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

[sandi66]

* Board of Executive Directors at the IMF advised to raise the prices of exchange and the increase in foreign reserve

January 9, 2011 08:53 pm

Board of Executive Directors at the IMF advised to raise the prices of exchange and the increase in foreign reserve

ÇáÃÍÏ, 09 íäÇíÑ 2011 Sunday, January 9, 2011

Council discussed the Executive Directors of the Fund International Monetary ways to reduce the volatility of capital flows across borders, and enhance their role in supporting economic growth and stability and the protection of the financial system, but differing views and attitudes of the case without reaching an agreement that allows change the terms of agreement «Bretton Woods», who founded the IMF and World Bank international law, including allowing the establishment of an international legal framework to address the issues associated with the movement of so-called «hot money capital».

Did not disclose the Board of Directors unveiled the nature of the differences, but only the reference in the statement that «some managers indicated a willingness to discuss the amendment of the Agreement Constitution, while I felt the majority was that it was premature to begin discussions on the issue, before subjecting capital flows for further analysis, and study the practical experiences» Member States.

According to the statement that «the managers (from what appears to be few enthusiastic to the question of establishing a legal framework), they noted that volatile capital flows have played a major role in the global financial crisis, both increase the vulnerabilities and shocks to be transmitted across the border, arguing that these flows are lacking governed by the international road map, like the international rules governing trade in goods and services, as well as the international monetary arrangements ».

The Directors agreed on the need to strengthen the IMF's role in matters relating to capital flows, on the basis of the responsibility entrusted to him b «iPod» on the stability of the financial system.

The decision to implement the plan of the Board of Governors, the highest authority in the Fund, adopted at its annual meeting in October (October) the past, and sentenced to «deepen» Role of IDA in the affairs of exchange rates and capital flows, which they considered of «vital to the functioning of the economy and the stability of the system Cash global ».

Spokeswoman Monetary Fund Caroline Atkinson in a press conference, that the Fund is working on an extensive analysis of capital flows and their engines and the experiences of Member States, noting that a preliminary study presented by the Foundation to the meeting of Board of Directors, which included a package of measures which States, especially emerging economies, which have made it a revival of their economies and high yielding investment, compared with developed countries more attractive for foreign investments, applied to reduce the dangers of these flows.

Among the key actions in the package reduce the risks available to emerging economies, the target levels of huge flows of capital seeking high returns, highlighted Atkinson increase reserves states of hard currencies, and allow their currencies to the national high exchange rates, in addition to procedures secondary aims to strengthen the capacity of financial sectors Banking and resistant to shocks, such as a precautionary measure, which resorted to Brazil last week, it ordered the banks to raise levels of reserves.

And according to recent estimates by the institutions concerned with the affairs of the emerging economies, the private investment that flowed to emerging markets Chairperson last year, exceeded most forecasts as Nahzat 820 billion dollars, registering an increase Tnov 40 percent, compared to 2009.

And are expected to maintain these capital flows, which are direct investments in stocks of productive projects about 40 percent of the total volume, to maintain the level if not a slight increase this year.

The share of five emerging economies of the Arab president, Saudi Arabia, UAE, Egypt, Morocco and Lebanon in 2010 about $ 60 billion, double the level recorded in 2009.

Attracted oil and gas projects in Saudi Arabia and the UAE the bulk of direct investment, while financial markets regained some of the Arab, especially Egypt, the attractiveness of investments in shares.

However, the Fund has published several reports which confirmed that the fight against the repercussions of the global economic recession through the programs of investment and government spending and support the capacity of financial and banking sectors to resist shocks, sapped the energy savings for many emerging economies.

A report, foreign currency reserves of the fund, which he published last week, the emerging economies strengthen reserves resumed strongly in the second half of 2010, but at a slower pace than the previous year.

In the first nine months of 2010, the balance of emerging economies rose by 7.8 percent to 5.9 trillion dollars, while the reserve that used by States in the form of the Chairman of the financing of imports, rose 10 percent in the same period of 2009, to 5.17 trillion dollars.

But the accumulation of reserves of hard currency is in itself a strong indication that the emerging economies, especially China, which is unique to about 45 percent of the balance of these economies (2.65 trillion U.S. dollars), is not enthusiastic about the item relating to raising the exchange rates of their national currencies of the package of measures which it deems Fund «appropriate» to combat the threat of capital flows.

Wow / 22

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[sandi66]

* Iraqia New Joint Committee
January 9th, 2011 09:49 pm · Posted in NEWS
Sunday, January 9th 2011

Baghdad, Jan9 (AKnews) – A member in Iraqiya List announced on Sunday his list formed a joint committee with the National Coalition (NC), which came on the background of the recent meeting between Ayad Allawi, the head of Iraqiya and PM Nouri al Maliki.

al-iraqia logo, listi iraqia Escandar Watut told AKnews the meeting between Allawi and Maliki on Friday was productive. The meeting discussed the security ministries situation, and resolved the file of the Strategic Policies’ council.

Watut explained that the meeting agreed on the council of strategic policies to be a complement for the other ministries; noting that at the beginning the council will be consultant but later on will be executive.

Regarding the Iraqiya candidate, Falah al Naqib, for the Defense portfolio, Watut said that many names discussed during the meeting; noting that the names will be reviewed for selection by the committee.

The Iraqi Prime Minister, Nouri al Maliki announced of Friday his agreement wil Allawi on adopting a unified position in the internal and external correspondences of the security and political affairs.

Ahmed al Massari, a member in Iraqiya told AKnews earlier that Maliki did not officially object on Iraqiya candidate for defense, al Naqib, therefore he expressed optimism to receive the portfolio at the end.

Reported by Fadi al Issa
Ah/Gs AKnews

www.aknews.com/en/aknews/4/209129/?AKmobile=true

www3.theiraqidinar.com/2011/01/09/iraqia-new-joint-committee/

[sandi66]

DC lobbyist Ashley Turton found dead in burning car

January 10, 2011

Ashley Turton, former chief of staff to Rep. Rosa DeLauro (D-CT), and wife of White House liaison to the House of Representatives Dan Turton, was found dead in a burning car early this morning.

A joint investigation by the fire and police departments is ongoing, and the car was located in a garage behind the Turton’s home. The couple has three small children. One adult and two children were evacuated from the Turton’s home, located eight blocks from the US Capitol. Turton was discovered in the driver’s seat of the vehicle, an SUV, and the “leading theory” is reportedly that the incident stemmed from a car crash “in or around the garage.”

Bill Johnson, president and CEO of Duke Energy, where Turton was employed, released a statement regarding her death:

“Ashley was a valued employee whose insight and hard work had been critical on so many of our legislative and regulatory issues. She was also a dear friend to many of us and this news is very hard to take. I know we all will keep her husband, children and parents in our thoughts and prayers. Today is an eventful day for us as employees of Progress Energy. Ashley’s tragic death reminds us all to keep perspective in all things.”

The incident has also been described as possibly a “freak accident.”


www.inquisitr.com/95140/dc-lobbyist-ashley-turton-found-dead-in-burning-car/

[sandi66]

UPDATE 1-Sarkozy tells Obama he recognizes U.S. dollar's role


Mon Jan 10, 2011 1:57pm EST

(Adds details)

WASHINGTON Jan 10 (Reuters) - French President Nicolas Sarkozy on Monday told President Barack Obama he recognized how important the role of the U.S. dollar was and pledged to work with him on ideas to help the global economy.

Sarkozy, whose country is head of the Group of 20 global economic steering committee, said he would be working with the United States on new ideas for the world economic system and talked about the need to reduce global imbalances.

During a visit between the two leaders at the White House, Obama also expressed concern about global economic imbalances, saying they were inhibiting growth.

www.reuters.com/article/idUSN1028304220110110

[sandi66]

Obama, Sarkozy Say They Are Aligned on Economic Agenda

By Hans Nichols and Gregory Viscusi - Jan 10, 2011 2:10 PM ET

President Barack Obama and French President Nicolas Sarkozy discussed how to coordinate their economic agendas leading up to meetings of the Group of Eight and Group of 20 nations.

“There are still too many imbalances in the world economy that are inhibiting the prospects of growth,” Obama said after an hour of private talks at the White House.

Sarkozy said France and the U.S. will work together on ideas for monetary reform. He said he understands the “key role” of the dollar and that it is “the world’s No. 1 currency.”

“I know what important a role the U.S. plays. I know what important a role the U.S. dollar plays in the world economy,” Sarkozy said before the two men began a working lunch.

Sarkozy this year heads the presidency of G-8 and the wider G-20 group of emerging nations, which includes China, India and Brazil. One of Sarkozy’s priorities is revamping the global monetary system to reduce the dollar’s dominance as a reserve currency, money held to pay international debts.

Sarkozy raised the monetary issue that will be on the agenda at the G-20 summit in the Mediterranean resort of Cannes Nov. 3-4.

Currency Debate

“Our teams are going to be working very hard together to come up with common provisions on the issues which are of interest and which come into the remit of the G20, such as currency, commodity prices and all that needs to be done in order to reduce current and present imbalances,” Sarkozy said through a translator.

French officials say their goal isn’t to dethrone the dollar. Even so, they want to open a debate to reflect changes since the 1944 Bretton Woods conference that established the U.S. currency’s role. Sarkozy and Finance Minister Christine Lagarde have said the dollar’s prominence contributed to the financial crisis by encouraging global imbalances.

The U.S. emphasis has been to develop early indicators to head off economic imbalances, including the Obama administration’s appeals to China to let the yuan rise further in value over time, according to free-market forces.

“We discussed how can we coordinate our agendas to make sure that we are productive as possible and deliver the kinds of reforms and follow-through that will result in prosperity for people’s around the globe,” Obama said.

The two leaders also conferred on counterterrorism cooperation as well as global trouble spots including Afghanistan, Lebanon, Iran, Ivory Coast, Sudan and Middle East Peace efforts.

Arizona Shootings

Both commented on the mass shooting in Tucson, Arizona, that killed six people and wounded at least 13 others, including U.S. Representative Gabrielle Giffords. He said the U.S. is still in shock from the attack.

‘Its important for the country as a whole, as well as for the people of Arizona that we speak directly to our sense of loss but also speaking to our hopes to the future and how out of this tragedy we can come together stronger,” Obama said.

Sarkozy said the French people were “moved and upset” by the Arizona tragedy.

www.bloomberg.com/news/2011-01-10/obama-sarkozy-say-they-are-aligned-on-economic-agenda-update1-.html

[sandi66]

JANUARY 10, 2011, 2:07 P.M. ET

UPDATE: Geithner,Lagarde Meet To Talk Europe Woes, G20, Monetary System

WASHINGTON (Dow Jones)--U.S. Treasury Secretary Timothy Geithner and French finance minister Christine Lagarde met Monday morning to discuss Europe's economic woes and plans to rebalance the global economy.

