Chinese Prime Minister Wen Jiabao rejects European pressure to let its currency rise against the euro…. From BBC News. Full story

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Fed Chairman Bernanke wrote an op-ed in the Washington Post on Sunday on the very touchy subject of regulatory reform.  I guess he’s tired of everyone talking about him as if he’s not in the room while he’s in the room.  The first salvo:

For many Americans, the financial crisis, and the recession it spawned, have been devastating — jobs, homes, savings lost. Understandably, many people are calling for change. Yet change needs to be about creating a system that works better, not just differently. As a nation, our challenge is to design a system of financial oversight that will embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause.

Hmm… a system that works better would be something different, now wouldn’t it?  Hey, he left the door wide open, so yes, I stepped right on in.

More from the Chairman:

The proposed measures are at least in part the product of public anger over the financial crisis and the government’s response, particularly the rescues of some individual financial firms. The government’s actions to avoid financial collapse last fall — as distasteful and unfair as some undoubtedly were — were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society. (I know something about this, having spent my career prior to public service studying these issues.) My colleagues at the Federal Reserve and I were determined not to allow that to happen.

The bailout of individual firms was merely a product of the panic you and your colleagues at the Federal Reserve were engulfed in.  The attempt to justify it is farcical.

Moreover, looking to the future, we strongly support measures — including the development of a special bankruptcy regime for financial firms whose disorderly failure would threaten the integrity of the financial system — to ensure that ad hoc interventions of the type we were forced to use last fall never happen again. Adopting such a resolution regime, together with tougher oversight of large, complex financial firms, would make clear that no institution is “too big to fail” — while ensuring that the costs of failure are borne by owners, managers, creditors and the financial services industry, not by taxpayers.

You mean like the options you had available for AIG?  You didn’t need to buy the CDOs and CDS from AIG’s counterparties.  The second option on page 13 in the SIGTARP report was available to you and the New York Fed, but you and the New York Fed panicked and decided to try pay everyone off at par and sweep it all under the rug and out of the market.  You didn’t plan to fail, you just failed to plan.  Maybe you should revisit the definition of moral hazard because every step of that transaction shows everyone exactly what it looks like.

Of course, the ultimate goal of all our efforts is to restore and sustain economic prosperity. To support economic growth, the Fed has cut interest rates aggressively and provided further stimulus through lending and asset-purchase programs. Our ability to take such actions without engendering sharp increases in inflation depends heavily on our credibility and independence from short-term political pressures. Many studies have shown that countries whose central banks make monetary policy independently of such political influence have better economic performance, including lower inflation and interest rates.

You people have never met a rate cut you didn’t like.  You always think the answer is cheap liquidity, no matter what the question is.  Well guess what?  You have no more room to cut, your target rate trades in a range because you can’t set a target rate anymore.  Why?  You let the money market get away from you.  You’re already irrelevant in monetary policy.

In a fiat money system, the most important job for a central bank is not to control interest rates, but the supply of credit/money in the system.  If money supply is controlled, velocity of money is maintained and GDP will follow suit.  Interest rates will respond to the money supply.  What I’m trying to tell you Mr. Chairman, is that Volcker had it right.

You and former Chmn. Greenspan have succeeded in weakening and de-stabilizing the market by conditioning the market to expect a free handout at the slightest sign of trouble in the form of a rate cut.  Congratulations.

Independent does not mean unaccountable. In its making of monetary policy, the Fed is highly transparent, providing detailed minutes of policy meetings and regular testimony before Congress, among other information. Our financial statements are public and audited by an outside accounting firm; we publish our balance sheet weekly; and we provide monthly reports with extensive information on all the temporary lending facilities developed during the crisis. Congress, through the Government Accountability Office, can and does audit all parts of our operations except for the monetary policy deliberations and actions covered by the 1978 exemption. The general repeal of that exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation.

But we have no idea who pledges what at the discount window and the haircuts you give them are.  Are you aggressive in valuing their collateral or not?  Besides, as David Merkel suggested, you are not independent at all.  You don’t have the will to tell a politician ‘No.’  Your institution hasn’t made an unpopular decision in over 2 decades.  Independent?  Hardly.

It’s time to audit the Fed and support HR1207.  Because as much as some folks want to go back to the gold standard, the politicos have gotten a taste of what budget-making is like under a fiat regime.

And like a heroin junkie after that first rush, the pols can’t break their addiction to easy votes via pork-barreling and massive deficit spending.

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MERS and Countrywide v Agin Trustee D Ct Mass Aff’d B Ct on Avoidance Mtg 20091117

NOTE FROM EDITOR SEEKING HELP: Rumor has it San Diego has stopped all foreclosures. I need this corroborated or debunked quickly. Can I get a little help here?

