Canada’s national newspaper - The National Post - ran this article on Tuesday November 4th in the Financial Post section.  Perhaps you read it too and found yourself asking, “what should I do if mutual funds aren’t the most effective place for my RSP investments?”

If this thought crossed your mind, you’ll want to learn more about AltaPacific Mortgage Investment Co.

Please don’t hesitate to call or email us for more details on investing in Real Estate mortgages.

Mutual fund gives investor dividend or distribution of capital. Dividend may be required from company, which gives dividend periodically. Moreover, your sponsor invests in blue chip stocks. It can raise your return by high dividend. Your sponsor will give dividend to you. Fixed income funds that invest your fund to fixed income will get interest semi-annually except your sponsor invests in Zero Coupon Bond.

Your return is the difference of today NAV plus capital gain then divided by initial NAV. From information in first paragraph we can count our return are ((25-16) + 0.4) / 16 = 0.5875 or 58.75%. This mutual fund gives you very high return.

Is 58.75% your total real return? No, is not yet. You must calculate you return with other fees. Sponsor will charges you with some expenses. Sponsor charges you front end load at least 6% but may not exceed 8.5%. When you redeem your fund, sponsor charges you back-end load for 5 % or 6%. Operating expenses include company operation like administrative, advisor etc. SEC allows your sponsor to charge for 0.2 – 2 % fee. Meanwhile, 12b-1 is cost for advertising and marketing expenses. Suppose your total fee is 15%. Your total return is return rate minus fee or 43.75% (58.75% - 15%).

Sometimes we find mutual funds with high return charges us by high cost, other side mutual funds with low return charge investor with low returns too. E.g., mutual fund A gives you return 30% and charges you fee for 15%. Meanwhile, mutual fund B gives return just 23% but charges you fee for 9 %. You must careful to find your sponsor. Before start investing mutual funds, you must consider the reputation and cost of investment. You must read prospectus of mutual funds carefully. The prospectus of sponsor contains information about fee as your consideration.

Mutual fund usually called for open-end investment company. Open-end mutual fund is most favorite’s investment company in US. At the end 1999, there are more than seven thousand mutual companies in US. Fidelity, Vanguard, Putnam, Dreyfus etc is the most well-management mutual fund company.

Which one is the best? It is depend on your view. Your aim investment may determine which funds fit with you.

There are types based on mutual fund investment policies are:

Equity funds, Mutual funds that invest in equity funds like stock. This fund is suitable for investors who like capital gain and dividend. Sometimes investment manager buy little portion fixed-income securities. Fixed income securities support mutual fund company to steady when investor liquidate the funds suddenly.

Equity funds differ on income fund and growth fund. Income fund refer to company stock with dividend, other side growth refers to focusing on capital gain.

Fixed income securities, Investment manager use fixed income securities for investing investor money. This mutual fund is ideal for medium term and long-term investor who want to avoid risk like pension, old officer, etc. Some companies invest their assets to specific fixed income securities like Municipal Bond, Government Bond, Debentures, Commercial Papers, Corporate Bond, T- Bills, etc.

Money market funds, Investment manager invest funds at highly liquidity money market instrument. They may put money at foreign currency certificate deposit. This fund is liquid. This fund is suitable for short-term investor like corporate and other business organization.

Balanced and Income Funds (hybrid), mutual funds that invest money at various investment vehicles likes bond, stock, money market, index, etc. Investment manager construct best portfolio to get higher profit. This fund fit with moderate investor. This fund is ideal for medium and long term.

Assets Allocation funds, Similar with balanced and Income Funds. Investment manager find to design high investment vehicle.

Index Fund, This fund buys index. Index represents index performance in capital market. E.g., S&P 500 Index fund is mutual fund represent S&P 500 Index. There is also other index like Dow Jones, NASDAQ, Wilshire 500, etc.

Newspaper provides information of mutual funds. Open-end mutual has obligation to publish NAV daily at newspaper. Meanwhile, close-end has obligation to publish NAV weekly at newspaper. You can see table noted NAV or Net Asset Value. You can notice that NAV of one mutual fund is different day by day. Sometimes NAV rise, other day NAV descends.

NAV should changes because the difference between NAV can result capital gain. Investor expect NAV rise after they buy mutual fund. The best performance manager will provide good capital gain. Suppose, three months ago, you bought mutual funds for $ 25. Today your mutual fund price is about $ 30. So you can get capital gain for $5 ($30 -$25).

So, what is NAV? NAV is price of shares mutual fund. NAV price is similar with company stock price. You can buy mutual fund at NAV that effective that day. Today, information announced a mutual fund NAV is about $25 so you can buy mutual fund for $25.

How can NAV count? NAV is total assets of mutual funds minus liabilities divided by total number shares of outstanding. Suppose one mutual fund has stock that has market value $ 125 million. They have liabilities $25 million including owe to advisers, rent, wages due etc. That mutual fund offers 5 million shares to investors. NAV of mutual funds are: ($ 125 million - $ 25 million) / 5 million = $ 20.

Mutual fund has some assets from investment vehicle. They invests investor money to stock, bonds, index, etc. The assets vary day by day because stocks, bonds, index move volatility. Stocks that invested may give dividend periodically especially blue chip stock. Meanwhile, bonds pay interest semi-annually except zero coupon bonds. Money market mutual fund also invests in certificate deposits so they can get interest periodically. This is explaining that NAV can change day by day. A mutual fund has liabilities too. Liabilities can reduce NAV value. Sometimes mutual fund has liabilities. They owe money to others financial institution and they owe for salary officer, office rent, miscellaneous expenses etc.

Investing in stock will give you higher profit than investing in mutual fund moreover blue chip stock. Even there is no one guarantee your risk, investing in blue chip stock is safely and profitable. Center for Research in Security Prices[1] has research that stock will give you rate of return about 13.11% for large stock and 18.81 % for small stock.

Investing in stock has means that you construct portfolio by yourself. You can choose your stock that will give you more profit. You can fit your risk with the stock. Aggressive investor may choose speculative stock that may give you spectacular return. Meanwhile risk avoid investor can buy blue chip stock or defensive stock.

Stock Investing give you new experience. You can feel the fear the investment. You can learn investment in real world. Learning by doing is the best learn method.

Stock Investing will sharpen your intuition. You can appraisal the stock for a moment. The result you will gain more money.

Both mutual fund and stock are risk fully. You must suffer the risk even your mutual fund company is the best mutual fund company in the world and have good reputation for over 20 years. You can deny the risk even though you investing in risk-free asset like Certificate Deposit. Your money in Certificate Deposit may loose if country in the war.

Investing in mutual fund is expensive. You must pay much fee. When you buy mutual fund, you will be charged with Front End Load. The Security Exchange Committee (SEC) limits Front-end load for 8.5%. In practical, Mutual Fund Company usually charge investor more than 6%. When you liquidate your mutual fund, you will be charged with Back-end load. The SEC allow mutual fund to charge operating expenses. Operating expense is including administrative expenses and consultation fee. Last, invests mutual fund charge you for 12b-1 charges. At least you must pay four fees in investing mutual fund. Remember, high-risk high return.

[1] Bodie. Z, A. Kane and Marcus A.J. 2002. Investments. 5th edition. Mc Graw-Hill Irwin. New York.

In my opinion, ETFs is better than mutual fund. ETFs have many advantages than mutual funds. ETFs are newer product than mutual fund stock index. ETFs are more liquid than mutual fund. Investor can buy and sell ETFs anytime they want like stock. You can trade ETFs through day. You may buy ETFs in the morning and sell it afternoon. This will give you chance to gain profit at short time. On, contrary, mutual fund can sell after sponsor finish counting Net Asset Value (NAV).

Even, ETFs are cheaply than conventional mutual fund. ETFs charged investor with few management fees. E.g., Barclays charges annual expenses for nine basis point (0.09 %) of net asset value per year on its S&P 500 ETF, whereas Vanguard charges your annual expenses for 18 basis points on its S&P 500 index mutual fund. On Contrary, Mutual fund will charges you with so many fees. When you buy mutual fund you will be charge with front-end load. The sponsor is usually charges you for 6% invested funds. You need to expend money for redemption too. The sponsor will charge you for 5% or 6% invested funds. Others fee that must you pay are operating expenses and 12b-1 charges.

ETF have also potential taxes advantages. When investor sells their ETFs, the sponsor does not have to sell their share. Therefore, the government does not charge tax to your ETFs. On contrary, when investor redeem mutual fund, sponsor must sell their stock. Consequently, the investor must pay taxes for capital gain taxes.

The mutual fund will have an authorized capital of P400 million, said Isfani Daba, chairperson of the First Community Cooperative (Fico), which will have a 45-percent stake in the fund.

The other cooperatives investing in the mutual fund are Amkor Technology Philippines Employees Cooperative, Peace and Equity Foundation, Coop Life Insurance and Mutual Benefit Services, Cebu CFI Multi-Purpose Cooperative, Novaliches Development Cooperative, San Dionisio Credit Cooperative and the United Sugar Cane Planters of Davao.

Although local financial markets are in the doldrums, Daba said the mutual fund offered a good opportunity for cooperatives to participate in a fund that could pick up securities at bargain prices.

The minimum investment in the cooperative mutual fund has been set at P100,000.

Roa said the new mutual fund will be a balanced fund or invested in a combination of stocks and bonds.

“Many people still view investing as the province of financially well-off individuals. Nothing could be farther from the truth—individuals, both the high net-worth and the regular Juan dela Cruz, must be able to maximize opportunities in the financial markets, and mutual funds certainly assist in leveling the playing field for all client types,” said Jose Cuisia Jr., president of PAMI’s parent company, Philippine American Life and General Insurance Co. (Philamlife).

Through its partnership with the National Cooperative Movement, Cuisia said the Philam group would like to encourage larger investments in mutual funds.

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Mutual Fund investment in India is a pick up. Mutual funds are collective investment schemes that clubs money from investors and invest in securities like stocks and money market instruments. For investment in Mutual Fund, there are a number of mutual funds in the country, both domestic as well as international players.

One of the most important reasons why mutual fund investment is preferred investment tool in India is because they offer the investors the ability to easily invest in complex markets. According to a survey, mutual fund investment in India constituted around 40 per cent of stock investment plan in 2007. But these are certainly bad times even for mutual fund investors. The worst sufferers in the present market are those funds that have investment portfolios of small and mid-cap stocks. Moreover, tax-saving mutual funds too have performed badly with Principal Personal Tax saver witnessing losses of 80 per cent from its high.

Investors looking for impressive returns from mutual fund investment in India are also disappointed by balanced funds (having equity exposure of around 65-75%). Balanced funds invest both in stocks and fixed income securities as per the prescribed proportion in their offer documents. For the four-month period (July-October), there has been 30 per cent drop in values of average balanced funds.

Mutual Fund is an investment alternative for investors, especially for small investors and those who have less time and skill to count the risks of their investments. Mutual Fund is designed as tool to gather fund from public that have the capital, will to invest, but only have limited time and knowledge. Beside that, through Mutual Fund, it is expected that the number of local investors in the Indonesia’s Capital Market can increase.

Generally, Mutual Fund is defined as a mean to collect fund from the investment society to be invested in portfolios by the fund manager. This definition is also written in the Capital Market Law No.8/1995 section 1 clause (27) regarding Mutual Fund. There are three points shown on this statement. First, Mutual Fund collects fund from the society. Second, the fund is then invested in the securities portfolio. Third, the fund is managed by an Investment manager.

Therefore, the fund put in the Mutual Fund is investors’ collective fund, and the Investment Manager is the person trusted to manage the fund.

Second, Mutual Fund helps the investor to invest in capital market easier. Determining which good stocks to buy is not easy. It needs specific knowledge and experiences, which some investors don’t have.

Third, time efficiency. Since the fund invested in the Mutual Fund is managed by a professional fund manager, investors do not need to monitor their investment performance all the time.

Like other investments, besides giving the investor the opportunity of profit, Mutual Fund has possibilities of risks. Such as:

From the investment portfolio, mutual fund can be categorized as follow:

Different kinds of mutual funds

Mutual fund usually called for open-end investment company. Open-end mutual fund is most favorite’s investment company in US. At the end 1999, there are more than seven thousand mutual companies in US. Fidelity, Vanguard, Putnam, Dreyfus etc is the most well-management mutual fund company.

Which one is the best? It is depend on your view. Your aim investment may determine which funds fit with you.

There are types based on mutual fund investment policies are:

Equity funds, Mutual funds that invest in equity funds like stock. This fund is suitable for investors who like capital gain and dividend. Sometimes investment manager buy little portion fixed-income securities. Fixed income securities support mutual fund company to steady when investor liquidate the funds suddenly.

Equity funds differ on income fund and growth fund. Income fund refer to company stock with dividend, other side growth refers to focusing on capital gain.

Fixed income securities, Investment manager use fixed income securities for investing investor money. This mutual fund is ideal for medium term and long-term investor who want to avoid risk like pension, old officer, etc. Some companies invest their assets to specific fixed income securities like Municipal Bond, Government Bond, Debentures, Commercial Papers, Corporate Bond, T- Bills, etc.

Money market funds, Investment manager invest funds at highly liquidity money market instrument. They may put money at foreign currency certificate deposit. This fund is liquid. This fund is suitable for short-term investor like corporate and other business organization.

Balanced and Income Funds (hybrid), mutual funds that invest money at various investment vehicles likes bond, stock, money market, index, etc. Investment manager construct best portfolio to get higher profit. This fund fit with moderate investor. This fund is ideal for medium and long term.

Assets Allocation funds, Similar with balanced and Income Funds. Investment manager find to design high investment vehicle.

Index Fund, This fund buys index. Index represents index performance in capital market. E.g., S&P 500 Index fund is mutual fund represent S&P 500 Index. There is also other index like Dow Jones, NASDAQ, Wilshire 500, etc.

Specialized sector fund, your investment manager invest in industry like biotechnology, utilities, telecommunication, precious metal (Gold & Silver), etc.

ET pointed to this development in India’s Mutual Fund Industry which came as a rude shock.

Assured returns?? How can Mutual Funds give assured returns to big ticket investors and penalise small investors (r’ber the difference is accounted an expense deducted from the NAV of other investors over a period of time). Is this a mutual fund concept at all?

Reminds of John Bogle who often says, there is nothing mutual about mutual fund industry. Agreed MF industry is under severe stress but you can’t penalise small investors. Instead of cutting expenses, what investors might get is higher expenses and moreover they may not be aware of it all. As it is the investments in Mfs have halved and this might be lower going ahead as well.

[...] exit packages for employees and below par returns for investors! I had pointed that in these times small time MF investors loose out (for whom Mfs are designed) and big ticket [...]

Since we are talking about ETFs and mutual funds, it would be an appropriate time to briefly tackle the subject of taxes. Mutual fund investors will be in for a surprise. Not only are funds down 30, 40% or more, poor investors will get a big, fat tax as well. Even if your growth fund lost money, you’ll owe taxes, something that wouldn’t happen with growth ETFs or most any ETFs.

For many, ignorance is bliss. Few will do something about it and join the movement towards ETFs away from mutual funds. Even though September saw ETF assets decline, the ICI reports net creation of $52 billion worth of ETFs This is outstanding and the largest number I remember seeing. Even though investors lose money everywhere (Russia ETF, Commodity ETFs, Energy ETFs, you name it) they’ve come to trust ETFs more. More power to you.

With the market finally hitting a lower daily volitility it is time for you to consider buying mutual funds again. In order for you to make a good decision on who to get a proper mutual fund purchase you should consider shoping around at different Mutual Fund Store. Shop around and take your time before making a decision.

Mutual Fund investing has exploded over the past 50 years to become one of the most popular forms of investing anywhere, there are still possible pitfalls that you can run into if you’re not very careful. Investing is still a very risky business, even if people are doing it. Here are a few tips to help you through any problems you might have.

One common criticism of mutual fund investing is that they don’t have a high enough return on their investment and that index funds, which aren’t as popular have historically returned a higher investment than the much more popular actively managed mutual funds.

A second common problem that some have with mutual fund investing is the use of load funds. You have probably seen the phrase “no-load mutual fund” in the newspaper or on television. The reason the no-load type of fund is preferred is because load funds come loaded with fees.

The fees can cost anywhere between half a percent, all the way up to 8.5 percent of however much you chose to invest. It’s thought that these fees are a clear conflict of interest as they clearly benefit the people making the sale and hurt the person making the investment. Load mutual funds are also thought to have your broker recommend funds that will maximize his fee, and not your investment portfolio.

A few investors also look to a perceived conflict of interest in regards to the size of the mutual fund. Most companies that manage the mutual fund charge a fee of between half a percent up to two and a half percent of the total amount of the funds assets. It’s thought that this fee could cause a fund to spend more on advertising than is actually needed so that they can get more people to invest in the fund and maximize their fee as much as possible.

The mutual fund market isn’t immune to scandals, either. In 2003, a scandal involving the practice of unethical and underhanded trading practices. Many funds were found to have participated in late trading and market trimming, both of which are illegal practices. You obviously don’t want to invest in a mutual fund that is engaged in illegal activities.

Mutual fund investing is really gaining in popularity on an almost weekly basis, and a few bad eggs in the business won’t ruin it for everyone. However, it is always good advice to enter into any kind of investing with your eyes open, and if you feel your mutual fund is behaving improperly, there are authorities you can report them to.

Author: Michael Carey is a online marketer and blogger join his mailing list at bigmike@freeautobot.com visit his webpage at http://www.peoplesearch922.com

Mutual Funds

Mutual Funds
By Ankit Agarwal

A mutual fund is a company that pools investors’ money to make multiple types of investments, known as the portfolio. Stocks, bonds, and money market funds are all examples of the types of investments that may make up a mutual fund. The mutual fund is managed by a professional investment manager who buys and sells securities for the most effective growth of the fund. As a mutual fund investor, you become a “shareholder” of the mutual fund company. When there are profits you will earn dividends. When there are losses, your shares will decrease in value. Mutual funds are, by definition, diversified, meaning they are made up a lot of different investments. That tends to lower your risk (avoiding the old “all of your eggs in one basket” problem). Because someone else manages them, you don’t have to worry about diversifying individual investments yourself or doing your own record keeping. That makes it easier to just buy them and forget about them. That’s not always the best strategy, however since your money is in someone else hands, after all.So,a little bit of research always comes in handy. Since the fund manager compensation is based on how well the fund performs, you can be assured they will work diligently to make sure the fund performs well. Managing their fund is their full-time job!

Every mutual fund has expenses and can have a negative effect on your returns. If you’re like me, and the rest of the stock market investors who have lost (on paper at least) vast sums due to the market’s downturn, you need to be invested in mutual, or better yet, index funds with low expense ratios. Check out the following pdf that we share with clientele.

mutfundexpenses

Let me start first by saying that my intent today is not to add to the confusion of the past few months, but facts are facts. The stock market has been on a “roller-coaster” ride, and people are reacting to it. Many investors are seeking cover because of the damage done to their portfolios, and others sense buying opportunities due to the historic lows in the market.

Whichever boat you may be in, now is the time to carefully consider ANY financial move you might be thinking about. Bearing that in mind, let’s talk about capital gains derived from mutual funds. They get paid out annually, generally in December. For those of you who have suffered losses in your mutual fund portfolio, you may have an income tax hit looming as well.

Huh? What? How is that possible? My portfolio has suffered huge losses in asset value, and now I capital gains tax to look forward to? What gives?

Well, a mutual fund (by law), has to distribute its income to its shareholders. The funds don’t get taxed, you do.

A mutual fund derives income from its various holdings stocks, bonds, etc. and pays that income out to its shareholders. This generally occurs twice a year and is known as income distribution.

Capital gains are accumulated throughout the year and are generally paid out in December.

Many investors assume that they couldn’t possibly incur any capital gains because their funds have lost too much money. Unfortunately, that isn’t the reality of the situation. A decline in a mutual fund’s share price has more to do with losses in the value of its assets, not from losses in its portfolio due to stock transactions.

One of the reasons that a person buys a mutual fund is portfolio diversity, and another is to have a money manager running their portfolio. Most managers don’t operate like the general public, i.e. buying high and selling low. A lot of managers are holding assets in anticipation of a comeback, or even buying to take advantage of value. So, the end of the year comes along, and it’s time to distribute all of those capital gains that have been accumulating inside of the fund.

What does this mean to you? This might be a good time to consider dumping some of those funds that are not performing so well. If it suits your situation, you could sell now and avoid any potential tax hit. If you are considering buying a fund, you might want to wait until after the distribution date.

Before you anything, get a hold of the fund in question and ask them if they are going to have a taxable capital gains pay out. That should help you make a decision that’s right for you, and when in doubt, consult with a trusted advisor.

For more reading on the subject, consult the following article:

http://www.filife.com/stories/fund-investors-face-risk-of-tax-hit

Despite the declining demand in equities which causes downward movement in most bourses, there is potential in mutual funds. This type of investment is most suitable to balance risk and return in medium to long term plan. Thus, invest with objective, and maximize wealth accumulation.

Potential is always there … continue read the excerpt from AsianInvestor.

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Mutual fund AUM in Asia will drop by 20% this year, but Korea and India will lead a quick rebound, according to consultancy Cerulli Associates.

Consultancy Cerulli Associates predicts mutual-fund assets under management in Asia ex-Japan to revisit their 2007 peak by 2010, and remain on track to hit $1.6 trillion by 2012.

AUM in the industry peaked at $1.13 trillion at the end of 2007, thanks to strong stock market performance, the increasing shift from savings into investments, and the expansion of wealth management services.

The picture hasn’t been so rosy since. China, the biggest contributor to growth through 2007 (when AUM grew 86% over 2006 levels), has seen total fund AUM contract by 34% in the first half of 2008; a reduction sure to be worse in the second half.

But Cerulli argues most of these losses are due to market valuations, rather than redemptions. Net redemptions have been few, in stark contrast to markets in Europe, where investors have fled from mutual funds, particularly equity products.

Cerulli says, over the next five years, the funds industry will return to high growth rates, although not the 33% compound annual growth rates (CAGR) experienced between 2003 and 2007. Rather, CAGR will be 7% for the 2007-2012 period. The markets of Korea and India should lead the charge, with growth rates of 13% and 9% respectively, thanks to the proliferation of bank-led regular savings plans into funds.

Those growth rates may lack the fireworks of the mid-2000s, but are respectable, and reflect the ability of foreign bank distributors – which have experienced downturns before – to recover more quickly than local ones, which are still novices in wealth management.

Why is Cerulli optimistic? The consultancy notes that year-to-date net flows to Asian mutual funds are still positive, at $105 billion, versus an outflow from European funds of $90 billion. Moreover, a CAGR of 7% is decent but hardly rose-tinted, compared to the extremely strong growth experienced in the mid-2000s. Cerulli also notes that this 7% is expected to amortise over a five-year period – and most of that growth won’t emerge until late 2009 or early 2010.

Cerulli expects revenues should also remain healthy, growing at 9.2% over the next five years, outstripping AUM growth rates by 2%.

As of June 2008, Asia ex-Japan mutual fund AUM stood at $991 billion (comprising Hong Kong, Singapore, Taiwan, South Korea, China and India), and Cerulli predicts it will end the year around $915 billion. As much as 80% of these assets are onshore funds, invested locally. Domestic banks and securities companies make up 49.6% and 18.7% of fund distribution, respectively. Cerulli also suspects insurance could become the fastest-growing distribution segment, albeit from a low base, in the coming years.

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A couple rather shocking yet insightful reads on the current state of Mutual Fund companies; including the peril of a few.

We will not be so sweeping in our statement that investing in real estate is the only choice for investors, but we sure feel more comfortable with our own investments (RSP and direct placement) invested in AltaPacific Mortgage Investment Corporation.  Contact us if you’re like more details on investing in Canadian Mortgages.

Chuck Jaffe brainstorms on structural change to bring down the fees and costs of mutual funds. He begins with recent data from the ever-growing class of overwhelming evidence against the notion that investors can beat the market with actively traded mutual funds.

The cost of doing poor business

Fund companies have raked in billions of dollars from investors, despite what can only be described as miserable, below-expectation performance.

Here are the statistics regarding investors’ ongoing willingness to pay money managers for losses greater and gains smaller than the market itself.

S&P index bests most actively managed funds

The Standard & Poor’s 500 stock index outperformed most actively managed mutual funds for the past five years, according to the New York-based firm’s latest research.

For the five-year period ended June 30, the S&P 500 outperformed 68.6% of actively managed large-cap funds.

In addition, the S&P MidCap 400 outperformed 75.9% of actively managed mid-cap funds and the S&P SmallCap 600 outperformed 77.8% of actively managed small-cap funds.

The results were announced as Standard & Poor’s Index Services introduced a new version of its Standard & Poor’s Indices Versus Active Funds Scorecard yesterday.

The firm also reported on international returns.

The S&P Global 1200 outperformed 70.1% of global equity funds over the five-year period.

The S&P International 700 outperformed 86.5% of international equity funds and the S&P IFCI Composite outperformed 73.9% of emerging market funds.

In the fixed income area, more than 75% of actively managed domestic bond funds were outperformed by indices.

Emerging-market bond funds was the only category where a majority of active managers beat the benchmark, the firm reported.

End of last month India Infoline received an in-principle nod from SEBI for sponsoring a mutual fund. Recruitments for the asset management business began a few months ago with the hiring of Deepesh Pandey, (ex-Deputy CIO of Mirae Asset, Singapore) and Manish Srivastava (ex-Fund Manager of Halbis - HSBC Global Asset Management- Singapore).

Ironically, the times could not have been worse. October recorded a massive liquidity and confidence crisis that sent fund houses reeling. Consequently, many fund houses are rethinking their strategy and business models.

The massive redemptions in liquid funds coupled with a tumbling equity market resulted in Assets Under Management (AUM) crumbling. Reliance Mutual Fund lost Rs 15,400 crore in its assets from the previous month (September), ICICI Prudential Mutual Fund, Rs 10,594 crore and HDFC Mutual Fund, Rs 6,519 crore. The highest percentage fall in assets was seen in Mirae Asset Mutual Fund (57%) and AIG Global Investment Group Mutual Fund (44%).

Are you considering buying mutual funds in a taxable account (as opposed to an IRA or 401K)? Then you should be aware that most funds distribute capital gains this time of year. These distributions are taxable to you as long-term capital gains, even if you just bought the fund.

It is sad that these kinds of question are surfacing. The problem (of fund defaults) may come from the numerous layers of management that publicly traded mutual fund families face along with performance expectations by the shareholders of those companies.

Funds fail because of a lack of value perception. Fees don’t seem nearly as high when the fund is performing at its peak. But once those returns are jeopardized, even if, as in the current market it was not your fund manager’s fault, those fees look some much more ominous. And couple that sudden realization with a long market downturn and redemptions skyrocket. After that, the weak (and too expensive) funds fall like dominoes.

Secondly, in the future, take the time to explore diversity in your investing, the cost of fees and now, how well the fund manager navigated these brutal times.

Release here.

Washington, D.C., Nov. 19, 2008 — The Securities and Exchange Commission today voted unanimously to improve mutual fund disclosure by requiring that funds provide investors with a concise summary — in plain English — of the key information they need to make informed investment decisions. The new summary prospectus will appear at the front of a fund’s prospectus.

The Commission also approved amendments to encourage funds to make greater use of the Internet so investors can receive more detailed information in a way that best suits their needs.

“Today’s action will help mutual fund investors more easily obtain the key information they need — such as the description of the fund’s investment objectives and strategies, fees, risks, and performance,” said SEC Chairman Christopher Cox. “The summary prospectus will quickly give investors a basic understanding of the fund and will permit them readily to compare one fund to another. Investors will also have access to more searchable information about mutual funds on the Internet — an important improvement in their ability to comparison shop.”

Andrew J. Donohue, Director of the SEC’s Division of Investment Management, added, “Many investors often find current fund prospectuses to be lengthy, legalistic and confusing. This mutual fund disclosure framework will provide information that is easier to use and more readily accessible, while retaining the comprehensive quality of the mutual fund information available today.”

Specifically, the Commission adopted the following improvements to mutual fund disclosure:

Summary Information at the Front of the Prospectus

The Commission adopted amendments to Form N-1A, the registration form for mutual funds, to require that every mutual fund include key information at the front of its statutory prospectus about the fund’s investment objectives and strategies, risks, and costs. The summary will also include brief information regarding investment advisers and portfolio managers, purchase and sale procedures, tax consequences, and financial intermediary compensation. Funds will be required to provide the summary information in plain English and in a standardized order.

New Prospectus Delivery Option for Mutual Fund Securities

The Commission adopted a new rule that permits sending a summary prospectus to satisfy prospectus delivery requirements provided that the mutual fund’s summary prospectus, statutory prospectus, and other specified information are available online. The summary prospectus must have the same information in the same order as the summary at the front of the statutory prospectus. In addition:

* The online materials must be in a user-friendly format that permits investors and other users to move back and forth between the summary prospectus and the statutory prospectus. This will allow investors and others to efficiently access particular information that is of interest to them.

* Investors have to be able to download and retain an electronic version of the information.

* The statutory prospectus and other information must be provided in paper or by e-mail upon request so investors can choose the format in which they receive more detailed information.

The full text of the Commission’s new disclosure requirements will be posted to the SEC Web site as soon as possible.

These basic disclosure guidelines have been suggested for ages yet reasons for delay and continued study seemed unending. Not anymore.

The Securities and Exchange Commission has voted unanimously to improve mutual fund disclosure by requiring that funds provide investors with a concise summary – in plain English – of the key information they need to make informed investment decisions.

The new summary prospectus will appear at the front of a fund’s prospectus.

The commission also approved amendments to encourage funds to make greater use of the Internet so investors can receive more detailed information in a way that best suits their needs.

“Today’s action will help mutual fund investors more easily obtain the key information they need – such as the description of the fund’s investment objectives and strategies, fees, risks, and performance,” SEC Chairman Christopher Cox said in a statement.

SEC improves disclosure for fund investors

We do not have much retirement, but we had started putting back a little. And some of it has gone down almost 50%. I recognize that it will go back up before we retire, but it is still painful to watch and it makes me feel so terribly bad for people who are closer to retirement who don’t have decades to wait for everything to recover.

I feel so so lucky in this economy. To have an income. To have some savings. To be able to buy heat and groceries. And it breaks my heart for those who are in such a different place. And it makes me furious that this has happened and that those who caused it probably aren’t suffering that much and that the government has not found a reasonable way to help people struggling to eat and pay bills.

This is not super insightful or anything. Just a thought. My heart goes out to those who are struggling. May friends, and family, and the divine be with them in some way that makes a difference for them.

Please.

Cheney Indicted

A South Texas grand jury has indicted Vice President Dick Cheney and former Attorney General Alberto Gonzales on charges related to the alleged abuse of prisoners in Willacy County’s federal detention centers.

The indictment criticizes Cheney’s investment in the Vanguard Group, which holds interests in the private prison companies running the federal detention centers. It accuses Cheney of a conflict of interest and “at least misdemeanor assaults” on detainees by working through the prison companies.

Gonzales is accused of using his position while in office to stop an investigation into abuses at the federal detention centers.

Another indictment charges state Sen. Eddie Lucio Jr. with profiting from his public office by accepting honoraria from prison management companies.

Yikes … I own some Vanguard Funds. I’d better call my attorney. Sheesh!

Oh … It appears DA Guerra’s had his own problems. (http://www.themonitor.com/onset?id=4370&template=article.html)

A South Texas grand jury has indicted Vice President Dick Cheney and former Attorney General Alberto Gonzales on charges related to the alleged abuse of prisoners in Willacy County’s federal detention centers.

The indictment criticizes Cheney’s investment in the Vanguard Group, which holds interests in the private prison companies running the federal detention centers. It accuses Cheney of a conflict of interest and “at least misdemeanor assaults” on detainees by working through the prison companies.

Gonzales is accused of using his position while in office to stop an investigation into abuses at the federal detention centers.

Another indictment charges state Sen. Eddie Lucio Jr. with profiting from his public office by accepting honoraria from prison management companies.

Yikes … I own some Vanguard Funds. I’d better call my attorney. Sheesh!

Oh … It appears DA Guerra’s had his own problems. (http://www.themonitor.com/onset?id=4370&template=article.html)

Given that Vanguard is among the top mutual fund managers in the US, millions of Americans will be complicant in the lawsuit.

How to play the mutual fund investment in India, especially when it is a no brainer that rate cuts are nearby? Impending rate cuts have also opened up a great opportunity in a particular segment of mutual funds in India: gilt funds.  If you are looking at equity, banking stocks or bank ETFs also look a good bet now.

In fact, the Reserve Bank of India is behind the curve in slashing rates than other central banks. Now, it is a question of when the Indian central bank announces the rate cuts.  Already, investors have anticipated this move. News reports say that in October mutual funds in India saw a net inflow in gilt funds while equity funds saw a heavy outflow.

Gilt mutual funds invest in government securities. Since government securities carry the lowest rate of default, gilt mutual funds are secure. But gilt funds are subject to interest rate risks. If interest rate goes up, then values of securities in the portfolio of gilt mutual funds go down, thus negatively impacting the gilt funds. On the other hand, if interest rates go down, values of bonds go up, thus positively impacting the gilt funds. If you like to play in the gilts market, prefer short-term mutual funds in India that let you play at different stages of rate cut.

Yao Jun

Fund expense ratios headed up in 2009

Mutual funds fees will be going up next year, with market turmoil likely to be the main culprit.

Stock funds could experience an average increase in expense ratio of 0.05 to 0.1 percentage points, said Jeff Tjornehoj, a Denver-based senior research analyst at Lipper Inc. of New York. And bond funds could go up slightly, maybe 0.01 to 0.02 percentage points, he added. In addition, as assets have declined this year, some funds that operate with break points may have dipped below that level, causing management fees to rise.

“I absolutely expect fees will go up,” Mr. Tjornehoj said. “A lot of fund complexes work on a sliding fee scale. There are break points where there is a margin where costs go down. Unfortunately, costs go up when assets slide back down below those break points.”

“This is the worst year on record for equity mutual funds,” Mr. Tjornehoj said. Returns for the average equity fund are down about 40%, he said.

Equity mutual funds have been particularly hard-hit, with record outflows of $48 billion in September and $69 billion in October, according to Chicago-based fund tracker Morningstar Inc.

Worse still, investors are not even aware of the rising costs the funds may already be incurring. Shareholders get less of a return as a result of fee increases.

“Fees are usually constantly being assessed,” Mr. Tjornehoj said. “So incremental changes are already being made.”

Over the next tree years, the mutual fund industry will begin to resemble a distressed telephone company, making up for a loss of volume by charging more to the shareholders who fail to flee.

Meanwhile, it looks like the post-meltdown investment dollar will be increasingly likely to seek out low-cost, passive investment alternatives.

Fund Fees Expected to Tumble $38 Billion by 2012

November 25, 2008  —   Fees on actively managed mutual funds in the U.S. could fall as much as 26%, or $38 billion, by 2012 due to investors’ renewed preference for fixed income and passive investments, Bloomberg reports, citing a report from Boston Consulting Group.

This year alone, actively managed fund assets in all classes around the world will decline from $58.9 trillion to $50 trillion, representing a 15% decline, according to Boston Consulting.

Worldwide, the declines through 2012 could reduce the proportion of mutual funds’ revenue out of the total asset management pie to 36%, down from its current 49%.

Last year, active mutual funds took in $147 billion in fees, about the same amount as hedge funds, private equity funds and real estate funds—combined.

The popularity of alternative investments is expected to shoot up to 61% of total fees, and index funds’ share could reach between 3% and 4%.

“Investors have wised up to the fact that the performance of classic active funds has failed to live up to benchmarks,” said Boston Consulting Partner Michael Spellacy. “There’s a shift by consumers to allocate to more passive, lower-fee products, and to the pursuit of alpha, or market-beating performance,” Spellacy said.

When people invest in Mutual Funds, the general objective is yearning for long term capital growth and gain. Even though Mutual Funds doesn’t provide you with the same kind of financial security like an insurance policy, it still gathers the interest of a million of investors, solely because of the fact to provide richer dividends compared to other investment modules. Under the Income Tax Section of Government of India, Mutual Fund Investments are subjected to tax exemptions. Hence during an investment, most investors include tax-saving funds or ELSS (equity linked saving schemes) in their portfolio to get the added benefit of income-tax deduction.

Prior to opting for a tax saving mutual fund, it is important that the investor consider certain important factors such as performance, investment style, expenses(entry load & exit load) and other critical parameters. This is done to ensure that the investor will start treating the fund at par with regular diversified equity fund which could lead to improper asset allocation. Despite of the current financial crisis that the market is going through, investors are advised to invest in funds where the underlying assets are mainly equity funds. If you invest in a rising market, the more risk you are willing to take will get you more returns. It means if you have more equity funds in your investment portfolio or if you invest in more aggressive Mutual Fund, you are bound to make money compared to a moderate investor.

The prime criteria that an investor will have to consider prior to opting for a tax saving mutual fund will be the performance of that particular fund in the recent past. Performance is critical parameter, through which a fund must re-deem itself before it could be considered to for investing. Practically all equity linked investments are considered with a 3-5 year period investment horizon. While evaluating the performance of a fund importance on premium on consistency across market phases is to be kept. Opting for tax-saving funds that have put in a reasonable show during the upturns and downturns of the market consistently during the last 5 years (approximately) is a good idea. Volatility and return along with proper investment planning is another important aspect of a mutual fund. Usually it is a fund manager, who determines the performance of a fund in the market. Good returns on Mutual Fund NAV’s (net asset values) can be achieved by pursuing an aggressive investment strategy. Investing in tax-saving funds that have rewarded investors more per unit of risk taken by them is suggested. Managing other costs and expenses like a fund manager’s salary, marketing/advertising costs, administering costs is to be maintained. The cost of investing in a mutual fund is measured by the expense ratio. The ratio represents the percentage of the fund’s assets that go purely towards the cost of running the fund.

According to SEBI (securities & exchange board India), taxes that are implied on your annual salary will be exempted if you invest in tax saving mutual funds. Moreover the returns that you earn aren’t taxable. Tax Saving Mutual Funds in India generally maintain the following rules while granting tax benefits on their schemes: 1) Any special tax benefits for the mutual fund company and its shareholders (only section numbers of the Income Tax Act and their substance should be mentioned, without reproducing the text of the sections). 2) Tax benefits are to be declared under the column of “objects of the offering”. Some excellent tax saving mutual funds in India are: a) SBI Mutual Funds, b) Prudential ICICI, c) Franklin Templeton Mutual Fund India, d) Standard Chartered Mutual fund India, & e) Bajaj Capital. As stock markets turn more volatile, and the choice of funds increases, it will become pertinent to make the right investment decision to start with. Going forward, & opting to invest in a fund that not only provides you tax relief but also good returns is advisable.

The mutual fund industry has never seen these kinds of losses before;, in additiion, the marketplace has never offered so many popular, transprent, and low-cost alternatives to mutual funds. These two novel factors make it reasonable to suppose that a good portion of this capital may never come back.

After seeming to weather the worst of the credit storm, the mutual-fund industry has been getting walloped, losing more than 20% of assets under management in just five months.

Data from research firm Lipper show that as of Oct. 31, mutual funds of all types — stock funds, bond funds and money market funds — had $9.5 trillion in assets. That’s a 20.8% drop from where the industry stood on May 31 when it sported a record $12 trillion under management.

Mutual funds have lost 19.3% of their assets in the first 10 months of the year after closing 2007 with $11.7 trillion under wraps. This puts the industry on pace for one of the worst years in its history.

According to Lipper, since 1959 — the first year for which it has data — the largest year-on-year asset declines came in 1973, when assets dropped 20.4% to $3.4 billion, and 1974, when assets fell by 21.4% to $2.7 billion.

We are wanting to discuss mutual fund performance in recent months and talk about the flows and trends the managers are seeing. Please feel free to add comments.

So you want to make a donation to charity for a family member but you’re not sure where they would want to donate?  Well you could just take a gamble and see how it turns out or you could get them a gift certificate to justgive.org

Spending the day away from Carol. Me, Rufus, Cari and our lonesomes all together as usual. Having a good time and not worrying about much at all. Trying to figure out who to bring along when we head out a little later. Seen this mutual fund companies investments info before?

Published: November 24, 2008

While Citigroup’s second multibillion-dollar rescue from Washington hit Wall Street like a shot of adrenaline on Monday, many analysts worried that the jolt would soon wear off. Citigroup has been stabilized, but the outlook for the financial industry as a whole is bleak.

With the red ink deepening, other banks may eventually turn to the government to soak up some of their losses. Taxpayers could end up guaranteeing hundreds of billions of dollars of banks’ toxic assets. Indeed, Treasury Secretary Henry M. Paulson Jr. is expected to announce a new plan on Tuesday to bolster the consumer-finance market.

“When all else fails, government does come in,” said David A. Moss, a public policy professor at Harvard Business School.

On Monday, Wall Street put aside its worries, at least for a day. Citigroup’s share price, which had plunged to a mere $3.77 on Friday, shot up to $5.95. Shares of its biggest rivals — banks which, with the government’s help, are emerging to dominate the industry — also soared. Bank of America jumped 27 percent, JPMorgan Chase leapt 21 percent and Wells Fargo gained nearly 20 percent.

In the short term, the latest effort to steady Citigroup has removed the risk that a sudden failure of the giant bank would send losses cascading through the financial industry.

But longer term, the new bailout could haunt regulators and taxpayers. The move ultimately may encourage banks to take more risks in the belief that the government will step in if they run into trouble.

With a recession looming, if not here already, banks big and small are bracing for more loans to sour, particularly those related to commercial real estate, autos and credit cards. Many are making fewer loans, even though the industry has received nearly $300 billion from the government.

Before long, anxious investors may start wondering which banks will be vulnerable next. If confidence fades, other big lenders will probably seek deals like Citigroup’s, in which the government has pledged to pick up potentially $290 billion in additional losses. Regulators drafted the plan with an eye to using it as a template for future bailouts.

There are other worries for Citigroup’s big rivals. Almost overnight, Citigroup went from being the sick man of the industry to an institution with an edge over its competitors. The government is guaranteeing $250 billion of risky assets and pumping an additional $20 billion into the bank.

With the government behind it, Citigroup may now be able to borrow money in the capital markets at lower interest rates than its peers.

“Citi has a decided advantage over them because of the loss-sharing agreement,” said John Kanas, the former chief executive of North Fork Bank of Long Island. While banks may hold out for now, it may be only a matter of time before they too line up, several analysts said.

Indeed, a big question is how Bank of America, JPMorgan Chase and Wells Fargo will respond. Spokesmen for Bank of America and JPMorgan Chase declined to comment on Monday. A Wells Fargo spokesman did not return telephone calls.

Each of these giant banks, like Citigroup, is sitting on piles of residential mortgages, credit card debt, and corporate and commercial real estate loans that are rapidly losing value. Each is trying to absorb new businesses that were recently acquired.

“Everyone is in the same soup,” said Meredith A. Whitney, a banking analyst with Oppenheimer who has been bearish on the industry for more than a year. “Citigroup has a host of problems, but Citi’s problem assets are not dissimilar from its rivals.”

Smaller banks could be even more disadvantaged. Depositors now have stronger incentives to put their money in bigger banks, given the government’s demonstrated willingness to intervene.

“It’s got to be frustrating for small banks. They don’t get special treatment,” said David Ellison, a mutual fund manager who specializes in financial companies. “If you are a big bank, you get special treatment. That is why everyone wants to be so big.”

To level the playing field, some analysts say, the government may be forced to guarantee hundreds of billions of dollars of assets on all banks’ balance sheets. That would be the third iteration of the government’s financial rescue.

“It looks like TARP 3.0,” Ms. Whitney said, referring to the Treasury Department’s $350 billion bailout fund known as the Troubled Asset Relief Program. “TARP 1.0 was buying illiquid assets from banks. Now, they are backstopping assets and really putting taxpayers on the line for much of this.”

Even though the American government can secure a nearly 8 percent stake, overtaking an Abu Dhabi investment fund and a Saudi prince as Citigroup’s largest shareholder, it will not have any seats on the board.

Other strings that the government attached are not onerous.

New limits on executive pay still leave Citigroup with room to maneuver, even though regulators must approve compensation. A required program to modify home mortgages is similar to an effort that Citigroup voluntarily announced earlier this month.

But Citigroup faces bigger problems down the road, especially if it needs additional capital. The company was forced to turn to the government again because it could not raise capital from private investors.

“If you look at the track record for raising equity, it has been a difficult exercise” for financial institutions, said Gary L. Crittenden, Citigroup’s chief financial officer, in an interview on Monday.

And Citigroup still has many problems. Vikram S. Pandit, the chief executive, is making some progress in controlling costs and managing its sprawling operations, but the environment is tough. Executives say they have no plans to change their strategy.

Mr. Crittenden said that the bank intended to keep itself intact and stay on the course it had been pursuing since at last spring and even longer under prior management, but that as a matter of practice the bank did not rule out any options.

Among the many daunting tasks for the Obama Administration is the revamping of HUD that has languished under poor leadership and neglect for eight years. The muddling of missions was also repeated by federal oversight agencies that assumed roles of consultants.

Meanwhile, sales of existing and new houses hit new lows as nervous lenders freeze funds or direct them toward more profitable investments.

While press attention has focused on Hurricane Ike’s devastation of the Texas coast, volunteers in flood-ravaged Wichita Falls methodically toil to restore 86 partially destroyed homes.

For a pdf version of the full stories, plus contextual articles in environmental, social and legal areas, contact Bo McCarver at bmccarver@austin.rr.com

This is tantamount to evaluating the American Community Survey, Home Mortgage Disclosure Act (HMDA) data, sales data, and labor statistics, and concluding that the weakest parts of the weakest markets are the weakest parts of the weakest markets. What sort of genius it took to figure this out is anybody’s guess, but it’s a good bet that it was gestated in the womb of a community development field and movement quite unwilling to separate the affordable housing needs of low-income households from the negative impacts that concentrations of poverty impose on markets our own practices birthed and perpetuate.

Fannie Mae and Freddie Mac said the hiatus on foreclosures — which will run from November 26 through January 9 — will give mortgage servicers more to work out easier borrowing terms for troubled homeowners.

Regulators and lawmakers have leaned harder on the two companies to help stabilize the crumbling U.S. housing market since they own or control about half of residential mortgages outstanding.

Department of Housing and Urban Development Secretary Steve Preston announced changes that aim to expand participation in the new “Hope for Homeowners” program.Launched Oct. 1, the program is off to a slow start, with the government receiving just 111 applications during the first month.

The benefits were clear: Countrywide’s new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank’s mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch.

But OTS was not an effective regulator. This year, the government has seized three of the largest institutions regulated by OTS, including IndyMac Bancorp, Washington Mutual — the largest bank in U.S. history to go bust — and on Friday evening, Downey Savings and Loan Association. The total assets of the OTS thrifts to fail this year: $355.7 billion. Three others were forced to sell to avoid failure, including Countrywide.

In the parade of regulators that missed signals or made decisions they came to regret on the road to the current financial crisis, the Office of Thrift Supervision stands out.

Adding to the gloom for the U.S. economy, a separate report from the Federal Reserve Bank of Chicago showed its National Activity Index contracted again in October, staying mired in negative terrain for 15 straight months.

Existing-home sales have been down every month so far this year compared with sales last year. New-home sales were down through September, data from First American CoreLogic show. It has not yet released October new-home sales data.

But at least one national economist thinks the Houston-area housing market will see price appreciation of as much as 10 percent in 2009.

Mr. Perry will reiterate that Texas needs the federal agency to cover all of the hurricane debris removal costs for the next 18 months, or risk bankrupting the state’s hard-hit coastal communities.

The Federal Emergency Managment Agency installed it but must remove it after the city said no trailers were allowed.

Two months after the storm devastated major chunks of the county, though, an estimated 900 residents who look to live in those temporary homes are still weeks away from moving in.

The program was designed to provide temporary housing alternatives to eligible applicants who need a place to stay because their houses are uninhabitable due to Hurricane Ike damage.

Around 240,000 people were eligible for TSA, although only 25,000 used the program, including 4,700 people who are currently check into participating hotels. Another 5,000 have been moved to longer-term disaster housing under the Disaster Housing Program-Ike, and 7,700 are receiving rental assistance grants from FEMA.

TSA-eligible applicants staying in hotels are reviewed every two weeks. The program runs through Jan 15.

The Federal Emergency Management Agency and the Small Business Adminstration have extended deadlines to Dec. 12 for those affected by Hurricane Ike.

As soon as they can sell the damaged house on the bay side of island’s East End, he and his wife plan to buy another one somewhere on the mainland, McCoy said. The McCoys are among dozens of property owners swept off the island by Ike, which made landfall Sept. 13, flooding 75 percent of Galveston houses.

“The work has been consistent so far. We started a little early with five houses the weekend of Nov. 8 and have been doing three to five houses per week,” said Bob Johnston, member of the Wichita Falls Area Disaster Recovery Committee.

It used to cost about $600 per month to live at the Stoneridge Apartments, what many consider the last affordable apartment complex near downtown. About a year ago a developer bought the property and demolished it.

Volvo has confirmed that they are developing a new car with Swedish glassworks Orrefor to attend as a mold for the next generation Volve S60. The Swedish carmaker enlisted the help of Orrefor to come up with an imaginative interior that uses a schooner-rock pivot panel to give the bungalow a light-focused target.

The wineglass-sparkler interior hand crafted and very work intensive to make. The crystal panel is integrated into the dashboard and forms a center panel that flows all the way to the rear seat backrest.

Volvo planed to show their new car for the first time at the Detroit international Motor Show in January 2009. Read more information in official press release bellow.

UPDATED: Volvo released new teaser image of their S60 Concept (click to enlarge):

Volvo Cars has engaged world-famous Swedish glassworks Orrefors in the work with the company’s next concept car, which will be a first taste of the next-generation Volvo S60. The joint creation, a floating centre stack of hand-made Orrefors crystal, will be shown for the first time at the Detroit international motor show in January 2009.

In the concept car, the graceful, crystal-clear centre stack forms a gentle, calm wave from the instrument panel all the way to the rear seat backrest.

“It almost looks like a waterfall from the instrument panel, flowing through the centre of the car,” says Volvo Cars design director Steve Mattin.

The crystal panel appears to float above the centre console’s smart functionality. It rests softly on rubber pads and with the help of invisible light sources the crystal’s shimmering glow can be tailored to match the driver’s mood.

“If you want to explore the full scope of Scandinavian design, Sweden’s glassworks are a natural source of inspiration. Large glass areas are also very much part of modern Swedish architecture, creating the special, light transparency,” says Steve Mattin.

The experts at Orrefors were keen to accept the challenge and the result is one of the most unusual and handicraft-intensive objects in the company’s 110-year history. Producing the stack was in itself a challenge beyond the ordinary - even for the experienced experts at Orrefors.

Traditionally, the moulds for the crystal are first chiselled by hand from thick planks of alder wood. After casting, the glass is carefully polished to produce its final, crystal-clear lustre.

In order to meet the relevant strength standards, the finished piece consists of three sections joined together at the Volvo Cars concept car workshops.

“The full-size crystal piece in the concept car will not be a production feature. However, it does open up opportunities to use crystal on a smaller scale in the future. We’ll have to see how our customers respond,” says Steve Mattin.

Creativity and functionality

At the Volvo Cars design centre, exploring the glassworks in the deepest forests of southern Sweden has been a stimulating adventure.

“The clean lines of the Orrefors products have been a true source of inspiration for many years. This was perfect timing for using crystal as a material in a concept car too,” says Steve Mattin. For the Orrefors glassworks, the debut as a supplier to the car world has also served as a new creative inspiration.

“Volvo’s thin centre stack is an industrial product with an artistic yet at the same time functional form. It immediately inspires you to think of other application areas. Why not an elegant hanging ceiling light or a table-top ornament of some sort? We’ll just have to see,” says Gunilla Arvidsson.

In the financial markets, a trend is generally understood to be the current market direction. Markets can be trending higher, trending lower, or trending sideways.

But defining a trend so that it can be profitably traded is something else entirely.

Many would say the S&P 500 Index is currently in a bullish trend. But at the same time, the Nasdaq Composite and Nasdaq 100 Index have been trading sideways for months. So trends can obviously exist for one sector while another is going nowhere.

Just saying that a trend consists of “rising” prices, or “declining” prices is not enough. Every day is different. A trend must be clearly defined in order to be profitably traded.

And what about time frame? Are we talking about a trend on a 5 minute bar chart where it could last an hour? Or is it of longer duration; days, weeks, years?

It is easy to determine trends on a chart of prices that have already occurred. Developing a trading strategy that will keep you on the right side of future trends is needed to profit from trend trading (market timing).

Successful market timers know and use several facts about trends that give them an edge in trading them:

1. While financial markets may spend time in consolidation (sideways trends), they are more often moving up or down for sustained periods of time.

2. A timing strategy that defines trends can be used to take advantage of continued momentum in the market place.

3. Trends tend to go higher, or lower, than most investors expect. So correctly identifying and trading a trend can be very profitable.

4. Profitable trends occur only once or twice a year. The rest of the time the markets trend sideways. The Nasdaq, for example, would have to be considered as being in a sideways trend over the past several months.

Because tradable trends only occur once or twice a year, market timers must be prepared to sometimes wait months before catching that one highly profitable trend.

a. To be consistently successful over time, market timers must have clear rules telling them when to enter, and when to exit.

b. When in a sideways trend, market timers often have multiple trades that result in small losses, or small gains. These small losses and gains “must” be accepted because timers “must” trade every identified trend change. There is no way to know “ahead of time” which trend will be the highly profitable one.

c. Market timers usually make the majority of their profits in only one or two trades a year. If you don’t take every trade, you will likely miss the one that makes most of your profits.

d. When the markets are in a bullish or bearish trend, trading position changes may not occur for months at a time as the trend progresses. Exiting early to lock in profits can cost you dearly. The trend must be allowed to play out without making unnecessary trades because of volatile short term conditions.

e. A profitable trading strategy will “not” allow a market timer to miss that trade!

Correctly identifying and trading financial market trends with mutual funds, ETF’s and even carefully selected stocks, is doable, profitable, and with a well tested trading strategy can achieve results far above “buy-and-hold” investing.

Market timing, when following a well thought out trading strategy, is actually “less” risky than a buy and hold approach.

The active investing style used in FibTimer’s market timing strategies (identifying and trading trends) prevents huge losses in the inevitable bear markets (or any large decline that is of substantial duration).

If bearish strategies are used in the timing strategy, declining markets actually add to profits.

Market timers, when following a well defined and tested timing strategy that identifies market trends, will consistently beat the market over any fair time frame.

Author: Frank Kollar

Monday he wrote a special piece for his subscribers. Here are some highlights:

Note from Scott: I disagree with Dr. Weiss on the safety of US Treasuries. I believe that, within as little as two to six months we will see the US government default (go bankrupt). This is unthinkable to virtually everyone with any extensive financial background. Nonetheless, I think it will happen. Will US Treasuries be safe?

I don’t know.

I dunno.

I do know physical gold and silver are stores of real wealth, and have been since Jesus was a toddler. US Treasuries are still just a “promise to pay.”

Please do what you think is in the best interests of you and your family. Please be safe.

The Wall Street Journal reports on Hu’s visit to America’s backyard. The Russian president is also in the region, but is facing a less receptive audience.

By William Ratliff | Nov 26, 2008 | The Wall Street Journal

Last week Chinese President Hu Jintao pledged that China will make a “concerted effort” to “establish a comprehensive cooperative partnership of equality, mutual benefit and common development” with Latin America, according to China’s Xinhua news agency. The Chinese president made his comments in Lima just before the 16th Asia-Pacific Economic Cooperation summit. Mr. Hu’s words — and other recent developments — warrant careful attention because they clearly signal a relationship that will expand greatly in the years ahead.

APEC was the last stop in Mr. Hu’s journey to the West, a 10-day trip which shows how much Beijing’s relations with the Western Hemisphere have changed from the “lie-low” strategy of Deng Xiaoping. This was Mr. Hu’s first trip to South America since November 2004, when he visited Brazil and Argentina en route to an APEC summit in Chile. That trip raised China’s profile in the region, but this latest trip, in a period of international financial crisis, confirmed China’s intention to play a more open, active, permanent and constructive role in the Americas, though some Latins have become doubtful or jaded.

The first-ever official policy paper on China and Latin America was released just before Mr. Hu’s trip. It outlines a range of programs in the region, including cooperation in science, technology and education, and political exchanges at all levels.

Each side has a lot to gain. China’s interests in Latin America include buying raw materials and foodstuffs, ranging from oil and copper to soybeans; helping to develop Latin infrastructure to produce and deliver those products; and selling (some countries have charged “dumping”) manufactures. Latin countries hope to sell raw materials and manufactures to develop their historically unstable economies; draw investments without the strings attached by Western powers; reduce dependence on the United States; and perhaps get ideas on how to develop national economies under elitist leadership, still the norm in Latin America.

In a talk to the Peruvian Congress, Mr. Hu proposed ways to boost Sino-Latin ties, including increasing high-level exchanges of personnel to improve dialogue, trust and cross-cultural understanding. He also spoke about cooperation on overlapping international objectives and mutually beneficial cooperation on economic issues. Cultural differences, ignorance of each other and logistics are constant challenges.

The rise of populist governments inspired by Venezuela’s Hugo Chavez is a burden as well as blessing to Beijing. Chinese leaders know that Latin America’s populist leaders and their economic policies are bound to fail. Still, China has pledged billions of dollars for Venezuelan oil while diplomatically distancing itself from Mr. Chavez’s self-proclaimed “Maoist” campaign against Washington. In fact, in Lima Mr. Hu praised President George Bush for his active efforts to improve Sino-U.S. relations.

Other recent events that demonstrate China’s greatly increasing role in the hemisphere include Beijing’s new donor membership in the Inter-American Development bank, which for decades was considered a key weapon in the “U.S. imperialism” arsenal. Almost half of China’s initial contribution of $350 million is earmarked for the micro-enterprises, and small- and medium-sized businesses, the Chinese for so long excoriated.

Mr. Hu also played a major role in the G-20 meeting in Washington at the beginning of his most recent trip. China’s active cooperation, which Mr. Hu promised again in Lima, is critical in efforts to work out the current financial crisis. China now has much to gain from helping Washington survive and from funding the World Bank and International Monetary Fund.

China also has a political agenda in Latin America. Mr. Hu’s trip took him also to Costa Rica, which last year switched its diplomatic recognition from Taiwan to Beijing, which it did not recognize before. Since half of the countries in the world that recognize Taiwan are in Central America and the Caribbean, China hopes its attention to Costa Rica, including the launch of FTA negotiations, will encourage others to follow suit.

In recent years, China has been second only to Venezuela in propping up the Castro brothers’ regime in Cuba with trade, investments and aid. On a visit to Havana, Mr. Hu contributed generously to Cuba’s hurricane reconstruction and met with Cuba’s new leader, Raul Castro. He talked at length with Fidel, seen as an old “Marxist” whose ideas are wrong but who stood by Beijing in 1989 and must somehow be venerated for his stubborn refusal to give up.

Some around the hemisphere are concerned about China’s increasing attention to Latin America, but on balance Beijing’s expanding links are largely in line with what the U.S. has said China should do to become an active “stakeholder” in the modern world. Besides, China’s trade and investments in the U.S. dwarf its links to Latin America.

China’s expansion into the Western Hemisphere is an inevitable development that must be watched carefully but cultivated as much as possible for everyone’s benefit. Indeed, if China has to seriously reduce its purchases of commodities from Latin America, many countries there will feel real pain. Mr. Hu’s trip to Lima shows that China can be an active force for good in the world’s economy. Especially today, in times of financial distress, its influence is a welcome one.

Author: Daniel A. Levis

Imagine tossing a pebble into a crystal clear pond on a still day, & watching the ripples make their way to the shore. A tiny cause has a massive effect.

But on a windswept stormy day? You could hurl the largest boulder into the same pool, and the effect would be felt for no more than a few feet.

So it is with marketing new ideas.

Your prospects are in a trance that is like a still pool of awareness. They are in an “I’m worried about money” trance. They are in an “I wish I could finally find that somebody special” trance. They are in an “I’m sick of my dead end job” trance, & so on.

If you enter that trance with your words, your prospects will follow you. They will accept your suggestions. They will give those suggestions power, like the pebble that makes its presence felt on the shore, because receiving your message is effortless.

On the other hand, any striving on the part of your prospect to maintain their attention on your message, because it fails to harmonize with their trance, & no power will be granted.

“Belief Is All-Powerful!”

To enter the buyer’s trance, begin your sales message by showing where your position agrees with their accepted beliefs.

As you move forward, make a logical connection between that which is accepted, & another conclusion that is a step closer to the new conclusion you wish to promote.

This act of mental agreement creates momentum.

For example, let’s say your target market believes that Guaranteed Investment Certificates are the best way to invest for their retirement. Are they likely to listen to you if you boldly proclaim the superiority of Mutual Funds?

But would they give you some attention if you began with, “Would you be interested in more of the kind of money growth you’ve enjoyed through Guaranteed Investment Certificates?”

And then, “If there were a low risk strategy for using GICs, together with Mutual Funds to increase your returns by 53% or more, would you want to find out about it?”

And then, “Give me just 15 minutes, & I’ll show you the failsafe secret to an earlier retirement!”

By establishing empathy in your sales message, you enter the trance. And you can begin marketing new ideas.

Each successive point or question should do three things.

1) Echo accepted belief.

2) Introduce a new element that when logically combined with the previous conclusion, creates a new hypothesis.

3) Raise the level of commitment to the new idea.

You begin pursuing small yes responses, & gradually grow those agreements into bigger YES responses, until your final call to action.

Do you see how this works?

Use questions, statements, & logic that get your prospect thinking YES & OK!

Why Does It Work?

To be human, is to have unlimited freedom of choice. We are able to consciously decide our response to every stimulus. This is our god given gift.

However, we forget this. Instead, we are a bundle of conditioned responses. We hypnotize ourselves into believing that external circumstances give rise to our thoughts.

For instance, if I were to say to you that you are stupid, you would probably become angry. You would think I was a jerk for saying so. That is a choice you make.

You could just as easily make a choice to ignore my remark. You could make any choice you wish. You could even decide to think that I am a jealous fool, & feel sorry for me. The choice is all yours.

On the other hand, if I were to say to you that you are brilliant, you would no doubt feel pleased with yourself. Again, this is a choice. You could just as easily decide to pay no attention to my opinion.

But you forget you are making a choice. You automatically become angry or flattered, depending on the stimulus. You are in a trance of your own making.

To be human, is to be filled with such conditioning.

When we accept a logical conclusion that contains our own beliefs, we are conditioned to accept another one, & then another. Until without even realizing it, we have before long accepted a new belief that we would not have accepted, had it been forced on us in the first place.

Such is the judo of persuasion, & marketing new ideas.

Daniel Levis is a top marketing consultant & direct response copywriter based in Toronto Canada. Recently, Daniel & world-renowned publicist & copywriter Joe Vitale teamed up to co author “Million Dollar Online Advertising Strategies - From The Greatest Letter Writer Of The 20th Century!”, a tribute to the late, great Robert Collier.