Geithner's top concerns are encouraging European officials to take quick and assertive action to contain the sovereign-debt crisis, and developing a strategy within the Group of 20 major nations to rein in widening global economic imbalances.

Lagarde is seeking to cajole the U.S. into supporting France's agenda of reforming the international monetary system. French President Nicolas Sarkozy, visiting with President Barack Obama on Monday, has said he plans to use his country's chairmanship of the G-20 to champion restrucuturing of the world's reserve currency system.

French officials complain that reliance on the U.S. dollar during the global financial crisis has been a major factor in exacerbating volatile capital flows as investment moves from low-interest-rate rich countries to high-yield emerging nations.

The Obama administration says far more vital to the global economy right now is getting the European sovereign-debt crisis under control. Greece and Ireland have already needed emergency bailouts and markets are speculating that Portugal may need external assistance as well.

While International Monetary Fund and Treasury officials say they don't believe Spain will need a rescue package, some economists and analysts paint a more pessimistic picture. Spain's economy eclipses those of Portugal, Ireland and Greece, and, as one of the major drivers of the European economy, fiscal failure could trigger another global recession.

Although European officials are debating a new package of programs that could help to cordon off contagion, the U.S. is concerned that the markets will sell off sovereign debt before Brussels acts. Washington is also fearful that Europe's actions may be retroactive--loaning cash after a financial disaster--rather than proactive--stemming the problem before it occurs.

For example, the Obama Administration thinks that Europe's current emergency package--which currently only allows for countries to apply for loans after they've hit dire straights--could be restructured. One idea under consideration in Brussels is allowing the bailout package to buy the sovereign debt of countries before they reach crisis stage.

The idea has faced fierce opposition from German officials, however, who want to maintain access to funds only on a last-resort basis. That attitude has frustrated U.S. officials who say similar resistance and foot-dragging exacerbated the Greek and Ireland crises.

France's Sarkozy, meanwhile, is developing a plan to reform the international monetary system that could include giving the IMF greater oversight of capital accounts and controls and boosting currency basket diversity and use of the IMF's currency, Special Drawing Rights, or SDRs.

The investment that has fueled emerging countries' stellar growth has turned into "hot money" threatening to overheat their economies with hyperactive inflation and strong currencies. Many, such as Brazil, are blaming the U.S. Federal Reserve's easing monetary policy, designed to spur U.S. growth. The U.S. says the Fed is simply acting in the economic interests of the country, and that it's in the world's interest that the globe's biggest economy returns to health.

As for SDRs, the Obama Administration doesn't think it likely that boosting the role of the IMF currency would take much, if anything, away from the dollar's global hegemony. The costs of doing business in SDRs would likely prove prohibitive and there likely wouldn't be enough liquidity for a deep market.

online.wsj.com/article/BT-CO-20110110-712294.html

[sandi66]

Monday, January 10, 2011Last Update: 4:54 PM PT
Indian Tribe May Collect on 150-Year-Old Trust
By MATT REYNOLDS

(CN) - The descendants of a Minnesota Indian tribe that was loyal to the U.S. government during the 1862 Sioux Uprising were unfairly deprived of benefits from three tracts of tribal land, the U.S. Court of Federal Claims ruled.
Judge Charles Lettow rejected the government's argument that appropriations laws passed by Congress in 1980 trumped the Mdewakanton Sioux's right to funds that originated from a trust created in the late 1800s.
"Fairly interpreted, in light of the historical record and 90 years of the department's own legal opinions and actions, the appropriations acts are reasonably amenable to the reading that they created a money-mandating duty on the part of the government to the lineal descendants of the loyal Mdewakanton," Lettow wrote.
The government set aside the funds for the Mdewakanton as a reward for their help in a revolt against the government by Minnesota Sioux tribes.
Angry that the government refused to hand over money in exchange for the land the tribes relinquished, the resulting massacre left 500 settlers dead. After U.S. armed forces quelled the rebellion, Sioux were removed from land in the state.
The Mdewakanton, who sat out the revolt or actively helped the settlers, were rewarded for their loyalty in appropriations laws passed in 1888, 1889 and 1890.
After other tribes intermingled with the Mdewakanton, however, the Indian Reorganization Act of 1934 changed how the government viewed the three tracts of land.
By the time the 1980 law was passed, the government argued that the Mdewakanton no longer had an exclusive claim to the land.
Lettow sided with the government on one issue: the tribe's entitlement to funds from a transfer of Indian land in Wabasha to a portion of the Upper Mississippi River. He said a 1944 bill crafted by lawmakers extinguished any rights the tribe had to that land under prior appropriations laws.
The judge, however, said the government was liable to the tribe for funds collected before the 1980 laws were enacted.
"The undisputed facts demonstrate that the government disbursed the funds to the three communities rather than to the lineal descendants, thereby contravening the provisions of the appropriations acts that dictated that only eligible Mdewakanton could receive the benefits of the acts and that such benefits be conferred in as equal an amount as practicable," Lettow wrote.


www.courthousenews.com/2011/01/10/33192.htm

ty nalmann

[sandi66]

* Bilateral meetings behind the scenes will be witnessed by Baghdad summit to resolve the crisis between Iraq and Kuwait
January 11th, 2011 08:01 am · Posted in NEWS
Bilateral meetings behind the scenes will be witnessed by Baghdad summit to resolve the crisis between Iraq and Kuwait
Posted: January 11, 2011 by CURRENCY NEWSHOUND – Just Hopin in Iraqi Dinar/Politics


Khalid al-Asadi: bilateral meetings behind the scenes will be witnessed by Baghdad summit to resolve the crisis between Iraq and Kuwait
Agencies – said a member of a coalition of state law, Khalid al-Asadi said the coming Arab summit will hold bilateral meetings behind the scenes to resolve the crisis between Iraq and Kuwait.

theiraqidinar.com/2011/01/11/bilateral-meetings-behind-the-scenes-will-be-witnessed-by-baghdad-summit-to-resolve-the-crisis-between-iraq-and-kuwait/

[sandi66]

* Opec may act if oil hits $110
January 11th, 2011 07:57 am · Posted in NEWS
January 10, 2011

Price hike caused by speculation reason to increase production, says Kuwait official
Speculation could push oil prices to rise to $110 per barrel within a few weeks, which may prompt Opec to raise production, a member of Kuwait’s Supreme Petroleum Council (SPC) said yesterday.

“Demand will increase slightly, but this increase in price is usually technical, due to analysts’ forecasts and speculations,” Imad Al Atiqi, a member of the country’s highest oil policy body, told Reuters in a telephone interview.

“This [increase] could be a reason to increase production so the oil market does not get worried… especially if the rise was quick and crossed the $110,” he said.

However, Opec members are unlikely to meet before their scheduled meeting in June if prices reach $100 a barrel, Al Atiqi said, adding that the global economy could afford a $100 oil price, and that it would not hurt recovery.

“It wouldn’t because this is coordinated with other strategic commodities like gold, metals, food and basic materials,” he said.

Last week Kuwait’s oil minister Shaikh Ahmad Al Abdullah Al Sabah said he did not expect Opec to meet before June unless “something dramatic” happens and did not expect an increase in output in the first half of 2011.

Al Atiqi said for the time being there was ample supplies of crude oil in the market.

On Friday the ICE Brent crude price for February fell $1.19 to $93.33 a barrel, trading from $92.59 to $94.58.

Last month the price spiked to $94.74 a barrel, its highest since October 2008.

Unlikely to touch $150

Nearly three years to the day after oil prices first pierced $100 a barrel, they are again threatening to break triple digits on a wave of fund-led optimism, but similarities between 2008 and 2011 end there.

Even the most bullish analysts are quick to recite a litany of reasons why oil will not surge to near $150 again this year. Such a sharp spike would deal the world economy a heavy blow it can ill afford.

By far the most compelling reasons are short-term supply fundamentals: There is far more oil in storage, far more fuel capacity at refiners worldwide, and far more idle oil wells that Opec can reactivate when it chooses, braking the market’s rally in a way it could not three years ago.

Analysts expect an additional 8 per cent gain in average prices in 2011.

“To a substantial degree, oil is not like it was then because there are bottlenecks that have been overcome both in refining and production capacity,” said Edward Morse, managing director at Credit Suisse.

theiraqidinar.com/2011/01/11/opec-may-act-if-oil-hits-110/

[sandi66]

* Kuwait Demands Strengthening of Border Patrols With Iraq
January 11th, 2011 07:55 am · Posted in NEWS
en.aswataliraq.info/?p=140480

January 11, 2011
BAGHDAD / Aswat al-Iraq: Kuwait’s Foreign Minister, Mohammed al-Subah, has called for the strengthening of borders with Iraq and increasing border patrols, following the killing of an Iraqi fisherman and a Kuwaiti coast guard, close to their joint borders over the past few days.

“The killing of a Kuwaiti coast guard imposes on us to strengthen the borders between Iraq and Kuwait, along with increasing border patrols,” Subah told the Kuwaiti Al-Siyasa Newspaper on Tuesday, charging that the Iraqi fisherman, who were confronted by Kuwaiti Coastal Guards on Monday, have been “pirates and terrorists.”

Southern Iraq Faw Terminal’s Mayor, Walid al-Sharify, has stated that “the Kuwaiti Coast Guards have drowned an Iraqi fishing boat on Monday, with 9 persons on board, out of whom they detained five, whilst the others were considered as “lost.”

A source, representing the Iraqi Fishers Society had stated that “the Kuwaiti Navy had opened fire on Monday morning on an Iraqi fishing boat in the Iraqi territorial waters, sinking the boat, thing that caused the loss of four fishermen and arresting five others, among them three wounded men.”

Noteworthy is that several violations have taken place against Iraqi fishermen in Faw Terminal, 100 km to the south of Basra, while carrying out their fishing in the Iraqi territorial waters, by Kuwaiti and Iranian patrols.

Southern Iraq’s Basra Administration had demanded the Iraqi authorities and the Foreign Ministry to conclude joint agreements with Kuwait and Iran to protect and facilitate the activity of the local Iraqi fishermen in the Iraqi territorial waters.

The dossier of the Iraqi-Kuwaiti relations contain several suspended issues, most significant of which had been the huge compensations paid by Iraq to Kuwait due to the latter’s occupation by Iraq in 1991and Kuwait’s position towards Iraq’s exclusion from the UN Charter’s 7th Article, imposing sanctions against Iraq, along with the demarcation of joint borders with Kuwait and the fate of the remnants of the Kuwaitis lost in Iraq during the occupation.

GS (A) / SKH/SR

theiraqidinar.com/2011/01/11/kuwait-demands-strengthening-of-border-patrols-with-iraq/

[sandi66]

January 11, 2011, 2:35 PM ET

Jan. 25 Set for Obama’s State of the Union Address

By Laura Meckler
House Speaker John Boehner invited President Barack Obama to give his State of the Union address on Jan. 25th and suggested he hopes they can work together in the coming months.