The case in this POST comes out of Massachusetts where the cases are not quite stopped, but almost so — AND where property title insurance companies are NOT underwriting ANY policy that covers a home whose mortgage was securitized.

Many thanks to MAX GARDNER for this case and best wishes for his speedy recovery. He’s one of the titans of this movement. we want him around!

The primary point that needs emphasis here is that as you read this case you will see that if you give the Court something SOLID to hang its hat on, you can get the results you want.

The mistake being made repeatedly out there is simple: either the homeowner or the lawyer goes in with a legal argument addressing the conclusions of the case instead of directing the Judge’s attention to the beginning of the case — discovery, motions to compel, TRO etc. based upon discovery requirements.

The obvious requirement that you need to know in your mind what you are talking about it so you know the significance of the issue legally seems to  have escaped all but a few lawyers. Many lawyers are taking half baked “audits” going to court and making legal arguments about a report they have not read, do not understand and which does not contains all the elements needed anyway.

You must educate the Judge not lecture him. You must NOT rely on securitization in your preliminary arguments because it sounds like legal maneuvering to get out of a legitimate debt.

Unfortunately these mistakes are being made even by people who have attended our survey courses. So we are expanding our offering by adding DVDs, Boot Camps and home study.

We are discontinuing our own efforts at forensic review because we don’t actually have the time or manpower to engage in a large venture. We will start to refer cases to forensic analysts and lawyers.

BUT we are are starting courses to train, and certify forensic analysts who pick up even the most minute flaw in a document — like a document you you know in your heart is fabricated and forged but feel intimidated by the process of proving it.

And we are starting specific courses on training forensic analysts and attorneys how to be expert witnesses, how to prepare expert declarations and affidavits and how to defend your expert declarations in deposition or in an evidentiary hearing. The course is also for lawyers who feel they could use a little support on direct and cross examination of experts.

Shutterstock

AFTER taking office in September, Hirohisa Fujii, Japan’s finance minister, widely let it be known that he was happy with a strong yen. But he had not anticipated that the currency would so soon become a bolt hole for panicky investors fleeing turmoil in world financial markets.

Fears of a renewed bout of financial turbulence caused by Dubai World’s debt standstill this week drove the yen to a 14-year high against the dollar on Friday November 27th, its strength exacerbated by thinly traded markets because of America’s Thanksgiving holiday. The rally, which coincided with a slump in Japanese and other Asian stockmarkets, as well as a decline in most of the other widely traded currencies, forced Japan’s new government to convene to discuss its impact on the economy and, possibly, to reconsider its non-intervention line.

Mr Fujii, who once said that intervention was only necessary as a result of “outrageously reckless” currency movements, hinted that he was now prepared to discuss it with his G7 counterparts. In that he was goaded on by some of his cabinet colleagues. He complained, with plenty of justification, that the yen’s appreciation was “one-sided”.

Just the hint of action was enough to drive the yen off its highs. But there was only a half-hearted belief that Mr Fujii or his G7 counterparts were ready to strike. Currency experts in Japan see the rise in the yen from 101 half a year ago to around 85 now as symptomatic more of dollar weakness than yen strength–it stems from the sluggishness of the American economy. Although there are howls of protest from Japanese exporters, currency strategists say the yen is not significantly overvalued. Because of huge differences between Japanese and American inflation over the past 15 years, Tohru Sasaki, chief currency strategist at JPMorgan, calculates that the yen would need to hit 57 per dollar to match its strongest post-war level of 79 yen per dollar reached in 1995.

Yet such calculations, however valid, may miss the point. The trouble that Mr Fujii faces is that the steeper the yen’s rise, the greater the risk that Japan degenerates from a situation of mild deflation into a spiral of falling prices and wages, which would cause untold damage to itself and to the world economy. Already, deflation is looking increasingly entrenched; on Friday the government announced that core consumer prices fell by 2.2% in October, the eighth straight month of decline.

Until very recently, the authorities have appeared to be relaxed about living with moderate deflation and a strong yen, hoping that over time the economy, which has rebounded faster than expected in recent quarters, would heal itself. That belief was partly reinforced by Japan’s past experience of deflation, which ended temporarily in 2006 when the economy exported its way back to growth.

However, back then, the world economy was also expanding fast and globalisation made it easy to conquer new markets. Now the American and European economies are far weaker, and though Japan’s exports to Asia have grown this year, they do not counteract the sloth elsewhere. On top of that, Japan’s domestic market is crippled by a shrinking population, low wages and weak demand, which adds to the huge deflationary output gap in Japan, according to some estimates as high as 8% of GDP.

