Global Articles on what is going on...posted daily

[sandi66]

JULY 9, 2010
U.S. Presses China on Currency
WASHINGTON—The U.S. declined to name China a currency manipulator in a regular report, but at the same time, Treasury Secretary Timothy Geithner pressed Beijing to let the yuan appreciate faster.
The twin moves reflects the Obama administration's difficulty in finding the right degree of pressure to cajole Beijing to change economic policies. Since China announced on June 19 that it would it make its exchange-rate policy more flexible, long a goal of U.S. policy makers, the yuan has appreciated less than 1% against the dollar—and 0.4 percentage points came on the first trading day after the announcement.
"What matters is how far and how fast the renminbi appreciates," said U.S. Treasury Secretary Timothy Geithner, using the formal name of the Chinese currency. He vowed in a statement to "closely and regularly monitor" the currency's appreciation.
The U.S. Treasury is obligated by Congress to every six months produce a report on global currencies, which has become a way to pressure China and other countries over the value of their currencies. American lawmakers and others have long wanted China to appreciate its currency to boost the spending power of its own consumers, easing strains with other nations caused by its long reliance on cheap exports.

The small movement in the value of the yuan has done little to quell Congressional critics. "There is no real question that China's exchange-rate policy is unfair," said House Ways and Means Committee Chairman Sander M. Levin, a Michigan Democrat.
But Rep. Levin didn't specifically threaten legislation. Rather, he said Congress and the administration "should fully explore the option" of suing China in the World Trade Organization for using its currency policy as an unfair subsidy.
The executive branch decides on whether to bring WTO cases and the Obama administration hasn't expressed interest in taking such action.
New York Democratic Sen. Charles Schumer, a leading China hawk, called the report "as disappointing as it is unsurprising." He did raise the threat of legislation to punish China for its currency policies.
Mr. Geithner has used the prospect of the report to tighten pressure on China. In April, he publicly delayed its issuance and privately warned Beijing that if it didn't take significant steps to let the yuan strengthen, he would use the report to accuse China of manipulating the yuan to gain an edge in global trade.
Such a designation is largely symbolic—it merely requires the U.S. to try to negotiate changes in policy—but would have given a significant boost to Congressional efforts to penalize Beijing
The U.S. then used the June leaders' summit of the Group-of-20 industrialized and emerging nations as an informal deadline for China to change polices. The Chinese leadership made the announcement shortly before the G-20 meeting, reducing global pressure on Beijing on currency issues.
Given the Chinese decision, it has been clear that Treasury wouldn't cite China for manipulating its currency. The only question was when the Treasury would issue the report, which it did on Thursday, a little more than a week after the G-20 summit.
While the report said the yuan was "undervalued," it termed China's decision to let the currency float more was "significant development."
Parts of the report were complimentary of Beijing's policies during the global economic downturn, calling China "a significant source of economic support," and said it contributed 1.6 percentage points to global growth during a time when global demand declined 0.6%.
China's immense stimulus plan, the report said, "contributed to the expansion of U.S. exports to China by 15%" in the second half of 2009, a faster pace of U.S. export growth than to the rest of the world.
A senior U.S. official also said it didn't expect China to signal ahead of time how deep an appreciation it expected, which could make it more difficult for Beijing to manage the currency's movement. But U.S. officials regularly note that the yuan appreciated about 21% between 2005 and 2008, when China halted its movement. That works out to a rise of about 7% a year.
The U.S. retains other pressure points, including the next currency manipulation report, which is due Oct. 15. There is also a meeting of G-20 finance ministers in October, and another leaders meeting, in Seoul, in November, where China's currency policy is likely to draw sharp criticism unless the yuan appreciates further.

online.wsj.com/article/SB10001424052748703609004575355604275024896.html



Dollar bounces back vs. euro

July 9, 2010: 8:31 AM ET
NEW YORK (CNNMoney.com) -- The dollar recovered losses versus the euro Friday and was little changed against other major currencies as investors wavered ahead of the weekend.
What prices are doing: The dollar gained 0.3% versus the euro to $1.2658 after dropping to a 7-week low in earlier trading.

Against the British pound, the greenback edged up 0.2% to $1.5135 and it rose 0.2% versus the Japanese yen to ¥88.53.
On Thursday, the dollar was pressured as global markets rallied and investors focused on upbeat economic reports on employment and retail sales.

What's moving the market: With a lack of major economic data on tap Friday and U.S. stocks poised for a lackluster open, trading was thin as the dollar waited for guidance.

"There's not much going on today, so its been very, very quiet trading," said Kathy Lien, director of currency research at Global Forex Trading. "All we have to look at today is how the stock markets move, and that's the only thing that could trigger volatility."
Following China's decision last month to end its currency peg to the dollar, the U.S. Treasury said in a report on whether countries manipulated their currencies that while the yuan is undervalued, China does not manipulate it.

This temporarily eased worries about tensions mounting between the countries, but investors were not all that surprised and remain skeptical about how much the country will allow its currency rise against the dollar.
"Part of the reason China made the move back in June was to deflect the risk of being named a currency manipulator by the U.S., so by taking this action, they were buying their way out of being branded a manipulator," said Lien. "While it takes off a little risk for the U.S. dollar, it was pretty much expected and won't have much of an impact on the market."
Since its decision to allow the yuan to appreciate, the Chinese currency has gained about 0.8% versus the dollar.
Meanwhile, a report on U.S. wholesale inventories was the only major economic release scheduled Friday.
Economists surveyed by Briefing.com expect inventories to have risen 0.4% in May after increasing the same amount in April.


money.cnn.com/2010/07/09/markets/dollar/



Can BRIC Economies forge a New Global Reserve Currency?
July 9, 2010

The 2008 recession has turned the global currency picture upside down. The impact of the slowdown has been felt harder on the advanced economies such as the US, UK and Europe, leading to substantial drain in their currency strength and prospects.
Prior to the great recession, economists had pegged Euro as the next global reserve currency which could give tough competition to the US dollar for its decades of dominance. However, the recent spate of Greece-led turbulence in the Euro zone had almost brought the euro on the brink of breakdown, if not for the $1 trillion rescue package announced by the EU-IMF bailout deal.
With both the dollar and the euro looking weak now, the balance tilts towards the currencies led by emerging market economies such as China’s yuan, India’s rupee and Russia’s rouble. However, the above statement is far away from concluding them as a reserve currency.

China’s yuan is no divine. China has humungous amount of reserves denominated in dollar terms which renders its fortunes susceptible to the fluctuations of the US dollar and store of value in it. The world needs a global currency which does not rely on the US dollars as the single major reserve currency.
Reports indicate that the pace of recovery in the US and Europe is unlikely to witness a sharp bounce back in the near term. In fact, some analysts are as well predicting a double-dip recession in the US. With both the US and Europe still under the wraps of recession, the global GDP is unlikely to witness a fast-paced growth.

According to the IMF data, the US dollar’s share of reserves dropped from more than 62% in the previous quarter to a 10-year low of 61.5%. Meanwhile, the euro’s share fell from 27.3 per cent to 27.2 per cent. In fact, even China is diversifying away from dollar at $3.7 trillion unallocated reserves.
In fact, the euro and the dollar are losing their sheen off late. This view can be supported by the fact that their share in the global foreign exchange reserves have decreased in the Q1-2010.
Sparkling among the lot of BRIC economies is Indian currency – The Rupee.
The Indian economy has emerged relatively unscathed from the global slowdown and leading the curve. In fact, India leads the charts in terms of inbound inflows by the way of FII and Foreign Direct Investment (FDI), being amongst the top out-performers on the global podium.
Mirroring this trend, the Indian Rupee has appreciated sharply from the lows of Rs.50 per dollar during recession to the highs of Rs.45 more recently, currently around Rs.47 against a dollar. However, it cannot be pegged as a global reserve currency as Indian financial markets are highly susceptible to the volatility in the global flow of funds, as witnessed during the recent recession.
Economists are of the view that the new global reserve currency should not be based upon a basket of currencies, but the special drawing rights (SDRs) which would be controlled by IMF.

More over, even Russia wants rouble to be one of the world’s reserve currencies. Russia has renewed its push to reduce dollar’s dominance. In fact, the Russian president Dmitry Medvedev opines that the world may need as many as six currency reserves rather than relying solely on the fundamentals of any particular currency as a global reserve.

trak.in/tags/business/2010/07/09/indian-rupee-global-reserve-currency/

[sandi66]

The Bank for International Settlements said it loaned billions of dollars backed by gold to commercial banks in recent months.

JULY 7, 2010, 5:38 P.M. ET Commercial Banks Used Gold Swaps

The Bank for International Settlements said it loaned billions of dollars backed by gold to commercial banks in recent months.

Most of the loans—known as gold swaps—were conducted with European banks in exchange for foreign currencies, mainly U.S. dollars, according to data released last week in the BIS's annual report.

"The operations concerned were purely market operations with commercial banks," the BIS said in an email statement. The statement came in response to a Wall Street Journal article on Wednesday that said the BIS swaps were with central banks.

The sheer size of the recent swaps—involving 349 metric tons of gold, valued at about $14 billion currently—indicates the stress that the international banking system is under, particularly in European countries facing investor concerns about sovereign-debt woes.

The enormous amount of gold involved, nearly tripling what the BIS itself owns, left many market participants wondering about the nature of the deals. The BIS declined to identify the commercial banks involved.

The BIS report indicated that all its outstanding gold swaps are set to expire in less than one year, when the borrowers are obliged to repay the loans and repurchase the gold. The swaps are backed by gold held at central banks.

The Basel-based international agency is known as a bank for central banks. It takes deposits from central banks, but lends to a broader spectrum of financial institutions, including commercial banks and corporations.

Through an arrangement called "gold swap," financial institutions exchange gold with the BIS in return for cash, agreeing to buy back the gold at a later date. The practical implications for the gold market are limited, because the gold hasn't entered the open market.

By contrast, the BIS reported that it had no gold swaps outstanding at the end of the prior fiscal year. Gold swaps have rarely been used at the BIS in recent years, largely because capital was often readily available in the marketplace.

It isn't clear what prompted the banks to borrow from the BIS instead of their central banks. "It's odd, but it could be bad," said Andy Smith, senior metals strategist at Bache Commodities Group in London.

Analysts note that the time of the transactions—mostly taking place in January—coincides with a flare-up in worries about a sovereign-debt crisis in Greece spreading across Europe.