“A new Congress provides us a renewed opportunity to find common ground and address the priorities of the American people,” Mr. Boehner (R., Ohio) said in a letter sent today.

The address will be Mr. Obama’s second State of the Union speech and his fourth address to a joint session of the House and Senate.

The likely date of this year’s speech was already well known, but the letter from the speaker confirms it.

The State of the Union address is an important opportunity for the president to outline his top priorities for the coming year and to try and set a tone for how he hopes to accomplish them. This year’s address is considered particularly important as Mr. Obama begins figuring out how to navigate the new Congress, with Republicans controlling the House and Democrats with a small majority in the Senate. The speech will come about 2 1/2 weeks after the Arizona shooting rampage, which has prompted a temporary truce in Washington battles.

Mr. Boehner’s letter made reference to the weekend events, which killed six people and wounded 14 others, including Rep. Gabrielle Giffords (D., Ariz.).

“Recent events have reminded us of the imperfect nature of our representative democracy, but also how much we cherish the ideal that our government exists to serve the people,” Mr. Boehner wrote. “Even in the wake of tragedy, we must never waiver from our obligation to carry out their will and provide solutions to keep moving our nation forward.”

blogs.wsj.com/washwire/2011/01/11/jan-25-set-for-obamas-state-of-the-union-address/

[sandi66]

Gasparino: Insider Trading Probe Could Ensnare 300 People

January 12, 2011


SEC: Schwab agrees to $118M Settlement in Fraud Cases


By Teresa Rivas

As the Securities and Exchange Commission continues its ongoing insider trading investigation, which has already led to about two dozen arrests, Fox Business Network Senior Correspondent Charlie Gasparino is reporting that the probe could ultimately have as many as 300 targets.

If this were to be the case, it would make the government inquiry "the largest white collar criminal case ever." The FBI has not commented on the report.

"I said on Friday there would be another round of arrests and we got an arrest today from one of those expert networks, but the real interesting story here is not just this arrest, but what’s going to come in the future," Gasparino said. "They have not gone after the hedge funds yet. That is clearly the next shoe to drop."

blogs.barrons.com/stockstowatchtoday/2011/01/11/gasparino-insider-trading-probe-could-ensnare-300-people/tab/comments/#comment-225898

[sandi66]

January 12, 2011 |

Are Forex Brokers Cheating Their Clients?
Just as foreign currency trading is on the verge of going mainstream, regulators say they are preparing to launch an investigation into whether foreign exchange firms are using unfair trading practices to take advantage of retail investors.

In two weeks, the National Futures Association – a self-regulatory body that polices the futures industry much the way Finra oversees the brokerage business – says it will begin analyzing trades executed by its 16 member forex firms. The regulator will search for signs these firms are designing computer systems to take advantage of what's known in the industry as "slippage" – small price movements that happen between when a customer orders a trade and when that trade is actually executed. While some slippage is normal (currency prices naturally fluctuate 24/7), the NFA will be looking to see if trades are being executed only when the currency price moves in the firm's favor. This would indicate a firm may be violating NFA rules mandating fair business practices, says spokesman Larry Dykeman. The group can then assess fines, and in some cases may suspend or expel a firm from membership in the organization.

The investigation follows after the NFA issued two complaints in October against Ikon Global Markets and GAIN Capital, accusing both firms of taking advantage of slippage at their clients' expense (These complaints are internal matters, not lawsuits filed in a court.) Both firms settled without admitting or denying the allegations, according to the NFA: Ikon paid a $320,000 fine to the NFA and has stopped offering retail FX trading to U.S. clients; GAIN, which paid a $459,000 penalty, went public in December. A spokesman for Ikon declined to comment. A GAIN spokeswomen said the trades in question accounted for only .05% of its transactions, and that the company will continue to review its operations to ensure that "the interests of our clients and partners are fully protected."

Slippage is a slippery issue, and for individual investors, it's almost impossible to detect. Here's how it works: Let's say a retail investor places an order for euros at $1.335; he may find that by the time his brokerage firm executes the order, the rate has changed to $1.332. Does the customer get that new, lower price, or does the firm reject the order? Is the firm only executing an order when the price moves up in its favor, to say $1.338, and it can pocket the spread? "The market moves very quickly, and that's accepted," Dykeman says. "What we're looking for is fairness."

The price movements in question are tiny. But because currencies move within a narrow range of prices, and because even retail traders commonly use leverage, a tiny advantage can quickly add up. For example, a trader using 50-to-1 leverage could buy $100,000 worth of euros with just $2,000 in his account. If he placed an order to buy at $1.335, but instead paid $1.337, those euros cost him an extra $20. Within months, such spreads can mean millions of extra dollars for forex firms, experts say.

The probe comes at time when currency trading is becoming more popular for small investors looking for bigger returns. Average daily volume in retail forex trading grew 25% from 2008 to 2009, to $125 billion -- up more than tenfold from eight years ago according to consultancy Aite Group. But news of the industry probe could send those new forex clients in search of safer alternatives. "This is really a black mark for an industry that's trying to establish itself as more of a legitimate business," says Sang Lee, a managing partner with Aite Group.

Both the NFA and the Commodity Futures Trading Commission are also keeping mum about any additional investigations that may be ongoing. But when another forex trading firm, FXCM ( FXCM: 14.02, +0.55, +4.08% ) , went public in December, its SEC filings mentioned the Ikon and GAIN cases, and disclosed that FXCM had also been contacted by both regulatory agencies with requests for information about trade execution practices. An FXCM spokeswoman declined to comment by press time.

Regardless of whether regulators find cases of unfair trading, retail investors are still at a disadvantage when trading currency because forex is far from transparent, says Charles Rotblut, the vice president of the American Association of Individual Investors. For example, if a forex firm is acting as a market-maker – taking the other side of a client's trades – it's doubtful the investor is getting the best possible price, he says.

www.smartmoney.com/investing/short-term-investing/are-forex-brokers-cheating-their-clients-1294786044234/

[sandi66]

* Al-Shabibi: We could control the rise of U.S. dollar through the Iraqi cash reserves

January 12, 2011 09:20 am · Posted in NEWS ·

Al-Shabibi: We could control the rise of U.S. dollar through the Iraqi cash reserves

Posted: January 12, 2011 by CURRENCY NEWSHOUND – Just Hopin in Iraqi Dinar/Politics


Currency Newshound Commentary: This article was submitted to Currency Newshound. The article originated from a site called todayiraq.com. The post was dated January 11, 2011. However after further research this identical article was published in June 2009 LINK. Please use caution referring to todayiraq.com as a source for information as some of the articles appear to be outdated or archived articles have been brought current. Nevertheless the article could be used for reference purposes.

JANUARY 11, 2011 AT 4:24 PM

The governor of Iraqi Central Bank Dr. Sinan al-Shabibi stated to (Al-Sabah paper) that the central bank has proved its ability to meet the disclosure of Iraq dinar and limit the deficit against the dollar due to the accumulation of Iraqi cash reserves, which exceeded 41 billion dollars, as stated in the conference of banking business, which held under the auspices of Iraqi Banks Association with high-level representation of the Iraqi Central Bank.

Al-shabibi said that there might be participations in the first stage to finance the wheel of major reconstruction, and we in the Iraqi Central Bank would encourage the entry of private banks in financing the strategic projects.
With regard to the high exchange rate of U.S. dollar, Alshabibi said that Iraqi Central Bank does not work randomly, but there are some measures that we have tried to check out for some important issues in central bank’s auction, because the situation was very sensitive and has an impact on the market rapidly, the dollar exchange rate moved upward, which we wish clearly that the rapid realization what makes the bad reaction of the market’s exchange rate, but the capacity of the Central Bank and its hard work was able to go back to stability and full control over the cash reserve which is managed by the Central Bank of Iraq that dealt with the case of oscillation at high speed.

Alshabibi called the Iraqi officials to make sober statements about monetary policy, because we are talking on developing a particular sector, the most sensitive and important sector which is real advance for the development in Iraq, and as mentioned above, the purpose of the reserve is to stabilize the Iraqi dinar, that the Central Bank succeeded to sustain.

Alshabibi added that the Iraqi private banks have good financial status now, to contribute in the investment of big and medium enterprises, as they are qualified to play a real role in reviving the Iraqi economy.
Alshabibi called the private banks to take the advantage of the Iraqi government’s invitation to support the private sector through playing the role of money product supplier and urged the bankers to access to ideas aimed to develop the Iraqi banking sector.

Submitted to Currency Newshound. This blog article states its source as Al-Sabaah News however provides no direct link or print date.

bit.ly/enrpCU

theiraqidinar.com/category/news/

[sandi66]

* Emir of Kuwait, in Baghdad on Wednesday (Ch7 Discussed)
January 12, 2011 08:57 am · Posted in NEWS · Comments Off
Palm – political sources confirmed that the Prince of Kuwait Sabah Al-Ahmad Al-Jaber Al-Sabah will visit Baghdad on Wednesday, where it is the first visit to Iraq twenty years ago.

She informed that the morning he will meet during the visit of President Jalal Talabani and Prime Minister Nuri al-Maliki and parliament speaker Osama Najafi and a number of Iraqi officials to strengthen the relationship between the two countries.

So said a newspaper Kuwaiti Kuwaiti diplomatic sources high-level announced that Prime Minister Nouri al-Maliki will make an official visit to Kuwait later this month to discuss the files that have not yet been completed, stressing that Kuwait was and will remain eager to get out of Iraq from Chapter VII of money to come back for the exercise of its role in normal .

theiraqidinar.com/2011/01/12/emir-of-kuwait-in-baghdad-on-wednesday-ch7-discussed/

[sandi66]

Biden Touches Down in Baghdad; Will Meet with Unity Government

by Kelly Chernenkoff | January 12, 2011

Vice President Biden has just made a surprise visit to Baghdad, Iraq, capping off a whirlwind Middle East tour. Air Force two touched down at 12:43a local time; late afternoon in Washington, DC Wednesday.

Mr. Biden is set to meet with Prime Minister Nouri al-Maliki and President Jalal Talabani. After a year of discord and struggle, Iraq was able to form a unity government last December. While on the ground, the Vice President will also meet with two other key officials in Iraq's leadership: Iraqiyya Leader Ayad Allawi and Iraqi parliament speaker Osama al-Nujaifi.

American troop presence has been whittled down to fewer than 50,000, as combat has officially ended in Iraq. However, the administration has continually said long-term ties to Iraq will not be severed.

"The remaining troops are advising and assisting Iraq's security forces, conducting partnered counter-terrorism operations, and protecting U.S. civilians," a White House official explains. "At the same time, the United States is increasing its diplomatic, political and economic engagement with Iraq, opening consulates and branch offices throughout the country and pursuing important programs to help train Iraq's police and judiciary and to build strong business and investment ties," the official added.

According to a U.S. agreement with the Iraqis established under President George W. Bush, all American forces are due to leave Iraq at the end of the year.

Mr. Biden has been traveling throughout the Middle East since Monday.