Intervention to weaken the yen would carry a cost in terms of irritating Japan’s main trading partners. As Mr Fujii has noted, currency interventions can quickly lead to a round of competitive devaluations. But if he does raise the issue with his G7 counterparts, which he should, he should also stress the price impact of an excessively strong yen. If Japan were to fall into a deflationary trap, it would not suffer alone. Markets might quickly worry that over-indebted, slow-growing economies such as those of America and Britain were headed in the same direction.

In the 800s, Islam enshrined the 10 percent ushr tax rate on farm yields in the Hadith.  The tax may have been appropriate for the Middle East in the Ninth Century, but it hasn’t worked out so well since then.

As I have pointed out on Money Jihad several times, my concerns about the ushr are its use to fund jihad (especially as ushr collections on poppy yields by the Taliban in Afghanistan today), its imposition by religious fiat rather than by the consent of the governed, its excessive penalties for non-payment, the difficulty it presents for making accurate assessments of crop yields after expenses, its discriminatory impact against farmers, and its overall anachronistic nature.

As it turns out, the America South had its own brief flirtation with a harvest tax during the Civil War.  Beset with increasing war debts, the Confederate Secretary of the Treasury Christopher Memminger proposed a 10 percent in-kind tax on agriculture.  The Confederate Congress added various rates for income and ad valorem taxes to constitute the Tax Act of April 24, 1863.  Given the legislation’s focus on the crop tax, the act was usually called the “Tithe Tax.”  The following is a remarkable passage from Richard Cecil Todd’s 1954 book, Confederate Finance:

Many of the farmers…became dissatisfied and contended that the tax should be placed on the profits of their crops and not on the gross value.  The farmer believed that a graduated tax, payable in currency, should be applied to the income from his products in the same manner in which it was applied to the income from salaries and other sources.  To him the tithe or tax-in-kind looked large and discriminatory in comparison with the 2% currency tax on salaries over $1,500.  As a result of this dissatisfaction, public meetings were held during the summer of 1863 and resolutions were drawn up denouncing the tax-in-kind.  One of the resolutions passed by the farmers stated that the act of April 24 in “taking from the hard labors of the Confederacy one-tenth of the people’s living, instead of taking…currency, is unjust and tyrannical, and we solemnly protest against that act.”  Another pictured the tax as being “oppressive, and a relic of barbarism, which alone is practised in the worst despotisms.”  Still another stated that “We are in favor of a just and equitable system of taxation so that all classes may bear their burden equally; [but] we are…opposed to the tithe system…discriminating against and taxing the labor and industry of the agricultural classes.” (p. 142)

A relic of barbarism?  It looks like even the pro-slavery South found crop tithing to be barbaric and despotic.  What does that say about Islam, and what does it say about Pakistan, which still imposes an ushr?  It tells you that Pakistan is more committed to having an Islamized tax system than having an effective one, and that jihadists are a more important constituency in Pakistan than are farmers.

In Sec. Memminger’s defense, however, there were good reasons for the Tithe Tax in wartime.  Among Memminger’s arguments were to “Relieve the currency from an issue of the amount necessary to purchase the articles levied in kind, and assist greatly in restoring all prices to their usual and normal condition,” and to “Render much more productive the tax itself…because being certain in quantity it would not be subject to the fluctuation which would attend any further expansion of the currency.”

This argument for in-kind taxation in an era of inflation is also a familiar one for those acquainted with Roman public finance toward the end of their empire.  Emperor Diocletian and his successors had devalued the denarius into oblivion.  The currency became so worthless that the Romans resorted to in-kind taxation.  Memminger, concerned about Confederate inflation, clearly understood that being able to feed the troops with in-kind yields was more important than collecting increasingly worthless Confederate dollars.

Thus, one can make a plausible argument for an agricultural tithe for a particular place during a particular time.  Even in the Bible, the Hebrews were instructed, “You shall tithe all the yield of your seed, which comes forth from the field year by year,” (Deuteronomy 14:22), but this was localized to Jerusalem for the purposes of subsidizing the Temple and the Levite clergy at the time.

But to enshrine a permanent tax rate for all of a religion’s adherents for all time handicaps industry and prevents flexible financial policy-making for future generations.  We can only hope that the jihadists and their revenue measures meet the same fate as the Confederates.

It is by the grace of God that all individuals are distinct from each other and this applies to the art of forex trading as well. Each forex trader has his own learning curve and style of forex trading which are unique and may not match with the learning curves and styles of others. In such a situation, it is important for a him to understand his own learning curve and decide on his style of forex trading rather than compare himself with a trader with a quicker learning forex trading curve and different style and make regrettable mistakes.
The immense popularity of the forex trading market has resulted in the burgeoning of a number of tutorials and courses one of which can be undertaken by an aspiring trader for the sake of acquiring knowledge pertaining to the forex trading market. Forex trading education is an ongoing learning experience for a trader which continues beyond the realms of the classroom and extends through all the years when he gets an opportunity to make practical use of his knowledge and at the same time learn something new about the forex trading market everyday.
Faith in one’s ability is often a result of self consciousness and self awareness and a forex trader should be aware of his individual capacity to learn and adapt to various forex trading situations. Since forex trading is an individual activity, it is up to each pearson to realize his learning potential and accordingly chart his forex trading career. There are many unique opportunities which arise during the course of forex trading and these can be capitalized by the trader by cultivating his own distinct style and adapting to various forex trading situations.