Let the legendary Robert Collier show you how to write words that sell…Visit the below site & get 3 FREE Chapters! http://www.Advertising-Online-Strategies.com/ad-strategies.html

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Mr. Krugman is halfway smart: he is an economist who understands some of the dangers of the Floating Currency. But he doesn’t go after ‘free trade’ or he would lose his perch at the NYT, I guess. But yesterday, he took off after the ‘Three Musketeers’: Greenspan, Rubin & Summers. This is because the dumb trio pretended to be too stupefied to foresee the very obvious housing and buy-up bubbles. In his editorial, Mr. Krugman mentions a very interesting Time Magazine article from 1999.

Krugman - Lest We Forget - NYTimes.com

Consider, in particular, what happened after the crisis of 1997-98. This crisis showed that the modern financial system, with its deregulated markets, highly leveraged players and global capital flows, was becoming dangerously fragile. But when the crisis abated, the order of the day was triumphalism, not soul-searching.

Time magazine famously named Mr. Greenspan, Robert Rubin and Lawrence Summers “The Committee to Save the World” — the “Three Marketeers” who “prevented a global meltdown.” In effect, everyone declared a victory party over our pullback from the brink, while forgetting to ask how we got so close to the brink in the first place.

In fact, both the crisis of 1997-98 and the bursting of the dot-com bubble probably had the perverse effect of making both investors and public officials more, not less, complacent. Because neither crisis quite lived up to our worst fears, because neither brought about another Great Depression, investors came to believe that Mr. Greenspan had the magical power to solve all problems — and so, one suspects, did Mr. Greenspan himself, who opposed all proposals for prudential regulation of the financial system.

During the 1990’s, the US stock market rose over 18%. The only decade where this grew even better was the decade when the US recovered all the losses from the Great Crash of 1929. Stocks rose nearly 18% in the 1980’s and even more, the next decade. The Dot Com Crash hit the US in 2000: the NASDAQ began to collapse in March. The rest, right BEFORE 9/11, not after. Bush’s popularity was crashing after March, 2000. He wanted to boost it and the tax cuts were supposed to assure a crashing stock market.

The world was sliding into a bad recession back then. In Japan, all economic indicators, especially exports, were falling swiftly. The Bush mega-tax cuts poured money into the world economic systems. The consumer economy in the US took off again. After 9/11, Greenspan dropped interest rates far, far below the rate of inflation right when the US increased military spending to record levels.

Two things took off for the skies: the US trade deficit ballooned right as all our housing values ballooned. These were part of the outcome of the tax cutting coupled with military overspending and let us not forget the ‘free trade’ business which ground onwards, eliminating nearly all US trade protections.

I remember that time well. Bush pushed for emergency tax cuts to ’save the economy.’ I was disgusted. Clinton and the GOP, due to hating each other and snarling up Washington, DC’s massive debt machine, balanced the budgets for the first time since President Kennedy. It was obvious, by 1999, the US was in the middle of a very disastrous and energetic inflow of foreign funds driving up stocks. iTulip.com was launched in 1999 during the Dot Com stock market madness.

iTulip is a great way to find information that seems to be obscured from the eyes of the Three Marketeers:

The Three Marketeers - TIME Feb. 15, 1999

The Asian collapse of 1998-1999 was fixed in two very interesting ways: the nations that either went through the collapse or who anticipated runs on their own finances all began to amass gigantic FOREX reserves. Before the Asian Currency Crisis, virtually no one had FOREX reserves bigger than $80 billion. Afterwards, Asian and then, in the last three years, nearly all our trade partners ran up their FOREX reserves. In Asia, these grew from less than $80 billion to $2 trillion or more in size.

One thing that our brainless Three Marketeers should think about is exactly this: the sudden surge in FOREX reserves after a series of bubbles popped in Asia. After all, the Federal RESERVE is supposed to be the entity holding our dollars, eh? And instead of changing direction after Asia and then the world, changed direction, the US stubbornly kept the old reserve levels. We should had been buying and holding euros and yen. We didn’t. And so our trade deficit shot upwards to nearly a trillion in losses a year by 2007.

Greenspan, Rubin and Summers were supposed to be MONETARISTS. This means, the manipulate the CURRENCY. To do this, they use tools and one of these is the FOREX reserves! Duh! Why on earth don’t they understand this simple story?

According to Krugman, the semi-sane economist, these nutty guys claim they have no idea what went wrong here. They couldn’t see bubbles forming. This, of course, is a lie. At the point where Krugman talks about this pretense of ignorance, he should have gone off to see why this is so. Why do our leaders always profess stupidity when messes they made are obvious to anyone?

HAHAHA. They are a bunch of very naughty little boys, aren’t they? They don’t want anyone to know their dirty deeds. So, once they drop the cookie jar, they hold up their hands and yell, ‘I didn’t touch it!’

I still remember the Asian crisis. Note how the article from back then, clearly states that this was due to too much real estate and useless factories being built. And the value of all existing systems suddenly shooting upwards as FOREIGN money flowed suddenly into Asian lands!

OK: here is where it gets most interesting. WHOSE MONEY WAS FLOWING INTO ASIA???? Ah! This is the key. We know how these bubbles form. Someone is very reckless with lending money to someone else. That someone else takes these stupid sub-1% loans and dumps them all over everything on this planet, seeking someone to be trapped into paying interest rates forever and ever.

And what bank dropped their interest rates to nearly zero in 1996? This, incidentally, is when the bubbles began to suddenly form and grow rapidly, in Asia, in South America. Well, I look around and I spot someone who is probably the guilty party: the Bank of Japan!

The carry trade began in 1996. By 1998, it was a roaring business in Asia. This tsunami of easy credit pouring out of the Bank of Japan was carried offshore. It was Japan’s greatest export product! On top of this, Japanese exporters and Japanese savers needed to park money offshore and have it earn a higher interest rate since rates in Japan were at 0%. So a flood of savings and profits from the world’s #2 economy flooded all of Asia and sluggishly flowed over South America. And the US itself. Housing values in these places began to balloon nearly instantly.

Bloomberg.com: Latin America

Why is that? HAHAHA. Mortgages are for 30 years! Guaranteed income for life. The Time Magazine 1999 article left this dynamic out. Indeed, no one in the media mentioned the words ‘Japanese carry trade’ back then. It was a devil of a time for me to figure this out during the last decade. A real educational experience.

The Three Marketeers - TIME

The initial downturn didn’t surprise the Fed or the Treasury too much. For the better part of two years, Greenspan and Rubin had been quietly fretting about the narrowing “spread”–the difference in interest rates–between U.S. bonds and emerging-market bonds. By 1996 banks were lending money to countries such as Malaysia at interest rates just a few percentage points above what the U.S. Treasuries commanded. The implication: Malaysia was not a much riskier bet than the U.S. This was nonsense, and the committee knew some correction was in order.

But the speed of the collapse, when it came, was breathtaking, and proof that world markets had entered a new and much more volatile phase. Summers has a favorite analogy: “Global capital markets pose the same kinds of problems that jet planes do. They are faster, more comfortable, and they get you where you are going better. But the crashes are much more spectacular.”

Summers and Rubin didn’t run the Bush train off the tracks. But Greenspan obviously was the main driver in this present crash. But Summers and Rubins are meddlers who were VERY active in dealing with the previous Bank of Japan-engineered crashes. Since they ran around the world, ‘fixing’ things, they bear a lot of responsibility for the present mess. Because they didn’t fix what was really wrong. Instead, we are all striving now to ape the Bank of Japan!

Namely, all the INDUSTRIAL NATIONS are dropping interest rates to 0%, fast. And all the COMMODITY nations are raising interest rates! Isn’t that rather queer? Especially since the US market is rather a big more a commodity exporter compared to Japan or England, just for example.

Bloomberg.com: Exclusive

“I’m in the middle of shifting my cash holdings to hedge funds,” Sagami, 48, said in an Oct. 14 interview at his Hisashi Kobayashi-designed house on a 3,300 square-meter (0.8 acre) lot. “This is the beginning of the biggest bargain sale.” He confirmed last week he is still investing in the funds….Department Chief Hiromitsu Nakagawa said he offers mutual funds that include hedge funds to individuals with more than 500 million yen in financial assets. He said many clients want to diversify portfolios that are mostly made up of inherited properties and securities.

Whenever an economic system develops whereby a large upper class simply sits back and collects wealth via inheritance and clipping coupons, we get long, long depressions. Japan is in the grip of this epic depression and like Victorian England, the upper classed don’t mind this one bit. Indeed, they work very hard to prevent it from ending. The benefits of seeing their holdings grow steadily while the prices fall at home is a lot of fun.

On the other hand, it kills economies. The dead hand of debt accumulation eventually grinds commerce to a halt. In Japan, this is deliberate. The ruling LDP is made up of these sorts of people who want money to flow steadily into their laps. They do NOT want a consumer surge that might encourage imports. Once a country has an ‘inheritor class’ in charge of things, it is all downhill. This is why we had such high inheritance taxes here. It was a sociological experiment at trying to prevent depressions due to a nation being run by people who inherit their wealth.

It is now set at 0%. The rich can happily accumulate wealth without working, for infinite lengths of time. It is also part of our budget crisis. Money is no longer flowing in like it used to. I remember when the inheritance tax was first reduced: it was to save ‘the family farm.’ Instead, ‘family farms’ are dying as they are turned into vast estates that are worked by foreign stoop-labor of mostly illegal aliens from the South.

Since the repeal of the inheritance tax, nearly all the small family farms in my community have vanished. Now, mega-rich people like the McCain family can hand off their wealth intact to their children. Couple this with the drop in the number of babies produced by these rich families and we get an accumulation of wealth that is very dangerous. If rich families marry each other and then have one or at most, two children, this ‘old wealth’ will accumulate into fewer and fewer hands! This is bad. Very bad. Nowhere on earth do democracies thrive when there is this sort of passive wealth accumulation at work.

The Three Marketeers - TIME

The three men trying to cope with these mid-ether collisions of dollars and expectations are an unlikely team. Greenspan, the data-loving analyst with government roots sunk back into the financial and moral chaos of the Nixon Administration, and a shaman-like power over global markets. Rubin, the Goldman Sachs wonder boy who ran the firm’s complex and dangerous arbitrage operations and then led it to rocket-ship international growth. And Summers, the Harvard-trained academic who is invariably called the Kissinger of economics: a total pragmatist whose ambition sometimes grates but whose intellect never fails to dazzle.

What holds them together is a passion for thinking and an inextinguishable curiosity about a new economic order that is unfolding before them like an Alice in Wonderland world. The sheer fascination of inventing a 21st century financial system motivates them more than the usual Washington drugs of power and money. In the past six years the three men have merged into a kind of brotherhood, with an easy rapport.

All Goldman Sachs people should be permanently banned from working in the government. Especially the Treasury or the Federal Reserve. Ditto, JP Morgan. These clowns have, as the article in 1999 points out, invented this financial system! And it truly is an ‘Alice In Wonderland’ world: the Mad Hatter’s Tea Party as well as the Queen of Heart’s court. These guys eat a meal and then move down the endless table, leaving us, Alice, to eat off of their dirty plates.

When she suggests they ALL move forwards to clean dishes, the Mad Hatter and the March Hare regard her as insane. The criminal brotherhood of these three guys has prepared a global feast where 90% of humanity gets to eat the crumbs off of their dirty dishes! While they dine on clean dishes. I will note here that there are many ‘widdershin’ aspects to both ‘Alice in Wonderland’ and ‘Through the Looking Glass’ stories.

The three men have a mania for analysis that has bred a rigorous, unique intellectual honesty…. This pragmatism is a faith that recalls nothing so much as the objectivist philosophy of the novelist and social critic Ayn Rand (The Fountainhead, Atlas Shrugged), which Greenspan has studied intently. During long nights at Rand’s apartment and through her articles and letters, Greenspan found in objectivism a sense that markets are an expression of the deepest truths about human nature and that, as a result, they will ultimately be correct….they all agree that trying to defy global market forces is in the end futile….In the same way that the threat of mutually assured destruction helped Kissinger replace Washington ideology with Realpolitik, the shadow of a massive economic meltdown has helped the committee sell a market-driven policy that could be labeled Realeconomik.

Ayn Rand is like any number of demons in the Cave of Wealth and Death. She knew that there is a connection between sex and money. She exploited this information. Note here that this toxic trio viewed the collapse of the Japanese-carry-trade flood of lending to Asia is a motivation to INCREASE danger by pursuing a MARKET-DRIVEN policy. Misnamed as ‘Realeconomik’.

How about ‘Realcrash’? For this was obvious by 1999: flooding any nation with lots of easy lending leads to bubbles and terrible crashes. So why did the US immediately volunteer to be the new destination of all this Japanese carry trade loot? It was obvious, back then, this was a very bad thing!

And if the ‘markets’ are correct, then why interfere with them? The markets are obviously screaming, ‘This was a BAD BUBBLE! RUN AWAY!’ And off, we go, seeking shelter in gold or bonds, classic depression items. Instead, everyone is struggling to restart this goofy lending business that failed so abruptly in 2007.

The Three Marketeers - TIME

The IMF has taken particular heat because even as these nations suffer, the U.S. and Europe continue to grow. The committee believes that the IMF remains a key international tool, especially as it works to clean up the abuses that led to the current mess and makes it easier for investors to get back into those developing markets.

That means trying to reduce volatility where possible. Many countries are at the mercy of international lenders who can decide, if they feel nervous, to jerk billions of dollars from country to country. This would be like having your bank pull your mortgage because your banker heard you’d had a bad day. The solution to the problem, the men believe, is more honesty on the part of borrowers–so banks know what they are getting into–and more caution on the part of banks. While some economic thinkers–notably Soros and Malaysia’s Mahathir–have lobbied for more dramatic controls, Rubin warns that simply locking capital in place can often become a substitute for much needed reform, delaying an inevitable correction. As for the impact of speculators, who have been torched by politicians around the world, Rubin says they are a part of the crisis but a much less important factor than the real economic problems of the countries they hit.

No nation has more economic problems than the US. No nation is running so huge a deficit in government spending, so huge a trade deficit. These two things doom our nation to destruction. Yet, no one is trying to stop either. Only after inflation of necessities sucked dry, nearly everyone’s bank accounts in the US, has the spending on imports slowed down.

Capital being ‘locked in place’ is not the problem nor the solution. Preventing floods of easy lending: that is the problem. The IMF forbade countries undergoing collapse to spend on social services or increase public debt. Yet, as the US spends to infinity, probably doubling our government debt obligations in ONE YEAR! Well…the IMF is silent, of course. All the smaller nations who were hammered by the US officials in the IMF in the past are steamed that the US gets a free ride.

But international powers like China and Russia are quite happy about letting the US continue to build up debts! They want us to go bankrupt. This is called ‘revenge.’ And is best eaten cold. And the leaders of Russia and China can be quite cold-blooded.

Note also, in the old Times article, the writers mention that banks should be more cautious. And borrowers shouldn’t lie about their incomes! HAHAHA. Both did the opposite here in the US when the flood of Japanese carry trade lending hit our own shores! Money was ladled out like there was no tomorrow. And when tomorrow came, everyone began to default. Fast.

The Three Marketeers - TIME

To operate effectively in this new world, Rubin has remade the Treasury into an organization that is “more like an investment bank,” says Tim Geithner, the 37-year-old Under Secretary for International Affairs….And fresh thinking has been crucial in the new economic order. One legacy of 1998 has been the destruction of some of academe’s and Wall Street’s most cherished models of the world. More data and faster markets, says Greenspan, mean more opportunities to make money.

They also mean more chances to lose your shirt, something he calls “the increased productivity of mistakes.” Computers make it possible to push a button and destroy a billion dollars of wealth. The chairman was warning about the problem long before Long-Term Capital Management vaporized $4 billion, but that debacle silenced any skeptics of the new risks.

All our investment banks are bankrupt. They all changed their names to ‘regular banks’ and are struggling to recapitalize themselves AT GOVERNMENT EXPENSE. They can’t attract wealth anymore. They are negative wealth machines due to the Derivatives Beast eating anything they park inside their banks. Instead of giving up and having all our systems nationalized, we are trying to use future taxes to recapitalize these stupid banks that are bankrupt.

The Treasury has no money. Our government has run in the red nearly my entire life! How can a Treasury be an ‘investment bank’ if all it has is epic red ink? It is a NEGATIVE system. All such systems eat capital, not create capital. Right now, everyone wants treasuries only because we are in a NEGATIVE FLOW situation thanks to the investment bankers! Selling our debts, cheap, isn’t productive. It still increases our net out-flow. It still destroys, not makes, our nation. Here is the latest news about US Treasuries:

Bloomberg.com: Bond

The Three Marketeers - TIME

The problem, the men say, is that the markets are encumbered by all kinds of imperfections. Even tiny flaws create problems. A Thai banker who breaks the rules by passing $100,000 to his brother-in-law puts the whole system at risk.

To help resolve the riddle of imperfect markets, the committee has spent six years working on an experiment. It’s called the U.S. economy. The current boom is as much a part of the committee’s legacy as is its battle to stem global turmoil. It was Rubin–via the 1993 deficit-reduction plan–who navigated the Clinton Administration into budgetary agreements that helped create the first surplus in 29 years. This fiscal responsibility helped lower interest rates, which kicked off a surge in business spending. Greenspan, who dovetailed his own monetary policy with those goals, let the economy build up its present head of steam. The men don’t get all the credit for the boom–they’re the first to say all they did was let the markets work–but on both Wall Street and Pennsylvania Avenue, they get the bulk of it.

The flood of corruption that flows through the Washington, DC sewer is far worse than some Thai banker giving his goofy brother some loot. I have pointed out in the past, the ‘imperfections’ are exactly where wealth is created. The investment bankers, hedge fund geniuses and other people restlessly roam about, seeking loopholes, creating loopholes via bribing politicians, they seek imperfections and hammer away at them, turning them into mega-abuse opportunities for free funny money.

Another lie here: constricting US spending does NOT cause lower interest rates! When we were overspending merrily by 2001, Greenspan dropped rates due to 9/11. Then kept them at a ridiculous 1% as energy costs soared. As the budget deficit grew, rates remained low.

Then, in a hurry, Bernanke tried to raise them again. Only to panic and drop them BELOW 1%, heading to 0% by December.

The Race to Zero Interest Rates - Seeking Alpha

When a central bank runs out of room to cut interest rates, it resorts to Quantitative Easing. This term was coined by the Bank of Japan in 2001 when interest rates were already at zero and the central bank stopped targeting the overnight call rate and turned to targeting a current account level. Their goal was to flood the Japanese financial system with liquidity by buying trillions of yen of financial securities including asset-backed instruments and equities.It can be argued that the US has already engaged in Quantitative Easing as the government has recently announced plans to spend $800 billion to unfreeze the consumer and mortgage market.

They have agreed to buy mortgage backed securities backed by government sponsored entities and could accelerate that if interest rates hit zero. Excess reserves have also increased significantly, driving the effective fed funds rate well below 0.5 percent. This would have been one of the desired outcomes of quantitative easing. Last week, Fed vice chairman Donald Kohn said quantitative easing measures were under review at the central bank as normal contingency planning.

The goal would be to encourage banks to lend more aggressively by coming in as a buyer at specified rates. Even though quantitative easing drove Japan into deflation, it was the key to turning around the economy and this is a risk that the US central bank may have to take.

I have pointed out in the past that the US cannot do what Japan has done: run eternal depressions that benefit mostly the coupon-clipping inheritors of wealth. We cannot imitate Japan’s 0% system because we run a trade deficit. We import far too much energy products to run a Fortress Japan situation. This is due to Japan restricting the use of energy going to workers and the poor.

This is why Japanese workers must toil in colder or hotter offices, for example. And live in homes that are uncomfortable. The US loves climate systems even though we need to import fuel to run our delightful McMansion energy systems. And of course, how can the US be doing ‘quantative easing’ when the stated result is supposed to be no depression but a light form of inflation?

Either this will boomerang badly and become mega-inflation or it will do what it did to Japan: kill the lower classes off. Guess which system the very rich who have children, want?

Of course! The Japanese system whereby they can clip coupons and marry each other and concentrate wealth more and more in the hands of fewer and fewer people.

FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net

Because I’m unemployed or because it’s the Thanksgiving holidays, I’m watching more television than usual. This commercial reminds me of something Dave Chappelle would have produced on his historic comedy show:

Although I’ve got the USA Today from November 5 and the Newsweek from November 17, heralding Obama’s victory, stashed away in a drawer, I won’t be buying any limited edition, historic plates. I equate buying something such as this as investing in Beanie Babies or a six-pack of commemorative Coca-Cola bottles heralding a college football team’s national championship.

Have I ever fallen victim to a scam such as the Obama Commemorative Plate? Oh, yes, I purchased the commemorative Jimmy Carter Presidential Coin, after his election in 1976. What is it worth today? $10.99. A few years after I purchased it, I realized that it wasn’t worth much, so I gave it as a gift at a White Elephant Christmas Gift Exchange. I don’t think that Andy Miller, who got stuck with it, appreciated it very much.

And that six-pack of commemorative Coca-Cola celebrating the 1998 National Championship of the Tennessee Volunteers? After collecting dust for a few years (along with the coach of that team), it was discarded.

Since falling victim to buying those worthless commemorative gifts, I now invest only in mutual funds.

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They’re also doing big things. Specifically, they’re doing big things that Washington has failed to do. In a time of federal policy paralysis, when partisanship-on-crack has made compromise almost impossible, when President George W. Bush’s political adviser is a household name but his domestic policy adviser was unknown even in Washington until he was arrested for shoplifting, cities and states are filling the void. Bloomberg and Schwarzenegger happen to be the best examples of this phenomenon as well as the best known. Bloomberg is 65; the Last Action Hero is turning 60; they’ve got better things to do than bicker and posture. “These are two exceptional and forceful guys who don’t need the job at all; they had pretty damn good lives before they got into politics,” says their mutual friend Warren Buffett. “They’re in office to get things done. And they’re doing that a lot better than anyone in D.C.”

Look at global warming. Washington rejected the Kyoto Protocol, but more than 500 U.S. mayors have pledged to meet its emissions-reduction standards, none more aggressively than Bloomberg. His PlaNYC calls for a 30% cut in greenhouse gases by 2030. It will quadruple the city’s bike lanes, convert the city’s taxis to hybrids and impose a controversial congestion fee for driving into Manhattan. And Schwarzenegger signed the U.S.’s first cap on greenhouse gases, including unprecedented fuel-efficiency standards for California cars. (He’s already tricked out two of his five Hummers, one to run on biofuel and another on hydrogen.) The feds have done nothing on fuel efficiency in two decades, but 11 states will follow California’s lead if Bush grants a waiver. After signing a climate deal with Ontario — on the same day as his stem-cell deal — he said he had a message for Detroit: “Get off your butt!” He had a similar message for Washington. “Eventually, the Federal government is going to get on board,” he said. “If not, we’re going to sue.”

But they’re tackling not just the climate. Bloomberg is leading a national crackdown on illegal guns, along with America’s biggest affordable-housing program. He also enacted America’s most draconian smoking ban and the first big-city trans-fat ban. And he’s so concerned about Washington’s neglect of the working poor that he’s raised $50 million in private money, including some of his own millions, to fund a pilot workfare program. Meanwhile, after the Bush Administration rebuffed California’s appeals for help repairing the precarious levees that protect Sacramento, Schwarzenegger pushed through $42 billion worth of bonds to start rebuilding the state’s infrastructure. He’s also pushing a universal health-insurance plan and hopes to negotiate a deal with Democrats this summer. “All the great ideas are coming from state and local governments,” Schwarzenegger told Time. “We’re not going to wait for Big Daddy to take care of us.”

So they’re not exactly playing politics as usual. But their model of crossing party lines to act where Washington won’t is increasingly common. As D.C. politics has become more of a zero-sum partisan game, Mayors and Governors in both parties have taken on predatory lending, obesity, energy, health care and even immigration. “It’s innovation by necessity,” says Stephen Goldsmith, a former Republican mayor of Indianapolis who oversees Harvard’s Innovations in American Government awards. This year hardly any federal programs applied. “Very unusual,” Goldsmith says.

“Nature abhors a vacuum,” says Bruce Katz, director of metropolitan policy at the Brookings Institution. “And the vacuum at the national level is immense.”

After Bloomberg was ousted from Salomon in 1981, he used his $10 million payout to start Bloomberg LP, which now includes Bloomberg News, Bloomberg Radio and Bloomberg Television as well as the ubiquitous Bloomberg terminals that have served as the company’s cash machines since they started appearing on desks everywhere financial information was needed. In his autobiography, he called his name “a synonym for success,” describing his branding strategy thusly: “I was Bloomberg — Bloomberg was money — and money talked.” In 2001, after the lifelong Democrat joined the Republican Party because the Democratic mayoral primary was too crowded, he self-funded his way to city hall. An endorsement from Mayor Rudolph Giuliani helped, but mostly, money talked.

Bloomberg inherited a tough situation. The city was hemorrhaging jobs after the Sept. 11 attacks, and Giuliani’s second-term spending spree had left the city in a financial hole. Bloomberg raised property taxes 18% to attack the deficit, and he made some modest but politically difficult spending cuts, including the closing of several firehouses. He also engineered a hostile takeover of the city’s troubled schools and banned smoking in the city’s restaurants and bars. His approval ratings sagged into the 20s; his constituents booed him at parades. “They’ll come around,” he told aides.

They have, because the city has. Bloomberg hasn’t etched his personality into the city’s soul, but major crime has dropped 30% in New York in the Bloomberg era, without the racial antagonisms of the Giuliani era. Test scores and graduation rates are up, unemployment is at a record low, welfare rolls are at a 40-year low, construction is booming, the deficit has become a surplus, and the city’s bond rating just hit an all-time high of double-A.

As a candidate with no political base, no political history and no political debts, Bloomberg came into office beholden to no one. Even when they don’t agree with his decisions, New Yorkers seem to sense that he’s set aside his conglomerate and his four vacation homes for public-minded reasons; his approval rating has hovered around 70% for nearly two years. His administration has made mistakes — an ill-fated stadium plan, a school-bus snafu — but it’s been scandal-free, and every major media outlet endorsed his re-election. Bloomberg likes to think big: as a businessman, he aimed to make financial markets transparent; as a philanthropist, he’s funding research designed to eliminate malaria by building a better mosquito. “I was hired to solve problems,” told Time. “Yes, I’ll fix potholes, but that’s not why I wanted this job.”

There’s a good view of Bloomberg’s problem solving from the roof of the 123-unit building Ken Haron just developed in Harlem. That neighborhood was once a national symbol of urban decay — drugs, violence, all the classic inner-city problems — but now its main problem is that it’s so desirable, its housing is unaffordable. And in recent decades, the feds have stopped building subsidized housing. So Bloomberg has leveraged private money for a $7.5 billion effort to create 165,000 affordable apartments, enough to house the population of Atlanta. It’s already one-third complete. Haron charges some tenants market rents of about $3,000 a month, but he has to reserve 80% of his building for lower-income families that won lotteries to pay as little as $700 for apartments with the same granite countertops. On the roof, Haron points out similar mixed-income projects in every direction: “That one’s in the program. So is that one. That one’s condo; it’s ours too.” Its penthouse is for sale for $1.7 million, but moderate-income families will pay $250,000 to live in the same building. “There’s stagnation at the federal level, so we had to get creative,” says Bloomberg’s housing commissioner, Shaun Donovan.

To Bloomberg, Washington means gridlock, extremism and pettiness. It’s the place where homeland-security funds were “spread out like peanut butter” for political reasons, so that rural states got more per capita than New York. And it’s the place that’s blocking him from cracking down on illegal guns. In 2005, after a rash of shootings, Bloomberg’s aides told him that 90% of the illegal guns used in local crimes came from out of state and that 1% of U.S. gun dealers supplied 60% of its crime guns. And the Bush Administration had stopped tracking the problem; in fact, the G.O.P. Congress had enacted N.R.A.-backed language restricting federal officials from sharing gun-trace information with local police. Bloomberg appealed to Attorney General Alberto Gonzales but got the brush-off. So the mayor hired investigators to run stings in gun shops nationwide and sued 27 of the shadiest dealers; a dozen are now under court supervision. He also started Mayors Against Illegal Guns to fight the information-sharing restrictions; the group has recruited more than 220 mayors in a year, but Congress has not reversed the policy. “Ultimately, you have to blame the public,” Bloomberg says. “They’re not holding Washington accountable.”

Politicians aren’t supposed to blame the public. Or fly their own planes or pepper their autobiographies with sentences like “I dated all the girls.” (He’s now divorced with two daughters; he’s dating New York’s former banking commissioner.) But Bloomberg isn’t typical. He’s a press mogul who seems perpetually annoyed with the press. He broke with 200 years of tradition by rearranging city hall into a bullpen modeled on a trading floor, with his desk in the middle of 50 aides. (Perhaps transparency breeds loyalty, because his senior staff has barely changed in six years.) And now he wants to charge $8 to drive into busy parts of Manhattan on weekdays.

Bloomberg was initially skeptical of congestion fees because he feared the effect on outer-borough New Yorkers. But the data showed that few of them drive into Manhattan, and most who do will be served by the transit improvements the fees will subsidize. “What good is a 70% approval rating if we don’t take risks?” he asked his aides. So far, that rating hasn’t budged, which has given political cover to New York Governor Eliot Spitzer and even the Bush Administration to support his efforts to reduce emissions. “The naysayers who think global warming is too big a problem just don’t have any vision,” he says.

Schwarzenegger turned out to be a very good politician. He considered running for Governor in 2002, even though his only prior public service had been chairing President George H.W. Bush’s fitness council. Instead, he decided to sponsor a wildly popular ballot initiative to fund after-school programs. The next year, when a fiscal crisis and an electricity crisis fueled an effort to recall Democratic Governor Gray Davis, Schwarzenegger jumped into the chaotic race to replace him. After a two-month campaign too quick to get deep into policy specifics, he had a new job in Sacramento.

If Bloomberg is a technocrat, Schwarzenegger is a populist; he’s never stopped trying to give people what they want. In fact, he’s never really left the campaign trail, spending much of his time pushing ballot initiatives. The most prominent was the stem-cell measure. The $3 billion referendum was a clear rebuke to President George W. Bush, and some Schwarzenegger advisers warned him that supporting it would alienate his Republican base. But he adopted the initiative as his own, named the Democrat who wrote it to be his top stem-cell adviser and became a global spokesman for California’s medical-research industry.

“I like to do everything big,” Schwarzenegger says. But he’s not a superhero anymore. He’s still got that incredible jaw, but he looks almost life-size, and he seems to have inherited Strom Thurmond’s hair dye. He’s still an enthusiastic salesman — everything is “fantastic” or “terrific” or “greatgreat” — but his constituents didn’t want what he was selling in 2005, rejecting all four of his initiatives. He recovered in time to get re-elected by apologizing and reaching out to the Democrats who run the legislature. If the Bloomberg administration’s symbol is the bullpen where the mayor manages, the Schwarzenegger administration’s symbol is the smoking tent outside the state capitol where the Governor schmoozes while he lights up his cigar. “Our Founding Fathers would still be meeting at the Holiday Inn in Philadelphia if they wouldn’t have compromised,” he said in a blistering anti-Washington speech in February. “Why can’t our political leaders?” He suggested that Bush should get himself a smoking tent.

Schwarzenegger made his most important compromise last September, when he signed a Democratic bill capping greenhouse-gas emissions. With his Hummers, his private plane and his conspicuous delight in conspicuous consumption, Schwarzenegger is an unlikely environmentalist, but he’s become a global salesman for the war on carbon. His message, as usual, is that the naysayers are wrong: you can clean up the environment and still have a growing economy with big houses and big cars. He talks about green technology as California’s next gold rush, its next Internet boom: “One plus one can make three!” He scoffs at environmental buzzkills who want Americans to drive wimpy cars and live like Buddhist monks. “Guilt doesn’t work,” he says. He sees the future in the Tesla, a hot new electric car that goes from 0 to 60 in 4 sec. His model cost a mere $100,000.

It’s not exactly the Sierra Club message, but he’s a powerful messenger. He was in Vancouver to sign another climate deal when news broke that Bush would reject Europe’s push for climate caps at the G-8 summit and would propose a meeting instead. “We don’t need another meeting on global warming,” Schwarzenegger told a crowd of reporters. “We need action.” Action, of course, is Schwarzenegger’s thing. He was never much for dialogue. In an interview, he marveled at Bush’s notion that America shouldn’t cap its own emissions until China and India agree to do so. “That’s not what leadership is about,” he said. “We don’t care if Arizona is going to do the right thing; we take action ourselves.”

That love of action is the real link between Schwarzenegger and Bloomberg, and the real source of the recent Bloomberg-for-President buzz. There’s no obvious niche for a candidate who supports gay marriage and gun control while opposing the death penalty and deadlines for withdrawing troops from Iraq. But there is an obvious appeal to a businessman who can work across party lines to get things done — and could drop $500 million on a campaign without even noticing it was gone. Buffett thinks it’s a great idea, and when he first heard it, he turned to the Constitution. “I wanted to see if Schwarzenegger could be his Vice President,” Buffett said. “I think he could.” It states that the President must be native born, but it’s silent on the Vice President. “That would be one hell of a team, wouldn’t it?”

Twice in recent weeks, the Balochistan Assembly couldn’t hold its winter session due to lack of quorum. This happened on two consecutive occasions as 15 assembly members out of 65 turned up in the first session while only six were present in the second. This was despite the fact that 63 MPAs are part of the PPP-led coalition government in the province and sit on the treasury benches. It is certainly a cause for alarm that the 45 provincial ministers and the rest, almost all of whom hold some official position, are unable to ensure quorum of the provincial assembly so that its sessions are held in time, the grave issues confronting Balochistan and Pakistan are debated and legislative business is conducted.

There could be a reason as to why the Balochistan Assembly failed to meet due to absence of the required number of its members. It is argued that the MPAs on one occasion had to attend a function of Prime Minister Syed Yusuf Raza Gilani, who finally found time to visit Balochistan to belatedly console the unfortunate victims of the Ziarat earthquake. On the second occasion, the MPAs found it more exciting to attend the wedding of the son of federal minister Syed Khurshid Shah in Karachi than staying back in Quetta and taking part in the normally lacklustre proceedings of the provincial assembly. However, the assembly speaker and the parliamentary leaders of the political parties making up the ruling coalition should have figured out in advance that it would be inopportune to convene the assembly’s session when such momentous events such as the prime minister’s visit or a royal wedding were taking place.

The way the Balochistan Assembly is functioning and the manner in which the provincial government is being run cannot inspire confidence among those who were hoping for a change following the installation of democratic governments in keeping with the verdict of the voters in the Feb 18 general elections. It is business as usual, with the lawmakers once again indulging in their familiar pastime of seeking and enjoying the perks of power at the cost of public interest.

It would not be fair to single out Balochistan for its poor state of governance, but the purpose of highlighting the shortcomings of Chief Minister Nawab Mohammad Aslam Raisani’s unwieldy provincial government was to show how Pakistan’s latest experiment with democracy was already causing disappointment to all those who had attached so much hopes with the February polls.

Of the 65 assembly members in Balochistan, only one sits on the empty opposition benches. Sardar Yar Mohammad Rind, a former federal minister, cannot join the government due to tribal disputes with Chief Minister Raisani. He reportedly attended just one session of the assembly, to take oath as MPA, and that too in the company of heavily-armed guards. Being powerful tribal elders, the two Baloch chieftains have been running a feud and are, therefore, constrained to remain in opposite camps. Sardar Bakhtiar Khan Domki, son of the late Nawab Akbar Khan Bugti’s son-in-law Sardar Chakar Khan Domki, could be classified as an independent MPA as he isn’t part of the coalition government despite reposing trust in the chief minister at the time of Mr Raisani’s election. One could well imagine that there is practically no opposition in the Balochistan Assembly, and, therefore, no check on the working of the government. In the absence of any real opposition, some PPP lawmakers took it upon themselves to oppose their own government in Balochistan recently when they staged a walkout from the assembly to show solidarity with a party MPA and minister, Ghazala Gola; she was upset at the portfolio of minority affairs being taken away from her and given to a minister affiliated with the PML-Q, Basant Lal Gulshan. Three PPP ministers and an MPA, led by parliamentary party leader Sadiq Umrani, staged the walkout in protest and held a press conference in which they expressed reservations on the affairs of the coalition government headed by their own party member, Sardar Raisani, who otherwise has an honest reputation and is admired for his straightforward nature.

This is something familiar not only in Balochistan but also other provinces where coalition governments are in place. Protests at allocation of ministerial portfolios is an old story. Political parties without ideology lack discipline as its leaders and members seek personal glory and are driven by self-interest. A coalition government cannot have direction because the ruling partners tend to pull it in different directions. Balochistan suffers more due to its coalition governments as its electorate, belonging to different ethnic and political groups, always gives a split mandate in elections. Secular, progressive and nationalist politicians have no qualms joining hands with Islamists and centrists to form coalition governments in Balochistan even though they make strange bedfellows.

Like Balochistan, the federal government too is an amalgamation of political parties espousing conflicting causes and ideologies. It was, therefore, not surprising that the federal cabinet’s strength has already risen to 55 and is poised to become even larger once Altaf Hussain’s MQM and Maulana Fazlur Rahman’s JUI-F are accommodated. The coalition partners, from the PPP to the JUI-F and the ANP to the MQM, are already pulling it in different directions. Prime Minister Gilani, by now known more for his interesting and often meaningless statements than anything substantial in terms of his administrative skills, watches helplessly while he panders to the wishes of the leaders of the coalition parties, and at the same time take orders from the his party boss: President Asif Ali Zardari doesn’t want to step down as the head of the PPP and become the president of all Pakistanis irrespective of their political affiliation.

In Sindh, the PPP has entered into a coalition with the MQM, a party with which it shares little owing to the two parties’ mutual distrust. Sooner or later, the two might encounter serious disputes and the only way they could stay together is to allow each other a free hand in running their respective ministries.

The situation in the NWFP isn’t much different. The PPP and ANP always make uneasy coalition partners and this time is no exception. Paralysed by the rising militancy and violence, the coalition government enjoys an unassailable majority in the NWFP Assembly and the JUI-F-led opposition too is largely a friendly opposition. The PML-N hasn’t taken up the insignificant ministerial berths that were offered to it by the ANP and the PPP but it doesn’t want to sit in the opposition as this would deprive its MPAs of government patronage and funds.

However, the provincial government cannot function normally due to the serious law-and-order problems afflicting the province. The expectations attached to it by the voters cannot be fulfilled and public trust in the coalition government’s ability to deliver is gradually diminishing. Add to it the familiar problems that arise between coalition partners in our country and there is this growing feeling that the ANP and the PPP could in due course develop problems of mutual mistrust.

Punjab probably is the best-administered province at present, primarily due to Chief Minister Shahbaz Sharif’s sincerity of purpose and governance skills. But Governor Salmaan Taseer would not let it work smoothly and the PPP doesn’t want to remain out of the provincial government even if Nawaz Sharif wants it to quit the coalition in Punjab. Coalition politics in Punjab too is causing frustration and could even undo the delicate balance of power now in place in Pakistan’s biggest province.

It would be unfortunate if Pakistan’s latest experiment with democracy falls by the wayside due to the lust for power among our politicians.

After doing some research and investigation, I have come to realise that portfolio management is essential for every individual investor to create wealth. With a long-term investment horizon and balanced medium- to high-risk, I would like to seek an appropriate asset allocation strategy in my mutual fund portfolio. How should I do this allocation on a monthly basis? Can you suggest some other investment avenues apart from mutual funds?

Profile of the Investor Name: Sundara Kumar Age: 26 years Risk Appetite: Balanced Medium to High Investing Amount: Rs 22,500 per month

It’s impressive to see that you have a pre-planned set of strategies before you set out. You are definitely headed towards the right direction in building a diversified portfolio.

The world of health care is enormous and confusing. “Consumer-Directed Health Care” (CDHC) must empower consumers, not leave them to figure it out for themselves.  Most HSA administrators only provide a Visa/Debit card and an interest bearing account for your funds.  However, some will offer mutual funds after your account reaches $2,000 balance.  Remember, this account is portable/individually owned and the money rolls over year after year creating a nice tax advantaged account for eligible medical expenses - no “use it, or lose it” clause.

As a member of Consumer Care Solutions (CCS) our HSA Administration offers an exclusive Visa/Debit card to pay for your medical costs from your HSA, so that’s easy.  The card even knows which expenses are HSA-approved and which aren’t.  You get control and convenience, while CCS does the math!

Until now, most CDHC options have been structured and sold simply as a different way to fund health care; the problem is that in doing so, they perform the way traditional health plans perform.  To fulfill the promise of major savings, Consumer Care Solutions can deliver 30% - 40% savings on your annual health care costs.

www.consumercaresolutions.comis a web portal delivering a comprehensive collection of integrated products designed to launch consumers into this new era of health care.  Whether or not you have health insurance, a CCS membership provides important savings on prescriptions, dental care, hearing, vision and chiropractic care.  It instantly expands your network of doctors and health care providers far beyond what any individual health plan may offer.  And it gives your the power of a revolutionary web portal to manage your family’s health care, compare costs, and take advantage of the most powerful wellness site on the Internet. 

Best of Breed discounts available to all members = Better care, lower costs. Now within reach.

Okay so I know I should be writing about culture and stuff. I just got back last Sunday from ten days abroad and have been digging out from under a heap of emails and huge massive piles of backlog work. I was in Tel Aviv for awhile, which is amazing. It is like Paris with Palm Trees. I saw tons of cool art, partied with the Batsheva dance company at the Susanne Dellal center and much, much more. It was hard to come back to cold, cold, NYC. But I’m getting back in the swing of things.

And what with the holidays and all, my thoughts turn to credit card debt. According to Wikipedia (and their sources):

It just seems to me that if the government can bailout AIG to the tune of some $85 billion and Citi to the tune of, what, $45 billion? And a total bailout plan to all the fatcat investors of nearly $1 trillion dollars - that maybe it would be a really great idea to bailout more regular american who are burdened by credit card debt. Many people have accumulated debt that they’ve had since they were in their 20’s. The credit card people target students, we live in a culture that saturates common consumers with overwhelming messages to get into debt for a better life, etc. etc. Wages have remained stagnant at the  price of living has gone up, etc. etc.

Imagine the financial stimulus if people who are spending significant parts of their annual budget trying to pay down credit card debt - and never being able to get out from under it - could actually start over? What if they could have the opportunity to restructure their personal finances to get ahead and become a more robust and healthy part of the economy? Surely someone could figure out a way to distinguish between the chronically malfeasant and the redeemable but burdened debtors?

How about a bailout plan for the little guy?!!!

The first official Jobwhore post concerns a run of the mill cesspool called New England Wealth Strategies.  Jobwhore recently sat down with an employee of this organization and received an earful.  This person is a new rep for this organaization.  For purposes of this article this rep will be known as “Rep Z”.

Background

This company has three offices - Uniondale Long Island, New York City and Westport, CT.  They are a franchised financial services firm, affiliated with New England Financial a wholly owned subsidiary of Met Life.  New England Wealth Strategies is a franchise run by two managing partners.  If it sounds a little convoluted, it is.  It’s one of the early indications that this is a bit of a sloppy, poorly conceived outfit that is resting on its laurels as a division of Met Life and New England Financial, both of which have solid reputations.  New England Wealth Strategies, does not share the sterling reputation of Met Life and is actually an all together different animal.

There are two primary hiring tracks for New England Wealth Strategies, experienced producers and newly licensed reps.  The producers are overwhelmingly male, perhaps up to 95%, although one of the managing partners is a woman.  If you are an experienced producer, you can make an agreement with the owners to bring your existing clients into this company.  This happens infrequently, as most top producers can write their ticket with their own firms.  Occasionally, however a rainmaker type gets dissatisfied with his current affiliation and wants a change.

Far more frequently, however, the organization hires inexperienced reps.  These are either recent college grads or seasoned professionals seeking a career change.  New England Wealth Strategies will require you to gain FINRA licensing before you are hired.  This includes the passage of the State Life and Health Exam, as well as the Series 6 & 63 exams.  From all accounts, however, this the bare minium licensure you can receive in order to become a so called financial advisor.  A financial advisor is someone who actually has a series 7 which allows you to be a broker.  With just a 6 & 63 you can sell life insurance, annuities and mutual funds.  Passing these three exams will take you approximately three months and will be known as a “financial representative”.  It’s not that the tests are particularly difficult, but you have to wait for your “window” from FINRA to take the 6 & 63.  The life and Health exam is adminstered by each state.  Many people cannot pass the life and health exam and can go no further.

The New Rep Hiring Process

Generally, most people are recruited by New England Wealth Strategies from an internet job site.  Typically the firm employee responsible for this task will download dozens of resumes and call 50 - 100 potential new recruits per day.  They make contact with just a handful of these individuals and have a brief conversation.  If all goes well, they are offered a chance to interview.  At the interview the applicant meets with recruiting manager as well one of the rep managers.  If there is any kind of interest (”a pulse”) an invitation is given to take an aptitude test.  If the aptitude test is passed, then the applicant is called back to complete paperwork and arrange for the Life and Health Exam.  Background and credit checka are performed.  Once this threshhold is passed, the Life and Health Exam is arranged and taken.

Once the applicant has completed the application they can become what is known as an unpaid intern.  S/he is given the opportunity to come to meetings and learn the business.  Mondays are essentially filled with meetings, from 8:00 a.m. to 12:00 p.m. or later.  So the new reps often attend these meetings for 2 or 3 months before they are officially hired by the company.  Only after one has passed the three licensing exams will the company offer to “contract” or hire you.  You also have to attend an upaid week of class in the NYC headquarters, called “Induction School”.  Essentially it will be extremely difficult to have another full time job in this time period as you be asked to come in every monday and sometimes on other days, to work without pay or “intern”. 

The main selling points for working at New England Wealth Strategies are that, “you will get teamed up with a senior producer”, “we don’t just hand you the phonebook”, “don’t make cold calls”.  These however, are not accurate and according to Rep Z, believe them at your own peril. 

There are iron clad call requirements, call nights and little guidance on prospecting is given to the reps.  In fact, there is virtually no guidance whatsover in how to prospect, except to “make calls” or “grab the phonebook”.  Most people will not be provided lists of potential customers to call, none but the chosen few will.

I turned 30 today. Fucking scariest day of my entire life. I’ve been dreading it since the day after I turned 29. For a few months during mid-2008 I managed to forget, but come the end of August it hit me full force. I would be 30 in a few months and had nothing to show for myself.

No career. No house. No vehicle. No partner. No kids.

I earn 10$ an hour processing mutual funds. When I want people to think I have a ‘real’ job, something that’s not just over-glorified data entry, I tell them I manage RESPs. Not quite a lie, but not quite the full truth either.

I still live with my parents. I moved back home a few years ago to help out with some Stuff…and have yet to leave. Now that the economy’s taken a nose-dive, it looks like I won’t be able to for at least another six months. I refuse to rent when one month’s rent is the same as what a mortgage payment could be.

Long story short, this has had me effing depressed for a while now. Blah blah, some days I don’t want to get out of bed, blah blah emo blah. But when I can see past the depression, I have been seriously thinking about it. If I haven’t gotten my shit together by the age of 30, is it even worth trying to pull it together, still? Am I past the point of no return or can I still go on to live a happy, productive life and have something to show for myself?

I have no clue. It’s possibly possible that I can get my shit together, but as the old saying goes, only time will tell.

Taking some time off work to be at home today. Me and the family having a most excellent time. Stealing a little bit of shuteye on the sly I have to admit - but that ain’t so bad. You know, I’m beginning to think that there’s something pretty amazing in my future. By the way check out this interesting mutual fund financial investing site.

Here in the kitchen and wondering if I belong. Parents are going to be visiting so thinking about that. Getting things ready for the long weekend coming up next week - Yahoo! Can’t help but wonder if everything will be the same next month . . . And check this mutual fund analysis research stuff out.

S Naganath,CIO, DSP Blackrock

For stock-picking, we do pretty much the same thing that everybody else does – a combination of fundamental analysis, liquidity analysis and macro analysis. I don’t believe that bottom-up stock-picking alone works. The future price of a stock is influenced by a variety of factors. To focus only on the stock’s fundamentals would be to take a very narrow view. So, we have a mix of top-down and bottom-up approaches. If I had to look at one parameter, I would focus more on return on equity (RoE).

Tushar Pradhan, CIO, AIG

I simply look at growth at a price. India is in- herently a growth market. If you are looking for value here, you are likely to underperform for many years. Look at Procter & Gamble. It’s a wonderful business and it doesn’t require any capital. It makes sanitary napkins and it makes Vicks Vaporub. Both are perennial businesses in India. But the stock price just doesn’t move. None of the open-ended mutual funds has the patience to buy this company’s shares. On the other hand, growth can be very dramatic when the cycle is rising. For instance, look at the kind of growth the capital goods sector enjoyed in the past five years. When the cycle turns down, it doesn’t mean that the rate turns negative. The rate of growth goes down for a while before turning up again. So that is my focus – growth at a price, which will give you good returns.

Anoop Bhaskar, CIO (Equity), UTI Mutual Fund

If you are buying a company for growth and you expect it to double in size in three years, it cannot have free cash flow. My only criterion is that its cash from operations should be free. I think, the other thing is experience. You have to keep on meeting companies every week and in their offices and plants so that you know how their offices are and can observe other small things which tell you a lot about how they are managed – whether the guy serving the tea has a stained uniform; whether he greets you properly. Usually, in good companies, the lowest-level guys are very keen to work and keen to help. They are very proud to be in that company. If you didn’t like the tea and didn’t have it, they would notice and ask if they should make it again. All this tells you how the company is managed. This information is not there in the balance sheet.

Meeting companies management gives you a lead. You tend to understand what exactly is happening structurally in the industry. The key is not to have a meeting to discuss the next quarter numbers. The key is to spend time with the promoter and the management team. So I have meetings where I don’t discuss any numbers with them; some of my colleagues are very amazed – how could one have a meeting and come back without asking anything about the numbers? I say, we can call the right brokers and we will get the numbers but the point is we have just 45 minutes and let’s find out from him where he sees we could be three years from now. Is it really going to be different from what it is today? That is the key.

There is one rule (of investing) which is that, if the intensity of the working capital is lower than the sales intensity, then the company is a fraud.

Nilesh Shah, Deputy MD, ICICI Prudential MF

Selecting the right business is taking a call that, if the economy moves in a particular direction, then sector X would do well. Then you have to select the right company. The definition of a right company for us is a company which has a vision, which has an execution plan to back that vision and where promoters will not take the minority shareholders for a ride. The third important factor is to see if the price is right. Here again you try to analyse past trends, global benchmarking, some emerging market experiences and do some future analysis, to figure out if the price is right or not.

Source: Moneylife

Related link: http://deveshkayal.wordpress.com/2007/12/03/fund-managers-investment-strategy/

The Charlotte Observer reports…

“The phone rang at 8:30 on a chilly Friday night at the woman’s Hickory home. Her caller ID showed the number for J.V. Huffman Jr., who managed her $130,000 retirement account – but there was a different voice on the line.

“This is agent Shawn Pruett with the N.C. Secretary of State’s office,” the woman recalled hearing. “Do you have money invested with J.V. Huffman? We’ve got him for fraud.”

“I started shaking so bad, it was like I was having a seizure,” said the woman, who asked not to be named for fear it would compromise plans to consolidate her loans. “It turned my life upside down. It was the money I was going to live on the rest of my life.”

Claremont, a blink-and-you-miss-it town of 1,100, has been jolted by accusations that Huffman, one of its best-known residents, cheated hundreds of investors out of millions, spending the money on fancy cars and his sprawling home.

Interviews with about a dozen friends, associates and investors paint a complicated portrait of the former school board member and church leader. Those who know him say they’re torn between images of the man they know – a soft-spoken hometown boy who quoted scripture, donated to charity and threw parties for college students – and the man they’ve read about in the papers recently.

Some say they feel foolish for getting caught in the web or angry that they’ve lost their savings; others say they’ve forgiven Huffman and are praying for his family.

Huffman, who remains in jail in Catawba County under a $1 million bond, confessed the scheme to state investigators after they raided his house, seizing documents and computer equipment, authorities said. Huffman could not be reached for comment, and family members did not return phone messages or answer their doors in recent weeks.

State authorities arrested Huffman on Nov. 7 on four felony counts of securities fraud. A few days later, the SEC filed a civil suit in federal court, saying Huffman and his company, Biltmore Financial Group, sold $25 million in investments to more than 500 people across the country, many of whom were part of the Lutheran community in Claremont, 50 miles northwest of Charlotte.

Court documents say Huffman spent investors’ money on vacation houses, a home movie theater and an Aston Martin convertible, among other lavish purchases.

Associates say he used his small-town connections and strong reputation – plus the promise of high returns – to persuade strangers, friends and family members to invest.

In the 17 years since it launched, Biltmore Financial collected clients nationwide, from Claremont to Colorado. Huffman didn’t advertise; most investors found out about the company through church members or relatives.

Friends and family say his parents are God-fearing, honest people, and that Huffman was a mild-mannered young man. His father, who lives in a two-story Claremont home, worked as a furniture upholsterer and later opened S&H Pools Inc., a swimming pool construction company.

Huffman Jr. attended Bunker Hill High School and Lenoir-Rhyne College, friends and relatives say. After college, he worked as an insurance salesman for the Aid Association for Lutherans.

In November 1991, Huffman launched Biltmore Financial Group. Authorities say he has not been registered to sell securities since October of that year, and a check with the Financial Industry Regulatory Authority confirms Huffman has not been licensed as a broker anywhere in the United States for the past two years, the oldest records available.

Huffman was plugged into his community. He won a seat on the Catawba County Board of Education in 1996 and was elected at least once again, serving until he lost a bid for re-election in 2002.

He donated to his church and charities and served on Catawba’s Board of Adjustment, where fellow members say he was respected and did a good job.

Huffman was successful in business. He moved into his house on Wishing Well Lane, which friends say his father built, in 1993, gutted it and added on, installing the movie theater with reclining leather seats, among other upgrades.

The house, whose tax value is $765,000, unfolds along a winding ribbon of asphalt in the Claremont foothills, surrounded by mobile homes and modest brick houses, chain-link fences and barking dogs. There’s a circular driveway with a fountain in the center, bright sprays of flowers outside and a long, low porch with rocking chairs and fans.

No one answered the door on a recent day – friends say Huffman’s wife and four children have left town.

Public records show Huffman owns almost a dozen other properties, including vacation and rental homes. Court documents allege he spent investors’ money on a $1 million recreational vehicle and other luxuries, and friends say he wore expensive clothes and took frequent trips to the islands and, about a month ago, to Alaska.

Court records and clients detail how the business worked:

Initially, he told investors his company operated like a mutual fund, but he changed his pitch after Sept. 11, 2001, to ease fears about market volatility. He would say Biltmore profited by pooling investors’ funds to buy and sell mortgages.

Huffman promised interest rates as high as 16.5 percent and told investors their money was insured by the FDIC, Securities Investor Protection Corp. and other groups.

As worries mounted about the subprime mortgage crisis, Huffman reassured investors, saying he only bought mortgages “with a good five- to seven-year history and a minimum equity position of 20 percent,” the SEC said.

In a recent letter to investors, Huffman promised higher interest rates to clients who increased their account balance by Nov. 15 and said if investors transferred money from a declining mutual fund or stock into a new account with Biltmore, “I will restore your balance back to the level on your last quarterly statement or as of Sept. 30, 2008.”

Investors say they never had trouble withdrawing money; some received monthly interest payments; others took out $5,000 or $20,000 whenever they needed it. They said they didn’t suspect anything until news broke about the arrest.

The Hickory woman who got that Friday-night phone call said she invested $130,000 with Huffman after her ex-husband introduced her to him. She remembers plaques in his office with Bible verses and the promise of higher returns than the BB&T account she had her money in previously.

The woman, 63, has been retired about two years, and wonders what she’ll do now. She’s negotiated with her insurance company to lower her monthly payments, is trying to consolidate bills – and is waiting for whatever happens next.

“What else can we do?” she said. “I’m running on pure emotion right now.”

Another investor, Vickie Drum of Newton, is Huffman’s second cousin and saw him about once a year at family Christmas parties, she said. Drum said Huffman’s clients were mostly frugal, hard-working folks who saved their whole lives. Her money came from selling property passed down through generations in her family, she said.

“(Investors) pinched pennies,” Drum said. “They did without to put this money aside to live off of for the rest of their lives. It’s kind of a slap in the face.”

“I only think of good things when I think of J.V.,” said Harrison Smith, a junior from Clayton, who’s known Huffman since his freshman year. “… Everything he did was geared around someone else.”

The Huffmans invited students to their home for Thanksgiving, for instance, offered to let students do laundry there and often hosted parties for students, where Huffman would grill burgers and make smoothies. He used his RV for church mission trips and drove it to college football tailgates, offering a spread of pizza and other snacks.

Huffman would often speak on campus, too, dressing casually in Abercrombie pajama pants and slippers and carrying a bag of CDs and T-shirts to give away. He was friendly and inspiring – but never slick, students said.

Samantha Quave, a junior from Winston-Salem, said she and the others have talked about the situation with their pastor and friends.

“We certainly don’t try to excuse it,” she said. “For me, it’s just confusing. It’s really just very hard to put the J.V. we know with the horrible picture the press has painted of him. He taught us so much about grace and forgiveness. … We want to extend that to him.”

Huffman is scheduled to appear in court Monday. He’s requested court-appointed attorneys.

Kit Addleman of the SEC said she has never investigated a Ponzi scheme where investors have gotten all their money back.

“They will be lucky to get between 30 cents and 50 cents on the dollar,” she said.

Even that could be good news for investors, some say.

One investor, a 63-year-old former race car driver, said he might have to sell his vacation home and rental properties to cover his losses. The man, who asked not to be identified because he grew up with Huffman’s father and is close to the family, said his extended family had invested close to $750,000.

“We were so confident, and he led us to believe everything was so healthy,” he said. “For somebody I have known his whole life, I can’t believe he could look me in the eye and tell me that.”

From http://www.charlotteobserver.com/597/story/383186.html

So far, I havn’t done any “professional” blogging, although I do have personal one where I give about beauty and health product reviews; products I personally use. 

I do have a LinkedIn account where I could post a resume and work that I’ve done, but haven’t done so yet. I have about 140 contacts and try to keep the number fairly low with people whom I know or are in the same field I’m in. 

Here’s a general summary of my career and what I’ve found I’m good at and want to pursue:

I’m a communications professional with expertise in marketing, training and project management. I have been recognized by peers and managers for my strong organizational abilities, interpersonal skills and resourceful, out-of-the-box thinking and actions. My background is diverse and can bring in-depth experience to increase effectiveness of projects of all types and new aspects to existing and proposed products. When a project is completed, I don’t sit back and say “that’s enough”; I continue to look for ways that processes can be improved and content can be freshened.

Kristin

JASPER JOTTINGS Week 48 - 2008 Nov 30

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

http://www.jasperjottings.com/2008/jasperjottings2008WEEK48.html

INDEX

POSITRACTION: Overcoming a horendous accident

JEmail: Quinlan, Liam (MC1985) updates us on Kinnally, Rev. Robert M. [MC1982]

JEmail: Louis Menchise (MC1985) agrees with cards for vets in Wally World

JFound: Muller, Mark (MC????)

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

JFound: Cicuto, Sarah (MC20??) uses consumer choice for good

JBlogger: Gibbons, Patti (MC1986) thinks Churches should be open!

JOY: Katkocin, Matthew [MC????] engaged

JHQ: Manhattan College To Honor John V. Magliano ’66, Chairman Of Syska Hennessy Group, Inc., At 2009 De La Salle Medal Dinner

MFound: A pic of Cheerleaders and Dancers is on Flickr site

JEmail: Jack Raidy (MC1961) seeking John Fisher (MC1961)

JFound: Ryan, Tom (MC1985) identified

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

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

JObit: DeMicco, Bonnie M. [MC1984], husband of Emil [MC1979]

MNews: Manhattan College Christmas Lessons And Carols Singers Jazz Band

QUADRANGLE: “Missing Professor Now Deceased”

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

JFound: Dupper, Thad [MC1979] P+CEO of Evolving Systems

JOY: Finch, Bernadette Kelly (MC1995) gives us something to be thankful for. Among other things.

MFound: Jack Taylor (19th century baseball player)

JFound: Romero, Dennis O. [MC????] in 2006 was … …

JObit: Coyne, Robert T (MC1970) reports the obit for Jackman, Frederick [MC1945]

JEmail: Breen, Jerry (MC1971) shares Obama calligraphy portrait

JUpdate: Hughes, Gerry [MC1982] seeking Microsoft Business Intelligence position

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

JNews: Kelly, Ray [MC1963] was going to run for NYC mayor?

JEmail: Dandola, John (MC1970) celebrates 60 with … …

Comment on MObit: Eugene J. O’Brien, Eugene J. [MCattendee] by Peg O’Brien

ENDNOTE: Lincoln wasn’t the worst President, but close!

# - # - #

POSITRACTION: Overcoming a horendous accident

http://www.nytimes.com/2008/11/03/nyregion/03long.html?ex=13

83454800&en=0c00edc864f96127&ei=5124&partner=fac

ebook&exprod=facebook

http://tinyurl.com/6jsfwv

After Serious Accident, His Time to Beat? 3 Years

Published: November 2, 2008

*** begin quote ***

On Sunday, Matthew Long, 42, finished the New York City Marathon in 7 hours, 21 minutes. He was well back in the pack of tens of thousands of entrants, yet his finish was, in its own way, a first.

*** end quote ***

What was that famous quote … … I learned it back at MC … … in Brother Barry Austin “measurements” class … … did we ever learn any “measuring”? … … it went something like “If you think you can or you can’t, you’re right!”

Here’s a little inspiration, when you think you “can’t”, maybe this might convince you’re wrong!

# # # # #

* Posted on: Sun, Nov 23 2008 12:37 PM

JEmail: Quinlan, Liam (MC1985) updates us on Kinnally, Rev. Robert M. [MC1982]

From: Quinlan, Liam (MC1985)

Date: November 23, 2008 9:56:30 AM EST

To: Distribute_Jasper_Jottings-owner@yahoogroups.com

Subject: JFound: Kinnally, Rev. Robert M. [MC????]

John–Fr. Kinnally is the class of 1982, English Major with a minor in French.

[JR: Thanks, Liam. Much appreciated.]

# # # # #

* Posted on: Sun, Nov 23 2008 3:32 PM

JEmail: Louis Menchise (MC1985) agrees with cards for vets in Wally World

From: Louis Menchise (MC1985)

Date: November 23, 2008 12:08:40 PM EST

To: Distribute_Jasper_Jottings-owner@yahoogroups.com

Subject: Re: [Distribute_Jasper_Jottings] JASPER JOTTINGS Week 47 - 2008 Nov 23

I “went through” Walter Reed twice in my life. First, for chemotherapy in 1994-5 and the second time in 2003 when my left inner ear was damaged by a virus in Iraq that required vestibular rehabilitation. In the six weeks I spent at Wally World (Walter Reed) in 2003, I saw three times more amputees than I had in my previous 38 years on Earth. So - especially in this Holiday season - I can tell you that a letter to a veteran at a military or VA hospital would do a world of good. Please thank all veterans. I had it relatively easy in 2003. I only served one year on active duty. WW II and Korean (The Forgotten War) servicemembers were gone for years. Vietnam veterans had no support from the people back home, much less well-wishing stickers/magnets on cars. In fact, upon their return from Hell, they were spit on and called baby-killers. So, when you see a veteran - any veteran - thank them.