He's also made stops in Afghanistan and Pakistan.


politics.blogs.foxnews.com/2011/01/12/biden-touches-down-baghdad-will-meet-unity-government

[sandi66]

Biden holds meeting with Maliki - spokesman

1/13/2011 2:16 PM

BAGHDAD / Aswat al-Iraq: U.S.

Vice President Joe Biden held on Thursday a meeting with Prime Minister Nouri al-Maliki in Baghdad, the official spokesman of the Iraqi government said.

"Biden arrived in Baghdad and met with al-Maliki to congratulate him on forming the new government and to discuss the latest developments in the country," Ali al-Dabbagh told Aswat al-Iraq news agency.

Biden had arrived in Baghdad Wednesday night after a visit to Pakistan on an unannounced visit to the country for talks with the country's leaders.

The U.S. embassy in Baghdad had announced this morning the arrival of Biden, who is scheduled to meet also with President Jalal Talabani, Parliament's speaker Osama al-Nujiefi, Head of the al-Iraqiya List Iyad Allawi and senior political figures in Iraq.
SH (P)/SR

http://en.aswatalira...e&id=140539&l=1

[sandi66]

Biden visits Iraq for talks on future relationship

Thursday, January 13, 2011; 4:46 AM

BAGHDAD - Vice President Joe Biden arrived in Baghdad on an unannounced visit early Thursday for talks expected to focus on America's future relationship with Iraq beyond the scheduled December 2011 deadline for the departure of U.S. troops.

Biden will meet with Iraqi leaders for the first time since the formation of a new Iraqi government last month opened the door to discussions on the politically sensitive subject.

He is also expected to offer his congratulations on the establishment of what the White House hailed as "an inclusive national partnership government" grouping all the country's major factions, after 10 months of tortuous negotiations that at times had threatened to tear the country apart.

"I'm here to help the Iraqis celebrate the progress they made. They formed a government. And that's a good thing," Biden said ahead of a briefing with Gen. Lloyd J. Austin III, the commander of U.S. forces in Iraq, and U.S. Ambassador James Jeffrey.

"They have a long way to go," Biden added.

There are 47,000 U.S. troops in Iraq, and they are scheduled to leave by the end of the year under terms of a security agreement negotiated between then-President George W. Bush and Prime Minister Nouri al-Maliki in 2008.

Maliki, embarking on his second term of office, publicly insists that he wants all the troops to leave on time, and the Obama administration also says it is planning to pull them out on schedule.

But Iraqi military commanders have said they would prefer at least some form of continued U.S. military presence to help deter external threats from Iraq's neighbors until Iraq has its own conventional defense capabilities.

Although Iraq's security forces have proved themselves able to sustain security gains since the formal end of American combat operations last August, they will also need help with training and logistics for several more years, U.S. and Iraqi officials say.

The return to Iraq last week of the anti-American Shiite leader Moqtada al-Sadr has diminished the likelihood of an extended troop presence. Sadr's decision to support Maliki for a second term broke the political deadlock that had paralyzed the country since elections last March, but he has threatened to withdraw from the government if any attempt is made to retain U.S. troops beyond the deadline.

There are ways, however, of providing military help without a formal troop presence, and U.S. and Iraqi officials are looking at ways in which the State Department could oversee a small number of military trainers and contractors.

Among the officials Biden is scheduled to meet are Maliki, President Jalal Talabani, who is also starting his second term, and the new speaker of parliament, Osama al-Nujaifi. Later in the day, he is expected to visit U.S. troops at Camp Victory, the sprawling U.S. military base adjoining Baghdad's airport.

Coinciding with Biden's visit, car bombs exploded outside three Baghdad mosques early Thursday. Two people were killed and 11 wounded, the Associated Press reported.


www.washingtonpost.com/wp-dyn/content/article/2011/01/13/AR2011011300784.html

[sandi66]

Iraq prepares to open bidding of oil licenses to up to 45 companies

Jan 13, 2011, 11:24 GMT

Baghdad- Iraq's oil ministry said Thursday it is preparing to open up a fourth round of bidding to 45 companies to invest in Iraq's gas and crude oil reserves.

Abdul-Karim Eleibi, told the German Press Agency dpa that 12 areas for exploration will be discussed in the coming weeks.

'The fourth round will be dedicated to the exploration of Iraq's oil reserves and to increasing gas production rates,' he said.

He also said that Iraq is working to export more than 4.5 million barrels per day (bpd).

Just a day earlier, the ministry announced that the oil-rich nation will boost its production of crude oil to 3 million bpd before the end of 2011, up from the current rate of 2.1 million bpd.

In the last round of contracts awarded in September, a number of foreign investors secured deals in Iraq worth billions of dollars in both the infrastructure and energy sectors.

Iraq announced last year that it has around 143 billion barrels of crude oil reserves, about 24 per cent more than previous estimates.

Iraq has the world's fourth largest crude oil reserves, behind Saudi Arabia, Venezuela, and Canada.


www.monstersandcritics.com/news/business/news/article_1611452.php/Iraq-prepares-to-open-bidding-of-oil-licenses-to-up-to-45-companies

[sandi66]

Kuwaiti PM makes first visit to Iraq since Gulf War
World
By REUTERS
Posted -8 second ago


BAGHDAD -- Kuwait's prime minister declared his country's interest in investing in Iraq on Wednesday during the first visit to Baghdad by a Kuwaiti leader since Saddam Hussein invaded it in 1990.

Prime Minister Sheikh Nasser al-Mohammad al-Sabah met his Iraqi counterpart Nuri al-Maliki in an effort to improve relations still strained by Kuwait's insistence that Baghdad owes it around $22 billion in reparations.


Iraq's new leaders have argued they should not be held accountable for the actions of Hussein, overthrown in the U.S.-led invasion of Iraq in 2003.

www.nugget.ca/ArticleDisplay.aspx?e=2927403

[sandi66]

[ ... The Public Banking Institute is being launched on January 13 to explore that alternative. For more information, see http://PublicBankingInstitute.org.]


www.webofdebt.com/articles/nobailout_mainstreet.php


THE FED HAS SPOKEN: NO BAILOUT FOR MAIN STREET


webofdebt.com

Ellen Brown

JANUARY 12, 2011

The Federal Reserve was set up by bankers for bankers, and it has served them well. Out of the blue, it came up with $12.3 trillion in nearly interest-free credit to bail the banks out of a credit crunch they created. That same credit crisis has plunged state and local governments into insolvency, but the Fed has now delivered its ultimatum: there will be no “quantitative easing” for municipal governments.



On January 7, according to the Wall Street Journal, Federal Reserve Chairman Ben Bernanke announced that the Fed had ruled out a central bank bailout of state and local governments. "We have no expectation or intention to get involved in state and local finance," he said in testimony before the Senate Budget Committee. The states "should not expect loans from the Fed."

So much for the proposal of President Barack Obama, reported in Reuters a year ago, to have the Fed buy municipal bonds to cut the heavy borrowing costs of cash-strapped cities and states.

The credit woes of state and municipal governments are a direct result of Wall Street’s malfeasance. Their borrowing costs first shot up in 2008, when the “monoline” bond insurers lost their own credit ratings after gambling in derivatives. The Fed’s low-interest facilities could have been used to restore local government credit, just as it was used to restore the credit of the banks. But Chairman Bernanke has now vetoed that plan.

Why? It can hardly be argued that the Fed doesn’t have the money. The collective budget deficit of the states for 2011 is projected at $140 billion, a mere drop in the bucket compared to the sums the Fed managed to come up with to bail out the banks. According to data recently released, the central bank provided roughly $3.3 trillion in liquidity and $9 trillion in short-term loans and other financial arrangements to banks, multinational corporations, and foreign financial institutions following the credit crisis of 2008.

The argument may be that continuing the Fed’s controversial “quantitative easing” program (easing credit conditions by creating money with accounting entries) will drive the economy into hyperinflation. But creating $12.3 trillion for the banks -- nearly ten times the sum needed by state governments -- did not have that dire effect. Rather, the money supply is shrinking – by some estimates, at the fastest rate since the Great Depression. Creating another $140 billion would hardly affect the money supply at all.

Why didn’t the $12.3 trillion drive the economy into hyperinflation? Because, contrary to popular belief, when the Fed engages in “quantitative easing,” it is not simply printing money and giving it away. It is merely extending CREDIT, creating an overdraft on the account of the borrower to be paid back in due course. The Fed is simply replacing expensive credit from private banks (which also create the loan money on their books) with cheap credit from the central bank.

So why isn’t the Fed open to advancing this cheap credit to the states? According to Mr. Bernanke, its hands are tied. He says the Fed is limited by statute to buying municipal government debt with maturities of six months or less that is directly backed by tax or other assured revenue, a form of debt that makes up less than 2% of the overall muni market.

Congress imposed that restriction, and only Congress can change it.

That may sound like he is passing the buck, but he is probably right. Bailing out state and local governments IS outside the Fed’s mandate. The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their interests. No others need apply. The Federal Reserve is the bankers’ own private club, and its legal structure keeps all non-members out.


Earlier Central Bank Ventures into Commercial Lending

That is how the Fed is structured today, but it hasn’t always been that way. In 1934, Section 13(b) was added to the Federal Reserve Act, authorizing the Fed to “make credit available for the purpose of supplying working capital to established industrial and commercial businesses.” This long-forgotten section was implemented and remained in effect for 24 years. In a 2002 article called “Lender of More Than Last Resort” posted on the Minneapolis Fed’s website, David Fettig summarized its provisions as follows:



- [Federal] Reserve banks could make loans to any established businesses, including businesses begun that year (a change from earlier legislation that limited funds to more established enterprises).



- Reserve banks were permitted to participate [share in loans] with lending institutions, but only if the latter assumed 20 percent of the risk.



- No limitation was placed on the amount of a single loan.



- A Reserve bank could make a direct loan only to a business in its district.

Today, that venture into commercial banking sounds like a radical departure from the Fed’s given role; but at the time it evidently seemed like a reasonable alternative. Fettig notes that “the Fed was still less than 20 years old and many likely remembered the arguments put forth during the System's founding, when some advocated that the discount window should be open to all comers, not just member banks.” In Australia and other countries, the central bank was then assuming commercial as well as central bank functions.

Section 13(b) was repealed in 1958, but one state has kept its memory alive. In North Dakota, the publicly owned Bank of North Dakota (BND) acts as a “mini-Fed” for the state. Like the Federal Reserve of the 1930s and 1940s, the BND makes loans to local businesses and participates in loans made by local banks.

The BND has helped North Dakota escape the credit crisis. In 2009, when other states were teetering on bankruptcy, North Dakota sported the largest surplus it had ever had. Other states, prompted by their own budget crises to explore alternatives, are now looking to North Dakota for inspiration.