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I’m currently working on some code for a client who wants to use an online calculator.
The site is localized in two languages, but the online calculator must present its value as Euro.

You might say what’s the big deal. just create a textbox, and assing the textbox a value of

txtPrice.Text = String.Format("{0} Euro", calculatedPrice);

However, if you use the globalization capabilities of .NET you won’t have to deal with this kind of issue.
It all comes down to using the correct formatting.

Lets say you have a site in 2 languages, English(American) and French:

txtPrice.Text = calculatedPrice.ToString("c");

This code would render as eg “€ 12345.00″ for French and “$ 12345.00″ for English

However for my application I would want it to be Euro all the time, no matter what language the site is currently presented in.
You can easily accomplish this by adding a FormatProvider. In my case I used a culture where the Euro currency is used.

txtPrice.Text = calculatedPrice.ToString("c", new CultureInfo("fr-FR"));

this line of code makes sure the result is always rendered as eg. “€ 12345.00″.
that’s what i wanted. quick and easy

I think Bob Herbert of the NY Times wrote today what will be eventually seen as the most important article on the financial crisis. We’ve seen it before — the children of the great depression, children of the holocaust, returning veterans from WWI, WWII, Korea, Vietnam, Iraq, Afghanistan. Now it’s the financial meltdown.We ignore it at our peril.

All these events have one inescapable thing in common — damaged children, the extent of which was not easily discernible until years later. Damaged children lead necessarily to a dysfunctional society, and that is what we have.

TODAY CHILDREN ARE GROWING UP WITH A HISTORY OF BEING TORN FROM THEIR HOMES, THEIR LIFESTYLES AND THEIR PRECIOUS HOPE AND TRUST IN THEIR PARENT’S PROTECTION IN A WORLD THAT IS NOT FAIR OR JUST. (It is this point and this point alone that I publish this blog, my writings, my public appearances and my seminars).

EXACTLY HOW MUCH BRAIN POWER DOES IT TAKE TO REALIZE HOW THESE CHILDREN WILL PERCEIVE THE WORLD WHEN THEY GROW UP AND START RUNNING THE WORLD? MAYBE WE SHOULD START PAYING ATTENTION TO THEM. MAYBE WE SHOULD GIVE THEM THE MESSAGE THAT THEY MATTER MORE THAN ANYTHING ELSE. MAYBE WE CAN MODEL HOW TO MAKE THE WORLD A LITLE BETTER FOR THE NEXT GENERATION.

But that’s just my opinion. I could be wrong.

Stacking the Deck Against Kids

Every year at Thanksgiving, parts of the Upper West Side of Manhattan become like a paradise for children. There’s the exciting preparation of the balloons and floats for the Thanksgiving Day parade, and then, on Thursday morning, the parade itself.

The weather isn’t always kind. I’ve seen the kids out there in snow, in freezing rain, in winds that threaten to send the balloons and their handlers soaring to distant venues. It doesn’t seem to matter. The children come into the neighborhood in waves, holding the hands of adults or riding atop their shoulders, smiling, laughing, playing hide-and-seek among the police barricades. Finally, inevitably, they end up staring in absolute open-mouthed, wide-eyed awe as the mammoth, colorful helium-filled creations of their favorite characters begin making their majestic way down Central Park West.

We have an obligation and an opportunity at this special moment in history to do right by these youngsters, and all the rest of America’s kids. It’s a special moment because we’ve seen so clearly the many things that have gone haywire in the society, and while it may not be easy to articulate, we have a sense of what needs to be done.

The American economy is broken, ruined by the greed and irresponsibility of fabulously wealthy corporate chieftains and their shabby acolytes and enablers in government. While Wall Street is handing out billions in bonuses, American families are struggling with joblessness, home foreclosures and rampant debt. The economic woes are exacting a fierce toll on family life, and children are taking a big hit — emotionally, psychologically and otherwise.

One effect of the Great Recession, according to a recent series in The Times, has been a big jump in the number of runaway children, many of them living in dangerous conditions on the street.

Family homelessness is also up, and poverty is increasing. More than a third of all black children in America are poor, and that tragic percentage is expanding. The outlook for America’s working classes is bleak. A few weeks ago a New York cab driver nearly broke down in tears as he told me he’d had to apply for food stamps to continue feeding his family.