Louis Menchise

‘87B

US Army 1994 -2004

[JR: As a USAF vet of the 70-73 era, I am probably overly sensitive to how the American People "mistreat" veterans. And, how we allow politicians to pander to the people on the dead and broken bodies of vets. (Calm down, or this will have to be an end note!) Sorry, but I agree with Robert Heinlein's proscription that only veterans should be allowed to vote. In "Starship Troopers" and his other writings, he makes the argument that: Only those have fought for their country and risk death should be allowed to vote. I still agree with that. With a very practical corollary, from "A Few Good Men", "... I suggest that you pick up a weapon and stand a post. Either way, I don't give a damn what you think you are entitled to." Only those called on to fight need to be consulted. Those, that won't fight, won't revolt anyway, so they shouldn't vote either. Old politicians send young men in harm's way and turn their backs when the "check comes due". The VA medical care system should be a crown jewel. And, it's not by a long shot!]

# # # # #

* Posted on: Sun, Nov 23 2008 4:02 PM

JFound: Muller, Mark (MC????)

REPORTING LIVE FROM THE SPOCK NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Muller, Mark (MC????)

http://www.iatp.org/iatp/experts.cfm

Director, Environment and Agriculture Program

Since starting at IATP in 1997, Muller has worked on a wide variety of issues, including agricultural diversification, nutrient management, agricultural transportation, regional food systems and renewable energy production. He has been involved in both regional project-based efforts and national policy development. He has had opinion pieces on agricultural policy appear in newspapers throughout the Midwest. Muller has a B.A. in physics from the State University of New York at Geneseo and a M.S. in environmental engineering from Manhattan College. Prior to joining IATP, Muller worked as an environmental engineer and high school science teacher.

# # # # #

* Posted on: Sun, Nov 23 2008 6:37 PM

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

Desposito, Joseph (MC????)

http://electronicdesign.com/Article/ArticleID/17392/17392.html

Engineering Bridges Isn’t Just Civil Anymore

Joseph Desposito | ED Online ID #17392 | November 5, 2007

*** begin quote ***

During my days as an engineering student at Manhattan College, my calculus teacher used to say, “No partial credit! Get wrong answer, bridge fall down!” This was the first thing that flashed through my mind back in August when I heard about the I-35W bridge collapse in Minnesota. My very next thought was that an error in calculations couldn’t have been the cause of this disaster. So what was the cause?

The day after the collapse, Michael J. O’Rourke, a professor of civil and environmental engineering at Rensselaer Polytechnic Institute, said in a New York Times article that the bridge’s renovations likely caused the collapse, not general decrepitude. “It is more common for a bridge to have problems during renovations than before or after,” he said.

I travel over two bridges to get to my office in Paramus, New Jersey, from my home on Long Island: the Throgs Neck Bridge and the George Washington Bridge. A statement like this gives me pause, since these two bridges are under constant renovation. In fact, I often wonder how long it will take to remove the copious rust from the towers of the Throgs Neck.

*** end quote ***

[JR: Automated searching is uniquely frustrting. Here's a "recent" alert I received today. I guess it was a long way from hither to yon. And, I'll quibble with the quote. I received the admonition many times: "Ohhh, wrong sign, bridge fall down! Nooooooo partial credit." This from the guy who gave a final exam of one question. That was pressure! Argh. Still agravates me to THIS day.]

# - # - #

[JR: This Jasper has been doing a lot of that authoring stuff!]

http://electronicdesign.com/Authors/AuthorID/914/914.html

# # # # #

* Posted on: Sun, Nov 23 2008 6:37 PM

JFound: Cicuto, Sarah (MC20??) uses consumer choice for good

Cicuto, Sarah (MC20??)

http://fairtrade.crs-blog.org/fairtrade/students-say-you-are-what-you-eatand-drink-and-wear/

Students Say: You are what you eat…and drink, and wear!

*** begin quote ***

When Lois Harr, CRS Fair Trade Ambassador from the Bronx, invited me to join her and Manhattan College student Sarah Cicuto in St. Louis at a conference with the theme, “Global Learning and Social Responsibility through a LaSallian Education,” I was all about the global social responsibility piece, but I had to do a little homework to learn who the “LaSallians” are. I quickly figured out these are the educators—both religious and lay–associated with the Brothers of the Christian Schools, an order founded by the “universal patron of educators,” French priest John Baptiste de La Salle. The warm welcome and the outstanding range of speakers I am experiencing here at their Huether Conference is educating me quickly on the power and reach of the LaSallian tradition. At our workshop, Lois and I discussed the faith-based roots of Fair Trade and how Fair Trade is a tool of economic justice. But Sarah was the star of the show, explaining how Manhattan College’s Just Peace group helps students live their values through eating chocolate and drinking coffee!

Sarah took the gathered group through the brief but impressive history of Just Peace on campus. In her role as Campus Minister, Lois had taken a group of student volunteers on a service trip to Ecuador where they were introduced to the need for Fair Trade. Soon after, some of the students decided to attend a United Students for Fair Trade (USFT) convergence in Boston in 2006 to learn how other students were bringing Fair Trade to campus. After seeking out examples from surrounding schools in their region, the students decided to take on a campus campaign. But first they organized themselves as an official student government organization, not only to spread news of their mission but also to get some of the budget allocated to student groups on campus. Pretty savvy kids.

The group started its campaign by encouraging students to fill out the comment cards in the dining halls asking for Fair Trade coffee, and then they set up a meeting with the Operations Manager for Sodexho to “demand” Fair Trade coffee. What they didn’t realize is that the manager, Dennis McCoskey, was quite willing to make the switch if the students wanted it. Sarah and her fellow group members were surprised that Sodexho was so willing to respond. Sarah says, “I learned that to make change sometimes you just have to ask the right people the right questions.”

{Extraneous Deleted}

*** end quote ***

[JR: Now, I'm not much on "Social Justice" (aka Socialism) or "Free or Fair Trade" (aka gooferment trade restrictions). But this sounds like something a little different. Consumers making choices. I can support that as long as there's no gooferment thumb in the equation.]

# # # # #

* Posted on: Sun, Nov 23 2008 6:37 PM

JBlogger: Gibbons, Patti (MC1986) thinks Churches should be open!

http://pattigibbons.com/?p=821

This is the wrong direction, people!

*** begin quote ***

With regard to my strong belief that Christians ought not expect the government to handle the mercy and justice aspects of the Church’s mission, I need to vent. I came across a news item today providing information that just astounds me in it’s abject stupidity.

*** end quote ***

Gibbons, Patti (MC1986)

[JR: Clearly, she doesn't understand that the gooferment's diktats preempt the free exercise of one's religion in the new United Socialist States of Amerika! None of that Church charity. That's the job of Nanny Gooferment. So what if a few bums freeze to death. It's the RULES that have to be followed. Shut up, comrade citizen!]

# # # # #

* Posted on: Mon, Nov 24 2008 3:11 AM

JOY: Katkocin, Matthew [MC????] engaged

http://www.newstimes.com/ci_11043723?source=most_emailed

Engaged: Crystal Russo, Matthew Katkocin

Newstimes

Updated: 11/21/2008 05:33:48 PM EST

John Russo of Myrtle Beach, S.C., and Ruth Cabral of Rose Lane, Danbury, announce the engagement of their daughter, Crystal Russo, to Matthew Katkocin, son of Mr. and Mrs. Dennis Katkocin of Sunswept Drive, New Fairfield.

The future bride graduated from Danbury High School and from Western Connecticut State University in Danbury with a bachelor’s degree in financial accounting.

She is an accountant for Equale & Cirone in Danbury.

The future bridegroom graduated from New Fairfield High School and from Manhattan College with a bachelor’s degree in civil engineering.

He is a project engineer for a company in New York City.

A March wedding is planned.

# - # - #

Katkocin, Matthew [MC????]

# # # # #

* Posted on: Mon, Nov 24 2008 3:26 AM

JHQ: Manhattan College To Honor John V. Magliano ’66, Chairman Of Syska Hennessy Group, Inc., At 2009 De La Salle Medal Dinner

News Release

November 21, 2008

Manhattan College To Honor John V. Magliano ’66, Chairman Of Syska Hennessy Group, Inc., At 2009 De La Salle Medal Dinner

De La Salle Medal Dinner is the College’s key annual fundraising event.

RIVERDALE, N.Y. – Manhattan College will present John Magliano ’66, chairman of Syska Hennesssy Group, Inc., with the De La Salle Medal at the College’s annual fundraising dinner on Wednesday, Jan. 21, 2009.

The ceremony will be held at The Waldorf=Astoria in New York City.

Magliano, a licensed professional engineer in 12 states, joined Syska Hennesssy Group, one of the country’s leading consulting, engineering, technology and construction firms, in 1970, after graduated from the College with a degree in electrical engineering and served a four-year tour of duty in the U.S. Air Force.

During his 38 years with the firm, he has served as principal-in-charge of many of its high-profile clients and projects, including Goldman Sachs, JPMorgan, New York-Presbyterian Hospital, the United Nations and the U.S. Department of Agriculture.

“I am both humbled and thankful at the thought of being the honoree at the Manhattan College De La Salle Dinner,” Magliano says. “Humbled because I was fortunate to be able to make good use of the gift of a superb education that the College gave me in the four years I spent there.”

A firm advocate of mentoring and team advancement, Magliano is one of the founding members of the ACE Mentor Program, a nonprofit group that provides mentoring for high school students in the fields of architecture, construction and engineering. He also established Syska’s unique Engineer in Training Program, an intensive program for new engineers just out of college, among other initiatives.

Richard Anderson, president of the New York Building Congress, Tom Farrell ’83, senior managing director of Tishman Speyer, and Richard Tomasetti ’63, founding principal of Thornton Tomasetti, Inc., will serve as dinner co-chairmen.

The De La Salle Medal Dinner is the College’s top fundraising event. Proceeds from the $750-per-plate fundraiser are applied to academic and cocurricular programs, scholarship assistance and library resources. The black-tie event begins with a cocktail reception at 6:30 p.m., followed by dinner and dancing at 7:30 p.m. For more information about the dinner, please call Susan Bronson, director of corporate and foundation relations, at (718) 862-7837 or e-mail susan.bronson@manhattan.edu.

The De La Salle Medal was established in 1951 in honor of John Baptist de La Salle, founder of the Institute of the Brothers of the Christian Schools and one of the world’s great educators. The Order founded Manhattan College in 1853. Since 1977, the De La Salle Medal has been conferred annually by the College’s board of trustees to honor executives who exemplify the principles of excellence and corporate leadership. Past recipients include New York Life Insurance Chief Executive Sy Sternberg, former Mayor of New York City Rudolph W. Giuliani ’65 and Con Edison Chairman Eugene R. McGrath ’63.

# # # # #

* Posted on: Mon, Nov 24 2008 12:27 PM

MFound: A pic of Cheerleaders and Dancers is on Flickr site

REPORTING LIVE FROM THE FLICKR NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

http://www.flickr.com/photos/kcjc/3049487243/in/pool-35575849@N00

Manhattan College Jasper Cheerleaders

# - # - #

http://www.flickr.com/photos/kcjc/3049469619/in/pool-35575849@N00

Manhattan College Jasper Dance Team

# - # - #

About kcjc009 / Kevin Coles

# # # # #

* Posted on: Mon, Nov 24 2008 4:37 PM

JEmail: Jack Raidy (MC1961) seeking John Fisher (MC1961)

From: Jack Raidy (MC1961)

Date: November 24, 2008 4:27:45 PM EST

To: Distribute_Jasper_Jottings-owner@yahoogroups.com

Subject: Re: [Distribute_Jasper_Jottings] JASPER JOTTINGS Week 47 - 2008 Nov 23

Hi.

I don’t know what the “protocol” is for posting this request, but…does anyone know the whereabouts of John Fisher (MC1961)? I was a classmate of his and would like to re-connect, if possible. The last contact was sometime in the 1970s, when he was living in Philadelphia, and had recently been divorced from his wife, the former Jeanne Blank. Can anyone help?

Thanks -

Jack Raidy, MC1961

[JR: I'll ask the readership to help.]

# # # # #

* Posted on: Mon, Nov 24 2008 5:29 PM

JFound: Ryan, Tom (MC1985) identified

Ryan, Tom (MC1985)

http://www.jasperjottings.com/2007/jasperjottings20070422.htm#_JFound1

http://www.linkedin.com/pub/4/52b/a09

[JR: I happened to spot a "loose end" in my never ending quest for 'hidden' Jaspers. So this puts a Class Year with an old story.]

# # # # #

* Posted on: Mon, Nov 24 2008 6:37 PM

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

By reinkefj on MC????

http://www.marketwatch.com/news/story/New-York-Life-Taps-Chris/

story.aspx?guid={2B3DB908-9577-4901-A1C5-057BE9FA7EF9}

PRESS RELEASE

New York Life Taps Chris Blunt and Mark Pfaff to Run Key Operations

Company Combines Two Powerhouses: Life Insurance and Career Agency; Senior Vice President Mark Pfaff to Run New Entity

Last update: 3:58 p.m. EST Nov. 24, 2008

NEW YORK, Nov 24, 2008 (BUSINESS WIRE) — –Company Bolsters Retirement Business to Help Consumers Handle Retirement Challenge; Senior Vice President Chris Blunt to Run Retirement Income Security Operation Comprised of Annuities, Long Term Care Insurance and the Distribution of Mutual Funds

New York Life Insurance Company announced today that it will place its life insurance manufacturing and marketing operations under the direction of Senior Vice President Mark Pfaff, who has run the Agency Department since 2006. The move creates a powerful combination of the industry’s leading field force and one of its strongest life insurance franchises. Concurrent with that announcement, the company said it has bolstered its retirement business. Senior Vice President Chris Blunt will run a new organization, Retirement Income Security (RIS), dedicated to providing solutions to consumers in both the accumulation and income phases of retirement. RIS brings together for the first time under a single executive, New York Life’s income annuities, investment annuities, long-term care insurance, and the distribution of mutual funds.

Ted Mathas, New York Life’s president and chief executive officer, said, “With these organizational changes we are combining our number one product - life insurance - with our primary distribution system - career agents. I expect the combination to grow the company, which benefits our policyholders over the long term, and bring numerous consumer benefits in the form of better product development, better marketing, and in the end, a better-protected public.

“At the same time we recognize the enormous potential for New York Life to contribute to the retirement security of millions of people across the country. By focusing on our unique positions and capabilities in annuities, long term care insurance and mutual funds, we will grow more rapidly and provide better solutions to consumers seeking reliable sources of income in retirement. Mark Pfaff and Chris Blunt are veteran leaders and I have every confidence they will lead these businesses to substantially greater growth in the decade ahead.” Mr. Mathas noted that with these changes the four primary business operations of New York Life are:

– U.S. Life Insurance and Agency

– Retirement Income Security

– Investments, a wholly owned subsidiary with more than $235 billion in assets under management.

– International, a wholly owned subsidiary with insurance operations in eight markets in Asia and Latin America.

U.S. Life Insurance and Agency

The U.S. life insurance operations being consolidated under Mark Pfaff include the company’s individual, bank- and corporate-owned life insurance, as well as its Group Membership Association Division, the largest underwriter of professional association insurance programs in the United States, and life insurance sold through an exclusive, endorsed program with AARP. Consolidated revenue is expected to be more than $8 billion in 2008. Agency has more than 10,500 licensed agents in the United States.

Mr. Pfaff said, “Our mission for 163 years has been to bring the protection of life insurance to as many families as possible. The role of the agent in this process has never been more important, as studies have shown that Americans are significantly underinsured. Much of that phenomenon can be attributed to a lack of good advice. As one of America’s leading life insurance companies, we can have a positive impact in countering the nation’s underinsurance problem. We believe we have the best-trained, most professional career agents in the nation. This is also a time when more Americans are seeking advice about their family’s financial future. I know that combining our agency operations with the life insurance operations will lead to stronger growth of our company’s primary product line, greater benefits to the consumer, as well as more opportunities for those seeking careers in insurance and financial services.”

Mr. Pfaff noted that a recent public opinion survey by Greenwald & Associates, sponsored by New York Life, found that Americans have just half the life insurance they need to achieve their own self-described financial objectives.

{Extraneous Deleted}

Mr. Pfaff received a B.A. from Manhattan College and an A.A. degree from Westchester Community College. He joined New York Life in 1985.

About New York Life

New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings from all four of the major credit rating agencies. Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investment Management LLC provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

New York Life Insurance Company

William Werfelman, 212-576-5385

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Pfaff, Mark [MC????]

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* Posted on: Mon, Nov 24 2008 11:37 PM

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

Sposito, Peter J. [MC????]

Peter J. Sposito

http://www.spock.com/Peter-J.-Sposito-Ml4Km1Dh

Peter Sposito has over 35 years in banking with an emphasis on sales management and depository institution market development. He is recognized both regionally and nationally for his diverse expertise within the correspondent banking arena. He has had extensive interaction with the CEOs and CFOs of banks, thrifts and credit unions throughout the Northeast. bankersbanknortheast

# - # - #

http://www.bankersbanknortheast.com/sposito.htm

Peter J. Sposito

President & CEO

Peter Sposito has over 35 years in banking with an emphasis on sales management and depository institution market development. He is recognized both regionally and nationally for his diverse expertise within the correspondent banking arena. He has had extensive interaction with the CEOs and CFOs of banks, thrifts and credit unions throughout the Northeast. Mr. Sposito has a strong working knowledge of the national payment system, lending, investments, operations, systems, and regulatory compliance and wholesale business development.

Mr. Sposito began his career with the Hartford National Bank shortly after completing the MBA program at the University of Connecticut. As manager of correspondent banking he directed the business activity for the Connecticut and national markets. After a merger with Shawmut Bank, he managed the Correspondent Banking Division for Shawmut Bank in Boston and in Hartford.

In 1994 Mr. Sposito recognized an opportunity to provide community banks with an array of correspondent services. Dramatic changes in the banking industry had negatively impacted traditional correspondent banking activity. His research led to the bankers’ bank concept whose sole purpose was to meet the financial, operational and business needs of community banks. After an extensive due diligence process, capital was raised and a charter was granted to the Bankers’ Bank Northeast on September 8, 1998. Mr. Sposito was elected President / CEO and Director of the new entity. He is Past Chairman of the Bankers’ Bank Council, a national association of CEOs of bankers’ banks. He serves on the Board of Directors of Connecticut Farmland Trust, an organization formed to protect Connecticut’s remaining farmland for agricultural use by current and future farmers. Mr. Sposito is also active with Americares Homefront at St. Dunstan’s Church in Glastonbury, CT.

Mr. Sposito graduated from Manhattan College with a Bachelor of Science in Business Administration, majoring in Accounting. He completed his graduate degree at the University of Connecticut where he received an MBA in Marketing. He lives in Glastonbury with his wife Susan.

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* Posted on: Tue, Nov 25 2008 6:37 AM

JObit: DeMicco, Bonnie M. [MC1984], husband of Emil {MC1979]

http://www.legacy.com/MCall/Obituaries.asp?

Page=LifeStory&PersonId=120628727

http://tinyurl.com/5pckef

Bonnie M. DeMicco

Bonnie M. DeMicco, 51, of Lower Macungie Township, passed away November 24, 2008. She was a mechanical engineering graduate of Manhattan College with an M.B.A. from Lehigh University and eventually became a manager at AT&T. Despite her professional success, she put her career on hold to devote more time to raising her two children. Bonnie continue to work as an adjunct professor and academic advisor at Moravian College and later as a tax preparer for H&R Block. In an effort to giver her son every possible advantage, she became heavily involved in the issues of special needs children. She was an active member of St. Thomas More Catholic Church, where she enjoyed singing in the choir.

Survivors: Husband, Emil; daughter, Amy; son, Michael; sisters, Susan MacDougall, Maureen MacDougall and Lynn Tobin; brothers, Brian and Craig MacDougall.

Services: Mass of Christian Burial, will be held at 10 a.m. Wednesday, November 26 in St. Thomas More Catholic Church, 1040 Flexer Ave., Allentown. Calling hours will be held today, November 25 from 7-9 p.m. and Wednesday from 9-10 a.m. in the church. Arrangements by J.S. Burkholder Funeral Home, Allentown. Contributions: In lieu of flowers, contributions may be made in her memory to A Special Needs Fund for Michael DeMicco, c/o St. Thomas More Catholic Church, 1040 Flexer Ave., Allentown, PA 18103.

Published in the Morning Call on 11/25/2008

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Dear John,

I believe that Bonnie is a member of the Class of 1984 and her Husband Emil, is a member of the Class of 1979.

May She Rest In Peace.

Mike

[JR: Thanks, Mike. Much appreciated. ]

Dear John,

I believe that her brother Brian W. MacDougall is a member of the Class of 1973.

Mike

# - # - #

From: “Richard A. Lawrence” (MC1968)

Date: November 26, 2008 12:02:11 PM EST

To: “reinke, fjohn68″

Subject: Re: [ManhattanCollegeAlumni] Jasper Obit: DeMicco, Bonnie M. [MC????]

F. John,

1984 MBA according to the MC Alumni Directory

[JR: Thanks, RAL68. Much appreciated. ]

# - # - #

DeMicco, Bonnie M. [MC1984]

Guestbook: http://tinyurl.com/5byco6

[JR: This especially saddens me. A young woman, a decade plus younger than me, with a special needs child. Makes me sad to report this.]

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* Posted on: Tue, Nov 25 2008 8:58 AM

* Updated: Thu, Nov 27 2008 11:36 AM

MNews: Manhattan College Christmas Lessons And Carols Singers Jazz Band

Jonathan Bernaber (MC2012) invited you to “A festival of Lessons and Carols” on Sunday, December 7 at 4:00pm.

n515066362_625.jpg

Event: A festival of Lessons and Carols

“Manhattan College Christmas Lessons And Carols Singers Jazz Band”

What: Concert

Host: Singers & Jazz Band

Start Time: Sunday, December 7 at 4:00pm

End Time: Sunday, December 7 at 5:15pm

Where: The Chapel of De La Salle

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* Posted on: Tue, Nov 25 2008 3:56 PM

QUADRANGLE: “Missing Professor Now Deceased”

http://www.mcquadrangle.org

Missing Professor Now Deceased

by Matthew Coyne in News

In what was originally suspected to be a missing persons case, Dr. Munther Nushiwat, an adjunct professor of Finance and Economics here at MC, has been identified as dead after he suffered a sudden and fatal heart attack. “As far as we can tell … he (Nushiwat) had a heart attack in the (Kingsbridge Avenue) library on Sunday the 26th of October,” said Dr.…

[JR: Interesting. Sad. Troubling.]

News

* Busy Person’s Retreat Enlightens MC Students

* Costello Lecture 2008 Echoes the Ideals of its Namesake

* Manhattan Magazine Sponsors Coffeehouses

* Missing Professor Now Deceased

* Music Men Frat Returns to MC

* New Study Abroad Trips Offered

* News Briefs

Op Ed

* Got Issues? No Problem!

* Is the Nation Ready for a Black President?

* Notes from the Editor

* P/C: Change? Yeah, Right

* P/C: Yes We Did

* Sports Briefs

* The 2008 Presidential Election

* The Majority Isn’t Always Right

* The Mystery and Magic of the Gypsy Cab

Features

* A Day in the Life of a Bridge Inspector

* Energy Sustainability Lecture at MC

* Falling Short

* Ryan’s Journey to the Olympics Benefits MC Track and Field

Arts & Entertainment

* Abba Fans Look Out, Mamma Mia Keeps on Dancing

* Bob That Head

* New NHL ‘09 Video Game

* Return of the Jedi

* What’s On Your iPod?

Sports

* Lady Jaspers Dive into Final Half of Season

* Tennis Courts to be Built on New Garage

* Women’s Basketball Program Willy Rely on Intensity and Youth

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* Posted on: Tue, Nov 25 2008 6:37 PM

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

http://blog-hendri.blogspot.com/2008/11/engineering-entrepreneurs-industry.html

Honora Nerz Eskridge

89_Honora_Nerz_Eskridge-Small.JPG

Honora Nerz Eskridge is currently the Head, Textiles Library and Engineering Services and the Interim Associate Head of Collection Management. She has been with the NCSU Libraries since 1998, following completion of her Master’s degree in Library and Information Science, which she received from The Catholic University of America in Washington, DC. She also holds a Bachelor of Engineering Degree in Mechanical Engineering from Manhattan College in New York, NY.

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Eskridge, Honora Nerz [MC????]

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* Posted on: Wed, Nov 26 2008 2:36 PM

JFound: Dupper, Thad [MC1979] P+CEO of Evolving Systems

[JR: Sometime between 10/2006 and now, Jasper Thad got kicked upstairs. Automated searching rarely works. Argh!]

Dupper, Thad [MC1979]

http://www.evolving.com/thad_dupper_m.html

Thad Dupper

President & Chief Executive Officer

Dupper, promoted to Chief Executive Officer in April 2007, joined Evolving Systems’ leadership team in 2004 to oversee sales, business development and marketing. Dupper has more than 23 years’ experience in the telecommunications technology industry and has a track record of delivering innovative solutions to leading telecommunications companies.

Dupper was Vice President of Sales and Marketing for Expand Beyond, a wireless software company. He was also Vice President, International Sales and Business Development of Terabeam, where he helped pioneer the use of free space optics with telecommunications carriers around the world. Dupper held positions as Senior Vice President of Dun & Bradstreet and Vice President of Teradata, where he oversaw data warehousing solutions for the communication industry. He holds a B.S. in Computer Information Systems from Manhattan College in New York.

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http://www.jasperjottings.com/2006/jasperjottings20061022.htm#_JNews5_1

JNews5

October 16, 2006

Evolving Systems, Inc.

9777 Mount Pyramid Ct. Suite 100

Englewood, CO 80112

UNITED STATES OF AMERICA

KEY EMPLOYEES:

{extraneous deleted}

Thad Dupper, Executive Vice President, Worldwide Sales and Marketing

BOARD: Senior Management

SINCE: 2004

BIOGRAPHY: Mr Dupper was Vice President of Sales and Marketing for Expand Beyond, a wireless software company. He was also Vice President, International Sales and Business Development of Terabeam, where he helped pioneer the use of free space optics with telecommunications carriers around the world. Dupper held positions as Senior Vice President of Dun & Bradstreet and Vice President of Teradata, where he oversaw data warehousing solutions for the communication industry. He holds a B.S. in Computer Information Systems from Manhattan College in New York.

{extraneous deleted}

LOAD-DATE: October 17, 2006

{MikeMcE reports: Dear John, I believe that Thad is a member of the Class of 1979. Mike (Thanks, Mike.) }

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* Posted on: Wed, Nov 26 2008 6:37 PM

JOY: Finch, Bernadette Kelly (MC1995) gives us something to be thankful for. Among other things.

REPORTING LIVE FROM THE FACEBOOK NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

http://www.facebook.com/profile.php?id=32104185#/profile.php?id=1014258209&ref=nf

baby.jpg

Finch, Bernadette Kelly (MC1995) shares photos of James from HOME! After a very rough start. Proof that prayers are answered. What happy story for Thanksgiving Day!

[JR: Yes, I am a sucker for happy endings. And, I am thankful to have something to post today! Hope this makes you smile as it did me.]

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* Posted on: Thu, Nov 27 2008 7:19 AM

MFound: Jack Taylor (19th century baseball player)

http://sqnet.org/27/jack-taylor-19th-century-baseball-player/

Jack Taylor (19th century baseball player)

Jack Taylor

Pitcher

Born: May 23, 1873(1873-05-23)

Sandy Hill, Maryland

Died: February 7, 1900 (aged 26)

Staten Island, New York

Batted: Right Threw: Right

MLB debut

September 16, 1891

for the New York Giants

Final game

September 12, 1899

for the Cincinnati Reds

Career statistics

Win-Loss record 120-117

Earned run average 4.23

Strikeouts 528

Teams

* New York Giants (1891)

* Philadelphia Phillies (1891-1897)

* St. Louis Browns (1898)

* Cincinnati Reds (1899)

Career highlights and awards

John Besson “Brewery Jack” Taylor (May 23, 1873 - Feb 7, 1900) was a baseball player in the National League from 1891 to 1899. He is often confused with John W. “Jack” Taylor, who also played in the NL during an overlapping period. His real name has also been erroneously published as John Budd Taylor in many sources, perhaps confused with the Minor League pitcher Jack “Bud” Taylor of similar period. John Besson Taylor was born in Sandy Hill, Maryland and moved to Staten Island, New York as a young child, where he played with would-become Major League contemporaries Jack Cronin, Jack Sharrott, George Sharrott, and Tuck Turner.

“Brewery Jack” was a right-handed pitcher with a career record and 120 wins and 117 losses. His nine-season career consisted of (in chronological order) one game for the 1891 New York Giants, six seasons with the Philadelphia Phillies, one with the St. Louis Browns, and a final one with the Cincinnati Reds. While an ace pitcher, Taylor was known for arguing with umpire calls and (as his nickname implies) for his propensity for drinking. Taylor was still considered active in the National League during planning for the 1900 season, but died of Bright’s disease in February of that year. He is buried nearby his mother at Fairview Cemetery in the Castleton Corners neighborhood of Staten Island, and was inducted into the Staten Island Sports Hall Of Fame in 2002.

See also

* List of Major League Baseball leaders in career wins

Related Discussions

* There is currently an open discussion as to whether or not Taylor was an alumnus of (or even a student in) Manhattan College; category status is pending the ability to cite a source on the matter.

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[JR: Never heard this one. You?]

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* Posted on: Thu, Nov 27 2008 5:03 PM

JFound: Romero, Dennis O. [MC????] in 2006 was … …

REPORTING LIVE FROM THE SPOCK NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Romero, Dennis O. [MC????]

http://www.recoverymonth.gov/2006/press/dromero.aspx

Dennis O. Romero, M.A.

Acting Director, Center for Substance Abuse Prevention

*** begin quote ***

Mr. Dennis O. Romero is the Acting Director for the Center for Substance Abuse Prevention (CSAP), Substance Abuse and Mental Health Services Administration (SAMHSA), U.S. Department of Health and Human Service (DHHS). Mr. Romero’s role is to provide national leadership and direction in substance abuse prevention, setting the goals and objectives of the Center and participating in the formulation of strategies and guidelines needed to plan, implement and manage national programs and projects. He will also give national presence by representing CSAP to members of the White House Committees, the Office of National Drug Control Policy and the news media to ensure an understanding of CSAP programs, objectives, and priorities. As Chief Operating Officer, he is responsible for development of strategic program plans and management of CSAP’s internal operations. This includes management of CSAP’s $634 million annual budget, human resources, and program implementation and performance.

{Extraneous Deleted}

Mr. Romero received a Bachelor of Arts Degree in Philosophy and Psychology from Cathedral College and a Masters Degree in Counseling Psychology from Manhattan College. He received post-graduate training at the State University of New York (SUNY), Albany Campus.

*** end quote ***

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* Posted on: Thu, Nov 27 2008 6:37 PM

JObit: Coyne, Robert T (MC1970) reports the obit for Jackman, Frederick [MC1945]

REPORTING LIVE FROM THE FACEBOOKLINKED NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Coyne, Robert T. (MC1970) reports the obit for Jackman, Frederick [MC1945]

http://www.licatholic.org/news/obits.htm

*** begin quote ***

Vol. 47 No. 36 November 26, 2008

Deacon Frederick Jackman

Smithtown — Deacon Frederick Jackman, who served at St. Patrick’s Church, Smithtown, died Nov. 15.

Deacon Jackman, 84, a member of the first ordination class of the Diocese of Rockville Centre, was ordained to the permanent diaconate June 9, 1979.

He graduated from Manhattan College in 1945 and subsequently taught world history at Regis High School, Manhattan (1945-1946) and history and English at Fordham Prep in the Bronx (1946-1947). From 1962 until his retirement, he worked for the Suffolk County Department of Social Services as a supervisor of case workers in the housing unit in Babylon Center. He was a certified social worker.

During his ministry at St. Patrick’s, Deacon Jackman served as a hospital chaplain. He assisted retired priests at the bi-monthly Mass at Holy Rood Cemetery in Westbury, and he performed burial services for the Diocese of Brooklyn, St. Vincent de Paul Society at St. Charles Cemetery, usually every third Friday. As sacristan at St. Patrick’s, he worked with members of the Rosary Altar Society to maintain all aspects of the sacristy.

The Mass of Transferral on Monday evening, Nov. 17 at St. Patrick’s was celebrated by Msgr. Ellsworth R. Walden, pastor; Deacon Vincent Abrahams was homilist. Msgr. Walden also celebrated the Mass of Christian Burial on Nov. 18. Deacon Jackman was interred at St. Patrick’s Cemetery here.

Deacon Jackman is survived by Mary Anne, his wife of 52 years; three children, Jeanmarie Romero, Michael, and Lisa Marie Asendorf; a sister, Delores Donato; and four grandchildren.

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Jackman, Frederick [MC1945]

Guestbook: None cited

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* Posted on: Thu, Nov 27 2008 8:39 PM

JEmail: Breen, Jerry (MC1971) shares Obama calligraphy portrait

From: Breen, Jerry (MC1971)

Date: November 27, 2008 3:38:09 AM EST

Subject: Obama calligraphy portrait

To one and all: My latest creation is a new addition to a series of unique calligraphy portraits that I’ve done over the years. My calligraphy portrait of President-elect Barack Obama “In His Own Words” is literally that - Obama’s own words, from his eloquent keynote address at the 2004 Democratic National Convention, rendered by hand in calligraphy, actually forms his portrait! An absolutely unique collectible work of art. Nobody

Here in the kitchen and wondering if I belong. Jack and Kate are over like you’d expect. Stealing a little bit of shuteye on the sly I have to admit - but that ain’t so bad. Can’t help but wonder if everything will be the same next month . . . By the way check out this interesting mutual fund magazine analysis site.

Here in my hotel at the conference. Me and the family having a most excellent time. Playing a couple of mind games that you’d never be able to figure out. Thinking there’s no way I’m going to get my whole todo list done by tomorrow. By the way check out this interesting mutual fund comparison site.

Hanging out at the apartment today. Hanging out with the crew that we met at the club last week. Getting ready to go out later tonight . . . It’s going to be a good time. Thinking that life couldn’t really get any better . . . And not expecting it to. Seen this mutual fund company ratings info before?

Taking some time off work to be at home today. Me and the family having a most excellent time. Getting ready to go out later tonight . . . It’s going to be a good time. Thinking about those spiders up in the corner. How did they get there? And check this largest mutual fund companies stuff out.

Hanging out at the apartment today. Just me and the gang. Making the most of a few spare hours cause I know that won’t last long. Imagining myself and where I’ll be in 2 weeks - going to be awesome! Seen this mutual fund analysis research info before?

Taking some time off work to be at home today. Me and the family having a most excellent time. Having a good time and not worrying about much at all. Thinking there’s no way I’m going to get my whole todo list done by tomorrow. mutual fund investment ratings stuff - check it out.

Kindly check the below web link, and requesting compatriots to disseminate this paper, as well as, joining this United Front of Army and Iranian People to work toward liberation of Iran.

Ba doroud va sepas,

Az mobarezin va Iran Parastan Taghaza mishavad da pakhshe in ealamih ma ra yari dahand ta dast dar daste yek digar Iraneman ra azad sazim.

Taghaza mishavad be link zir morajeh farmaid:

Borut Šeparović

The oil market is only ever driven by fear

This summer, when global oil prices surged to an apocalyptic US$150 a barrel and filling up the gas tank began to feel like making a mortgage payment, radio call-in shows were in an uproar. My voice mail fielded almost-daily invitations to answer questions on “the oil crisis” for one station or another. That invariably meant coming ear-to-face with the public’s visceral fury. In three months, the oil price had shot up by 50 per cent and had more than doubled in less than a year. Anybody with a car and a furnace was ready to lash out—at “greedy speculators,” at Alberta, at billionaire oil barons, even at innocent journalists cheerfully answering their questions out of the goodness of their heart.

How, they asked, could prices change so fast? And why? Why!? Why dammit!!

Nerves aren’t nearly so raw now that extreme volatility is working in the opposite direction. Oil is now in sudden free fall, having dipped below US$50 a barrel last week for the first time in years. Crude has plunged by roughly two-thirds in four months, but the open-line shows are conspicuously quiet. The fact that oil went from US$85 to US$150 to US$50 in 12 months tells us something important, not only about the shape of the global economy, but also about the forces that dictate our oil and gas bills. But you won’t hear it discussed much on talk radio.

There is a fundamental misunderstanding about energy prices, which is exacerbated by analysts and executives who continually insist that prices are driven by supply and demand. This is misleading, and the constant repetition of this idea has produced in people a widespread distrust of the energy industry. These days, the price of oil is driven primarily by expectations of future supply and demand months and even years down the line. We have a pretty decent idea of what current supply and demand are, and how big global stockpiles are. But trying to estimate the future is little more than educated guesswork, subject to the naturally distorting effects of human emotion.

That guesswork is further complicated by the fact that global oil supply is routinely manipulated. The Organization of the Petroleum Exporting Countries (better known as OPEC, and dominated by our dear friends in Saudi Arabia and Iran) open and close the spigot arbitrarily, to maximize their own profits, often at the expense of market stability. OPEC members routinely lie to each other about how much oil they’re pumping on a monthly basis. It may be technically true that supply and demand drive the price—except that demand is estimated, and supply is manipulated. So is it any wonder that nobody has any firm idea of what a barrel really ought to cost at any given moment?

It’s often said that all markets are driven by the constant war between fear and greed, but the oil market is an exception. It is only ever driven by different forms of fear. Last summer, when oil hit US$150, the fear was of global shortages. With China and India expanding at a blistering pace, and much of the world supply buried beneath an ancient war zone, traders swapped stories of pipeline bombings and millions of Chinese urbanites preparing to buy their first car. Now, with oil at US$50, the overriding fear is of a sudden collapse in global trade. The question is no longer whether the world economy is growing too fast, but whether it will grow at all over the next couple of years. Pick your poison: the bulls are all about unstable supply; the bears are obsessed with anemic demand. Right now, the bears are on top, but that’ll change. It always does.

It’s enough to drive a poor commuter nuts, and sometimes it seems like it has. No other commodity is such a constant and looming presence in our lives, and so nothing else has the same power to get our blood boiling. The price for copper soared for more than a year (also driven by burgeoning demand in Asia) and has recently collapsed. But unless you’re a copper miner or happen to be replacing your plumbing, nobody much cares.

This is understandable, but not entirely rational. If we really sat back and thought about it, we’d be far more worried about the impact that falling energy prices have had on the Canadian stock market and the value of the loonie in recent months. Stocks are in the midst of a crash every bit as bad as the one in 1987, and far worse than in 2000. But where most crashes work like explosions, this one is unfolding more like an earthquake with multiple aftershocks, and the victims are piling up. If you’ve been diligently socking away money into mutual funds for the past few decades, chances are your losses are now well into six figures. By contrast, when gas jumps from 85 cents to $1.25 a litre, it costs an extra $20 to fill up a 50-litre tank. If you drive a lot, and fill up about twice a week, that surge adds about $2,000 to your annual gasoline bill—not chump change by any means, but miniscule compared to the impact of the recent market meltdown. A new survey from Desjardins Financial just revealed that almost half of Canadians over the age of 40 now expect they will have to delay their retirement plans by an average of almost six years due to the market turmoil. That kind of news produces weary resignation. Meanwhile, a 10-cent jump at the gas pump has people ready to man the barricades.

Release here.

Ladies and gentlemen,

I would like to thank the organisers for inviting me to speak at this forum, which is being held in Hong Kong for the first time.

In the past several months, we have witnessed the unfolding of a global financial crisis. The sub-prime problem in the US and the ensuing credit crunch in the industrialised economies have spread and brought about a weakening of confidence in the solvency of the financial system. Concerns about credit risk exposures among financial market participants mounted following the failure of Lehman Brothers. Interbank money markets in many economies came under extreme pressure or seized up entirely. Extraordinary and concerted efforts by governments and central banks to restore confidence, inject liquidity and recapitalise the banking system appear to have paid off to the extent of preventing the collapse of the banking and financial system although credit and money markets remain stressed. As the turmoil deepened, people have also focussed attention on the wider impact of the crisis on the real economy, leading to a grimmer outlook for global economic performance.

Against the backdrop of this global financial crisis, Islamic finance is inevitably affected and subject to challenging conditions reflected by a steep slowdown in activities such as sukuk issuance and declines in equity value managed by Islamic funds. New sukuk brought to the market in the first three quarters amounted to some US$13 billion, down 40% from the same period last year.[Footnote 1 - Source: Bloomberg.]

But the pullback in new sukuk issuance and the widening of sukuk yield spreads are generally in line with what has been happening in the conventional market. This broadly suggests that the global sukuk market slowdown has more to do with the general market conditions and a general reluctance to issue US dollar instruments. Observers say that while there are still those who wish to issue sukuk, investors would prefer to stay on the sidelines in the current volatile market environment. It is true that the industry is experiencing a temporary setback, but this also reflects how closely integrated Islamic finance is with the global financial system, which is not at all bad news for the industry because when global markets stabilise and take a turn for the better – as they must in the long run – Islamic finance will ride on that curve and excel.

While we are in the midst of a global financial turmoil and there are many challenges lying ahead of us, I’m delighted to find this impressive gathering of regulators, shariah scholars, business leaders and practitioners who commit themselves to the future development of the financial market. Your presence here is ample evidence that there remains plenty of opportunities even in circumstances like these and that a forward-looking view is more important than ever. Today, I’m particularly honoured to join you in the discussion of a topic that has been recognised as a source of sustainability and growth – Islamic finance. There are two main issues that I would like to talk about today.

First, despite the current financial turmoil, we continue to see the long term potential in Islamic finance. There are two good reasons for this. One is that the Islamic finance industry is in many ways fortunate to be at an early stage of development during this turmoil. Despite the effects of a temporary shortage of liquidity, which has been a worldwide phenomenon, the degree of damage has been far lower than that to the much wider network of international finance, primarily because of the more restricted spread of Islamic financial instruments across regions and the generally lower level of leverage allowed in Islamic financial transactions. Although Islamic finance has grown by leaps and bounds in recent years, assets held by Islamic financial institutions and insurance operators known as takaful providers are estimated to be US$1 trillion, accounting for only about 1% of the financial assets in the overall banking and insurance sectors.[Footnote 2 - 2 Sources: Islamic Financial Services Board; IFSL Research]

The industry’s remarkable annual growth rate of 15% to 20% has to be viewed in perspective: after all it began from a small base. This suggests that there is still ample room for growth on the supply side in the provision of Islamic financial products.

On the demand side, the potential of Islamic finance is often linked to the 1.4 billion-strong Muslim population worldwide, and some people appear to believe that this obviates the need for further development of Islamic finance. But population is not the only factor: economic development in Islamic regions also has to be taken into account. The IMF has estimated that there are some US$800 billion worth of investment projects under way or in the pipeline in countries of the Gulf Cooperation Council (GCC) over the next five years, with major projects in the oil and gas sectors, infrastructure and real estate. According to a UK research report, the annual investment rate in the range of US$200 billion to US$300 billion in the GCC is about half the annual rate of India and one-tenth that of China.[Footnote 3: 3 Source: Chatham House report on “The Gulf as a Global Financial Centre”]

As some of the deals may be of a scale that requires financial risks to be spread internationally, global banks are already geared up to tap this market through the formation of Islamic bank subsidiaries and Islamic banking windows. With the increased participation of global and regional players, project financing opportunities will increasingly attract interest from investors worldwide and that project finance will need to be delivered in forms that comply with the principles of Islamic finance. This in turn will fuel the demand for Islamic finance. There is clearly very significant long-term potential across most of the region.

The second issue is our continuous commitment to developing Islamic finance in Hong Kong. The Chief Executive of the Hong Kong Special Administrative Region acknowledged in his Policy Address in 2007 that Islamic finance offers huge potential for development. To further consolidate Hong Kong’s position as a global financial centre, Hong Kong should actively leverage on this new trend by developing an Islamic financial platform. Our priority is to push ahead with the development of an Islamic bond market. There should be no doubt about our determination to establish a platform for Islamic finance in Hong Kong.

In a recent speech, the Secretary for Financial Services and the Treasury also mentioned that having reviewed Hong Kong’s legal, taxation and regulatory regimes, there is no fundamental obstacle to accommodating a sukuk market in our existing system. Technical modifications to the taxation regime to provide a level playing field for Islamic finance transactions are being pursued as a priority.

With our commitment and status as an international financial centre, we believe that Hong Kong is well positioned to develop Islamic finance. We should play to our key strengths and capabilities and I would like to highlight two very important aspects on which Hong Kong intends to capitalise.

The first aspect relates to the core strengths of Hong Kong in providing a stable and free economy. Hong Kong has been ranked the freest economy in the world for 14 consecutive years by the Heritage Foundation. We have no foreign exchange controls and do not impose tax on offshore income, capital gains, dividends, estate or sales. There is free movement of capital, talent and goods. It is a combination of many factors including political stability, a strong legal and regulatory regime, and a pro-business market environment which makes Hong Kong a popular city for international business in Asia. Given these core values, there are no barriers to entry and no obstacles to mobility for financial and human capital from local and overseas financial institutions planning to engage in Islamic or conventional finance in Hong Kong.

The second aspect is the unique role Hong Kong plays in the economic development of China. In the past three decades when the Mainland was achieving economic liberalisation, Hong Kong has capitalised on its strong cultural and geographic links to become the gateway connecting the Mainland market to the world. Our close and increasing economic cooperation with the Mainland undoubtedly makes Hong Kong the natural choice for anyone wishing to tap into China’s high savings rate and huge growth potential.

Hong Kong is the premier capital formation centre for the Mainland and hence a global investment platform for enterprises from around the world wishing to gain exposure to China’s growth. This is demonstrated by the fact that we have the largest, deepest, and most open Chinese capital markets outside of the Mainland: half of our stock market capitalisation comprises Mainland related companies. At the end of August, our stock market was the sixth largest in the world and the second largest in Asia in terms of market capitalisation. It ranked first in the world in securitised derivatives turnover, and first in Asia for stock options turnover and exchange-traded funds turnover. It also ranked fifth in the world in total equity raised through IPOs.[Footnote 4 Source: World Federation of Exchanges]

In the other direction, many Mainland companies have set up regional headquarters or offices in Hong Kong as part of their strategies to step up their international presence. Continuously high growth in recent years has resulted in a vast accumulation of wealth on the Mainland and the authorities there are progressively liberalising the requirements for Mainland financial institutions to invest overseas. As a result, Hong Kong has benefited from the outward investment flows given our geographic, cultural and linguistic affinities with the Mainland and our ability to provide a broad access to numerous Asia-Pacific and global markets. The potential demand for wealth management thus presents capital-market intermediaries in Hong Kong with huge opportunities.

We are also the first jurisdiction outside of the Mainland with the ability to conduct renminbi banking business and deal in renminbi-denominated financial products. The establishment of a renminbi bond market in Hong Kong last year marked a key milestone in the development of renminbi business here. It has helped entrench Hong Kong as a testing ground and pilot market for China’s continuing financial reform and liberalisation.

There is clearly immense scope for us to leverage on our key strengths as a close business partner, a capital formation centre and a financial intermediary for the Mainland economy in the development of Islamic finance. There are opportunities for us to extend our reach to potential Islamic investors and financiers in the Middle East and Asia. The addition of Islamic finance as a new asset class in our financial system will add value to Hong Kong as a thriving financial centre and a leading financial services hub in Asia.

As a major financial centre, Hong Kong – with its flexible and innovative market participants and its responsive government – has always stood ready to adapt to and embrace new ideas. Even if the current financial environment appears unfavourable to the development of Islamic finance in the short term, this is, at worst, a temporary setback as future prospects remain promising. We at least do not intend to be put off by temporary difficulties from our goal of making Hong Kong an Islamic financial hub. Indeed we believe that this is a good time to do the groundwork of installing the necessary legal, taxation and market infrastructure.

To name just a few developments in the past 12 months: a new Dow Jones Islamic Market Index was launched to track China-related equities listed on the Hong Kong Stock Exchange; Islamic mutual funds were introduced by a local bank and an asset management company featuring China-related equity investments through the stock market platform in Hong Kong; and an exchangeable sukuk linked to the shares of a Mainland company listed in Hong Kong was issued in March, enabling investors to gain exposure to China’s growth story. The response so far has been highly encouraging: for example, the sukuk was 10 times oversubscribed.

Likewise, positive progress is achieved in the development of Islamic banking in Hong Kong. Following the first Islamic banking window introduced three months ago, I’m glad to witness yet another market player who is set to launch its Islamic banking window in Hong Kong at this auspicious occasion today. The increasing number of banks taking part in Islamic banking activities will add further momentum to the development of an Islamic capital market in Hong Kong by providing an important tool for funding and liquidity management.

The Hong Kong Monetary Authority will continue to give full support to the HKSAR government in its initiative to develop Islamic finance in Hong Kong by acting as a market enabler and infrastructure provider. The HKMA has taken important steps and devoted considerable resources to promote the industry in Hong Kong. We are now focusing our efforts on four major areas: first, building Hong Kong’s international profile and forging closer ties with market participants in the Middle East; secondly, promoting market infrastructure and establishing policies conducive to the development of Islamic finance; thirdly, promoting talent and knowledge of Islamic financial principles among market professionals in Hong Kong; and fourthly, encouraging the development and launch of Islamic finance products in Hong Kong.

Concluding remarks

Ladies and gentlemen, the potential for the growth of Islamic finance is clear. The foundations for its development here in Hong Kong have already been laid. It is essential for all of us to look beyond the current global financial turbulence and treat the development of Islamic finance as an investment in the future. With this in mind, I would like to encourage all of you, whether you are regulators, financial institutions or investors, to look critically at the opportunities that lie before us. Islamic finance is a new asset class that has the potential to bring new economic growth to Hong Kong and the region given our wealth of knowledge in financial intermediation, our experience, and our agility in adopting innovative products. So let us work together towards building a stronger and stronger link and increasing cooperation with other global players to identify and capitalise on new opportunities. Today’s holding of the Islamic Finance Forum in Hong Kong is a significant step on a journey that is just beginning. I look forward to travelling this road with all of you.

Thank you.

JASPER JOTTINGS Week 48 - 2008 Nov 30

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

http://www.jasperjottings.com/2008/jasperjottings2008WEEK48.html

INDEX

POSITRACTION: Overcoming a horendous accident

JEmail: Quinlan, Liam (MC1985) updates us on Kinnally, Rev. Robert M. [MC1982]

JEmail: Louis Menchise (MC1985) agrees with cards for vets in Wally World

JFound: Muller, Mark (MC????)

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

JFound: Cicuto, Sarah (MC20??) uses consumer choice for good

JBlogger: Gibbons, Patti (MC1986) thinks Churches should be open!

JOY: Katkocin, Matthew [MC????] engaged

JHQ: Manhattan College To Honor John V. Magliano ’66, Chairman Of Syska Hennessy Group, Inc., At 2009 De La Salle Medal Dinner

MFound: A pic of Cheerleaders and Dancers is on Flickr site

JEmail: Jack Raidy (MC1961) seeking John Fisher (MC1961)

JFound: Ryan, Tom (MC1985) identified

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

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

JObit: DeMicco, Bonnie M. [MC1984], husband of Emil [MC1979]

MNews: Manhattan College Christmas Lessons And Carols Singers Jazz Band

QUADRANGLE: “Missing Professor Now Deceased”

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

JFound: Dupper, Thad [MC1979] P+CEO of Evolving Systems

JOY: Finch, Bernadette Kelly (MC1995) gives us something to be thankful for. Among other things.

MFound: Jack Taylor (19th century baseball player)

JFound: Romero, Dennis O. [MC????] in 2006 was … …

JObit: Coyne, Robert T (MC1970) reports the obit for Jackman, Frederick [MC1945]

JEmail: Breen, Jerry (MC1971) shares Obama calligraphy portrait

JUpdate: Hughes, Gerry [MC1982] seeking Microsoft Business Intelligence position

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

JNews: Kelly, Ray [MC1963] was going to run for NYC mayor?

JEmail: Dandola, John (MC1970) celebrates 60 with … …

Comment on MObit: Eugene J. O’Brien, Eugene J. [MCattendee] by Peg O’Brien

ENDNOTE: Lincoln wasn’t the worst President, but close!

# - # - #

POSITRACTION: Overcoming a horendous accident

http://www.nytimes.com/2008/11/03/nyregion/03long.html?ex=13

83454800&en=0c00edc864f96127&ei=5124&partner=fac

ebook&exprod=facebook

http://tinyurl.com/6jsfwv

After Serious Accident, His Time to Beat? 3 Years

Published: November 2, 2008

*** begin quote ***

On Sunday, Matthew Long, 42, finished the New York City Marathon in 7 hours, 21 minutes. He was well back in the pack of tens of thousands of entrants, yet his finish was, in its own way, a first.

*** end quote ***

What was that famous quote … … I learned it back at MC … … in Brother Barry Austin “measurements” class … … did we ever learn any “measuring”? … … it went something like “If you think you can or you can’t, you’re right!”

Here’s a little inspiration, when you think you “can’t”, maybe this might convince you’re wrong!

# # # # #

* Posted on: Sun, Nov 23 2008 12:37 PM

JEmail: Quinlan, Liam (MC1985) updates us on Kinnally, Rev. Robert M. [MC1982]

From: Quinlan, Liam (MC1985)

Date: November 23, 2008 9:56:30 AM EST

To: Distribute_Jasper_Jottings-owner@yahoogroups.com

Subject: JFound: Kinnally, Rev. Robert M. [MC????]

John–Fr. Kinnally is the class of 1982, English Major with a minor in French.

[JR: Thanks, Liam. Much appreciated.]

# # # # #

* Posted on: Sun, Nov 23 2008 3:32 PM

JEmail: Louis Menchise (MC1985) agrees with cards for vets in Wally World

From: Louis Menchise (MC1985)

Date: November 23, 2008 12:08:40 PM EST

To: Distribute_Jasper_Jottings-owner@yahoogroups.com

Subject: Re: [Distribute_Jasper_Jottings] JASPER JOTTINGS Week 47 - 2008 Nov 23

I “went through” Walter Reed twice in my life. First, for chemotherapy in 1994-5 and the second time in 2003 when my left inner ear was damaged by a virus in Iraq that required vestibular rehabilitation. In the six weeks I spent at Wally World (Walter Reed) in 2003, I saw three times more amputees than I had in my previous 38 years on Earth. So - especially in this Holiday season - I can tell you that a letter to a veteran at a military or VA hospital would do a world of good. Please thank all veterans. I had it relatively easy in 2003. I only served one year on active duty. WW II and Korean (The Forgotten War) servicemembers were gone for years. Vietnam veterans had no support from the people back home, much less well-wishing stickers/magnets on cars. In fact, upon their return from Hell, they were spit on and called baby-killers. So, when you see a veteran - any veteran - thank them.

Louis Menchise

‘87B

US Army 1994 -2004

[JR: As a USAF vet of the 70-73 era, I am probably overly sensitive to how the American People "mistreat" veterans. And, how we allow politicians to pander to the people on the dead and broken bodies of vets. (Calm down, or this will have to be an end note!) Sorry, but I agree with Robert Heinlein's proscription that only veterans should be allowed to vote. In "Starship Troopers" and his other writings, he makes the argument that: Only those have fought for their country and risk death should be allowed to vote. I still agree with that. With a very practical corollary, from "A Few Good Men", "... I suggest that you pick up a weapon and stand a post. Either way, I don't give a damn what you think you are entitled to." Only those called on to fight need to be consulted. Those, that won't fight, won't revolt anyway, so they shouldn't vote either. Old politicians send young men in harm's way and turn their backs when the "check comes due". The VA medical care system should be a crown jewel. And, it's not by a long shot!]

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* Posted on: Sun, Nov 23 2008 4:02 PM

JFound: Muller, Mark (MC????)

REPORTING LIVE FROM THE SPOCK NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Muller, Mark (MC????)

http://www.iatp.org/iatp/experts.cfm

Director, Environment and Agriculture Program

Since starting at IATP in 1997, Muller has worked on a wide variety of issues, including agricultural diversification, nutrient management, agricultural transportation, regional food systems and renewable energy production. He has been involved in both regional project-based efforts and national policy development. He has had opinion pieces on agricultural policy appear in newspapers throughout the Midwest. Muller has a B.A. in physics from the State University of New York at Geneseo and a M.S. in environmental engineering from Manhattan College. Prior to joining IATP, Muller worked as an environmental engineer and high school science teacher.

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* Posted on: Sun, Nov 23 2008 6:37 PM

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

Desposito, Joseph (MC????)

http://electronicdesign.com/Article/ArticleID/17392/17392.html

Engineering Bridges Isn’t Just Civil Anymore

Joseph Desposito | ED Online ID #17392 | November 5, 2007

*** begin quote ***

During my days as an engineering student at Manhattan College, my calculus teacher used to say, “No partial credit! Get wrong answer, bridge fall down!” This was the first thing that flashed through my mind back in August when I heard about the I-35W bridge collapse in Minnesota. My very next thought was that an error in calculations couldn’t have been the cause of this disaster. So what was the cause?

The day after the collapse, Michael J. O’Rourke, a professor of civil and environmental engineering at Rensselaer Polytechnic Institute, said in a New York Times article that the bridge’s renovations likely caused the collapse, not general decrepitude. “It is more common for a bridge to have problems during renovations than before or after,” he said.

I travel over two bridges to get to my office in Paramus, New Jersey, from my home on Long Island: the Throgs Neck Bridge and the George Washington Bridge. A statement like this gives me pause, since these two bridges are under constant renovation. In fact, I often wonder how long it will take to remove the copious rust from the towers of the Throgs Neck.

*** end quote ***

[JR: Automated searching is uniquely frustrting. Here's a "recent" alert I received today. I guess it was a long way from hither to yon. And, I'll quibble with the quote. I received the admonition many times: "Ohhh, wrong sign, bridge fall down! Nooooooo partial credit." This from the guy who gave a final exam of one question. That was pressure! Argh. Still agravates me to THIS day.]

# - # - #

[JR: This Jasper has been doing a lot of that authoring stuff!]

http://electronicdesign.com/Authors/AuthorID/914/914.html

# # # # #

* Posted on: Sun, Nov 23 2008 6:37 PM

JFound: Cicuto, Sarah (MC20??) uses consumer choice for good

Cicuto, Sarah (MC20??)

http://fairtrade.crs-blog.org/fairtrade/students-say-you-are-what-you-eatand-drink-and-wear/

Students Say: You are what you eat…and drink, and wear!

*** begin quote ***

When Lois Harr, CRS Fair Trade Ambassador from the Bronx, invited me to join her and Manhattan College student Sarah Cicuto in St. Louis at a conference with the theme, “Global Learning and Social Responsibility through a LaSallian Education,” I was all about the global social responsibility piece, but I had to do a little homework to learn who the “LaSallians” are. I quickly figured out these are the educators—both religious and lay–associated with the Brothers of the Christian Schools, an order founded by the “universal patron of educators,” French priest John Baptiste de La Salle. The warm welcome and the outstanding range of speakers I am experiencing here at their Huether Conference is educating me quickly on the power and reach of the LaSallian tradition. At our workshop, Lois and I discussed the faith-based roots of Fair Trade and how Fair Trade is a tool of economic justice. But Sarah was the star of the show, explaining how Manhattan College’s Just Peace group helps students live their values through eating chocolate and drinking coffee!

Sarah took the gathered group through the brief but impressive history of Just Peace on campus. In her role as Campus Minister, Lois had taken a group of student volunteers on a service trip to Ecuador where they were introduced to the need for Fair Trade. Soon after, some of the students decided to attend a United Students for Fair Trade (USFT) convergence in Boston in 2006 to learn how other students were bringing Fair Trade to campus. After seeking out examples from surrounding schools in their region, the students decided to take on a campus campaign. But first they organized themselves as an official student government organization, not only to spread news of their mission but also to get some of the budget allocated to student groups on campus. Pretty savvy kids.

The group started its campaign by encouraging students to fill out the comment cards in the dining halls asking for Fair Trade coffee, and then they set up a meeting with the Operations Manager for Sodexho to “demand” Fair Trade coffee. What they didn’t realize is that the manager, Dennis McCoskey, was quite willing to make the switch if the students wanted it. Sarah and her fellow group members were surprised that Sodexho was so willing to respond. Sarah says, “I learned that to make change sometimes you just have to ask the right people the right questions.”

{Extraneous Deleted}

*** end quote ***

[JR: Now, I'm not much on "Social Justice" (aka Socialism) or "Free or Fair Trade" (aka gooferment trade restrictions). But this sounds like something a little different. Consumers making choices. I can support that as long as there's no gooferment thumb in the equation.]

# # # # #

* Posted on: Sun, Nov 23 2008 6:37 PM

JBlogger: Gibbons, Patti (MC1986) thinks Churches should be open!

http://pattigibbons.com/?p=821

This is the wrong direction, people!

*** begin quote ***

With regard to my strong belief that Christians ought not expect the government to handle the mercy and justice aspects of the Church’s mission, I need to vent. I came across a news item today providing information that just astounds me in it’s abject stupidity.

*** end quote ***

Gibbons, Patti (MC1986)

[JR: Clearly, she doesn't understand that the gooferment's diktats preempt the free exercise of one's religion in the new United Socialist States of Amerika! None of that Church charity. That's the job of Nanny Gooferment. So what if a few bums freeze to death. It's the RULES that have to be followed. Shut up, comrade citizen!]

# # # # #

* Posted on: Mon, Nov 24 2008 3:11 AM

JOY: Katkocin, Matthew [MC????] engaged

http://www.newstimes.com/ci_11043723?source=most_emailed

Engaged: Crystal Russo, Matthew Katkocin

Newstimes

Updated: 11/21/2008 05:33:48 PM EST

John Russo of Myrtle Beach, S.C., and Ruth Cabral of Rose Lane, Danbury, announce the engagement of their daughter, Crystal Russo, to Matthew Katkocin, son of Mr. and Mrs. Dennis Katkocin of Sunswept Drive, New Fairfield.

The future bride graduated from Danbury High School and from Western Connecticut State University in Danbury with a bachelor’s degree in financial accounting.

She is an accountant for Equale & Cirone in Danbury.

The future bridegroom graduated from New Fairfield High School and from Manhattan College with a bachelor’s degree in civil engineering.

He is a project engineer for a company in New York City.

A March wedding is planned.

# - # - #

Katkocin, Matthew [MC????]

