company was sidelined due to the Bangladesh Liberation War and emergency.

In the early days under the powerful patronage of Sanjay Gandhi, the company was provided with free land, tax breaks and funds. Till the end of 1970s, the company had not started the production and a prototype test model was welcomed with criticism and skepticism. The company went into liquidation in 1977. The media perceived it to be another area of growing corruption. [4] Unfortunately, Maruti started to fly only after the death of Sanjay Gandhi, when Suzuki Motors joined the Government of India as a joint venture partner with 50% share.[5]

After his death, Indira Gandhi decided that the project should not be allowed to die. Maruti entered into this collaboration with Suzuki Motors, The collaboration heralded a revolution in the Indian car industry by producing the Maruti 800. The car went on sale on December 14, 1983. It created a record by taking 13 months time to go from design to rolling out cars from a production line.

Hanuman, actually devine and is an reincarnation of Lord Shiva. Pavan is anoather name of Vayu. Pavan had played an important role in Anjana’s begetting Hanuman as her child. Hanuman’s spiritual father is Vayu, so Hanuman is also called Pavan-putra (meaning ’son of Pavan’) or Maruti. Being divine, Hanuman was born with immense physical strength, the power to fly, and divine levels of endurance.

Hanuman was born as the son of Anjana a female vanara. Anjana was actually an Apsaras (a celestial being), named Punjikasthala, who, due to a curse, was born on the earth as a female vanara. The curse was to be removed on her giving birth to an incarnation of Lord Shiva. Anjana was the wife of Kesari, a strong vanara who once killed a mighty elephant that was troubling sages and hermits. He therefore got the name ‘Kesari’, meaning lion, and is also called Kunjara Südana, the elephant killer.

The other speciality of this place is that the waterfall flows upwards… a few more kilometers trek away from this place. is said that the wind is so strong that it pushes the water flow upwards… probably that is why he is called the son of Wind God - Pavan Putra Hanuman

The Disability Law & Policy e-Newsletter

An electronic publication of

December 9, 2008

Volume 5, Issue 10

Dear Colleague:

Below is a topical overview of the items presented in this issue.

G. EMERGENCY RESPONSE / PREPAREDNESS: Disaster mitigation and preparedness news

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

A. CIVIL RIGHTS

http://www.walmartspeakout.com/page/-/ADAreport.pdf

http://www.walmartspeakout.com.

Full Story:

http://www.law.com/jsp/article.jsp?id=1202426195671

Full Story:

http://www.uiowa.edu/~fyi/issues/issues2008_v45/11032008/profiles.html

Full Story:

http://pmr.uoregon.edu/science-and-innov…istance-center/

http://media.www.vermontcynic.com/media/…e-3548139.shtml

Full Story:

http://www.perkins.org/assets/downloads/lantern/2008-fall-lantern_.pdf

Full Story:

http://www.press-citizen.com/apps/pbcs.dll/article?AID=/20081015/NEWS01/810150304/1079

1. Will Technology Replace Service Animals?

Full Story:

http://www.eetimes.com/showArticle.jhtml…cleID=211601091

Full Story:

http://www.computeractive.co.uk/computeractive/news/2230257/disabled-children-specially

Full Story:

http://www.sciencedaily.com/releases/2008/11/081107072015.htm

Full Story:

http://www.ssa.gov/cola/colafacts2009.htm

Full Story:

http://www.nytimes.com/2008/11/19/health/policy/19fda.html?ref=health

Also available at

http://www.iht.com/articles/2008/11/20/healthscience/19fda.php and http://www.starnewsonline.com/article/20081119/ZNYT04/811193013

Full Story:

http://www.hrhero.com/hl/100308-lead-ada_amendments_act.html

Full Story:

http://www.dol.gov/opa/media/press/odep/odep20081327.htm

For more information on USBLN:

http://www.usbln.org/

Full Story:

http://www.newstimes.com/ci_10942030

Full Story:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1303047

Full Story:

http://www2.ljworld.com/news/2008/nov/17/county_emergency_making_sure_nobody_left_behind/

Full Story:

http://www.tmcnet.com/usubmit/2008/11/11/3778464.htm

Full Story:

http://www.nj.com/news/times/regional/index.ssf?/base/news-15/1226811912192100.xml&coll=5

Full Story:

http://www.unhcr.org/refworld/docid/48db99e82.html

https://wcd.coe.int/ViewDoc.jsp?Ref=NE18…orLogged=A9BACE

Full Story:

http://www.mdri.org/mdrihtmlemail/Nov2008Alert.html

For more information,

http://www.mdri.org/index.html

Full Story:

http://www.irinnews.org/Report.aspx?ReportId=81016

http://disability.law.uiowa.edu/

The e-Newsletter is archived at http://disability2.law.uiowa.edu/

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Interest rates as of December 12, 2008

What a week!  Below are some of the best rates we have EVER seen along with some important comments.

Market Comments -

Today was one of those ‘Strange Days’ marked by wild, volatile swings in both stocks and bonds. Stocks went crazy as well with the Dow trading in a 335 point range. The day’s economic news was mostly bond-friendly, but it took a back seat to the drama taking place in Washington, D.C. with the auto bailout legislation. A surprising defeat in the U.S. Senate for a $14 billion bailout bill followed by an announcement by the U.S. Treasury that it was ready to come to the aid of the Big 3 automakers turned stock and bond traders on their heads, triggering a session filled with frenzied selling and buying as positions were flipped back and forth. 