A sense of urgency may be starting to emerge. With President Obama’s jobs summit approaching, representatives from labor and progressive organizations gathered in Washington to warn of the lasting damage being inflicted on the prospects of young Americans by the continuing employment crisis.

Millions of youngsters like those who were suffused with such delight at the Thanksgiving Day parade are being buffeted by an economy that is eroding their quality of life, curtailing their educational opportunities and undermining their prospects for economic success as adults. That more attention is not being paid to this growing disaster is criminal.

Groups represented at the meeting in Washington, which was sponsored by the Economic Policy Institute, included the A.F.L.-C.I.O., the Leadership Conference on Civil Rights, the N.A.A.C.P., the National Council of La Raza and the Center for Community Change. Among other things, they urged the administration and Congress to provide substantial additional relief to economically distressed state and local governments, to invest in much more widespread infrastructure improvements, and to engage in some direct government creation of jobs.

All of that, in my view, would amount to just a first step. We remain stuck in an economic model that not only permits but encourages the continued existence of financial institutions that are too big to fail, which means that when one or more of them fail — as will surely happen at some point — we’ll again be rushing to “save the system” by bailing them out at taxpayers’ expense.

The system remains grotesquely unfair, with the deck stacked against working people, even as we’re desperate to have them sustain the economy with nonstop consumer purchases. Keep in mind that at the start of the recession the collective wealth of the richest 1 percent of Americans was greater than that of the bottom 90 percent combined. The economic and political clout of that bottom 90 percent has only weakened since then.

We still have a hideously dysfunctional public education system, one that has mastered the art of manufacturing dropouts and functional illiterates. We have not even begun to turn that around.

We still keep fighting tragic, futile, stupid wars, squandering lives and resources and creative energies that could be put to use right here at home, where the need for nation-building is beyond critical.

The U.S. should be a paradise for young people. We need big changes in this country, approaches that are constructive, creative and fundamentally new, if we’re going to give those smiling kids I saw on Thanksgiving Day the kind of society they deserve.

On the morning of Nov 26 I made a post here to the effect that something was afoot in the UK and one small toe is now beginning to poke itself through a hole in the sock:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6673550/Prime-Minister-stays-upbeat-on-Dubai-setback.html

Prime Minister stays upbeat on Dubai ’setback’

Gordon Brown has moved to calm global markets by claiming Dubai’s debt crisis will not have a widespread impact on the worldwide economic recovery.

The Prime Minister said he had spoken with senior figures in Dubai and was confident that the debt problem was containable and localised.

“Upbeat”. “Containable and localized”. Yeah, I’ve heard that song and seen the dance before.

Mr Brown said in his capacity as G20 president he called the chairman of the Financial Stability Board, Mario Draghi, and was “satisfied” that there was no risk of contagion. He said: “The world economy has put in place mechanisms by which when a problem starts in one country we are in a far better position to monitor it and to gauge the effects.”

On Wednesday, Dubai World, the government investment company behind some of the emirate’s most ambitious projects, stunned global markets by announcing it was seeking to delay repayments on $3.5bn (£2.1bn) of its $60bn debt. The so-called “standstill” prompted fears that Dubai could default on its sovereign debt, which sparked a sell-off on global markets, particularly of emerging markets. In Britain, the banks were particularly hard hit on the back of reports that they have the biggest exposure to Dubai’s debt.

And, the Brits just happened to have that computer problem on Thursday…

The fears were carried into Friday as the confusion was compounded by a lack of information from Dubai, which has started a 10-day holiday for Eid.

In Britain markets were further destabilised by a report from the Bank of International Settlements which showed that foreign banks have lent a total of $123bn to the United Arab Emirates (UAE). The list, which does not break down the UAE borrowing by nation, shows that British banks are collectively the biggest lender with a total exposure of $50.2bn. France is the next biggest with $11.3bn followed by Germany and the US with $10bn each.

Surprise, surprise: some US exposure to risk.

British banks moved to allay fears about their exposure. Michael Geoghegan, chief executive of HSBC, said: “Although our business on the ground in the Middle East represents only 2pc of the group’s balance sheet, it’s an important and high-potential part of our international business mix and a region we are completely committed to. I am confident that the leadership of Dubai and the UAE will overcome any short-term issues they face, which appear to have been somewhat sensationalised, and continue to lay the foundations for sustainable growth.”

“Somewhat sensationalised” but great timing for that computer glitch on Thursday.

Dubai’s Sheikh Ahmed bin Saeed al-Maktoum, chairman of the Supreme Fiscal Committee, said: “While the government understands the concerns of the market and the creditors, it had to intervene because of the need to take decisive action to address its particular debt ­burden.” He said the government had acted in full knowledge of how markets would react.

Of course.