If the borrowings were prompted by the need to enhance liquidity, it would have "a greater resonance" in the gold market, said Philip Klapwijk, executive chairman of GFMS Ltd., a London-based metals consultancy. "Whatever your long position was in gold, you would rationally decide there were more risks attached to it," Mr. Smith said. "Something untoward might happen with this gold that was being swapped."

If the banks that loaned the gold are for some reason unable to make good on the loan, the BIS could opt to sell the gold in order to get its money back, which could amount to flooding the market with an unexpected boost to the global supply.

On Wednesday, the gold contract for July delivery eked out a gain of $3.80 per troy ounce to settle at $1,198.60 on the Comex division of the New York Mercantile Exchange. It is now off 5% from its record hit on June 18.

Prices of gold are up 9.4% so far this year, so banks might have to record losses on the swaps and pay more to buy back the gold from the BIS, though they may also have hedged that risk


online.wsj.com/article/SB10001424052748704545004575353403943560776.html?mod=googlenews_wsj

[sandi66]

Are Overdue Reports Concealing ObamaCare Impact On Medicare?
By PETER FERRARA
Posted 07/06/2010 06:04 PM ET


Every year, the Annual Report of the Social Security Board of Trustees comes out between mid-April and mid-May. Now it's July, and there's no sign of this year's report. What is the Obama administration hiding?

The annual report includes detailed information about Social Security and its financing over the next 75 years, produced by the Office of the Actuary of the Social Security Administration.

The Congressional Budget Office reported last week in its Long Term Budget Outlook that Social Security was already running a deficit this year. According to last year's Social Security Trustees Report, that was not supposed to happen until 2015, with the trust fund to run out completely by 2037.

With the disastrous Obama economy, the great Social Security surplus that started in the Reagan administration is gone completely.

Every year, the federal government has been raiding the Social Security trust funds to take that annual surplus and spend it on the rest of the federal government's runaway spending, leaving the trust funds only with IOUs backed by nothing but politicians' promise to pay it back when it's needed. Now even that annual surplus is gone. How soon will the trust funds run out completely now?

President Obama keeps telling us a fairy tale that he saved us from another Great Depression. But he is actually leading us into another Depression.

The National Bureau of Economic Research scores the recession as officially starting in December 2007. Thirty-one months later, with unemployment still near 10% and the work force still declining, the NBER says it still cannot determine an official end to the recession.

The longest recession since World War II previously was 16 months, with the average being 10 months. By next month, it will be twice as long as the previous postwar record since the latest recession started. The markets echoed by many pundits are now suggesting a renewed double-dip downturn may be starting, with the comprehensive Obama tax rate increases next year poised to pour napalm on this developing bonfire.

How soon will the trust funds run out with this utter failure of 1930s-style Obamanomics?

The implications for Social Security aren't what the Obama administration is hiding by delaying the annual trustees reports. Those annual reports also include information regarding Medicare over the next 75 years. What the administration is trying to hide are sweeping draconian cuts to Medicare resulting from the ObamaCare legislation, which the annual report will document.

www.investors.com/NewsAndAnalysis/Article/539411/201007061804/Are-Overdue-Reports-Concealing-ObamaCare-Impact-On-Medicare-.aspx

[sandi66]

Why Can't We Fire Failed Regulators?

By MARK A. CALABRIA

Posted 07/08/2010 06:59 PM ET


As Congress returns from its weeklong July 4 break, the Senate is poised to vote on the Dodd-Frank financial regulation bill. With the recent House passage, a Senate vote is all that stands between the bill and the president.

While people continue to debate the causes of the financial crisis, there is one factor that appears to be widely agreed upon: the absolute failure of banking regulators to do their job.

The Dodd-Frank bill claims to address this failure by eliminating agencies, such as the Office of Thrift Supervision, or transferring regulatory responsibilities, such as consumer protection, from existing agencies. What the press releases leave out is that all of the same bureaucrats behind the failures also move to the new agencies along with their previous responsibilities.

In debating against the creation of an independent consumer protection bureau, Republicans argued that all of the existing bank regulators have warned against separating consumer protection from safety and soundness regulation. They pointed out that this reflected a concern of the regulators that such separation would undermine bank safety and soundness.

Rep. Barney Frank's response was that the current regulators lack credibility on the issue. Frank went as far as to say that "the Fed has a terrible record of consumer protection."

Frank's solution is to therefore transfer the Fed's consumer duties to a new regulator. However, the Dodd-Frank bill clearly states in Section 1064 that "all employees of the Board of Governors identified ... shall be transferred to the Bureau for employment."

If one believes that such employees have "a terrible record," then what exactly is the rationale for keeping said employees?

Such transfers are not limited to consumer protection. Although there is little evidence that the Office of Thrift Supervision (OTS) performed any worse, or better, than other bank regulators, the Dodd-Frank bill eliminates the OTS, moving its powers to the Office of the Comptroller of the Currency.

But Section 322 of the bill guarantees that "all employees of the Office of Thrift Supervision shall be transferred to the Office of the Comptroller of the Currency" or to the FDIC. Once again, if the OTC is a failed regulator, then why are we not firing its employees? Or at least making them re-apply for their jobs.

Some might argue that firing regulators would erode the trade-off that government employees make between job security and salary. For this to be true, one would expect to find government salaries to be lower than those of the private sector. Yet what we find is the opposite, especially when it comes to financial regulators.

While the typical American household has to manage to get by on just over $50,000 a year (2008), the average compensation, not including benefits, for federal bank regulators is over $115,000, with some agencies, such as the Securities and Exchange Commission, seeing average annual compensation of over $130,000.

Not only do bank regulators get to keep their jobs regardless of their performance, they are rewarded with six-figure salaries. One of the most harmful aspects of the bank bailouts was the rewarding of irresponsible private-sector behavior. Ultimately more damaging, however, will be the continued rewarding of failure on the part of government.

There is probably no regulator who was more asleep at the wheel than the Federal Reserve Bank of New York. Yet, in what must be a new twist on the Peter Principle, the New York Fed's leadership during the crisis, Timothy Geithner, was promoted to Treasury secretary and placed in charge of Obama's financial reform efforts.

But then such a promotion, in the face of repeated failure, pales in comparison to the reappointment of Ben Bernanke as Federal Reserve chair.

The sad truth is that the Dodd-Frank bill is in keeping with a long tradition: that government exists to serve special interests rather than provide for the common good. And when it comes to special interests, there is perhaps no more powerful special interest than government employees.

In addition to ignoring the government policies that drove the financial crisis, the Dodd-Frank bill places protecting government employees over protecting both the taxpayer and our financial system. At a time when millions of Americans have lost their jobs, generally by no fault of their own, protecting the jobs of failed bank regulators only adds insult to injury.

• Calabria is director of financial regulatory studies at the Cato Institute.

www.investors.com/NewsAndAnalysis/Article.aspx?id=539762

[sandi66]

chronicle.gi

GIBRALTAR | 9 July 2010

No6 ANNOUNCES NEW GIBRALTAR CURRENCY NOTES

READY CASH: Chief Minister Peter Caruana holds up a new banknote and coin at No 6



Yesterday.


They have the colour and modernity of their Euro equivalents, touched with the serious look of Gibraltar’s history and are set to be entered by the famous Thomas De La Rue security printers for the US based International Bank Note Society’s banknote of the year award. Gibraltar has new money.






Just a week after he announced in the Budget how the Government is going to spend its cash, Chief Minister Peter Caruana yesterday flashed a new set of notes before local bank chiefs gathered at No6.

Mr Caruana, who is also the Finance Minister, announced the issue of a new series of Gibraltar currency notes issued by the Gibraltar Government.

There are five currency notes in the series - £5, £10, £20, £50 and for the first time a £100 note. He has also launched the circulation of the new £10 and £50 notes.

The currency notes will be released into circulation in two phases. The £10 and £50 notes were released yesterday and the £5, £20 and £100 notes will follow in early 2011.

Gibraltar notes are not a currency as such but, as stated on each one, they are sterling backed pound for pound with a Gibraltar Government deposit in the Bank of England. And Mr Caruana said yesterday that even when the old (current) notes eventually cease to be legal tender in the street, the Gibraltar Treasury will redeem them for valid notes.

The new notes design was applauded by de la Rue not only for the design but the overall security and features. There are tactile features for the blind and visually impaired, features that become visible in the light, watermarks and especially reinforced corners to ensure durability.

The reverse of each of the banknotes carries a vignette which shows an aspect of Gibraltar through the ages. The £5 note shows the Moorish Castle; the £10 note has a scene from the Great Siege of 1779-1783 and the £20 note depicts HMS Victory returning to Gibraltar in 1805. The £50 shows Casemates Square as it is today and the £100 note depicts the Kings Bastion Leisure Centre.

Although a new £5 has been introduced the non-tarnishing £5 coin that makes history describing the Queen as ‘Queen of Gibraltar’ will be in circulation shortly.

A booklet with full information on the currency notes and a short history on the themes depicted in each note is available at the Ministry of Finance, Treasury Department, 23 John Mackintosh Square and online at www.gibraltar.gov.gi.



www.chronicle.gi/headlines_details.php?id=19449

[sandi66]

America's Second Declaration of Independence!

Newt Gingrich says: "I think there is a lot to be said for eliminating the income tax."

Radio Hall of Fame Talk Show Host Neal Boortz says: "The FairTax would create the greatest transfer of power from the government to the people since the Declaration of Independence freed us from the King of England."

Ronald Reagan's eldest son Michael says: "My father would lead the charge for the FairTax if he were here."

It's hard to believe just how much damage our own government is doing to our national economy! We're taxing the very things that make our economy grow - work, savings and investment - and we're strangling job growth with complexity and tax compliance costs.

Click here to take action now to end the income tax, create an economic boom, and restore power to the people instead of the political power brokers!

Our tax system even gives foreign producers a price advantage when they sell their products here. We're killing off the "Made in America" label through our self defeating tax system, and this must change.

And that's why Nobel Prize winning economist Dr. Vernon L. Smith and more than 80 other leading economists say we should enact the FairTax Now!