# # # # #

* Posted on: Mon, Nov 24 2008 3:26 AM

JHQ: Manhattan College To Honor John V. Magliano ’66, Chairman Of Syska Hennessy Group, Inc., At 2009 De La Salle Medal Dinner

News Release

November 21, 2008

Manhattan College To Honor John V. Magliano ’66, Chairman Of Syska Hennessy Group, Inc., At 2009 De La Salle Medal Dinner

De La Salle Medal Dinner is the College’s key annual fundraising event.

RIVERDALE, N.Y. – Manhattan College will present John Magliano ’66, chairman of Syska Hennesssy Group, Inc., with the De La Salle Medal at the College’s annual fundraising dinner on Wednesday, Jan. 21, 2009.

The ceremony will be held at The Waldorf=Astoria in New York City.

Magliano, a licensed professional engineer in 12 states, joined Syska Hennesssy Group, one of the country’s leading consulting, engineering, technology and construction firms, in 1970, after graduated from the College with a degree in electrical engineering and served a four-year tour of duty in the U.S. Air Force.

During his 38 years with the firm, he has served as principal-in-charge of many of its high-profile clients and projects, including Goldman Sachs, JPMorgan, New York-Presbyterian Hospital, the United Nations and the U.S. Department of Agriculture.

“I am both humbled and thankful at the thought of being the honoree at the Manhattan College De La Salle Dinner,” Magliano says. “Humbled because I was fortunate to be able to make good use of the gift of a superb education that the College gave me in the four years I spent there.”

A firm advocate of mentoring and team advancement, Magliano is one of the founding members of the ACE Mentor Program, a nonprofit group that provides mentoring for high school students in the fields of architecture, construction and engineering. He also established Syska’s unique Engineer in Training Program, an intensive program for new engineers just out of college, among other initiatives.

Richard Anderson, president of the New York Building Congress, Tom Farrell ’83, senior managing director of Tishman Speyer, and Richard Tomasetti ’63, founding principal of Thornton Tomasetti, Inc., will serve as dinner co-chairmen.

The De La Salle Medal Dinner is the College’s top fundraising event. Proceeds from the $750-per-plate fundraiser are applied to academic and cocurricular programs, scholarship assistance and library resources. The black-tie event begins with a cocktail reception at 6:30 p.m., followed by dinner and dancing at 7:30 p.m. For more information about the dinner, please call Susan Bronson, director of corporate and foundation relations, at (718) 862-7837 or e-mail susan.bronson@manhattan.edu.

The De La Salle Medal was established in 1951 in honor of John Baptist de La Salle, founder of the Institute of the Brothers of the Christian Schools and one of the world’s great educators. The Order founded Manhattan College in 1853. Since 1977, the De La Salle Medal has been conferred annually by the College’s board of trustees to honor executives who exemplify the principles of excellence and corporate leadership. Past recipients include New York Life Insurance Chief Executive Sy Sternberg, former Mayor of New York City Rudolph W. Giuliani ’65 and Con Edison Chairman Eugene R. McGrath ’63.

# # # # #

* Posted on: Mon, Nov 24 2008 12:27 PM

MFound: A pic of Cheerleaders and Dancers is on Flickr site

REPORTING LIVE FROM THE FLICKR NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

http://www.flickr.com/photos/kcjc/3049487243/in/pool-35575849@N00

Manhattan College Jasper Cheerleaders

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http://www.flickr.com/photos/kcjc/3049469619/in/pool-35575849@N00

Manhattan College Jasper Dance Team

# - # - #

About kcjc009 / Kevin Coles

# # # # #

* Posted on: Mon, Nov 24 2008 4:37 PM

JEmail: Jack Raidy (MC1961) seeking John Fisher (MC1961)

From: Jack Raidy (MC1961)

Date: November 24, 2008 4:27:45 PM EST

To: Distribute_Jasper_Jottings-owner@yahoogroups.com

Subject: Re: [Distribute_Jasper_Jottings] JASPER JOTTINGS Week 47 - 2008 Nov 23

Hi.

I don’t know what the “protocol” is for posting this request, but…does anyone know the whereabouts of John Fisher (MC1961)? I was a classmate of his and would like to re-connect, if possible. The last contact was sometime in the 1970s, when he was living in Philadelphia, and had recently been divorced from his wife, the former Jeanne Blank. Can anyone help?

Thanks -

Jack Raidy, MC1961

[JR: I'll ask the readership to help.]

# # # # #

* Posted on: Mon, Nov 24 2008 5:29 PM

JFound: Ryan, Tom (MC1985) identified

Ryan, Tom (MC1985)

http://www.jasperjottings.com/2007/jasperjottings20070422.htm#_JFound1

http://www.linkedin.com/pub/4/52b/a09

[JR: I happened to spot a "loose end" in my never ending quest for 'hidden' Jaspers. So this puts a Class Year with an old story.]

# # # # #

* Posted on: Mon, Nov 24 2008 6:37 PM

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

By reinkefj on MC????

http://www.marketwatch.com/news/story/New-York-Life-Taps-Chris/

story.aspx?guid={2B3DB908-9577-4901-A1C5-057BE9FA7EF9}

PRESS RELEASE

New York Life Taps Chris Blunt and Mark Pfaff to Run Key Operations

Company Combines Two Powerhouses: Life Insurance and Career Agency; Senior Vice President Mark Pfaff to Run New Entity

Last update: 3:58 p.m. EST Nov. 24, 2008

NEW YORK, Nov 24, 2008 (BUSINESS WIRE) — –Company Bolsters Retirement Business to Help Consumers Handle Retirement Challenge; Senior Vice President Chris Blunt to Run Retirement Income Security Operation Comprised of Annuities, Long Term Care Insurance and the Distribution of Mutual Funds

New York Life Insurance Company announced today that it will place its life insurance manufacturing and marketing operations under the direction of Senior Vice President Mark Pfaff, who has run the Agency Department since 2006. The move creates a powerful combination of the industry’s leading field force and one of its strongest life insurance franchises. Concurrent with that announcement, the company said it has bolstered its retirement business. Senior Vice President Chris Blunt will run a new organization, Retirement Income Security (RIS), dedicated to providing solutions to consumers in both the accumulation and income phases of retirement. RIS brings together for the first time under a single executive, New York Life’s income annuities, investment annuities, long-term care insurance, and the distribution of mutual funds.

Ted Mathas, New York Life’s president and chief executive officer, said, “With these organizational changes we are combining our number one product - life insurance - with our primary distribution system - career agents. I expect the combination to grow the company, which benefits our policyholders over the long term, and bring numerous consumer benefits in the form of better product development, better marketing, and in the end, a better-protected public.

“At the same time we recognize the enormous potential for New York Life to contribute to the retirement security of millions of people across the country. By focusing on our unique positions and capabilities in annuities, long term care insurance and mutual funds, we will grow more rapidly and provide better solutions to consumers seeking reliable sources of income in retirement. Mark Pfaff and Chris Blunt are veteran leaders and I have every confidence they will lead these businesses to substantially greater growth in the decade ahead.” Mr. Mathas noted that with these changes the four primary business operations of New York Life are:

– U.S. Life Insurance and Agency

– Retirement Income Security

– Investments, a wholly owned subsidiary with more than $235 billion in assets under management.

– International, a wholly owned subsidiary with insurance operations in eight markets in Asia and Latin America.

U.S. Life Insurance and Agency

The U.S. life insurance operations being consolidated under Mark Pfaff include the company’s individual, bank- and corporate-owned life insurance, as well as its Group Membership Association Division, the largest underwriter of professional association insurance programs in the United States, and life insurance sold through an exclusive, endorsed program with AARP. Consolidated revenue is expected to be more than $8 billion in 2008. Agency has more than 10,500 licensed agents in the United States.

Mr. Pfaff said, “Our mission for 163 years has been to bring the protection of life insurance to as many families as possible. The role of the agent in this process has never been more important, as studies have shown that Americans are significantly underinsured. Much of that phenomenon can be attributed to a lack of good advice. As one of America’s leading life insurance companies, we can have a positive impact in countering the nation’s underinsurance problem. We believe we have the best-trained, most professional career agents in the nation. This is also a time when more Americans are seeking advice about their family’s financial future. I know that combining our agency operations with the life insurance operations will lead to stronger growth of our company’s primary product line, greater benefits to the consumer, as well as more opportunities for those seeking careers in insurance and financial services.”

Mr. Pfaff noted that a recent public opinion survey by Greenwald & Associates, sponsored by New York Life, found that Americans have just half the life insurance they need to achieve their own self-described financial objectives.

{Extraneous Deleted}

Mr. Pfaff received a B.A. from Manhattan College and an A.A. degree from Westchester Community College. He joined New York Life in 1985.

About New York Life

New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings from all four of the major credit rating agencies. Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investment Management LLC provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

New York Life Insurance Company

William Werfelman, 212-576-5385

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Pfaff, Mark [MC????]

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* Posted on: Mon, Nov 24 2008 11:37 PM

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

Sposito, Peter J. [MC????]

Peter J. Sposito

http://www.spock.com/Peter-J.-Sposito-Ml4Km1Dh

Peter Sposito has over 35 years in banking with an emphasis on sales management and depository institution market development. He is recognized both regionally and nationally for his diverse expertise within the correspondent banking arena. He has had extensive interaction with the CEOs and CFOs of banks, thrifts and credit unions throughout the Northeast. bankersbanknortheast

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http://www.bankersbanknortheast.com/sposito.htm

Peter J. Sposito

President & CEO

Peter Sposito has over 35 years in banking with an emphasis on sales management and depository institution market development. He is recognized both regionally and nationally for his diverse expertise within the correspondent banking arena. He has had extensive interaction with the CEOs and CFOs of banks, thrifts and credit unions throughout the Northeast. Mr. Sposito has a strong working knowledge of the national payment system, lending, investments, operations, systems, and regulatory compliance and wholesale business development.

Mr. Sposito began his career with the Hartford National Bank shortly after completing the MBA program at the University of Connecticut. As manager of correspondent banking he directed the business activity for the Connecticut and national markets. After a merger with Shawmut Bank, he managed the Correspondent Banking Division for Shawmut Bank in Boston and in Hartford.

In 1994 Mr. Sposito recognized an opportunity to provide community banks with an array of correspondent services. Dramatic changes in the banking industry had negatively impacted traditional correspondent banking activity. His research led to the bankers’ bank concept whose sole purpose was to meet the financial, operational and business needs of community banks. After an extensive due diligence process, capital was raised and a charter was granted to the Bankers’ Bank Northeast on September 8, 1998. Mr. Sposito was elected President / CEO and Director of the new entity. He is Past Chairman of the Bankers’ Bank Council, a national association of CEOs of bankers’ banks. He serves on the Board of Directors of Connecticut Farmland Trust, an organization formed to protect Connecticut’s remaining farmland for agricultural use by current and future farmers. Mr. Sposito is also active with Americares Homefront at St. Dunstan’s Church in Glastonbury, CT.

Mr. Sposito graduated from Manhattan College with a Bachelor of Science in Business Administration, majoring in Accounting. He completed his graduate degree at the University of Connecticut where he received an MBA in Marketing. He lives in Glastonbury with his wife Susan.

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* Posted on: Tue, Nov 25 2008 6:37 AM

JObit: DeMicco, Bonnie M. [MC1984], husband of Emil {MC1979]

http://www.legacy.com/MCall/Obituaries.asp?

Page=LifeStory&PersonId=120628727

http://tinyurl.com/5pckef

Bonnie M. DeMicco

Bonnie M. DeMicco, 51, of Lower Macungie Township, passed away November 24, 2008. She was a mechanical engineering graduate of Manhattan College with an M.B.A. from Lehigh University and eventually became a manager at AT&T. Despite her professional success, she put her career on hold to devote more time to raising her two children. Bonnie continue to work as an adjunct professor and academic advisor at Moravian College and later as a tax preparer for H&R Block. In an effort to giver her son every possible advantage, she became heavily involved in the issues of special needs children. She was an active member of St. Thomas More Catholic Church, where she enjoyed singing in the choir.

Survivors: Husband, Emil; daughter, Amy; son, Michael; sisters, Susan MacDougall, Maureen MacDougall and Lynn Tobin; brothers, Brian and Craig MacDougall.

Services: Mass of Christian Burial, will be held at 10 a.m. Wednesday, November 26 in St. Thomas More Catholic Church, 1040 Flexer Ave., Allentown. Calling hours will be held today, November 25 from 7-9 p.m. and Wednesday from 9-10 a.m. in the church. Arrangements by J.S. Burkholder Funeral Home, Allentown. Contributions: In lieu of flowers, contributions may be made in her memory to A Special Needs Fund for Michael DeMicco, c/o St. Thomas More Catholic Church, 1040 Flexer Ave., Allentown, PA 18103.

Published in the Morning Call on 11/25/2008

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Dear John,

I believe that Bonnie is a member of the Class of 1984 and her Husband Emil, is a member of the Class of 1979.

May She Rest In Peace.

Mike

[JR: Thanks, Mike. Much appreciated. ]

Dear John,

I believe that her brother Brian W. MacDougall is a member of the Class of 1973.

Mike

# - # - #

From: “Richard A. Lawrence” (MC1968)

Date: November 26, 2008 12:02:11 PM EST

To: “reinke, fjohn68″

Subject: Re: [ManhattanCollegeAlumni] Jasper Obit: DeMicco, Bonnie M. [MC????]

F. John,

1984 MBA according to the MC Alumni Directory

[JR: Thanks, RAL68. Much appreciated. ]

# - # - #

DeMicco, Bonnie M. [MC1984]

Guestbook: http://tinyurl.com/5byco6

[JR: This especially saddens me. A young woman, a decade plus younger than me, with a special needs child. Makes me sad to report this.]

# # # # #

* Posted on: Tue, Nov 25 2008 8:58 AM

* Updated: Thu, Nov 27 2008 11:36 AM

MNews: Manhattan College Christmas Lessons And Carols Singers Jazz Band

Jonathan Bernaber (MC2012) invited you to “A festival of Lessons and Carols” on Sunday, December 7 at 4:00pm.

n515066362_625.jpg

Event: A festival of Lessons and Carols

“Manhattan College Christmas Lessons And Carols Singers Jazz Band”

What: Concert

Host: Singers & Jazz Band

Start Time: Sunday, December 7 at 4:00pm

End Time: Sunday, December 7 at 5:15pm

Where: The Chapel of De La Salle

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* Posted on: Tue, Nov 25 2008 3:56 PM

QUADRANGLE: “Missing Professor Now Deceased”

http://www.mcquadrangle.org

Missing Professor Now Deceased

by Matthew Coyne in News

In what was originally suspected to be a missing persons case, Dr. Munther Nushiwat, an adjunct professor of Finance and Economics here at MC, has been identified as dead after he suffered a sudden and fatal heart attack. “As far as we can tell … he (Nushiwat) had a heart attack in the (Kingsbridge Avenue) library on Sunday the 26th of October,” said Dr.…

[JR: Interesting. Sad. Troubling.]

News

* Busy Person’s Retreat Enlightens MC Students

* Costello Lecture 2008 Echoes the Ideals of its Namesake

* Manhattan Magazine Sponsors Coffeehouses

* Missing Professor Now Deceased

* Music Men Frat Returns to MC

* New Study Abroad Trips Offered

* News Briefs

Op Ed

* Got Issues? No Problem!

* Is the Nation Ready for a Black President?

* Notes from the Editor

* P/C: Change? Yeah, Right

* P/C: Yes We Did

* Sports Briefs

* The 2008 Presidential Election

* The Majority Isn’t Always Right

* The Mystery and Magic of the Gypsy Cab

Features

* A Day in the Life of a Bridge Inspector

* Energy Sustainability Lecture at MC

* Falling Short

* Ryan’s Journey to the Olympics Benefits MC Track and Field

Arts & Entertainment

* Abba Fans Look Out, Mamma Mia Keeps on Dancing

* Bob That Head

* New NHL ‘09 Video Game

* Return of the Jedi

* What’s On Your iPod?

Sports

* Lady Jaspers Dive into Final Half of Season

* Tennis Courts to be Built on New Garage

* Women’s Basketball Program Willy Rely on Intensity and Youth

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* Posted on: Tue, Nov 25 2008 6:37 PM

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

http://blog-hendri.blogspot.com/2008/11/engineering-entrepreneurs-industry.html

Honora Nerz Eskridge

89_Honora_Nerz_Eskridge-Small.JPG

Honora Nerz Eskridge is currently the Head, Textiles Library and Engineering Services and the Interim Associate Head of Collection Management. She has been with the NCSU Libraries since 1998, following completion of her Master’s degree in Library and Information Science, which she received from The Catholic University of America in Washington, DC. She also holds a Bachelor of Engineering Degree in Mechanical Engineering from Manhattan College in New York, NY.

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Eskridge, Honora Nerz [MC????]

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* Posted on: Wed, Nov 26 2008 2:36 PM

JFound: Dupper, Thad [MC1979] P+CEO of Evolving Systems

[JR: Sometime between 10/2006 and now, Jasper Thad got kicked upstairs. Automated searching rarely works. Argh!]

Dupper, Thad [MC1979]

http://www.evolving.com/thad_dupper_m.html

Thad Dupper

President & Chief Executive Officer

Dupper, promoted to Chief Executive Officer in April 2007, joined Evolving Systems’ leadership team in 2004 to oversee sales, business development and marketing. Dupper has more than 23 years’ experience in the telecommunications technology industry and has a track record of delivering innovative solutions to leading telecommunications companies.

Dupper was Vice President of Sales and Marketing for Expand Beyond, a wireless software company. He was also Vice President, International Sales and Business Development of Terabeam, where he helped pioneer the use of free space optics with telecommunications carriers around the world. Dupper held positions as Senior Vice President of Dun & Bradstreet and Vice President of Teradata, where he oversaw data warehousing solutions for the communication industry. He holds a B.S. in Computer Information Systems from Manhattan College in New York.

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http://www.jasperjottings.com/2006/jasperjottings20061022.htm#_JNews5_1

JNews5

October 16, 2006

Evolving Systems, Inc.

9777 Mount Pyramid Ct. Suite 100

Englewood, CO 80112

UNITED STATES OF AMERICA

KEY EMPLOYEES:

{extraneous deleted}

Thad Dupper, Executive Vice President, Worldwide Sales and Marketing

BOARD: Senior Management

SINCE: 2004

BIOGRAPHY: Mr Dupper was Vice President of Sales and Marketing for Expand Beyond, a wireless software company. He was also Vice President, International Sales and Business Development of Terabeam, where he helped pioneer the use of free space optics with telecommunications carriers around the world. Dupper held positions as Senior Vice President of Dun & Bradstreet and Vice President of Teradata, where he oversaw data warehousing solutions for the communication industry. He holds a B.S. in Computer Information Systems from Manhattan College in New York.

{extraneous deleted}

LOAD-DATE: October 17, 2006

{MikeMcE reports: Dear John, I believe that Thad is a member of the Class of 1979. Mike (Thanks, Mike.) }

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* Posted on: Wed, Nov 26 2008 6:37 PM

JOY: Finch, Bernadette Kelly (MC1995) gives us something to be thankful for. Among other things.

REPORTING LIVE FROM THE FACEBOOK NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

http://www.facebook.com/profile.php?id=32104185#/profile.php?id=1014258209&ref=nf

baby.jpg

Finch, Bernadette Kelly (MC1995) shares photos of James from HOME! After a very rough start. Proof that prayers are answered. What happy story for Thanksgiving Day!

[JR: Yes, I am a sucker for happy endings. And, I am thankful to have something to post today! Hope this makes you smile as it did me.]

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* Posted on: Thu, Nov 27 2008 7:19 AM

MFound: Jack Taylor (19th century baseball player)

http://sqnet.org/27/jack-taylor-19th-century-baseball-player/

Jack Taylor (19th century baseball player)

Jack Taylor

Pitcher

Born: May 23, 1873(1873-05-23)

Sandy Hill, Maryland

Died: February 7, 1900 (aged 26)

Staten Island, New York

Batted: Right Threw: Right

MLB debut

September 16, 1891

for the New York Giants

Final game

September 12, 1899

for the Cincinnati Reds

Career statistics

Win-Loss record 120-117

Earned run average 4.23

Strikeouts 528

Teams

* New York Giants (1891)

* Philadelphia Phillies (1891-1897)

* St. Louis Browns (1898)

* Cincinnati Reds (1899)

Career highlights and awards

John Besson “Brewery Jack” Taylor (May 23, 1873 - Feb 7, 1900) was a baseball player in the National League from 1891 to 1899. He is often confused with John W. “Jack” Taylor, who also played in the NL during an overlapping period. His real name has also been erroneously published as John Budd Taylor in many sources, perhaps confused with the Minor League pitcher Jack “Bud” Taylor of similar period. John Besson Taylor was born in Sandy Hill, Maryland and moved to Staten Island, New York as a young child, where he played with would-become Major League contemporaries Jack Cronin, Jack Sharrott, George Sharrott, and Tuck Turner.

“Brewery Jack” was a right-handed pitcher with a career record and 120 wins and 117 losses. His nine-season career consisted of (in chronological order) one game for the 1891 New York Giants, six seasons with the Philadelphia Phillies, one with the St. Louis Browns, and a final one with the Cincinnati Reds. While an ace pitcher, Taylor was known for arguing with umpire calls and (as his nickname implies) for his propensity for drinking. Taylor was still considered active in the National League during planning for the 1900 season, but died of Bright’s disease in February of that year. He is buried nearby his mother at Fairview Cemetery in the Castleton Corners neighborhood of Staten Island, and was inducted into the Staten Island Sports Hall Of Fame in 2002.

See also

* List of Major League Baseball leaders in career wins

Related Discussions

* There is currently an open discussion as to whether or not Taylor was an alumnus of (or even a student in) Manhattan College; category status is pending the ability to cite a source on the matter.

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[JR: Never heard this one. You?]

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* Posted on: Thu, Nov 27 2008 5:03 PM

JFound: Romero, Dennis O. [MC????] in 2006 was … …

REPORTING LIVE FROM THE SPOCK NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Romero, Dennis O. [MC????]

http://www.recoverymonth.gov/2006/press/dromero.aspx

Dennis O. Romero, M.A.

Acting Director, Center for Substance Abuse Prevention

*** begin quote ***

Mr. Dennis O. Romero is the Acting Director for the Center for Substance Abuse Prevention (CSAP), Substance Abuse and Mental Health Services Administration (SAMHSA), U.S. Department of Health and Human Service (DHHS). Mr. Romero’s role is to provide national leadership and direction in substance abuse prevention, setting the goals and objectives of the Center and participating in the formulation of strategies and guidelines needed to plan, implement and manage national programs and projects. He will also give national presence by representing CSAP to members of the White House Committees, the Office of National Drug Control Policy and the news media to ensure an understanding of CSAP programs, objectives, and priorities. As Chief Operating Officer, he is responsible for development of strategic program plans and management of CSAP’s internal operations. This includes management of CSAP’s $634 million annual budget, human resources, and program implementation and performance.

{Extraneous Deleted}

Mr. Romero received a Bachelor of Arts Degree in Philosophy and Psychology from Cathedral College and a Masters Degree in Counseling Psychology from Manhattan College. He received post-graduate training at the State University of New York (SUNY), Albany Campus.

*** end quote ***

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* Posted on: Thu, Nov 27 2008 6:37 PM

JObit: Coyne, Robert T (MC1970) reports the obit for Jackman, Frederick [MC1945]

REPORTING LIVE FROM THE FACEBOOKLINKED NEWS DESK

IN THE VIRTUAL JASPER JOTTINGS NEWSROOM …

Coyne, Robert T. (MC1970) reports the obit for Jackman, Frederick [MC1945]

http://www.licatholic.org/news/obits.htm

*** begin quote ***

Vol. 47 No. 36 November 26, 2008

Deacon Frederick Jackman

Smithtown — Deacon Frederick Jackman, who served at St. Patrick’s Church, Smithtown, died Nov. 15.

Deacon Jackman, 84, a member of the first ordination class of the Diocese of Rockville Centre, was ordained to the permanent diaconate June 9, 1979.

He graduated from Manhattan College in 1945 and subsequently taught world history at Regis High School, Manhattan (1945-1946) and history and English at Fordham Prep in the Bronx (1946-1947). From 1962 until his retirement, he worked for the Suffolk County Department of Social Services as a supervisor of case workers in the housing unit in Babylon Center. He was a certified social worker.

During his ministry at St. Patrick’s, Deacon Jackman served as a hospital chaplain. He assisted retired priests at the bi-monthly Mass at Holy Rood Cemetery in Westbury, and he performed burial services for the Diocese of Brooklyn, St. Vincent de Paul Society at St. Charles Cemetery, usually every third Friday. As sacristan at St. Patrick’s, he worked with members of the Rosary Altar Society to maintain all aspects of the sacristy.

The Mass of Transferral on Monday evening, Nov. 17 at St. Patrick’s was celebrated by Msgr. Ellsworth R. Walden, pastor; Deacon Vincent Abrahams was homilist. Msgr. Walden also celebrated the Mass of Christian Burial on Nov. 18. Deacon Jackman was interred at St. Patrick’s Cemetery here.

Deacon Jackman is survived by Mary Anne, his wife of 52 years; three children, Jeanmarie Romero, Michael, and Lisa Marie Asendorf; a sister, Delores Donato; and four grandchildren.

# - # - #

Jackman, Frederick [MC1945]

Guestbook: None cited

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* Posted on: Thu, Nov 27 2008 8:39 PM

JEmail: Breen, Jerry (MC1971) shares Obama calligraphy portrait

From: Breen, Jerry (MC1971)

Date: November 27, 2008 3:38:09 AM EST

Subject: Obama calligraphy portrait

To one and all: My latest creation is a new addition to a series of unique calligraphy portraits that I’ve done over the years. My calligraphy portrait of President-elect Barack Obama “In His Own Words” is literally that - Obama’s own words, from his eloquent keynote address at the 2004 Democratic National Convention, rendered by hand in calligraphy, actually forms his portrait! An absolutely unique collectible work of art. Nobody

S.No ISBN TITLE Buy From Nbcindia Series CE1 CE2 Rel_Dt Pages PB (US$) PB (Rs) HB (US$) HB (Rs) Snapshot

1 978-81-314-1561-0 Lean Transformation - Perspectives and Experiences www.nbcindia.com Jaya Krishna S 18-Oct-08 344 20 500 0 0 Today, ‘lean’ is an enterprise-wide concept although it has originated and evolved in the manufacturing plants and factory floors. It has become pervasive throughout the organization and an overriding principle that guides every activity in the organization. On the other hand, it has evolved as a vital tool to become competitive. Broad insights into success factors, nitty-gritty’s, prerequisites and capabilities for transforming an organization or function into lean can make the difference between lean winners and losers. Hence, organizations and their people need to know what it requires and how one should approach to successfully transform into lean. This book can act as a potential resource for those forward-looking firms and professionals in such critical situations.  This book, while introducing the concept of ‘lean transformation’, highlights the potential of transforming into ‘lean’ at large and offer guidance in transforming certain critical functions or organizations into ‘lean’. It is an attempt to address what, why, where and how of lean transformation to empower the concerned. It tries to enlighten the concerned with the lessons learnt from previous experiences of transforming into lean. Further, the lean transformation initiatives and/or experiences of some organizations (predominantly the manufacturing firms) are being included with an aim to offer practical insights to prospective readers.  The book is targeted at various interest groups, including practising professionals/executives in the areas of Business Process Reengineering (BPR), Total Quality Management (TQM), Lean Management, production and operations, which are the primary audience for this book. It can be of use for academicians and students of operations, and process management.  

2 978-81-314-1536-8 Ecosystem Management: Issues And Trends www.nbcindia.com Simantee Sen 18-Oct-08 252 17 425 0 0 Today, we are undergoing a fundamental shift in our attitude to natural resources and the environment from the focus on the production of commodities to the focus on the ecological conditions of the land. Scientists, land managers, and others are increasingly proposing the ecosystem management as the best way to manage our planet’s resources. It is a management philosophy that depends as much on understanding political and social factors as it does on understanding biological information. Further, ecosystem management calls for a shift in the way humans approach the natural world; it requires an explicit examination of the relationship between humans and nature, our patterns of politics, and methods of scientific inquiry.  Humanity has always depended on the services provided by the biosphere and its ecosystems. Further, the biosphere is itself the product of life on Earth. The composition of the atmosphere and soil, the cycling of elements through air and waterways, and many other ecological assets are all the results of living processes—and all are maintained and replenished by living ecosystems. The human species, while buffered against environmental immediacies by culture and technology, is ultimately fully dependent on the flow of ecosystem services.  Patterns of politics suggested by ecosystem management include public deliberation of values toward the environment, cooperative solutions, and dispersion of power and authority. These are all avenues to lessen social hierarchy and domination. The significance lies in the fact that ecosystem management maintains the flow and balance between environment, economic as well as social goods and services. Institutions as well as every global citizen must, therefore, cooperate towards this end.  

3 978-81-314-1548-1 Urban Water Supply and Sanitation: A Management Perspective www.nbcindia.com Mallikarjun Janardan Iyyer 18-Oct-08 244 16.5 425 0 0 Access to water is a human right as declared by UNESCO. Civilizations have developed at the proximity of rivers and other fresh water sources. Water is a basic human need and its availability has governed the survival of human existence and, therefore, the civilizations.  The provision of water supply and sanitation services in the urban areas continues to be one of the core functions of the urban local bodies. Rapid urbanization in the last few decades has brought the sector providing these services under stress.   Improved investment in water sector infrastructure, which is accorded high priority, needs to be supported by efficient management of the day-to-day operation and maintenance. This poses a major challenge with fresher elements contributing to its efficacy. Training personnel in water management and bringing about awareness of the scarcity of water to public attention are the need of the hour. The book has tried to bring to the fore some of the challenges in water management. It provides the reader with various perspectives on the issues posed by water management and discusses the best practices being evolved by the local governments in consultation with their country’s Governments to overcome them.  

4 978-81-314-1957-1 Medical Ethics: Issues and Implications www.nbcindia.com Ethics and Corporate Governance Asis Kumar Pain 18-Oct-08 232 16 400 0 0 “Medical ethics is a field of applied ethics that deals with the study of moral values and judgments in the area of healthcare and medicine. It encompasses its practical application in clinical settings apart from that in history, philosophy, theology and sociology. Looked at from a historical perspective, Western medical ethics can be traced from the Hippocratic Oath apart from early rabbinic and Christian teachings. During the Medieval and early modern period, the field was indebted to Islamic physicians such as Ishaq bin Ali Rahawi and al-Razi, Jewish thinkers, Roman Catholic scholastic thinkers such as Thomas Aquinas. 

During the 18th and 19th centuries, medical ethics emerged as a more self-conscious discourse, enriched with the writings of such authors as the British doctor Thomas Percival (1740-1804) of Manchester. Based on his thought, the American Medical Association instituted its first code of ethics in 1847. However, in the 1960s and 1970s, medical ethics went through a dramatic shift by confining itself into bioethics through appropriate development of liberal theory and procedural justice. Medical ethics tends to be understood narrowly as an applied professional ethics, whereas bioethics appears to have more expansive concerns, touching upon the philosophy of science and the critique of biotechnology. Still, the two fields often overlap and the distinction is more a matter of style than professional consensus. The aforesaid discussion sets the tone of the proposed book wherein the concept and development of medical ethics along with its implications are perused upon. Also, the practical aspects of medical ethics reflected in its practice in different countries of the world are taken a look.

“

5 978-81-314-1460-6 Economic Sovereignty and Global Capital Flows www.nbcindia.com Economy Fikret Causevic 17-Oct-08 276 18 450 20.5 525 This book Economic Sovereignty and Global Capital Flows has three parts. The first part treats financial liberalization, analysing its development, the opportunities and risks involved in financial globalization, fundamental problems within the international financial system, and the consequences of financial liberalization and globalization, drawing on standard studies in the field. The second part addresses the theoretical basis of contemporary monetary policy, how financial asset prices affect economic policy implementation, basic controversies regarding exchange rate policy, and the interdependence of exchange rate, monetary, and fiscal policy under conditions of free capital movement. The third part presents a review of the results of economic development in a sample of 122 countries, between 1980 and 2004.  The methodological basis for the analysis is a national Wealth Coefficient, which expresses the ratio of a country’s share in world GDP to its share in world population. As GDP growth does not necessarily have a sound economic basis, the data from the 20 countries with the highest rates of Wealth Coefficient growth was supplemented by data on GDP, foreign debt, foreign reserves, and import-export ratios to allow conclusions to be drawn regarding the sustainability of relative prosperity growth in high-growth economies. Finally, growth rate data was compared to the speed of financial liberalization and openness to international capital flows. Comparison of Wealth Coefficient growth rates with the dynamics and degree of financial liberalization allowed conclusions to be drawn regarding financial liberalization’s impact on economic policy’s real results.  

6 978-81-314-1550-4 Cisco s Growth and Business Strategy www.nbcindia.com Business Strategy Kalai Selvan N 17-Oct-08 252 17 425 0 0 Cisco system, Inc was founded by a small group of computer scientists from Stanford University in 1984. It has now become a multinational corporation and a leader in networking for the Internet employing 61,000 people all over the world, with an annual turnover of US$ 35 billion. In 2007, it ranked 74th in the Fortune 500 list of companies. With a unique networking system and solution, Cisco has created a big revolution in the Internet networking industry.  Its growth strategy has focused on three market segments such as, Core technologies based market like routing and switching; the Service provider based market segment; and Advanced Technology market segment.   Cisco’s product development has evolved based on customer needs and wants. It has successfully implemented their customer friendly strategies which have enabled it to become the market leader. Cisco Systems have used acquisition as a strategic business weapon. It has made more than126 acquisitions since 1993 to broaden its product offerings and secure talent pool in the extremely competitive networking industry. It has transformed its business through strong business strategy, focusing on the technology and dotcom boom in the last decade to become a market leader in the field of computer software, hardware, and networking and communication industry.   This book discusses how Cisco gained its competitiveness in the market place through its innovative business model, technology innovation, product innovation, and customer management.  

7 978-81-314-1565-8 Audit Committees - An Insight www.nbcindia.com General Books Padmavathi C Aparna Bellur 17-Oct-08 212 15.5 400 0 0 Audit Committees today face the onerous task of overseeing the dynamics, and metamorphosed corporate reporting process resulting in increased responsibilities and accountabilities. An Audit Committee is viewed as the cornerstone of the shareholder’s protection. This new facet can be attributed to changes in regulatory reforms, corporate governance environment, dynamic business environment and heightened expectations of market players. Its functions, role and responsibilities vary from company to company, even though, in essence, its objectives of overseeing the company’s processes related to risk and control environment, financial reporting and evaluation of internal controls and audit process remain same. This book, ‘Audit Committees – An Insight,’ is an effort to bring together Audit Committee practices and responsibilities, as also the worldwide practices in various sectors.     To be effective, Audit Committees must have the right structure and process in place. But in the absence of strong leadership and good group dynamics to promote a culture of challenge and engagement, they may not be able to fulfil their role effectively. Audit Committees, in general, are to meet the expectations of the committee members themselves, the board, the shareholders, the regulators and capital markets.  The maximization of their contribution to corporate governance and capital market calls for an efficient and appropriate design of Audit Committee practices. Independence is the cornerstone for effectiveness. The success of their functioning depends on the skills, knowledge and ability of their members, committee’s mission, which is tailor-made to company, and the tone set at the top. To be effective, Audit Committee members should be dynamic, proactive and should possess a wide range of knowledge, strong interpersonal skills, and willingness to take up challenges.  

8 978-81-314-1556-6 Management Control Systems in Competitive Environment www.nbcindia.com Satyanarayana Y 17-Oct-08 188 14.5 375 17 425 Having winning strategies is very important for a company. Executing these strategies is the key to business. Studies have shown that most companies fail more on account of their inability to implement strategies than, perhaps, their not being able to have the right strategies. Here comes the role of management control.  Under the management control system, managers play a key role in implementing the company’s strategies. In fact, they influence other members of the organisation/company in executing this task. Imperfect design or inadequate implementation can even result in failure to achieve the objectives of the organisation. This keeps the managers on tenterhooks. They should have a clear understanding of the management control system.  According to studies, though many organizations have been making efforts for improving their performance through conventional methods, like lower-cost, improved quality, etc., they have not identified any strategic processes. Many of them do not link their performance management systems to strategy. Current trend is that most innovative companies implement management control more effectively than their lesser innovative counterparts. This shows the need for management control and innovation.  This book makes a study of the issues pertaining to management control, which will be useful for both practicing managers and students of management.  

9 81-314-1287-8 Case Studies on Strategies for Foreign Markets - An Anthology www.nbcindia.com Business and Finance Specials Bharathi S.Gopal 17-Oct-08 360 0 0 50 1250 Companies that aim to extend their operations to other countries face unique challenges. Entering into a foreign country market requires a clear mindset as to what the company wants to achieve. This determines the mode of entry that the business wants to adopt. The mode of market entry chosen will also have implications in the marketing strategies that the company wants to implement in the foreign market. If the company intends to enter indirectly, like exporting, its control over marketing is limited. On the contrary, if a company wants to control marketing of its products or services, it needs to have a foresight of how the business will develop in the future.   Equally daunting is the task of developing a foreign market. It is important that companies understand the local business environment before formulating strategies for the foreign market. Companies that have shown greater commitment at the early stage of market entry, made long-term plans and focused on localizing their marketing programs have succeeded in foreign countries.   This book “Case Studies on Strategies for Foreign Markets – An Anthology” is a compilation of case studies that chronicle the strategies in foreign markets of various companies across industries. The book is divided into two sections. The first section comprises case studies that deal with strategies pertaining to entry or re-entry into foreign markets, while the second section consists of case studies on strategies to develop foreign markets.  

10 978-81-314-1491-0 India and Japan: Economic and Strategic Partnership www.nbcindia.com Economy Sukhvinder Kaur Multani 4-Oct-08 268 17 425 0 0 The Indo-Japanese relationship has witnessed a major transformation since the end of cold war. The bipolar system resulted in greater interdependence among nations. The concept of security became more comprehensive and included non-military elements. Above all, globalization created new opportunities and united the whole world by integrating and breaking barriers. All these transformed the Indo-Japanese relations which hitherto seemed stagnated. India’s economic liberalization also played its role by throwing new opportunities. Since liberalization, both the countries have reaffirmed to continue to promote commonalities and identify areas of convergence for mutual cooperation between them in a constructive manner. With common values and broad convergence of our interests, India-Japan partnership has the potential to create a ripple effect, leading to positive developments – not just for them but for Asia as a whole and, in turn, the world as well.  Of late, the Indo-Japanese relations have broadened and included security along with economic aspects. One important lesson that both the countries have learnt from their past experiences is that they should improve the quality of their relationship. In future, it would be interesting to see how the bilateral relationship between the two countries would have an impact on Asia.  Focusing on the Indo-Japanese relations, the book is designed in two sections. The first section delves into economic relations between India and Japan and focuses on Trade, business, investments, etc. The second section exclusively deals with the strategic aspect of their relationship.  

11 978-81-314-1506-1 Shareholder Value - Concepts and Cases www.nbcindia.com Finance Keerti Mallela 4-Oct-08 248 16.5 425 0 0 It is often said in the world of finance and management that the role of the CEO of an enterprise encompasses something more than just delivering profits. It stretches to the intention of creating and maximizing shareholder value. In this context, value-based management has come a long way in helping enterprises and managers create, measure and enhance shareholder value. It has prescribed many an antidote to overcome major hindrances in processes, operations and systems inside an organization and at the same time pay singular attention to processes that enhance shareholder value. Adhering to and establishing organizational goals by understanding the ultimate goals and objectives of the enterprise may come a long way, according to experts. This involves many inter-related and mutually dependent functions like managing risk, strategy initiation and development, earnings improvement and most importantly focusing and capitalizing on growth opportunities. Things that help goals fall in line with maximizing shareholder value may be some reference points like review of historical performance, comprehending competitors’ strategies, taking note of stock market expectations, due diligence towards ensuring that the current risk factors are all met with realistic and executable measures and preparing for future economic and value-based performance.   This book covers some very vital aspects of shareholder value creation at enterprises, what enterprises ought to do in order to create shareholder value and maximize it. Firms that have undertaken shareholder value creation and enhancement on a serious measure are illustrated in the form of cases.  

12 978-81-314-2073-7 Customer Service in Hotel Industry www.nbcindia.com Marketing Amitabha Ghose Ishita Mukherjee 4-Oct-08 200 15 375 0 0 The rapid pace of globalization has caused increasing consciousness among customers. Due to growing competition and improved job opportunities, especially in the private sector, coupled with improved buying power (which is a direct impact of regular employment generation), consumers have become more demanding. Therefore, to attract and retain customers, cost and quality control continues to be the keywords as hospitality remains primarily a service catering to the business as well as leisure customers. It is, therefore, vital to focus on the planning and delivery aspects related to effective customer service in the hotel industry.  Associations of hotel and restaurant owners have been established by those who create and enforce quality standards, and many of those associations are honored as corporations, that embody the philosophies of effective quality management. As per the principles of total quality management, accomplishment of service quality is a continuous process. It extends throughout every stage of the client’s lifecycle. This is applicable for all in business, and the delivery of service that meets or exceeds customers’ expectations becomes an increasingly significant differentiating factor in business development. Therefore, continuous efforts have to be made to reassess the gap between expectations and delivery of service. What constitutes service quality is a matter of concern as it is a relative concept, referring to the demand and expectation fulfilment of customers. Reduced price coupled with a tailor-made service is one strategy to attract and retain customers by service provider.  

13 978-81-314-1897-0 Addressing Health Issues: Financial Perspectives www.nbcindia.com General Azmal Hussain 4-Oct-08 216 15 375 0 0 “As applicable to any other development paradigm, finance often forms the lifeline of health intervention and therefore, merits prudent considerations. But, government commitment allegedly falls short in healthcare funding in resource poor countries for several reasons, the most conspicuous of them being modest tax revenues limiting spending on healthcare services. This leads to a gap between ideal and affordable investments. Another factor which often escapes the attention of the authorities concerned is the seemingly sub-standard quality of public services and the low motivation of public servants dealing with those services grossly undermining and compromising the value of public investments. The erstwhile evidences are suggestive of manifold issues hinging around the financial aspects of health interventions. This book provides a practical know-how of the issues and dimensions in healthcare financing through suitable examples.

Structured into two sections, this book covers the conceptual and generic aspects of healthcare financing, besides providing a close look at the issues and dimensions in healthcare financing through suitable country experiences. This book will be useful for development professionals, policy planners, grass-root level organizations including NGOs devoted to health issues (especially the implementing organizations), administrators and social activists.

“

14 978-81-314-2034-8 Case Studies on Retail Store Strategies: A Repertoire www.nbcindia.com Supply Chain Management Menaka Rao 4-Oct-08 376 0 0 50 1250 Unlike never before, companies have to constantly watch out to maintain that edge over competition, which sometimes is essentially a break or make situation that a company finds itself in. As Cases occupy a prominent place among pedagogical tools for teaching, this book with a repository of 19 case studies extends over 3 sections showcasing the technical segmentation and in-store strategies used by retailers to drive growth, increase profit margins, beat competition and grab market share. The cases chosen in this book serve as excellent vehicles to project an integrated view of retailers, to blend theory with practice, and sharpen the analytical skills of the readers. Compared to the large number and wide range of marketing topics covered in marketing books, this book focuses on the “Store Strategy” in retailing and in tune with the current needs of the industry. Rich in pedagogic content, the book navigates through case studies to provide a deep understanding of the retail industry and the challenges faced by retailers like 7-Eleven stores, Wal-Mart, Metro cash and carry, Starbucks, McDonald’s, Amazon, to name a few. The book helps in discussing retail strategy, customer centricity, in-store facelifts and makeovers, the shift to virtual shopping, the advantages of on-line shopping and the fortitude borne by companies during challenges. With real time people and happenings, each case study comes alive before the reader.  What, perhaps, is a significant take away from the book, apart from its intrinsic pedagogic objectives are the thoughts and opinions of great retailers like Sam Walton, founder of Wal-Mart, Bezos, founder of Amazon, Brad Anderson, CEO of Best Buy Inc., Kishore Biyani, the Indian retail pioneer and others.

15 978-81-314-1435-4 Case Studies on Business Ethics and CSR Initiatives www.nbcindia.com Case Study Collection Krishna Kumar Lekha Ravi 4-Oct-08 224 0 0 50 1250 Business Ethics relates to value-based and ethical business practices. Business ethics defines “how a company integrates core values - such as honesty, trust, respect, and fairness ¬- into its policies, practices, and decision making. Business ethics also involves a company’s compliance with legal standards and adherence to internal rules and regulations”. The last decade has  witnessed extensive awareness  among  companies  of their responsibilities toward the communities they impact on, which has evolved into the concept of CSR and allied notions such as  ‘corporate sustainability’.  Many companies have grown globally and are adopting ethical practices to preserve a sustainable business. If a company’s main purpose is to maximize the returns to its shareholders, is it unethical for a company to consider the interests and rights of anyone else? The book attempts to be an eye-opener to the business firms’ sensitivity to the society and environment. It analyses the issues faced in this dilemma of business vs. ethics.  This case book discusses opportunities and constraints in engaging the private sector in  demand-driven community development programs. The book aims to provide readers with a critical analysis of CSR to question the underlying assumption that companies, as currently constituted, can be part of a shift to a more sustainable and socially just society. The book hopes to provide a meaningful edge to the debate around CSR. As such, while it does not claim to have all the answers, it hopes to serve as an eye-opener to these issues.  

16 978-81-314-1449-1 Global Scenario on HIV and AIDS: Is there a way out? www.nbcindia.com General Naveen Kumar Agarwal Ramani V V 30-Sep-08 340 20 500 0 0 AIDS is the new epidemic of 80s, which destroyed many families and communities and posed a threat to the modern world. Most of the countries hit by this epidemic suffered from mortality search and drop in life expectancy. This epidemic is causing harm to the productive citizens that too between ages of 15 and 35. Kids are becoming orphans because of the untimely death of their parents and families are losing their talented young lot, who are the key earning members of the family. AIDS ranks fourth among the leading causes of death worldwide and first in sub-Saharan Africa.  The most affected countries are located in Eastern Europe, Central Asia, and Asia. The key challenges of the epidemic are how to control the epidemic, arrest the spread among infants and adults, provide low cost treatment facility, obtain support from the society for the infected and check impact on poor countries.  Collective effort should focus on the prevention of HIV and also provide access to Antiretroviral Treatment for the affected people. The civil society and the government together have to combat HIV and AIDS in developing and under developed countries. With this background, the book has been divided into two sections. Section-I consists of Global Perspectives of HIV and AIDS and Section-II covers Mitigation Strategies. The book attempts to give an overview of the status of HIV and AIDS in regions like Africa, Asia, America and Europe. Efforts have also been made to include the experiences from these regions to know how far they have been able to treat their HIV infected people and mitigate this chronic and intimidating syndrome.  

17 978-81-314-2065-2 Economic Downturns - Lessons from Country Experiences www.nbcindia.com Economy: World Jayshree Bose Keerti Mallela 30-Sep-08 244 16.5 425 0 0 An economy’s prosperity is generally measured by specific indicators like international prices, costs of external financing, capital flows and trade flows. Rise in interest rates, tightening monetary conditions, nevertheless, natural calamities and disasters like the 9/11 and the resultant global imbalances in recent times have led economists worldwide to think of an impending recession. The year 2006 saw the US stating a Current Account Deficit of more than US$800 billion and, on the other hand, the oil-exporting countries reaped surpluses. In 2008, the world at large is expected to watch out for continuing stock market falls, less of foreign direct investment in both developing and developed economies, oil price shocks, further fall in house prices and, therefore, gloomier credit markets. Erosion of investor confidence is on the way given the huge losses reported by Banks, given the shattering aftermath of the subprime crisis. It is widely opined that even if the Fed keeps cutting interest rates, these cuts may not really be able to offset the rate cuts in the previous recessions, since consumers and businesses may not be able to borrow enough to keep up their spending. A long-standing view point is that a flexible economy, with maximum competition as its driving force is the most sought after method to withstand recession. In that continuum, flexible market-driven economies have been cited to be more resilient towards recessions.  This book on Economic Downturns focuses more on some vital concepts of economic recessions, policy changes brought about by nations that ran into profound recessions and some country-experiences. In its various segments, it covers some important preventive measures prescribed by leading economists and experts.  

18 978-81-314-2014-0 Globalization: Latin American Experience www.nbcindia.com Globalization Asis Kumar Pain 30-Sep-08 236 16 400 0 0 After the “lost decade” of the 1980s, the 1990s were a distinct improvement for Latin America with the continent embracing the structural reform process. GDP growth rose as high as 4 percent in 1997 prior to the outbreak of the crisis in Asia and in the emerging markets. On a country basis, 17 countries were found to have raised their average annual growth rate in the 1990s (average per capita income in the region grew 1.5 percent per annum in the 1990s) compared to the 1980s. Besides, 24 countries showed a reduction in the volatility of their growth performance while 13 countries achieved both higher growth and greater stability of growth. Inflation was also brought down to single-digit-level after decades of double-digit inflation. These enhanced economic performance had its reflection in the various parameters of social progress. Between the period 1975 and 1997, the gap in the UNDP’s Human Development Index was reduced by more than 20 percent, reflecting a substantial improvement in social indicators. Despite these positive directions of economic development, the extent of poverty still affected 36 percent of Latin Americans. Income distribution across quintiles or deciles continued, thus presenting a discouraging picture.   The aforementioned portrayal brings up the Latin American development initiated with the globalization process. The present volume is a modest effort at capturing some essence of this process wherein the basic idea of the circumstances for embracing globalization and economic development ushered thereon, supplemented with individualistic experiences, are examined.  

19 81-314-1292-4 Case Studies on Business Ethics and Corporate Governance- Promoting Social Responsibility www.nbcindia.com Ethics and Corporate Governance Harish R 30-Sep-08 332 0 0 50 1250 There is a growing awareness and realization about the need for industry to be more ethical and responsible in its actions, whether towards its employees, suppliers or customers; or towards the environment and the society at large. Adhering to appropriate norms and regulations pertaining to corporate governance and maintaining financial and fiscal integrity are also gaining importance. Shareholder groups too have become more active and are raising their voices whenever they observe that companies may not have been adequately ethical and fair in their behavior and dealings. Several movements aimed at ethical and fairtrade practices have gained ground, and products with fairtrade and/or environment friendly/organic labels are beginning to command significant market demand and price premiums.  Given this background, Business Ethics and Corporate Governance have become important subjects of study in many business schools across the world. It is, therefore, felt that a book of cases pertaining to the concepts and issues typically dealt with in such a course would be of immense help to both faculty and students. This book attempts to fill this need by presenting a bouquet of cases on a cross-section of topics that may be covered in a course on Business Ethics and Corporate Governance. The cases are selected from different industries and geographic regions of the world, thereby adding to the diversity and richness of content.  

20 978-81-314-1459-0 The Icfai Handbook Of Behavioral Sciences www.nbcindia.com General Anamika Sharma 27-Sep-08 356 21 525 0 0 The Icfai Handbook of Behavioral Sciences is addressed to the undergraduate & postgraduate students of behavioral sciences and its allied disciplines. They include psychology, social psychology, psychobiology, social neuroscience, cognitive organization theory, consumer psychology, management science & operations research besides ethology, anthropology, organizational studies & psycho-economics, memetics, organizational behavior, social networks, and organizational ecology. Psychologists, behavioral scientists, management consultants, sociologists, anthropologists, OD consultants and the faculties in the concerned areas and general readers whose daily work demands some familiarity with terminology of Behavioral Sciences like history and meaning of Behavioral Sciences and its allied areas are expected to benefit by this handbook. The handbook also addresses terms from the conceptual level to the advanced level. It aims to provide a comprehensive companion to support other readings in a discipline, which employs remarkably similar terminology.  This handbook is an authentic, accessible and alphabetical reference resource for the main ideas and teaching connected to the basics of and advances in Behavioral Sciences. The book is designed to cover the salient facts and features of various terms of Behavioral Sciences and its allied areas. It also explores conceptual development in various sciences from professional perspective. Over 3000 entries define and explain clearly the salient facts within the context of Behavioral Sciences. It incorporates up-to-date information which is sure to appeal to active psychologists, behavioral scientists, management consultants, and the faculty and students of Behavioral Sciences.  

21 978-81-314-1527-6 Perspectives on Inclusive Growth in India www.nbcindia.com Economy: Issues in Economic De Dholakia J R 27-Sep-08 356 21 525 0 0 Inclusive growth is a major concern for human development in India with rising inequalities. Despite tremendous growth of economy, failure on distributive front has aggravated the progressive journey towards collective well-being. Inclusive growth has become the buzzword in policy-spheres with recent phenomenon of rapid growth with characteristic patterns of exclusion. The sectoral, social and spatial inequalities have raised questions about welfare approaches of Government planning, and emphasized the role of the private sector in addressing development issues in the country. Employment generation, social and developmental infrastructure, health-care and rural diversification are some of the major suggestions from experts. Due to faulty approaches and often politically motivated policies, growth has generated inequalities. It is imperative for the planners and policy-makers to make growth inclusive through adoption of pragmatic policies. The journey towards balancing the outcome of economic growth involves many challenges. The dominant challenges include the imperative of maintaining the acceleration of economic growth without compromising on human development and sustainability.  The book analyses various policy and programming issues about inclusive growth in India. With indepth overview of human development issues surfaced by various researches, the book outlines certain policy issues pertinent to inclusive growth. This book specifically looks at the issue in broader framework of sectoral, social and regional inequalities which form the macro framework for inclusive growth.  

22 978-81-314-1529-0 Addressing Health Issues: Role of Participatory Research and Action www.nbcindia.com General Azmal Hussain Nirbachita Karmakar 27-Sep-08 308 19 475 0 0 It is clear for all to see that in the attainment of sustainable growth and development, health plays a crucial role. The question of accessibility of the health benefits by the poor brings to the fore the role of participatory research and action. This book attempts to show how different participatory approaches are useful in improving mass health, and document practices in health intervention through participatory action and research. Approaches like Participatory Action Research (PAR), Community Participation (CP) and Community-Based Participatory Research (CBPR) are discussed in possible detail wherever deemed necessary.   CBPR is particularly viewed as consistent with the goals of “result-oriented philanthropy” of various national as well as international funding agencies who often become discouraged by the modest or even disappointing results of more traditional research and intervention efforts in many low income communities. Supporters of participatory approaches, however, face challenging issues in the areas of partnership capacity and readiness, time requirements, funding flexibility, evaluation and so on.   The book intends to identify strategies for addressing such issues through documentation of desirable practices justifying participation as an important tool for effectively addressing health issues. It is expected to be of use for development professionals, policy planners, public administrators, applied anthropologists, social work professionals and other social scientists.  

23 978-81-314-1542-9 Community Investing www.nbcindia.com Economy: World Swapna Gopalan 27-Sep-08 316 19 475 0 0 Community investing refers to financing that creates resources and opportunities for economically disadvantaged people and people under-served by traditional financial institutions. Capital generated through community investing initiatives enable local organizations to generate jobs, fund small businesses, create affordable housing and provide financial and other vital community services to financially disadvantaged people.  Community investments are known to make a greater impact in helping communities in need than charitable giving. It is perhaps for this reason that community investing has become an attractive investment option for wealthy individuals, interested in making a social impact, even earn monetary gains. Corporates have also found a good avenue in community investing to fulfil  their social missions.   Today, community investors are playing a crucial role in alleviating poverty in many countries like the US, the UK, South Africa and India. In fact, community investors have been at the forefront of rehabilitation efforts in the aftermath of the disastrous tsunami, hurricane Katrina and after the war in Afghanistan.  This book captures the recent developments in the area of community investing across the globe. It is divided into three sections: the first section titled “Introduction” introduces and explains the concept of ‘Community Investing’, the second section “Experiences” showcases a few country experiences and the third section “Corporate Community Investments” is devoted to studying the

As it is investment season and people are desperate to save from that dreaded taxman and invest in instruments classified under Sec80c , here are my top 3 Tax Saving Mutual Funds.

Please do ur own research before u come to a decision and dont blame me if they dont perform according to ur expectations. Also note due to the market crash most mutual funds have lost money on investments made during last 2 yrs.* standard disclaimers apply.

Sundaram BNP Paribas Taxsaver

NAV 22.56  EXPENSE RATIO 2.24

Fund has a good performance record for the last 2 years and has come out as a leader in its class.

Magnum Taxgain

NAV 28.5 EXPENSE RATIO 2.5

One of the best Tax savings funds over the long term with a good pf and a consistant track record but a slightly higher expense ratio than the market.

Franklin India Taxshield

NAV 94.68  EXPENSE RATIO 2.24

Fund is slightly more risky and does not have a consistant performance but has performed better than its peers in the current downturn.

HDFC Taxsaver

NAV 90.95  EXPENSE RATIO 1.98

This is also a relatively good performer but has been hit by the current downturn

An article in a local paper here in Atlanta, ‘Investors likely to face higher mutual fund fees” by Eileen Ambrose detailsJeff Tjornehoj, a senior research analyst at Lipper, Inc, estimates that the average equity mutual will increase its expense ratio by .10%.

These increases are because mutual funds have actually dollar cost many being fixed cost.  They then set fees according to their assets under management.  So as their total portfolio values drop due to their investing and investors it mass pull money out of these funds, the fees no longer are adequate.     

This is why we will see increases among to most damaged mutual funds.  International funds may be among the largest category to increase its fees.

The Securities and Exchanage Commission unanimously ruled that a “plain English” executive summary must be made available on the cover of a mutual fund prospectus.  Now I don’t mean to be a curmudgeon but really, shouldn’t this be the case with all such filings?  Isn’t “plain-English” what we Americans speak?

Okay, I’ll get on board and applaud them and encourage them not to stop here but to make sure ALL filings have an executive summary in “plain English.”

New release

Computer Apps-First a couple of changes: Your final Alice project (game or movie) is due on December 12th. The date change is to enable us to fit a few more projects into the semester. After you finish this, refer to my previous post about completion of the 32 things assignment.

Personal Finance-Your terms test is tomorrow as promised. Here is a list of the last terms you should add to the previous data:

Here is the first concrete example we’ve found of the losing proposition mentioned in several posts over the last three weeks. Many more are on the way.

Mutual fund shareholders who have lost up to 50% will face serious taxable events as a result of manager sell-offs to generate cash for redemptions. One statistic we’ll be looking for is the tax liability for investors in active vs. passive investment vehicles.

Fidelity, Franklin Stick Investors With Tax Bills as Funds Fall

Investors in the $4 billion Templeton Foreign Fund already have lost more than 50 percent of their money this year and now they’ll be forced to pay taxes on as much as $1 billion of gains from the sales of investments.

Shareholders of Templeton Foreign, run by Franklin Resources Inc. in San Mateo, California, have plenty of company. Franklin said 33 of its 106 stock and bond funds will have capital gains. Fidelity Investments, the world’s largest mutual- fund manager, expects 135 of its 212 funds to make the distributions, based on data as of Nov. 15.

Money managers have had to sell profitable holdings this year as customer redemptions increased, resulting in short- and long-term capital gains. The result means tax bills for investors in the worst year for financial markets since the 1930s.

Mutual funds had $9.5 trillion in assets as of Oct. 31, a full $2.5 trillion, or 21% less, than their year-to-date $12 trillion under management peak at the end of May, Lipper data shows. Since the beginning of the year, when mutual funds had $11.7 trillion under management, assets have fallen 19%.

Going back to Lipper’s archive of data dating to 1959, the biggest annual percentage drop in assets on record was in 1973, when they fell 20%, and 1974, when they dropped 21%.

Certainly, billions of dollars in redemptions have exacerbated the market’s steep declines; stock funds lost $86 billion in October. Even fixed-income funds lost $44.3 billion. To put the fixed-income mutual fund redemptions in perspective, the very worst monthly outflow prior to 2008 was in September 1992, when $37 billion left such funds, and May 2004, when $16.7 billion was lost.

Noting that the Dow Jones Industrial Average was on track to decline more than 9% in November, Lipper Senior Analyst Tom Roseen told The Wall Street Journal: “Funds are still going to have difficult periods to go through.”

About 10 years ago, I took a serious look at my financial life.  I had grown concerned that my net worth was not moving ahead at the velocity it needed to in order that my wife and I could have a comfortable retirement.  Frankly, we were doing the things that Wall Street and the Banks encouraged us to do.  We thought these were the prudent financial behaviors needed for success.  We were wrong as my research was going to point out. 

There are really three behaviors needed to have a successful financial life; spending control, wealth creation, and wealth preservation.  We had concentrated on spending control and what we thought was wealth creation, but was really wealth preservation.  In short, we were doing whatthe majority of the middle class tries to do.  We were concerned about the size of our mortgage, wanting to have it paid off as soon as possible, and invested in mutual funds inside a tax deferred wrapper (403B).  And we were good at saving over 15% of our income.  That is why I became agitated, we were doing exactly what we were supposed to be doing and our financial progress was not very convincing.

So I went on a fact finding mission, researching wealth creation and personal finance.  Well, what I found was eye opening.  I was not involved in any wealth creation strategies.  What we thought was a wealth creating strategy, mutual fund investing, was really a wealth preservation strategy.  We were failing to produce wealth because we were confused as to how wealth is really created.  We were taken in by the propaganda emerging from Wall Street.  I can not overstress how bad I felt, as one who had formal finance training, to learn that I was making this fundamental mistake.

Since then I have reversed course and concentrated on wealth creation first.  An amazing thing happened.  Our net worth started to accelerate upward.  And last year I decided to create a part of my business dedicated to teaching/helping people do the same thing with their financial lives that I am accomplishing with mine.  This blog is dedicated to offering folks free insight into my thinking on wealth creation and wealth building plans.  I hope the reader keeps in mind that what I am offering is my experience, my intellect, and my research into wealth.  Whether you ever formalize our relationship by joining with me at the Shafer Wealth Academy, or not, I hope my words are used as encouragement to creating a better, more fufilling life based on true wealth relationships! 

Now that Thanksgiving is behind us, we will be hit with a full out attack of the Christmas season.  I put my lights up on my house yesterday!  No matter what your religious preference is, I know this next month is a very stressful time.  It is, of course, made even more stressful by recessionary economic times.  Let us all remember that this is a time of joyful giving.  As a gift to my readers, if you send me a message with your e-mail address, I will send you a copy of “The Best of Uncommon Financial Wisdom,” an e-book created for my impending new web-site!  This e-book is a compilation of the best blog posts, as judged by my readers.  Perfect for those holiday resolutions!

Scam type: 419

Subject: Urgent Business Proposition!

From: fz@live.co.za

The trouble with the UK is ‘Great Britain’. The future of the UK, if it has one, will be settled by coming to a more stable, mature and equitable relationship between the different nations that currently make up that state. Great Britain, and its even more ill-defined cognate ‘Britain’, is the great interloper that stands in the way of those nations finding a new path of mutual autonomy and co-operation. Great Britain wants it all – and wants to be all; and while it’s still around, it will try to stop its ‘constituent nations’ from realising their aspirations to be themselves.