I’m beginning to wonder which banks will be under economic attack in the coming weeks. This will trickle down to various sectors of the US economy later and result in yet tighter credit against small business.

In any case, while Gordon Brown and the Telegraph are proclaiming “don’t panic” the Times has taken a bit of a different approach:

http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6935620.ece

The spectre of “Financial Crisis 2” continued to loom over global markets yesterday after Dubai’s revelation that it may not be able to meet its debt obligations.

Stock markets in Asia and the United States fell sharply while the dollar and Japanese yen rose as investors shifted their money to their perceived safety.

UK banks were also revealed to be the biggest lenders to the United Arab Emirates, which includes Dubai, with more than $50 billion owed by the Gulf state’s residents.

In another blow to the beleaguered UK banking sector, the Royal Bank of Scotland emerged as the largest single loan-arranger to Dubai World, the state-owned conglomerate that sparked this latest financial crisis when it sought a standstill on its debt repayments on Wednesday.

RBS, which is owned by British taxpayers, has arranged loans worth up to $2.3 billion to Dubai World.

The Financial Services Authority, the regulator, is understood to have sought assurances from banks that their exposure to Dubai will not threaten their financial strength. The FSA said it would continue to keep a close eye on the situation.

Dubai World, which owns a range of assets including the Turnberry golf club in southwest Scotland, sparked panic when it asked for the debt standstill.
….
The standstill has raised the prospect that Dubai World and, by extension, the government of Dubai might default on their debt.

As the drama in Dubai has unfolded, financial traders have had to come to terms with the possibility that other countries may also struggle to repay their ballooning debts in coming months.

This has sparked fears that we may be entering another phase in the financial crisis should lenders take fright and hold on to their cash rather than lend it, leading to another seizure in the world economy.

“If you look to government balance sheets around the world you’ll find plenty of potential banana skins,” said Jim Reid, strategist at Deutsche Bank. “Given the nature of this crisis the probability of further sovereign events remains elevated.”

Bank of America analysts also warned that Dubai’s crisis could trigger a wider problem as countries default on their debts, resulting in a “major step back” in the global economic recovery. Another analyst dubbed this scenario “Financial Crisis 2”.
….
One indication of the fear among investors has been the rise in credit default swaps (CDS), which is the cost of insurance against a debtor defaulting.

I seem to recall those CDSs caused some big problems in the past. But according to Brown it’s “everything is fine, nothing to see here, please move along”:

Gordon Brown attempted to calm growing panic over the threat to a global economic recovery. Speaking at a Commonwealth summit in Port of Spain, Trinidad, Mr Brown said: “While it is a setback, I think we will find it is not on the scale of previous problems we have dealt with. I think global recovery has depended on monetary action and fiscal stimulus.”
….
British banks are among the most vulnerable to a potential Dubai World debt default, partly because of the strong historical ties between the countries — Dubai was a British protectorate until 1971.

Goldman Sachs estimated that HSBC, Britain’s largest bank, could lose up to $611 million if Dubai World defaulted. The bank has a total of $15.9 billion loaned to the UAE.

Standard Chartered, another British bank, could lose up to $177 million if Dubai World defaults, while RBS is the biggest potential loser with an exposure up to $2.3 billion.

More than £14 billion was written off the value of British banks on Thursday but the FTSE 100 regained momentum yesterday and rose 51.6 points, or 1 per cent, to 5,245.73.

Must be the books and computer glitches were all fixed on Thursday. Sure, people, go ahead and swallow it.

Dubai is estimated to have total debts of $88 billion but investors had assumed that this would be manageable because, if worst came to worst, the emirate could be bailed out by Abu Dhabi, its oil-rich neighbour.

Abu Dhabi’s sovereign wealth funds have reserves estimated at over $700 billion, so a bailout of Dubai is easily within its reach.

What if one or both of those countries decide to screw western banks and throw in with that Chinese, Russian, etc currency block that was talked about over the summer? Oh, surely they wouldn’t. That’s how really big world wars get started.

It was once believed that India lives in its villages.

.

Now it is clear that India’s wealth lies in its cities, or more specifically, Mumbai.

 

India's Wealth Lies in Its Cities

A study conducted by Delhi-based SMC Global classified companies geographically on the location of their registered offices.

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It reveals that Mumbai-registered companies account for 36.28% of the total BSE 500 market cap.

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Some of the prominent names based out of Mumbai are Reliance Industries, L&T, HDFC and SBI.

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Also, out of the market capitalisation ascribed to Maharashtra which has the highest market capitalization among the states — more than 90% originates from Mumbai.

In fact, Mumbai and six other cities account for 85.71% of the total market capitalisation of BSE 500.

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With Delhi NCR (National Capital Region, which includes satellite cities such as Gurgaon and Noida along with the capital) contributing 27.82%.