The FairTax Bill H. R. 25 eliminates all personal income taxes, the marriage penalty, payroll taxes, capital gains taxes, death taxes, the Alternative Minimum Tax, corporate taxes, and Social Security taxes. It's a retail sales tax collected only on new items which expands the American tax base to bring in illegal immigrants and trillions of dollars now in the underground economy or hidden offshore. It makes the true taxpayer cost of the federal government highly visible; it's simple and fair and allows every honest American to take home far larger paychecks free of federal withholding. It unleashes our economy to grow - and best, already has 66 Senators and Congressional co-sponsors.

But we need your support to pass the FairTax Bill. I know it's a lot to ask you to invest $50 or $100. I have personally invested $200 in this FairTax National Victory Campaign. By investing $200, I have given at least twice what I am asking you to invest today. But this is the big one. If we get started big, we get started right, and we can do it!

Will you follow this link and help enact the FairTax today?

Immediate action is critical, because the longer we wait, the worse things will get. Our tax system is broken, and it actually rewards dishonesty. Drug dealers and other criminals pay no taxes, illegal transactions are not taxed, millions of Illegal immigrants pay no taxes but enjoy the fruits of our labors, and those who hide money in offshore banks and investments pay no tax.

Instead, we tax honest, hardworking Americans the most- the very people who work the hardest, save and invest the most money. That's why our economy and our country are failing, and our national debt is doubling and tripling into the trillions upon trillions of dollars. And we cannot allow this to continue.

So will you follow this link to join our campaign today? Click here right now, we can be on the way to victory.

The FairTax Bill in Congress is just that - fair. Taxes will be collected when anyone and everyone chooses to purchase a new product or service... there is no hiding from these taxes by the dishonest and politically powerful. The FairTax will reduce the tax burden for all honest, hard working Americans and close the IRS. Imagine a world without the IRS and 70,300+ pages of tax code!

That's why we're asking you to join in the campaign today. How much return can you expect for your investment? It is so great you probably cannot even calculate it - go ahead, try. This investment will be the best investment of your life - just think what ridding the nation of everything but a sales tax will do for us, our children, our grandchildren and our beloved nation. So please click here and act today!

Eighty economists, including the Nobel Prize winning economist Dr. Vernon L. Smith have called upon Congress to pass the FairTax Bill. And even Alan Greenspan says a consumption tax, such as the FairTax, "could certainly meet the fundamental criteria of being simple, fair, and pro-growth."

The FairTax will put trillions of dollars into our economy as funds which are in offshore banks and investments in income tax avoidance schemes come home - enough to create an economic boom for a generation or more. But we need your support to overcome the relatively small but privileged class of Washington insiders who profit so richly from the tax code and who have put themselves ahead of the nation.

Click here now and earn a membership in your FairTax organization until 2012. We'll mail your Membership Card out to you right away when you invest. But more importantly, you will be making the best investment of your life - just think what ridding the nation of everything but a sales tax will do for us, for our children, for our grandkids, for our beloved nation.

Every investment at every level in your FairTax Organization comes with a very simple and complete 100% guarantee: if you are every disappointed that you became an American Citizen Patriot Member of the FairTax Organization, 100% of your investment will be returned to you at any time, even after your Membership expires in 2012. No questions asked.

Thank you in for your support.

Urgently yours,

Ken Hoagland
Chairman, FairTax National Victory Campaign

P.S. With 66 Congressional co-sponsors of the FairTax Bill now under consideration in the House Ways and Means Committee and the Senate Finance Committee we're on our way, but we have so much more to do. Together we can put our country back on the right track. Please join us in our campaign for the FairTax by clicking here to take action today!





Americans for Fair Taxation
PO Box 27487, Houston, Texas 77227-7487
1-800-FAIRTAX (324-7829)


Americans For Fair Taxation is a 501(c)(4) non-profit organization. One provision in the 70,000+ pages of the Federal Tax Code makes your investment in your non-profit FairTax organization non-deductible.

[sandi66]

Bahrain’s Al-Maraj Says Gulf States Committed to Currency Plans

July 04, 2010, 8:22 AM EDT

July 4 (Bloomberg) -- Bahraini Central Bank Governor Rasheed al-Maraj said the four Persian Gulf states planning a single currency are committed to their goal and are monitoring developments in the euro region.

“We are learning from what is happening in Europe,” al- Maraj said in an interview in Aix-en-Provence, France. “We keep our commitment. I am sure the four countries have the same views.”

Saudi Arabia, Kuwait, Qatar and Bahrain took an initial step toward a single currency on March 30 when their central bank governors held the first meeting of the Monetary Council, a precursor to a united central bank. Kuwait’s dinar is pegged to a basket of currencies while the other three countries have a dollar peg. The United Arab Emirates and Oman have pulled out of the project.

Al-Maraj said the Gulf states are watching the euro zone’s decisions on “public debt and the fiscal policies.”

Bahrain’s currency will remain pegged to the dollar, he said.

“I think we are not going to change our foreign exchange policy on this short term volatility,” he said. “Currency markets always become very volatile from time to time.”



www.businessweek.com/news/2010-07-04/bahrain-s-al-maraj-says-gulf-states-committed-to-currency-plans.html

[sandi66]

Euro Breakup Would Unleash GDP Growth, Capital Economics Says

By Jeffrey Donovan

July 11 (Bloomberg) -- The breakup of the euro area would save the 16-nation region from years of economic stagnation by boosting weaker members’ competitiveness as well as domestic demand in Germany to spark growth, Capital Economics said.

“The threatened breakup of the euro zone, which many see as a potential disaster, would actually open the door to renewed economic growth, not just for weaker members of the zone, but for Europe as a whole,” Capital Economics analysts including Roger Bootle in London said in a report released today.

Greece’s debt crisis has driven down the euro and forced governments from Spain to Italy to embrace austerity measures and cut their deficits, clouding the outlook for recovery from the worst recession in six decades. The International Monetary Fund on July 8 kept its forecast for 1 percent growth this year in the region, which expanded 0.2 percent in the first quarter.

Europe’s weaker economies face “years of economic pain” as they deflate costs and prices to regain competitiveness with Germany, which runs a large trade surplus and restrains domestic demand, Capital Economics said. Italy, Spain, Ireland, Portugal and Greece could quickly narrow the competitiveness gap if they returned to their own currencies, which would depreciate and allow exports to expand, it said.

‘Escape Route’

“This would offer them an escape route from their difficulties through economic growth, rather than depression,” the economists wrote.

A full abandonment of the euro would also help Germany as a restored deutsche mark would appreciate and make the government expand domestic demand to maintain jobs and growth, pushing up the German standard of living, according to the report. That, in turn, would further fuel imports from euro countries, helping to rebalance Europe’s economy.

In a separate report on July 7 by ING Bank NV, economists including Mark Cliffe in London said a euro-area breakup is “thinkable, but unpalatable.” The region’s cumulative loss in economic output in the first two years after a breakup would be “close to 10 percent, dwarfing the fallout caused by the collapse after the demise of Lehman Brothers in September 2008,” according to the report.


Last Updated: July 10, 2010 18:01 EDT

noir.bloomberg.com/apps/news?pid=20601010&sid=anNIrGmxu5.A

[sandi66]

Crisis Awaits World’s Banks as Trillions Come Due
By JACK EWING
Published: July 11, 2010

FRANKFURT — The sovereign debt crisis would seem to create worry enough for European banks, but there is another gathering threat that has not garnered as much notice: the trillions of dollars in short-term borrowing that institutions around the world must repay or roll over in the next two years.

The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is.

Their concern is that banks hungry for refinancing will compete with governments — which also must roll over huge sums — for the bond market’s favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.

“There is a cliff we are racing toward — it’s huge,” said Richard Barwell, an economist at Royal Bank of Scotland and formerly a senior economist at the Bank of England, Britain’s central bank. “No one seems to be talking about it that much.” But, he added, “it’s of first-order importance for lending and output.”

Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe.

U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.

How banks will come up with the money is an open question. With investors worried about government over-indebtedness in Greece, Spain, Ireland and other parts of Europe, many banks have been reluctant or unable to sell bonds, which they typically use to raise money that they lend on to businesses and households.

The financing crunch has its origins in a worldwide trend for banks to borrow money for shorter periods.

The practice of short-term borrowing and long-term lending contributed to the near-collapse of the world financial system in late 2008 when short-term financing dried up. Banks suddenly found themselves starved for cash, and some would have collapsed without central bank support.

Government bank guarantees extended in response to the crisis also inadvertently encouraged short-term lending. The guarantees were typically only for several years, and banks issued bonds to match.

Other banks took advantage of the gap between short-term and long-term rates, borrowing cheaply from money markets or central banks and lending to their customers at higher, long-term rates.

A study in November by Moody’s Investors Service found that new bond issues by banks during the past five years matured in an average of 4.7 years — the shortest average in 30 years.

Since then, worries about Greek and Spanish debt and whether Europe is headed for another recession have caused new problems. Investors are unsure which institutions are in good shape and which are sitting on piles of bad loans and potentially tainted government bonds.

Bond issuance by financial institutions in Europe plunged to $10.7 billion in May, compared with $106 billion in January and $95 billion in May 2009, according to Dealogic, a data provider. New issues have recovered somewhat since, to $42 billion in June and $19 billion so far in July.

Bank stress tests being conducted by European regulators could help if they succeed in convincing markets that most banks are healthy. Bank regulators plan to release results of the tests, covering 91 large banks, on July 23.

Sandeep Agarwal, head of financial institutions debt capital markets in Europe at Credit Suisse, predicted that the market could be separated into haves and have-nots, with the healthy banks raising money fairly easily but weaker banks required to pay a premium. “There is cash at the right price for many institutions, not all institutions,” Mr. Agarwal said.

That could add pressure on the weakest banks to merge, seek government help, or scale back their activities. Some might even fold. The Landesbanks in Germany, savings banks in Spain or other institutions that have struggled may be forced to confront difficult choices.

A shortage of bank finance also could create quandaries for the European Central Bank, which appears anxious to wean banks from the cheap cash that it began providing in the heat of the global financial crisis.

If institutions are unable to raise the money that they need on the open market, the European Central Bank would have to decide whether to continue to prop them up.

“Banks that have trouble tapping new funding sources will have to shrink,” the Bank for International Settlements said in its annual report in late June. The institution, based in Basel, Switzerland, brings together the world’s main central banks.

Stephen G. Cecchetti, head of the monetary and economic department at the institution, called the refinancing issue “a vulnerability and something to be watched.” But, he added, in a telephone interview, “I am confident that national authorities will take the necessary actions so that it isn’t a problem.”