What is Great Britain, after all? You could call it the non-existent national core of the state, the United Kingdom; or the alter ego of England as the unacknowledged heart of the UK state. Although the ‘national’ UK politicians make great capital out of Great Britain or Britain as the personality of the state, does Great Britain actually exist in the present in any fundamental national, political or constitutional sense? Great Britain is indeed the ‘foundation’ of the UK state because that state’s parliament was constituted as the parliament of the Kingdom of Great Britain through the Acts of Union between England (including Wales) and Scotland in 1707. When Ireland (later reduced to Northern Ireland) was added 100 years later to form the United Kingdom of Great Britain and Ireland, this was essentially an extension of the jurisdiction of the Great Britain parliament and government to include Ireland. So the UK, on this basis, remained Great Britain at its core.

However, Great Britain itself was in reality the product of an extension of the writ of the English parliament and state to include Scotland – albeit that to ’sell’ the deal to the English and Scots alike, the new state had to be re-branded Great Britain rather than the Great(er) England that was implied. The English and Scots people have always been aware that this was the ‘real deal’: that real power and rule over Scotland was simply transferred to the English crown and sovereign parliament.

Before I set out my ideas here for a new federal constitutional settlement, it will be useful to discuss further some of the overlaps and distinctions between Britain and England, as I see them. That way, the differences between my proposed federal UK and Britain as we know it will be clearer. Readers who wish to skip this preamble could jump down to the heading ‘Blueprint for a new federal UK’ below.

The first thing I would want to lay out is the proposition that Great Britain / Britain is not a nation, let alone a ‘great nation’: England is the real nation at the heart of the UK state. I’m not trying to deny that the actual states of Great Britain and later the United Kingdom don’t have a ‘great’ history, defined as having made possibly the biggest contribution of any state towards shaping the modern world. What I’m trying to get at is the myth that Britain is a nation. Many people in all of the actual nations of the UK do feel that Britain is a nation, indeed ‘their’ nation in a sense that either sits alongside their feelings of being English, Scottish, Welsh or Northern Irish, or takes priority over those feelings. But the paradox is that, constitutionally, Great Britain does not exist. The state is the United Kingdom: it has been for over 200 years. And the United Kingdom definitely is not a nation: nobody says ‘I’m UK’ to describe their nationality, other than in the sense of their citizenship; they say ‘I’m British’. But (Great) Britain itself does not have any constitutional status as either a state (which is the UK) or a nation. When laws are enacted in the UK parliament, for instance, they are laws either for the whole of the UK or – more often – they are UK laws that have effect only in one or more ‘parts’ of the UK, but certainly not in ‘Great Britain’ as such. If some laws do apply to England, Wales and Scotland, they are described as applying to England and Wales, and to Scotland – as England and Wales, and Scotland respectively have two separate legal systems. Great Britain has no legal personality. There is no such thing as British law. Technically, there is no parliament or government for Great Britain, either. Indeed, the fact that the laws of the land are enacted for England and Wales, for Scotland and – where applicable – Northern Ireland itself implies that the ‘lands’ (nations) of those laws are indeed England, Wales, Scotland and (Northern) Ireland – not (Great) Britain.

So Great Britain / Britain is just a ‘nation name’ or ‘national persona’ for the UK, not a formal nation in its own right. If you wanted to finesse this argument further, you could say that the reason why ‘Britain’ rather than ‘Great Britain’ tends to be used nowadays to evoke a national identity for the non-nation state of the UK is that ‘Great Britain’ refers back to the historical nation – ‘kingdom’ – of Great Britain about which people are vaguely aware that it ended when Ireland came on board; and that it is not, consequently, inclusive of Northern Ireland. So ‘Britain’ is used precisely because it is not the formal name of a state or a nation that does or does not exist in the present. Indeed, one might say that the power of the name ‘Britain’ to evoke feelings and ideas of nationhood is in inverse proportion to the actual existence, past or present, of such a state or nation.

In fact, this power of the words ‘Britain’ and ‘British’ to arouse feelings of patriotism and nationhood – despite the non-existence of such a nation in legal or constitutional fact – is primarily a function of English national identity and pride: England being the real nation that has fantasied and mythologised itself as British. That is to say, the English, historically, have tended to merge their English national identity with the idea of (Great) Britain, to the extent that ‘England / English’ and ‘Britain / British’ became co-terminous and indistinguishable. This has never been true to the same extent in Scotland or Wales. Scottish and Welsh unionists are indeed proud to be British; but this ‘being British’ has not tended to override or replace their primary national identities. They are proud as Scottish or Welsh persons to be part of the great British project and its historical achievements: Britain being clearly demarcated as a state (’dominated’ by and synonymous with the English nation) to which the Scots and Welsh by and large have been content for their nations to adhere, albeit for pragmatic or ideological reasons as much as through any affection they might or might not have felt for their mutual neighbour.

By contrast, the feelings and pride felt by English people at being English and at being British have tended to be one and the same thing. They still are for many people, as present-day surveys of people living in England discover that virtually the same high percentage of respondents feel they are English (and proud of it) as feel British (and proud of it) – with the balance slowly tipping in favour of English being the primary identity. Indeed, this is so much the case that a stranger from Mars, or from another country (say, Scotland), might conclude that ‘British’ is merely another name for ‘English’. Indeed, this is the perception of many Scots, who are all too aware that when supposedly national (that is, UK-wide) media or English people in general talk about ‘Britain’ or ‘the country’, they are generally referring to England only; or else, they may be trying in their own minds to include Scotland and Wales (and possibly, Northern Ireland) but are in fact still dealing with English circumstances and situations, as the realities in Scotland and Wales are often quite different – increasingly so, after devolution.

This business of politicians and the media (and the marketing and branding of consumer products, and general parlance to some extent) saying ‘Britain’ or ‘the / this country’ when they’re actually referring to England is a real bugbear to those who have woken up to the post-devolution realities, which mean that the majority of what Westminster politicians do and talk about does in fact relate to England only, as their writ now stops there in so many vital areas of government. But in a way, this tendency is a continuation of the longstanding habit of English people to confuse England and Britain: to say ‘Britain’ when they’re really thinking of England, and to say ‘England’ even when talking about Scotland or Wales – demonstrating the extent to which the concepts of ‘England’ and ‘Britain’ were interchangeable in their minds.

The difference now, however – and it is fundamental – is that, whereas it’s politically correct (if factually incorrect) to say ‘Britain’ when talking about England, it’s definitely no longer politically correct to say ‘England’: not just where the whole of Britain is concerned but even when one is referring to exclusively English concerns and facts. I have frequently commented on this politically motivated linguistic suppression of ‘England’ – both in this blog and its sister blog Britology Watch. At the extreme, this almost pathological aversion to using the word ‘England’ when talking about England appears to express a wish, on the part of some within the political establishment, to abolish England altogether and replace it with some sort of regionally divided New Britain.

There is a curious paradox here, the form of which, in its simplicity, only became apparent to me a few days ago. You could express it as follows:

In other words, when England was Britain, it was OK to call it England; but now it’s England, you have to call it ‘Britain’.

How did this truly (and typically English) bonkers situation come about? The explanation is quite straightforward, really. The old ‘Britain’ (idea, not nation) was, as I’ve said, largely a projection and alternative name for England itself, and expressed England’s pride in having extended its dominion and influence first to the island of Britain and then across the world – historically, through the British Empire. Post-devolution Britain, by contrast, is a world where a separation has been made between both the identities and polities of England and Britain: in the national (that is, English) psyche as well as in national political institutions, England and Britain are no longer seen as indivisible. This separation between England and Britain in people’s minds has the potential to blow the whole UK state apart by virtue of a very simple logic: ‘if the English people start thinking of themselves as English and not British’, so the thinking goes, ‘then they’re going to want an English parliament, government and eventually even state’. The response on the part of the establishment, fighting for its survival, is classic denial – in the psychological sense: it seeks to deny that any split between the English and British identities has occurred, and to suppress people’s developing sense of a distinct Englishness by censoring ‘England’ (politically, linguistically, psychologically), and pretending that there is only Britain, and that England effectively does not exist.

The primary political manifestation of this is that the government and the mainstream parties, who feel they have most to lose from a disintegration of Britain into its constituent parts, carry on a pretence that there is absolutely no distinction between the areas of government that genuinely extend across the whole of the UK, and those that relate to England only (or, at a pinch, to England and Wales only). This thinking reflects, and is used to justify, the fact that, in the matters that do in reality relate to England only, England is – uniquely – governed in the way all the UK countries were governed before devolution: with the participation of elected representatives from all four national corners of the state.

Without rehearsing the arguments about the democratic deficit and lack of accountability on the part of their supposed representatives this creates for the people of England, another paradoxical aspect of this is that it means that England and the UK ironically continue to be indistinguishable and interchangeable – in fact, even more so (technically and constitutionally) than before devolution: England is the only part of the UK that continues to be the old unitary UK in all respects of national governance. And, of course, it’s because the establishment is desperate to hold on to the unitary UK, despite having broken it up by its own actions through devolution, that it has to deny any alternative existential status for England: as England, and not as the UK. But you could just as easily turn this completely on its head and say that if England is the UK, then you might as well just call the UK ‘England’. Then, whenever all those politicians and lazy journalists go on about ‘the country’ (meaning England but pretending they’re talking about the whole of the UK), instead of assuming they’re referring to the UK, we should assume that the default meaning of ‘the country’ is England. As this is the fact, in most cases, it shouldn’t offend our Scottish and Welsh friends if we start to call a spade a spade. However, if we develop this consciousness that ‘the country’ is England – not Britain – then the game truly is up for the unionist establishment.

If England really is to establish itself in its turn as a nation and polity separate from Britain and the UK, then we’re going to have to develop just such a consciousness of our distinct national identity (England as ‘the country’) along with a new political maturity, separate from Britain; rather in the way that a child needs to outgrow its parent’s expectations, beliefs and attitudes of an earlier generation in order to establish itself as an adult able to make its own way in the world of today. Now that England and Britain have started to separate out – psychologically and politically – the rational, mentally sane response has to be define a new English identity and future – including political future – not to try to deny that there is such a thing as England and Englishness out of a delusional retreat into a unitary Britain that no longer exists, other than in England itself. Psychologically speaking, that’s a pathological defence mechanism: avoiding the challenge and need for individuation, and retreating into one’s parent’s (Britain’s) certainties rather than exploring one’s own truth and possibilities, as a self-reliant England.

Taking these psychological metaphors a little bit further, if the reader will forgive me this self-indulgence (if not, read on to the next paragraph!), one could say that England – a nation whose people are characterised to some extent by dualistic psychological conflicts, such as that between aggression towards the stranger and an over-willingness to let the stranger feel at home here – ‘projectively’ identified with Britain as a persona enabling England to pursue world domination under the guise of a civilising, anglicising mission. This means that ‘Britain’ and the civilising project of the Empire provided a justifying ‘outlet’ for what might otherwise have been seen as totally unacceptable and destructive English aggression. Now that, even within the British ‘homeland’, the nations England once subdued are turning away from England-Britain, that projection of Englishness onto the world in the name of Britain has turned aggressively in on itself, ‘introjectively’: England’s aggression is now directed self-destructively against England itself, which is the last savage colony resisting the creation of a Britain made in the image of the global civilisation with which it identifies – the diametrical reverse of the previous project to fashion a world made in the image of England.

Put in more straightforward language, if you’ve followed the logic so far, the potential destruction of the nation of England in the name of a New Britain that takes England’s place is primarily being undertaken by English people: effectively, England turning against England because an England distinct from Britain risks destroying the ‘great Britain’ that has been England’s power, pride and joy. And power is what essentially it comes down to. We the English created Britain as an instrument for English power; and now, those who are the heirs of British power see a separate England as a mortal rival and as something that could undermine their whole power base – forgetting all the while that England is their power base: Britain’s foundation and its very raison d’être. If England is the foundation, then you could say that ‘Britain’ is the superstructure of the building – all show, display of pomp and circumstance, glamour and sophistication; while Scotland and Wales represent the supporting walls. Just as the foundation is necessary to hold up the walls and prevent the building from collapsing, so Scotland and Wales would not be joined into Britain were they not rooted in and conjoined with England, which provides the whole basis for Britain and the ground on which it stands. But as Scotland and Wales loosen their ties with England, the superstructure that is Britain – sitting astride the whole edifice – thinks it is sufficient in itself to hold it all together: its values, its high-minded ideals and its top-down instruments of power enough to shore up its collapsing internal walls. In reality, however, it’s the grit, the determination, the solidity and commitment of the English that has held the building together up till now, for better or for worse. Undermine and strip that away, and the whole building cannot stand.

Which is to say that the legitimacy of power comes from the people, not from the apparatus of state: from the English people who previously invested the British state with their self-sacrificing loyalty, commitment and support; and not from that state that now seeks to deny that very Englishness that is its living core and soul. Britain is about power: it was the vehicle of English global power, and dominion over its Empire and over its island neighbours; and now it’s a system of power that sees itself as ruling the tumultuous waves and surfing the changing tides of global markets (we English were ever a merchant, seafaring nation, after all) with little if any concept of the nation – England – which the activity of government and the economy is intended to serve, build and defend. In fact, the more that memory of Britain’s original, founding nation – England – can be erased, the more we can fashion ourselves (and retain that projected image of ourselves) as a global power.

Poor England; deluded Britain – the monster we created (and which we in part are) that is now devouring its own true greatness, which is not in domination but in itself. We have to become a new creation, as it were: a new England that sets aside the will to dominate and Britain’s delusions of grandeur. England not Britain; but united, if still possible, with our neighbours in a different sort of union: a union of equals – not a Britain that is merely a name for an aggressive England it could not avow, and which now it aggressively disavows in turn. We have to do away with Britain to become truly a united kingdom and not all in our different ways vassals of an overweening state that would remake us in its image rather than let us make it in ours.

New England, new United Kingdom: not a United Kingdom of Great Britain and Northern Ireland, but a United Kingdom of England, Scotland, Wales and Northern Ireland (and Cornwall, perhaps). Why bother with the UK at all, albeit a re-cast one, some might ask? Why not just discard this remnant of empire and domination, and let each nation chart out its own course across the choppy seas of the present? I, for one, would be far from unhappy to see an independent nation state of England. But perhaps before we throw the baby of our Union out to sea with the bath water of lost illusions, there could still be something worth salvaging from the past in a new union for the future. The greatness of Britain, as I’ve attempted to evoke, was not Great Britain, but the greatness of its people: yes, the English but also of course the Scots, Welsh and Irish with which we have – still – so many things in common; more that ‘unites’ us than divides us, in fact. Our island home; our historic civilisations; our mingled blood lines and family ties; our Christian and liberal heritage; our English language; and, yes, our British history.

It’s worth a punt trying to keep all this together in some form; that much I would concede to the unionists. But if this is to work, it has to be a togetherness that allows us to express our own identities, plot our own destinies and govern our own lives: as separate and not subordinate nations, working together in a common structure for mutual advantage and enrichment.

It’s worth a punt; so here’s mine:

This solution would prevent the national parliaments from competing with the federal, UK parliament, as they would be integrated into a single system. However, this would not involve a subordination of the national parliaments to the UK parliament. It would be redistribution, not devolution, of power: power in the areas assigned to the national parliaments would be permanently transferred to them, not handed over to them ‘on licence’, as under devolution. When I say permanently, this is because there would be a written constitution setting out the specific roles and responsibilities of the national and UK parliaments, as well as the many other details concerning the composition of and relationships between the executives, parliaments and judiciaries in each nation.

One important, founding element of this constitution should be that it would declare that sovereignty resides with the people of each UK nation; and that it is therefore each nation’s intrinsic right to determine the form of government it desires: enshrining the freedom to secede from the UK at any time should there be a clear popular mandate to do so, as manifested in a referendum. This latter principle redresses the imbalance that prevails at present, whereby many of the UK’s leading politicians, including Gordon Brown, are on record as having accepted the above principles of popular sovereignty and national self-determination for Scotland while denying the same rights to England, which remains subject to the sovereignty of the UK parliament. This imbalance has made a major contribution towards the present asymmetric, multi-track, creeping devolution process. It has involved the setting up of a national Scottish parliament with quite extensive powers to pass primary legislation, and which is a clear rival to the UK parliament and focus for aspirations for an independent Scotland. At the same time, a much less powerful and more dependent body has been established for Wales; while England, of course, has been denied any form of national self-government.

Clearly, this is one of the most contentious proposals, as it could be seen by many in Scotland, Wales and Northern Ireland as a means for England to ensure that it is able to fund a higher per-capita level of public expenditure because it can raise higher per-capita tax revenues. On the other hand, a certain redressing of the imbalance that is currently tilted in favour of the devolved nations via the Barnett Formula is definitely needed. I believe that an integrated national and federal parliament could provide the most effective mechanism for regulating these competing claims on the wealth of our respective nations. On the one hand, it would create a means for the needs and rights of England to be defended, which does not exist in the present. But, on the other hand, so long as the nations were still bound together in a common state, with a common economic policy, the idea that a certain proportion of our collective wealth should be redistributed to where it was genuinely most needed could be safeguarded. And that also means directing more resources to the under-funded ‘regions’ of England, particularly in the North and South-West.

One objection that is often made to the idea of a federal UK parliament is that England would be too dominant. Yet, in the same breath almost, defenders of the present asymmetric system say that England’s needs are adequately represented by the UK parliament, as English MPs make up around 85% of the House of Commons; so England is, supposedly, dominant there. I’ve discussed the specious nature of this argument elsewhere. But the whole point of this present proposal, in fact, is to move away from a situation in which either England can dominate the other nations of the UK (which was more the case pre-devolution than post, as discussed above), or in which the central UK government can subordinate any of the nations; which is the case now with the UK government regulating English affairs in the interests of the UK and of its own political survival, rather than seeking the good of England itself.

The above objection to federal government, under my model, could in any case apply only to those areas of policy that remained the responsibility of the federal government; most of the aspects of government, in pretty fundamental areas (e.g. planning, health, education, etc.) would be completely transferred to the national governments, free from any interference from the UK state or from any of the other national governments. In addition, I would propose a system for the decision-making processes of the federal parliament that ensured that fundamental objections to federal policies on the part of any of the nations could not be overridden; and indeed, the way the new parliament worked would be designed to prevent such policies forming the basis of parliamentary bills in the first place.

For a start, it could be a principle enshrined in the constitution that any UK government should contain MPs from each of the UK nations. If it were a government for the nations, it should be a government of the nations. This should not be too complicated a principle to enact, as the new national and federal parliaments would be elected by a proportional system, meaning that coalition government would be required probably in each of the nations as well as in the federal parliament. My idea is that UK bills would be subject to separate scrutiny by each of the national parliaments; rather like a combination of the scrutiny bills presently receive at their second reading together with the principle of referring legislation to a second chamber of parliament: currently, the House of Lords. At this stage, amendments could be suggested, which could be debated and voted on by the full parliament. If the bill in its final form still encountered the objection of the majority of MPs from any country, a final attempt could be made to find common ground, so the bill could be passed with the unanimity of all the nations. If this were still not possible, and the bill enjoyed substantive majority support (e.g. 55% or more of the MPs in each of the other nations), then it could be passed. However, if this substantive cross-nation support did not exist, it would fail.

Such a mechanism would prevent any one nation, e.g. England, from being dominant. The only circumstance in which a bill could be passed against the will of the elected representatives of any country would be if it enjoyed strong support in each of the other countries, and then only if this support added up to the backing of the majority of UK MPs as a whole. For certain critical issues, such as the use of UK troops in war or the ratification of international treaties, majority support from all countries would be required. If bills were consistently driven through without the support of the MPs from any one country (e.g. Scotland), this would engender resentment and would create greater demands for full independence on the part of that nation. Therefore, the system would contain its own natural checks and balances: push things too far, and the nations might seek total separation; but refuse to co-operate at all, and no business would get done – and again, the system would implode and there would be no alternative other than independence for all four (or five) countries.

In addition, it would be virtually impossible for bills to be passed without enjoying at least strong support from English MPs. At the very least, you’d need the MPs from all three (or four) other UK countries to be strongly in favour of a bill plus a large minority of English MPs for it to go through without the full majority support of English MPs. This is simply because of the arithmetic: the English MPs would continue to far outnumber the combined total of Scottish, Welsh and Northern Irish (and Cornish) MPs. It would in theory be possible for such a bill to be passed, though; which is right and proper given that those bills would relate to the whole of the UK and should ultimately be decided on by a majority of UK MPs. However, this would not at all be equivalent to the present situation, where bills that relate to England only can be, and have been, passed through the support of non-English MPs whose constituents are not affected by them. England-only bills, under my system, would be decided on by English MPs only.

There would, however, be the possibility of the UK federal parliament providing some sort of second house-type revising scrutiny of bills from the national parliaments. This would not mean that it would have the power to permanently amend or override provisions in national-parliamentary bills. But this scrutiny would provide an opportunity for policy development in each of the nations to be compared and co-ordinated with that in the other nations, providing opportunities to learn from each other’s experiences and capitalise on best practice; as well as to elaborate the most economically efficient way to deliver the best results, because the more the nations co-operated and worked on combining resources where it was opportune to do so, the more cost-effective could be the delivery.

This aspect of co-ordinated policy development and implementation in devolved areas of government has been profoundly and damagingly lacking under the present devolution settlement. This is not to say that, in my system, there would be, for instance, a single strategy on education or transport across the UK, which the individual nations would have to comply with. But it would be useful and beneficial to the nations themselves to try to agree on a common overall UK strategy and vision for national-level policy areas, so that the measures adopted in each country were tailored to the needs of the whole of the UK as well as to those of each nation; and so that policies in each country could support and complement each other rather than competing against each other, which could be detrimental to the social cohesion and economic competitiveness of the UK as a whole. This is really one of the main arguments in favour of keeping any overall UK state and government structure: that it helps to realise the potential for each country to prosper to a greater extent by working together than by pulling apart. But, for this to work, there has to be a balance between central direction and national autonomy.

Under the present settlement, what we have is either one or the other: the UK state calling all the shots in some areas (including over all policy affecting England), with the devolved nations doing entirely their own thing in their own areas of responsibility. This has meant, among other things, that there has been little or no development of social policy for England as England because the UK government has no mandate as an English government, and does not want to be a government for England, even in areas where effectively that is all it is. So the government has washed its hands of England and has sought to let ‘the market’ determine what is best for England in health, education and planning. This abnegation and delegation of its responsibilities to the market reflects the fact that the government at least has some sort of mandate for England on economic affairs, together with the fact that it has been wedded to the ideology of the free market. Meanwhile, English people understandably feel resentment when they see the Scottish and Welsh governments pursuing the kind of social policies they would like to see implemented in England, based on true democratic mandates received from the people of Scotland and Wales themselves, and on resources made available to them thanks to cost savings and wealth generated (at least before the whole thing imploded in the credit crunch) by the English market model.

The level of co-operation and compromise required under my system to get bills through the UK parliament could well appear elusive, given the adversarial and confrontational politics we are used to. However, as there would be coalition government at both national and federal levels, a willingness to make deals, and forge cross-party and cross-country alliances would just have to become part of the day-to-day fabric of our political life. This has already worked to a considerable degree in the Scottish Parliament and Welsh Assembly. And, in any case, while this could be difficult to get used to, it’s the right thing to do, because it ensures that decisions that are made enjoy the majority support of the people’s elected representatives and that that majority accurately reflects the way the people actually voted. The first-past-the-post (FPTP) system used to choose the present House of Commons is enormously distorting of the popular vote, allowing huge majorities for either Labour or the Conservatives on a minority of votes cast while preventing smaller parties from making the impact that their true level of support deserves.

This raises the question of what system of proportional representation (PR) should be used for the new integrated national and federal parliamentary system I am proposing. I favour multi-member Single Transferrable Vote (STV), which is widely thought to be the best system for achieving the goals both of proportional representation at national level while preserving the link between MPs and their constituencies. This electoral system would also provide a very effective means to counter one of the main objections that could be raised to my proposals: that the fact that you were effectively holding two elections in one (national and federal) would distort the result, causing voters’ choices at national level to be overly influenced by UK-wide issues. If the electoral system used were multi-member STV, however, there would be absolutely no reason why voters could not pick candidates on the basis of parties’ national programmes as well as their UK manifestos, because there would be, say, four or five MPs per seat. So you could express your preferences for the best party(-ies) and candidate(s) for the national and UK parliaments in the ranking you gave to the various candidates you decided to vote for (STV relying on ranking candidates from number one down to the last candidate on the ballot paper, if you so wish).

In any case, the parties already present effectively dual-mandate manifestos at general elections, albeit disingenuous ones: in Scotland, the parties try to make political capital from referring to what they have achieved or stood up for at Holyrood – which has nothing to do with Westminster elections; and in England, they set out effectively England-only policies in all of the devolved areas of government while misleadingly creating the impression that those policies apply UK-wide. Under my system, there would be no getting away with attempting to make electoral gain from misrepresenting what was really on offer for voters in this way: the parties in each country would have to set out the parts of their agenda that were UK-wide and those that were nation-specific; and, as I’ve said, the voters could effectively vote for two or more parties (or two or more candidates from a single party) based on their national and / or federal policies and credentials. It is possible that, under certain circumstances, voters’ choices would be influenced by UK-wide concerns more than by national ones, such as in the present economic crisis, where Scottish people might be more inclined to vote Labour rather than the SNP. But then, it is equally the case that voters are influenced in this way even in the presently separate Holyrood and Westminster elections; and it can also work the other way round: a combined national and federal election under multi-member STV would almost certainly produce much more representation for the SNP in the UK parliament than under the present system.

Another objection that could be raised to my proposals is that the national parliaments elected in this way would not be genuine, autonomous national parliaments but would be subordinate and beholden to the UK parliament and party apparatuses. This risk is one of the main reasons why it would be important to protect the national parliaments’ autonomy through a written constitution. Certain types of attempted interference in, or centralised direction of, national policy and parliamentary tactics by the UK government could become an offence against the constitution. And, as I’ve said, the national parliaments would have real and permanent powers: greater and better protected autonomy than at present. In addition, the use of multi-member STV would mean that different coalition groupings would be required in the national parliaments from those in the federal parliament: if there were a Tory / Lib Dem coalition at UK level, there might be an SNP / Green Party coalition in Scotland (the Greens winning more MPs because of the fairer voting system) and a Labour / Plaid or Labour / Lib Dem coalition in Wales. Therefore, it would be impossible for the governing coalition of the UK parliament to dictate the shape of the governing coalitions in the national parliaments and impose central control over them.

Another advantage of this integrated system is that it would avoid creating an unnecessary and expensive extra tier of government, with a whole new set of MPs, and a whole new English parliament that would be almost as big as the present UK parliament on its own. In fact, we’d get a reduction in duplication, as there would no longer be both MSPs and MPs for Scotland, and AMs and MPs for Wales. There is a valid question, however, about whether the relatively small number of Scottish and Welsh MPs would be sufficient to fulfil all of the functions of a national parliament in those countries. In elections in Scotland and Wales, it might be necessary to elect, say, five candidates per multi-member constituency compared with four per seat in England. Only four elected candidates would then serve as UK MPs; and the additional candidate would be elected to the national parliament only. Voters could opt to indicate whether they wanted the candidates they were choosing to go to the national or federal parliament. The national-only MP would be the successful candidate with the largest number of ticks in the ‘national’ check box. An incentive for candidates to put themselves forward as national-only MPs would be that they would be more likely to be preferred for ministerial positions, as they’d be exclusively devoted to the national parliament. This would also provide a boost to their salaries, which, as MPs for the national parliaments only, would be lower than that of dual-purpose MPs. (Let’s not pretend that’s not an issue!)

What of the questions of nationality and statehood? Well, as I set out in the first half of this post, the new federal state would no longer be Britain or Great Britain in any shape or form: having ‘Great Britain’ in its full name, as it does now; referred to in official statements as ‘Britain’, as it is now, even though a state or nation of Britain does not exist; or ‘Britain’ in the more profound sense as the national persona of the state that was previously the vehicle of English power and is now a means above all to suppress the aspirations to self-government of the English nation. So it would, as stated above, be ‘the United Kingdom of England, Scotland, Wales and Northern Ireland’ (and potentially with Cornwall listed as the fifth nation of the federal kingdom). Formally, the adjectival form of the state’s name would be ‘UK’ not ‘British’, as in ‘the UK government’ or ‘UK citizens’. Doubtless, many people would continue, at least for a time, to use the word ‘British’ informally in this sense, particularly as the geographical extent of the state would remain largely that of Britain, with the addition of Northern Ireland. But the point is that there would be a move away from the tendency to imagine or create a ‘British nation’ superseding and suppressing the primary nationalities of England, Scotland, Wales, Northern Ireland and Cornwall. So in England, to describe their nationality, people would be encouraged to think of and refer to themselves as English in the first instance – unless, of course, they are genuinely something else such as Scottish or from a different state altogether. If people wish to continue to think of themselves as British first and foremost, they would be fully entitled to do so. But the way the language of official statements and the media would change to reflect the altered political realities (i.e. thriving English-national government and civic institutions) would mean that ‘British’ would increasingly be limited to meaning either ‘UK’ in the informal sense (i.e. the UK state rather than a nation) or the merely geographical meaning. People might find that they were asked to clarify ‘you mean English’, or that they were assumed to mean English based on things such as they way they spoke.

So we’d be English nationals but UK citizens. Of course, all of the above paragraph is predicated on the assumptions that the UK remained a kingdom (i.e. a monarchy), and that present-day constituent parts of the UK such as Scotland and Northern Ireland chose to sign up to and stay within such a new federal state. But, based on the principles outlined above, it would be entirely a matter for the people of the UK as a whole – who would be sovereign – to decide whether they wanted a monarch or an elected president as head of state. And, similarly, it would be up to the people of each UK nation to decide whether to remain part of the new state. At least, putting the present creeping and asymmetri

 New York Times: December 1, 2008

MICHAEL M. GRYNBAUM | nytimes.com | December 1, 2008

The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.

But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.

The sharp declines on Wall Street — the Dow Jones industrial average dropped 679.95 points or 7.7 percent — appeared more about profit-taking than the economy. Investors have long assumed that the country was in recession, and analysts said that after last week’s gains, including the biggest five-day rally in decades, a sell-off was to be expected.

Still, Monday’s losses were striking, and they reminded investors that nothing can be predicted in today’s environment. The major indexes fell by hundreds of points from the start, led by huge declines in shares of financial firms. Citigroup, Merrill Lynch and Morgan Stanley shares all dropped nearly 20 percent. Most other major Wall Street banks were also in double-digit percentage declines.

“Financials led the rally on the way up, and they’re leading on the way down,” said Anthony Conroy, head equity trader at BNY ConvergEx Group.

The broader Standard & Poor’s 500-stock index was down 8.9 percent, and the Nasdaq fell 8.95 percent.

The S.&P. and the Dow are back to their levels of last Monday, erasing nearly four days of gains.

Crude oil futures for January delivery settled Monday at $49.34 barrel, down $5.09. in New York trading.

Some hedge fund and mutual fund managers, anticipating big redemption requests from clients, may have seen last week’s rally as a good point to unload assets at a decent price. Other investors may have been spooked by a spate of poor economic news, including the worst reading on the health of the manufacturing industry since 1982.

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

It is also somewhat remarkable that on one of the worst days in the history of the stock market, there was no panic to be seen on Wall Street. In six and a half hours, the S.&P. declined more than 8 percent — the type of collapse that historically has taken years to occur. But in the new Wall Street, the reaction was quiet.

“Investors have slowly become accustomed to it, after seeing it day after day for month after month,” said Todd Salamone, an analyst at Schaeffer’s Investment Research. “A year ago, an 8 percent move would have raised a lot more eyebrows than it does today.”

The difference, of course, is that the country entered a recession exactly one year ago, at least according to the Business Cycle Dating Committee, which is made up of seven prominent economists, most from the academic sector. The group made their official announcement on Monday that the economy entered a recession in December 2007.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

David Jolly contributed reporting.

Hi all-

Here is a post concerning tax tips for the end of the year.  It is a good idea to evaluate what has happened during the current year to see if there might be some advantage to repositioning some assets.  In years like this one, some of your assets held in mutual funds may see some significant capital gains due to moves made early in the year–moves designed to avoid excesive losses due to market fluctuation, economic changes, etc.  It may seem weird, but even though your account values have declined, you may still be on the hook for short and long term capital gains due to these moves.   Read on and shoot me any questions.  Cheers!

The first step in your year-end investment planning process should be a review of your overall portfolio. That review can tell you whether you need to rebalance. If one type of investment has done well–for example, large-cap stocks–it might now represent a greater percentage of your portfolio than you originally intended. To rebalance, you would sell some of that asset class and use that money to buy other types of investments to bring your overall allocation back to an appropriate balance. Your overall review should also help you decide whether that rebalancing should be done before or after December 31 for tax reasons.

Also, make sure your asset allocation is still appropriate for your time horizon and goals. You might consider being a bit more aggressive if you’re not meeting your financial targets, or more conservative if you’re getting closer to retirement. If you want greater diversification, you might consider adding an asset class that tends to react to market conditions differently than your existing investments do. Or you might look into an investment that you have avoided in the past because of its high valuation if it’s now selling at a more attractive price. Diversification and asset allocation don’t guarantee a profit or insure against a possible loss, of course, but they’re worth reviewing at least once a year.

Your holding period can also affect the treatment of qualified stock dividends, which are taxed at the more favorable long-term capital gains rates if you have held the stock at least 61 days. (Those days must occur within the 121-day period that starts 60 days before the stock’s ex-dividend date; preferred stock must be held for 91 days within a 181-day window.) The lower rate also depends on when and whether your shares were hedged or optioned during those 61 days. Check with your tax professional to make sure you don’t inadvertently incur unnecessary taxes by selling or buying at the wrong time.

If you have realized capital gains from selling securities at a profit (congratulations!) and you have no tax losses carried forward from previous years, you can sell losing positions to avoid being taxed on some or all of those gains. Any losses over and above the amount of your gains can be used to offset up to $3,000 of ordinary income ($1,500 for a married person filing separately) or carried forward to reduce your taxes in future years. Selling losing positions for the tax benefit they will provide next April is a common financial practice known as “harvesting your losses.”

If you’re selling to harvest losses in a stock or mutual fund and intend to repurchase the same security, make sure you wait at least 31 days before buying it again. Otherwise, the trade is considered a “wash sale,” and the tax loss will be disallowed. The wash sale rule also applies if you buy an option on the stock, sell it short, or buy it through your spouse within 30 days before or after the sale.

If you have unrealized losses that you want to capture but still believe in a specific investment, there are a couple of strategies you might think about. If you want to sell but don’t want to be out of the market for even a short period, you could sell your position at a loss, then buy a similar exchange-traded fund (ETF) that invests in the same asset class or industry. Or you could double your holdings, then sell your original shares at a loss after 31 days. You’d end up with the same position, but would have captured the tax loss.

If you’re buying a mutual fund in a taxable account, find out when it will distribute any dividends or capital gains. Consider delaying your purchase until after that date, which often is near year-end. If you buy just before the distribution, you’ll owe taxes this year on that money, even if your own shares haven’t appreciated. And if you plan to sell a fund anyway, you may minimize taxes by selling before the distribution date.

If you own a stock, fund, or ETF and decide to unload some shares, you may be able to maximize your tax advantage. For a mutual fund, the most common way to calculate cost basis is to use the average cost per share. However, you can also request that specific shares be sold–for example, those bought at a certain price. Which shares you choose depends on whether you want to book capital losses to offset gains, or keep gains to a minimum to reduce the tax bite. (This only applies to shares held in a taxable account.) Be aware that you must use the same method when you sell the rest of those shares.

I think the culprits should be caught and prosecuted in our court of law. The due process of our legal system must take its own course. No mercy should be accorded to them especially who had committed these offences several times. They operated under different names and the schemes were created under various labels. Swiss Cash or Hibah Scheme are few examples which being part of the long lists. Although, the Government Agencies are trying very hard to educate the public and many laws were enacted specifically to curb these illegal activities but the problems are still rampant.

On the other hand, it does not mean when invest in a legal operation which adhere with the laws such as Unit Trusts, Bonds, Money Market, Index Markets, Comodities, Forex Market and even Fixed Deposits, our money are safe. Even your money in the savings or current accounts is not safe anymore. This is what Americans are facing now, even if their money protected by the Insurance Companies but bear in mind, it is not for the entire amount. I was once told, that even our own Bank Negara has lost millions of taxpayers money due to the false prediction by its top officers in Currency Market but of course nobody can take action against the Government. Subsequently that same officer has been promoted and now he is advising the Prime Minister on how to manage the economy. Sometimes, even the culprit can be rewarded, but of course I cannot corroborate this statement.

It might be true but in other words, when you invest either in legal or illegal means, your money is not guaranteed to be there tomorrow. Nonetheless, your agents or financial planner will try to paint different picture such as “the financial market is down or the stock shares are generally cheap, so it’s good time to buy or if you invest more, they will apply dollar cost averaging” and other excuses they might apply without saying or stating that they have advised wrongly or the Fund Managers are not performing. Perhaps, they will blame the economics scenarios because it is now moving towards recession and as a result their Mutual Fund are badly affected. These are the sort of advice that you would get after they already charged you the administrative charges while they laugh all the way to the Banks. So, for those who do not understand the economy in its totality and its so called cycles, will take their agents’ words at their face values. These are the same peoples who do not even understand the actual meaning of some economic jargons. What a pity!! and I am not trying to belittle these peoples who are active in this industry. The words fluctuation, volatility, bearish become handy to them nowadays.

For a long time the oil companies, insurance companies, and pharmaceutical companies have gouged the public. Will there ever be changes that will benefit the good of the public instead of these companies?

Also, I read somewhere that there will be fewer doctors. The reason is due to problems dealing with the insurance companies.

Hi Dera,

This is a great question, one we’d all be interested in knowing.  So lets look at a couple different charts for the US, and see what will be going on in the world of doctors and health care as time progresses.

Let me explain the 8th house thing spilling into the 9th (8=cults, 9=foreigners), that would be the Pilgrims, the Quakers, the Shakers and all the small radical religious groups that “came over,” (actually many were kicked out of England because of their beliefs) during that time. It was these people who founded this nation, and that energy which is all very 8th house is the bedrock of our nation, sort of like our subconscious.

However, just because we declared our Independence we still were not truly legal until the US Constitution started, and was signed. Often the later is used as the true north of the US because it is comprable to a marriage date as opposed to when you first started dating. It’s the completion of what was started on July 4, 1776. That being said, the first date with your spouse is also very important because it sets the tone of a relationship.

Our Declaration, definitely set the tone for our nation, which is why we are a haven for radical religious (cult-like or lets come on out and just say it cults). 

Truly the only difference between a cult and an organized religion like Catholicism, Islam, Buddhism, Hinduism or Judaism is the length of time and amount of people that identify themselves as part of that religion, so I don’t mean to demean the word “cult,” all religions start out as cults. Judaism, Buddhism, Christianity, Islam, the Mormons started out this way, the Shakers, the Quakers, Scientology is now becoming more acceptable and less seen as a cult. Basically, once a religion goes from a small group to an institution it looses its cult status.

But, anyway, I digress. I want to also say that I just looked at all 3 charts and compared them to 9/11 and found the most accurate by far to be the US Constitution signing chart. Someone had posted much earlier (sometime in September or October) that the US Declaration chart had been used by Liz Greene and somehow she had found a way to make it dovetail with the 9/11 attacks. I would very much doubt this to be true, and this reader was probably confused. Liz Greene more than likely used the Constitution Signing chart because if you look at it in terms of transits, it should have been a very good period with Jupiter returning and hitting this charts stellium in Cancer. And transiting Pluto is not making any close opposing aspects. Perhaps she used a solar arc chart or a progressed chart based on it but it couldn’t have been that actual chart with the transits.

Anyway in the US Constitution Chart, transiting Pluto had just gone over the US Cons. Sign. chart’s Moon and squared Mercury ruler of the 8th house, both death aspects and transiting Neptune was in the 12th house of loss making an applying a conjunction to the ascendant, again major loss. The 12th and 8th house are both death houses, and both Neptune and Pluto are key to major loss, transformation, literal and figurative death.  

So lets focus on the US Constitution Chart as it seems most accurate in terms of transits. 

1st your question of health-care:

In the spring of 2009 we’ll see the first in a series of bills aimed at health-care reform as transiting Uranus in Pisces goes through the first house and opposes the US cons. sign. chart’s Sun. The way we see this issue has been changing over the past seven or so years, our minds began changing then when Uranus opposed Mercury in the 7th. And then as bankruptcy laws changed and increases in health-care costs went up, Uranus opposed Venus in the 7th, again highlighting the financial need for laws to change how we deal with our health-care system, pointing out the lack of human kindness in it. And finally when it hits the Sun in spring of 09, the vitality of this issue, the soul of the problem will be tackled in a bill. This aspect will go back and forth for a while so it will be the first in a series of several major changes to the system we now have in place.

It probably won’t be until May of 2010 until these changes are really put into action. This will be when transiting Uranus in Pisces will be trining the US cons. sign’s Uranus in the 6th house of health and the health-care system. This overhaul will be immediate, and a bit of a shock to the system, but will be a great improvement especially for women and children, and those who don’t have steady employment, but work more piece meal.

In terms of the Pharmaceutical company’s getting there’s — it’s coming. In February of 2012 when Neptune (ruler of their industry) enters Pisces they will start to see their days ripping off Americans coming to an end. This same thing can be said of the oil companies who are also ruled by Neptune. Companies who lower their prices and make sacrifices will stay in business, and do very well. Volume will be the key to this business and be very profitable from that angle. Those that want to continue making 150,000,000% profit off each pill will go under. The oil industry will have to basically do what its doing now, keep cheap in order to survive. Even then as Neptune goes into Pisces alternative types of fuel will become the mainstay, most likely hydrogen based, either water itself or hydrogen engines this will happen in 2012.

Of course all of these changes won’t happen overnight, little by little we’ll see things headed down this path, and this trend will continue until about 2025. So hopefully by the end of it we will be a completely green world. Let’s cross our fingers that is one potential outcome.

My guess is that at that time (2025 when Uranus enters Aries) the pharmaceutical industry will have a revolution of a different sort, and will be more nano-technology driven, with tiny micro surgical techniques in the form of pills that will release tiny robots that will cut out ulcers or cancers or whatever, very early on, staving off the need for more traditional medicine in a lot of cases.

Hi Denise, I have a question in relation to the property market in Australia. Will property crash in Australia? Will it drop more than 30%?

Thanking you in advance.

Hi Truthseeker,

Real Estate will crash or bottom out in 2011, truly bottom out. Meaning the value of houses will go under. I’m not familiar enough with the real estate market down there but if you feel that the houses are really over valued, this will be when they are not just “corrected” but when they are actually worth less then what logic dictates that they should be. People will not want to buy real estate during this period. They will be afraid of it. This is when you should buy real estate. You can make a fortune at that time until about 2013. Then you still can make money but not as much. It will hit a peak again starting around 2018 and really 2019, 2020, people will be going crazy again like they just did for it. so there you go. Hope that helps.

Any thoughts on the two unresolved Senate races in Minnesota and Georgia? I think you predicted the Senate would get close to 60 seats a few weeks back. I wonder what the cards say closer to the evantual realities. Thanks!

Hi Northernlights,

I still have the feeling that the Dems are just barely going to crack that 60 margin. I lost track of where it was now. It’s hard to believe its still going on! And no one really cares! That’s the amazing thing, it shows how good things are on the political front at least.

Hi Sally Ann,

The tarot says: Yes.

It seems there has been some lying going on. Some illusion, delusion, some mismanagement and whoever was in charge has just sort of walked away from the problem leaving the company and investors in the lurch, while taking what they could from the situation. Not good. Hope this turns out to be a false read on the situation, here. But that’s what the cards are saying. Sometimes though the cards aren’t very good with timing. Astrology is much better for that.

I want to clarify a basic note here. I wish I could have seen the little bump up last week in the stock market, but as I said before there is too much novelty here to read the market for these. There is too much irrational, emotional stuff clouding the zeitgeist of the market. It’s almost as if everyone is on amphetamines, stuffed into a theater in the dark, and someone shouts “Fire!” There’s a stampede before anyone bothers to look around, and see if there actually is one or if its just a nut yelling it.

And on the other end of that, are the financial “experts” who are kissing the “ouchy’s” of investors and lulling them back into the market with false expectations that everything is OK when it’s not which is why we saw this crazy drop when the news came out that we are in a recession. Duh. Really? It’s ridiculous. And I’m sure in another month it will be news that we’re in a Depression that will cause the market to plummet. But look around, it doesn’t take a genius to figure this out.

The arguement against why this isn’t a Depression is a very flimsy one right now. It is simply that unemployment isn’t high enough. But back when George W. took office his administration changed the laws so that as soon as your 6 months of unemployment ran out you were taken out of the unemployment statistics. So how many people have been unemployed for years? We don’t know. They aren’t being counted. This is a hidden problem, another shadow that we’ll see come out when Pluto pops over the ascendant of the Dow.

Here’s the other thing, in the Decleration chart Pluto is about to shred it. I’m glad it’s not our real chart, (and if it is well, we’ll know it for sure soon) but rather our more unconscious one, or we’d be in even bigger trouble then we already are. But it’s still posed to do some major damage to our US Cons. Sign chart this will happen a little later though in March of 2009, and will again most likely hit speculators and the stock market.

Ironically, this Monday Pluto hit 0 degrees again as it had the last time we had the major drop in November, and that is directly on the US Const. Sign charts south node in the 5th — meaning, what we have reaped in the market we are going to be sowing, and it’s going to be powerful, and painful. I think the Dow’s big Pluto over the ascendant happening at the end of December into January will be more about the horrible corruption, lies and sociopathic behavior of CEOs that will come out making investors think twice about trusting their money to these people, many of whom are really criminals in business suits. This is the shore I think the Tsunami is headed in terms of the Dow.

OK, More questions tomorrow. These will be covered over the next couple of days:

Be well. Best wishes to all. Pray for our planet and each other. We need it now!

Hi Denise,

Thanks.

Dear Denise,

Thank you for your analysis and insights. In these troubled times on a lot of fronts ( financial, physical and even spiritual ) you provide clarity and hope.

I have two questions.

To readers of this blog, please do google “urban survival” and make some basic preparations.

Peace

Hi : Very interesting

On the prediction that India will hit Pak sites, I wonder whether this could happen thru US, becos it seems more likely that Obama will use his power to persuade Pak to let US take on the training camps etc in Pak. Don’t see India doing this unless we continue to get hit like 26/11. May be you could run a chart for US vis-a-vis Pak and see how it looks…

I woke up with the feeling that the credit crisis wasnt the cause of the market crash at the end of Dec/ Jan

Any thoughts on the two unresolved Senate races in Minnesota and Georgia? I think you predicted the Senate would get close to 60 seats a few weeks back. I wonder what the cards say closer to the evantual realities. Thanks!

Another question. Some of Obama’s supporters are up in arms about the people he is choosing to work in his Administration. They feel that they have been betrayed. Will the Disgruntled Dems. get over it in time or will they hold a grudge for the next 4 years?

Will Arnold Schwartzenegger be joining Obama’s cabniet? I thought when Obama said a top Republican would be on his cabniet, it would be Arnie. Now he’s picked Gates to stay on as Sec. of Defense. Since some very conservative Christians are in top level positions in the military, this seems to be a wise move aimed at keeping them calm. What’s up for the Governator after his term runs out?

Thanks in advance!

PS

I sure hope he will be. After four years of having to look at Bush and Cheney, this lady would appreciate someone up there easier on the eyes. LOL

To simplify this groups argument a little, we can say that efficient market theorist  believe markets are efficient and in constant equilibrium, therefore priced correctly and future movements are always random.  Since information is readily available to everyone there is no advantage had by anyone, therefore no way of “beating” the market.  For this reason they insist that investing in index mutual funds is the way to maximize returns by minimizing risk.

Interestingly, Warren Buffett pointed out, “observing correctly that the market was frequently efficient, they [the efficient marketers] went on the conclude incorrectly that it was always efficient.”  And George Soros commented that he had found the workings of the efficient market theorist, with their complex equations, to be more like the medieval scholastics calculating the number of angels able to stand on the head of a pin than like those of the eighteenth-century rationalists.

Why post on this?  Well, the efficient marketers have a hard time explaining asset bubbles and extreme bear markets like we are in now.  If all the information is out there to correctly price an asset, then why do people buy expensive assets one year and then sell them another when they are cheap?  And they have a hard time explaining people like Warren Buffett and George Soros who have made billions by beating the market, something that the efficient marketers insist is impossible in the long run.  Also the 1980s designers of derivatives were efficient marketers and designed a trading strategy called portfolio insurance that was suppose to be a fail-safe investment strategy that brought on the 1987 crash in the stock market.  And of course the failed derivatives of mortgage backed securities were designed by these same folks and we are now living through the nightmare of that failure.

Now, we are starting to see the crack in their indexed funds recomendation.  So if you are still on the indexed mutual funds route, you might want to consider the history associated with their main proponents or more truthfully the failures associated with index mutual fund proponents!  Beware of the leaders you are following!

Just food for thought! 

Assalamualaikum. Just to share with all an article that I’ve read a month ago. packed with facts..

The Financial Crisis, From A-Z

Tunku Varadarajan,

Is Adam Smith under the TARP?

The editors at Forbes.com–not, on the whole, a pedantic bunch–made a decision a little while back to swap the phrase “Wall Street Crisis” for another, spookier one: “Global Financial Crisis.” While this taxonomical adjustment is important–reflecting, as it does, the borderless nature of the financial contagion–the underlying cast of causes and characters remains unchanged. Here, I offer an alphabetic sampling, by no means exhaustive. Apologies to anyone who feels unfairly left out.

A is for America, the big swinging Richard whose dysfunction started it all. Think also of accountability (lack of); AIG(which has cost the U.S. $140 billion, and counting–who knew insurance could be so exciting!); assets (what assets?), and Adam Smith, who’s slapping us about the face–with his invisible hand.

B boasts Ben Bernanke, known, lovingly, as “Helicopter Ben,” who’s clearly no Greenspan, um … Volcker, um … Morgan. And isn’t it swell that he’s an expert on the Great Depression and its causes? Bear Sterns was the big, fat canary in the coal-mine, whose death-trill was the first note of a symphony known as the bailout. B is also for balance sheet and belt-tightening.

C is for Credit Default Swaps, defined for me by a Wall Street watcher as: Risk whatever you want, and we insure it; risk too much, taxpayers insure it. And there are those CDOs (pronounced “seedy owes”) that were all the rage at Citigroup, one of many tarnished poster children of capitalism, a philosophy that’s taken a hefty write-down. (Congress certainly doesn’t believe in it.) And then there’s Christopher Cox, whose finger was never going to be big enough for the dike, poor bloke.

E is for excess (of, for example, executive pay and easy money).

F has a rich hand: Fannie & Freddie (that avuncular couple down the street with their children’s bodies in the basement), and Fuld (Richard, Last of the Lehmans). Let’s not forget flippers, the Fed, and frozen credit; or FDR and fear: The only thing we have to fear is fear itself … Yikes, isn’t that exactly what’s happening? (F is also for Fair Value Accounting, a genie that all the banks once clamored for, but now wish they could stuff back in the bottle.)

G is for Greenspan, godfather of this crisis, whose legacy sleeps with the fishes; and Goldman Sachs, coming to an ATM near you. G is also for greed, simple and unadorned.

H is for home equity, a quaint notion from the 1990s (cf. housing bubble), and haircut (a cold-blooded euphemism for household calamity). H is also for hearings (expect a lot of those).

I is for Iceland, on which Britain exacted its revenge, some 1,300 years after the Viking raids; and inflation, the next crisis … or will that be deflation? Of course, there’s your IRA … but let’s change the subject. I is also for innovation, the life-blood of the American economic miracle. Will it survive the coming age of regulatory overreach?

J is for Jamie Dimon, jolly good fellow, whose JP Morgan held back–and missed the mess.

K is for Kashkari (Neel), the bald young hero brought in by Paulson to fish us out of the deep end; oh … and it’s also for Keynes (John Maynard), who is enjoying a comeback to match anything that the Rolling Stones could ever pull off. (Watch, as Washington’s fever swamps are drained of neo-cons and then restocked with neo-Keynsians.)

L is for leverage (a means of maximizing your losses), liar loans, Lehman (pronounced “lemon”)–and the losses/liabilities that unite them all. L is also for liquidity puts (don’t ask me what that means, Robert Rubin didn’t know, either); and layoffs.

M is for where it all started: the mortgage (which, aptly, means death-pledge). Like the dog, it comes in a variety of breeds, “sub-prime” being a cross between a pit bull and a chihuahua. And let’s not forget marking-to-market, a hyper-purist tool that contributed to the downward spiral; moral hazard (moral what?); Main Street (the rest of us dopes); and, my favorite, macroprudence (a sadly neglected word–and concept, come to that).

N is the no-short rule. Why didn’t someone tell the SEC there’s no shortcut?

O is for Obama, the most important political outcome of the Global Financial Crisis. The question is, will Obamanomics only make things worse?

P is for Paulson: Is he Moses, or Don Quixote? At least he isn’t John Snow. And for that small mercy we give thanks.

Q is for quants, who forgot that, every so often, past performance is no indicator of anything at all.

R is for Roubini (Nouriel), the professor at NYU’s Stern Business School and Forbes.com columnist, who foresaw it all. Not for nothing is he known as Doctor Doom. In person, he’s a rather cheerful chap. And why shouldn’t he be? There’s no tonic more invigorating than one’s being right.

S is for securitization, the process by which one passes off cat food as caviar. This is how mortgage debt was repackaged and sold. Be suspicious–very suspicious–of that stuff on the plate before you.

T is for TARP, which is what all of Wall Street is hiding under. This writer finds the acronym (for Troubled Assets Relief Program) reassuring: it’s proof that someone in Treasury has a sense of fun, even when dealing with toxic securities.

U is for unemployment. And also for underwater (almost every hedge fund, mutual fund and 401(k)).

V is for a new vocabulary, which we’ve had to acquire in a blazing hurry, to fathom our way through this failure. Try these for size: CRA, Alt-A, ABCP, SPV. And that’s just the ones in English. (What’s Icelandic for CDO?)

W is for Wall Street, which will never be the same again–until the next boom, when idiocy will once more stake its claim to excess.

X is for xenophobia. Let’s blame the Chinese … Wait, can we really do that?

Y is for yelling “fire!” in a crowded theater, what Jim Cramer was accused of doing when he went on NBC’s Today Show and told people to pull their money from the stock market. (His response: There is a fire!)

Z is for ZWD, the symbol for the Zimbabwe dollar. If you thought the greenback had problems … try getting a mortgage in Harare.

p/s-

Tunku Varadarajan, a professor at the Stern Business School at NYU and research fellow at Stanford’s Hoover Institution, is Opinions editor at Forbes.com, where he writes a weekly column. (For this week’s column he’d like to offer a grateful tip of the hat to the following: Sudhakar Balachandran, Dan Bigman, Jerry Bowyer, Reuven Brenner, Philip Delves Broughton, Thomas Cooley, Charles Dubow, Andy Kessler, Annabel Levy, David Levy, Paul Maidment, Partha Mohanram, Thomas Peacock, Roy Smith, Marti Subrahmanyam, Hugh H. Shull Jr., Hugh H. Shull III and Vijay Vaitheeswaran.)

id="blog_description">Simple Living = Frugality = Peace of Mind: Personal Finance and Stress Control

At Living Almost Large, the 154th Festival of Frugality has gone live. Funny’s post on whether (or not) to plunge into the Black Friday frenzy appears among a number of observations on frantic holiday sales: Silicon Valley Blogger thinks they’re not worth the hassle and risk; Summer at Wired for Noise subscribes to the Buy Nothing Day approach; at Greener Pastures Lisa Spinelli offers ten sane and fresh attitudes toward Christmas; and Ask Mr. Credit Card has a system, which he calls “Extreme Christmas Shopping.” On other fronts, Green Panda continues the project to rise to Ramit’s Save $1,000 in 30 days challenge. Student Scrooge has kicked off an entertaining new feature, “Frugal Court,” with the Netflix case. And here’s an interesting report at the Happy Rock, whose proprietor switched to cash for all spending and is comparing the results with her prior credit-card expenses.

NBFCs are an integral part of economy that provides easier access to credit and hence help in attaining aggressive growth. But that also makes them vulnerable as any slowdown in the economy hits them hard first. Let us try to analyse the business sense of these NBFCs and arrive at the scenario of Indian NBFCs.

In this post, I have tried to make an analysis of Indian NBFCs yesterday, today and tomorrow.

NBFC - a brief introduction

NBFC stands for Non Banking Financial Company. These are money lending institutions that are much more agile than traditional banks. They are agile in the sense that the credit line extended is much deeper and aggressive than normal banks. Other advantages of NBFCs are that they are extremely quick at processing and accomodate riskier profiles in their portfolio. And since they take more risks, they get their cushion in the form of higher interest rates. Yes, they charge higher interest rates than what normally banks charge. This also has to be viewed in the context that the acquisition cost of funds for NBFCs come at a higher cost than banks, the details of which we will explore further below.

Lending and Credit

Before delving deep into the subject of NBFCs, it is important to understand how credit extension and growth of a country are interlinked. Most of the business operations are financed by lending institutions. Banks form a major chunk of providing funds to these companies. This is evident from the fact that more than 50% of credit portfolio of State Bank of India is through corporate lending. These funds are required to meet varied requirements like day-to-day operations, capital expansion, business consolidation, etc. For most of the small and medium sized businesses, access to aggressive credit from banks is unthinkable. These businesses usually turn to such non-banking finance companies for gaining access to credit. More credits to businesses means more growth when things go fine. Thus along with growth numbers of these companies, the GDP index also climbs up. But if the going gets tough, then defaults go on the rise. This is when the risks taken by these NBFCs start showing its naked face. As the defaults rise, to stay on the NBFCs naturally would tighten the valves and rework their risk model to flush out riskier profiles. Access to credits become tougher and businesses shutdown leading to job cuts. Hence the production comes down and consequently the GDP numbers take a hit. It is not as straight-forward as explained here but I have tried to provide a simple explanation of what happens in large scale.

List of popular NBFCs in India

NBFCs Yesterday

For the past five years, the indian economy was promising on all aspects and with money from foreign investors pouring in, large pool of investments were created through mutual funds. These mutual funds have been the primary source of funds for NBFCs. As there was excessive inflow of money, borrowing from mutual funds was cheaper then. A bunch of above mentioned NBFCs mushroomed during this period to ride on such a promising opportunity. With indian banks remaining as conservative as ever (partly due to government regulations), and natural greed of mutual funds, NBFCs were nothing less than celebrating. Many other small NBFCs have also been started within a short span of five years. An Increasing number of microfinance institutions (MFIs) were also seeking non-banking finance company (NBFC) status from RBI to get wide access to funding, including bank finance. As the weather was fine and the government was poised to attain aggressive GDP growth, nothing could have stopped these NBFCs from posting tremendous growth. NBFCs have been accounting for as much as 30% of the retail lending sector where the only other aggressive lender among banks is ICICI Bank. Well, the world was about to receive one of the greatest shocks of this century that would threaten the world economy to bring it to a grinding halt.

NBFCs today

As of the time I am writing this article, most of the NBFCs that have mushroomed during the last five years have either shutdown their shops or have stopped providing credit for the time being. Yes, they have come to a stand-still. Why did this happen all of a sudden? The reason is very simple. All these NBFCs have been relying on Mutual Funds to provide them with access to capital. But as the global economy was facing turmoil, mutual funds were profusely bleeding under redemption pressure. With capital drying up and banks refusing to lend any money at all to these institutions, NBFCs could no longer stay afloat. Atleast, these institutions no longer provide any unsecured loans like personal loans and they dont have the money to provide home loans.

NBFCs tomorrow

In the long term, as said by CRISIL, these institutions would have to change their business model with strong focus on product innovation and a move towards the originate-and-sell model.

Other interesting articles that covers the state of affairs of NBFCs in India

Given the current controversy surrounding former EFCC boss Nuhu Ribadu, I thought it worthwhile to dig into the archives and let readers review this article published a year ago by Tell Magazine on former Delta State Governor James Ibori who was accused of scandalous corruption, and was being prosecuted by Ribadu until Ribadu’s removal from the EFCC stopped Ibori’s prosecution. Today, Ibori is a free man, his prosecution has stalled and he is still enjoying his illegally gotten wealth and access to Nigeria’s political elite. This is the story of how Ibori stole from the Nigerian people.

Sir,

I write to solicit your assistance in a project of mutual benefit and regret any inconvenience contacting you this way with my proposal. I am Donald Nelson, former head of Accounts Department at a diamond mining company in Sierra Leone.

I am in urgent need of a foreign associate to work with to facilitate the transfer of money which I intend to invest into profitable areas of business in your country. The funds currently secured with a security company is legitimate money rightfully belonging to me and earned from private diamond business deals during my time as a top official at the diamond mining company. Due to political problems and unfavourable economic environment in Africa, it is not quite safe investing ones financial future in this part of the world. I am currently living in Banjul capital city of The Gambia and in collaboration with some top officials of Bank of Gambia have concluded arrangements for confidential transfer of the money.

Please consider this proposal seriously and handle with utmost confidentiality the information I have provided you with here. If you are in a position to assist, then get back to me immediately, so I can give you more details.

Thank you in anticipation.

Donald Nelson.

————=_491FDE80.006BD470–

Scam of the day

For go to the Committee on Oversight and Government Reform’s home page, please Click here

For Download this Testimony from the Committe’s home page, please Click here

I have been reading a lot of global writers & commentators over the last 1 year. A common theme among investors/traders is to play the ETF market in the US. Exchange traded funds (ETF) are akin to open ended mutual funds - the similarities end there.

An ETF has a particular strategy, for ex. an INDEX ETF would replicate the Index. ETFs allow an investor to diversify, capitalize on arbitrage opportunities - without increasing the transaction costs. ETFs are traded on exchanges and as with any other stock, you can have long, short positions on them.

I had already invested in GOLDSHARE which is essentially a gold ETF, run by UTI. On a quick check, it seems  we don’t really have ETF’s beyond the simple Index ETF s (Nifty, Jr Nifty & Bank) options available.

It would have been good to have sector ETFs.  People would have made a killing shorting a real-estate ETF. And in such volatile markets, if one is not an active trader an ultra short (levered ETF) would have given us an option of playing the volatility without taking the risk of naked positions.

So, many more investment opportunities would have been possible.

Years ago, at a speech at Harvard, the famous, or infamous, George Soros said that the trouble with mutual funds is that they are rewarded by the amount of money they collect, not the amount of money they earn. Seeing the remark as an astute summary of a range of flaws and weaknesses of funds and the industry that provided them, I used Soros” remark as an epithet for my book, The Trouble with Mutual Funds.

Today, we see the degree to which the mutual fund industry has been reduced to an asset gathering machine. By marketing CDs, Fidelity promotes the idea of bailing out of the market right now. Of course, this notion contradicts the advice that level-headed advisers and public figures have been giving to individual investors in this time of crisis, (see anything said or written by J. Bogle or W. Buffet in the last six months).