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After the financial and political capitals, state capitals take the fore.

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Bangalore lays claim to 7.10%,

Hyderabad to 4.86% and Kolkata accounts for 3.83%,

while Ahmedabad and Chennai account for 3.35% and 2.47%, respectively.

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On a state-wide basis, five states in combination with Delhi NCR and Maharashtra account for 94.20% of the total market cap.

A total of 66.17% of the index’s market cap can be traced to Maharashtra and Delhi NCR.

While the latter accounts for 38.35%, Delhi accounts 27.82%.

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Karnataka accounts for 7.74%, Gujarat, 7.48%, Andhra Pradesh is at 4.95% and Tamil Nadu at 4.02%, while Bengal has 3.83%.

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Though the big Indian companies have a pan-India presence with factories or plants located across the country, they tend to have registered offices in metros.

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That is because of the ease of operations and presence of other corporate houses, suggested the study.

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“The traditional metro cities have accumulation advantage.

Its ultimately the money which brings in more money.

As the Indian economy keeps evolving, tier-2 and tier-3 cities may catchup gradually, to bring-in more equitable distribution of wealth across the country.”

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…said Jagannadham Thunuguntla, equity head at SMC Capitals.

Here is the fastest and easiest way to tell the trend in the foreign exchange markets.

In today’s video I’m going to share with you a wonderful way to look at the forex markets and determine which way they are headed in a matter of seconds. We’ll be looking at three different cross rates and how they all correlate together in a way that I think may surprise you.

The forex markets are the biggest markets in the world and MarketClub not only covers all of them, but also covers them in real-time with pricing and charts. I hope you learn from this video and take the time to post your comments on our blog.

Click here to watch

As always there is no charge and no registration to watch this educational trading video.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

As someone who follows international economics pretty closely, I’m surprised I didn’t find this Dean Baker op-ed until today. I’ve previously asked what the United States could do to convince the Chinese government to let the yuan appreciate. Baker doesn’t so much want to convince China, but rather beat China at its own game. He suggests that the US Treasury set a dollar-yuan exchange rate higher than the Chinese government and creating an incentive for Chinese firms and other individuals to use the new exchange rate.

I’m going to file this one under “interesting wonky idea that would NEVER, EVER happen”. The Chinese government flipped when the United States imposed a tariff on tires; imagine the reaction to the United States creating a new exchange rate. I’m highlighting Baker’s op-ed not because I think it’s a good idea, but proof that the problem of the yuan peg is not an easy one to solve and will require some creative thinking. Even if some thoughts won’t work.

Editor’s Note: This might not be as far-fetched as you think. Median income is dropping like a rock. Housing prices have historically been closely related to median income. I don’t know about the percentage drop, but another crash in real estate values seems likely. median income is still out of whack with housing prices indicating an “adjustment” of very substantial proportions is in the works. With unemployment and underemployment at record highs, it is difficult to see how this will get better any time soon.

Case-Shiller Still Predicts Massive 45% Fall From Today’s Values

November 24th, 2009 • Related • Filed Under

Filed Under: Featured Post • housing bear market • housing stats

The 10 major cities in the Standard & Poor’s/Case-Shiller home price index have risen 5% from their April low, but the index is still predicting a massive 45% fall from today’s values.

The index is still showing a current loss of 30% from the high in June 2006. Based upon a trend generated from the actual prices of 1987 to 1997, and generated forward in a linear projection, the index will fall a total of 62% before it reaches the trend norm.

A more comprehensive analysis of the 10-city index based upon a full 120 years of data shows current values off 36% and a comparatively modest 20% fall ahead.

Review four charts and key data based upon major real estate price indexes at “Property Price Index”.

Ken McLeod has the figures on this, having done detailed statistical analysis, and capable of testifying as an expert on the usual outcome of these sales. The important point being “why would the “bank” let the property go for 60% of distressed market price — even to an insider?” Answer: because it is all a game to them. The money is free. They don’t have one dime invested, they have already been paid their fees and now that they have the house too they get to share in the spoils. Talk about situational versus sustainable ethics!

Every Auction should be conducted like this. It would at least take some of the greedy momentum out of this market.

November 26, 2009

Miami-Dade Hopes Online Auctions Will Help Reduce Backlog of Foreclosures

Commonwealth non-governmental organisations (NGOs) have lent their support for a proposal from British Prime Minister Gordon Brown for a financial transaction tax (FTT) in support of health and humanitarian projects across the globe. David Hillman, director of Stamp Out Poverty, a global humanitarian non-governmental lobby group, said the proposed tax has the potential to finance several global humanitarian funds that are struggling to reach their targets for delivering service and drugs to achieve their millennium goals.