Banks insist that they enjoy the trust of the markets and will be able to raise the cash they need.

“We’re in a comfortable position,” said Horst Bertram, head of investor relations at Bayerische Landesbank, Germany’s largest Landesbank, which is owned by the state of Bavaria and local savings banks. He said that as a result of government backing and a radical restructuring last year, the bank had ample cash and limited need for new financing.

Commerzbank, partly owned by the German government after a bailout, said its liquidity was well within regulatory limits. Commerzbank “can refinance at any time at market conditions,” the bank said.

Even if there is no market meltdown, banks still face a transition to a period of higher interest rates that will weigh on profits.

The cost of borrowing is likely to rise faster than banks can pass it on to customers, analysts say.

Jean-François Tremblay, a Moody’s vice president who has studied the refinancing issue, said that so far banks had managed to roll over debt better than expected. They have increased customer deposits, drawn on cash from central banks, or simply reduced their lending and their need for new financing — which is exactly what some economists feared.

The Bank of England estimates that British banks will need to issue £25 billion in bonds every month to meet their refinancing needs, which the central bank puts at £800 billion, or $1.2 trillion. That means banks will have to sell new bonds at double the rate they have been issuing so far this year.

“There is a risk that banks alleviate their own funding pressures by further constraining credit conditions for customers,” the Bank of England said last month in its Financial Stability Report. “That would dent economic recovery and so raise credit risk for all banks.”

www.nytimes.com/2010/07/12/business/global/12refinance.html?ref=business&pagewanted=print

ty nalmann

[sandi66]

JULY 12, 2010, 5:39 A.M. ET

UPDATE: China Yuan Up Late After Record Low Central Parity Rate

SHANGHAI (Dow Jones)--China's yuan was slightly higher against the U.S. dollar late Monday afternoon, after the country's central bank set the session's dollar-yuan central parity rate at a record low.

But dollar demand from Chinese banks, as well as traders' concerns the central bank could intervene in the market if the yuan rises too quickly, limited the local currency's gains.

On the over-the-counter market, the dollar was at CNY6.7711 at 0930 GMT, down from Friday's close of CNY6.7735. It traded between CNY6.7708 and CNY6.7742.

The People's Bank of China set the dollar-yuan central parity rate at 6.7718, a record low, down from 6.7753 Friday and the previous low of 6.7720 on July 2. The daily dollar-yuan fixing is the mid-point around which the spot rate is allowed to trade up or down by as much as 0.5% intraday.

The fixing was lower than most traders had expected, as the euro fell slightly against the dollar to $1.2640 in late New York trade Friday, from $1.2703 late Thursday.

"The central parity is quite low today, drawing some dollar selling shortly after the open," said a Shanghai-based trader at a European bank.

"But Chinese banks were buying the dollar around CNY6.7740 later in the morning, likely on behalf of clients," the trader said.

The dollar moved closer to the fixing level later as local banks' dollar demand waned.

Traders said most in the market still expect the yuan to appreciate further against the dollar in the medium term, but trading has been cautious because of potential central bank intervention.

"The central bank appeared to have been defending CNY6.7700 several times last week," the trader said.

A Shenzhen-based trader at a local bank was also skeptical about how much the yuan could appreciate in the near term, pointing to a still wavering euro.

"At the current point, the euro is unlikely to rise much against the dollar, hence demand for dollars could rise," he said.

Offshore, one-year dollar-yuan nondeliverable forwards were at 6.6568/6.6593, down slightly from 6.6609/6.6659 late Friday.

online.wsj.com/article/BT-CO-20100712-702528.html

[sandi66]

JULY 12, 2010, 5:16 A.M. ET

HK Shares End Higher Led By China Banks, Property Companies

HONG KONG (Dow Jones)--China banks and property companies led Hong Kong shares higher Monday following gains on Wall Street on Friday, though investors were cautious ahead of a slew of economic data out of the U.S. and China this week, as well as the start of the U.S. earnings season.

The blue-chip Hang Seng Index rose 88.77 points, or 0.4%, to 20,467.43 after trading between 20,368.62 and 20,539.61.

Market volume totaled HK$54.30 billion, down from HK$59.20 billion Friday.

"Today's trade was still quiet. The main driver was Wall Street's gain. This week we have tons of data and earnings to watch," said Jackson Wong, investment manager at Tanrich Securities.

The Dow Jones Industrial Average rose 0.58% to 10198.03 Friday. Aluminum giant Alcoa was the session and the week's best performer in the U.S., ahead of its second-quarter report due Monday, when the U.S. earnings season begins.

Investors are also awaiting major economic data due this week, including China's second-quarter gross domestic product Thursday and U.S. inflation data Friday.

Analysts said they expect the Hang Seng Index to trade between 19,800 and 20,800 the rest of this month as investors process the data and continued to weigh the strength of the global economic recovery.

China banks and property companies rose Monday on expectations the pace of China's tightening would slow after data showed signs of a slowdown in loan growth and property sales, said Linus Yip, a strategist at First Shanghai.

Financial institutions in China extended CNY603.4 billion worth of new yuan loans in June, central bank data showed Sunday, bringing the first-half total to 62% of the government's annual target and implying credit growth will slow in coming months.

Property prices in 70 of China's large and medium-sized cities rose 11.4% in June from a year earlier, slowing from May's 12.4% rise, the National Bureau of Statistics said Monday, suggesting the start of a long-awaited turnaround for the overheated market.

"I think both Chinese banks and Chinese property stocks are going to outperform the broader market in the second half of 2010," Yip said.

China Construction Bank rose 2.4% to HK$6.48 and ICBC gained 1.9% to HK$5.83.

Mainland developer China Overseas Land was the day's biggest blue-chip gainer, rising 4.4% to HK$16.08, and China Resources Land added 2.2% to HK$15.86.

China insurers, however, fell sharply, weighed by concerns about intensifying competition after China's insurance regulator said Sunday it plans to remove the guaranteed annual return limit of 2.5% on traditional life insurance products, with the aim of improving investor protection and the sector's development.

China Life tumbled 3.7% to HK$33.95, China Pacific Insurance plunged 5.2% to HK$29.85 and China Taiping Insurance slid 5.6% to HK$25.40.

Telecom services provider China Unicom rose 1.8% to HK$10.38, after a new version of Apple's iPhone with Wi-Fi capability received a Chinese network access license last week.

New listing Chiho-Tiande ended at HK$2.39, 1.6% below its HK$2.43 offer price following a weak response to its initial public offering. The retail tranche of the mixed metal scrap recycler's IPO was oversubscribed only 0.19 times, and the offer price was set at the bottom of the indicative HK$2.43-HK$3.13 range.

online.wsj.com/article/BT-CO-20100712-702386.html

[sandi66]

E.C.B. Tries to Talk Up Prospects for the Euro Area

July 12, 2010, 5:57 am

The European Central Bank’s de facto chief economist said Friday that “the worst is over” for Europe’s sovereign debt crisis and expressed optimism about the Continent’s growth, underscoring similar comments by the head of the bank in what seemed to be a concerted effort to restore confidence in the euro area’s economy.

But the economist, Jürgen Stark, and other top bank officials found optimism a tough sell at a conference of central bank members and economists, The New York Times’s Jack Ewing reported. At times the meeting resembled a monetary policy confrontation, as leading economists and analysts attacked the bank president, Jean-Claude Trichet, and other members of the governing board about their crisis management and even the viability of the euro.

Mr. Stark, a member of the central bank’s executive board, said he was “a bit more optimistic” about growth after data released on Thursday showed a better-than-expected increase in manufacturing in Germany, the bloc’s biggest economy.

Speaking to reporters at the conference, Mr. Stark said he was also encouraged by signs that European banks were becoming less dependent on E.C.B. cash, and that governments were showing they were able to get their budgets under control and push through changes in labor laws and other measures to promote growth.

“The European politicians have understood that the crisis is a wake-up call, that they have to change their behavior — and this is what we are seeing,” Mr. Stark said, noting progress made by countries like Portugal and Spain.

“It’s not only fiscal consolidation. It’s also a commitment by governments to embark on structural reforms. This is key,” he added.

Mr. Stark’s comments came a day after Mr. Trichet said at a news conference that European growth in the second quarter was probably better than in the first quarter, and that outside observers were being overly pessimistic about the economy.

Speaking on Friday at the same conference as Mr. Stark, Mr. Trichet said that outsiders had underestimated “the capacity of the Europeans to make decisions.”

But Mr. Stark was less guarded than Mr. Trichet, saying that an economic forecast issued on Thursday by the International Monetary Fund was too pessimistic. The I.M.F. “has not caught up to the reality in Europe,” Mr. Stark said. “The I.M.F. is underestimating the strength of the economy in Europe.”

He suggested that the E.C.B. could be winding down its unprecedented and controversial purchases of government bonds, which the bank began on May 10 to unfreeze debt and money markets. “We always said this is a temporary measure,” he said.

Mr. Stark answered critics who charged that stress tests of 91 European banks, intended to clear up questions about their ability to stand up to economic and market shocks, would not be rigorous enough to restore confidence.

“As far as I know these are serious tests,” Mr. Stark said. “You should not listen to those who always ask for more.”

The conference for professional E.C.B. observers, sponsored by the Center for Financial Studies in Frankfurt, is an annual affair, but several participants said the debate was more heated than in past years.

Economists offered pointed criticism of the way that the bank had managed the crisis, and a much more pessimistic view of the state of the euro area.

Daniel Gros, director of the Center for European Policy Studies in Brussels, referred to polls showing declining public confidence in the E.C.B. He told Mr. Trichet that the bank needed to be frank about how its role had expanded from guardian of price stability to the last line of defense against a market collapse.

“It’s difficult to tell people you have to buy Greek and Irish bonds to maintain price stability,” Mr. Gros said. “Wouldn’t it be better to be honest about this?”

Manfred J. M. Neumann, a professor at the University of Bonn, pointed to a growing split in the economic performance of Northern and Southern Europe. “This cannot last. If you do this for another 10 years the euro will fall apart,” Mr. Neumann said.

He said there should be a procedure to allow countries to exit the common currency.

That proposal prompted a sharp response from another E.C.B. executive board member, Lorenzo Bini Smaghi. “Have you sat down 10 minutes and thought about what that would mean?” Mr. Bini Smaghi asked, arguing that any country that dropped out of the euro would go broke.