News of a $50 billion investment fund Ponzi scheme engineered by Bernard Madoff, a former chairman of the Nasdaq Stock Market, also caused ripples in the financial markets. The Producer Price Index (PPI) fell -2.2% vs. a consensus of -2.0% for November. An 11.2% drop in energy costs led the decline in wholesale inflation. After excluding volatile food and energy costs, the Core PPI rose by 0.1% vs. an estimate of 0.2%, its smallest gain since last March. This is another positive for bonds. 

November Retail Sales fell by a less than forecast -1.8% vs. a consensus estimate of -2.0%. After factoring out auto sales, Retail Sales fell -1.6% vs. a consensus estimate of -1.8%. Preliminary Consumer Sentiment for December was reported at a higher than expected 59.1 vs. a consensus of 55.0, probably due to lower energy costs. Economists were expecting Consumer Sentiment to rise to 58.0 from November’s level of 55.3. The Dow managed to gain 64 points to close at 8,629 while the broader S&P 500 Index advanced 6 points to end at 879. The NASDAQ Composite Index rose 32 points to finish at 1,540.

Now is the time to be refinancing or buying a home that’s for sure!  Call Mike with any questions!

Louis J. Sheehan, Esquire .  For most of October, it seemed nearly everything that could go wrong with the markets did. But the rout turned into a jackpot for author and investor Nassim Nicholas Taleb.

Mr. Taleb last year published “The Black Swan,” a best-selling book about the impact of extreme events on the world and the financial markets. He also helped start a hedge fund, Universa Investments L.P., which bases many of its strategies on themes in the book, including how to reap big rewards in a sharp market downturn. Like October’s. http://louis-j-sheehan-esquire.blog.friendster.com

Separate funds in Universa’s so-called Black Swan Protection Protocol were up by a range of 65% to 115% in October, according to a person close to the fund. “We’re discovering the fragility of the financial system,” said Mr. Taleb, who says he expects market volatility to continue as more hedge funds run into trouble.

A professor of mathematical finance at New York University, Mr. Taleb believes investors often ignore the risk of extreme moves in the market, especially when times are good and volatility is low, as it was for several years leading up to the current turmoil. “Black swan” alludes to the belief, once widespread, that all swans are white — a notion that was proven false when European explorers discovered black swans in Australia. A black-swan event is something that is highly unexpected.

Assets under management at Universa have neared $2 billion since the fund launched early last year with $300 million under management. While Mr. Taleb frequently consults with Universa’s traders, the Santa Monica, Calif., fund is owned and managed by Mark Spitznagel, who worked for several years in the 1990s as a pit trader on the Chicago Board of Trade. http://louis-j-sheehan-esquire.blog.friendster.com

To execute its strategy, Universa buys far-out-of-the-money “put” options on stocks and stock indexes. These are bets that the market will see a sharp, sudden downturn. They become extremely valuable in a market decline of 20% or more in a one-month period.

When times are good, such options are cheap and Universa gobbles them up, taking small losses along the way. When the market makes a quick, steep turn south, as it has recently, Universa’s positions gain value as investors scramble to protect themselves in the downturn by buying puts. The strategy, which keeps more than 90% of assets in cash or cash equivalents such as Treasury bonds, either breaks even or loses small amounts in most months while waiting for periodic, infrequent spikes in volatility.

Here’s an example of a trade the fund made recently. In late September, when the Standard & Poor’s 500-stock index was trading around 1200, Universa purchased put options that would pay off if the index fell to 850 by late October. Since such a plunge was considered highly unlikely, such options cost only 90 cents. On Oct. 10, those options cost $60 as the S&P 500 tumbled sharply. Universa sold most of its position in the high-$50 range.

The fund has “done what it was supposed to do for us,” says John Salib, a partner at Landmark Advisors, a New York fund that invests in other hedge funds and that invested in Universa in July. “We wanted to protect our portfolio against this kind of environment.”

Mr. Taleb made his first killing on Black Monday, the crash of Oct. 19, 1987, as a trader with the investment bank First Boston (now a part of Credit Suisse), with a large position in out-of-the-money Eurodollar contracts. Investors fled into the highly liquid contracts as the market crashed, causing their value to surge.

While the black-swan strategy has paid off handsomely this year, it hasn’t always. Mr. Taleb’s previous fund, Empirica Capital, which used similar tactics, shut down in 2004 after several years of lackluster returns amid a period of low volatility. The strategy may face another test after the current bout of market turmoil. http://louis-j-sheehan-esquire.blog.friendster.com

The task for the fund’s managers is to persuade clients to stick around after their big gains. Historically, such dramatic downturns have been rare events, occurring only once or twice a decade.

Mr. Spitznagel cautions against optimism. “You could say that so much value has been destroyed that there just isn’t much left,” he said. That is “a dangerous assumption, since things can always get worse.” Louis J. Sheehan, Esquire

The Indus Valley Civilization (Mature period 2600–1900 BCE), abbreviated IVC, was an ancient civilization that flourished in the Indus River basin. Primarily centred in modern day Pakistan (Sindh and Punjab provinces) and India (Gujarat and Rajasthan), it extends westward into the Balochistan province of Pakistan. Remains have been excavated from Afghanistan, Turkmenistan and Iran, as well. Historically part of Ancient India, it is one of the world’s three earliest urban civilizations along with Mesopotamia and Ancient Egypt. The mature phase of this civilization is technically known as the Harappan Civilization, after the [1]first of its cities to be unearthed: Harappa in Pakistan. Excavation of IVC sites have been ongoing since 1920, with important breakthroughs occurring as recently as 1999.[2]

The civilization is sometimes referred to as the Indus Ghaggar-Hakra civilization[3] or the Indus-Sarasvati civilization. The appellation Indus-Sarasvati is based on the possible identification of the Ghaggar-Hakra River with the Sarasvati River mentioned in the Rig Veda,[4] but this usage is disputed on linguistic and geographical grounds.[

Many Indus valley seals show animals. One famous seal shows a figure seated in a posture reminiscent of the Lotus position and surrounded by animals was named after Pashupati (lord of cattle), an epithet of Shiva and Rudra.[56][57][58].