Speaking at a press conference at the IFC Building C, at the media centre of the Commonwealth Heads of Government Meeting (CHOGM) yesterday, Hillman urged Commonwealth leaders to support the financial transaction tax, including a currency transaction levy for health. Hillman said the foreign exchange market amounts to trillions of US dollars daily and exacting a tax of less than half of one per cent will be unnoticed by traders, yet make a significant difference to the standard of life for disadvantaged and poor people worldwide. He said a 0.05 per cent tax could easily raise US$20 billion annually for these special projects. Other speakers included Dr John Foster of the North South Institute (Canada) and Basil Williams, director HIV and Aids Alliance Caribbean.

Tax to benefit poor
Hillman said key benefactors of the funds will be UNAids and several related funds seeking to deliver medication, food and humanitarian relief for poor and disadvantaged countries. “This is a very exciting time for us, with the breakthrough two weeks ago with the British Prime Minister and the United Kingdom government openly coming out in support of the financial transaction tax after years of extensive lobbying from civil society and NGO groups. “It has recently come to our attention that indications from Number 10 Downing Street—the Prime Minister’s Office—that they are proposing to use 50 per cent of the revenues to help pay for bank bailouts, while the other half will be split between international development funds and projects dealing with delivering healthcare and climate change. “These are extraordinary times, the issue of FTTs or a currency transaction levy (CTL)—sometimes referred in the media as a Tobin tax—was not being discussed seriously by world leaders a year ago,” Hillman said. “Due to the recent financial crisis, governments are no longer prepared to fall back to the ‘so-called’ wisdom of banks, and there seem to be an end to ‘no-go’ areas, such as taxing currency transactions.”

Fixing the financial system
Hillman said serious questions were being asked about the actions and operations of the international banking system and the attitudes of bank leaders. “The approach was that the banks could get away with this because all of society appear to benefit from their actions, and their ‘if it’s not broke, don’t fix it’ attitude— but the financial international system literally became broke, and it needs to be fixed,” he said. “This changing approach by world leaders first manifested itself in the G20 meeting when they tasked the IMF in their recent summit in Pittsburgh to explore options for the financial sector to pay for its own bail out. This opened the discussion and we are pleased that these issues are being dealt with. “Finally, this subject can now be discussed and moved on in a way not possible before,” Hillman said. “The truth is, taxing financial transactions are normal, commonplace and technically simple because the market is electronic and automated, and a simple change in computer code can set aside the funds for collection.”

By PETER D NEPTUNE

Source: http://guardian.co.tt/business/business/2009/11/27/support-uk-s-proposed-global-forex-trade-tax

Just a year after the global downturn  derailed  Dubai’s explosive growth, the  city is now  so  swamped  in  debt that  it’s  asking  for a  six-month  reprieve  on  paying  its bills.

Dubai Debt Fears Grip World Markets

This has cast a shadow on a world only just emerging from the worst economic crisis since the 1930s,  knocking markets  from Sydney to Sao Paulo and raising questions about Dubai’s reputation  as a magnet for international investment.

For India, which has tens of thousands of its citizens living  and working in the emirate,  the concerns are more direct:  thousands of its expats staring at job losses and  the economy, sharply reduced trade.

India, which gets nearly a quarter of the remittances from the United Arab Emirates and  has lakhs of laborers working in the region, could be worse off than most other nations  if the crisis escalates into a full-blown one  like the Russian or Argentinean crises of the past.

India’s exports to the UAE stood at $23.92 billion in FY09.

It is very likely that we may see one more leg of job losses in Dubai.

The only consolation for the region is that Abu Dhabi is booming.

Indian shares and the rupee fell in sync with other global markets where investors are fleeing for safety after Dubai debt trap concerns.

The Bombay Stock Exchange benchmark Sensex on Friday tumbled over 451.63 points to 16,403.30 points in the first ten minutes of trading on hectic selling by funds in line with weak global cues and concerns over Dubai’s debt.

Similarly, the wide-based National Stock Exchange index Nifty dropped by 140.50 points to 4865.05 points.

Brokers said the selling focus was more on banking and realty stocks after Dubai’s debt problems revived concerns about the global financial system and rattled markets across Europe and Asia.

Indian rupee fell 24 paisa to 46.55 against the dollar.  The MSCI Emerging Markets Index lost 1.4%.

Most European indices were about 2% lower after Asia tumbled.

The Shanghai Composite Index slumped 3.6%, its biggest drop since August, and Brazil’s Bovespa Index slipped 1.1%. U.S. markets were closed for the Thanksgiving holiday.

Credit-default swaps tied to debt sold by Dubai rose as much as 131 basis points to 571.

“Dubai isn’t doing risk appetite any favours at all and the markets remain in a vulnerable state of mind,” said Market analysts.

“We’re still in an environment where we’re vulnerable to financial shocks of any sort and this is one of those.”