“The euro is here and it’s going to stay,” Mr. Bini Smaghi said.

Mr. Bini Smaghi rejected suggestions by other speakers that it would be better to let Greece default on its debt, instead of asking taxpayers of other countries to bail out Greece.

“I don’t think you can say easily we know how to do it in a clean way,” Mr. Bini Smaghi said, referring to a debt restructuring. “In Argentina it was really bad for the people. It was really bad.”

www.nytimes.com/2010/07/10/business/global/10iht-euro.html?_r=1&dbk

[sandi66]

FDIC Shuts Four More Banks

07-12-2010 |



The Federal Deposit Insurance Corporation (FDIC) has seized four banks in Maryland, New York and Oklahoma, The Wall Street Journal reports. Home National’s deposits, which were $560.7 million in deposits as of March 31, were sold to Oklahoma-based RCB Bank.

Baltimore’s Bay National Bank, which had $276.1 million in deposits, and its two branches were acquired by Maryland-based Bay Bank, while New York-based USA Bank’s $189.9 million in deposits and one branch under a loss-sharing were acquired by New Century Bank. The regulators are seeking a buyer for Ideal Federal Savings Bank, which has $5.8 million in deposits.

www.emii.com/Articles/2628396/Banking--Brokerage/Banking--Brokerage-Articles/FDIC-Shuts-Four-More-Banks.aspx

[sandi66]

UniCredit has discussed fund with 3 banks-source

MILAN | Mon Jul 12, 2010 6:16am EDT

MILAN July 12 (Reuters) - Italy's biggest lender UniCredit SpA (CRDI.MI) has discussed creation of a 20 billion euro ($25.19 billion) European bank rescue fund with Deutsche Bank (DBKGn.DE), BNP Paribas (BNPP.PA) and Banco Santander (SAN.MC), a source close to the issue told Reuters on Monday.

The reception has been "generally favourable but they have to decide", said the source, who spoke on condition of anonymity.

The proposed fund would be for lenders that regulators consider viable, said the source. It could group about 20 European cross-border banks, and is an alternative to a proposed bank tax, the source said.

(Reporting by Ian Simpson)

($1=.7939 Euro)

www.reuters.com/article/idUSWEA922020100712

[sandi66]

FACTBOX-Banks expand commodities trading in Asia

July 12 | Mon Jul 12, 2010 5:24am EDT

July 12 (Reuters) - Banks are expanding commodities trading desks in Asia as the region's rapid growth prospects and regulatory changes in the United States and Europe pull investors east.

Besides establishing footholds in emerging giants such as China and India, banks are also focused on enlarging portfolios to include metals, iron ore, coal and freight.

France's Societe Generale (SOGN.PA) expects commodities to be its main growth area for the next five years and plans to take a bigger share in trade financing and hedging.

Standard Chartered (STAN.L) aims to start trading energy products such as crude oil and coal on a spot basis, joining investment banks Morgan Stanley (MS.N), JPMorgan (JPM.N) and Barclays (BARC.L) and the latest entrant, Australia's Macquarie Group (MQG.AX).

Credit Suisse (CSGN.VX) sees big opportunities in bulk commodities while Citigroup Inc (C.N), Nomura International and Australia's ANZ Bank are beefing up their commodities teams.

SOCIETE GENERALE (SOGN.PA)

Global head -- Edouard Neviaski

Staff -- The bank covers Asia-Pacific trades out of Singapore and recently started a sales office in Shanghai. It plans to double its manpower in the region by the end of 2010, said Eric Simon, the bank's head of commodities sales for Asia-Pacific.

History -- SocGen started commodities trading in Europe in the late 1990s, entering the Asia market early in 2000 and trades energy products from crude oil, oil products to coal and metals. Focus -- It also trades in precious and base metals in over-the-counter (OTC) swaps as well as futures on the London Metals Exchange (LME).

SocGen has set up a sales team based in Shanghai, allowing it to do business with firms outside the 30 State-Owned Enterprises (SOE) allowed to trade with offshore banks, Simon said.

The team will focus on offering risk management services for the metals market.

Growth plan -- The bank expects commodities to be its main growth area for the next five years, said Simon. [ID:nSGE64O08K]

It plans to double its client base and develop soft commodities such as palm oil and grains over the next two years, he said.

It will next focus on the Indian commodities market for non-oil products, after building a strong presence in Singapore, China, Hong Kong and South Korea.

CREDIT SUISSE (CSGN.VX)

Global head -- Adam Knight, who joined in 2007 from Goldman Sachs where he was head of global metals trading.

Staff -- More than 130 staff globally at the end of 2008.

History -- Entered the business in 2005 and formed an alliance with physical trader Glencore a year later.

Focus -- Active across a wide range of commodities including base and precious metals, oil and refined products, natural gas, bulk commodities such as coal, iron ore and freight as well as investor products.

Growth plan -- The bank has expanded rapidly since 2007 and wants to continue to invest in areas of strong growth opportunity, such as Asia.

It has hired 100 people since 2007 and plans to add another 100 in the next 18 months, Knight told Reuters last year.

Credit Suisse will expand the commodities arm by leveraging its strong position through its fixed income and equities businesses in Asia, said Alexander Toone, its Asia-Pacific head of commodities.

Toone sees big opportunities in the bulk commodities market such as thermal coal, iron ore and freight, in addition to energy and metals.

STANDARD CHARTERED (STAN.L)

Global head -- Arun Murthy. He was promoted to the global head of commodities trading based in Singapore, from his previous role as global head of trading in June 2010. Before joining Stanchart in 2008, Murthy was the Asia commodities team head at Lehman Brothers.

History -- The bank started its commodities business four years ago. It tripled its customer base in 2008 from the previous year while commodities revenue almost doubled in 2009.

Focus -- The bank aims to provide hedging services to clients, mainly end users and producers. It offers commodity-linked financing and structured products in precious metals, base metals, energy and farm products. In the past year, its portfolio grew to include iron ore, freight, coal, palm oil and rubber.

Staff -- 50 in Asia and the Middle East. It recently hired the former managing director of Singapore-listed Chemoil, Karan Chabria, as its global head of oil products trading.

Growth plan -- Stanchart is looking to expand its commodities trading business into the physical energy markets, mainly for crude oil and coal, Murthy said. [ID:nSGE661097]

He expects hedging needs to rise in Asia as countries eventually deregulate prices.

www.reuters.com/article/idAFSGE6670GM20100712?rpc=44

[sandi66]

TD Bank hires Mitsui exec to launch metals team

Mon Jul 12, 2010 5:06pm EDT

* TD launches precious metals team

* Hires former Mitsui exec Tim Gardiner

* Gold trading near record levels

TORONTO, July 12 (Reuters) - With gold prices holding close to record-high levels, Toronto-Dominion Bank (TD.TO) has hired veteran metals executive Tim Gardiner to launch a precious metals trading team.

Gardiner, who recently ran the precious metals business of Japanese trader Mitsui & Co [8031.T], will lead a team focusing on "all aspects of trading in the gold, silver, platinum and palladium markets for corporate clients in the mining industry, manufacturers and investors," TD said in an e-mailed statement on Monday.

The move will increase TD's exposure to the mining sector, which in Canada has been the domain of rivals Royal Bank of Canada (RY.TO) and Bank of Montreal (BMO.TO), which have large mining investment banking divisions, and Bank of Nova Scotia (BNS.TO), which owns gold trader Scotia Mocatta.

Toronto is a major investment center for the mining industry. Many of the world's top gold producers, including No. 1 miner Barrick Gold (ABX.TO), are headquartered there, and about half of the world's mining companies are listed on the Toronto Stock Exchange's senior and junior markets.

Gold XAU= hit a record above $1,250 an ounce in June, and has continued to hold its value on the back of safe-haven demand and a weak U.S. dollar at a time when other commodities have pulled back on concerns that economic recovery will falter.

The yellow metal was trading around $1,200 an ounce on Monday.

TD said the metals team, which should initially consist of about a dozen people, would work with both producers and buyers of precious metals, and could also set up metals deals for industrial clients.

As well, TD could add gold-linked financial products to sell to sell through its retail channels, the bank said.

The business is expected to begin operation in the autumn.

($1=$1.04 Canadian)

www.reuters.com/article/idAFN1220292120100712?rpc=44

[sandi66]

MERS = (Mortgage Electronic Registration Systems)


Is MERS About To Unravel?
The Market Ticker ®
Sunday, July 11. 2010
Posted by Karl Denninger in Housing at 12:38

Is MERS About To Unravel?
One has to wonder, given this...

The United States Bankruptcy Court for the Eastern District of California has issued a ruling dated May 20, 2010 in the matter of In Re: Walker, Case No. 10-21656-E-11 which found that MERS could not, as a matter of law, have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp. The Court’s opinion is headlined stating that MERS and Citibank are not the real parties in interest.
The court found that MERS acted “only as a nominee” for Bayrock under the Deed of Trust and there was no evidence that the note was transferred. The opinion also provides that “several courts have acknowledged that MERS is not the owner of the underlying note and therefore could not transfer the note, the beneficial interest in the deed of trust, or foreclose on the property secured by the deed”, citing the well-known cases of In Re Vargas (California Bankruptcy Court), Landmark v. Kesler (Kansas decision as to lack of authority of MERS), LaSalle Bank v. Lamy (New York), and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court).

Indeed.

I have noted this repeatedly - that MERS own web site claims that it is exists for the purpose of circumventing assignments and documenting ownership!

MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.

Sorry, but "creating a real estate finance industry device" does not obviate state law, no matter how much you might wish it did.

From the opinion cited:

The opinion states: “Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”

Looks pretty basic to me: You can't transfer what you don't have, and creating a database for tracking purposes does not create an ownership interest.

As I noted in "And The Housing Fraud Continues" on May 31st there are plenty of reasons to doubt whether or not any of these notes are recoverable.

But whether something is difficult to unwind and put right legally doesn't have a thing to do with whether or not a note is legally enforceable. It either is or it is not.

When will we see Attorney General Holder open a criminal investigation into this matter? Is there not sufficient question as to whether or not the very existence of these so-called "transfer systems" evidences an enterprise between multiple parties formed for the very purpose of circumventing state law, and that such systems, inherently being formed and operated in interstate commerce, are certainly within the realm of Federal Government jurisdiction.