Imagine the investor who has just been convinced that he can’t win by bailing out now — that, in spite of the awful news and ugly data spitting out of the market meltdown, running won’t help, but only hurt, since you will miss the big days of the market’s recovery. Then he comes across Fidelity’s marketing campaign for CDs.

Confusing? You bet.

Fidelity is going where the money is. Period. If that means fanning the flames of panic, causing confusion and mistrust, and leading more investors to follow their emotions rather than reason, tough.

Fidelity Promoting FDIC-Insured CD

With the markets siphoning value from mutual funds and investors running for cover to the tune of billions of dollars in redemptions a month, Fidelity Investments is trying to hold onto customers’ assets by promoting FDIC-insured certificates of deposit.

Fidelity is promoting the CDs through mailers to existing clients and in no-nonsense advertisements.

Certainly, Fidelity is being impacted by the downturn, having announced it is laying off a total of 3,000 people, or 7% of its workforce, by the end of the first quarter of 2009. Thus, it makes sense that Fidelity is trying to hold onto assets, even in lower-paying CDs.

“As you might expect, in this volatile market, our customers have expressed interest in conservative, fixed-income investments,” Fidelity spokeswoman Jennifer Engle told the Boston Herald. Fidelity is letting its customers know that, like banks, CDs are available at select mutual fund companies, including Fidelity.

Thanks Jennifer. Thanks Fidelity. It’s good to know that America can count on you in turbulent times.

Last night I read a fascinating article in What is Enlightenment? Magazine (www.wie.org) by Howard Bloom subtitled “Descartes’ Delusion”.  The delusion was that René Descartes settled himself into a house in Amsterdam, back in 1636, and decided he’d sit there, more or less by himself, until he penetrated the bedrock of reality, ie “What is that I can know for sure?”.  And he came up with the famous statement “I think, therefore I am”.  Bloom deftly critiques Descartes’ methodology - and makes the statement that Descartes could only think because he inherited a body, a mind, a language, and an entire social environment from millions of years of evolution.  Like Descartes, each of us is in fact a multitude.

Descartes has had such an impact on our culture that today we tend to think it “common sense” that each of us is an island - or at least we behave that way.  One of my teachers, Julio Olalla, was fond of pointing out that we tend to think of ourselves and our problems as our own isolated psychological case, when in fact we are playing out cultural scripts that date back centuries.  These scripts are passed on through family stories, cultural messages, official history, and the very words we use to describe our world.

Our culture has achieved incredible material success/excess because of our ability to view ourselves as separate - as if, like Archimedes, all we need is a place to stand and a lever big enough, and we can move the earth.  The only problem is, we are standing on the earth.  There’s nowhere else to stand, space fantasies notwithstanding. Despite our limited success at conquering nature, we are in danger of overbreeding, starving and poisoning ourselves with our own toxins.

Eastern philosophies, particularly buddhism, offer a radically different worldview, based on mutual causality. Western philosophy has generally focused on linear causality until very recently.  A causes B, which causes C.  Which is exactly why so many of our great inventions have brought about unintended consequences. Pharmaceuticals have conquered many diseases, which is a good thing, but are now polluting our water, subjecting fish, and ourselves, to unmetabolized birth control pills, anti-depressants, etc.  Only recently, with the development of Systems Theory, have we begun to see how phenomena emerge, sometimes unexpectedly and chaotically, from a variety of causes.

In a chaotic, interconnected world, we see that we cannot control everything, but instead influence a complex chain of events through intentions and small actions - even if we are not sure which ones matter.  This is why random acts of kindness are a good thing!  Thich Nhat Hanh, the Vietnamese buddhist monk and peace activist, has coined the term “InterBeing” to describe this mutual connectedness.  Rather than believe our own story about how things happen to us, he suggests we continually ask why things occur the way they do.  And, when we keep asking that question, we ultimately see there is no one to blame, including ourselves.

The way of leading business that I see emerging among “natural” entrepreneurs draws from this well.  Any complex product arises from a number of ingredients, that come from different places.  Each has an impact on the local economy that produces it, the local ecology, the health and well being of the people who live and work there.  Likewise for the way it’s manufactured, packaged, used and ultimately disposed of.

Today on my BlogTalkRadio Show, I interviewed Joshua Onysko, the founder of Pangea Organics. Pangea is the fastest growing organic skin care line in the world.  Josh has built Pangea from the ground up to be a business that acknowledges the connectedness of all players in the manufacture and use of the product.  Josh has even thought deeply about packaging.  Since cardboard packaging consumes millions of trees a year, Pangea’s products are packaged in downcycled paper fiber which is impregnated with seeds.  Plant your holiday gift pack wrapper and a Colorado Blue Spruce tree will grow.

Josh is using profits from Pangea to fund micro-financing efforts that go back to the people - mostly women - who grow the crops that supply Pangea with ingredients.  This creates stable livelihood for the growers, and a steady supply of quality product for Pangea.

The market for organic personal care products is growing at 22% per year. Why does this matter? Our skin is our largest organ, and absorbs 87% of what we put on it.  Cold processed organic soaps maintain the liveliness and efficacy of the ingredients so they can be available to the skin.

Josh pointed out that we are led to believe that healthy products are a luxury. In many cases, because of their effectiveness, organic products are actually cheaper per use, and infinitely better for long term health. Is a “cheap” bar of soap actually cheaper, when we consider the real cost of petroleum by-products, wasteful packaging, and unknown efffects of chemical ingredients?

All of this may sound like fringe thinking, but Josh summed it up when he said “the Fringe predicts the Future”. Business people and economists are beginning to see how many costs we have traditionally “externalized” - but on a small, crowded planet, all those “externalized” costs, like the pharmaceuticals in the water supply, ultimately find us.

Source : The Nut Graph

KUALA LUMPUR, 2 Dec 2008: Umno Youth chief aspirant Datuk Mukhriz Mahathir continues to draw flak for suggesting that vernacular schools are the cause of racial polarisation.

Two members of parliament (MP), Charles Santiago of Klang and Nurul Izzah Anwar of Lembah Pantai, both said Mukhriz was clearly trying to win favour for his bid in the March Umno elections.

“MCA Youth will never agree to Mukhriz’s statement that our polarised society is due to the existence of different types of education in the country. Language alone cannot be deemed as a main factor for national unity.

“Naitonal unity should also entail mutual understanding, sincerity and respect among all the races,” Wee, who is also the Deputy Education Minister, said in a statement today.

He noted that not only Chinese, but pupils of other races also attended Chinese primary schools.

He also disagreed with Mukhriz’s proposal yesterday to convert vernacular schools into a single system, noting that other countries were promoting an inclusive society by granting equal rights to citizens from minority groups to maintain their own vernacular education.

“Any suggestion of racial assimilation is obsolete and will be forsaken by the people,” Wee said.

MCA president Datuk Ong Tee Keat in his blog yesterday said the Jerlun MP was using racial polemics because he was contesting in the Umno elections in March.

Kedah Gerakan Youth has also described the proposal to abolish vernacular schools as unconstitutional, and has instead called for the government to allow mother-tongue language classes in national schools.

DAP’s Santiago said Mukhriz showed “a total lack of sensitivity to the non-Malays in Malaysia.”

“It’s nonsensical. Vernacular schools do not prevent racial unity in the country. In fact, it is race-based policies in civil service employment, awarding of contracts and discrimination against minority communities and marginalisation of the poor that hampers national unity,” Santiago said in a statement.

Noting that there were some 50,000 Malay students currently enrolled in vernacular schools, Santiago said Mukhriz’s statement was aimed at securing support in his bid for the Umno Youth top post.

“Mukhriz should be deeply ashamed for politicising mother-tongue education to further his career in ruling Umno. He must immediately retract his statement and instead encourage the government to provide the necessary funds to vernacular schools to upgrade its existing infrastructure and build new facilities.”

Parti Keadilan Rakyat (PKR)’s Nurul Izzah also joined in the fray by accusing Mukhriz of fanning the flames of racial prejudice.

“He is suggesting that these schools be closed down as a reaction to the comments of other Barisan Nasional leaders on ‘ketuanan Melayu’,” she said.

PKR believed in strengthening the national school system while preserving the vernacular schools’ tradition to promote different cultures and the right for pupils to learn their mother tongue.

“Mukhriz’s proposal to have a single education system is clearly meant to promote himself as a Malay hero for his party elections in March. If he really was a Malay hero, he should oppose the teaching of science and mathematics in English which has caused the performance of rural and poor Malays to decline,” Nurul Izzah said, reiterating her party’s stand against the programme implemented by Mukhriz’ father, then prime minister Tun Dr Mahathir Mohamed.

She said that Mukhriz as an youth leader, was no open minded in his views but was instead following older politicians who used racial polemics.

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

From that moment, Whitney became E.F. Hutton: When she spoke, people listened. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of ­borrowed money, and imagine what they’d fetch in a fire sale. The vast assemblages of highly paid people inside the firms were essentially worth nothing. For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.

Rivals accused Whitney of being overrated; bloggers accused her of being lucky. What she was, mainly, was right. But it’s true that she was, in part, guessing. There was no way she could have known what was going to happen to these Wall Street firms. The C.E.O.’s themselves didn’t know.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

The arrangement bore the same relation to actual finance as fantasy football bears to the N.F.L. Eisman was perplexed in particular about why Wall Street firms would be coming to him and asking him to sell short. “What Lippman did, to his credit, was he came around several times to me and said, ‘Short this market,’ ” Eisman says. “In my entire life, I never saw a sell-side guy come in and say, ‘Short my market.’”

And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking home­owners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

More generally, the subprime market tapped a tranche of the American public that did not typically have anything to do with Wall Street. Lenders were making loans to people who, based on their credit ratings, were less creditworthy than 71 percent of the population. Eisman knew some of these people. One day, his housekeeper, a South American woman, told him that she was planning to buy a townhouse in Queens. “The price was absurd, and they were giving her a low-down-payment option-ARM,” says Eisman, who talked her into taking out a conventional fixed-rate mortgage. Next, the baby nurse he’d hired back in 1997 to take care of his newborn twin daughters phoned him. “She was this lovely woman from Jamaica,” he says. “One day she calls me and says she and her sister own five townhouses in Queens. I said, ‘How did that happen?’ ” It happened because after they bought the first one and its value rose, the lenders came and suggested they refinance and take out $250,000, which they used to buy another one. Then the price of that one rose too, and they repeated the experiment. “By the time they were done,” Eisman says, “they owned five of them, the market was falling, and they couldn’t make any of the payments.”

n retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) The default rate in Georgia was five times higher than that in Florida even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California’s was only 5 percent. Why?

The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

A full nine months earlier, Daniel and ­Moses had flown to Orlando for an industry conference. It had a grand title—the American Securitization Forum—but it was essentially a trade show for the ­subprime-mortgage business: the people who originated subprime mortgages, the Wall Street firms that packaged and sold subprime mortgages, the fund managers who invested in nothing but subprime-mortgage-backed bonds, the agencies that rated subprime-­mortgage bonds, the lawyers who did whatever the lawyers did. Daniel and Moses thought they were paying a courtesy call on a cottage industry, but the cottage had become a castle. “There were like 6,000 people there,” Daniel says. “There were so many people being fed by this industry. The entire fixed-income department of each brokerage firm is built on this. Everyone there was the long side of the trade. The wrong side of the trade. And then there was us. That’s when the picture really started to become clearer, and we started to get more cynical, if that was possible. We went back home and said to Steve, ‘You gotta see this.’ ”

Eisman, Daniel, and Moses then flew out to Las Vegas for an even bigger subprime conference. By now, Eisman knew everything he needed to know about the quality of the loans being made. He still didn’t fully understand how the apparatus worked, but he knew that Wall Street had built a doomsday machine. He was at once opportunistic and outraged.

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

A probability, said the C.E.O., and he continued his speech.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

This particular dinner was hosted by Deutsche Bank, whose head trader, Greg Lippman, was the fellow who had introduced Eisman to the subprime bond market. Eisman went and found Lippman, pointed back to his own dinner companion, and said, “I want to short him.” Lippman thought he was joking; he wasn’t. “Greg, I want to short his paper,” Eisman repeated. “Sight unseen.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

This was what they had been waiting for: total collapse. “The investment-banking industry is fucked,” Eisman had told me a few weeks earlier. “These guys are only beginning to understand how fucked they are. It’s like being a Scholastic, prior to Newton. Newton comes along, and one morning you wake up: ‘Holy shit, I’m wrong!’ ” Now Lehman Brothers had vanished, Merrill had surrendered, and Goldman Sachs and Morgan Stanley were just a week away from ceasing to be investment banks. The investment banks were not just fucked; they were extinct.

Not so for hedge fund managers who had seen it coming. “As we sat there, we were weirdly calm,” Moses says. “We felt insulated from the whole market reality. It was an out-of-body experience. We just sat and watched the people pass and talked about what might happen next. How many of these people were going to lose their jobs. Who was going to rent these buildings after all the Wall Street firms collapsed.” Eisman was appalled. “Look,” he said. “I’m short. I don’t want the country to go into a depression. I just want it to fucking deleverage.” He had tried a thousand times in a thousand ways to explain how screwed up the business was, and no one wanted to hear it. “That Wall Street has gone down because of this is justice,” he says. “They fucked people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.”

Truth to tell, there wasn’t a whole lot of hand-wringing inside FrontPoint either. The only one among them who wrestled a bit with his conscience was Daniel. “Vinny, being from Queens, needs to see the dark side of everything,” Eisman says. To which Daniel replies, “The way we thought about it was, ‘By shorting this market we’re creating the liquidity to keep the market going.’ ”

“It was like feeding the monster,” Eisman says of the market for subprime bonds. “We fed the monster until it blew up.”

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the fuck they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…fucking…book.”

I smiled back, though it wasn’t quite a smile.

“Your fucking book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your fucking book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”

Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm.

”Sandeep Isaac Abraham, is that you? What’s up nig-nog? Come on up here.” comes a dazed cry from upstairs. It’s Antoine, of course.

”Nothin’ much, just doing my fucking UC application. It’s like due in two days and I haven’t slept in 36 hours…you know, usual shit. But hey, this is why God created Aderol, right?”

His tolerance for the stuff is way too high; three pills now only keeps him wired for six hours. What once was salvation for narcoleptics and kids with ADHD is now the trendy drug of choice for overworked college kids inconvenienced by sleep. Adult side effects include stomachaches, dry mouth, dehydration, loss of appetite, inability to fall asleep, weight loss, extreme irritability, extreme mood swings, severe headaches, and mental depression. Then again, this is Antoine were talking about.

Antoine, had he a choice, would not live on Linden Lane. After all, he grew up in a $2 million mansion in a gated community and went to the 43^rd best public high school in the nation. His first car was an old Jaguar. He dressed in Armani and Express when he was twelve years old. But nothing’s ever as it seems. His parents divorced when he was twelve in a mess of legal documents, custody hearings, and alimony settlements. He drowned in depression and sold himself to apathy, adorning himself in black clothes and a constant grimace. When he was fourteen, his depression made them ship him off to Casa by the Sea (not a pseudonym), supposedly a youth rehab facility in Ensenada, Mexico run by “fucking Mormons.”

And fucking Mormons they were. Antoine once told me a story about a girl who came there after being raped and molested by her father. Kids there are given tags based on the “offences” that got them there. Her tag was “Daddy’s Little Slut.” To “cure” her, the administrator in charge of her was instructed to keep asking her about her father and when that didn’t work, to wave his penis in front of her. That was Casa by the Sea –shut down a year later by the Mexican government after abuse and neglect were suspected. A coke bottle shank and mass amounts of classic literature were what kept Antoine sane and safe in those years. He writes in one of his application essays: “I’m better now. When I’m manic and angry, I work harder. When I’m depressed, I read Camus.”

Send Money Worldwide

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Scam of the day

Hi Denise,

Thanks.

Hi Jean,

Here are the charts of both funds analysis to follow:

It looks like MEURX will really be hit hard when transiting Pluto through the 5th (house of speculation) makes an exact opposition to its Mercury in Cancer in the 11th (house of hopes and dreams). Also Mercury rules the second house of work and everyday sort of money flow, as well as ruling 2 planet, Venus=money(in this case) and Mars how the fund is perceived. They are both wedged in the 10th which is also another important earth/money house. I would move my money into a different fund if I were you before late January. Specifically right around inauguration. So move it before then.

MDISX will fair better until about the 20th of January 2010 when transiting Pluto will be at 4 Cap making an exact square to the funds moon which has involvement in the 5th house of speculation but mostly rules the 6th house. So I’d guess there will be some bizarre fluctuations in the value of the fund during this time, sort of irrational in nature. But it will settle down and it won’t see major changes until Jan. 2010 when perhaps new laws will take place forcing (more then likely many areas of the market) to adjust. It will be more in its business practices and ideology. So I’d say this fund looks healthier for the time being.

Hope that helped.

Next from Ylem:

Okay, this scared the crap out of me:

http://www.cnn.com/2008/US/12/02/terror.report/index.html

Do you have anything to say on the likelihood of a bioterror attack in the next 10 years (or much sooner) that will wipe out millions of people?

I’m freaked!

just to add to my post: The fear of a bioterror attack is in some ways paralyzing, as it makes working towards anything feel pointless - what’s the use if our world will be in ruins in less than five years? Give us some hope, please!

Hi Ylem,

I read the article you sent a link to. It is really, really, really scary. 

I have been thinking about this a lot lately, especially with what happened in Mumbai. And especially when looking at the charts of India and Pakistan, and seeing the upcoming transits over the next few years, and the direction the planets are headed.

I got scared when I realized that we weren’t that far off from Uranus hitting Aries. That revelation felt very bad. 

Uranus smacks Aries in March of 2011. My read on this is: sudden and explosive violence. Especially, as it will near a square to Pluto. These two warring planets will clash (square each other exactly) in August of 2012. We had better get our act together rounding up terrorists and spreading good will and compassion. I hate to say what this could bring. I will do more analysis on it over time. I don’t want to jump to conclusions right now. We have time to turn this potentially deadly aspect into something more innocuous, but it will be a hard ship to turn around. I’m not going to lie about that.

Good news though, we do have free will and we have the power to choose love and compassion, kindness and fairness over whatever crazy bee drove into those terrorists’ types heads. Sometimes I feel there is an almost sick sexual fetishism of murder really driving these people, more than any pretended belief they have in God. Because I’ll say one thing no one who is spiritual believes in killing anyone for any reason. And any religion or branch of a religion that preaches this is not a religion, its a political power machine using naive people to brainwash through fear so they can do the dirty work of those leaders who manipulate them and blindly seek power.

OK, enough of my going on about that. It makes me so angry. I wish there was a way to round up all the terrorists and make them sit around a campfire and listen to Kumbayah for a year, do some knitting, talk about their feelings, go through some therapy and deprogram them from their crazy- maker leaders. Most of these people are young men who have no way to feel important, and aren’t allowed to express their sensuality or sexuality except through this horrible violence. It’s a terribly sick combination. A stew of rotten meat, and I’m afraid we’ve all been guilty of not addressing it. I think the whole, “Well, it’s a cultural thing,” thing is part of the problem. Not that we should take control of their lives. I do think these groups pray on very impoverished, angry, probably abused souls who haven’t seen any other option in life. We owe it to all of our brothers and sisters to at least show them that there are other ways of seeing, believing, feeling, and help them live in dignity, not just ignore them, relegating them to deserts of the world to starve in, while we live it up. It’s no wonder they hate us. We are so decadent compared to them.

I really hope instead of bombing Pakistan and Afghanistan and Iraq and trying to control the Muslim world militarily, we try to lift them up and befriend them. That’s the only way we are going to make this world work.

Blah, blah, blah…

OK, power speech: this is why it is crucial for everyone to live up to their highest potential and do whatever little thing you can to change the hearts and minds of those around you for the better.  

If you imagine we are all drops of water in this sea of humanity, (check out the book, “The Messages in Water,” if you get a chance) and by being more loving and kind we actually effect the whole sea. We don’t have to become President or be a famous movie star or whatever, just being loving changes the world for the better.

Anyway, it’s 4 AM now I’m going to answer the next bunch of questions tomorrow.

Best wishes to all.

Denise

Sorry everyone down there! I’ll get to you soon!

Dear Denise,

Thank you for your analysis and insights. In these troubled times on a lot of fronts ( financial, physical and even spiritual ) you provide clarity and hope.

I have two questions.

To readers of this blog, please do google “urban survival” and make some basic preparations.

Peace

Hi : Very interesting

On the prediction that India will hit Pak sites, I wonder whether this could happen thru US, becos it seems more likely that Obama will use his power to persuade Pak to let US take on the training camps etc in Pak. Don’t see India doing this unless we continue to get hit like 26/11. May be you could run a chart for US vis-a-vis Pak and see how it looks…

I woke up with the feeling that the credit crisis wasnt the cause of the market crash at the end of Dec/ Jan

Any thoughts on the two unresolved Senate races in Minnesota and Georgia? I think you predicted the Senate would get close to 60 seats a few weeks back. I wonder what the cards say closer to the evantual realities. Thanks!

Another question. Some of Obama’s supporters are up in arms about the people he is choosing to work in his Administration. They feel that they have been betrayed. Will the Disgruntled Dems. get over it in time or will they hold a grudge for the next 4 years?

Will Arnold Schwartzenegger be joining Obama’s cabniet? I thought when Obama said a top Republican would be on his cabniet, it would be Arnie. Now he’s picked Gates to stay on as Sec. of Defense. Since some very conservative Christians are in top level positions in the military, this seems to be a wise move aimed at keeping them calm. What’s up for the Governator after his term runs out?

Thanks in advance!

PS

I sure hope he will be. After four years of having to look at Bush and Cheney, this lady would appreciate someone up there easier on the eyes. LOL

Most of you understand that much of my life view was forged by devouring “The Fountainhead” and “Atlas Shrugged” - both by Ayn Rand.

But, only a few of you know the profound impact Walker Percy’s “The Moviegoer” has had on me.

Walker Percy was forty-six years old when his first published novel, “The Moviegoer”, was awarded the National Book Award in 1962. It was, in some sense, the public beginning of the second half of Percy’s life. 

Percy himself wrote in 1972: 

“Life is much stranger than art-and often more geometrical. My life breaks exactly in half: 1st half growing up Southern and medical; 2nd half imposing art on 1st half.” 

But what, exactly, did Percy mean when he said this? In some sense, “The Moviegoer” is the beginning of an answer.

Percy was born in 1915 and lived his early life in Birmingham, Alabama. His grandfather committed suicide when Walker was an infant, and his father, too, committed suicide in 1929. Following his father’s suicide, his mother moved Walker and his two brothers to Mississippi. Percy’s family was one of the oldest families in the South, and he and his brothers soon found a father figure in the form of his cousin, William Alexander Percy - known affectionately as Uncle Will. Three years after his father’s suicide, Percy’s life was again marked by tragedy when his mother’s car went off a bridge, killing her and leaving Walker and his brothers in the charge of his Uncle Will.

Cork:  So, obviously, as self-absorbed and ego-centric as I am, I understand Walker.

Percy went to medical school at Columbia University, where he contracted tuberculosis during his internship. In and out of sanitariums for several years, he finally returned to the South in his early 30s, getting married in 1946 and settling in the New Orleans area, where he lived the remainder of his life. It was at this time that Percy received an inheritance from his Uncle Will that allowed him to devote himself completely to his long-standing interest in literature and philosophy.

More Cork:  So, this is where I really feel Walker Percy.

I (further) relate the biographical details because, as you read “The Moviegoer”, it seems (not surprisingly) heavily marked by Percy’s life experience, the author’s biography being one point of reference for the novel.

Even more Cork:  I am therefore I Blog.

“The Moviegoer” is a peculiarly American and belated expression of the existential novel that had been so brilliantly articulated in France by Albert Camus. Like “The Stranger”, Percy’s novel focuses on meaning.  In this case, the obsession of Binx Bolling, the novel’s narrator, on what he calls the “search”. /1

As Bolling says at one point: 

“The search is what anyone would undertake if he were not sunk in the everydayness of his own life.” 

And exactly what does this mean? 

“To become aware of the possibility of the search is to be onto something. Not to be onto something is to be in despair.”

This is certainly an enigmatic definition. But, one which makes the reader who spends time with “The Moviegoer”, who reads the book carefully and reflectively, to think more deeply about his or her own life.

“The Moviegoer” is not a novel dominated by plot. 

At a superficial level, the novel relates, in a wry and matter-of-fact way, a few days in the seemingly unremarkable life of Bolling, a New Orleans stockbroker whose main activities are going to the movies and carrying on with each of his successive secretaries. 

Muses Bolling:

“Once I thought of going into law or medicine or even pure science. I even dreamed of doing something great. But there is much to be said for giving up such grand ambitions and living the most ordinary life imaginable, a life without the old longings; selling stocks and bonds and mutual funds; quitting work at five o’clock like everyone else; having a girl and perhaps one day settling down and raising a flock of Marcias and Sandras and Lindas of my own.”

What “The Moviegoer” suggests is resonant of Thoreau’s contention that most men lead lives of quiet desperation. 

But it is a desperation that arises not from the ordinariness of everyday lives, but, rather, from the failure to transform that ordinariness through contemplation and self-reflection, through an appreciation for the mundane. 

Thus, in the book’s epigraph, Percy actually quotes Kierkegaard: 

“The specific character of despair is precisely this: it is unaware of being despair.” 

That rascal!

As Percy has suggested in another of his books, “Lost in the Cosmos” (a work of non-fiction subtitled “The Last Self-Help Book”), we inhabit a society of alienated and despairing “non-suicides” who Percy wanted to transform, through his writing, into “ex-suicides”. 

In Binx Bolling’s words: 

“For some time now the impression has been growing upon me that everyone is dead. It happens when I speak to people. In the middle of the sentence it will come over me: yes, beyond a doubt this is death . . . At times it seems that the conversation is spoken by automatons who have no choice in what they say.”

So, in summary, “The Moviegoer” is a thoughtful and a thought-provoking book that should be read and then re-read, slowly and carefully, for every paragraph is laden with insight into the character of its narrator, the character of its author and, ultimately, the character of ourselves.

Read what I tell you to, or don’t speak to me.

Today I shall be listening to “Bullet and a Target” by Citizen Cope.

Peace be to my Brothers and Sisters.

Brian Patrick Cork

__________________________

1/  We can see parallels to Ayn Rand’s Rourke (“The Fountainhead”) and Gault (“Atlas Shrugged”).

I was discussing with a friend of mine the other day about the impact of the IIT system on tertiary education in India. My contention was that the IIT system has caused the death of universities in India. He, ofcourse hotly contested the point. According to him, the IITs were a great idea at the time of independence, and have contributed immensely to the growth and development of the country. So I thought a little more about it, and the result of that thinking is the post below.

Now lets see if the Indian Institutes of Technology/Management/Information Technology/Fashion Technology/Drama/Design/what-have-you are really needed in this country and whether they have done more harm than good, as I think they have. It all started with the Indian Institutes of Technology. A result of a young socialist India’s admiration of the Soviet model of education. In fact, the first IIT was established at Kharagpur with help from the Government of the erstwhile Soviet Union in 1951. Other IITs followed, Mumbai in 1958, Kanpur and Chennai in 1961, and Delhi in 1963. Currently there are 13 Indian Institutes of Technology in various states in the country all covered under the Institutes of Technology Act of 1961 that declare these Institutions as Institutes of National Importance. The stated need for setting up the IIT system was to produce the scientists and engineers that a newly independent India needed for its development. It seems interesting that the decision makers deemed it necessary to create Institutes of National Importance like the IITs to impart education that could easily have been imparted simply by upgrading the existing universities to the status of Institutions of National Importance. The psychology behind the building of big Institutions with lofty ideals and huge amounts of public money as symbols of national pride is a distinguishing feature of socialist societies. Take the example of Mao Tse Tung’s destruction of the city of Beijing to build huge factories inside the city - his personal idea of, and a tribute to a worker’s paradise. In our case, we destroyed the University system by our own idea of socialized education. To really understand the basic evil of the Soviet system of higher education we have to realize that their society was based on collective ownership. The State owned everything, including your life. You individual growth and development as a person was essentially anti-state. An individual was simply a cog in the State machinery, everyone had his place in the society. You were not supposed to “think” as an individual, you were supposed to “do”. This led to their creation of highly specialized schools and universities dedicated to narrow disciplines — Institute of Mathematics, Institute of Genetics, Institute of Physical Research, the Medical Academies, and the list goes on and on. A highly centralized government controlled system put in place with the sole purpose of creating higly efficient workers for the country. This practice, of course created technically competent people, who were experts in their field of work — the Russian mathematicians and physicists for example, but did that system work? Were these people anything more than well programmed robots who were not good at anything but what they were trained for? I would be interested to know the real statistics. But their immediate success in the Soviet society was visible to everyone. They had great scientists, excellent engineers, efficient workers, but no philosophers, no independent artists, or film makers, or writers. But the quality of their engineers was probably what impressed Jawaharlal Nehru the most. He, after all had the responsibility of bringing India up to speed on development and infrastructure post independence. So the idea of setting up a series of engineering schools must have sounded good to him, and he went ahead and built the first series of IITs - Kharagpur, Bombay, Delhi, Kanpur and Madras. There is no doubt that at the time of Independence there was an urgent need for skilled technical manpower in order for India to build itself, and there was a very real need for the Government to focus on technical education. There is also no doubt about the fact that, given the stringent selection criteria, the IITs got the best students in the country who after graduation went on to lead successful professional lives. Given the socialist bent of mind, our leaders, possibly forgetting the original thoughts that went into the setting up of IITs started establishing other specialized Institutes and the Indian Institutes of Management, National Institute of Design, National Institute of Fashion Technology followed over the years. In parallel, the University system of this country went from bad to worse. Bad management, lack of funds, archaic rules, politics, all contributed to the rot. This asymmetry also led to an asymmetric perception of college education among the media and the public in general. In a country and at a time when good jobs were few, not getting into an IIT meant you were a failure even before you started.

From the Universities’ standpoint, the problems were compounded by the fact that in addition to the policy of establishing specialized undergraduate schools the Government also set up specialized research Institutes directly under the control of funding agencies. So we had the Council for Scientific and Industrial Research, The Department of Atomic Energy, The Department of Biotechnology, The Department of Science and Technology, all funding agencies under various ministries running a bunch of their own Institutes specializing in narrow research domains. One would agree that there are research problems that need coordinated effort of many people, and substantial financial inputs. Setting up small Institutes dedicated to specific questions of importance is in itself not a bad idea. So where is the problem? The problem lies in the fact that these institutes are not connected to universities. They are far better funded than university departments, and thus have excellent research facilities, but the scientists who work there are not required to teach. Most of them being situated away from universities, their scientists and students have limited interaction with people from other disciplines. There is little exchange of ideas and views in the free flowing manner that is at the heart of innovative research. The result? Our entire scientific establishment is engaged in a “me too” research program where the really radical and original ideas come from the west and we simply fill in the gaps. The lack of innovation in science is evident in the example of the use of Zebrafish as a genetic model system for biological research. Zebrafish, a native of the Ganges needed George Streisinger of the University of Oregon to be studied in detail and be used as a genetic model. Our experience with research on medicinal plants is another example. In the humanities, we need a William Dalrymple to teach us about the history of the Deccan, or Delhi. There are many economic and social factors involved this sad sate of affairs, but one of the most prominent of these factors is the utter lack of a vibrant univerisity system fostering unfettered interaction and exchange of ideas among people of widely disparate interests and expertise. All this affects another important part of the higher education system of the country - Graduate School. We are creating more PhDs than any other country in the world with the possible exception of China, but are our PhDs really worth the title of “Doctor of Philosophy”? I am not sure. Are our research institutes producing loads of doctorates who are nothing but highly trained technicians or are we producing leaders and thinkers who can cross boundaries of discipline and think creatively? I think our policy makers need to ask this question to themselves.

So what is the result of this long policy of specialization and fragmentation? Our leaders would have us believe that our country is progressing and India is shining because we have a huge pool of English speaking individuals who can program a computer and run a PCR reaction. What they will not admit even to themselves is that all this lopsided development comes at a price. In mundane terms, this preference for quantity over quality has led to a huge workforce trained in a specific skill set and completely dependent on a certain set of industries in order to remain employed. In a deeper sense, this has led to the slow, but definite dilution of the cultural and intellectual vibrancy of the country. We seem to be well on the path to becoming a country of unthinking automatons who do as they are told, trapped in our own little intellectual boxes. We seem to have forgotten our own historical contribution to higher education by way of inventing the model of multidisciplinary university system with Taxila. The path of higher education chosen at the infancy of the Indian republic has without doubt helped India reach a position of strength in the world. But everything has to evolve, what may have been relevant earlier may loose its relevance with time as society advances. For the country to really move forward, there is a need to rethink and reform the higher education system. We need to bring the University back! Unfortunately the government seems to think otherwise. They have gone ahead and established a bunch of more IITs taking the total to 13 (and 6 more planned). And as if that was not enough, they have started a chain of Indian Institutes of Science Education and Research! It seems we did not have enough university departments good enough to teach basic sciences to undergraduates. As I have mentioned earlier, specialized institutes, a misplaced and misguided priority in the first place, has now largely lost relevance in today’s society where people with new and “unconventional” combination of skill sets are often the drivers of progress. This country needs well rounded individuals who, while being trained in a particular discipline, are at the same time aware of their society and open to exchange of ideas.

In my “ideal” education and research policy, I would first increase funding to Universities and at the same time bring about changes in their academic and administrative structure. Over time, the universities will be run by academics who are also proven administrators. I would expect these institutions to be run in a democratic fashion with no interference from outside. Ultimately, funding to universities will be based on their performance. The Indian Institutes of technology will  be upgraded to the level of central universities and be treated as such. National laboratories and Institutes will be attached to universities with scientists having the option to teach if they so wish. I would ofcourse encourage researchers to teach undergraduates, which would mean that the academic staff of the universities will be of two kinds — research scientists, who choose not to teach in the class room but take graduate students for research work, and faculty, who choose to teach along with doing their research. The latter will ofcourse be more difficult but I would wish to make it more rewarding too. I would encourage private sector participation in higher education and research with tax benefits to corporates and private individuals who choose to support academic research in purely non-applied fields like history, philosophy, art or the basic sciences. Setting up of private universities will be encouraged subject to their satisfying stringent criteria (I will talk about higher education as an industry sector in a later post) to ensure quality. The idea is to turn universities into centers of knowledge rather than just degree granting bodies, places where knowledge is not only disseminated, but also generated, where students and teachers alike benefit from their mutual interactions without boundaries or restrictions. Universities in my “ideal” society will be as sensitive to social change as they will be drivers of that change.

It is high time the policy makers stopped and did a serious analysis of the higher education and research system in this country. The whole system needs to be reformed if we want to graduate (no pun intended) from being a “developing country” to being a “developed country” in the real sense of the term.

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Anti-government protesters have begun leaving Bangkok’s main airports after an eight-day siege that paralysed government and stymied tourism.They packed up bedding and began leaving the international and domestic airports as cleaners moved in.The People’s Alliance for Democracy called off the protests and after a court banned Prime Minister Somchai Wongsawat from politics.The protests have left thousands of tourists stranded in Thailand.The country has lost millions of dollars in revenue.

Who cares?
By Paula DearBBC NewsUnemployment is back. The economic downturn means the issue has again climbed to the surface of the political and news agenda. But for millions of people it never went away.Has British society been ignoring the real plight of the jobless in recent timesOur series on joblessness will explore the lives of Britain’s non-workers. How did they get there, how do they feel and how do they get by"The unemployed are portrayed as social outcasts who don’t share the moral and ethical values of the rest of us"Dr David Fryer, Stirling UniversityThose losing their jobs now are joining millions who have already been out of work long term, who want to work but for many reasons are not searching, or who have been lurching between insecure jobs and joblessness for years.The number of unemployed now stands at 1.8m, but thatheadline figure tells only part of the story. On top of the unemployed, a further 8m people of working age in the UK are not working and are categorised as “economically inactive”.Of that number some 2.2m - nearly all women - are looking after home and family, 2m are students and a further 2m are long-term sick.Nearly 40,000 people are listed as “discouraged workers” and some 760,000 people are categorised simply as “other” in figures that chart the reasons for people’s economic inactivity.Of the 8m inactive people, more than 2m say they want to work, but are not currently able to or have given up seeking a job. Meanwhile, the number of job vacancies in the UK has dropped below 600,000.BRITAIN’S JOBLESSOur series asks, who are Britain’s joblessInterviews with five people who are out of work will be published on the BBC News website in December and January. Read the first, ‘No-one works in our house’, hereWeek beginning 15 December - ask a government minister your questions about unemploymentQ&A: Who are the joblessKey statisticsThere is concern among some experts that ignoring the core issues and pressurising jobless people- for example with welfare reforms - will not only be a waste of time given the number of jobs available, but could further damage the mental wellbeing of individuals already demoralised.”If you have four million or so people chasing a few hundred thousand jobs, it goes without saying that putting pressure on the unemployed to look harder is not going to work,” says psychologist Dr David Fryer, of Stirling University.In the past few years it has been harder to get funding for research on unemployment, giving the impression people felt the problem had gone away, adds Dr Fryer.And what media coverage there has been often portrays the jobless as being to blame for their problems, even to be envied in the way we might envy the “idle rich”, he adds.”In general the media has not done unemployment a service. The unemployed are portrayed as social outcasts who don’t share the moral and ethical values of the rest of us.”‘In denial’Some people commit benefit fraud - with at least 2.6bn lost to fraud and errors last year - and tales of cheating lap dancers and fighting-fit football referees claiming sickness benefits make for popular copy.But, says New Policy Institute (NPI) Director Peter Kenway, if we start by believing that the vast majority are telling the truth when they say they want to work, then we have a big problem on our hands.An upcoming annual NPI report for the Joseph Rowntree Foundation concludes that the progress regarding most of those wanting, but lacking, work - which was seen in the first half of New Labour’s rule - flattened out in 2004. In the case of young adults unemployment went up, he says.Dr Kenway added that he believed the UK was heading into a recession after a period of several years in which the labour market had at best been steady, rather than strong.”The political class is still in complete denial that this unemployment issue is coming back with a vengeance."Employers will pick the freshest flowers and the others will get more and more wilted"Prof Alan Manning, LSESend us your comments”And you cannot say the whole responsibility for this lies with the would-be workers.”There’s a strange flaw in government reasoning that if you somehow got all these people out and plonked them onto the labour market, the jobs would just appear.” Until the credit crunch bit there was less attention on the long-term unemployed because numbers had genuinely fallen, says Professor Alan Manning, of the London School of Economics (LSE).”But if you are one of those people that remains long-term unemployed that’s not much comfort.”Like the rising tide lifting all boats, “the view was that the way to help those people was by having the labour market generally doing well”, he says.He predicts that with rising unemployment, sympathy levels will also rise, as more people have direct or indirect experience of joblessness.More sympathy but not more opportunities, he says, because the situation for the long-term unemployed is likely to worsen as more qualified recently redundant people flood the market.”The analogy of the flower shop rings true - employers will pick the freshest flowers and the others will get more and more wilted.”AnxietyLast week’s pre-Budget report put much emphasis on addressing the plight of the newly unemployed, but ministers do acknowledge the ongoing “scar” of long-term unemployment.Work and Pensions Secretary James Purnell told MPs last week the government would “do everything we can to bring those who have been out of a job for some time back closer to the world of work”.And welfare reforms have been brought in, with more on the table, which the government says will tackle some of the more entrenched areas of joblessness.The problem, some argue, is that leaders are ignoring the reality of life for the unemployed, and the societal ills that lie behind joblessness and deprivation.Last year the government ploughed millions into paying for more psychologists to treat people for depression and anxiety, in an attempt to get more people back to work."Working with an individual means they then compete more effectively against another unemployed person - it can never do anything other than reorder the queue"Dr David FryerResearch over decades has consistently shown that joblessness leads to mental ill health.For people like Drs Fryer and Kenway, putting the emphasis on treating individuals for their “deficiency” in finding work, is damaging.Dr Fryer is part of the Community Psychology movement, currently small in the UK, but a bigger force in other parts of the world - both rich and poor.He and fellow campaigners believe social change, not treatment for individuals, is the only way to deal with the distress caused by material inequality, poverty and joblessness. All the psychologists in the world could never “treat it better” unless the root problems were solved, they say.”Working with an individual person just means they then compete more effectively against another unemployed person. But it can never do anything other than reorder the queue,” adds Dr Fryer.”Society has become more individualist. And clinical treatment is individualist, which fits conveniently with this idea that all ills are related to the individual.”He likens treating someone depressed because they are unemployed to giving therapy to a woman who is beaten at home then returns each night to an unaltered situation.”All you are doing,” says Dr Fryer, “is making them think differently about being punched.This article is from the BBC News website. © British Broadcasting Corporation

England stars ready to shun tour
At least five England players are not prepared to return to India following the Mumbai terror attacks, according to former Test fast bowler Dominic Cork.The players are waiting for a security report before deciding whether to return to India for the Test series.But Cork told BBC Radio 5 Live: “I know of at least five or six players who are going to turn their backs on England.”Those I’ve spoken to are traumatised. What they saw on television was 10 times worse than what was shown here.”

MUMBAI: In a volatile trade session, the benchmark Sensex pared the early gains and slipped into the negative zone with a fall of over 106 points at 1100 hrs on profit selling by speculators at improved levels. The Bombay Stock Exchange barometer

Mutual funds may now have to list close-ended schemes - Economic Times
MUMBAI: Capital market regulator Securities and Exchange Board of India (Sebi) is set to revise its rules to make it mandatory for mutual funds to list close-ended schemes both equity and debt on stock exchanges. The proposed changes are

Crompton Greaves surges 4.79% at BSE - MyIris
Shares of Crompton Greaves are trading at Rs 113.80, up Rs 5.2, or 4.79% at the Bombay Stock Exchange (BSE) on Wednesday at 12:17 p.m. The scrip has touched an intra-day high of Rs 115.00 and low of Rs 109.10. The total volume of shares traded at the

US Currency Auction,Online Auction site - Coin,Currency,Bullion,Exonumia,Paper Money Auctions. Free listings! Buy or sell your Coins,Paper Money,Bullion & Exonumia at our on line

Currencies - Currency Converter & Latest Rates at CNNMoney.com
View exchange rates for top currencies and convert currencies from over 18 countries 7:22am: After slow trading on Thanksgiving, the dollar also slips against the euro and

End of post. . . . . . . . . . . . . . . .

Ting tong….

“Excuse me Mr Ramaswamy. We have come here to tell you that we urgently need to have a residents meeting.” complained a harried Saroja and other ladies in a similar state.

This was the third time that my bell was ringing for the same purpose, after I became the secretary of Kumbha Residency, a middle class apartment straight out of ‘Wagle ki duniya’. I moved in there about 5 years ago. And moved out about 2 years back. But memories of that dismal building are plastered like concrete on my brain.

Kumbha was a grand residential apartment filled up mostly by middle class brahmin folks. It boasted of grand amenities like an overtank, a sump, 2 coconut trees and a special ’sand pit’ for kids to play. All in the middle of peaceful Banashankari 2nd Stage. It consisted of 11 flats, both single and double bedroom options, distributed over 3 levels with no liftman. Why? No lift. The highlight was undoubtedly the parking lot, that could ideally hold about 1/3rd of the vehicles in the apartment, but still had a big heart to accommodate all of them. All of this Kumbha was safe guarded by the perseverant watchman named ‘Bahadur III’ (The third watchman in the first year of my stay, who’s name was Bahadur, twice again. The first one ran away. The second one ran away. The third Bahadur didn’t get a chance to meet the first two.)

‘Secretary’

This grand title was bestowed on me when nobody volunteered to take up this post. So my name was picked out in a draw of lots. And I was crowned ’secretary’ for the following six months.

I took my mandatory oath,

1. I promise to provide phenyl, broom and other cleaning products on a monthly basis to the watchman. And keep a tab of it.

2. I will ensure that the common electricity and water bills are paid on time. If I fail, I will bear the cost of any fine that is incurred due to my negligence.

3. I will arrange for acrobats on a timely basis to pluck coconut from the coconut trees.

4. I will ration out the plucked coconuts to all the residents, ensuring that everyone gets an equal share. In case any coconut turns out to be spoilt after breaking, I will replace it with one from my own collection.

5. I will hunt for plumbers, electricians, gardeners and other difficult to find people, whenever need arises.

6. I will monitor the watchman to remove dog poo from the ’sand pit’ every week.

7. I will beg and plead for monthly maintenance from all residents.

8. I will maintain a strict record in a fat ledger of all the accounts, down to the last penny. I will submit the ledger to anyone who feels like scrutinizing it, at any time in the night.

9. I will arrange meetings and also campaign them among the residents.

10. I will distribute ‘minutes of the meeting’ to all residents after the meetings are over. And that too in a typed form. (Apparently, the previous person who held the post had a bad handwriting, so this amendment was made.)

Needless to say, any other emergencies like the watchman running away, leakage in drainpipes etc., is the secretary’s headache.

So giving into the pressure, I dutifully went and pasted a ‘notice’ on the notice board inviting audiences for the evening entertainment program - ‘The Residents Meeting’.

I was also forced at yell-point to invent a list of ‘reasons to meet’ and make it compelling for the usual bunkers to attend.

The venue was my flat. It was agreed upon in the previous meeting to sacrifice a sum of Rs. 300 from the apartment fund towards ‘refreshments’ for these meetings. A glass of Fanta, potato chips and a sweet of the host’s choice was the agreed menu.

I left office early, to reach home on time, and host the entertainment programme with the approved ‘list of refreshments’.

Protocol demanded that the watchman be sent with a repeat invitation, and request the anxious guests to grace the occasion with their presence.

Usually these meetings were dominated by women folk, as the men knew little about domestic matters, and secondly, it made better sense to make the loudest respondents represent their household.

In about half an hour the guests trooped in, wearing clothes that were specially reserved to be inaugurated on this day. It was the usual turnout. By now, the bunkers had learnt to wear blinkers to any notice. Extra chairs were brought in by the watchman from the neighbouring flats and the guests seated themselves with a determined look on their faces to make the evening, a promising one. Their respective children were granted liberty to use any other room as play area for the stipulated time.

After initial discussions on each others’ sarees, which tailor in the locality stitches good ’saree falls/ zig-zag’ on time, and who possessed how many blouse pieces, the first decision was taken.

A mutual date was agreed upon where they could meet up and barter their ‘unused blouse pieces’.

Then, refreshments were served.

After a few crunches, comments were passed on the quality of the chips. An impromptu survey was done on the neighbouring ‘chips shops’. They were compared on various parameters like freshness, taste, price and service. Branded chips like Lays were also considered, but lost out on the fear of exceeding the ‘painfully-arrived-at-budget’. And the second verdict was passed.

The winning ‘chips shop’ was declared as the default chips provider for all future meetings.

The sweet had mixed reactions. Someone suggested her Uncle’s sweet shop, that he had recently opened on Avenue Road. She also volunteered to exercise her influence and get us a special discount. It was decided that further action would be taken only after the volunteer first served a free sample of Her Uncle’s flagship sweet.

“Not bad, three concrete decisions even before the meeting started” I thought to myself.

……to be contd.

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NOTE:  I originally published this article in 2007

Accessing information and interactive resources available around the globe via the Internet is a pretty simple task. In a carefree Internet world, the dynamics of connecting to resources are transparent, and we expect resources we want to access are available through our local Internet service provider. Technical details of connecting to Internet resources are an abstract concept for most, and whatever mechanics happen behind the scenes are not relevant to our everyday use of the network.

Because the Internet is made up of a complex matrix of physical, business and international relationships, how these systems interact and collaborate is actually very important to the end user, as well as to those providing Internet services and content. Of the greatest concern impacting online resources from eBay to the Bank of America is the potential financial pressure brought on by the largest Tier 1 networks. As the only networks in the world having global Internet visibility, these few companies, including AT&T, Sprint, Verizon, Level 3, and Cable and Wireless, facilitate access to the global Internet - a function which people and companies worldwide depend on to ensure small networks and content providers are available through their local service providers.

The Tier 1 world was born at the demise of NSFNet (National Science Foundation Network). In the early days of Internet development, the NSF supported development of a large publicaly funded academic and research network throughout the United States, and connecting many foreign academic networks to the US as a hub through the International Connections Manager (ICM Network). As commercial Internet development grew in the early 1990s, the NSF realized it was time to back away from publicaly funding the “Internet” and grant contracts to large US carriers to take over responsibility for the former US Domestic backbone and ICM portions of the NSFNet.

Small Internet exchange points (IXPs) were also funded, allowing the large networks taking over NSFNet assets, as well as their own commercial Internets to connect and share Internet traffic. Those network access points (NAPs) were also contracted to the large US carriers, who managed policies for US and International network exchange. The large US carriers ultimately had control of the networks, and were the original Tier 1 Internet providers.

Roadblocks in the Internet Community

Debates around net neutrality highlight some underlying issues. The goal of net neutrality is to preserve the open and interconnected nature of the public Internet. But whether the largest networks use their control to hinder growth and innovation within the Internet-connect business community or impede free access to Internet-connected content sources, they have the power and control which could present challenges to an open Internet environment.

A Tier 1 network, for example, has the power to charge a major content delivery network (CDN) a premium to access its network. This is because the CDN may deliver a very large amount of content traffic into a network, and the Tier 1 network believes they should receive additional compensation to fund additional capacity needed to support content distribution. This premium may be more money than the CDN is willing or able to pay. In turn, if the CDN doesn’t comply, the Tier 1 can ultimately refuse the CDN access to its network and cut its consumers access to the CDN’s content. This applies whether consumers access the Tier 1 directly or if the Tier 1 is the middle-network between consumers and their Tier 2 or 3 networks.

A voice over Internet Protocol Company underscores another potential conflict of interest. Let’s say you’re a consumer of a Tier 1 network that’s also a telephone company and you want to use a VoIP company, such as Vonage. But the Tier 1 doesn’t want the VoIP company to compete with its network and would rather that you use its own telephone product, so the Tier 1 may prevent you from using your VoIP company. In other words, a Tier 1, in developing its own commercial VoIP product, can prevent non-owned VoIP traffic from passing through its network.

While Tier 1 networks hold value for much of the Internet world, they also impose many political and financial barriers on smaller networks, content delivery networks, emerging VoIP companies, online gaming businesses, B2B and online commerce, and entertainment web sites. It is evident that Internet Service Providers (ISPs), CDNs, VoIPs, and many others need an alternative method of communicating with each other - one providing tools to redesign how relationships and interconnections bond the US Internet content and access communities.

Breaking Down Barriers

One objective in building efficiency and the performance needed to deliver content resources to end users is to flatten existing Internet architecture. Whenever possible, you eliminate the Tier 1 Internet networks from participating in the delivery of content resources to end users.

How do we accomplish this task? One option is through development and use of commercial Internet Exchange Points (IXPs), a location where many Internet-enabled networks and content resources meet to interconnect with each other as peers.

According to Wikipedia, an IXP is a physical infrastructure that allows different Internet Service Providers to exchange Internet traffic between their networks (autonomous systems) by means of mutual peering agreements, which allows traffic to be exchanged without cost. An IXP is essentially a physical switch in a carrier hotel or data center with the capacity to connect thousands of networks together, whether content providers or network providers.

Today at the Any2 Exchange, an IXP built within One Wilshire, on a single switch 125 different networks interconnect and are freely able to pass traffic amongst each other without having to go to a Tier 1 for routing. Members pay a small annual fee to the Any2 Exchange for the one-time connection and then benefit from the “peering” relationships among members of the Internet exchange.

Akamai, for example, a large content distribution network company that delivers streaming media and movies on demand, can connect to American Internet Services, a Tier 3 ISP in San Diego, Calif., through a local or regional Internet exchange point such as the Any2 Exchange, the Palo Alto Internet Exchange (PAIX), or other large exchange points operated by data centers and carrier hotels.

When an American Internet Services user wants to watch a movie that’s available on Akamai’s content delivery network, the data is passed directly from Akamai to American Internet Services - and subsequently to the end user - without transiting any other network. Not only has the goal of being less reliant on a Tier 1 been achieved, but the performance is superior because there are no “hops” between the CSP and ISP. Anytime you’re able to cut out the transit network, you increase the end user experience. Plus, it’s more economical, as in moist cases the CDN and ISP have no financial settlement for data exchanged.

The European IXP model, which is more mature and robust than the US model, highlights the important function of IXPs and how an exchange point alone can help influence the net neutrality debate. In Europe, Internet service providers and content delivery networks look to the IXP as their first connection point and if the IXP doesn’t have what they’re looking for, only then will they go to a Tier 1 or large Tier 2. Americans on the other hand, partially due to geographic size

Overall European IXP traffic grew at a rate of 11.05%, compared to America’s rate of 7.44%, according to the European Internet Exchange Association in August 2007. This can be attributed in part to greater member density in Europe - the London Internet Exchange/LINX has more than 275 members - where the larger the addressable community, the larger the traffic exchanged and the more the members want to get involved. After all, network effect (exponential growth of a community) and the “Law of Plentitude” (the idea that once an addressable or social community reaches participation by 15% or greater of a total community, it becomes a risk to not participate in the emerging community) motivate European companies to use IXPs. Additionally, Europeans generally have lower entry costs for participation, giving companies every reason why to participate in the IXP-enabled peering community. If one were to buy access to 275 networks through a Tier 1, the cost would be astronomical, but through a single connection to LINX, one can access 275 networks for a nominal fee. This is why European companies rely on IXPs 60% of the time, and only look to Tier 1 or 2 networks 40% of the time.

In contrast, American ISPs normally look to larger wholesale and Internet transit providers first and then consider reducing their operational expenses via an IXP as a second priority. American ISPs companies use IXPs at a more meager 15% rate, looking to larger wholesale and transit Tier 1 or Tier 2 networks 85% of the time. Still, recent American IXP traffic growth does exceed other regions, such as Japan (+5.85% in August) and the rest of Asia (+4.3% in August), which we believe is a result of increased price pressure on the American IXP industry. Newer IXPs, such as the Any2 Exchange, have lowered entry costs significantly, forcing others to follow suit and encouraging more networks to participate. As the cost of entry to IXPs continues to fall, participation in IXPs will become more common and attractive to all access and CDN networks.

What can we learn from the European model? Participation in an IXP can increase performance, lower operational costs and expenses, as well as bring an additional layer of redundancy and disaster recovery capacity to even the smallest networks. But most important, companies’ independence from Tier 1s through the collective bargaining of the exchange points puts them in a stronger position to deal with large networks than our position allows for in the US, where the vast majority of people have their primary Internet connections through a large Tier 2 or Tier 1 network provider.

Adding to the Cause

Today’s content-rich Internet is just a prelude to the future content, media, applications and services soon to be developed and deployed. It’s no wonder that in large IXPs, such as the Amsterdam Internet Exchange (AMS-IX), there are already several content delivery networks using bundled 10Gbps ports, clearly showing end users’ insatiable demand for high bandwidth applications and services. High Definition Internet TV (IPTV), massive online interactive gaming, video on demand (VOD), and feature-rich communications (video conferencing) are just a few examples of Internet-enabled applications contributing to the heightened demand.

For American ISPs that pay anywhere from $20-to-$40/Mbps when connecting to Tier 1 and Tier 2 networks, the cost of delivering applications and services to end users who require much larger network and bandwidth resources is one of the obstacles that needs to be overcome. But without broad participation in IXPs, access networks have a difficult future, as do content providers who will find that the cost of delivery to end users becomes much more expensive if Tier 1 and Tier 2 networks increase the cost of delivering both wholesale and end user Internet traffic.

What Can the American Internet-Connected Community Do?

Whether through price increases or monopolistic practices, the largest networks are currently writing the rules for a global Internet product. They are gradually merging and acquiring competition, reinforcing their influence in wholesale and transit network share and presence. Opportunities for network peering decrease with each merger.

Carrier hotels and large data centers in the US can support positive change in the Internet peering community by creating or supporting open and low cost Internet Exchange points promoting network peering and content delivery to all networks.

Reducing barriers to entry and the cost of wholesale or transit networks will allow Internet network and content companies to focus on delivering network access and services, with the ultimate winner being end users who will enjoy a lower cost, higher performance Internet experience.

I am on a reading frenzy, and finally got to the October 17, 2008 issue of Medical Economics.  There was an excellent article by Elizabeth A. Pector, MD, on fixing health care.  I will highlight some key points, but encourage all of you to see the entire article (pages 29-33.)  (www.memag.com)

“Establish equal rights for doctors.”  Dr. Pector advocates appropriate reimbursement, taming the paper tiger, and reigning in “etitlementiasisis” by patients.  Bravo!

“Improve access to doctors.”  She again targets physician reimbursement, but my only question is “how”?  Increasing physician reimbursement will be a tough sell in today’s economic times.  Sadly, I don’t see a way off the office visit treadmill that is the bane of primary care existence.

“Stop the blame game.”  Our society has turned into expert finger pointers.  Bad things just happen.  People die.  Sometimes, physicians make mistakes.  We need to have mutual respect between patients and physicians, rather than mutual antagonism.  And hey, tort reform wouldn’t be so bad either!

“Establish workable technology standards.”  Amen.  “We need to establish workable standards for PHR and EHR systems, including mutually compatible communications platforms.  Also, cash strapped doctors need help to fund changes…”  Technology is here to stay, but we need a coherent direction for all of health care, such that physicians and patients can access records through out the spectrum of medical institutions (clinics, offices, hospitals, nursing homes, etc.) 

“Stop punishing doctors and hospitals.”  See my previous rant on the medicare never ever no pay list.  The no pay list will continue to grow as Medicare pokes its fingers into patient management.  The no pay rules range from common sense to absurd, but there seems to be no one reigning in the free wheeling CMS.

“Take responsibility.”  Americans need to pony up and take responsibility for their choices, rather than shifting the responsibility elsewhere.  This will take giant social change, from throwing out the television and X-box to eating meals that don’t come in a “super size.”  Are we up for the challenge?

I think Dr. Pector is my twin sister of a different mother! Keep fighting the good fight, Dr. Pector!

With New Year’s Day less than a month away, it’s time to consider converting investment lemons into lemonade.

For most investors, this has been an abysmal year. But if you’re stuck with hefty losses, here’s a way to help soften the blow: Take a fresh look at what’s left of your wounded portfolio, dump losers you were thinking of ditching anyway and use your losses to cut your taxes for this year.

Tax professionals refer to this as “tax-loss harvesting.” While it may not make you feel much better about those ill-starred investments, it certainly can help fatten your wallet at tax time next year — and possibly in future years, too. “It’s a great year to tax-loss-harvest,” says Lawrence Glazer, managing partner of Mayflower Advisors, an investment advisory firm based in Boston.

The basic tax rules are fairly simple. But in your haste to save taxes, try to avoid wrong turns. For example, steer clear of a painful pothole known as the wash-sale rule, says Bob D. Scharin, a senior tax analyst at the tax and accounting business of Thomson Reuters in New York.

Here is a summary of the basic rules of the road, a few twists and turns to watch out for, and advice from investment and tax professionals.

THE BASICS: Although losing money is painful, you can use capital losses to soak up an unlimited amount of capital gains. If your capital losses are bigger than your gains or you don’t have any gains at all, you typically can deduct as much as $3,000 of net losses from wages and other income. The limit is $1,500 if you’re married and filing separately from your spouse, says Mr. Scharin.

Additional net losses get carried over onto your federal returns in future years, which can mean tax savings for years to come. However, capital-loss carryovers survive only as long as you do. You can’t leave them in your will for your heirs.

Naturally, paper losses don’t count. To be able to use your capital losses for tax purposes, you have to actually sell the investments.

These rules aren’t limited to stocks. They also apply to bonds and other securities.

During this year’s presidential campaign, Sen. John McCain proposed increasing the $3,000-a-year limit to $15,000 a year. President-elect Barack Obama hasn’t said whether he favors this idea.

IT’S A WASH: A “wash sale” typically happens when someone sells a stock or some other security at a loss and then buys the same stock, or something “substantially identical,” within 30 days of the sale. That means 30 days before or after the sale — not just 30 days after. Break this rule, and you aren’t allowed to deduct your loss. Instead, you add the disallowed loss to the cost of the new stock; that becomes your basis in that stock.

Thus, if you sell a security at a loss and want to be able to deduct that loss, don’t buy the same security, or something “substantially identical,” within the banned period. What does “substantially identical” mean? It can be a gray area, says Gregory Rosica, tax partner at Ernst & Young LLP in Tampa, Fla. The IRS says it depends on the facts and circumstances of your particular case, and the issue can get surprisingly tricky.

The safest bet: Wait until after the banned period to purchase the security — or buy something completely different. For more details, see IRS Publication 550, or check with a trusted tax expert.

The IRS has finally answered a separate question that lawyers and accountants had debated for years: Could an investor dodge the wash-sale rule by selling a stock at a loss in a taxable account and then buying it back a few minutes later for an IRA or some other tax-advantaged account? The IRS said no: That would violate the wash-sale rule.

TAX RATES: Under current law, the top rate on long-term capital gains on stocks, bonds and other securities is 15%. “Long term” means something you’ve owned for more than a year. If you sell an investment you’ve owned for a year or less, that’s a short-term gain, and it’s usually subject to tax at ordinary income rates. There’s also a capital-gains rate of zero — yes, zero — for people in the lowest brackets, but it’s complicated. To see if you qualify, consider buying inexpensive tax-preparation software programs, such as Intuit Inc.’s TurboTax. For more details, see IRS Publications 550 and 564, available on the IRS Web site (irs.gov).

During the presidential campaign, Sen. Obama called for raising the top long-term capital-gains rate on stocks and other securities to 20% — but only for households making more than $250,000, or individuals making more than $200,000. He also indicated he might delay the idea of raising taxes next year if the economy is weak.

If you sell art, jewelry or other collectibles for a profit, the top long-term capital-gains rate is 28%.

TAX TRAP: With stock prices down sharply, many investors may be looking for opportunities to jump back into the market and scoop up bargains. But if you’re thinking of buying stock mutual funds this month for a regular taxable account, do some homework first. Otherwise, you could get hit with a large tax bill that could easily have been avoided.

This is the time of year when mutual funds typically make their required capital-gains distributions. Those payouts are taxable — unless you’re investing for a tax-advantaged account such as an IRA. Thus, before investing in a fund, be sure to contact the fund and ask whether it’s planning a distribution, how much and when it will be paid, says Mr. Glazer of Mayflower Advisors. If getting a large distribution would have a significant impact on your taxes, consider deferring your investment in that fund until shortly after the date to qualify for the payout — or pick another fund, Mr. Glazer says. Otherwise, you’ll essentially be getting back part of your own investment and owing taxes on it, which would be “adding insult to injury,” he says.

It may seem this couldn’t possibly be an issue this year since most funds have lost money. Logical — but wrong. Not every fund is going to have a distribution, but many will this year despite the decline of your investment, Mr. Glazer says.

STRATEGIES: Don’t ever sell a stock solely for tax reasons. But if you’re considering selling something for solid investment reasons, be sure you at least consider the tax consequences.