“Following the Mumbai attacks and the subsequent tension between Pakistan and India, the United Jihad Council has decided to remain silent,” an unnamed commander of one of the militant groups in the UJC told ‘The News’ daily.

He said the current Pakistani leadership is pursuing the policy adopted by ex-President Pervez Musharraf and “statements on Kashmir issued so far by President Asif Zardari had made it clear that the present Pakistan government would extend no support” to them.

In India, the elite stay above the fray. They live in walled compounds, have their own source of electricity, hire their own security guards  and educate their children in private schools, avoiding the issues confronting the government and the masses. But for the first time as it happened that the 60-hour siege that struck the heart of India’s financial and entertainment center, killing 171 people, has fractured that secure existence, galvanizing thousands of middle- and upper-class Indians to get involved. A day after the assault ended, dozens turned out for a march along Mumbai’s elegant Marine Drive. “I’m gonna vote!” shouted Shrenik Kenia, a 24-year-old engineering student. “We’re all gonna vote!” It’s not something many affluent Indians bother with, but mep the state, with its notoriously turgid, corrupt, and inefficient government.

Now the Ruling Hegemonies and their Agencies including National governments and security forces with Creamy Layer Policy Makers have been SET for MASS DESTRUCTION everywhere in this part of the Galaxy so Complex with ETHNIC DIVIDES! Thus, the War Goddess ATHENA is Invoked far away from the TROY of GREECE!

India is hurtling towards an industrial recession despite the much hyped Risilience claims by the outgoing Chettiar Gangsters of World Bank, FIMNMIn and RBI!Indian exports have already recorded double-digit declines in October and November. Imports continue to rise, which could put the balance of payments under immense pressure.The government said on Friday that the Index of Industrial Production in October was 0.4% lower than what it was a year ago. This is the first such decline in industrial output since 1993.

The FREEsenSEX is in CHOPPING times and it is all the PLEASURE for the BEARs! The recent interest rate cuts and fiscal stimulus will make an impact a few months later. Forget 8%: even a 7% growth rate seems unlikely now.

Since early September, the Organization of the Petroleum Exporting Countries has already agreed to reduce supply by a total of two million barrels per day (bpd).

OPEC oil ministers are scheduled to meet in the western Algerian city of Oran on Wednesday amid expectations they will endorse a large cut in supplies to prevent further falls in oil prices.

Khelil, who is also Algeria’s energy and mining minister, said Russia and some other non-OPEC oil producing countries like Azerbijan are to due attend the Oran meeting.

Army Chief Deepak Kapoor on Saturday asserted that Indian security forces are well equipped to handle any challenges saying, the country can produce many Unnikrishnans who will readily sacrifice their lives on the motherland.

Addressing the Passing Out ceremony of Indian Military Academy in Dehradoon, the Army chief said that our security forces have faced various challenges many times and are always ready to handle all kind of difficult situations.

“Our forces will produce many Unnikrishnans who will be ready to sacrifice their lives for the motherland,” Chief guest Kapoor said adding, “India is a secular country and the main duty of our soldiers are to protect the countrymen.”

He said “our officers not only ensure the security of the country but also uphold it’s honour and dignity.”

He added that our officers were not only soldiers but also doctors, teachers, environmentalists and technical experts.

Advising the cadets during the ceremony, Kapoor said that one should never stop the process of acquiring knowledge which helps in facing any adversary.

He addressed 498 cadets, including six from Assam Rifles and 24 from foreign countries like Nepal, Tazhakistan and Bhutan on the occasion.

While prestigious ‘Sword of Honour’ award and Gold medal was bestowed on Abhishek Gurgmukh, cadets Atul Kumar Rai and Kunandan Kumar were awarded with silver and bronze medals respectively during the ceremony

However, Army Banner Award was given to Casino company of Bhagat Batallion.

Just note the US TURNAROUND! You depend so much on it!

“Is that the message the US has sent out?” McCormack was asked. “No,” he replied.

“…Pakistan did this because it saw it in its interest. As we have said many, many times over, the threat from violent extremists is as much a threat to Pakistani people and the Pakistani government as it is to anybody else. All that said, it’s a welcome step that they took,” he said.

“This is a day-by-day process, and it’s something that requires vigilance every single day, fighting terrorism,” he said making the point that at no time was there any talk of branding Pakistan as a terrorist state.

The Spokesman was also asked to clarify if the banning of the Jamaat would be one of the topics that the Secretary of State Condoleezza Rice would be covering when she visits the United Nations next week.

Rice is scheduled to be in New York for two days starting Monday for discussion on a range of issues including Zimbabwe and piracy.

“…there are a lot of different things that she’s going to be talking about up there. I’m sure that she will touch on the issues related to India and Pakistan. I know that Foreign Secretary Miliband, at least at this point in time, plans to be up there and she plans to see him. And if they do get together, I’m sure that that topic will come up,” he added.