There are many who will argue that this is "just" a civil matter. I disagree. The intentional creation of these devices as an enabler to alleged value where none exists is not a civil matter. Nor is creating securities where one represents that a particular interest exists for the purchaser, when in fact it does not.

Wake up America - and if the United States AG will not act, then the State Attorneys General must.

In the meantime if you are facing a foreclosure and MERS was involved in some fashion, either in assignment of the paper just before the suit was filed or worse, in bringing the suit itself, you need competent legal advice right now.

You may be able to stop the foreclosure dead in its tracks.

market-ticker.denninger.net/archives/2490-Is-MERS-About-To-Unravel.html

ty joye

[sandi66]

Barrasso efforts would scuttle Indian settlement
ELOUISE P. COBELL | Posted: Tuesday, July 13, 2010 12:00 am | Loading…

Praising Sen. John Barrasso, R-Wyo., for his so-called efforts to “improve” the $3.4 billion settlement of the Cobell case — as Kimberly Craven does in her July 8 guest opinion in The Gazette — is like honoring Hurricane Katrina for what it did to the city of New Orleans.
What she leaves out altogether is the fact that the senator’s proposal would kill the Cobell settlement and deny to 500,000 individual Native Americans a measure of justice for generations of abuse by the federal government’s mismanagement of their trust lands and assets. If the settlement agreement is materially modified in any way, the agreement itself states that it “shall be null and void in its entirety.” As the lead plaintiff in this litigation, I along with Secretary of the Interior Ken Salazar and Attorney General Eric Holder Notwithstanding the clamoring of a few, the Cobell settlement has received overwhelming support among individual Indians, including tens of thousands of individual Indian trust beneficiaries in Wyoming, Montana and elsewhere throughout the West. Tribes concerned about the best interests of their members have also strongly supported the settlement. The National Congress of American Indians, the largest association of tribes in this country, expressly rejected Barrasso’s proposed amendment and called for immediate enactment of the Cobell settlement authorization.


Open discussions

Craven’s main objection is that the settlement supposedly lacks transparency. Where has she been? There has been extensive public discussion and debate, including for example: public hearings before the House and the Senate; hours of public debate by members of Congress; over 30 listening meetings with myself, our attorneys and class members across Indian Country discussing the agreement; 12 open letters to Indian Country answering questions about the agreement; and even the development of a website at www.cobellsettlement.com with a “frequently asked questions” section and every settlement document available for public review.

Also, the court’s rules require, following extensive notice to all class members and time to object and comment, a full hearing in open court before the judge decides whether the settlement agreement is fair to the entire class. Thus, there has been and will continue to be transparency throughout the process.

Craven’s attacks on the motivations of the plaintiffs’ attorneys is as baseless as it is unfortunate. Those attorneys have fought fiercely for more than 14 years against an opponent with unlimited resources in contentious litigation. They have given no quarter and pulled no punches in a veritable brawl with the federal government. To now denigrate their efforts with unsupported charges of improper conduct is ludicrous in light of both the fact they valiantly waged a bitterly fought war against the government and the fact that they have been successful in obtaining the largest settlement in the history of this country for Native Americans. Having taken on a case no one thought could be won, they have brought us to the precipice of prevailing against all odds.


Claim confusion

Craven is also confused about the nature of the claims that are resolved by the settlement agreement. Mismanagement has always been a part of the case and, solely as a result of the Cobell litigation, the government estimates that it has spent more than $5 billion to rehabilitate trust systems, staff and records management.

If Craven does not want to participate in the settlement of mismanagement claims, she, like every other member of the class, may choose to not be included in that portion of the settlement and preserve all her rights regarding those claims. Of course, to then obtain any recovery, she would have to hire an attorney and spend countless hours over many years fighting the federal government to try to prove her claims, something she inexplicably has not done to date. While that may be her choice, other beneficiaries should have the opportunity to accept the substantial benefits available to them now from this settlement without having to incur further personal expense and sacrifice.

The $3.4 billion Cobell settlement is historic. Time for its approval is now.

Elouise P. Cobell, a member of the Blackfeet Tribe, is lead plaintiff in the suit against the U.S. government. She lives in Browning. billingsgazette.com/news/opinion/guest/article_74bed146-8e22-11df-9277-001cc4c002e0.html

[sandi66]

Major banking bill faces final vote this week

WASHINGTON – Senate Majority Leader Harry Reid is planning a final vote Thursday morning on a sweeping overhaul of financial regulations. Passage in the Senate would send the bill to President Barack Obama for his signature.

Reid announced the timing Tuesday after votes to ensure its passage fell into place. At least three Republicans, 55 Democrats and two independents are expected to support the bill. That would provide the 60 votes needed to overcome Republican procedural hurdles.

The legislation is one of Obama's top legislative initiatives. Democrats and the White House had hoped for passage before July 4, but met with concerns from some key senators.

By Tuesday, the 60th vote appeared to lock in when conservative Democrat Ben Nelson of Nebraska announced his support for the bill.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP) — All but clearing the way for passage of financial regulations, conservative Democratic Sen. Ben Nelson of Nebraska said Tuesday he will vote for the sweeping overhaul of banking.

His support ensures the legislation now has 60 votes to clear the Senate and land on President Barack Obama's desk for his signature. The House passed the bill last month.

Obama on Tuesday urged the Senate to act quickly and Senate Majority Leader Harry Reid said he wants to complete the bill this week.

"This reform is good for families, it is good for businesses , it's good for the entire economy," Obama said as he announced his nomination of Jacob Lew to be the new director of the White House budget office.

The 2,300-page bill aims to address regulatory weaknesses blamed for the 2008 financial crisis that fueled the worst recession since the Great Depression.

Nelson, who voted for a Senate version of the bill, surprised Democratic leaders Monday by voicing concerns about the legislation.

He voiced his misgivings the same day that two Republicans — Sens. Olympia Snowe of Maine and Scott Brown of Massachusetts — announced their support for the bill. A third Republican, Sen. Susan Collins of Maine, had already indicated she would back the bill.

Nelson's vote is crucial because Democrat Russ Feingold of Wisconsin has said he will vote against the legislation. The death of Sen. Robert Byrd has left a vacancy in the Democratic ranks.

That means the three Republican supporters, 55 Democrats, and two independents add up to the precise number of votes needed to beat back potentially fatal procedural votes.

"It is in America's best interests that risks to our financial system are identified and addressed before they threaten our nation's financial stability again," Nelson said in a statement. "This bill will restore accountability and confidence in our financial system."


news.yahoo.com/s/ap/us_financial_overhaul

tramp2.proboards.com/index.cgi?board=general&action=display&thread=13261

[sandi66]

US Senate to take up Wall St bill today - Reid

Tue Jul 13, 2010 10:13am EDT

WASHINGTON July 13 (Reuters) - U.S. Senate Democratic Leader Harry Reid on Tuesday said that he expects to take up a historic rewrite of financial regulations later in the day, setting the stage for a final vote later in the week.

"I also expect to consider the Wall Street conference reform sometime later today," Reid said in remarks on the Senate floor.


www.reuters.com/article/idCNWEN689520100713?rpc=44

ty Liz

[sandi66]

Dumping the dollar: Why it's time to diversify

July 14, 2010: 4:35 AM ET


FORTUNE -- Imagine a world without the almighty greenback as the main reserve currency.

It's not an easy thought. The U.S. dollar has long been the global currency of choice. As much as 64% of the world's currency reserves are held in greenbacks, according to the IMF.

But given the manic ups and downs of the dollar in recent years, it may finally be time to diversify the world's reserves. And that's exactly what some central bankers around the globe are now doing.

This comes as a growing number of economists and policymakers are calling to move away from the greenback as the world's dominant currency. A recent United Nations report says the dollar's movements have been too erratic to hold value and the UN urges central banks to replace it with anything but a single currency or even multiple-national currencies.

One potential replacement is special drawing rights (SDRs), the international reserve created by the IMF in 1969. SDRs aren't something you can carry in your pocket like cash. They represent potential claims on currencies of IMF members. Because the value of SDRs is based on a basket of the world's major currencies (US dollars, yen, euros and pounds), its value typically isn't as volatile as a single currency. Central bankers in Russia and China have supported the idea of SDRs.

"I think there is a general sense that these recommendations are at least worth debating," says José Antonio Ocampo, a Columbia University professor who served on a UN expert commission that considered ways of overhauling the global financial system. Ocampo says lessons learned following the financial crisis have renewed interest in the development of a global multi-currency system including SDRs.

The latest UN report isn't the first time there's been a call for lesser reliance on the greenback. The idea of a global currency has been around for decades, with the late British economist John Maynard Keynes going as far as to favor the concept of an independent global central bank with its own currency.

These ideas are unlikely to take off anytime soon, but it appears momentum is at least gaining to give the global reserve system a new face.

SDR reserves: Still an idea ahead of its time

Last April the G20 countries, which include the wealthiest nations plus major emerging economies such as China, Brazil and India, authorized the IMF to issue $250 billion in new SDRs to help countries bolster reserves amid the global financial crisis. The move was rare and significant. The last SDR allocation of $21.4 billion was proposed in 1997, but it never went into effect because it fell short of the required IMF votes.

The IMF typically makes loans to countries denominated in SDRs, which can be converted to whatever national currency the borrower desires at the daily exchange rate. At today's exchange rate, $1 million would translate to 670,000 SDRs.

Though the greenback has strengthened against the euro recently, it has lost more than a quarter of its value over the past eight years. This is particularly worrisome for emerging-market nations that hold larger quantities of dollar-denominated debt mostly in U.S. Treasury securities. Not only has the value of the dollar declined, but official interest rates are close to zero and yields on bonds are at record lows.

Central bankers have acted on their worries of holding U.S. debt amid soaring U.S. deficits and slow growth. A Morgan Stanley report earlier this month noted that central banks have grown weary of the greenback. During the first quarter, they reduced their allocation to US dollars by almost one percentage point to 57.3% from 58.1% and have raised allocations of other currencies -- chiefly, the Australian and Canadian dollars.

"[U.S. dollars] remain the greatest weight in reserves, but over time we anticipate that reserve managers may reduce their holdings further," a Morgan Stanley analyst wrote in the July 8 report.