Many investors who have ordinary income and who also are stuck with investments that are underwater routinely try to arrange their affairs so that they take full advantage of the net capital-loss rules. That typically means taking enough losses during the year so that they wind up with at least $3,000 in net realized capital losses, which can be used to offset ordinary income. This can be especially helpful for upper-income investors since ordinary income-tax rates range as high as 35%.

Considering giving away stock to charity? If so, don’t donate stocks that are selling for less than you paid for them. Instead, sell the losers so that you can claim a loss that can help you cut your taxes. Then, if you wish, donate the proceeds to charity. If you want to donate stock, donate shares that have gone up significantly in value and that you’ve owned for more than a year.

When making your decisions, take a look at all your investments, not just your deeply depressed stocks. For example, a friend is thinking of selling the New York City apartment that he and his wife have lived in as their primary residence for many years. They expect to make a profit well in excess of $500,000.

Under current law, joint filers who sell their primary residence typically can exclude a gain of as much as $500,000 if they’ve owned it — and lived there — for at least two of the five years prior to the sale. (For most singles, the limit is $250,000.) Gains of more than that are subject to capital-gains taxes.

So how could this New York couple avoid those taxes? They could sell their apartment and also get rid of stocks or other securities at a loss to reduce or even eliminate the excess gains on the apartment sale.

—Mr. Herman is a Wall Street Journal staff reporter in New York.

NOTE FROM EDITOR:  If you’re worried about selling to take advantage of tax loss harvesting because you would potentially lose exposure to the stock market (and therefore miss any potential rebound), consider reinvesting the sale proceeds in a tax efficient ETF until you can reinvest in the stock you sold (31 days).

The Securities and Exchange Commission took aim at the big credit rating firms Wednesday, passing new rules designed to prevent conflicts of interest and increase transparency in the $5 billion a year industry.

The three largest ratings firms — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings — have been widely criticized for their role in the global financial crisis brought on by the collapse of the subprime mortgage market.

Critics claim the rating firms gave their highest ratings to securities laced with risky mortgage backed assets in order to curry favor — and profits — from the firms buying and selling the securities.

The new rules specifically forbid the firms from advising banks on how to package securities in order to secure high ratings.

Thousands of securities initially given AAA ratings were later downgraded as the financial crisis washed across Wall Street, forcing nearly every large bank to write down billions of dollars in losses.

SEC commissioners voted unanimously at a public meeting to adopt the new rules.

SEC Chairman Christopher Cox called adoption of the new rules “a significant and substantive action.”

The industry had regulated itself for nearly a century, but that ended in 2007 as it became clear that many mortgage-backed securities given AAA ratings were likely to collapse in value.

The agencies have long been as almost de facto regulators, issuing ratings on the creditworthiness of public companies and securities. Investors depend on the ratings to purchase the safest possible securities.

Their grades can be key factors in determining a company’s ability to raise or borrow money, and at what cost which securities will be purchased by banks, mutual funds, state pension funds or local governments.

Among the other new rules is one that will require the rating firms to disclose how much verification they performed on the quality of the securities they review.

SEC Approves New Credit-Rating Rules By FBN,  http://www.foxbusiness.com/story/markets/industries/finance/sec-approves-new-credit-rating-rules/

Jeffrey Free Luers interviews Grant Barnes:

JL: You are currently serving a long prison sentence for arsons claimed on behalf of the Earth Liberation Front. What compelled you to take such actions?

GB: I had been aware of the ELF for some time, and as I became more aware of the severity of the most likely consequences of climate change I decided it was time for me to do my part and take responsibility. I think that property destruction is a useful component in a united front of tactics toward first, earth liberation, and ultimately towards the cultivation of a biocentric culture. It raises the economic and psychological costs of earth destruction, and when there is media coverage, as there usually is, it shows people on all sides of the struggle that the destroyers are vulnerable. I believe that property destruction is one of the things that the other species of the planet would do in their defense against extinction if they had the knowledge and ability to do so. Those who destroy the property of uncaring, irresponsible people act on behalf of these other species, which are our cousins.

JL: How did you first get into activism?

GB I helped with an info-shop in Denver (now closed) and Food Not Bombs, and I worked for the Rape Assistance and Awareness Program.

JL: You are serving your sentence in maximum security. What has that been like?

GB: One challenge has been racism. Im white, and most of the people I talk to are not, and this has led to some confrontations with racists. My friends back me up though, so when problems arrive we respond and that keeps me safe enough. They deserve the better part of the credit for that.

Otherwise, the hardest thing is the isolation; Im a social person and community is very important to me, so everyday it takes a conscious effort to adapt to spending most of my time alone (most of the time Im not allowed to leave the cell). However, I stay productive by studying for my degree and working out, and Ive made strong progress in both areas. I occasionally have the opportunity to return correspondence and that is one of my favorite things to do.

JL: When you first decided to get involved in eco-defense did you think you would end up in prison? If so, how did you prepare yourself for that possibility?

GB: I knew I could go down and I strove not to. At various times in my life I had read prison memoirs like Soul On Ice by Black Panther Eldridge Cleaver and Soledad Brother by George Jackson, and some more recent accounts of prison life, including a web file entitled How To Survive In Prison. It contains some good information, for instance on the importance of respect, but I think I would have picked up on that sort of thing whether or not I had read anything on it. Probably the best way somebody could prepare would be to stay in good physical shape.

JL: How has your support been? How can people get involved?

GB: The Lucy Parsons Project sent two books last year, which are outstanding to have as good reading material is hard to get here. Earth First! Journal kindly gave me a free prisoner subscription, and I also got an issue apiece from Green Anarchy and Bite Back, all of which I considered notable on the outside and appreciate having in here. I am especially thankful that Earth First! Journal and Green Anarchy have listed my address. Ive got several letters and postcards wishing me well, and recently Ive begun corresponding with several people. It would be outstanding to hear from others.

The best thing people can do is send information on intentional communities, mutual aid networks, and similar formations I might contribute to when I am released. One of the most frustrating things about being inside is having few outlets to give to others, but I want to lay a solid foundation for such community that I can build on when my time here is done. Creating community takes a great deal of work, and I know its necessary to spend time to understand, among other things, a potential members level of commitment and the extent of the common ground shared with existing members. I want to start that dialogue, because the kind of life I want to live on the outside is one spent as much as possible in spaces of liberation from patriarchy, exploitation, anthropocentrism, racism, and all other symptoms of the present alienating civilization. To that end I am most interested in more primitive groups.

Also, I find that in general pictures are more natural expressions than words, and it means a lot to me to see photos along with peoples writings. Regardless, it is always special to receive a letter or postcard from anyone who feels concern for the earth and joy for life.

JL: Are you working on projects while locked up?

GB: Im finishing my degree in cultural anthropology; I was a student when I was arrested. Reading about a range of cultures has been provocative. It has shown me to some extent how much is being lost with the extinction of so many sustainable, primitive ways of life–knowledge we need now more than ever. I also keep up with reports on climate change, and I am reading some books I had not made time for on the outside, like Derrick Jensens Endgame.

JL: And now heres your chance for a shameless wish list. Would you like people to send any specific books or books on particular subjects? Are there any canteen items, like a radio or anything else, we can help you buy to make your time easier?

GB: I dont listen to the radio or watch TV, or buy snacks, and money is qualitatively less valuable to me than heartfelt correspondence, but I would certainly appreciate funds for mailing supplies, and for beans and oats, as the vegan food here is very limited. One luxury I do love is music and receiving some of that would be a treat.

One of the subjects I most want to better understand is the difference between primitive and complex cultures. I would be very grateful for any well-researched reading material at the undergrad level on this topic. Much of what is listed in Green Anarchy is of interest, for instance.

–

Grant Barnes is serving a 12 year prison sentence for the arson of SUVs. From his prison cell he watches the birds that have made their nest within the razor wire. A reflection of what is happening to our world. Write to: Grant Barnes, #137563, San Carlos Correctional Facility, PO Box 3, Pueblo, CO 81002. Visit his new website at http://grantbarnes.wordpress.com.

—————————-

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Scam of the day

Indeed, the fact that keeping up with stocks can induce a headache if you were to personally keep track of your own investment finance gft forex portfolio, especially if you have your hand in a lot of options to consider, and keeping up with stocks can As one of the most liquidly traded instruments forex trading charts in the world, the EURUSD is often the last place that one would see sharp drops in liquidity. �Dante financial market difficulty could be felt through forex trading markets, as a drop in liquidity led typically narrow bid/ask spreads on the Euro/US dollar currency pair to widen considerably. Its unusually swift mid-week money market fund seizure ends a long saga for the beleaguered financial behemoth, but it likewise timothee market fears of systemic risk in broader credit markets. Packston Mutual bank, the nation money market accounts getting started forex trading largest savings and loan institution, was seized by the US Office of Thrift Supervision and most of it was quickly sold to JPMorgan Chase. The Japanese Yen quickly rallied on the financial market distress, and the JPY would stand to strengthen further if conditions do not improve through upcoming trade. Forex market john hancock money market investments conditions deteriorated overnight, as the largest bank failure in US history took forex broker its toll on broader financial markets.

As much as life is about chasing dreams, make sure you live each day to the fullest.   Laugh.  Smile.  Share.  Engage with people.  We are all in a rat race, some with a lot less pressure, some with everything at stake everyday.   How we handle ourselves, is how we define our character.   Some us will have relentless schedules.   Others will have huge debts.  Some will enjoy nature and others will be trapped behind the desk.   Find your happiness.   Find your medium.   Enjoy the moments. 

Johnny and I were standing outside the tennis courts in Forsythe Park watching some of the regulars try to revive their backhands and discussing Obama’s win. I asked him if he was excited.

“Why? Because a black man is president?”

“Um, yeah.” Duh.

He shook his head. “Just because I’m black don’t mean I’m impressed.” Then he leaned in as if he was fearful of being overheard even though there was no one around except the players who had enough on their hands discovering top spin. “I’m a socialist,” he said in a near-whisper. “You know what that is?”

We’d been talking politics all summer but he’d never said the word before. “I’ve heard of it,” I said non-commitally. “What is it?”

“It means taking care of people. Socialism is people first.”

[T]he definition above is the commonly accepted depiction of Communism, while the commonly accepted definition of socialism has come to resemble what you call “European Democratic Socialism”. Might there be some good reason to accept these definitions rather than go back to Square One?

I was thinking of Johnny when I wrote that.

Political or economic movements/philosophies/policies should ultimately have as their goal the welfare of the people - all the people, not just a select few. Socialism has always seemed to me the best way to achieve that. Her definition is neatly put and couldn’t be clearer.

Socialism, as I envision it, is an economic system under which all natural resources, as well as all means of producing goods and commodities (above the scale of individual artisanship), and of organizing the delivery of services, would be owned and managed by a democratically-run government for the benefit of the society as a whole. The government, in turn, would take full responsibility for meeting everyone’s fundamental needs – food, clothing, shelter, health care, education, transportation, a healthy ecosystem, access to cultural and recreational resources – at the highest level possible.Rational planning, not competition for profit, would drive the allocation of resources, with the goal of meeting the needs of society as a whole. Maximum use of technology – intelligently designed and environmentally sustainable – would ensure that human drudgery could be continually reduced over time. Advances in productivity would be used to reduce the length of the work week and raise the standard of living for everyone, not to enrich a small elite.

That definition certainly encompasses what both Johnny and I have in mind.

But the problem with socialism for those of us who have looked at it has never really been in defining it. Its greatest flaw is its reliance on decision-making by citizens, most of whom, at least in America, seem notoriously disinterested in making any decisions at all, while the rest want to make as few as they can get away with. Socialism demands heavy participation by the majority of a nation’s citizens. But even that isn’t enough. They need to be knowledgable, educated (not necessarily the same thing), have a fund of common sense, and a solid connection to their communities.

***

In a society in which people are absolutely assured that their fundamental needs, and those of their family, friends, coworkers, and neighbors will be met without question, this insecurity, and the greed it produces, will fade away, and people will no longer feel the need to amass as much money and as many possessions as possible in order to bolster their sense of self-worth and provide for an uncertain future. When workplaces and other social institutions are administered with the goal of meeting human needs through cooperation and teamwork, people will no longer feel the need to compete with one another in destructive ways. Instead, people will derive satisfaction and pleasure primarily from contributing to their society through creative and fulfilling work.

Maybe, but while behaviour is malleable and depends on circumstances, just as she says, the circumstances in the US preclude a preponderance of the population acquiring the skills needed even to envision a socialist democracy, much less bring one about or participate in its maintenance. For that reason I, many years ago and with great reluctance, reached the conclusion that for the foreseeable future, the best we could hope for in America is what Organian calls “European Democratic Socialism” and describes, accurately I’m afraid, as little more than “a kinder, gentler capitalism”.

Given the alternative as we have experienced it for 30 years and especially for the last 8 as capitalism ran amok, I’d take it. Gladly.

Still, there is no inherent reason, not behaviour or our so-called “innate nature”, why a socialist society would not work. Indeed, many have and for very long periods of time. Most were brought down by outside forces far stronger than they could defend against and armed with weapons they didn’t expect and knew nothing about. But for as long as they lasted they were stable, hospitable, and peaceful. From the outside, in the case of those that were studied, they even appeared to be happy, a condition that could, of course, not be allowed to continue since it was a “threat”, to our self-image if nothing more.

Organian seems to be aiming at clearing the ground for an eventual discussion around realistically creating a socialist democracy in America, a discussion which the Bush Era makes almost inevitable and maybe even important. I’d urge you to read what she’s written and join in. If there’s any way it can be done, it might be our only way out of repeating Bush every century or so and we owe it to our grandkids to do everything we can think of to make sure that doesn’t happen.

Personally, I don’t think it can be done. There are too many shitheads and greedos who define America as a country where you have the right to make as much $$$ as you can get your grubby fingers on. They’re loud, they’re bullies, and they’ll threaten to kill you if you disagree with them. Still, I’m willing to listen.

Source : NEP (New Economics Papers) | RePEc

Source : NEP (New Economics Papers) | RePEc

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British representatives of a unique twinning scheme are due to meet with their Nepalese counterparts shortly, in what will be an exciting and enlightening experience for all concerned.

The idea for the twinning came to fruition when former Gurkha Captain, Gaubahadur Gurung approached his District Councillor, Tina Knight. He asked for her help in setting up some form of charity, to help support and aid his home village.

It was Councillor Knight’s radical idea to ‘twin’ the Nepalese and English villages, as she felt that the twinning would have many benefits, including improving community links between the English villages, Carver Barracks and the Nepalese community in the UK, as well as raising money for Tang Ting. Out of this new relationship the Tang Ting Twinning Association was born, which over its short life has raised many lakh rupees to support Tang Ting.

The twinning was celebrated in style in May 2007 at Carver Barracks, with the acting Nepalese Ambassador in attendance, the Gurkha band playing, school children singing and dancing and many local dignitaries in attendance, culminating in the signing of a Charter which joins these different communities in friendship, and which pledges to support the Nepalese people.

In England the charters were signed, but the ceremonies were not fully completed as spaces were reserved for signatures from the Tang Ting elders. Now, more than a year later, these spaces are about to be filled, as the committee members from the TTTA, together with members of the British Nepalese community, are making their way to Tang Ting to complete the ceremonies, formally open the Day Care centre and find out more about the village, its life and its needs.

The Tang Ting Twinning Association aims to promote friendship and co-operation between the communities of Debden, Debden Green and Wimbish in the UK, and of Tang Ting in Nepal, to the benefit of all of our citizens.

• The Tang Ting Twinning Association aims to encourage mutual understanding of life within the communities, in relation to cultural, economic, educational and social affairs, via communication between our communities, particularly through our children, but also through other sections of society.

Honest to goodness, if Rip Van Winkle didn’t wake up and file the Amended Answer for defendant Forensic Analysis and Engineering, it’s difficult to account for many of 67 defenses (yes, 67!).

New to the case or not, any Statue of Limitations that might apply would not consider the date an attorney makes an appearance; but, that’s only date that might, just might, be beyond some limit.

Like many of the defenses, the fifth had no supporting citation.  In those defenses with a citation, the reference was broad with no information on how it might apply.  For example:

A particularly bewildering defense are the many related to punitive damages beginning with defense thirteen and continuing through defense twenty-six save the one exception, defense twenty-five.

What makes the twelve punitive damage defenses so bewildering is that no punitive damages are sought.

WHEREFORE, Relators demand judgment against the Defendants jointly and severally in the amount of three times the overcharges submitted for payment to the United States Government, for a civil penalty against the Defendants each jointly and severally in an amount between Five Thousand, Five Hundred Dollars ($5,500.00) and Eleven Thousand Dollars ($11,000.00) for each violation of 31 U.S.C. § 3729, etseq., for the maximum amount allowed to the Qui Tam Plaintiff under 31 U.S.C. § 3730(d) of the False Claims Act or any other applicable provision of law, including any alternate remedy provisions, for its court costs and reasonable attorneys fees at prevailing rates, for expenses, and for such other and further relief as this Court deems meet, just and proper.

The False Claims Act establishes the penalty at three times the amount of each infraction.  Consequently, the qui tam claim filed by the Rigsby sisters simply requests a judgment consistent with the law and not requesting punitive damages -  which brings up the law established by the Act and another of the defenses.

WHEREFORE, Relators demand judgment against the Defendants jointly and severally for a fair and reasonable amount to be determined by a jury, for its court costs and reasonable attorneys fees at prevailing rates, for expenses, and for such other and further relief as this Court deems meet, just and proper.

Having filled the sink with 67 defenses, the brief the brief turns on the water and attempts to float 44 answers. en moves to answers. Two are particularly noteworthy:

3. It is admitted that FAEC conducted some limited business in this district immediately after Hurricane Katrina. Subject to the other defenses pled herein, FAEC admits only that it is properly before the court and that venue is proper in this district. Otherwise, paragraph 7 of the Complaint is denied.

However, the contact page on the Forensic website lists an office in Ocean Springs, Mississippi - and surely it takes more than “some limited business in this district” to maintain an office.

5. In response to paragraph 17, it is admitted that FAEC is in business to provide engineering services to its clients, which sometimes include insurance companies.

The insurance companies listed on the client page of the Forensic website represent 57% of the company’s total clients listed and include:

Allstate Insurance, Amica Mutual Insurance, Bituminous Insurance,Cigna Property & Casualty,CNA Insurance, Erie Insurance, Farmer’s Insurance,Fireman’s Fund Companies (Atlanta), GEICO, Golden Eagle Insurance (Los Angeles),Home Insurance (Jacksonville), Kemper Insurance, Liberty Mutual Insurance, Lloyds of London, Nationwide Insurance, North Carolina Farm Bureau,North Carolina Grange Mutual Insurance Company, Penn National Insurance, Phillips Petroleum, Reliance Insurance Group, Safeco Insurance, Selective Insurance, St. Paul Fire & Marine Insurance, State Farm Insurance,Texas Workers’ Compensation Fund, TIG Insurance (Honolulu), and USAA Property & Casualty Insurance

One can’t help but wonder how Judge Senter will drain the sink; but, when it comes to the Rigsby qui tam claim, the unexpected is always expected.

Managed Futures involve risk and are not suitable for all investors. Past performance is not indicative of future results.

by AIG Commercial Insurance

Risk Specialists Companies, Inc. (RSC), a subsidiary of AIG Commercial Insurance, is introducing what it says is a first in the U.S.: a homeowners insurance product that is compliant with key Islamic finance tenets and based on the concept of mutual insurance.

The Takaful Homeowners Policy is underwritten through RSC member company A.I. Risk Specialists Insurance, Inc., in conjunction with Lexington Insurance Co. and in association with AIG Takaful Enaya. Headquartered in Bahrain, AIG Takaful Enaya was established in 2006 to provide Takaful products, including accident and health, auto, energy, property and casualty products.

The Takaful home policy is the first installment in Lexington Takaful Solutions, a series of Shari’ah-compliant (Takaful) product offerings in the U.S.

According to Ernst & Young’s 2008 World Takaful Report, Takaful was estimated to be a $5.7 billion market globally with over 130 providers in 2006. The Takaful market is estimated to be in excess of $10 billion by 2010.

Takaful is similar to mutual insurance and cooperative risk sharing but there are key differences including a clear segregation of funds owned by participants and those owned by the insurance operations entity. Investments of funds are also restricted to avoid companies involved in entertainment, alcohol, pork and other elements prohibited by Islamic law.

Muslim countries only account for 5 percent of the global insurance market although they represent 25 percent of the world’s population, according to AIG, which launched its Takaful operation in October 2006.

The Takaful Homeowners Policy builds on LexElite, the homeowners policy from Lexington that is sold throughout the U.S. The Takaful Homeowners Policy is available in all 50 states.

According to Jim Crain, associate vice president and personal lines underwriting director for Risk Specialists, the coverage, terms, commissions and sales proceduers are the same for this new products as they are for LexElite.

“The introduction of Takaful products in the U.S. represents an important and emerging growth opportunity for AIG Commercial Insurance. We are pleased to offer socially responsible solutions to this segment of the domestic market,” said Matthew F. Power, president, Risk Specialists Companies, Inc.

AIG Takaful Enaya is licensed by the Central Bank of Bahrain and its Shari’ah Supervisory Board is composed of Shari’ah scholars Sheikh Nizam Yaquby, Dr. Mohammed Ali Elgari and Dr. Muhammad Imran Usmani.

Risk Specialists Companies, Inc. is a U.S. surplus lines broker providing access to specialty casualty, property and personal lines insurance from Lexington and other AIG companies.

Since our October market update in which I stated that this is the worst financial crisis I have seen in my thirty years as a wealth manager, both consumers and investors are more scared and have retreated even further. The big three U.S. auto companies are in trouble and the markets have made lower lows. Until we see a solid bottom, caution is warranted.

I have recommended our 401K investors to be in fixed income or cash until the dust settles. With the markets trying to find a bottom and the possibility of much lower lows, we sold most of our mutual funds (representing about 10% of our portfolios) in last week’s rally. I have been very disappointed with their ability to protect their investors on the downside. By selling we can lock in capital losses to combat potential tax increases with the Obama administration. What is working well for us is our intraday trading and protecting our portfolios with ultra short Proshares positions.  We are very active in protecting our investor’s principal, as I feel it is better to be safe than sorry. The economy is not going to turn up for a while and we are going to hear negative news from different sectors that are adversely affected by the recession. However, I am anticipating that the markets will present great opportunities going into in the second quarter of 2009.

In other news, a new year is approaching and with this new year comes a new President and administration, and more importantly, new tax policies.  While President-elect Obama has not been specific with details or commitments, the hints he has dropped indicate that the tax increases he campaigned with will most likely be postponed until after 2009.

Even with this uncertainty, it is prudent to take action now and help shape your income tax liability for 2008.  Here are some traditional tax strategies to consider:

These are only a few but enough to start us thinking about tax savings.  For more detailed information on 2008 strategies and tax law changes, check out the “Year-End Tax Planning for Individuals” article, which is located in the news and resources section of the Tellone Financial Services website.  For questions more specific in nature, don’t hesitate to call.

Infoshop News

JL: You are currently serving a long prison sentence for arsons claimed on behalf of the Earth Liberation Front. What compelled you to take such actions?

GB: I had been aware of the ELF for some time, and as I became more aware of the severity of the most likely consequences of climate change I decided it was time for me to do my part and take responsibility. I think that property destruction is a useful component in a united front of tactics toward first, earth liberation, and ultimately towards the cultivation of a biocentric culture. It raises the economic and psychological costs of earth destruction, and when there is media coverage, as there usually is, it hows people on all sides of the struggle that the destroyers are vulnerable. I believe that property destruction is one of the things that the other species of the planet would do in their defense against extinction if they had the knowledge and ability to do so. Those who destroy the property of uncaring, irresponsible people act on behalf of these other species, which are our cousins.

JL: How did you first get into activism?

JL: You are serving your sentence in maximum security. What has that been like?

JL: How has your support been? How can people get involved?

JL: Are you working on projects while locked up?

id="blog-title">kavips

id="tagline">Just another Delaware WordPress.com weblog

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.

From that moment, Whitney became E.F. Hutton: When she spoke, people listened. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of ­borrowed money, and imagine what they’d fetch in a fire sale. The vast assemblages of highly paid people inside the firms were essentially worth nothing. For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.

Rivals accused Whitney of being overrated; bloggers accused her of being lucky. What she was, mainly, was right. But it’s true that she was, in part, guessing. There was no way she could have known what was going to happen to these Wall Street firms. The C.E.O.’s themselves didn’t know.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”

Harboring suspicions about ­people’s morals and telling investors that companies don’t deserve their capital wasn’t, in the 1990s or at any other time, the fast track to success on Wall Street. Eisman quit Oppenheimer in 2001 to work as an analyst at a hedge fund, but what he really wanted to do was run money. FrontPoint Partners, another hedge fund, hired him in 2004 to invest in financial stocks. Eisman’s brief was to evaluate Wall Street banks, homebuilders, mortgage originators, and any company (General Electric or General Motors, for instance) with a big financial-services division—anyone who touched American finance. An insurance company backed him with $50 million, a paltry sum. “Basically, we tried to raise money and didn’t really do it,” Eisman says.

Instead of money, he attracted people whose worldviews were as shaded as his own—Vincent Daniel, for instance, who became a partner and an analyst in charge of the mortgage sector. Now 36, Daniel grew up a lower-middle-class kid in Queens. One of his first jobs, as a junior accountant at Arthur Andersen, was to audit Salomon Brothers’ books. “It was shocking,” he says. “No one could explain to me what they were doing.” He left accounting in the middle of the internet boom to become a research analyst, looking at companies that made subprime loans. “I was the only guy I knew covering companies that were all going to go bust,” he says. “I saw how the sausage was made in the economy, and it was really freaky.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.

Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.

And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking home­owners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

In retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) The default rate in Georgia was five times higher than that in Florida even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California’s was only 5 percent. Why?

The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

Eisman, Daniel, and Moses then flew out to Las Vegas for an even bigger subprime conference. By now, Eisman knew everything he needed to know about the quality of the loans being made. He still didn’t fully understand how the apparatus worked, but he knew that Wall Street had built a doomsday machine. He was at once opportunistic and outraged.

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

“Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it. “Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

This particular dinner was hosted by Deutsche Bank, whose head trader, Greg Lippman, was the fellow who had introduced Eisman to the subprime bond market. Eisman went and found Lippman, pointed back to his own dinner companion, and said, “I want to short him.” Lippman thought he was joking; he wasn’t. “Greg, I want to short his paper,” Eisman repeated. “Sight unseen.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

Not so for hedge fund managers who had seen it coming. “As we sat there, we were weirdly calm,” Moses says. “We felt insulated from the whole market reality. It was an out-of-body experience. We just sat and watched the people pass and talked about what might happen next. How many of these people were going to lose their jobs. Who was going to rent these buildings after all the Wall Street firms collapsed.” Eisman was appalled. “Look,” he said. “I’m short. I don’t want the country to go into a depression. I just want it to fucking deleverage.” He had tried a thousand times in a thousand ways to explain how screwed up the business was, and no one wanted to hear it. “That Wall Street has gone down because of this is justice,” he says. “They fucked people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.”

“It was like feeding the monster,” Eisman says of the market for subprime bonds. “We fed the monster until it blew up.”

About the time they were sitting on the steps of the midtown cathedral, I sat in a booth in a restaurant on the East Side, waiting for John Gutfreund to arrive for lunch, and wondered, among other things, why any restaurant would seat side by side two men without the slightest interest in touching each other.

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

When I published my book, the 1980s were supposed to be ending. I received a lot of undeserved credit for my timing. The social disruption caused by the collapse of the savings-and-loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations. Just as most students at Ohio State read Liar’s Poker as a manual, most TV and radio interviewers regarded me as a whistleblower. (The big exception was Geraldo Rivera. He put me on a show called “People Who Succeed Too Early in Life” along with some child actors who’d gone on to become drug addicts.) Anti-Wall Street feeling ran high—high enough for Rudy Giuliani to float a political career on it—but the result felt more like a witch hunt than an honest reappraisal of the financial order. The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

I’d not seen Gutfreund since I quit Wall Street. I’d met him, nervously, a couple of times on the trading floor. A few months before I left, my bosses asked me to explain to Gutfreund what at the time seemed like exotic trades in derivatives I’d done with a European hedge fund. I tried. He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street C.E.O. showed he was the boss, by rising above the details. There was no reason for him to remember any of these encounters, and he didn’t: When my book came out and became a public-relations nuisance to him, he told reporters we’d never met.

Over the years, I’d heard bits and pieces about Gutfreund. I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept.

When I emailed him to invite him to lunch, he could not have been more polite or more gracious. That attitude persisted as he was escorted to the table, made chitchat with the owner, and ordered his food. He’d lost a half-step and was more deliberate in his movements, but otherwise he was completely recognizable. The same veneer of denatured courtliness masked the same animal need to see the world as it was, rather than as it should be.

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the fuck they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…fucking…book.”

I smiled back, though it wasn’t quite a smile.

“Your fucking book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your fucking book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”

Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm.

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.

From that moment, Whitney became E.F. Hutton: When she spoke, people listened. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of ­borrowed money, and imagine what they’d fetch in a fire sale. The vast assemblages of highly paid people inside the firms were essentially worth nothing. For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.

Rivals accused Whitney of being overrated; bloggers accused her of being lucky. What she was, mainly, was right. But it’s true that she was, in part, guessing. There was no way she could have known what was going to happen to these Wall Street firms. The C.E.O.’s themselves didn’t know.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”

Harboring suspicions about ­people’s morals and telling investors that companies don’t deserve their capital wasn’t, in the 1990s or at any other time, the fast track to success on Wall Street. Eisman quit Oppenheimer in 2001 to work as an analyst at a hedge fund, but what he really wanted to do was run money. FrontPoint Partners, another hedge fund, hired him in 2004 to invest in financial stocks. Eisman’s brief was to evaluate Wall Street banks, homebuilders, mortgage originators, and any company (General Electric or General Motors, for instance) with a big financial-services division—anyone who touched American finance. An insurance company backed him with $50 million, a paltry sum. “Basically, we tried to raise money and didn’t really do it,” Eisman says.

Instead of money, he attracted people whose worldviews were as shaded as his own—Vincent Daniel, for instance, who became a partner and an analyst in charge of the mortgage sector. Now 36, Daniel grew up a lower-middle-class kid in Queens. One of his first jobs, as a junior accountant at Arthur Andersen, was to audit Salomon Brothers’ books. “It was shocking,” he says. “No one could explain to me what they were doing.” He left accounting in the middle of the internet boom to become a research analyst, looking at companies that made subprime loans. “I was the only guy I knew covering companies that were all going to go bust,” he says. “I saw how the sausage was made in the economy, and it was really freaky.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.

Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.

And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking home­owners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

In retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) The default rate in Georgia was five times higher than that in Florida even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California’s was only 5 percent. Why?

The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

Eisman, Daniel, and Moses then flew out to Las Vegas for an even bigger subprime conference. By now, Eisman knew everything he needed to know about the quality of the loans being made. He still didn’t fully understand how the apparatus worked, but he knew that Wall Street had built a doomsday machine. He was at once opportunistic and outraged.

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

“Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it. “Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

This particular dinner was hosted by Deutsche Bank, whose head trader, Greg Lippman, was the fellow who had introduced Eisman to the subprime bond market. Eisman went and found Lippman, pointed back to his own dinner companion, and said, “I want to short him.” Lippman thought he was joking; he wasn’t. “Greg, I want to short his paper,” Eisman repeated. “Sight unseen.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

Not so for hedge fund managers who had seen it coming. “As we sat there, we were weirdly calm,” Moses says. “We felt insulated from the whole market reality. It was an out-of-body experience. We just sat and watched the people pass and talked about what might happen next. How many of these people were going to lose their jobs. Who was going to rent these buildings after all the Wall Street firms collapsed.” Eisman was appalled. “Look,” he said. “I’m short. I don’t want the country to go into a depression. I just want it to fucking deleverage.” He had tried a thousand times in a thousand ways to explain how screwed up the business was, and no one wanted to hear it. “That Wall Street has gone down because of this is justice,” he says. “They fucked people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.”

“It was like feeding the monster,” Eisman says of the market for subprime bonds. “We fed the monster until it blew up.”

About the time they were sitting on the steps of the midtown cathedral, I sat in a booth in a restaurant on the East Side, waiting for John Gutfreund to arrive for lunch, and wondered, among other things, why any restaurant would seat side by side two men without the slightest interest in touching each other.

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

When I published my book, the 1980s were supposed to be ending. I received a lot of undeserved credit for my timing. The social disruption caused by the collapse of the savings-and-loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations. Just as most students at Ohio State read Liar’s Poker as a manual, most TV and radio interviewers regarded me as a whistleblower. (The big exception was Geraldo Rivera. He put me on a show called “People Who Succeed Too Early in Life” along with some child actors who’d gone on to become drug addicts.) Anti-Wall Street feeling ran high—high enough for Rudy Giuliani to float a political career on it—but the result felt more like a witch hunt than an honest reappraisal of the financial order. The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

I’d not seen Gutfreund since I quit Wall Street. I’d met him, nervously, a couple of times on the trading floor. A few months before I left, my bosses asked me to explain to Gutfreund what at the time seemed like exotic trades in derivatives I’d done with a European hedge fund. I tried. He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street C.E.O. showed he was the boss, by rising above the details. There was no reason for him to remember any of these encounters, and he didn’t: When my book came out and became a public-relations nuisance to him, he told reporters we’d never met.

Over the years, I’d heard bits and pieces about Gutfreund. I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept.

When I emailed him to invite him to lunch, he could not have been more polite or more gracious. That attitude persisted as he was escorted to the table, made chitchat with the owner, and ordered his food. He’d lost a half-step and was more deliberate in his movements, but otherwise he was completely recognizable. The same veneer of denatured courtliness masked the same animal need to see the world as it was, rather than as it should be.

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the fuck they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…fucking…book.”

I smiled back, though it wasn’t quite a smile.

“Your fucking book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your fucking book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”

Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.

Rivals accused Whitney of being overrated; bloggers accused her of being lucky. What she was, mainly, was right. But it’s true that she was, in part, guessing. There was no way she could have known what was going to happen to these Wall Street firms. The C.E.O.’s themselves didn’t know.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”

Instead of money, he attracted people whose worldviews were as shaded as his own—Vincent Daniel, for instance, who became a partner and an analyst in charge of the mortgage sector. Now 36, Daniel grew up a lower-middle-class kid in Queens. One of his first jobs, as a junior accountant at Arthur Andersen, was to audit Salomon Brothers’ books. “It was shocking,” he says. “No one could explain to me what they were doing.” He left accounting in the middle of the internet boom to become a research analyst, looking at companies that made subprime loans. “I was the only guy I knew covering companies that were all going to go bust,” he says. “I saw how the sausage was made in the economy, and it was really freaky.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.

Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

“Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it. “Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

This particular dinner was hosted by Deutsche Bank, whose head trader, Greg Lippman, was the fellow who had introduced Eisman to the subprime bond market. Eisman went and found Lippman, pointed back to his own dinner companion, and said, “I want to short him.” Lippman thought he was joking; he wasn’t. “Greg, I want to short his paper,” Eisman repeated. “Sight unseen.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

About the time they were sitting on the steps of the midtown cathedral, I sat in a booth in a restaurant on the East Side, waiting for John Gutfreund to arrive for lunch, and wondered, among other things, why any restaurant would seat side by side two men without the slightest interest in touching each other.

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

When I published my book, the 1980s were supposed to be ending. I received a lot of undeserved credit for my timing. The social disruption caused by the collapse of the savings-and-loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations. Just as most students at Ohio State read Liar’s Poker as a manual, most TV and radio interviewers regarded me as a whistleblower. (The big exception was Geraldo Rivera. He put me on a show called “People Who Succeed Too Early in Life” along with some child actors who’d gone on to become drug addicts.) Anti-Wall Street feeling ran high—high enough for Rudy Giuliani to float a political career on it—but the result felt more like a witch hunt than an honest reappraisal of the financial order. The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

I’d not seen Gutfreund since I quit Wall Street. I’d met him, nervously, a couple of times on the trading floor. A few months before I left, my bosses asked me to explain to Gutfreund what at the time seemed like exotic trades in derivatives I’d done with a European hedge fund. I tried. He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street C.E.O. showed he was the boss, by rising above the details. There was no reason for him to remember any of these encounters, and he didn’t: When my book came out and became a public-relations nuisance to him, he told reporters we’d never met.

Over the years, I’d heard bits and pieces about Gutfreund. I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept.

When I emailed him to invite him to lunch, he could not have been more polite or more gracious. That attitude persisted as he was escorted to the table, made chitchat with the owner, and ordered his food. He’d lost a half-step and was more deliberate in his movements, but otherwise he was completely recognizable. The same veneer of denatured courtliness masked the same animal need to see the world as it was, rather than as it should be.

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the fuck they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…fucking…book.”

I smiled back, though it wasn’t quite a smile.

“Your fucking book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your fucking book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”

Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.

Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

“Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it. “Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

When I published my book, the 1980s were supposed to be ending. I received a lot of undeserved credit for my timing. The social disruption caused by the collapse of the savings-and-loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations. Just as most students at Ohio State read Liar’s Poker as a manual, most TV and radio interviewers regarded me as a whistleblower. (The big exception was Geraldo Rivera. He put me on a show called “People Who Succeed Too Early in Life” along with some child actors who’d gone on to become drug addicts.) Anti-Wall Street feeling ran high—high enough for Rudy Giuliani to float a political career on it—but the result felt more like a witch hunt than an honest reappraisal of the financial order. The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

I’d not seen Gutfreund since I quit Wall Street. I’d met him, nervously, a couple of times on the trading floor. A few months before I left, my bosses asked me to explain to Gutfreund what at the time seemed like exotic trades in derivatives I’d done with a European hedge fund. I tried. He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street C.E.O. showed he was the boss, by rising above the details. There was no reason for him to remember any of these encounters, and he didn’t: When my book came out and became a public-relations nuisance to him, he told reporters we’d never met.

Over the years, I’d heard bits and pieces about Gutfreund. I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept.

When I emailed him to invite him to lunch, he could not have been more polite or more gracious. That attitude persisted as he was escorted to the table, made chitchat with the owner, and ordered his food. He’d lost a half-step and was more deliberate in his movements, but otherwise he was completely recognizable. The same veneer of denatured courtliness masked the same animal need to see the world as it was, rather than as it should be.

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the fuck they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…fucking…book.”

I smiled back, though it wasn’t quite a smile.

“Your fucking book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your fucking book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”

Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.

Rivals accused Whitney of being overrated; bloggers accused her of being lucky. What she was, mainly, was right. But it’s true that she was, in part, guessing. There was no way she could have known what was going to happen to these Wall Street firms. The C.E.O.’s themselves didn’t know.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”

Instead of money, he attracted people whose worldviews were as shaded as his own—Vincent Daniel, for instance, who became a partner and an analyst in charge of the mortgage sector. Now 36, Daniel grew up a lower-middle-class kid in Queens. One of his first jobs, as a junior accountant at Arthur Andersen, was to audit Salomon Brothers’ books. “It was shocking,” he says. “No one could explain to me what they were doing.” He left accounting in the middle of the internet boom to become a research analyst, looking at companies that made subprime loans. “I was the only guy I knew covering companies that were all going to go bust,” he says. “I saw how the sausage was made in the economy, and it was really freaky.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.

Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

“Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it. “Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

This particular dinner was hosted by Deutsche Bank, whose head trader, Greg Lippman, was the fellow who had introduced Eisman to the subprime bond market. Eisman went and found Lippman, pointed back to his own dinner companion, and said, “I want to short him.” Lippman thought he was joking; he wasn’t. “Greg, I want to short his paper,” Eisman repeated. “Sight unseen.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

About the time they were sitting on the steps of the midtown cathedral, I sat in a booth in a restaurant on the East Side, waiting for John Gutfreund to arrive for lunch, and wondered, among other things, why any restaurant would seat side by side two men without the slightest interest in touching each other.

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

When I published my book, the 1980s were supposed to be ending. I received a lot of undeserved credit for my timing. The social disruption caused by the collapse of the savings-and-loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations. Just as most students at Ohio State read Liar’s Poker as a manual, most TV and radio interviewers regarded me as a whistleblower. (The big exception was Geraldo Rivera. He put me on a show called “People Who Succeed Too Early in Life” along with some child actors who’d gone on to become drug addicts.) Anti-Wall Street feeling ran high—high enough for Rudy Giuliani to float a political career on it—but the result felt more like a witch hunt than an honest reappraisal of the financial order. The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

I’d not seen Gutfreund since I quit Wall Street. I’d met him, nervously, a couple of times on the trading floor. A few months before I left, my bosses asked me to explain to Gutfreund what at the time seemed like exotic trades in derivatives I’d done with a European hedge fund. I tried. He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street C.E.O. showed he was the boss, by rising above the details. There was no reason for him to remember any of these encounters, and he didn’t: When my book came out and became a public-relations nuisance to him, he told reporters we’d never met.

Over the years, I’d heard bits and pieces about Gutfreund. I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept.

When I emailed him to invite him to lunch, he could not have been more polite or more gracious. That attitude persisted as he was escorted to the table, made chitchat with the owner, and ordered his food. He’d lost a half-step and was more deliberate in his movements, but otherwise he was completely recognizable. The same veneer of denatured courtliness masked the same animal need to see the world as it was, rather than as it should be.

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the fuck they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…fucking…book.”

I smiled back, though it wasn’t quite a smile.

“Your fucking book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your fucking book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”

Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm.

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.

From that moment, Whitney became E.F. Hutton: When she spoke, people listened. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of ­borrowed money, and imagine what they’d fetch in a fire sale. The vast assemblages of highly paid people inside the firms were essentially worth nothing. For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.

Rivals accused Whitney of being overrated; bloggers accused her of being lucky. What she was, mainly, was right. But it’s true that she was, in part, guessing. There was no way she could have known what was going to happen to these Wall Street firms. The C.E.O.’s themselves didn’t know.

Now, obviously, Meredith Whitney didn’t sink Wall Street. She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

At some point, I could no longer contain myself: I called Whitney. This was back in March, when Wall Street’s fate still hung in the balance. I thought, If she’s right, then this really could be the end of Wall Street as we’ve known it. I was curious to see if she made sense but also to know where this young woman who was crashing the stock market with her every utterance had come from.

It turned out that she made a great deal of sense and that she’d arrived on Wall Street in 1993, from the Brown University history department. “I got to New York, and I didn’t even know research existed,” she says. She’d wound up at Oppenheimer and had the most incredible piece of luck: to be trained by a man who helped her establish not merely a career but a worldview. His name, she says, was Steve Eisman.

Eisman had moved on, but they kept in touch. “After I made the Citi call,” she says, “one of the best things that happened was when Steve called and told me how proud he was of me.”

Having never heard of Eisman, I didn’t think anything of this. But a few months later, I called Whitney again and asked her, as I was asking others, whom she knew who had anticipated the cataclysm and set themselves up to make a fortune from it. There’s a long list of people who now say they saw it coming all along but a far shorter one of people who actually did. Of those, even fewer had the nerve to bet on their vision. It’s not easy to stand apart from mass hysteria—to believe that most of what’s in the financial news is wrong or distorted, to believe that most important financial people are either lying or deluded—without actually being insane. A handful of people had been inside the black box, understood how it worked, and bet on it blowing up. Whitney rattled off a list with a half-dozen names on it. At the top was Steve Eisman.

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the ­documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”

Harboring suspicions about ­people’s morals and telling investors that companies don’t deserve their capital wasn’t, in the 1990s or at any other time, the fast track to success on Wall Street. Eisman quit Oppenheimer in 2001 to work as an analyst at a hedge fund, but what he really wanted to do was run money. FrontPoint Partners, another hedge fund, hired him in 2004 to invest in financial stocks. Eisman’s brief was to evaluate Wall Street banks, homebuilders, mortgage originators, and any company (General Electric or General Motors, for instance) with a big financial-services division—anyone who touched American finance. An insurance company backed him with $50 million, a paltry sum. “Basically, we tried to raise money and didn’t really do it,” Eisman says.

Instead of money, he attracted people whose worldviews were as shaded as his own—Vincent Daniel, for instance, who became a partner and an analyst in charge of the mortgage sector. Now 36, Daniel grew up a lower-middle-class kid in Queens. One of his first jobs, as a junior accountant at Arthur Andersen, was to audit Salomon Brothers’ books. “It was shocking,” he says. “No one could explain to me what they were doing.” He left accounting in the middle of the internet boom to become a research analyst, looking at companies that made subprime loans. “I was the only guy I knew covering companies that were all going to go bust,” he says. “I saw how the sausage was made in the economy, and it was really freaky.”

Danny Moses, who became Eisman’s head trader, was another who shared his perspective. Raised in Georgia, Moses, the son of a finance professor, was a bit less fatalistic than Daniel or Eisman, but he nevertheless shared a general sense that bad things can and do happen. When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”

Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.

Both Daniel and Moses enjoyed, immensely, working with Steve Eisman. He put a fine point on the absurdity they saw everywhere around them. “Steve’s fun to take to any Wall Street meeting,” Daniel says. “Because he’ll say ‘Explain that to me’ 30 different times. Or ‘Could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.

Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.

And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking home­owners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

In retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) The default rate in Georgia was five times higher than that in Florida even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California’s was only 5 percent. Why?

The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

Eisman, Daniel, and Moses then flew out to Las Vegas for an even bigger subprime conference. By now, Eisman knew everything he needed to know about the quality of the loans being made. He still didn’t fully understand how the apparatus worked, but he knew that Wall Street had built a doomsday machine. He was at once opportunistic and outraged.

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

“Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it. “Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman’s willingness to be abrasive in order to get to the heart of the matter was obvious to all; what was harder to see was his credulity: He actually wanted to believe in the system. As quick as he was to cry bullshit when he saw it, he was still shocked by bad behavior. That night in Vegas, he was seated at dinner beside a really nice guy who invested in mortgage C.D.O.’s—collateralized debt obligations. By then, Eisman thought he knew what he needed to know about C.D.O.’s. He didn’t, it turned out.

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

FrontPoint had spent a lot of time digging around in the dog shit and knew that the default rates were already sufficient to wipe out this guy’s entire portfolio. “God, you must be having a hard time,” Eisman told his dinner companion.

“No,” the guy said, “I’ve sold everything out.”

After taking a fee, he passed them on to other investors. His job was to be the C.D.O. “expert,” but he actually didn’t spend any time at all thinking about what was in the C.D.O.’s. “He managed the C.D.O.’s,” says Eisman, “but managed what? I was just appalled. People would pay up to have someone manage their C.D.O.’s—as if this moron was helping you. I thought, You prick, you don’t give a fuck about the investors in this thing.”

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

This particular dinner was hosted by Deutsche Bank, whose head trader, Greg Lippman, was the fellow who had introduced Eisman to the subprime bond market. Eisman went and found Lippman, pointed back to his own dinner companion, and said, “I want to short him.” Lippman thought he was joking; he wasn’t. “Greg, I want to short his paper,” Eisman repeated. “Sight unseen.”

Eisman started out running a $60 million equity fund but was now short around $600 million of various ­subprime-related securities. In the spring of 2007, the market strengthened. But, says Eisman, “credit quality always gets better in March and April. And the reason it always gets better in March and April is that people get their tax refunds. You would think people in the securitization world would know this. We just thought that was moronic.”

He was already short the stocks of mortgage originators and the homebuilders. Now he took short positions in the rating agencies—“they were making 10 times more rating C.D.O.’s than they were rating G.M. bonds, and it was all going to end”—and, finally, the biggest Wall Street firms because of their exposure to C.D.O.’s. He wasn’t allowed to short Morgan Stanley because it owned a stake in his fund. But he shorted UBS, Lehman Brothers, and a few others. Not long after that, FrontPoint had a visit from Sanford C. Bernstein’s Brad Hintz, a prominent analyst who covered Wall Street firms. Hintz wanted to know what Eisman was up to. “We just shorted Merrill Lynch,” Eisman told him.

“Why?” asked Hintz.

“We have a simple thesis,” Eisman explained. “There is going to be a calamity, and whenever there is a calamity, Merrill is there.” When it came time to bankrupt Orange County with bad advice, Merrill was there. When the internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leash and lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic—the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was Crack the Whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

On September 18, 2008, Danny Moses came to work as usual at 6:30 a.m. Earlier that week, Lehman Brothers had filed for bankruptcy. The day before, the Dow had fallen 449 points to its lowest level in four years. Overnight, European governments announced a ban on short-selling, but that served as faint warning for what happened next.

At the market opening in the U.S., everything—every financial asset—went into free fall. “All hell was breaking loose in a way I had never seen in my career,” Moses says. FrontPoint was net short the market, so this total collapse should have given Moses pleasure. He might have been forgiven if he stood up and cheered. After all, he’d been betting for two years that this sort of thing could happen, and now it was, more dramatically than he had ever imagined. Instead, he felt this terrifying shudder run through him. He had maybe 100 trades on, and he worked hard to keep a handle on them all. “I spent my morning trying to control all this energy and all this information,” he says, “and I lost control. I looked at the screens. I was staring into the abyss. The end. I felt this shooting pain in my head. I don’t get headaches. At first, I thought I was having an aneurysm.”

Moses stood up, wobbled, then turned to Daniel and said, “I gotta leave. Get out of here. Now.” Daniel thought about calling an ambulance but instead took Moses out for a walk.

Outside it was gorgeous, the blue sky reaching down through the tall buildings and warming the soul. Eisman was at a Goldman Sachs conference for hedge fund managers, raising capital. Moses and Daniel got him on the phone, and he left the conference and met them on the steps of St. Patrick’s Cathedral. “We just sat there,” Moses says. “Watching the people pass.”

Not so for hedge fund managers who had seen it coming. “As we sat there, we were weirdly calm,” Moses says. “We felt insulated from the whole market reality. It was an out-of-body experience. We just sat and watched the people pass and talked about what might happen next. How many of these people were going to lose their jobs. Who was going to rent these buildings after all the Wall Street firms collapsed.” Eisman was appalled. “Look,” he said. “I’m short. I don’t want the country to go into a depression. I just want it to fucking deleverage.” He had tried a thousand times in a thousand ways to explain how screwed up the business was, and no one wanted to hear it. “That Wall Street has gone down because of this is justice,” he says. “They fucked people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.”

“It was like feeding the monster,” Eisman says of the market for subprime bonds. “We fed the monster until it blew up.”

About the time they were sitting on the steps of the midtown cathedral, I sat in a booth in a restaurant on the East Side, waiting for John Gutfreund to arrive for lunch, and wondered, among other things, why any restaurant would seat side by side two men without the slightest interest in touching each other.

There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”)

When I published my book, the 1980s were supposed to be ending. I received a lot of undeserved credit for my timing. The social disruption caused by the collapse of the savings-and-loan industry and the rise of hostile takeovers and leveraged buyouts had given way to a brief period of recriminations. Just as most students at Ohio State read Liar’s Poker as a manual, most TV and radio interviewers regarded me as a whistleblower. (The big exception was Geraldo Rivera. He put me on a show called “People Who Succeed Too Early in Life” along with some child actors who’d gone on to become drug addicts.) Anti-Wall Street feeling ran high—high enough for Rudy Giuliani to float a political career on it—but the result felt more like a witch hunt than an honest reappraisal of the financial order. The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

I’d not seen Gutfreund since I quit Wall Street. I’d met him, nervously, a couple of times on the trading floor. A few months before I left, my bosses asked me to explain to Gutfreund what at the time seemed like exotic trades in derivatives I’d done with a European hedge fund. I tried. He claimed not to be smart enough to understand any of it, and I assumed that was how a Wall Street C.E.O. showed he was the boss, by rising above the details. There was no reason for him to remember any of these encounters, and he didn’t: When my book came out and became a public-relations nuisance to him, he told reporters we’d never met.

Over the years, I’d heard bits and pieces about Gutfreund. I knew that after he’d been forced to resign from Salomon Brothers he’d fallen on harder times. I heard later that a few years ago he’d sat on a panel about Wall Street at Columbia Business School. When his turn came to speak, he advised students to find something more meaningful to do with their lives. As he began to describe his career, he broke down and wept.

When I emailed him to invite him to lunch, he could not have been more polite or more gracious. That attitude persisted as he was escorted to the table, made chitchat with the owner, and ordered his food. He’d lost a half-step and was more deliberate in his movements, but otherwise he was completely recognizable. The same veneer of denatured courtliness masked the same animal need to see the world as it was, rather than as it should be.

We spent 20 minutes or so determining that our presence at the same lunch table was not going to cause the earth to explode. We discovered we had a mutual acquaintance in New Orleans. We agreed that the Wall Street C.E.O. had no real ability to keep track of the frantic innovation occurring inside his firm. (“I didn’t understand all the product lines, and they don’t either,” he said.) We agreed, further, that the chief of the Wall Street investment bank had little control over his subordinates. (“They’re buttering you up and then doing whatever the fuck they want to do.”) He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

But I didn’t argue with him. For just as you revert to being about nine years old when you visit your parents, you revert to total subordination when you are in the presence of your former C.E.O. John Gutfreund was still the King of Wall Street, and I was still a geek. He spoke in declarative statements; I spoke in questions.

But as he spoke, my eyes kept drifting to his hands. His alarmingly thick and meaty hands. They weren’t the hands of a soft Wall Street banker but of a boxer. I looked up. The boxer was smiling—though it was less a smile than a placeholder expression. And he was saying, very deliberately, “Your…fucking…book.”

I smiled back, though it wasn’t quite a smile.

“Your fucking book destroyed my career, and it made yours,” he said.

I didn’t think of it that way and said so, sort of.

“Why did you ask me to lunch?” he asked, though pleasantly. He was genuinely curious.

You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil. Nor can you tell him that you asked him to lunch because you thought that you could trace the biggest financial crisis in the history of the world back to a decision he had made. John Gutfreund did violence to the Wall Street social order—and got himself dubbed the King of Wall Street—when he turned Salomon Brothers from a private partnership into Wall Street’s first public corporation. He ignored the outrage of Salomon’s retired partners. (“I was disgusted by his materialism,” William Salomon, the son of the firm’s founder, who had made Gutfreund C.E.O. only after he’d promised never to sell the firm, had told me.) He lifted a giant middle finger at the moral disapproval of his fellow Wall Street C.E.O.’s. And he seized the day. He and the other partners not only made a quick killing; they transferred the ultimate financial risk from themselves to their shareholders. It didn’t, in the end, make a great deal of sense for the shareholders. (A share of Salomon Brothers purchased when I arrived on the trading floor, in 1986, at a then market price of $42, would be worth 2.26 shares of Citigroup today—market value: $27.) But it made fantastic sense for the investment bankers.

From that moment, though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?

Now I asked Gutfreund about his biggest decision. “Yes,” he said. “They—the heads of the other Wall Street firms—all said what an awful thing it was to go public and how could you do such a thing. But when the temptation arose, they all gave in to it.” He agreed that the main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. “When things go wrong, it’s their problem,” he said—and obviously not theirs alone. When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.

It was now all someone else’s fault.

He watched me curiously as I scribbled down his words. “What’s this for?” he asked.

I told him I thought it might be worth revisiting the world I’d described in Liar’s Poker, now that it was finally dying. Maybe bring out a 20th-anniversary edition.

“That’s nauseating,” he said.

Hard as it was for him to enjoy my company, it was harder for me not to enjoy his. He was still tough, as straight and blunt as a butcher. He’d helped create a monster, but he still had in him a lot of the old Wall Street, where people said things like “A man’s word is his bond.” On that Wall Street, people didn’t walk out of their firms and cause trouble for their former bosses by writing books about them. “No,” he said, “I think we can agree about this: Your fucking book destroyed my career, and it made yours.” With that, the former king of a former Wall Street lifted the plate that held his appetizer and asked sweetly, “Would you like a deviled egg?”

Until that moment, I hadn’t paid much attention to what he’d been eating. Now I saw he’d ordered the best thing in the house, this gorgeous frothy confection of an earlier age. Who ever dreamed up the deviled egg? Who knew that a simple egg could be made so complicated and yet so appealing? I reached over and took one. Something for nothing. It never loses its charm.

As investments lose thousands, income is a `godsend’

Leon Berezowski takes a careful step onto the driveway. Patches of ice cover the black asphalt leading to the porch of the house – making even the short trek from sidewalk to mailbox a treacherous one.

“Look at this,” he says, shaking his head. He points a gloved finger at the walkway in front of a small bungalow in his central Etobicoke neighbourhood. “It’s like an ice rink.” He’s wearing his “sturdy boots” but for a moment he hesitates. At 71, he’s not one to take risks. But at 71, he knows he can’t avoid them either.

The retired pressman signed up a year ago to deliver the community paper twice a week to 55 houses on his street. His wife, Marie, said it would be a good way to keep active and meet the neighbours. The money he made – around $100 a month – was a bonus.

Six months later, the world has changed. Changes he reads about in the paper: failing businesses, struggling banks and bankrupt industries; changes that resonate in the financial statements he receives each month; changes he never saw coming.

“For a while, my stocks were doing really well,” says Berezowski. In 2006, his financial adviser put his life savings, more than $100,000, into a diversified mix of mutual funds, bonds and stocks.

“But in the last four months, it has been going down,” he says. Since September, he has lost thousands of dollars.

At a time when many seniors expected financial freedom, the economic crisis is forcing a growing number to face the harrowing reality that their nest eggs will run out before they do. As the stock market has plunged, so has confidence among older workers that they will be able to retire as comfortably as planned, or worse, be able to retire at all. A sizeable number of almost-retirees in Canada – around 30 per cent – plan to keep working past 65.

Some, like Berezowski, have turned to part-time employment, working at coffee shops or in retail. But many are holding tight, keeping their money where it is and hoping to survive the downturn.

“Everyone keeps saying it will recover. But will it go back up again?” he asks. “If it’s going to be in 25 years, I am not going to be here. So you just have to hope that things turn around sooner.”

THE NEIGHBOURS come out to talk with the grey-haired paper boy as he pulls his shopping buggy of Etobicoke Guardians behind him.

“I bowl with the guy who lives here,” says Berezowski. “We always joke around. He’ll say, `Where’s my paper?’ I’ll say, ‘You don’t get one today.’ ”

On Fridays, the paper is twice as big, filled more with flyers and coupons than with community news. It takes Berezowski twice as long to complete the route. While he makes the first round of deliveries, Marie collates the flyers and papers, staining her fingers with ink from the colourful holiday ads. “It takes both of us to get the job done,” she says. “The work never ends.”

She’s not complaining. She has come to depend on the route – maybe more than he does.

“This has been a godsend,” says Marie. “You just feel a little better because we aren’t taking the money out of our savings, because we need that. Every year, all the bills go up, not just by cents, they go up by dollars.”

The money helps cover their hobbies – golfing and bowling for him, dance lessons for her. The income supplements Berezowski’s old-age pension and mandatory withdrawals from his Registered Retirement Income Fund. After 27 years as a pressman, printing flyers, posters and advertisements, Berezowski didn’t get a company pension.

“When he left, that was him leaving with not a cent,” says Marie. “No package, no safety net. We invested in RRSPs, but with everything being invested in mutual funds, it’s kind of rocky at the moment.

“It’s kind of scary, because this is all we have.”

THE BEREZOWSKIS moved into the neighbourhood 40 years ago, when the bungalows were new and now-busy Martin Grove Rd. was a dirt road.

They paid off the house years ago, when their two children – now adults – were kids. Berezowski often thought of following his brothers out of the city into a bigger, more expensive home. But he stayed put, enjoying being a 15-minute drive from work.

He built the basement with his own hands, learning as he went along. Framed photographs and certificates in his study tell the story of his “good life” – the certificate for 25 years of service at printing company Welch and Quest Ltd. hangs on one wall. The retirement gift – a framed photo of a hole at an unnamed golf course – hangs on another.

Berezowski started golfing a decade ago.

“I enjoy it. It keeps me healthy,” he says. Now that he is a senior, it is more affordable, too. At the city-run Humber Valley Golf Course where he often plays, seniors pay $27 on weekdays.

But golf is rarely just about golf. “If you don’t do much and just sit around, you keep worrying about it (the economy). If you keep your mind busy with different things, you just don’t,” he says.

Marie also keeps herself preoccupied. Four days a week she takes dance lessons at the York West Senior Citizens Centre in North York – tap, line and “Riverdance-like” clogging.

“I wasn’t allowed to dance (as a child) because I was brought up strict Baptist,” she says. When she turned 50, a friend invited her to line dance. “From there I kept moving.” It costs about $150 a season, and the price will rise in January. “Everything adds up, you know. You start to feel every dollar.”

She can’t remember the last time the economy hit this close to home. Even through recessions of the ’70s and ’90s, Berezowski kept his job, earned overtime and had enough for a little vacation now and then. Marie worked part-time, at Canadian Tire. There was never a need to go full-time.

“Other times of recession didn’t really bother us. I never really gave it much thought before. Maybe (it does now) because we’re at that age where we can’t recoup as quickly.”

AT THE YORK West Senior Citizens Centre, women saunter in during the morning. They have no need to rush.

Prime attractions are the dance classes, bridge and euchre, and the Friendship Group, members of which sit around two tables. It used to be one large circle, but conversations couldn’t carry as far. A year ago, there were 10 regulars; now there are more than 22. Their conversations are dynamic, touching upon novels, family and sex. These days, talk naturally shifts to the economy.

“It’s impossible to ignore it,” says Rolande MacKinnon, 79, the most financially savvy of the group. She leaves twice during the morning to call her financial adviser. She is hoping to get the best interest rate for her GICs. “When I heard the slowdown was global, that’s when I started to worry.

“You hope you will be able to look after yourself in your old age. This is what we saved for.”

Others are more concerned about their children and grandchildren.

“One of my sons, who works in computers, was just told that he may be laid off before Christmas because times are slow in his sector,” said Pam Lee, 82, who has four children.

Lee was a teenager in London during World War II. She saw her home destroyed by bombs. She remembers leaving family and possessions behind, sleeping in bomb shelters and rationing food.

“We got one egg a month,” says Lee, a distant look in her eyes. “The biggest decision would be how to prepare it: boiled, scrambled or poached. I always chose scrambled, since it went the furthest.”

She was 17 when the war ended, and was put to work as a typist. “We didn’t choose our jobs, the government told us what they wanted us to do.” Resilience helped them move on.

“We were a generation that learned to live with very little,” says Lee. “And learned to do with what we have.”

After coming to Toronto, Lee raised two young children, remarried and saved enough working as a legal assistant to be financially secure. She knows she is fortunate for what she has. But she can’t forget what she has lost.

“Life is very lonely as a senior. I was married to my second husband for 42 years. When he died, it was like losing a part of my body.”

Everyone in the room feels her pain. They are all here for the same reason. They joined the group to be saved from their own sadness. They are here because they are widows.

The group formed 11 years ago for a University of Toronto study on how bereavement groups help widows cope with grief. After the study, the women continued to meet.

“This group is the best thing that has happened to me,” says MacKinnon, an original member. “You never get over losing your husband. You can adjust to anything, even losing some money. You never get over losing your husband.”

MARIE BEREZOWSKI’S friends turn to her to talk about their losses. “It seems like everyone has a story, the older you get,” says Marie. Her friends, family and the “girls” she dances with. Like the friend who grieves over her husband’s death five years ago from cancer. “She still gets angry. When we’re driving sometimes, she’ll hit the steering wheel and say, `Why’d you have to leave me?’”