Whoever may be behind the Terrorist activities, they never happen to be the Majority of the People. We may not blame the innocent Pakistani People for the crimes of Pakistani Military, ISI or even the government of pakistan. We never know the role played by United states of America and its NOTORIOUS Intelligence agency CIA, infamous for creating WAR and CIVIL WAR like Environment to protect US ZIONIST interests worldwide. Mind you, after POKARAN, Russia holds the ARMS MARKET MONOPOLY and since seventies America and NATo and the WEST never entered the Indian ARMS Market! Just because of SANCTIONS imposed by the same United satates of America! The Western Weapon Industry was very keen to operationalise the Indo US Nuclear deal and the US Congress obliged so easily. We got the NSG green Signal without any hinderance after DR Manmohan Manipulated Parliamentary Mandate at home! What for President BUSH has done all this HARD Work if US interests are not involved at all. Why does Barack OBAMA is so involved in Indian Affairs! The Ruling Hegemony knows very well that they have the best CHANCE to get an ESCAPE Route out of Recession in SOUTH ASIA if India and Pakistan tend to move into the US Weapon Market with long long shopping list!

Zardari’s ability to deliver anything beyond the current crackdown is in serious doubt. In a new twist to the Mumbai terror attack probe, the only surviving terrorist captured during the Mumbai attacks -Ajmal Kasab-has written a letter to the Pakistan embassy pleading for legal aid! What Option remains at last?

May we Consider the Option of War against Pakistan considering that India’s economy could expand at a much lower rate than estimated with data released on Friday showing that industrial output in October contracted by 0.4%, the first time this is happening in 15 years, because of a decline in both domestic and external demand.

Earlier, addressing the International Conference of Jurists on Terrorism, Rule of Law and Human Rights, Bhardwaj said time had come for a “really very effective” legislation to combat the menace in the aftermath of the Mumbai mayhem last month.

“We would arm ourselves with laws specifically aimed at terrorist and disruptive elements. The government would very soon declare the contents of the law,” he said. The minister said the country never thought that it will face terrorism to such an extent. “But now the time has come for really very effective laws,” he said.

Goddess ATHENA depicts Power as Indian Goddess Durga. But Durga, in her all forms, is associated with Lord SHIVA. As durga represents the PRAKRITI, Nature and Shiva , the MAN. Eternal relationship in between Nature and Man is thus symbolised in Age OLD Myths in India. Goddess Kali seems to be Aryanised in form of DURGA while Lord remains the same. We see durga mentioned well in Vedic Literature as well as in Upanishads and puran to be believed written by Aryans who created the Goddess replicating Indigenous Kali agnaist aboriginal indigenous black untouchables! Durga kills the Asuras, the aboriginal communities. kali is also described by the Aryans as war Goddess!Aboriginal Gods and Goddesses were ARYANISED to convert the NATIVES in Hindutva and occasionally fighting against the indigenous tribes as well as amongst themselves, that they conceived of some elemental gods and goddesses adopting the aboriginal and indigenous gods and goddesses as Shiva, Kali and even Durga!All documents and literature relating to Indigenous Dravid civilisation were first destroyed in Harappa and Mohanjodoro. US Imperialism did the same thing in Iraq and Afganistan! Mohanjodoro has not any legacy anywhere as they wiped out. Charvak philosophy was diluted in hindutva.south and North Indian dalits and Tribals are divided!ruling galaxy hegemony is NOTHING but  but an expression of racial supremacy which began with the destruction of Mahergargh, Harrapa and Mohanjodoro as well as Maya and Inca civilisations!Since the Indus script has not been deciphered and apart from the bathhouse in Mohenjo-doro there are no religious structures! But  we have enough evidences of their Indigenous developed agriculture, Civil Society, religion and culture. The Linga and YONI images which later transformed into SHIVALINGA is rooted in MOhanjedoro! The TERECOTA Seal found in HARAPPA depicts the Goddess of fertility, the Earth upsied down as the head lying underneath and the rest of the body stands vertically ERECT with stretching Legs and the stomock generating Production System depicted by storage of cereals. it resembles with the Abstract Modern Painting of Picasso! Not only this, the Goddess has two tigers face to face standing by her side. Mind you, Goddess durga stands on the Lion. She is the Daughter of Himalayas which has been always inhibited by Indigenous people but they were not Black! As the people of Kashir are also not Black but they never happen to be Aryans. We know about Baisno Devi, the Himalayan version of Goddess Durga! Thus, it may be understood that the Goddess of Peace and Fertility was translated as the Goddess of War by the Culture in Aggression, the Aryan!

But our people worship Goddess Kali, the SAVIOUR! She is known as Raksha Kali! The Kali who protects and who, at the same time depicts the fiercest REALITIES of life as we see in the Kali Idol in kalighat , well portrayed by Gunter Grass!

The question is, will their involvement make a difference? India is run by a massive, lumbering, outdated and frequently corrupt bureaucracy. While a civil service job used to be among the greatest professional plums for India’s educated classes, these days the rich and ambitious focus far more on the country’s fast-growing private sector.

And politics is riddled with century’s-old class conflicts, religious divisions and nepotism.

Also, in the 60 years since independence, India’s leaders have done the math and turned to the nation’s hundreds of millions of rural poor to win office, prompting the middle class to withdraw from the political process.

Residents lost friends, relatives and colleagues and live with the dread that it could have been them trapped as the gunmen sprayed five-star restaurants with bullets and grenades. Many now wonder where to meet for lunch.