Despite doubts of the dollar, it's still the currency most economies favor relative to other currencies, and it will likely remain so for the foreseeable future. Much of this has to do with ease of transactions as the dollar is still positioned nicely as the dominant international medium of exchange.

SDRs and the kind of global currency that Keynes supported are much farther off. Nevertheless, the world has begun to realize that perhaps the greenback shouldn't always be king. Eventually, the dollar will have to share the reserve throne with others.

money.cnn.com/2010/07/14/news/economy/dollar_reserves_SDRs.fortune/

[sandi66]

Congress Sends Obama Sweeping Financial Overhaul Bill

Published July 15, 2010
| Associated Press

Congress sent legislation to President Obama Thursday that imposes sweeping new regulations on Wall Street and creates new protections for millions of consumers.

The Senate's 60-39 vote came nearly two years after a financial crisis knocked the economy to its knees.

At a whopping 2,300 pages, the legislation is designed to rein in big banks and protect consumers in hopes of averting a repeat of the 2008 financial crisis. Its ultimate impact, however, will depend on the government regulators assigned to implement it.

The legislation gives the government new powers to break up companies that threaten the economy, creates a new agency to guard consumers in their financial transactions and shines a light into shadow financial markets that have escaped the oversight of regulators.

Named after Senate Banking Committee Chairman Chris Dodd and House Financial Services Committee Chairman Barney Frank, the legislation ends a trend to ease regulations and clamps down on the financial industry in ways unseen since the Great Depression.

Republicans cast the bill as a vast government overreach, and were betting that voters' antipathy toward big government and their worries over jobs would trump their anger at Wall Street in the November elections.

www.foxnews.com/

[sandi66]

Goldman SEC Deadline Nears

Published: Thursday, 15 Jul 2010 | 3:53 PM ET

The next move in the Securities and Exchange Commission’s fraud lawsuit against Goldman Sachs is likely to be revealed by Friday, according to a person familiar with the matter.

Update: The SEC is reportedly holding a press conference Thursday afternoon. It is not yet clear whether this is related to a settlement with Goldman Sachs.

Last month, Goldman [GS 145.59 6.53 (+4.7%) ] was granted a thirty day-extension to respond to the SEC’s lawsuit, pushing the deadline to Monday, July 19. Goldman filed for that extension the Friday before June deadline, which also fell on a Monday.

It’s likely that Goldman will follow the same pattern here—submitting a filing to the court on the Friday before the deadline.

Goldman’s response could take one of three forms: a request for another extension, a settlement proposal agreed with the SEC, or a substantive legal brief denying the charges.

It is likely that Goldman will file a request for another extension, a person familiar with the thinking of Goldman’s lawyers said. The new extension would be an indication that Goldman is working with the SEC to settle the case.

“The best bet now is that they extend and befriend, hoping to work out a settlement during the summer doldrums,” a prominent securities lawyer who is not involved with the case said. (He asked not to be identified because his firm does business with both Goldman and the SEC.)

Lawyers for Goldman have reportedly met recently with the SEC to propose settlement terms. The company has been trying to get the SEC to drop fraud charges, which Goldman believes are a black mark on its reputations and which would allow outside plaintiffs to bring private-actions. Goldman insiders say that as long as the fraud charges remain outstanding, Goldman is unwilling to agreement to a deal in which it neither admitted nor denied the charges.

It’s not clear whether the SEC is willing to agree to a settlement that would drop the fraud charges.

Other factors also complicate a possible settlement. Some analysts have said the fine Goldman might have to pay in a settlement could be as large as $1 billion, more than twice the largest fine ever paid to settle an SEC case. Goldman may be reluctant to set this kind of record, a person said.

SEC reportedly would like to preserve the right to bring new lawsuits against Goldman if it uncovers further evidence of alleged wrongdoing related to the existing case. Goldman would prefer a broader settlement that dispatched the worries over its Abacus derivatives deals once and for all, according to a person familiar with the matter.

Goldman’s posture seems to have softened over the last month. When the SEC filed the case against Goldman in April, Goldman lashed out at the regulator, describing the case as having no basis in fact or law. As late as last month, Goldman still appeared to be taking a tough stance, quietly indicating that it was preparing to take the case to court. Reports of recent settlement talks seem to indicate that the company is no longer girding for battle.

Earlier this week, people familiar with the matter told CNBC that a settlement was still very much a work-in-progress that was unlikely to be completed by the Monday deadline. It’s possible, however, that more progress than expected has been made this week.

Another factor complicating settlement talks is the SEC’s need to satisfy lawmakers and the judge in the case. Lawmakers on Capitol Hill have been highly critical of Goldman, making the SEC wary of seeming to treat the company too kindly. And the SEC is still stinging from public rebukes from the judge who accused the Commission of being too eager to settle a case against Bank of America.

www.cnbc.com/id/38262975

[sandi66]

Senate passes financial regulation bill, 60-39
Today

With a vote of 60-39, the Senate passed the House-Senate Conference Committee agreement on the financial regulation bill (HR4173), also known as the American Financial Stability Act of 2010. The House approved the bill last month 237 to 192. It will now go to the President for his signature, once signed the bill will become law.

The bank bill has been one the White House’s top domestic priorities after the passage of health care legislation. The measure became a top priority of Congress and the White House after the 2008 financial collapse. Attempting to hinder future instability, the legislation creates a Consumer Financial Protection Bureau, as well as other provisions to protect consumers from predatory lending.

www.c-span.org/

[sandi66]

July 15, 2010, 4:19 PM ET

Report: Goldman, SEC Reach Deal Over Fraud Suit

Update (4:24 EDT): The New York Times is reporting that Goldman will pay $550 million to settle the case.

–

This just in: CNBC is reporting that the Securities & Exchange Commission and Goldman Sachs have settled the SEC’s civil fraud suit against the bank.

The SEC has announced a “significant announcement” at 4:45 eastern. The SEC didn’t say what it would announce, but as we blogged this morning, Goldman and the SEC have held talks about a possible settlement to simultaneously resolve a fraud lawsuit against Goldman and some of the agency’s lower-profile probes of the Wall Street firm’s mortgage department.

Click here for previous LB coverage of the case. We’ll of course update the post when we get more news.

[sandi66]

Thursday, July 15, 2010
Goldman Settles Fraud Case With SEC

Fox Business Network has confirmed that Goldman Sachs (GS: 145.22, 6.15, 4.42%) has settled fraud charges filed earlier this year that accused the banking giant of misleading clients who invested in securities tied to sub-prime mortgages.

The Securities and Exchange Commission is scheduled to announce the settlement during a press conference later today in Washington, D.C.

The settlement will reportedly cost Goldman $550 million.

Goldman was charged by the SEC in April with fraud for not properly advising clients on mortgage-backed securities it sold but was also betting against in separate deals.

The collapse of the sub-prime mortgage market led to the worst financial crisis since the Great Depression.

It is expected that, as is typical in these types of settlements between large corporations and government regulators, Goldman has neither admitted nor denied the allegations.

Goldman’s shares rose sharply on Thursday closing up $6.16, or 4.43%, to $145.22. The shares rose more than $10 at one point.

The SEC alleged that Goldman structured and marketed complex securities known as a synthetic collateralized debt obligation (CDO: undefined, undefined, undefined%) that hinged on the performance of subprime residential mortgage-backed securities (RMBS: 18.84, -0.02, -0.11%).

However, Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

"The product was new and complex but the deception and conflicts are old and simple," Robert Khuzami, the SEC’s Director of the Division of Enforcement, said at the time. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

The SEC alleged that one of the world's largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would eventually tank.

A short position means the investor believes the security will lose value over time.

According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA: undefined, undefined, undefined%), a third party with expertise in analyzing credit risk in RMBS.

The SEC claimed that Goldman failed to tell investors that the Paulson & Co. hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.

According to the SEC’s complaint, after participating in the portfolio selection, Paulson & Co. shorted the RMBS portfolio it helped select by entering into credit default swaps with Goldman Sachs to buy protection on specific layers of the ABACUS security.

Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future, the SEC charged.

Goldman Sachs did not disclose Paulson & Co.s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors, according to the SEC.

Hence the fraud.

www.foxbusiness.com/story/markets/industries/finance/sec-hold-press-conference-make-significant-announcement/

[sandi66]

Asian Currencies: Thai Baht Tops Gains This Week as Rates Rise
July 16, 2010, 4:41 AM EDT

July 16 (Bloomberg) -- Thailand’s baht topped gains in Asian currencies this week as the central bank joined India, South Korea, Malaysia and Taiwan in raising interest rates, boosting the yield advantage on the nations’ assets.

The region is leading the global economic recovery, prompting policy makers to withdraw stimulus measures put in place at the height of the financial crisis. Singapore’s gross domestic product data this week signaled the city-state may become the world’s fastest-growing major economy in 2010, as the pace of expansion in China cooled last quarter. Malaysia’s ringgit and the Indonesian rupiah are heading the advance in Asia this year as overseas investors plow funds into stocks.

“We had some fabulous numbers out of Singapore and that’s really helping most other Asian currencies higher,” said Charles Han, Hong Kong-based head of foreign-exchange trading at Newedge Financial HK Ltd. “Overall, we are quite positive on Asian currencies. Even though China’s numbers were not fantastic, they were still robust relative to the global economy.”

The baht strengthened 0.3 percent this week to 32.24 per dollar as of 3:36 p.m. in Bangkok, and reached 32.22, the highest level since May 10, according to data compiled by Bloomberg. Singapore’s dollar rose 0.2 percent to S$1.3757 for a third week of gains.

Thailand’s currency climbed to a two-month high on speculation policy makers will add to this week’s interest-rate increase to curb inflation. The central bank said it expects inflation to rise next year and 2010 economic growth to beat its current forecast for an expansion of as much as 5.8 percent.

Rate Premiums

The Bank of Thailand lifted its one-day bond repurchase rate by a quarter of a percentage point to 1.5 percent on July 14, after keeping it unchanged for nine meetings. Borrowing costs in South Korea, Malaysia and Taiwan are 2.25 percent, 2.75 percent and 1.375 percent, respectively, compared with no higher than 1 percent in the U.S. and Europe.

“After the central bank hiked rates, the markets are now trying to price in their next moves, expecting more increases to come toward the end of the year,” said Disawat Tiaowvanich, a Bangkok-based foreign-exchange trader at Bangkok Bank Pcl, the nation’s biggest lender. “That’s the major driver for the baht.”