The “Unusual and Exigent Circumstances” Exception



Although Section 13(b) was repealed, the Federal Reserve Act retained enough vestiges of it in 2008 to allow the Fed to intervene to save a variety of non-bank entities from bankruptcy. The problem was that the tool was applied selectively. The recipients were major corporate players, not local businesses or local governments. Fettig writes:



Section 13(b) may be a memory, . . . but Section 13 paragraph 3 . . . is alive and well in the Federal Reserve Act. . . . [T]his amendment allows, "in unusual and exigent circumstances," a Reserve bank to advance credit to individuals, partnerships and corporations that are not depository institutions.



In 2008, the Fed bailed out investment company Bear Stearns and insurer AIG, neither of which was a bank. John Nichols reports in The Nation that Bear Stearns got almost $1 trillion in short-term loans, with interest rates as low as 0.5%. The Fed also made loans to other corporations, including GE, McDonald’s, and Verizon.

In 2010, Section 13(3) was modified by the Dodd-Frank bill, which replaced the phrase “individuals, partnerships and corporations” with the vaguer phrase “any program or facility with broad-based eligibility.” As explained in the notes to the bill:


Only Broad-Based Facilities Permitted. Section 13(3) is modified to remove the authority to extend credit to specific individuals, partnerships and corporations. Instead, the Board may authorize credit under section 13(3) only under a program or facility with “broad-based eligibility.”



What programs have “broad-based eligibility” isn’t clear from a reading of the Section, but long-term municipal bonds are evidently excluded. Mr. Bernanke said that if municipal defaults became a problem, it would be in Congress’ hands, not his.

Congress could change the law, just as it did in 1934, 1958, and 2010. It could change the law to allow the Fed to help Main Street just as it helped Wall Street. But as Senator Dick Durbin blurted out on a radio program in April 2009, Congress is owned by the banks. Changes in the law today are more likely to go the other way. Mike Whitney, writing in December 2010, noted:




So far, not one CEO or CFO of a major investment bank or financial institution has been charged, arrested, prosecuted, or convicted in what amounts to the largest incident of securities fraud in history. In the much-smaller Savings and Loan investigation, more than 1,000 people were charged and convicted. . . . [T]he system is broken and the old rules no longer apply.



The old rules no longer apply because they have been changed to suit the moneyed interests that hold Congress and the Fed captive. The law has been changed not only to keep the guilty out of jail but to preserve their exorbitant profits and bonuses at the expense of their victims.

To do this, the Federal Reserve had to take “extraordinary measures.” They were extraordinary but not illegal, because the Fed’s congressional mandate made them legal. Nobody’s permission even had to be sought. Section 13(3) of the Federal Reserve Act allows it to do what it needs to do in “unusual and exigent circumstances” to save its constituents.

If you’re a bank, it seems, anything goes. If you’re not a bank, you’re on your own.



So Who Will Save the States?



Highlighting the immediacy of the local government budget crisis, The Wall Street Journal quoted Meredith Whitney, a banking analyst who recently turned to analyzing state and local finances. She said on a recent broadcast of CBS's "60 Minutes" that the U.S. could see "50 to 100 sizable defaults" in 2011 among its local governments, amounting to "hundreds of billions of dollars."

If the Fed could so easily come up with 12.3 trillion dollars to save the banks, why can’t it find a few hundred billion under the mattress to save the states? Obviously it could, if Congress were inclined to put non-bank lending back into the Fed’s job description. Then why isn’t that being done?

The cynical view is that the states are purposely being kept on the edge of bankruptcy, because the banks that hold Congress hostage want the interest income and the control. An even darker theory is that there is an intentional attempt to break the middle class in order to bring America down to the level of a third world country, a necessary precedent to imposing One World Government.

Whatever the reason, Congress is standing down while the nation is sinking. Congress must summon the courage to take needed action; and that action is not to impose “austerity” by cutting services, at a time when an already-squeezed populace most needs them. Rather, it is to create the jobs that will generate real productivity. To do this, Congress would not even have to go through the Federal Reserve. It could issue its own debt-free money and spend it on repairing and modernizing our decaying infrastructure, among other needed works. Congress’ task will become easier if the people stand with them in demanding action, but Congress is now so gridlocked that change may still be long in coming.

In the meantime, the states could take matters in their own hands and set up their own state-owned banks, on the model of the Bank of North Dakota. They could then have their own very-low-interest credit lines, just as the Wall Street banks do. Rather than spending or selling off valuable public assets, or hoarding them in massive rainy day funds made necessary by the lack of ready credit, states could LEVERAGE their assets into a very strong and abundant local credit system, following the accepted business practices of the Wall Street banks themselves.

The Public Banking Institute is being launched on January 13 to explore that alternative. For more information, see PublicBankingInstitute.org.

Original source
goldsilver.com/news/the-fed-has-spoken-no-bailout-for-main-street/


Ellen Brown is an attorney and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com, ellenbrown.com, and public-banking.com.



ty joye

[sandi66]

The Recent Iraq 2011 Budget May Have Leaked the Coming Currency Revaluation

Many investors are taking a hard look at investing in Iraq. Iraq’s Parliament approved Prime Minister Nouri al-Maliki’s 42-member cabinet. Iraq’s growing stability, hard for many to imagine just a few years ago, now sets the stage for economic development and foreign investment.

As the security issues are slowly getting resolved, investors are getting closer to taking the next steps to setting up businesses in Iraq. The crude oil sector, building construction, and air transportation sectors are already making great strides, its only a matter of time until other business sectors move into the country.

There are other investors that will continue their investments from outside of Iraq. The Iraqi stock market investors can continue their investments in Iraq with out actually moving there.
The Iraqi dinar currency speculators will also be able to continue their type of investment from outside the country.

The currency speculators may have something good to look forward to in the near term, during the 2011 fiscal year, as a recent article was published either in error, or by accidental leaking of information pointing to a coming new exchange rate. The recent rate of exchange to the US Dollar has been 1170 dinars to one US Dollar.

Here is an excerpt from the recent Iraqi 2011 Budget article that gives possibility to a new exchange rate: “The Iraqi government has approved the draft federal budget law for fiscal year 2011, so inform the budget some 93 billion Iraqi dinars (79.6 billion dollars), when calculated per barrel to $ 73 U.S., and the rate of export of 2.25 million barrels per day.”

the recent Iraqi 2011 Budget

article:http://iraqdailytimes.com/kurdistan-region-of-iraq-can-afford-ten-thousand-employees-for-their-province/

If you do the math, this indicted value of “93 billion Iraqi dinars (79.6 billion dollars)”, would be equivalent to 1.168 Iraqi Dinars to one US Dollar, or .855 Us Dollars to one Iraqi Dinar.

Later on in the Iraqi 2011 Budget article, two additional references to the speculative exchange rate are again mentioned, which suggests the same rate of exchange outcome.
Now that the budget draft has been approved, how much will this significant change in the exchange rate benefit the 2011 Iraqi Economy?

dinartrade.org/the-recent-iraq-2011-budget-may-have-leaked-the-coming-currency-revaluation/

[sandi66]

A U.S.-China Reset? Minxin Pei
Q&A,

January 13, 2011

Resources Print PreviewIn his last state visit to the United States as president, Hu Jintao will try to stabilize U.S.-China relations to shore up his political legacy. Minxin Pei explains that the visit provides an opportunity to change the contentious tone of the past year and perhaps even ¡°reset¡± the bilateral relationship.

China and the United States are both partners and rivals but the potential for more effective U.S.-China cooperation in managing regional and global challenges is huge, argues Pei. ¡°At this moment, the relationship clearly has enough common interests but insufficient mutual trust.¡±

¡öWhat is the importance of President Hu¡¯s visit to Washington?


¡öIs the balance of power between the United States and China changing?


¡öWill the Obama administration press China on human rights? What is the current state of human and political rights in China?


¡öWill other sensitive issues¡ªTaiwan, Tibet, and Xinjiang¡ªbe discussed?


¡öHow strong are U.S.-China relations? How effectively are Washington and Beijing working together on critical regional and global challenges?


What is the importance of President Hu¡¯s visit to Washington?
In terms of specifics, the Hu-Obama summit is not expected to yield any major agreements. However, this visit is quite important both for the United States and for China.

U.S.-China relations had a rough year in 2010 and the level of mistrust is high. The two countries engaged in a series of disputes that covered many regional and global issues. While China was perceived by the United States as assertive, the United States was seen in China as trying to build an anti-China regional framework of containment. So Hu¡¯s visit provides an opportunity for the two presidents to change the contentious tone of the bilateral relationship and perhaps even ¡°reset¡± it.

For President Hu, this is his last state visit to the United States as president. He has an incentive to leave behind a healthy and stable Sino-American relationship as his political legacy.

In terms of the substance of the summit, North Korea will probably be the most important issue because both the United States and China have an incentive to see the Korean peninsula remain stable. The trick is how to re-start a process that will lead to the de-nuclearization of North Korea, which is China¡¯s official goal. Washington would like to see Beijing play a more active role in restraining North Korea. China wants the United States to provide more concessions to North Korea.

The most likely concrete outcome from the summit on this issue may be an announcement of the resumption of the Six-Party Talks, which is a multilateral forum established to conduct negotiations with Pyongyang regarding the dismantling of its nuclear facilities. The talks were suspended after North Korea¡¯s second nuclear test in May 2009. China has been trying to revive the talks, but the United States has been cool to the idea because it feels that would reward North Korea for violating prior agreements and for its aggressive acts against South Korea in 2010.

Another issue that will attract much attention is the value of the Chinese currency. China¡¯s fixed-exchange rate policy has been a sore spot in bilateral relations for some time; however, it is not expected to mar the summit in substantive terms this time because China began allowing the value of its currency to appreciate against the U.S. dollar about six months ago¡ªalbeit at a very gradual pace (roughly 5-6 percent a year). It may not appease China¡¯s harshest critics, but this does make things a bit easier for the Obama administration in counseling for more patience.


Is the balance of power between the United States and China changing?
The balance of power between the countries has been changing for at least two decades. While the United States maintains a formidable advantage vis-¨¤-vis China in all areas, the gap has been narrowing rapidly.

In terms of the size of the economy measured by exchange rates, China was about 7 percent of the United States when Bill Clinton was elected to the White House in 1992. In 2001, when George W. Bush became president, the Chinese economy was 13 percent of the American economy. When Barack Obama won the White House in 2008, the Chinese economy was about 30 percent of the U.S. economy. Today it is about 40 percent. So the relative balance of power has been changing at a pace that is bound to produce real geopolitical consequences.

What makes such change potentially destabilizing is its effect on the perception of the elites on both sides. In China, the political elites may interpret such a rapid shift as evidence of American decline and China¡¯s unstoppable rise. The mindset engendered by this perception will lead to more assertive behavior. In the United States, China¡¯s rapid gains may give rise to anxiety and fear.