The attack “has galvanized the middle class and elite like no other act of violence has before,” said Nilekani, who has just written a book on Indian society and politics, “Imagining India: Ideas for the New Century.”

Their quest for change is not unprecedented. The swelling ranks of educated, affluent Indians have already transformed the country into an emerging economic power and a high-tech leader. But this has been largely done despite the government and India’s primitive infrastructure.

For now, the frustrations amount to little more than symbolic gestures and an inchoate demand for change.

The Society of Indian Law Firms, a group of 60 top firms across the country, filed a petition last week, urging the Bombay High Court to compel the government to take concrete steps to improve security and set up a citizen oversight committee to make sure reforms stay on track. The Bombay Chamber of Commerce and Industry, a group of about 2,000 businesses based in Mumbai, signed on in support.

Pakistan has placed the charity’s leader Hafiz Saeed under house arrest and ordered its assets frozen after the UN Security Council listed it as a terror group following the attacks that left 172 people dead, including nine gunmen.

“The forces of terrorism, inspired by ideologies of hatred, intolerance and exclusion, pose today a fundamental challenge to liberal democracies,” Singh told a conference of jurists in New Delhi.

“They pose a challenge to democracy at home, to democracy in our region, to democracy around the world,” he said.

“Governments and authorities in our region and elsewhere have therefore a moral duty to act firmly and quickly,” he said.

New Delhi had previously blamed “elements in Pakistan” for being behind the 60-hour siege that ended on November 28, raising tensions between the two nuclear-armed South Asian rivals.

US Secretary of State Condoleezza Rice has said “non-state actors” operating on Pakistani soil were responsible for the attacks.

Indian Foreign Minister Pranab Mukherjee meanwhile voiced scepticism over Pakistan’s arrests of Saeed and Maulana Masood Azhar, the leader of Jaish-e-Mohammed, which like LeT is fighting Indian rule in Kashmir.

“We shall have to see whether these (actions by Pakistan) are taken to their logical conclusion,” said the minister, noting Islamabad had detained the pair in 2002 but later released them.

“All our common friends and responsible statesmen are playing their important role in defusing the situation and I’m pretty sure that will work.”

Gilani said Pakistan was taking its own action against groups and people put on a U.N. terrorist list, and the chances of India resorting to air strikes against militant targets were remote.

“I think India is equally responsible and they won’t. There is no fear of anything like that,” Gilani said.

Indian and U.S. officials have levelled accusations at Lashkar-e-Taiba, a jihadi organisation that fought Indian rule in Kashmir and, according to analysts, has had close ties to the Pakistani military’s Inter-Services Intelligence (ISI) agency.

Miss Trinidad and Tobago was named the second runner-up. The others in contention in the final five were Miss South Africa and Miss Angola.

India had high hopes on 21-year-old Parvathy to win the crown that last came to the country in 2000.

India boasts of Miss Worlds like Reita Faria (1966), Aishwarya Rai Bachchan (1994), Diana Hayden (1997), Yukta Mookhey (1999) and Priyanka Chopra (2000).

The ruling Hegemonies in this divided Bleeding Geopolitics of south Asia have done everything to make the Nation State Colonised SURRENDERING Sovereignity and FREEDOM. Have done everything to Americanise the People ENSLAVED with inherent inequality, injustice and GRADED Caste system sustaining! They havd done every thing to DESTROY Production systems and Productive FORCES. Corporate IMPERILISM, supported by Fascism and BETRAYAL of MARXISTS, has the Last Say in this Subcontinent. Now we share the US Destiny in Life and Death!  In the wake of last month’s terror attacks in Mumbai and the subsequent crackdown by the Pakistan Government on the banned 

Data released by the Central Statistical Organisation (CSO) on Friday showed that in the first seven months of this fiscal year (April-October), the Index of Industrial Production (IIP) grew 4.1% compared with 9.9% during the same period a year ago. The output of the manufacturing sector, which accounts for around 80% of IIP, shrank 1.2% in October, while those of the electricity and mining sector rose 4.4% and 2.8%, respectively. And while the output of intermediate goods and consumer goods companies fell, those of companies in the basic and capital goods sectors registered weak growth. Economists here do not expect the factory output numbers to get better in a hurry.

“Some 620 people have been redeployed in suitable positions in the bank and other group entities in India. The leavers have been placed in the bank’s priority returners scheme which will give them first preference for suitable jobs that come up in the next year,” the statement said.

Chairman of Central Board of Excise and Customs P.C. Jha commissioned two classes of vessels - three category I vessels and six category III vessels at the Mumbai Port Saturday evening.

These vessels shall be stationed in Mumbai, Raigad, Ratnagiri (Maharashtra), Goa, Mangalore (Karnataka), Kochi, Trichy (Kerala), Okha, Kandla, Valsad and Umargaon (Gujarat).

The vessels, built by a Malaysian company, Gold Bridge, can stay at sea for up to three days. The category I vessels are air-conditioned, 20 metres in length and can attain speeds of up to 25 knots, Jha said.

The category III vessels, built by a Singapore company, Brunswyck, are small speed boats measuring between six to nine metres and capable of achieving speeds of up to 35 knots and can remain at sea for up to 10 hours.

The induction of these vessels comes barely a fortnight after a group of terrorists entered Mumbai unobtrusively from the Arabian Sea and created mayhem for almost three days in which over 170 people lost their lives and nearly 300 others were injured.

“As an enforcement agency we are continuously faced with new challenges and complexities and the greatest challenge is to augment our capacity to respond effectively to those seeking to breach our coasts,” Jha said while commissioning the vessels.