The ringgit, Philippine peso and South Korea’s won dropped this week on concern about the strength of the economic recovery after the Federal Reserve said yesterday June manufacturing in the U.S. contracted by the most in a year. The central bank trimmed its 2010 economic growth forecast to not more than 3.5 percent versus as much as 3.7 percent predicted in April.

‘Sustainability’ Factor

“The data raises questions about the sustainability of the current pace of recovery and risk appetite suffers along the way,” said Julian Chow, head of Asian fixed-income and foreign exchange at AmInvestment Management Sdn. in Kuala Lumpur. “For emerging-market currencies, there’ll be more volatility and resistance to appreciation.”

Malaysia’s currency dropped 0.4 percent from a week ago to 3.2100 per dollar, paring this year’s advance to 6.9 percent. The peso fell 0.3 percent to 46.285 after Bangko Sentral ng Pilipinas yesterday left the overnight borrowing rate at 4 percent for a ninth meeting, and lowered its inflation forecast for this year and next.

Singapore’s dollar advanced for a third week, its longest winning streak since April, on speculation the central bank may tighten policy further by seeking a stronger currency. The Monetary Authority of Singapore uses the exchange rate rather than interest rates to set policy.

China Yuan Bets

The government lifted its forecast for the economy to grow as much as 15 percent this year from an earlier forecast of a maximum 9 percent. Gross domestic product increased 26 percent in the second quarter from a year earlier, compared with a revised 45.9 percent record pace in the previous three months, the government reported on July 14.

China’s economic growth eased to 10.3 percent from 11.9 percent in the previous three months, the statistics bureau said yesterday. Traders pared bets for future appreciation in the yuan on speculation policy makers will temper gains to support exports as the economy slows.

Twelve-month yuan non-deliverable forwards traded at 6.6625 per dollar from 6.6620 at the end of last week, reflecting odds the currency will strengthen 1.7 percent from the spot rate of 6.7767. The yuan has gained 0.8 percent since a two-year-old peg was relaxed on June 19.

“From a currency perspective, the data suggests there will be much less anticipation for big yuan appreciation,” Han of Newedge said.

Elsewhere this week, India’s rupee dropped 0.3 percent to 46.7825 per dollar and South Korea’s won fell 0.6 percent to 1,203.39. Indonesia’s rupiah slipped 0.1 percent to 9,051 from 9,043 on July 9 and Taiwan’s dollar was little changed at NT$32.143 from NT$32.125 a week ago.

www.businessweek.com/news/2010-07-16/asian-currencies-thai-baht-tops-gains-this-week-as-rates-rise.html

[sandi66]

Iraqi winning parties will hold a meeting in coming week

Friday, July 16th 2010 8:07 AM

Sulaimaniyah, July 16 (AKnews) – The member of Kurdistan alliance announced today that the Iraqi winning parties will conclude to speak out the formation of the Iraqi new government on that Monday in Baghdad.

"The Iraqi winning parties will set a meeting for discussions the new government formation of Iraq in the coming week on Monday," Shorsh Hajji noted.

The winning parties will take into consideration the latest development to form government by the political parties in Iraq and their negotiation sessions about political alliance, Hajji noted.
The member of Kurdistan Alliance, Najib Balatai contends, the Iraqi winning parties will set a meeting to shed a light on the latest political development regarding to government formation in the previous two weeks in Iraq.

The Iraqi political parties must seriously set their meetings to reach an agreement for dividing the state senior positions in the Iraqi prospective government, he concluded.

The Independent High Electoral Commission (IHEC) of Iraq issued the final results of March 27 parliamentary votes which Allawi's al-Iraqia list secured 91 parliamentary seats and Maliki's the State of Law (SOL) won 89 seats as well as the Iraqi National Accords (INA) obtained 70 ones and the Kurdistan Alliance secured 57 seats.

www.aknews.com/en/aknews/4/164292/

[sandi66]

Friday, Jul 16, 2010 08:01 ET

New finance bill: Mountain of paper, molehill of reform - Goldman gets a slap on the wrist, and regular Americans will stay pay the price for Wall Street's mistakes

Thursday the President pronounced that "because of this [financial reform] bill the American people will never again be asked to foot the bill for Wall Street's mistakes."

As if to prove him wrong, Goldman Sachs simultaneously announced it had struck a deal with federal prosecutors to pay $550 million to settle federal claims it misled investors — a sum representing a mere 15 days profit for the firm based on its 2009 earnings. Goldman's share price immediately jumped 4.3 percent, and the Street proclaimed its chair and CEO, Lloyd ("Goldman is doing God’s work") Blankfein, a winner. Financial analysts rushed to affirm a glowing outlook for Goldman stock.

Blankfein, you may recall, was at the meeting in late 2008 when Tim Geithner and Hank Paulson decided to bail out AIG, and thereby deliver through AIG a $13 billion no-strings-attached taxpayer windfall to Goldman. In a world where money is the measure of everything, Blankfein's power and influence have grown. Presumably, Goldman can expect more windfalls in future years.

Although the financial reform bill may have clipped some of Goldman's wings — its lucrative derivative business may require Goldman to jettison its status as a bank holding company, and the access to the Fed discount window that comes with it — the main point is that the Goldman settlement reveals everything that's weakest about the financial reform bill.

The American people will continue to have to foot the bill for the mistakes of Wall Street's biggest banks because the legislation does nothing to diminish the economic and political power of these giants. It does not cap their size. It does not resurrect the Glass-Steagall Act that once separated commercial (normal) banking from investment (casino) banking. It does not even link the pay of their traders and top executives to long-term performance. In other words, it does nothing to change their basic structure. And for this reason, it gives them an implicit federal insurance policy against failure unavailable to smaller banks — thereby adding to their economic and political power in the future.

www.salon.com/news/bank_reform/?story=/opinion/feature/2010/07/16/robert_reich_finance_bill_bank_reform

[sandi66]

JULY 16, 2010

Navigating the EU's Plans on Financial Regulation

The European Union's agenda to boost financial regulation has many moving parts, some of which—for example, the plan to regulate hedge funds—are moving more slowly than its supporters hoped. But here, as Brussels gets ready to embark on its summer recess, is a quick checklist, based on conversations with officials, on where the main proposals stand.

Alternative Investment Funds Directive: This effort to regulate hedge funds, private-equity and venture-capital funds has stagnated as negotiators try to find a way to resolve differences between the 27 member states—which together form the European Council—and the European Parliament.

The main issue of contention relates to the treatment of managers and funds from third countries. The Council, or at least a majority of it, supports a system that looks pretty much like the existing one: 27 national regulators allowing access to national markets, with all facing higher transparency and disclosure requirements than in the past. The Parliament is still backing the idea of a European passport that would allow a fund manager satisfying certain criteria to market throughout the whole EU.

Here, the Parliament is the champion of the single market—supported by the European Commission, the EU's executive arm—but the opposition from France and others has been pretty implacable.

There are outstanding differences on other issues, for example on how to treat private-equity funds. Here, the governments appear to take a more relaxed view than the Parliament, which appears to view them as a bunch of asset strippers. But treating private equity too harshly raises questions about why it should be treated differently from other ownership structures, such as those for sovereign wealth funds and Russian oligarchs. Still, it could be ironed out in September or October.

Financial Supervision: This sets up an overarching European Systemic Risk Board, based in Frankfurt, and three European supervisors—one each for banking, insurance and financial markets. Again, the expected date for resolution is September.

The Council wants the agencies to be based in London, Paris and Brussels, respectively. Parliament had voted for all three agencies to be located in Frankfurt, but the all-Frankfurt option was quickly negotiated away, as expected.

The remaining divisions here concern how much responsibility the European supervisors will have and how much will remain with the national authorities.

So far only one set of organizations is guaranteed to be regulated on a European level: rating agencies. The Parliament wants to include the big banks, but the governments are set against and it won't happen.

European authorities will, however, be able to assume extra powers in financial emergencies. The question about who would declare emergencies seems to have been answered: the member states will together make the declaration. There are still questions, however, over what interventions the European agencies could make. The U.K., which takes the toughest position in the Council, wants to restrict European interventions to cases where there is a clear breach of European law.

Derivatives and short-selling: The Commission launched a consultation in June on these issues and has received about 180 replies on derivatives and about 100 on short-selling. Proposals for derivatives legislation are likely to emerge from the Commission by mid-September, and Commission officials say they will probably follow the broad pattern laid down in the consultation document. That will preserve the exemption from most requirements for nonfinancial companies hedging as part of their business—though they will still face transparency requirements so that supervisors can be sure of what's going on.

Officials say, however, that the shape of proposed legislation related to short-selling and credit-default swaps is less certain, meaning a possible delay beyond September in its introduction. Drafters, with the help of a task force, are studying the role of credit-default swaps in the Greek crisis. Even if they find one, the Greek market is so small that it will be difficult to draw general conclusions from the experience.

Mifid: Consultations have started on the review of the Markets in Financial Instruments Directive, which was agreed on in 2004 and went into force in 2007. The objective is to improve information to investors as well as incorporate new markets in the scope of the directive. Not much space for the discussion here, but a lot of debate ahead before proposals are introduced, possibly early in the new year.

Bank capital requirements: This is the hottest topic for banks. The outcome is linked to what happens in tough talks now under way among the Group of 20 governments in Basel, Switzerland. This will be translated in Europe into a fourth revision of the Capital Requirements Directive. Proposals will probably come out before the year end.

There are divisions between Europe and the U.S. on the approach and even within Europe. In very broad terms, U.S. and U.K. governments lay more emphasis on bolstering capital, while those in continental Europe argue that improved supervision would reduce the need for extra capital.

Americans see European banks as undercapitalized. On the other hand, I've often heard Europeans seriously argue that this is a U.S. plan to put European banks at a competitive disadvantage by introducing rules that the U.S. won't implement—just as it didn't implement the Basel II directive on bank capital.

Banks play a much more important role in continental Europe in channeling funds to companies than they do in the U.S., where financial markets are much more important. Hence the sensitivity to overloading them with capital requirements, particularly if they would curb lending and hamper economic recovery.

Corporate governance: Further ahead, the Commission is likely to push its corporate-governance agenda, aimed at dealing with the role of shareholders and directors in financial institutions. This is may eventually expand to include nonfinancial corporations.

online.wsj.com/article/SB10001424052748704682604575368972442066924.html