However, in managing the changing balance of power between the United States and China, Washington has advantages that Beijing does not have. The United States plays an important role as a strategic balancer in Asia. China¡¯s rise has struck fear among its neighbors, and Beijing¡¯s assertive behavior in 2010 only reconfirmed their worst worries about a powerful China. As a result, these countries¡ªparticularly Japan, India, South Korea, Indonesia, and Vietnam¡ªare motivated to strengthen their ties with the United States.

So when we talk about the U.S.-China balance of power, we must also factor in the power of America¡¯s allies and friends in Asia that can be called upon to counter China.


Will the Obama administration press China on human rights? What is the current state of human and political rights in China?
President Obama will likely talk tough on human rights, but this will not be the most important issue for the summit. The United States does not have a lot of direct leverage on China in pressing for substantive and broad-based improvement in human rights.

China¡¯s human rights record is very mixed. In terms of economic rights and personal freedom, the country has seen significant progress in the last thirty years. Lifting several hundred million people out of poverty is one example. Physical mobility, lifestyle choices, access to information, and the freedom to travel overseas have expanded for nearly all Chinese.

But at the same time, civil liberties (the freedoms of association, speech, and religion) remain tightly controlled. Basic political rights, such as the right to vote and organize opposition parties, simply do not exist. The ruling Communist Party continues to try to keep a tight censorship on the media (even though the information revolution is making the task harder and most costly). The party also uses its control of the repressive apparatus of the state to silence and persecute pro-democracy and human rights activists (jailed Nobel laureate Liu Xiaobo is the most well-known example).

Another area where China¡¯s human rights performance is severely criticized is its policy toward ethnic minorities, especially those in Tibet and Xinjiang. In the eyes of the international community and these minority groups, Beijing has not lived up to its pledge to protect the rights to local autonomy, religious freedom, and cultural heritage of these ethnic minorities. Instead of seeking endurable political solutions that address the underlying grievances of the Tibetans and the Uighurs, China favors a dual-pronged approach that combines economic development and political repression in these areas.


Will other sensitive issues¡ªTaiwan, Tibet, and Xinjiang¡ªbe discussed?
President Hu will perhaps repeat China¡¯s long-standing position on Taiwan in his talks with President Obama, but he will not dwell on Taiwan since, aside from recent dispute over American arms sales to Taiwan, the Taiwan Strait is quiet today.

China¡¯s relationship with Taiwan has improved significantly since May 2008, when President Ma Ying-jeou came to power in Taiwan. The mainland and Taiwan signed a free-trade agreement and resumed direct commercial flights. So things look pretty good for China at the moment.

On Tibet and Xinjiang, Obama will urge Hu to resume meaningful dialogue with the Dalai Lama and urge China to respect the cultural rights and religious freedoms of ethnic minorities. Hu is not likely to make any concessions on Tibet or Xinjiang, which China regards as its ¡°internal affairs.¡±


How strong are U.S.-China relations? How effectively are Washington and Beijing working together on critical regional and global challenges?
The relationship is neither strong nor weak. It is complex, dynamic, and multi-faceted. The United States and China are rivals and partners at the same time. In geopolitical terms, they are more rivals than partners; in economic terms, they are more partners than rivals.

When translated into their management of regional and global challenges, this complexity means that Washington and Beijing cooperate on some issues but clash over others. One example is North Korea. The United States and China are both rivals and partners on the Korean peninsula. They work together to prevent conflict and war there. But they also work against each other at the same time¡ªthe Chinese provide aid to the North Koreans to maintain a strategic buffer against American influence, while the Americans maintain a powerful military presence and alliance structure in the region to balance against growing Chinese power.

On global climate change, the United States and China are also rivals and partners at the same time. They compete against each other for the moral high ground in global climate change negotiations and try to gain support for their respective positions. But at the same time, U.S. and Chinese companies work with each other in developing and commercializing green technologies.

The potential for more effective U.S.-China cooperation in managing regional and global challenges is huge. That would require common interests and mutual trust. At this moment, the relationship clearly has enough common interests but insufficient mutual trust.

www.carnegieendowment.org/publications/index.cfm?fa=view&id=42293

[sandi66]

January 12, 2011, 12:38AM ET

Chinese bank launches yuan service in New York

BEIJING

A state-owned Chinese bank says its New York City branch has begun offering accounts denominated in China's tightly controlled yuan in a new move to expand the currency's global reach.

Bank of China's announcement comes ahead of Chinese President Hu Jintao's visit to Washington next week. The White House says President Barack Obama will press U.S. complaints about China's currency controls that critics say keep the yuan undervalued and swell its multibillion-dollar trade surplus.

Beijing is trying to reduce reliance on the dollar by promoting the yuan, also known as the renminbi, for trade and finance. It is promoting Hong Kong, a Chinese territory with its own currency, as an offshore market for foreigners to conduct yuan business separate from the mainland, which is kept isolated from global capital flows.

Hong Kong banks began handling yuan transactions with the mainland last year and the World Bank and some foreign companies have sold yuan bonds.

Employees who answered the phone in the bank's Beijing headquarters Wednesday refused to give any other details.

Bank of China Ltd. says customers of its Chinatown branch in New York will be allowed to trade yuan for dollars and can wire yuan to or from China.

In a statement on its website, the bank said account holders can exchange up to the yuan equivalent of $4,000 per day, with a limit of $20,000 per year, while the limits are half those levels for non-account customers.

"They are trying to expand the scope of people who can hold renminbi and that increases demand," said Daniel Hui, a foreign exchange strategist for HSBC Corp. in Hong Kong.

Still, Hui said Chinese restrictions on money flows into and out of the mainland mean foreign customers who want to trade yuan will be limited to the Hong Kong market and currency available there.

China is the world's biggest exporter and the second-largest economy behind the United States but its exporters receive mostly U.S. dollars for their goods. Being paid in yuan would help them eliminate uncertainty about exchange rate changes. It also might help to promote China as the center of an Asian regional trading area.

China's leaders have said they will eventually let the yuan trade freely but say relaxing controls too abruptly would damage its financial system. They say a rapid rise in the yuan would hurt exporters, wiping out jobs.

Beijing promised more exchange rate flexibility in June and the currency has risen by about 3.5 percent against the dollar since then. Analysts expect another 5 percent gain this year but that is too low for U.S. manufacturers and others who say the yuan is undervalued by up to 40 percent. The U.S. Senate is considering a measure, already approved by the House of Representatives, that would allow Washington to sanction governments such as China if they are found to be manipulating exchange rates for trade advantage.

Economists say the process of making the yuan an international currency on the level of the U.S. dollar, euro or yen will take years and depend on factors such as how many foreign companies want to use it.

China's central bank governor, Zhou Xiaochuan, called in 2009 for a new global currency managed by the International Monetary Fund to replace the dollar for trade and storing reserves. Economists say such a change is unlikely, but the comments reflected Beijing's unease about the dollar, which it uses for the bulk of its trade and to store an estimated one-half of its $2.5 trillion in reserves.

"The next big step will be sanctioning and regulating renminbi trading in other markets besides Hong Kong," Hui said. "But that won't happen in the near-term."

------

Bank of China U.S. branch: www.bocusa.com


www.businessweek.com/ap/financialnews/D9KMJSP00.htm

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* Tariq Harb: Biden’s visit to Baghdad aimed at the success of the Arab summit and not to interfere with the formation of the government

January 13th, 2011 09:03 am · Posted in NEWS

Tariq Harb: Biden’s visit to Baghdad aimed at the success of the Arab summit and not to interfere with the formation of the government

Posted: January 13, 2011 by CURRENCY NEWSHOUND – Just Hopin in Iraqi Dinar/Politics



Said the legal expert Tareq Harb that the main reason for the visit by U.S. Vice President to Baghdad, is for the success of the Arab summit and to persuade Arab leaders and presidents to attend the summit in Baghdad.

War, told the news public opinion (and babysit) between that “Biden’s visit to Baghdad is Gnjah the Arab summit conference to be held in Baghdad, and take all necessary action on the attendance of leaders and Arab leaders to the summit.”
He denied that “this visit to be an interference in the cabinet reshuffle, which in the framework of the new government.” Adding that “Biden has nothing to do to change the candidate or another candidate within one end of this government.”

This comes as the U.S. Embassy announced that U.S. Vice President Joseph Biden, arriving in Baghdad to meet with political leaders in Iraq. The embassy statement said: that Biden arrived in Baghdad on an official visit where he will meet with President Jalal Talabani, Prime Minister Nuri al-Maliki, the President of the House of Representatives Osama Najafi, and the leader of the Iraqi List, Iyad Allawi, and senior political leaders. “Is Biden’s visit this seventh since December , 2009. The last visit to Biden in the month of September during the talks on forming the government and the leaders he met with leaders of political blocs.

bit.ly/hcji9g

theiraqidinar.com/2011/01/13/tariq-harb-biden%e2%80%99s-visit-to-baghdad-aimed-at-the-success-of-the-arab-summit-and-not-to-interfere-with-the-formation-of-the-government/

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Is Maliki’s new government a true ‘national partnership’ or a magical arrangement to avoid conflict?

Wednesday, 12 January 2011

Hamid Alkifaey
One of the prominent features of Noori Almaliki’s new government is that it is based on reassuring participating political forces that what happened in the past, such as marginalization, crackdown on, and elimination of, political opponents, won’t be repeated in the future. That’s why Maliki had to increase the number of ministers from 37 in the last government, to 42 in the new one. This number is almost double the number of ministries in China, whose population is 1.2 billion people (actual number of Chinese ministries is 24). The number of vice presidents and deputy prime minsters has also been increased from two to thee each. If the last government was inflated, what can we call the new government? Expanded? Greedily covetous? Or is it necessary, in order to avoid power struggle? But, can’t also be a recipe for more conflict?

Maliki should have sought to form a government that is balanced but effective – that is, one able to govern and ditch the legacy of the past, not simply satisfy the ambitions of some of those working in politics. There are basically thousands of people in Iraq today who believe that they are qualified to become ministers, senior officials and leaders – either because they have opposed the previous regime, and thereby acquired ‘freedom fighter’s legitimacy’ (especially those incarcerated); or because they possess advanced degrees, which of course entitles them to ‘knowledge legitimacy’! Or, because they are tribal sheikhs or clergymen, which gives them ‘historical’ or ‘religious’ legitimacy. Or, because they have appointed themselves as leaders of ethnic groups, sects, orders or regions, and this ‘legitimizes’ their demands to be in government. Most important for many is to be in the government, even if it’s only in name.

What has encouraged the spread of this phenomenon in Iraq is that some unsuitable and unqualified people have made it to becoming ministers and senior officials in the last three governments. This has enticed others to let their imaginations loose and seek high office, even if they are not qualified. Secondly, the financial and moral perks which people can get when becoming ministers, officials, or even advisors or managers, are enormous: huge salaries that they draw from the state, and the high social status they acquire out of joining the government, induce many to seek, painstakingly, to secure a governmental position, using whatever means are available to them. The pension that they get afterwards is also very tempting: 80% of final salary, for everyone who reaches the grade of an advisor and above, even if they worked for a week! There are very many youthful pensioners nowadays in Iraq, many having worked briefly as members of parliament or for provincial governing councils, or as aides or advisors for this official or that official – this is in addition to those forced to retire by the De-Baathification law, who run into tens of thousands. The Iraqi Retirement Act made Iraq a country of young pensioners.