The government will acquire another 24 such vessels over the next 15 months from Gold Bridge, he added.

In addition, a contract has been signed to acquire advanced patrol vessels in the category II, which are 13.5 metres long with a speed of 40 knots. Equipped with sophisticated communication and navigational aids like radar, GPS, satellite communication, VHF and other equipment, these shall be built by Bahrain’s Al Dhaen Craft, Jha said.

In the first phase of this programme, surveillance on the west coast shall be beefed on the coastal states of Gujarat, Maharashtra, Goa, Karnataka and Kerala.

India has a total coastline measuring 7,600 km.

The new vessels shall also augments efforts to monitor smuggling activities, narcotics trade through the sea, sneaking in arms and ammunition, apart from checking potential terrorist threat and bio-security threats.

The three large vessels commissioned today are named “Ila”, “Chitra”, and “Kaushalya” after the former senior women officers who served the customs department.

The Goa government, which has been urging the Centre to take steps to denotify the three notified SEZs in the state, will have to continue its discussions with developers to come to an amicable settlement on the issue. The state government had declared last December that it would not allow any SEZs and all existing zones would be scrapped.

Since three of the zones in the state are notified and have units, the state is finding it difficult to get rid of them.

SEZs, where developers have undertaken construction activity, can also be denotified if there are no units in the zone and the developers agree to refund the tax benefits they received during the construction phase.

SEZ developers and units get a host of tax breaks including tax-exemption on profits for a specified period. The problem of credit squeeze and global economic slowdown which has cast its shadow on the Indian industry at large, is also making it difficult for SEZ developers and units.

The commerce department has already asked the RBI to expedite action on the Centre’s decision to grant infrastructure status to SEZs (for all activities barring the acquisition of land), so that SEZs get access to funds at lower rate of interest.

In the board of approval (BoA) meeting of SEZs earlier this week, about six SEZs had applied for partial denotification of their land. Mr Pillai pointed out that it was routine for SEZ developers to ask for both pruning and expansion of their areas. “As long as the SEZs do not breach the minimum area and maximum area norms, it is allowed,” he said.

http://economictimes.indiatimes.com/Economy/Cranked-up_SEZs_wont_be_denotified/articleshow/3830674.cms

According to data released by the Reserve Bank of India (RBI) in its weekly statistical supplement (WSS), government banks borrowed Rs 30,986 crore — way higher than the enhanced limit of Rs 20,000 crore, which was revised upwards from Rs 6,000 crore in November in anticipation of revenue mismatches, as two government bond auctions were cancelled during the month.

WMA is a temporary advance to meet government revenue mismatches. At any given point in time, the government cannot have an outstanding borrowing over the prescribed limit under this facility. When 75% of the limit of WMA is utilised by the government, RBI may trigger fresh floatation of market loans. Borrowings within the prescribed limit are at the prevailing repo rate, while loans in excess of the limit attract an additional 2% interest.

Following a severe liquidity squeeze through October, the central bank on November 12 had enhanced the WMA limit to Rs 20,000 crore until December 31, 2008. RBI had then said, “The temporary enhancement of the limit of WMA will help meet the unanticipated mismatches between government payments and receipts arising from the cancellation of two auctions scheduled for October 2008, and the bunching of expenditure following the supplementary demand for grants.”

“The second half of Friday’s session conveys buoyancy returning to the market. Unless the US markets tank tonight in reaction to the failure of the auto makers’ bailout, (although it seems unlikely) there could be some downside for our markets. But our markets seem poised for a steady upmove with another round of fiscal stimulus on the cards,” said Sandeep Shenoy, head-equities at PINC Research.

Moreover, the image of FIIs scrambling en masse to the exit doors has changed with the reversal of trend in FII activity in the month of December. Till date this month, FIIs have turned buyers to the tune of Rs 2048.7 crore in equities, according to SEBI data. Anlaysts feel that the trend is likely to remain intact till the month end.

“In the last one week, we have observed that despite external insecurities, the Indian market has shown strength. Even after the collapse of the US automakers bailout and dismal IIP data, Indian equities showed remarkable strength. Bond markets were rallying on hopes of another round of rate cuts and fiscal package measures next week. This could keep the market sentiment upbeat,” said Anita Gandhi, head-institutional business at Arihant Capital.

The government is likely to announce another fiscal stimulus package next week aimed to prevent further deceleration in India’s growth rate, Commerce and Industry Minister Kamal Nath said.

“The package will be directed at employment-intensive sectors. It could include sops for engineering and textile sectors as well as refinance for exporters,” he said at the sidelines of a function organised by Spanish Institute of Foreign Trade.

According to initial estimates with the commerce ministry, exports have fallen by over 10 per cent in November compared with growth of over 30 per cent in the same month last year. This will be the second consecutive month in which exports have dipped owing to a waning demand from overseas clients.

The new package is likely to include enhanced rates of Duty Drawback and Duty Entitlement Passbook Scheme, which will allow exporters higher reimbursements of indirect taxes paid. Moreover, some sectors like textile could get additional subvention in interest rate on export credit.

India’s industrial production unexpectedly declined in October. Although the Indian economy depends largely on its services sector, analysts feel a contraction in the manufacturing sector is still of concern to its overall growth outlook. The slump in industrial output during October was likely attributed to a decline in both domestic and external demand.

The industry recorded negative growth for the first time in 15 years, falling to 0.4 per cent in October as against 12.2 per cent expansion a year ago as the impact of the global economic downturn deepened in the country. The fall is partly due to a dip of over 12 per cent in India’s exports.

Policy makers said the fall was bigger than expected even as they exuded confidence that the December 7 stimulus package would arrest any further decline.

Job losses force investors to turn traders

Increasing fears of job losses have prompted investors to raise cash levels and make money out of the intraday volatility.

The high volatile trading seen in the markets in the last few months was the result of the change in investor sentiment and attitude. The cascading effects of the global recession have changed the basic rules of the game.

The emerging economies like India have also not been spared from the slowdown threat. Job cuts, though not severe in Indian industries, is still creating havoc among the workforce. Employees from IT, realty and auto sectors are more worried about their job security. Employees, who were the long term investors in the stock markets and have lost their jobs, are now attracted towards intraday trading.

Kiran Bhagat who was with one of the top IT companies had invested Rs 1,00,000 on April 3, 2006 when Nifty was at 3473 level. Even after holding his shares for two years, he incurred a loss of Rs 17000 as on December 11, 2008. He would have remained invested for a longer time if he could have saved his job.

“I could have kept my investments for a longer duration but the sudden job loss has forced me to liquidate my investments at loss. However, I had invested Rs 25,000 on Oct 27 when Nifty was at 2450 levels and by October 31, I earned about Rs 3000 on my investments. A return of 12 per cent in 4 days,” said Bhagat.

Same is the case with another long term investor Unmesh Deodhar. He lost about Rs 48000 in the recent stock market carnage. “Investment from a long term point view is good, but when you are out of job or uncertainty lingers over your daily income you have to change yourself as per the situation,” said Deodhar.

He further added that, “When the future is not known and the present is bleak one should always play with the momentum. For me it’s better to loose some money in short term trade rather than losing from a long term approach. Now I have started going by my gut feelings. It helped me immensely for intraday trading.”

Fears of slowdown get dense as the index of industrial production data has turned into negative for the first time in at last 10 years. India’s index of industrial production for October turned negative for the first time in last 10 years. The industrial production fell to -0.4 per cent in October against 4.8 per cent in September and 12.22 per cent a year earlier.

“It is but obvious that when one’s source of income comes under the uncertainty, he ought to change his investment attitude. This is very natural thing. The volatility increases when players opt to go for very short term trade to avoid locking money for longer duration. However, there is a high risk for the unprofessional investors to trade from a very shorter time perspective or an intraday trading,” said Tanuj Shukla, analyst with Krug and Bordan Advisory.

Contrast this to the US reaction towards internal security, post the 9/11 attacks. The US initiated one of the largest multi-layered reforms to integrate its federal, state and local government efforts to secure its land, maritime, air, space and cyber domains.

The creation of the department of homeland security enabled synergy of efforts of otherwise disparate departments and agencies of the federal and local governments, thereby unifying the vision and ensuring cohesive strategic approach.

This was followed by the creation of office of director, national intelligence, the homeland security council, and the national counterterrorism centre. Extensive legal reforms included the US PATRIOT Act, the Intelligence Reform and Terrorism Prevention Act of 2004, and the Protect America Act of 2007. And what was the outcome? Despite being the prime target of global terrorism, the US did not have a single incident of major terrorist attack over the past seven years.

India has to necessarily learn lessons from the US experience and follow suit. To begin with, we should have a dedicated ministry for internal security, which would integrate the host of agencies and departments involved in preventive operations, enforcement of law, collection of intelligence, tasks of immigration, customs, coastal security and criminal investigation and prosecution upon such crime. Federal crimes, especially terror attacks, inter-state organised crimes, and Naxalite movements need to be tackled exclusively by federal agencies for investigation and prosecution.

Extensive legal reforms should be undertaken on a war footing. Legal and structural reforms are badly needed to prevent economic and cyber crimes, which can decimate the country. Criminal justice system should be overhauled at least for the limited purposes of investigating, prosecuting and trying persons accused of crimes against national security, in a manner comparable with military courts.

India’s borders are porous and we do not have an immigration policy or an enforcement system similar to that of the US. Cross-border infiltration from Bangladesh, Nepal and Pakistan is detrimental to national security. As a long-term strategy, we should deport all the illegal migrants from neighbouring countries.

Financial inclusion for the under-privileged

When I asked Bhavani why he had not yet opened a recurring deposit with his account, so that he could save the excess income he made during the peak periods of the year, such as during festive times, he looked bewildered. “Nobody at the bank told me anything, once the bank account was opened. What does this recurring deposit mean?”

In the statistics of the Government of India, Bhavani would be counted as one of the financially included, but on the ground, nothing has changed for him. The staff at the bank had fulfilled the statistical requirement of opening a bank account but had nothing else. Unfortunately Bhavani’s is not an isolated example. In a study by the management consulting firm, The Boston Consulting Group, it is estimated that close to 40% of all the no-frills account holders rarely access their accounts. While the bank account holders in rural India face other challenges such as the cost of reaching the banks as well as potential loss of income for that day, in urban India, the problem is essentially one of financial illiteracy.

What is financial inclusion? It is the access that an individual has to the full range of financial services, including savings, credit, insurance and investment advice.

At one end of the spectrum is the financially privileged individual who is constantly pursued by banks and other financial institutions wanting to give him loans, credit cards etc. (Anybody who has been at the receiving end of a persistent tele-caller trying to sell a credit card, guaranteed free for a life time, would fall into this category!). At the other extreme end are those who do not even have a bank account. But, as Bhavani’s example illustrates, having an account alone is not enough.