This policy will certainly inflict more and more harm on the Iraqi economy, for two reasons at least. First, it has frozen the energies and expertise of many people who are able to work. Second, it obliges the state to spend on people who could otherwise be productive taxpayers. The state also pays for the guards of some retired officials whose numbers run into hundreds, in addition paying their living, transport and office management expenses. One of those participating in the government revealed to me that one retired official had 800 guards, all paid for by the state, while he lives in the fortified Green Zone!

The other feature of the Maliki government is the shrinking representation of women – who occupied almost one fifth of ministerial positions in past governments – despite the increase in the number of ministries. Navin Dakhail Saeed, a female member of parliament, refused to take the position of Minster for Women in protest at the absence of women in the new government. Ms Dakhil Saeed deserves to be saluted for this principled position, so rare in today’s Iraq. Maliki blamed other political blocs for not fielding women candidates as minsters, but he admitted that one of the blocs did in fact do so, for one ministerial position at least – but he rejected her. It’s not a secret that the political list that fielded the woman candidate was ‘Iraqia’, the woman candidate was Maysoon Aldamluji, and the ministry was that of Culture. The question is why did Maliki reject Miss Aldamluji as minister for Culture? Was it because she had no experience? Certainly not, since she was the deputy minister for culture between 2003 and 2006. According to those who worked with her, she was one of the most able deputy ministers at the time. Was it for her lack of political skills? Of course not: Aldamluji is a well-known politician and women’s activist, who has devoted all her time to political and cultural work. She is also the Editor-in-Chief of Noon Magazine which specialises in women’s issues. She is also the spokeswomen of the Iraqia List and a member of parliament for four years. Was it for her lack of academic qualifications? Impossible: She holds a BSc and MSc in architecture from the University of London. This is in addition to her membership of many prestigious professional associations. She is also from a well-known family noted for its scientific and political credentials. Her uncle is Abdulla Aldamluji, the founder of Iraqi diplomacy and the first Iraqi foreign minster. Her parents were the late Drs Salim Aldamluji and Lama’an Amin Zaki, the medical professors at the University of Baghdad, who graduated hundreds of Iraqi doctors. More important than all of this is that she is very popular in the political and cultural media. Therefore, Maliki’s refusal to appoint her as Minister of Culture has nothing to do with the lack of expertise, qualifications or suitability, which he always talks about. It’s probably because she is a secular woman who has the potential to succeed, which will be recorded in favour of his political opponents. He may have listened to advice from advisors who do not wish to see any worthy change at the Ministry of Culture. Maliki’s position against Maysoon Aldamluji has in fact harmed him politically and put him in direct conflict with the women’s movement and the cultural community. But, it seems that he is not really concerned with any critical views.

Maliki’s government’s 43-point programme didn’t contain one single specific point, but instead, talked about a ‘big decrease’ in the rate of inflation and a ‘big increase’ in the value of the Iraqi dinar! It talked about support for the economy, media, women, and improving services, living standards and security, but without mentioning any numbers or specific proposals. If the Prime Minster doesn’t know how much the rate of inflation has fallen and how much the value of the dinar has gone up, who should?

Maliki’s programme has made no mention of the restrictions on personal freedoms which members of his party in provincial governing councils have imposed on people. These restrictions are illegal and unconstitutional, and are inspired by religious persuasions which are harmful to the interests of the Iraqi people and country at large. They do not respect people’s choices in life. Will Maliki’s partners try to remedy this situation? Are they really able to? And, does the issue of personal and people’s freedoms really matter to current political forces? Questions that no one has answers for, so far.

Some of the strong points of the Maliki government is that it has important and strong personalities who will contribute to the success of the government if they are persuaded by the correctness of the government path, and believe in the sincerity of its direction. Many Iraqis wished to see more changes in faces and positions, but this has hardly happened. The prevailing culture in today’s Iraq is for incumbents to hold onto their positions at any cost, and never give up a position under any circumstances, since they are regarded as personal sinecures. But renewal will always remain a basic popular demand regarding all positions, be they political, cultural or business.


www.alarabiya.net/views/2011/01/12/133163.html

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Geithner warns of future bailouts
Government ‘may have to do exceptional things again,’ Treasury secretary says

January 13, 2011, 2:27 PM ET

By Alistair Barr, MarketWatch


SAN FRANCISCO (MarketWatch) — Treasury Secretary Timothy Geithner warned that the U.S. government may have to bail out major financial institutions again if there’s a crisis as big as the last one, according to a report released Thursday by a group overseeing the Troubled Asset Relief Program.



“We may have to do exceptional things again if we face a shock that large,” Geithner told the Office of the Special Inspector General for TARP in December.

SIGTARP, as the oversight group is known, spoke with Geithner during its investigation of the government bailout of Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 5.06, -0.02, -0.39%) . The group’s findings were released Thursday.



SIGTARP commended Geithner for his candor about possible bailouts in the future, but the group also said the Treasury secretary’s comments highlight that TARP has left a legacy of “moral hazard associated with the continued existence of institutions that remain ‘too big to fail.’”

“It also serves as a reminder that the ultimate cost of bailing out Citigroup and the other ‘too big to fail’ institutions will remain unknown until the next financial crisis occurs,” SIGTARP added in its report.

Citigroup said in a statement Thursday that when the financial crisis hit in the fall of 2008, it was “well-capitalized and liquid,” but faced uncertainty resulting from “dysfunctional markets and a declining stock price.”

“The government’s investment removed that uncertainty,” the banking giant said.
“As Citi CEO Vikram Pandit has said, we owe a debt of gratitude to the U.S. Government and the American taxpayer for providing Citi with TARP funds,” the bank said. “This program restored confidence in the financial system and built a bridge to sound footing for many institutions.”
Citigroup shares slipped 3 cents to $5.05 in afternoon trading on Thursday. The stock is down 90% in the past five years.
www.marketwatch.com/story/geithner-warns-of-future-bailouts-2011-01-13

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Bank of China Seeks to Create Global Currency
Currencies / China Currency Yuan



Jan 13, 2011 - 05:58 AM

By: Money_Morning



Kerri Shannon writes: State-owned Bank of China Ltd. has announced that it will allow U.S. customers to open yuan accounts to buy and sell China's currency.



According Money Morning Chief Investment Strategist Keith Fitz-Gerald this is yet another deliberate move by China, which is attempting to promote the role of its currency in global trade.



"Prior to July 2010 such trading had been confined within China," says Fitz-Gerald. "Then, the government allowed limited yuan trading in Hong Kong, which has surpassed all expectations by blossoming literally from zero to more than $400 million a day. Against that baseline, here they come and here the Yuan comes."



While U.S. customers can already trade yuan through some Western banks, this move signifies the progression of China's goal to internationalize yuan trading.



BOC will limit individuals to $4,000 in trades per day and $20,000 per year, to prevent speculation in the currency. But there is currently no limit on firms and businesses, as long as they are involved in international trading.

"We're preparing for the day when renminbi beco

mes fully convertible," Li Xiaojing, general manager of BOC's New York branch, told The Wall Street Journal. The bank wants to be "the renminbi clearing center in America."



The move is also geared to reduce reliance on the U.S. dollar and push the yuan into a greater role as a global currency. Many are concerned that the U.S. dollar's value will decline as the U.S. Federal Reserve maintains its loose monetary policy. China, which holds nearly $3 trillion in foreign exchange reserves largely in dollar-denominated assets, is particularly concerned.



"China sees the global financial system as too U.S.-centric and dollar dependent," Robert Minikin, senior currency strategist at Standard Chartered Bank in Hong Kong, told The New York Times. "That created issues during the financial crisis."



Zhou Xiaochuan, Governor of the People's Bank of China (PBOC), in 2009 released an essay entitled "Reform of the International Monetary System" on the central bank's Web site calling for the dollar to be dismissed as the world's main currency reserve.
China also has signed billions of dollars in currency swap agreements to promote the yuan's use in international trade. And most recently, Chinese regulators last month increased by 7,000 the number of exporters that are allowed to use the yuan to settle global trade transactions.



Analysts predict that within a few years about 20% to 30% of China's $2.3 trillion of imports could be settled in yuan instead of U.S. dollars, up from the less than 1% today.

Money Morning's Keith Fitz-Gerald says this shift to the yuan is something for which the United States is not prepared.



"Arrogant U.S. officials will be stunned in a few months by the giant sucking sound this is going to create in the dollar," said Fitz-Gerald.



Fitz-Gerald calls China's recent move a "monster game changer," and said the yuan is on its way to meeting its global currency goal.



"Watch the yuan become a store of value on par with the U.S. dollar, the Japanese yen and the euro within five years, and still remain nearly completely outside the traditional western currency trading pairs and the sovereign debt risk that makes them all but worthless - quite literally and figuratively." said Fitz-Gerald.



Fitz-Gerald said China's other three big China state-owned banks - China Construction Bank Corp., Agricultural Bank of China Ltd. and Industrial and Commercial Bank of China - will shortly follow BOC's new policy, further broadening the yuan's liquidity. They will compete with each other for yuan clearing services, shutting out unprepared U.S. financial institutions.



Yuan trading by offshore entities will skyrocket as institutions jump on the trade. While most U.S. corporations settle in U.S. dollars, the yuan's appeal is growing. McDonald's Corp. (NYSE: MCD) and Caterpillar Inc. (NYSE: CAT) recently became the first U.S. non-financial companies to sell yuan-based bonds in Hong Kong.



Fitz-Gerald also said U.S. consumers should brace for higher inflation as the yuan strengthens and raises the price of Chinese goods.



"The loudmouths in Washington who believe that China's yuan is undervalued are now going to get a terribly painful lesson in how the real world works when a country with $2.8 trillion in reserves starts calling its own shots," said Fitz-Gerald.



U.S. Treasury Secretary Timothy F. Geithner has repeatedly asked China to revalue its currency, claiming it is too cheap against the U.S. dollar and gives Chinese exporters an unfair advantage. China's trade surplus with the United States increased by 26% in 2010 to $181 billion.



Geithner said in a speech yesterday that while China's tight exchange rate control has kept the currency "substantially undervalued," both countries were starting to see benefits of the yuan's recent appreciation.



"We're probably….at the end of the second inning…but it is changing and it has to happen," Geithner said.



The dollar has dropped to 6.6 yuan from 6.83 at the start of the year. The yuan currency is strengthening at a 10% rate when accounting for Chinese inflation.



"So if that appreciation was sustained over time, it would make a very substantial difference in correcting what is a major distortion for the Chinese economy and the global economy," Geithner said.



China in June by agreed to increase yuan flexibility by allowing the currency to move up to 0.5% each day.



"Conditions are in place for sustained yuan appreciation against the dollar," said Standard Chartered's Minikin, who predicts the yuan will move 6% this year to 6.20 per dollar.

Fitz-Gerald said this development solidifies for investors why China is such an important part of the New Year.



"If you haven't already bought yuan as part of your Chinese investing program, now's the time to do so," said Fitz-Gerald. "Having the yuan on the world's stage will unleash a wave of purchasing power the likes of which the world has never seen and it is a game changer in the truest sense of the world."

[Editor's Note: China's campaign



to transform the yuan into the world's new reserve currency is so crucial a development for investors that Money Morning will be following the story with a four-part series beginning next Tuesday. Be sure to check in for more insight from Money Morning Chief Investment Strategist Keith Fitz-Gerald.]


www.marketoracle.co.uk/Article25556.html

[sandi66]

Dancing on the ceiling
Talk of America defaulting on its debt is just that
Federal debt
Jan 13th 2011 | WASHINGTON, DC



FOR most finance ministers default is usually a subject to be avoided at all costs. Not so in America, where Tim Geithner, the treasury secretary, sent Congress a letter on January 6th describing in gory detail the “catastrophic economic consequences” such an event would entail.

The letter was part of the dance that takes place whenever the administration asks Congress to raise the ceiling on the national debt. America is unusual in requiring a vote both to adopt a budget, and to issue any debt necessary to finance it. Grandstanding legislators typically demand concessions from the administration before raising the ceiling. There is obvious potential for a stand-off, just as there was in 1995-96, when Bill Clinton rejected the budget cuts proposed by congressional Republicans as a condition for raising the debt ceiling.

A similar confrontation now looms. The Republicans, who took control of the House of Representatives on January 5th, say they will not raise the debt ceiling until they get $50 billion cut from spending for the fiscal year that ends on September 30th.

The Treasury can still borrow an extra $327 billion and draw down some $200 billion in deposits at the Federal Reserve before it breaches the current ceiling of $14.3 trillion. Mr Geithner says that will happen between March 31st and May 16th. He can then get additional breathing space by means of various gimmicks, such as redeeming debt issued to civil-service pension plans. Lou Crandall of Wrightson ICAP, a research firm, reckons the Treasury could free as much as $223 billion that way, and another $278 billion by selling mortgage-backed securities and privately originated student loans it acquired during the crisis. These steps, he says, could tide the government over until the autumn.

Once all such devices were exhausted, Mr Geithner warned, the Treasury would have to default on something. But he did not specify exactly what. The ambiguity may be deliberate. Even with no increase in the ceiling, the Treasury can easily service its existing debt; it is free to roll over maturing issues, and tax revenue covers monthly interest payments by a large multiple. But in that case it would have to postpone paying something else: tax refunds, Medicare or Medicaid payments, civil-service salaries, or Social Security (pensions) cheques.

It is not clear what the legal priority is among the Treasury’s obligations, whether contractual such as bond debt or statutory such as social security. “This is an area where the federal government itself is often the interpreter,” says a former official. Yet if it came to it, deciding between the two should not be hard. Delayed payments may hurt pensioners and cause political damage, but a default on Treasury debt would unleash global financial chaos. Either outcome would be deeply unpleasant; that may be Mr Geithner’s most potent weapon.

www.economist.com/node/17906039?story_id=17906039&fsrc=rss

[sandi66]

Bond Auctions Fuel Currency Rally
01/13/11 St. Louis, Missouri – Well… The bitter cold that was hanging over the currencies for the past week saw some milder weather yesterday, as that same bitter cold switched over to the dollar… Yesterday, I told you about how the Portuguese bond auction went off just fine, and yields actually fell in the secondary market. I said then that the news had initially put wind in the euro’s sails, but could not be withstood, and the euro (EUR) had fallen back below 1.30… Well, that was only for a short time… As the news of the auction filtered through the markets, adding in US Treasury Secretary Geithner’s comments on the renminbi (CNY), the dollar got sold… Right after lunch, I looked at the screens and the euro was not only through the 1.30 handle, but was trading through 1.31, which was a good thing for the currency because the move brought the beleaguered and beaten euro back to its 200-day moving average, which it fell through last week.

This morning, the news was even better, regarding bond auctions from the periphery countries of the Eurozone. This morning it was Spain, and Italy auctioning bonds, and both auctions went off without a hitch, and again, the yields on the bonds actually fell, which is an indication that the demand was strong!

The euro wasn’t the only currency taking liberties with the dollar yesterday and overnight… The Canadian dollar/loonie (CAD) traded to a 2 1/2-year high versus the dollar to the south of the loonie. The Aussie dollar (AUD) climbed back to $0.9950, and gold traded higher, after spending most of the day flat or in the red slightly.

So… The “flight to so-called safety” (to the dollar) was called off yesterday, and the trading looked like it was loaded for bear, with most of the losses taken by the currencies in the past week reversed in one afternoon’s trading…

And then the honorable Ron Paul, one of the few lawmakers who truly understands what’s going on with our debt and currency, posted a comment on his website…

It is nothing short of cruel and criminal for Congress to stand idly by while the life savings of Americans are inflated away to nothing. It is high time Congress insist on getting complete information on what the Fed has been doing, and for whom. My hope is that exposing the truth will demonstrate the insanity of the status quo and more people will call for sensible changes, such as legalizing competing currencies.

Unfortunately for gold, the rally yesterday didn’t last throughout the night, and the shiny metal has given back its gains from yesterday. Makes no sense to me, except of course if you believe in gold price manipulation, then it makes sense… And I do believe in that… Of course it could very well be profit taking… But given the story that I wrote about yesterday, regarding the tremendous demand that minters are seeing for physical gold, one still has to scratch one’s head in confusion over this selling of gold this morning.

The Bank of England, (BOE) and the European Central Bank (ECB) both are meeting as I type my fat fingers away here. These two meetings could very well have fireworks…but most likely, they will be non-events, with little clues to the future…

The ECB starts 2011 with the Sword of Damocles hanging over it… The ECB must deal with Europe’s sovereign-debt crisis as well as inflation… But there’s word out of China that soon the ECB might have one less worry… China is prepared to participate in any future Eurozone stabilization measures, seeing the euro as a key pillar of a multi-currency global financial system. Hmmm… If China is willing and able to supply needed depth to the stabilization fund, then that’s a good thing… It’s good for The Eurozone, as it could very well keep interest rates down on bonds, and it’s good for the Chinese, because… They get their foot in the Eurozone’s door just a little bit further in their attempt to rule the world! HA!

Yesterday, I was buying some pound sterling (GBP) for a customer, and said, “Whoa! That pound sterling price is pretty rich!” As long time readers know, I’m not a fan of pound sterling, as they have the same problems we have here, only on a smaller scale. But, when the bias is to sell dollars, the currencies – even the one’s limping along crutches – line up to take swings at the green/peachback!

Now… After all that euphoric talk about the currency rally, I’m watching the dollar rally back a bit, with gold really falling lower now. So, you see, currency traders are a fickle lot, and can be moved by the slightest change, which will affect their sentiment… Let’s hope this rally back by the dollar was just some profit taking.

Yesterday I talked about the weakening Swiss franc (CHF), and apparently the Swiss National Bank (SNB) saw it too and looked at it as a perfect opportunity to bash the currency… The SNB hasn’t had that opportunity in some time, but they do now… So, the SNB came out with a statement that scared some currency traders/investors/hedge funds into thinking the SNB could intervene and sell francs, thus reducing gains by trades, etc. The SNB said that franc appreciation was threatening economic growth. In fact, they said that the franc’s gains are “posing an extraordinary challenge” to some exporters.

So… Those comments caused some nervousness in those holding francs… But, quite frankly, I don’t know why! The SNB tried to huff and puff and blow down the franc’s house of strong currencies last year, but to no avail… If franc owners just ignore them, the SNB will go back to their children’s storybook, where they came from!

Yesterday, I told you about the 67% increase of income tax in Illinois… Upon further review, I see that it really raised the personal income tax from 3% to 5%, which is a 67% increase… But, the needs of the Illinois lawmakers to make ends meet are still not going to be met… So, in the end, it’s still bad…and it’s going to get worse!

And then… The Chinese renminbi (CNY) – again being hung out to dry by the Chinese government, as Chinese Premier, Hu, will be visiting the US next week – saw another huge mark up of the currency last night, which puts the renminbi, now, at a 17-year high versus the dollar. So… When Hu visits next week, and the lawmakers and all the President’s men try to beat on him about how strong the renminbi is, he can simply point to the fact that the renminbi is at a 17-year high versus the dollar!

Now… I know that I’ve said for some time now that the renminbi will be the next reserve currency of the world… That’s not going to happen any time soon, folks… But what I’m getting at here is that if you go back to 2003, when we first began offering renminbi deposits to US citizens, the IMF was saying that the renminbi was 40-50% undervalued… So, let’s split the spread and say it was 45% undervalued… Well, from July 2005, when the peg to the dollar was broken, to July 2008, the renminbi gained about 20% versus the dollar… Then from July 2008 to June 2010, the renminbi battened down the hatches and rode out the financial meltdown… But from June 2010 to now, the renminbi has gained 3.4%… So, that’s nearly 25% of the 45% in the books.

So when you hear US Treasury Secretary Geithner spout off about the renminbi being “significantly undervalued” like he did yesterday…is 20% considered “significantly undervalued”? Now, 45% in 2003, surely was “significantly undervalued” in my book… But 20%? I think Timmy Boy is pushing the envelope here, and going for the sensationalism of saying “significantly undervalued”!

Then there was this… And this is not good news, so if you don’t want to deal with this depressing news, skip ahead to the recap… From CNN Money…

Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even as notices started leveling off during the end year.

In total, there were nearly 2.9 million foreclosure notices filed during the year, according to report released Thursday by RealtyTrac. That was a record high, but just 1.7% above 2009.

It most certainly would have been higher had notices not plunged in November and December as banks halted tens of thousands of foreclosures in the face of the robo-signing scandal.

“Total properties receiving foreclosure filings would have easily exceeded 3 million in 2010 had it not been for the fourth quarter drop in foreclosure activity,” said James Saccacio, RealtyTrac’s CEO. “Many of the foreclosure proceedings that were stopped in late 2010 – which we estimate may be as high as a quarter million – will likely be re-started and add to [foreclosure] numbers in early 2011.”

This will continue, folks… Probably for years… UGH!

To recap… The dollar rally ran into Mr. Freeze, which cooled the dollar down and allowed the currencies to rally all day yesterday and overnight. The Portuguese bond auction was the igniter of the rally, and the well received bond auctions of Spain and Italy this morning, has kept the pressure on the dollar. Gold and silver are not rallying alongside their other non-dollar risk asset brothers – currencies…

Chuck Butler
for The Daily Reckoning



dailyreckoning.com/bond-auctions-fuel-currency-rally/