What is imperative is a systematic process which lays down the series of steps that the bank-staff need to go through in making the full range of financial services available to the individual with a no-frills account. Let’s take these up one by one.

Savings account: Most self-employed people belonging to this category earn in cash. They need to be coached on the habit of putting their surplus money beyond their immediate needs, in the savings account, through regular deposits. The life time habit of keeping this money either tucked away in the house in some corner, or with a ‘reliable friend’ is hard to break and needs diligent coaching.

Reports said that 11 more arrests were made from different parts and almost all offices of the JuD had been closed down either by the security agencies or by the JuD itself.

An interior ministry official said three out of four men who came under sanction by the U.N. Security Council Sanctions Committee on Wednesday — Muhammad Saeed a.k.a. Hafiz Muhammad Saeed, Zaki-ur-Rehman Lakhvi, Haji Muhammad Ashraf Arian, and Mohmoud Mohammad Ahmed Bahaziq — were apprehended, while the agencies were conducting raids to arrest Arian, an important member of the Lashkar-e-Taiba (LeT).

However, media reports said Arian had died some six years back. A report by GEO television quoting his close relatives said Arian died during his arrest in jail in 2002 after he was picked up from his home from interior Sindh.

Arian’s family migrated from Indian Punjab to Sindh in 1947 during the partition and since then was living there. His family members said security officials had raided their house and they were shown his death certificate issued by jail authorities.

Pakistan never implemented its earlier ban on LeT and allowed its leaders to work in freedom to recruit and train terrorists and collect funds, they charged on Friday.

“What is different this time?” they asked and sent a petition to UN Secretary-General Ban Ki-moon demanding that the world body threaten Pakistan with action unless it reins in terrorists operating from its territory.

“Otherwise, the world would witness another Mumbai massacre soon,” they warned, while carrying placards listing the demands.

Several participants suggested India should attack terrorist training camps inside Pakistan if Islamabad fails to do so within a short time.

But the Mumbai attacks, they said, were ‘most audacious’ so far as their planning and execution was concerned and showed that ‘weak action’ by Indian government had encouraged them.

But advocating more balanced approach, NRIs for Secular and Harmonious India (NRI-SAHI) commended the Indian government for not escalating the situation on the borders with Pakistan while simultaneously sending a strong message to Islamabad against encouraging terrorist outfits.

Cautioning the opposition parties which are demanding ‘war’ with Pakistan, NRI-SAHI said any conflict would be ‘disastrous’.

“Children of both countries need books, need bread and not bombs and bullets,” it said.

It also pointed out that Pakistan itself has been victim of terrorism and has suffered severely at the hands of religious extremists.

Islamabad (PTI): As the Pakistani government cracks down on terrorists linked to the Mumbai carnage, the media in the country has embarked on a “soul-searching exercise”, with questions being raised as to why the Islamic nation has become “the hub of militancy and terrorism.

“Soul-searching is in order, and an acceptance of the fact that Pakistan is indeed a hub of militancy and terrorism, the influential Dawn newspaper said on Saturday.

The Pakistani government has cracked down on the banned militant group Lashker-e-Toiba (LeT) and its affliate group Jamaat-ud-Dawa (JuD), which has been declared a terrorist organisation by the UN.

The newspaper lamented that even though an overwhelming majority of Pakistanis do not support militancy “a small fanatical fringe has come to dictate the agenda” of the country.

In an editorial headlined ‘The common enemy,’ it said “we have a collective responsibility to look inwards”.

The News daily said the JuD and the LeT were known to have scouted Punjab for suitable people to join their ranks.

“It is only when its roots are pulled out that an organisation like the JuD can be stopped. Otherwise, like a weed, it will continue to spread rapidly,” it said in an editorial on Saturday.

The media has highlighted the pull of money and identity for the self-styled ‘jihadis’. “The resentment the powerless feel may be cloaked in anti-Americanism or religiosity but in actual fact it boils down to a class conflict,” Dawn argued.

It warned that as long as nothing is done to address the growing underemployment in this country, “the militants will find no shortage of fresh recruits”. “At least that is the case in Pakistan,” it added.

The Dawn said becoming part of a militant or terrorist organisation “empowers poor, impressionable young men”. It cited the case of Ajmal Amir Kasab, the sole terrorist caught alive in the Mumbai carnage. Kasab, who hails from Faridkot, apparently first sought refuge from poverty in crime and then gravitated towards jehadi outfits.

The paper demanded the country’s leadership to inform the nation in unequivocal terms” that extremism will enjoy no sanction and will not be tolerated.

The News highlighted the fact that many of the leaders of the militant organisations were backed by the country’s top spy agency to fulfill its diplomatic agenda set by its leaders.

It said that in the mid-1980s, the LeT and Hafiz Muhammad Saeed enjoyed the backing of the CIA and the ISI to battle Soviet troops in Afghanistan.

“This patronage helped it to evolve into an organization believed to be one of South Asia’s largest militant forces. The links with elements within the ISI are thought to have been retained as the guns turned away from Afghanistan and towards Kashmir”, The News underlined.

“This background means that the current action against the JuD may not be enough,” it stressed, for “Its tentacles run deep and enwrap many minds”.

In effect, the media argued that Pakistan as a nation “face isolation, and internal ruin” if the militants are not “brought to book.

India has blamed Pakistan-based LeT and its front organisation JuD for planning and carrying out the Mumbai attacks on November 26 that killed nearly 200 people.

Expressing his condolences for the victims of the Mumbai att