“It makes me realize I have so much to be thankful for,” says Marie. “I have health, and I have a good marriage.” One that has lasted 46 years – and counting. They met in church. Marie sat in an uncomfortable pew, while Leon was on stage as a member of the Berezowski brothers trumpet quartet.

“I got the right person. It makes a huge difference to your life, to your health, to your mindset.” Leon smiles in agreement.

They aren’t ones to dwell on the future or the past. There are bills to pay, lessons to take and holes to play. Living in the present suits them fine.

By Geralyn Cruz, 23

The Christmas season is almost upon us and everything seems to be costing a lot more than before�and I am not even talking yet about the effects of the global financial crisis on our own �island of calm.�

A few weeks back I spoke with a friend, a mutual funds analyst who was trying to sell me her company�s products. She mentioned that this is the shopping season for such kinds of investments. And for the first time, I agreed with someone who was selling me something. �Yes, definitely,� I told her.

I understand why the wealthy would panic after what happened to Lehman Brothers and Merrill Lynch. These are institutions where other institutions put their money. It would have a domino effect when one tile collapses, and the effect would be faster if the financial turbulence is stronger.

International and local stock markets are doing very badly, they say. We all see that. However, what we fail to see is the investment opportunity this opens up for us. I, for example, would risk a part of my savings to buy stocks and other forms of investments while the world is being battered by the economic crisis. The market is holding spending, and this is causing stock prices to drop. While the action I am planning to take seems to be irrational, no one can really tell what is going to happen next. I am risking the money that I have for additional earnings. If I lose, I lose. It is a gamble: gain some, learn some.

This time is also a good time to start a new business. If I were richer, I would put up a pawnshop. It is one of the few businesses that flourish when everyone becomes poorer every day. When people cannot afford to buy something, they will pawn whatever they have: jewelry, bicycles, laptops and even their mobile phones.

The cell-phone loading business is another inviting option since most of us would skip a meal just to buy enough load to send a message to mom, whether she is here or abroad, that reads �Mom, please send us more money.�

The money we have today will change its value tomorrow. Its value will either increase or decrease, but most probably it will be the latter. Although I see banks as a safe place to keep one�s money, I am not recommending that you place your money in a savings account if you can afford to buy treasury bills and bonds. These are higher-yielding investments compared to a savings account where you would not even notice any increase in your deposit after a year. The good thing about these securities is that they are always prioritized and you always get paid first.

People who know me often wonder why I daydream so much. I tell them, �I am making money.�

Simple daydreaming may provide me with the bounty I wish for myself. I try to think of unusual ideas that might hit the market big-time. I can register these ideas so that my intellectual property rights are protected. In fact, I have a small notebook beside my bed where I write my �winning ideas.� Who knows, one of these ideas may yet make me a millionaire.

They say art is also a good form of investment. Since I am still on my way to earning my first million, I try to make my own art out of paper clips. I form different figures when I am nervous. I tell my sister that if I keep them in a box, a hundred years from now, my grandchildren will be able to sell them as works of art. But if you are richer than I am and you can afford the more expensive forms of art, invest in them. The older they get, the higher their value rises.

Back in college, our finance instructor asked, �What would you do if you do not have enough money?� My quick answer was, �Sell my things.�

I cannot recall now what the best answer was, but I apply my answer whenever the situation calls for it. Buy and sell�that is what I do. Sometimes, it is receive and sell.

This Christmas Season will probably be a receive-and-sell time for me. Not all the gifts I will receive will end up in my room; some will be listed on auction sites. What may be useless for me might be of great worth to another person.

So let us not blame other institutions for our own poverty and lack of cash. That is pass�. It has been tried and tested that institutions can only do so much. If we cannot rely on our basic salary or allowance, we have to make good use of what we have.

I say that we should learn to take risks, because it is only when we take risks that we learn the tricks. We are forced to learn because we are afraid of losing all the money we have invested and letting all our efforts go to waste. We learn because sometimes things fail and we do not want that to happen again. Remember the first rule of investment or even gambling: the higher the risks the higher the returns.

From the simplest to the most complicated, there are numerous ways to add to our savings. We should be enterprising and creative during these times and try to see the potential of everything. Let us not spend the whole day sulking and thinking about the crisis that is happening around us.

Geralyn L. Cruz, 23, works for a petroleum company in Ortigas Center.

On December 1st, I began a brief relationship with one Mr Zuma Pule from Johannesburg, South Africa. Mr Pule wrote to inform me of a financial opportunity he was inviting me to partake in. The following is the correspondences between the two of us over the last few days:

***********************

FROM:ZUMA PULE

APPEAL FOR ASSISSTANCE

I know that this message will come to you as a surprise since we don’t know each other before, but for purpose of introduction, I am ZUMA PULE the Bank Manager of AMALGAMATED BANK OF SOUTH AFRICA (ABSA).

First and foremost, I apologize using this medium to reach you for a transaction / business of this magnitude, but this is due to Confidentiality and prompt access reposed on this medium. Be informed that a member of the South Africa Export Promotion Council (SEPC) who was at the Government delegation to your country during a trade exhibition gave your enviable credentials / particulars to me. I plea to seek a confidential co-operation with you in the execution of the deal described hereunder for the benefit of all parties and hope you will keep it as a top secret because of the nature of this transaction.

There is an account opened in this bank in 1990 and since 1998 nobody has operated on this account again. After going through some old files in the records, I discovered that if I do not remit this money out urgently it would be forfeited for nothing. The owner of this account is MR. SAMUEL CARTER , a foreigner, and a miner at Kruger gold co., a geologist by profession and he died since 1998.

I need truthful person in this business because I don’t want to make mistake I need your strong assurance and trust. With my position now in the office I can transfer this money to any foreigner’s reliable account, which you can provide with assurance that this money will be intact pending my physical arrival in your country for sharing. I will destroy all documents of transaction immediately we receive this money leaving no trace to any place.

You can also come to discuss with me face to face after which I will make this remittance in your presence and two of us will fly to your country at least two days ahead of The money going into the account. I will apply for annual leave to get visa immediately I hear from you that you are ready to act and receive this fund in your account.

I look forward to your earliest reply

***********************

Zuma,

Thank you for contacting me. I am interested in this opportunity, and do have an American Bank account to deposit the funds into.

I would like to negotiate the percentages though, as I will be incurring much of the risk. How does 55% for me, and 45% for you seem?

Please let me know as soon as possible, time is running out.

Thank you.

***********************

Dear Craig Hennecke ,

Thank you so much for your mail and your interest to help transfer this fund to your account in your country.

Please i can not speak Chinese but i hope this would not be a problem to this transaction.

Now listing to me very well, we need to be very fast in this transfer of the fund because the bank auditors mighty be comeing in any time from today, therefore do what ever that it takes to be here this week so that i take you to the bank to open a non-resident dollar account in your name where the fund will be deposited first before finally transfer to your nominated local in your country and finally to sign the release order of the fund and other legal transfer documents which will be changed into your name as the beneficiary of the fund.

Please this needs to be done immediately, so try all you can to buy your air ticket and send to me your flight scheldue so that i will make a hotel reservations for you where you will stay just for onlt 2/3 days for the fund to be transferred into your nominated account, and with your flight scheldue i will know the date of your arrival so that i will come to pick you up from OR TAMBO INTERNATIONAL AIRPORT JOHANNESBURG.

To prove to you that what you are comeing for is legal and genuie i attached a copy of my international passport, a copy of our late customer Mr. Samuel Carter death certificate and his account balance in the bank as at today.

Remember that Mr. Samuel Carter is the late owner of the fund we want to transfer to your account in your country for our investments since there no body to come for it.

all the legal transfer documents will be issued to you on your arrival and immediately the fund is transferred to your account i will go with you for withdrwal and sharing.

Please we need also a copy of your international passport or ID, your fax/house and company address so that we can use them to change all the legal transfer documents into your name before your arrival here.

Thanks,

ZUMA

NB: Please we need to move this fund out into your nominated account immediately to avoid delay, therefore i urge you to make fast to be here if possible this week.

To the percentage you should know that i am not the only one involved in the transaction therefore with my own power as the manager and as theperson in four front of the transaction i would sugest you take 40% while i and others take the rest and you should also understand that we map out 5% of the total amount for our expenses.

I need to hear from you as soon as possible.

Thank.

***********************

Zuma,

I speak English, not Chinese, so this won’t be a problem.

I’m trying to find the best airfare deal right now to fly directly into JOHANNESBURG. Additionally, my doctor is out of town right now, and he supplies me with the medication which helps during these long flights to Africa.

Enclosed in a picture of my accountant, who will work on my side to clear the funds in my bank account.

Thanks

***********************

Dear Craig Hennecke,

You are free to fly down immediately since we have agreed to give you the 55%.

When you are ready send me your flight scheldue so that i make your hotel reservations and pick you from the airport.

Thanks,

zuma

***********************

Zuma -

This is excellent news! Thank you for alerting me of such great conclusions.

Thanks

***********************

Dear Craig Hennecke,

What type of joke are you trying to crack with me instead of telling me something important in the matter at hand.

Please tell me something.

thanks,

Zuma

***********************

Zuma -

Please keep me informed.

***********************

Dear Craig Hennecke

PLease we would like your own lawyer to prepare the agreement and send to us for signing while you send us a copy of your international passport, you home/company full address, your private phone/fax numbers so that we start chaneing the legal transfer documents in your name before your arrival.

Remember that a nonresident dollar account must be opened and upgrade in your name here in South Africa where the total fund will be deposited first before onward transfer to your nominated local account in USA.

This transfer of the fund to your account will only take 2/3 days, so you have to stay with us for those days and after that i have to go with you for the withdrwal and shareing.

Thanks,

Zuma

***********************

Zuma -

I need to have these details cleared before I finalize my traveling arrangements.

***********************

Zuma -

I have not heard from you lately and many of my questions remain unanswered.

Please let me know either way. Thanks

***********************

Dear Craig Hennecke,

Thank for your mail.

Just like you have said if you have bought your airticket, then i need to have your full flight scheldue so that i will make a hotel reservation for you, but most importantly you have to send a copy of your international passport, your full home address and your phone numbers for our easy cumunications.

Your coming on the 11th is not a problem but we must have all the requested itrems from you before any other thing.

Thanks,

Zuma

***********************

Zuma,

Thank you

***********************

Dear Craig Hennecke,

You can still see that you are joking, how dear you sent me a cover of your passport, no phone number as i requested.

Please send a real passport amnd your phone number or you forget about the transaction because i am not a fool as you may think.

Thanks,

ZUMA.

***********************

Zuma,

Do you have a phazar machine? This would be the best way to send the passport information without the security troubles which emails invite.

***********************

Dear Craig Hennecke,

You do not have to worry yourself much about the answers to your questions, i will do that immediately i receive the copy of your international passport and your telephone number because i would like to talk to you.

You can fax through this number 0027-866178662.

Thanks,

Zuma

***********************

Zuma -

I will use my airline ticket to meet them instead, as they have informed me of the local great eating places nearby the airport as well.

As a businessman, I’m sure you understand this decision.

Best of luck.

Release here.

The current world financial crisis has prompted significant debate around the proper management of monetary policy and its role in preventing financial crises, particularly when they grow to the size of the one we are now seeing in developed economies.

These are the issues I would like to address today, in the context of this seminar “Thinking Chile 2009, Proposals and Challenges in Critical Times,” to which I have been invited, and which makes us look into the future, beyond the juncture that has taken up the better part of our energies for the past several weeks.

I would like to make a special reference to the role that central banks play in both price and financial stability. It is interesting to note that financial stability has been overlooked for so long, or has been the secondary goal of central banks. Some people even thought that the only objective of central banks was price stability. However, at their origin, these institutions were created precisely to deal with the financial instability caused by frequent bank runs in the late 19th and early 20th century. Furthermore, the concern for price stability was even institutionalized later on around the world, with the inflation-targeting regime being the latest stage of its development.

It is important to review jointly the issues of price stability and financial stability, because here the well-known Tinbergen principle is clearly present. This principle indicates that, to achieve a certain number of objectives, at least an equal number of instruments are needed. We often have used this argument when asked to achieve inflationary, output and exchange rate objectives with only one instrument, that is, the interest rate.

Price stability: inflation targets

The regime adopted in Chile and in a number of other countries with low and stable inflation to pursue the price stability objective, is that of flexible inflation targeting. It consists of setting a quantitative inflation goal to anchor expectations, which in our case is 3% with a tolerance margin of plus/minus one percentage point, to be met most of the time.[Footnote 1 - 1 There is wide empirical debate on the effects of inflation targeting regimes on the volatility of inflation and output. Gonçalves and Salles (2008) show that output volatility and inflation volatility are actually reduced in inflation targeting emerging economies.]

To operationalize this objective – because the Central Bank controls inflation imperfectly and with lags and its purpose is not to cause output to deviate significantly to achieve its target – inflation deviations are corrected over a two-year horizon. In other words, the monetary policy is conducted in such a way as to have forecast annual inflation two years ahead stand at around 3%.

The instrument of monetary policy is the interest rate. It could be some monetary aggregate, but virtually everywhere central banks will rather use the interest rate for well-known reasons that are beyond the scope of this meeting.[Footnote 2 - 2 See, for example, De Gregorio (2003).]

What is inconsistent is to use both variables as monetary policy instruments, which certainly complicates the interpretation of the two-pillar strategy of the European Central Bank. Simply put, setting a monetary aggregate and the interest rate at the same time is tantamount to setting the price and the amount to be consumed for gasoline. Supply and demand constraints imply that you can peg either one, but not both. However, as I will discuss below, in practice the rationale for considering monetary aggregates is a little different.

What variables should a central bank consider when setting the interest rate? In the regime I just described, the answer to this question is pretty simple: anything affecting inflation over a two-year horizon. Variables such as inflation expectations, wages, output, the exchange rate, commodity prices, and so on, have important effects on inflationary forecasts and must be taken into account when deciding the future path of monetary policy.

There are other variables that have caught particular attention and I would like to take a brief look at them. These are the prices of assets (e.g., stocks, housing), the exchange rate and monetary aggregates.

Two questions arise with regard to asset prices. One is, should they influence monetary policy decisions? And the other is, what must be done when those prices contain speculative bubbles? I will address this second question in the next section. But it must be noted that we must avoid the confusion between inflation and financial stability.

Concern about asset price bubbles and distortions is at the core of financial stability analysis, but its impact on inflation is different. If stock or housing prices affect future inflation, they should be taken into account in monetary policy decisions. And this actually occurs via the effect of these prices on aggregate demand, output and, in the end, inflation. Hence, the monetary policy seems to have a stabilizing effect by leaning against the wind.

This should not be mistaken for setting goals for asset prices. In fact, the empirical evidence, particularly on stock prices, suggests that once the effects of asset prices have been internalized in inflation forecasts, they should have no further effects on the monetary policy reaction function, let alone be a monetary policy objective.[Footnote 3 - 3 This means that they should not be an argument in the Taylor rule. See, for example, Bernanke and Gertler (2001). In any case, they note that this prescription does not remove the possibility of short-term reactions to preserve financial stability.]

Something similar occurs with the effect of a house price boom. Where special care must be taken is in the relationship between a real-estate boom and financial crises, which makes it particularly important to monitor property prices and the expansion of mortgage credit, as I will review in a moment.[Footnote 4 - 4 In an interesting exercise, Taylor (2008) argues that monetary policy during 2003-2006 was more expansionary than what a Taylor rule would have suggested, and that if it had been more in line with it, the real-estate boom would have been milder.]

Implications on the exchange rate in the inflation-targeting context are similar to those just discussed for asset prices, since monetary policy should have a stabilizing effect. If the exchange rate appreciates persistently, this should reduce inflationary pressures and thus

blow some steam off the monetary policy, thereby tending to depreciate the exchange rate. This is precisely what the Board of the Central Bank of Chile decided to do in the face of the severe appreciation early this year, by holding the interest rate constant, while in the most likely scenario, had the appreciation not occurred, rates would have increased.

There is abundant evidence that pass-through from the exchange rate to inflation is fairly small. Monetary regimes pegging the exchange rate were based on the notion that exchange rate fluctuations were transmitted to inflation on a one-to-one basis. This was the logic, for example, of pegging the exchange rate in Chile in 1979. However, the empirical evidence shows a relatively low pass-through, particularly under floating regimes where the persistence of exchange rate movements is low. Still, despite the low pass-through, the inflationary effects of very acute depreciations such as those recently experienced by most emerging economies, would not be negligible. The final impact of the exchange rate depreciation on inflation will also depend on the behavior of international prices, which have been losing strength in the face of low growth prospects around the world.

With respect to monetary aggregates, some efforts have been made to bring them back to monetary policy, but as I said before, not with the intention of setting money targets, but rather because they are useful indicators of future inflationary pressures.

It is worth noting that the transmission mechanisms under study do not stem from the traditional recommendation of Friedman (1959) in his famous A Program for Monetary Stability, where the focus is on money demand stability and the role of money as a price anchor, and whose analytical base is the quantitative theory of money. Actually, recent works that assign a role to money, and to credit in general, do so because it can reveal future inflationary pressures or because it can contribute to achieve increased stability (Christiano et al., 2007; Goodfriend and McCallum, 2007; Kilponen and Leitemo, 2008).

Nonetheless, the empirical evidence on the ability of money to provide information to forecast inflation is not so favorable to monetary aggregates.[Footnote 5 - 5 For details on the European case, see Berger and Stavrev (2008). In Chile, there is no evidence, either, indicating that monetary aggregates improve inflation forecasts. For discussions on money and monetary policy, see papers in Cuadernos de Economía’s December 2003 issue (De Gregorio, 2003; García and Valdés, 2003; Vergara, 2003).]

It is more promising to conceive monetary and credit aggregates as indicators of potential distortions in financial markets, an issue I will discuss in the next section.

In this review of inflation targeting regimes it is worth to bear in mind that they are subjected to stress when inflation is of external origin and corresponds to a cost (or supply) shock. A cost shock that increases inflation may require a restrictive monetary policy in order to prevent relative price increases from snowballing into an inflationary spiral. In any case, and to avoid costly repercussions in terms of output losses, a horizon is established to correct deviations, which permits relative price changes to occur without requiring sharp monetary policy adjustments.

This is what has been happening in Chile since the prices of foods and fuels began soaring in an unprecedented way in early 2007. Constraining the monetary policy in the presence of a commodity price hike has its costs, but as we have stated a number of times, failing to tackle the inflationary problem opportunely leads to much higher output costs in the future, because inflation becomes much more entrenched.

On the contrary, when facing demand shocks the inflation targeting regimes are particularly useful, and that is the scenario we are seeing today. To rein in inflation, it is necessary to slow down growth via a more contractionary monetary policy. However, if output slowdown is caused by forces outside the monetary policy, the policy rate dosage should be small compared with that where the external scenario does not contribute to the deceleration, meaning that monetary policy conduct is countercyclical, reducing inflation and containing the demand slowdown.

Financial stability

Although more often than not, central banks have an explicit financial stability objective, for many years, and within a context of strong GDP growth and sound balance sheets of banks and firms, this was a second-class issue. Now things have changed dramatically. As of last year, financial stability became the protagonist in monetary policy management in developed countries.[Footnote 6 -The Fed does not have an explicit financial stability objective, although its role in this matter is widely known. See, for example, Plosser (2007).]

At the industrialized countries, particularly the United States, the potential distortions in financial markets were swept under the carpet. Furthermore, concern about the existence of an asset price bubble was nobody’s priority. An asset price bubble means that the price may be driven by variables other than its fundamentals. For example, stocks may be overpriced in comparison with the companies’ future stream of profits, or homes may be appraised at more than the living services they can provide. In other words, prices may be pushed up artificially, and the problem is that when the bubble bursts, it splatters across the financial markets and the overall economy.

Regarding how can monetary policy deal with the bubbles, as with the downfall of technological company stocks early this decade, the best strategy during the Greenspan era was believed to be “do nothing and clean up the mess when the bubble bursts” (Blinder and Reis, 2005). Laissez-faire is based on the idea that bubbles are hard to identify and also difficult to affect through monetary policy. Cleaning up afterwards consisted in providing liquidity, which normally was accompanied by aggressive interest rate cuts.

A major criticism to this strategy was that it favored bubbles, because financial markets internalized the final rescue. In fact, this strategy is known as the Greenspan put, in reference to interest rate reductions in the aftermaths of severe financial turmoil, such as the stock exchange downfall of 1987, the collapse of LTCM in 1998, or the technological stocks in the early 2000s.[Footnote 7 - 7 The idea is that investors could sell their shares at a given minimum price in the future, which is equivalent to a put option.]

In fact, from the standpoint of liquidity provision and potential downward pressures on inflation, a reduction in interest rates is generally recommended. The problem is that this response provides an incentive to adopting more risk-prone behavior, since investors perceive that they will have the put option available later. Therefore, it is advisable to not only provide the liquidity, but also carefully monitor the market’s operation to prevent overexposure to these risks in the future.

Indeed it can be argued that bubbles are difficult to identify. For example, Gürkaynak (2005) finds that, for every work identifying a bubble, there is another one finding the opposite. At the same time, it is not so clear how much of a given bubble can be affected by raising the interest rate and the necessary magnitude of the adjustment in order to make any difference, because, by definition, a bubble is determined by “non-fundamental” price movements. Thus, although after seeing the critical situation that developed financial markets have been enduring, a more proactive monetary policy strategy might have been advisable, but it is hard to believe that such a strategy could have averted this crisis by itself.

Actually, the overall purpose of financial stability is the proper functioning of markets and to avoid having to arrive at these degrees of turbulence and dislocation. From the macroeconomic standpoint, risks must be overseen and signaled, because the primary

Monetary aggregates in general, but especially the wider money aggregates as well as credit aggregates may signal unsustainable tendencies. As a matter of fact, whenever accelerated growth in credit and money aggregates occurs simultaneously with soaring asset prices and loose lending standards, increased inflation becomes very likely over the three years that follow (Roffia and Zaghini, 2007).[Footnote 8 - These authors find that only half of the accelerated expansions of broad monetary aggregates result in higher inflation, but the probability increases when this coincides with an asset price boom.]

In this context, one can argue that an increase in lending with inflation prospects can be fought with a tightening of monetary policy. However, if the boom was triggered by lack of regulation or supervision, monetary policy tightening by itself could probably be ineffective – or even counterproductive – if the financial system is weakened because of excessive risk taking.

Thus, financial regulation plays a major role in granting financial integrity. At the beginning, regulation focused on the strength of individual institutions. However, the tensions we are seeing now exemplify, once again, how individual fragility may quickly evolve into systemic problems. The interrelationships among financial institutions and the proper operation of the markets where liquidity is traded are essential ingredients of a market economy, but these characteristics are also the channels of financial contagion, as recently seen. So it is crucial to have a systemic vision, not only from the perspective of how the different institutions relate to each other, but also how the different types of financial and operating risks are intertwined, creating potential vulnerabilities.

The Financial Stability Reports that many central banks put together periodically – including us – seek to evaluate the resiliency of the system as a whole to large disruptions, by carrying out stress tests. It is necessary to continue strengthening the robustness of these methods to evaluate situations of extreme tension. Starting tomorrow, the Central Bank of Chile will hold its Annual Conference, and this version will feature frontier work in this area.

From the regulatory standpoint, supervision must consider the macroeconomic impact of financial activity. In the months to come, we will have to analyze also the potential procyclicality of the Basel II capital requirements, as well as the modeling and quantification of liquidity risk. A regulatory framework will be necessary to ensure the building of sufficient reserves in the boom phase of the cycle in order for the financial system to be well capitalized when the bust phase comes.[Footnote 9 - For an interesting discussion in the context of the present crisis, see Borio (2008).]

One of the most recurring sources of financial stress in the past few years in emerging economies are periods of euphoria or pessimism, which trigger movements in their exchange rates beyond what their fundamentals would justify. For example, when economic expectations are good, foreign exchange appreciations can arise with symptoms of bubbles in favor of all the domestic assets.

As I discussed before, a first line of defense for specific asset prices, stocks or housing is to raise the interest rate. However, in the area of exchange rates this may trigger more pressures to appreciate and exacerbate financial imbalances. A floating exchange rate regime is the most adequate to prevent exchange rate policy from inducing currency speculation. The fiscal policy can also contribute to reduce foreign exchange pressures. However, these measures may not be enough, and thus in some exceptional periods, and with the purpose of preserving financial stability, an intervention in the foreign exchange market is warranted.[Footnote 10 - In De Gregorio (2001), I discuss these points in connection with the first intervention period of 2001, and in De Gregorio (2006) I do so in the context of inflation targets and financial stability.]

In Chile, since the floating exchange rate regime was adopted, this has occurred on three occasions, all deemed exceptional. To avoid conflicting goals, consistency between the intervention and the direction of the monetary policy is important, and to that end a first requisite is that the intervention does not have a specific point or range objective for the exchange rate.

Finally, the current international financial crisis underscores the importance of having an adequate framework for international reserves management, as a key tool to cushion the impact of international liquidity shocks on the economy. The accumulation of reserves in Chile that begun in April this year was decided precisely to strengthen the liquidity position before the eventuality of a worsening of world financial conditions, which is what actually occurred in September.

Final remarks on the current juncture

The excesses of the US banking system could not have happened in Chile. Hence, the real-estate bubble driven by fast and unhealthy credit expansion would hardly have formed in our country.

In the first place, mortgage loans in Chile are different from those in the United States. There, these loans are issued “without recourse”, which allows the bank only to repossess the mortgaged property, but not other goods belonging to the debtor to recover the loan, as is the case in Chile.

Secondly, in Chile banks cannot hold substantial off-balance-sheet positions, because the General Banking Act expressly indicates what kind of firms the banks may establish, such as mutual fund administrators or securitizing firms. These firms, that the law terms affiliates, must have a single line of business and are banned from investing in other companies. In addition, banks must submit their consolidated financial statements on a monthly basis.

Moreover, banks may not take positions in credit derivatives, and face other restrictions regarding the operation of derivative instruments. In particular, to operate with interest rate or foreign exchange rate options, banks must undergo a thorough test by the SBIF, while holding uncovered positions in the balance sheet are costly in terms of capital requirements.

But not only regulators and policy-makers learned the lessons from our financial crisis. Enterprises did too. Thus we haven’t seen the massive currency speculations where so many firms in the emerging world were involved through the use of exotic derivatives that were not only complex but also very difficult to price.

In the present juncture we still face a severe inflationary challenge. In our last Monetary Policy Report we stated that, in our baseline scenario, we needed to grow somewhat less than our potential to contain the inflationary pressures and ensure inflation convergence to its target rate of 3% annually over a two-year horizon.

We also thought that the world economy would not help to reduce inflation. Today the scene has changed and we are carefully reviewing its inflationary implications. To begin with, the international scenario may trigger a reduction in demand that could help contain inflation. This certainly has implications on the monetary policy trajectory, consistent with the inflation target. Secondly, commodity prices are in a tailspin, particularly in the case of oil. However, these events have not fully passed through to our economy, because our currency has depreciated substantially. Overall, more evidence is needed with respect to the persistence of the recent events in the world to calibrate the monetary impulse.

The Central Bank of Chile has paid close attention to external developments and has been ready to provide any liquidity required for the proper operation of the financial markets, as it has been doing since the end of September and will continue to do for as long as it deems necessary.

I am convinced that we will weather this international financial crisis successfully. We have built a macroeconomic policy scheme with sufficient degrees of flexibility and a strong commitment to stability that, under the current circumstances have the challenge of attenuating the adverse world economic scenario and ensure stability.

Our monetary policy is oriented at controlling inflation. The exchange rate floats to absorb international shocks without causing major disruptions in domestic activity. The fiscal policy is based on a rule that implies saving transitory incomes and today enjoys the benefits of prudence. Fiscal savings, combined with the Central Bank’s international liquidity position, provide a reserve of resources that permits us to accommodate external financing shocks even worse than those we are seeing now. Our financial system has been prudent and has the necessary levels of capitalization to play its credit intermediating role properly. Prudence, both of the private sector and of the macroeconomic policies, can now yield their fruits in the worst financial episode the world has had to suffer in many decades.

Thank you.

References

Berger, H. and E. Stavrev (2008). “The Information Content of Money in Forecasting Euro Area Inflation”. IMF Working Paper WP/08/166.

Bernanke, B. and M. Gertler (2001). “Should Central Banks Respond to Movements in Asset Prices?” The American Economic Review, Papers and Proceedings of the Hundred Thirteenth Annual Meeting of the American Economic Association, 91(2): 253-257.

Blinder, A. and R. Reis (2005). “Understanding the Greenspan Standard.” In The Greenspan Era: Lessons for the Future, Proceedings of the Jackson Hole Symposium 2005, Federal Reserve Bank of Kansas City, pp. 11-96.

Borio, C. (2008). “The Financial Turmoil of 2007-?”: A Preliminary Assessment and Some Policy Considerations.” BIS Working Paper No. 251.

Christiano, L., R. Motto, and M. Rostagno (2007). “Two Reasons Why Money and Credit May Be Useful in Monetary Policy”. NBER Working Paper No. 13502.

De Gregorio, J. (2001). “La Política Cambiaria.” Economic Policy Paper No. 2, Central Bank of Chile.

_______. (2003). “Mucho Dinero y Poca Inflación: Chile y la Evidencia Internacional”. Cuadernos de Economía 40(121): 716-724.

_______. (2006). “Esquema de Metas de Inflación en Economías Emergentes”. Economic Policy Paper N° 18, Central Bank of Chile.

Friedman, M. (1959). A Program for Monetary Stability, Fordham University Press.

García, P. and R. Valdés (2003). “Dinero y Conducción de la Política Monetaria con Metas de Inflación.” Cuadernos de Economía 40(121): 698-706.

Gonçalves, C. and J. Salles (2008). “Inflation Targeting in Emerging Economies: What Do the Data Say?” Journal of Development Economics 85(1-2): 312–318.

Goodfriend, M. and B. McCallum (2007). “Banking and Interest Rate in Monetary Policy Analysis: A Quantitative Exploration”. Journal of Monetary Economics, 54(5): 1480-1507.

Gürkaynak, R. (2005). “Econometric Tests of Asset Price Bubbles: Taking Stock”. Federal Reserve Board, Finance and Economics Discussion Series 2005-04.

Kilponen, J. and K. Leitemo (2008). “Model Uncertainty and Delegation: A Case for Friedman’s “k”-percent Money Growth Rule”. Journal of Money, Credit and Banking 40(2-3): 547-556.

Plosser, C. (2007). “Two Pillars of Central Banking: Monetary Policy in Financial Stability.” Opening Remarks at the PACB Convention, Federal Reserve Bank of Philadelphia.

Roffia, B. and A. Zaghini (2007). “Excess Money Growth and Inflation Dynamics”. ECB Working Paper No. 749.

Taylor, J. (2008). “Housing and Monetary Policy”. In Housing, Housing Finance and Monetary Policy, Proceedings of the Jackson Hole Symposium 2007, Federal Reserve Bank of Kansas City.

Vergara, R. (2003). “El Dinero Como Indicador de Política Monetaria en Chile”. Cuadernos de Economía 40(121): 707-715.

The following is an article featured on Indexuniverse.com recent ally as part of my column, Efficient Investor.

Barclays Global Investors (BGI) just announced that out of its iShares family of 178 ETFs, only two are paying out capital gains this year.

The iShares Cohen & Steers Realty Majors Index (ICF) expects to pay out long-term capital gains in the range of 35 cents to 45 cents per share. That’s 0.74% to 0.94% of the net asset value. There are no short-term capital gains.

The iShares Lehman Short Treasury Bond ETF (SHV) will pay out a short-term capital gain of 0.74 cents per shares. This is payable on Friday, Dec. 5.

For over 25 years, the National Council for Research on Women has helped shape the future for women and girls. The Council is a network of 120 member research and policy centers and more than 2,000 top-level researchers. We provide the information and research needed to foster more equitable futures for women and girls. The key to the Council’s past and future success is highly-focused, accessible, timely research. Through Research-Action groups organized around urgent issue areas, rapid-response communications campaigns, and a website that features the research, expertise, and information produced by our network, the Council delivers the facts, promotes informed activism, and ensures positive change.

The National Council for Research on Women’s Intern Program exposes interns to the inner workings of a nonprofit while providing valuable job training, mentoring, and networking opportunities. The program introduces interns to the daily and long-term issues nonprofits currently face. At the same time, interns are immersed in a wide range of women’s issues and are introduced to an extensive feminist network of researchers, advocates, and activists, broadening an education that many of them begin in Women’s Studies courses in college.

Interns learn and assist with various Council projects and activities involving the Council’s Member Centers that will expand their awareness of jobs available within the feminist community and encourage their return to the Council or its Member Centers as future employees. In addition, interns have opportunities to forge connections with other interns and staff at NYC-Area Member Centers, thus initiating a professional network that will continue to serve them long after the internship ends.

During the Fall and Spring semesters, interns work a minimum of 10-15 hours per week. During the summer, a more full-time commitment is desired. When appropriate, the Council will assist interns in arranging for academic or work-study credit. A daily stipend of $10 (for food and travel) is available.

Each applicant will be evaluated on the basis of her/his resume, a writing sample, recommendations, and an interview. The ideal applicant will have a demonstrated commitment to women’s issues, strong writing and communication skills, and computer and general office proficiency. For more information, contact:

Internship Department: Research and Programs:

The National Council for Research on Women is a working alliance of 120 US based women’s research and policy centers. Its constituencies include educators, advocates, policymakers, and practitioners concerned with issues of diversity and gender equity. Through the Council’s role as an officially recognized non-governmental organization of the United Nations, and its programs for international scholars and activists, it is linked with over 250 women’s centers world-wide.

Council programs and publications move research off the shelves and into action reaching a broad audience of highly focused, economically diverse, and politically active women and girls. The Council connects researchers, activists and policymakers and has brought new and diverse voices to the public debate for over 25 years, providing accurate information and improving the lives of women and girls around the world. Bringing issues concerning women and girls to the forefront, the Council helps set the agenda for global debate.

Working under the direct supervision of the Director of Research and Programs, the Research Intern would support the research and policy programs at the National Council for Research on Women. S/he would help manage correspondence to member centers and other constituencies; contribute to the development of policy briefs and position papers; conduct relevant research on topics of interest to the Council; and help grow our Research Action Groups. Additionally, s/he will keep abreast of relevant issues and coordinate the collection and filing of news articles, reports and other materials.

The ideal candidate will be motivated, hardworking, self-directed and committed to social justice, equality, and women’s issues. Strong written and verbal communications are a must for this position. Interest or experience in public policy, intersectionality (race, class, gender, sexuality, ethnicity), or Council priority areas is desirable, but not required.

The intern’s responsibilities include (but are not limited to):

The intern’s responsibilities include (but are not limited to):

Find out more by visiting the organization’s website: http://www.ncrw.org/

The C Channel network has also recently introduced The C Directories, 5 user-friendly directories of websites, blogs, online retailers and other sites categorized under thousands of differenet subjects. Only a month old, it attracts new registrations every day of eBusinesses eager to become part of The C Channel Network. For example, in the Travel category, you can find Travel Street, a comprehensive guide to travel in Asia, Worlwide Holiday Homes with over 1,000 holiday homes in 51 countries including Spain, USA, Australia and Malaysia, plus Villa Tuscane and Tuscany Villas, the best place for holiday rentals in Tuscany.

In our Shopping Directory, we feature the likes of Teen Plus Size Clothing and Plus Size Lingerie. And if you’re getting married soon, you might like to check out http://engagementrings.ws. Plus, for the best deals the Directory of Wholesalers will tell you where to look.

In the Entertainment category, you can find a great site about Mahjong, for music-lovers there’s Hip Hop 100 and New York nightlife, keeps you up-to-date on the local party scene. You’ll also find a site about Indie rock musician Danielle Evin, and Rakeback for poker lovers. But there’s even links to Famous quotations and the Silly stuff blog. And game buffs can check out the Games Directory.

In the Health & Beauty category, we feature a myriad of sites with all sorts of information, like Cocovida Coconut Oil and Wellness News and Unique Asthma treatment secrets. In our Sports section, you’ll find the best source of information about all major sports in Sports Facts. Golfers will delight over at Secret Golf training System, and motorsports fans should visit Modded Mustangs and the German im-auto.de.

In the Real Estate Category, Construction World and the Real Estate Search by City Resource Directory are 2 of the best sources for home-searchers. And if you are a new home-buyer, check out our Finance category to find the best sources to help you with your money-matters, like TSP Talk, Ledger Services, Stocks and Mutual Funds or ChexSystems & Bad Credit Solutions.

In our Tools for Webmasters Directory, we feature some of the best multimedia directories for your audio, video and photo editing work, including Multimedia downloads, Audio & Video editing, converter and burning software, Audio & Video Software tools, the powerful and user-friendly MP3 Ripper, the best tool to Burn DVD Movies, Photo Editor, Digital Video Editor, Music Software, and two of the handiest directories for Multimedia and Graphics.

We also provide links to some of the best SEO sites online such as SEO and Internet Marketing, The Webmaster SEO Blog and SEO Ireland. Plus, there’s links to some of the best tools for webmasters, like Cheap domain register, Cheap domain hosting, and Webhost advisor. Learn where to find Niche articles, keep track of your backlinks with Link Checker, and Buy text links. We also feature other directories like the Alive Web Directory, Free Web Index and Submit Dot Com. Plus there’s other great links like Paid Survey online, which claims to tell you how you can make some extra cash.

There’s plenty to see, so pay us a visit.

The C Channel network has also recently introduced The C Directories, 5 user-friendly directories of websites, blogs, online retailers and other sites categorized under thousands of differenet subjects. Only a month old, it attracts new registrations every day of eBusinesses eager to become part of The C Channel Network. For example, in the Travel category, you can find Travel Street, a comprehensive guide to travel in Asia, Worlwide Holiday Homes with over 1,000 holiday homes in 51 countries including Spain, USA, Australia and Malaysia, plus Villa Tuscane and Tuscany Villas, the best place for holiday rentals in Tuscany.

In our Shopping Directory, we feature the likes of Teen Plus Size Clothing and Plus Size Lingerie. And if you’re getting married soon, you might like to check out http://engagementrings.ws. Plus, for the best deals the Directory of Wholesalers will tell you where to look.

In the Entertainment category, you can find a great site about Mahjong, for music-lovers there’s Hip Hop 100 and New York nightlife, keeps you up-to-date on the local party scene. You’ll also find a site about Indie rock musician Danielle Evin, and Rakeback for poker lovers. But there’s even links to Famous quotations and the Silly stuff blog. And game buffs can check out the Games Directory.

In the Health & Beauty category, we feature a myriad of sites with all sorts of information, like Cocovida Coconut Oil and Wellness News and Unique Asthma treatment secrets. In our Sports section, you’ll find the best source of information about all major sports in Sports Facts. Golfers will delight over at Secret Golf training System, and motorsports fans should visit Modded Mustangs and the German im-auto.de.

In the Real Estate Category, Construction World and the Real Estate Search by City Resource Directory are 2 of the best sources for home-searchers. And if you are a new home-buyer, check out our Finance category to find the best sources to help you with your money-matters, like TSP Talk, Ledger Services, Stocks and Mutual Funds or ChexSystems & Bad Credit Solutions.

In our Tools for Webmasters Directory, we feature some of the best multimedia directories for your audio, video and photo editing work, including Multimedia downloads, Audio & Video editing, converter and burning software, Audio & Video Software tools, the powerful and user-friendly MP3 Ripper, the best tool to Burn DVD Movies, Photo Editor, Digital Video Editor, Music Software, and two of the handiest directories for Multimedia and Graphics.

We also provide links to some of the best SEO sites online such as SEO and Internet Marketing, The Webmaster SEO Blog and SEO Ireland. Plus, there’s links to some of the best tools for webmasters, like Cheap domain register, Cheap domain hosting, and Webhost advisor. Learn where to find Niche articles, keep track of your backlinks with Link Checker, and Buy text links. We also feature other directories like the Alive Web Directory, Free Web Index and Submit Dot Com. Plus there’s other great links like Paid Survey online, which claims to tell you how you can make some extra cash.

There’s plenty to see, so pay us a visit.

Dear Sir/ Madam,

————=_4921B94E.B36C485E–

Scam of the day

REIT stands  for real estate investment trust. REIT concept is similar to mutual funds, except it pools the investors money to invest in real estate.Or in other words, Invest in REIT is almost as same as owning a property then rent it out and the rental income will the main source of income.

REITs depends on the property market. If the property market is HOT, and rentals shoot up, the prices of REIT would reflect that. If property is in excess and rental comes down, so will your REIT prices. Appreciation in property is only paper gain until the REIT sells the property. Until it does so, it will not be reflected as profits and will not be distributed to investors of REIT. As REIT distributes 90% of its profits back to investors as dividends after management fees.

And profits meaning their rents collected, not property prices. So if a REIT reports that their property holdings has rise 50% in value, it will not benefit you until they sell that property and realised their 50% gain. As long as they hold on to that property and collect rent from it, the 50% in value means nothing to you in dividends.

But noted that any retail unitholders are subject to withholding tax of 15% (20% for foreigner) for dividends received from the trust. Hence let’s say the rate is 7.7%, the net yield will be 7.7% x 0.85 = 6.55%. And the properties will be revalued once every 3 years.

The market price movement for all is simply due to the liquidity issue. Price can jump up and down very drastically due to not many buyer and sellers around.

Some terms frequently used are :

DPU = distribution per unit

Before Nick & I became committed to being debt free in 3 years, we stuck to a budget really well.  We didn’t spend more than we took in and even had a small savings account, in addition to having money to put into house projects, etc.  What I am really loving about gathering snowflakes every week is that in the past if we’d have $5 or even $50 unspent we would end up using that money on something we didn’t need or even realize we were spending extra money on.  This may have been an extra meal or two out,  a coffee, a small purchase at Walmart.  Now that we are *looking* for this extra money every week, we find it and pay it to debt before we can lose it.  We’re averaging just over $150/month that way.  Can you find $150/month in your budget that you can do something impactful with that would have otherwise slipped away from you?  If you don’t have debt to pay off, sock that money into a mutual fund and see where it takes you.

Please read the following article and you will know why you should be alarmed over what AIG is doing and them take action and sign the petition and phone call the numbers that will be listed.

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The North American Free Trade Agreement (NAFTA), which came into being in December 1994, has been one of the more important free trade agreements of its time. The NAFTA pact was signed by Canada, Mexico, and the United States in hopes of strengthening the prevailing commercial climate and promoting trade among the three member countries. NAFTA has been the model for other trade agreements, including the pending Colombian Free Trade Agreement. Both NAFTA and the Colombian FTA have been controversial in terms of market access, creation of jobs as well as the labor and environmental regulations applicable to them.

Free trade apologists argue that the Colombian FTA will produce more jobs and boost a sluggish global economy through the creation of enhanced market competition, leading to innovation and improved products. Members of various sectors that have been crushed and displaced might beg to differ, and claim that in Mexico, while free trade arguably has revamped the manufacturing sector, it has caused the agricultural industry to progressively wilt. While Congress debates whether to pass or to continue blocking the Colombian FTA, a growing number of FTA critics cites the overall negative effects that NAFTA has had on Mexico, claiming that Colombia will be comparably harmed by the ratification of the FTA.

Certainly, the economic relationship between the United States and Mexico has ostensibly strengthened since 1994 with the advent of NAFTA. The two countries have collaborated in forming development links such as the Security and Prosperity Partnership of North America (SPP), whereby they advance their joint security and prosperity through a common security strategy and the enforcement of economic growth and competitiveness goals.

NAFTA also has proven to be controversial in many of its economic and social ramifications. Its drafters assumed that the governments involved in formulating and implementing the agreement would behave rationally, markets would respond prudently, and that the agreement would pave the way for Mexico’s entrance into the developed world. Critics of NAFTA claim that the real impact of the agreement has been to destroy the social fabric of existing workers’ rights and the democratic accountability of government authorities, and argue that NAFTA has principally benefited large corporate interests at the expense of small and subsidized farmers. At the end of the NAFTA drafting process, many of its critics speculated that inequality within particular economic sectors in member countries would rise. What was not foreseeable was that the economic gap would steadily increase between Mexico and its northern partners. Additionally, the expropriation of foreign direct investments in Mexico, the imbalance of imports compared to exports, poorly enforced environmental regulations, growing unemployment rates in both the United States and Mexico, negative effects on immigration, and the loss of a competitive edge in Mexico’s agricultural sector, were all unanticipated consequences when NAFTA was being put together.

Both Mexico and Colombia have a particularly close relationship with the United States. Mexico shares a 2,000 mile border with its North American neighbor, as well as extensive interconnections through the Gulf of Mexico. Additionally, Mexico has achieved a priority trade status as the world’s second largest consumer of American imports. As one of the United States’ closest allies in Latin America, the U.S. has assisted Colombia through Plan Colombia, a more than $6 billion counter-narcotics and security operation aimed at eradicating coca crops and shutting down trafficking networks, as well as promoting efforts to dismantle leftist guerrillas operating in that country, the Revolutionary Armed Forces of Colombia (FARC). Colombia, although much smaller than Mexico, is an essential market for exports of U.S. goods, as it imports $6.7 billion in U.S. goods and services annually. Mexico and Colombia not only depend on material assistance from the United States, but are also two of the last countries in the region which have remained relatively close allies to the U.S.

The most revealing flaws in the two agreements underscore the vagueness and inadequacy of the pacts regarding their abilities to provide proper enforcement and administration. Distressing to those who oppose the Colombian FTA are the acute parallels between the Colombian FTA and NAFTA, and how little Washington and Bogotá took NAFTA’s increasingly apparent problems into account when drafting and negotiating the later agreement. NAFTA’s concepts of minimal trade barriers and tariffs might seem uniquely attractive to countries that wish to sign future trade agreements. However, opponents of the Colombian model cannot help but question what improvements can be made in order to save the country from the same fate affecting Mexico.

Laura Carlsen, a highly regarded researcher for America’s Policy, stated in her article, which related Mexico’s lessons to Asia: “the government conceded considerable ground to obtain the access that they claimed would serve to reorient the Mexican economy which was outwardly based on its absolute and comparative advantages.” Washington has maintained the upper hand in choosing the exact nature of the access it will provide to its trading partners, while requiring total liberalization for the products it hopes to export. At the same time, the U.S. demands protection in the form of quotas and non-tariff barriers for its own products. This built-in U.S. advantage has forced Mexico to lose its competitive edge, which will cause it to continuously suffer at Washington’s hand, as countries such as China offer cheaper labor and transportation costs.

Although trade is supposed to move workers from low-productivity, low-wage import-competing industries into high-production export jobs with better wages, NAFTA led to job losses in all fifty U.S. states. Jeff Faux, a journalist for the Economic Policy Institute, exclaims in his important piece, Revisiting NAFTA that, “growing trade deficits with Mexico and Canada have pushed more than 1 million workers out of higher-wage jobs into lower-wage positions in non-trade related industries. Thus, the displacement of 1 million jobs from traded to non-traded goods’ industries reduced wage payments to U.S workers by $7.6 billion in 2004 alone.” An increase in the impact of the trade deficit on wages affects workers exposed to foreign competition, limits manufacturing sector jobs, and adds to a surplus in supply of service sector workers, resulting in wage depression.

Market access provisions may not have an entirely negative effect on the trade relationship between the U.S. and Colombia. However, when these provisions are combined with new rules on investment, procurement, and services, U.S. investment may begin to shift overseas, in turn hurting American workers. NAFTA’s inherent flaws in market access regulations have been incorporated in the Colombian Free Trade Agreement. Colombia’s fate could parallel that of Mexico, mostly due to the similarity of the new market access regulations, an increased radicalism regarding tariff barriers, and duty-free implementation practices that will most likely increase Colombia’s prospects for economic impairment.

NAFTA’s market regulations were drafted to open Mexican markets to Canada and U.S. exports, gradually constraining the robustness of protectionism in each others’ foreign markets. Opening markets moderately was to be a positive initiative when the trade pact was originally drafted. What was not considered at the time was the relatively small size of the Mexican economy and the difficulties that would result in attempting to impact the economies of its northern neighbors. Before the implementation of NAFTA, between 1991 and 1993, the Mexican unemployment rates slightly rose from 2.6 percent to 3.1 percent.

Import increases have had a substantial effect on the United States, particularly regarding the job market. Agricultural exports to Mexico have increased by 195.3 percent, far surpassing general export growth. Shortly before NAFTA in 1993, Mexico only purchased 8 percent of U.S. agricultural exports, a rate which grew in 2005 to over 15 percent. With the explosion of exports from the United States to its southern neighbor, Mexico’s competitive capacity in the agricultural sector alarmingly has weakened.

A representative from the Michigan Farm Bureau remarked that “an advantage for Michigan agriculture is that most of the imports we have seen from Mexico do not compete with Michigan products, they tend to be seasonal vegetables, which don’t really compete in the Michigan market in our window of production.” Alarmingly, thirty percent of Mexico’s farm jobs have disappeared since the trade pact went into effect, which has translated into 2.8 million farmers being pushed out of their fields by foreign competition. Mexico’s relatively feeble agricultural trade performance, when it comes to the United States, is partly a result of U.S. agricultural subsidies. The U.S. government subsidizes its farmers to the tune of $24 billion a year. Additionally, Washington has authorized an eighty percent increase in subsidies over the next ten years as a result of the 2002 Farm Bill. Such developments make it possible for American farmers to produce and sell below the price of production; therefore, it is out of the question for Mexico and Colombia to equably compete with the U.S. on a level playing field.

Just as Mexico’s agricultural sector has been hard hit, Colombia’s agricultural production vis-à-vis the U.S. also will likely be at a disadvantage. Along with the problem posed by agricultural subsidies, Colombia’s corn and bean crops will suffer greatly. Under the pending U.S.-Colombia Free Trade Agreement, the U.S. will export two million tons of yellow corn to Colombia, jeopardizing the jobs of 300,000 farm workers in the Colombian domestic corn industry. The bean market in Putumayo, Colombia is considered to be one of the largest in the country, with 2,200 acres of beans being planted for internal consumption. Under the agreement, it is estimated that 15,000 tons of beans will enter Colombia duty free, in turn destroying the local bean market. The American Farm Bureau Federation predicts that this arrangement could potentially provide $910 million in gains annually for American agriculture. It remains unclear whether Colombia will experience gains, or whether its fate will emulate Mexico’s appalling agricultural record.

The New York Times reported today that “533,000 non-farm jobs were eliminated in November, the most in one month since the mid-1970s, and figures for the prior two months were revised upward by 199,000.” I had one of the non-farm jobs eliminated last month, and my husband’s non-farm job was eliminated in September. We’re both unemployed.

CNN is reporting that 1.9 million Americans lost their jobs this year. I turned off the television, as I watched the DOW dropping from the news.

Having talked with my financial advisor this week, I knew that the unemployment stats would be grim today. Luckily he and I worked out a plan to get us through the next few months. But I need my mutual fund investments (both 401K and regular) to rebound.

I was given health insurance by my former employer until June 30, 2009, which is a big help. My husband has been without health insurance since September. We’re playing Russian roulette that he stays well until he can get a job, although we will probably purchase a temporary policy for him against anything catastrophic. He has just left the house for his third interview in two weeks. I hope he gets employed.

My husband is getting his unemployment checks now. I was approved for unemployment benefits, but when I’ve applied online, I was told that my request was not timely. The state of Tennessee has eliminated its unemployment office, where live people answer questions, since I was last laid off ten years ago. Everything has to be done online or by phone. Since I have had no luck qualifying online, I called the telephone number repeatedly only to receive a busy signal. I have gotten through a couple of times, but I am told that my request is not timely. There is no live person anywhere who can help me.

We watched Dave Ramsey’s show last night. I was struck by his comment on small businesses. He said that if a small business with 100 employees lays ten people off, that’s significant. It’s 10% of the workforce at the business, but the business owner can’t go to Washington and demand a bailout. I worked for a small business with twenty employees, and three were laid off. That’s a 15% reduction. And, no, the owner won’t be going to Washington and asking for a bailout.

I have worked for 35 years in the publishing industry, either catalogs or magazines. I was laid off the first time in 1997, when the retailer, where I had worked for 19 years, decided to eliminate its in-house catalog production staff. Fortunately, I found a job within a few months for a magazine publisher in Nashville. After a year there, the magazine was not making money due to poor ad sales and was closed down. Everyone lost their jobs, including the editors who had relocated from New York City. I had lost two jobs in less than 15 months.

Again, I rebounded in a couple of months by finding employment with a small publishing firm. After layoffs at two corporations, I had been advised to try a small business. I welcomed the change. I worked there for almost ten years, survived a staff reduction in 2001, survived in 2002 when the owner’s partners left to form their own business, but succumbed this year when a major client cut back its business.

Do I stay in publishing? Since my layoff last month, two other publishers in Nashville have reduced their staffs. Others may have also reduced payroll, but escaped being reported in the local media. While I’m looking for a new position in publishing (or contract or freelance work), I’m expanding my knowledge of social media.

I have two blogs and shortly before my layoff, nowpublic.com approached me about reporting on recycling for their environment section because of the success of my blog about litter. I am now recycling myself, along with almost 2 million other Americans.

The Securities and Exchange Commission took aim at the big credit rating firms Wednesday, passing new rules designed to prevent conflicts of interest and increase transparency in the $5 billion a year industry.

The three largest ratings firms — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings — have been widely criticized for their role in the global financial crisis brought on by the collapse of the subprime mortgage market.

Critics claim the rating firms gave their highest ratings to securities laced with risky mortgage backed assets in order to curry favor — and profits — from the firms buying and selling the securities.

The new rules specifically forbid the firms from advising banks on how to package securities in order to secure high ratings.

Thousands of securities initially given AAA ratings were later downgraded as the financial crisis washed across Wall Street, forcing nearly every large bank to write down billions of dollars in losses.

SEC commissioners voted unanimously at a public meeting to adopt the new rules.

SEC Chairman Christopher Cox called adoption of the new rules “a significant and substantive action.”

The industry had regulated itself for nearly a century, but that ended in 2007 as it became clear that many mortgage-backed securities given AAA ratings were likely to collapse in value.

The agencies have long been as almost de facto regulators, issuing ratings on the creditworthiness of public companies and securities. Investors depend on the ratings to purchase the safest possible securities.

Their grades can be key factors in determining a company’s ability to raise or borrow money, and at what cost which securities will be purchased by banks, mutual funds, state pension funds or local governments.

Among the other new rules is one that will require the rating firms to disclose how much verification they performed on the quality of the securities they review.

SEC Approves New Credit-Rating Rules By FBN,  http://www.foxbusiness.com/story/markets/industries/finance/sec-approves-new-credit-rating-rules/

The Active U.S. Real Estate Fund (symbol PSR) invests in real estate investment trusts, aka REITs. The fund’s managed by a team of 13 investment pros experienced in managing real estate securities.

Unlike actively managed mutual fund. The real estate ETFs must disclose their portfolios at the end of each trading day. Since most ETFs track indexes, changes to the portfolio are rare and their performance predictably moves in line with the underlying benchmark.

Some industry watchers say that disclosing trades on a daily basis takes away the advantage of an active manager (mutual fund managers are only required to disclose their holdings quarterly.

Westchester GOP  Chairman Doug Colety is taking alot of heat from fellow Republicans for his recent attendance at a fundraising event for Tony Castro. Castro, a Democrat, has run for Westchester district attorney on two occassions, and is said to be considering a third run for DA. Its easy to see why republicans would be a bit peeved that their leader and chairman, Colety, was seen and photographed at a fundraiser for a prominent Democrat — Castro.

Colety was caught recently on the pages of the Westchester Guardian at the fundraiser with Westchester Independence Party Chairman Dr. Giulio Cavallo and Castro. We spoke to Colety, who told us, ”I was invited to an event by Dr. Giulio Cavallo to honor Tony Castro, who as far as I know, has not announced that he is running for anything.”

“The Republican Party does have candidates (plural) interested in running for DA. All of who will be interviewed by the Excecutive Committee and nominated at the convention by the rank and file. I will not be selecting the candidates alone, and there is a process that we will be going through next year. My attendance at the event in no way should indicate that I’m supporting any candidate.”

When we followed up with Colety and asked if Castro could be the Republican candidate for DA next year, he called it “total nonsense. My feeling about Tony Castro’s bid to run, if he decides to run in a Democratic primary, is that I believe he is best served running without the Republican endorsement. Strategically, in a Democratic primary, a Democrat cannot win with the Republican line.”

But Colety added this caveat to his friend Cavallo, saying, “If the Independence Party asks us to interview a candidate who they are supporting, we will consider doing so. My friendship with Dr. Cavallo will benefit Republican candidates throughout the county.”

There is no disputing that Colety and Cavallo share a strong political alliance that has turned into a friendship over the years, and if Doc Cavallo asked Colety to come to this event, he would do so. It is also true that the two political parties that Cavallo and Colety preside over  need to work together in order for Republicans to have any chance of remaining a viable party here in Westchester. This is another reason for Colety to appear at this event for Cavallo.

But that’s where the rationale for Colety attending this event ends. Here’s the other side of the argument aganst Colety attending. First, this was not an event for Cavallo, or his Independence Party. It was for a Democratic candidate for district attorney very likely to be running again, and possibly running against the Republican party’s candidate for DA, in 2009.  If Cavallo asked Colety to attend a Hillary or Obama event, would he do it?

Second, as Colety stated above, there are more than one Republican candidates interested in running for DA next year. Dan Schor is the one GOP DA candidate already actively campaigning and raising money, and yes, some of the rumblings we heard about Colety attending the Castro event came from Schor supporters (but we got calls and e-mails from Republicans from Yonkers, Harrison and Rye complaining about the photo in the Guardian).

Third, the growing relationship between Colety, Cavallo and Westchester Guardian Publisher Sam Zherka deserve mention, and attention from the powers that be. Cavallo and Zherka have become friends over the past year after a group led by Zherka attempted to overthrow Cavallo from power as Westchester Independence Party chairman. Since then, the two have formed a mutual opppostion to current District Attorney Janet DiFiore.

When Cavallo brings his good friend Doug Colety into the mix with Zherka and co., you have a very powerful and dangerous political alliance. In theory, a political candidate, who has the blessing of Sam Zherka, could easily have two political party lines to run on here in Westchester: the Republican and Independence lines.

This is what got Republicans and others in Westchester so upset about the photo in the Guardian; most thought this meant that Castro was going to attempt to get the Republican line. While Colety disputed those rumors in his quotes to us, he may have simply backed off the idea because of all the intense opposition to it.

One thing is clear: that photo, assumed to be taken by Guardian Editor-in-Chief Richard Blassberg, did not have the intended outcome. It exposed Colety, Cavallo and Zherka and put them all on the hot seat.  It also didn’t  help Blassberg’s eternal candidate for DA, Castro. Or is this what Dick wanted to do all along — expose this unholy alliance to the public? But how can you justify that to your boss, or does Sam even understand this?  

Let’s also realize that DA DiFiore is now a Democrat, so if Castro wants to challenge DiFiore again in 2009, he must do so in a Democratic primary.

More analysis on this upcoming race , and the unoly alliance,  in our next post.

id="blog_description">Simple Living = Frugality = Peace of Mind: Personal Finance and Stress Control

Is there any question about why some old folks ship out on luxury liners in their sunset years?

Medicaid will cover nursing home care, but only after you have utterly pauperized yourself. You must be left penniless, meaning you have had to sell your home, your car, and expend all other assets on medical and nursing home bills. In Arizona, if you’ve made the mistake of gifting your children, as is allowed under federal law, with a few thousand inheritance-tax-free bucks over the two years prior to your falling ill, you can be disqualified from this state’s equivalent of Medicaid on the theory that you must have been trying to cheat the system.

So as you can see, if you’re “lucky” enough to make it to advanced old age, you’d better have long-term care insurance. Fourteen percent of people over 71 suffer from dementia, and that doesn’t count strokes, broken hips, chronic heart failure, Parkinson’s disease, or any of the multitude of other causes that put the elderly out of commission.

In general, you should plan to buy long-term care insurance in your early fifties. Obviously, if you purchase a policy when you’re too young, you’ll pay premiums over a long period when your chance of needing the coverage is almost nil. If you wait until you’re too old, you may be disqualified from buying a policy or pay an exorbitant premium. 

You need to investigate any insurance company carefully before buying a long-term policy from it. Be sure it is financially sound and highly rated by Moody’s and A.M. Best. In addition, it’s important to fully understand what you’re buying. Most states have an agency on aging or an insurance commission. These agencies can provide you with information on what to look for and what to avoid in long-term care coverage. AARP also offers a  lot of valuable information, but you should be aware that this organization is in the business of selling long-term care insurance. 

Back on July 16 we warned “ Muni Securities are blowing up. Not safe.”

Today the news has hit the press:

As of Dec. 4, there were 12 muni funds down more than 30% this year — nine from OppenheimerFunds, two from Eaton Vance Corp. and one from Nuveen Investments.

“These are really extreme numbers,” said Lawrence Jones, senior mutual fund analyst at investment researcher Morningstar Inc. “It’s safe to say that muni funds have never seen losses like this.”

Thanks Lawrence. Back in July of course munis were seen as a safe bet by everyone and only cranks were suggesting that cities and states weren’t a good place to put your money.

Despite his fund’s losses, Fielding is bullish about the muni market in the years ahead.

id="blog-title">Islamic Banking & Finance Network

id="tagline">This blog explores the concept of Islamic Finance around the globe.

Arundhati Roy visits Albuquerque. The world as she sees it. A great speech.

My talk today is called “Come September.”

Writers imagine that they cull stories from the world. I’m beginning to believe that vanity makes them think so. That it’s actually the other way around. Stories cull writers from the world. Stories reveal themselves to us. The public narrative, the private narrative - they colonize us. They commission us. They insist on being told. Fiction and nonfiction are only different techniques of story telling. For reasons that I don’t fully understand, fiction dances out of me, and nonfiction is wrenched out by the aching, broken world I wake up to every morning.

The theme of much of what I write, fiction as well as nonfiction, is the relationship between power and powerlessness and the endless, circular conflict they’re engaged in. John Berger, that most wonderful writer, once wrote: “Never again will a single story be told as though it’s the only one.” There can never be a single story. There are only ways of seeing. So when I tell a story, I tell it not as an ideologue who wants to pit one absolutist ideology against another, but as a story-teller who wants to share her way of seeing. Though it might appear otherwise, my writing is not really about nations and histories; it’s about power. About the paranoia and ruthlessness of power. About the physics of power. I believe that the accumulation of vast unfettered power by a State or a country, a corporation or an institution - or even an individual, a spouse, a friend, a sibling -regardless of ideology, results in excesses such as the ones I will recount here.

Living as I do, as millions of us do, in the shadow of the nuclear holocaust that the governments of India and Pakistan keep promising their brain-washed citizenry, and in the global neighborhood of the War Against Terror (what President Bush rather biblically calls “The Task That Never Ends”), I find myself thinking a great deal about the relationship between Citizens and the State.

In India, those of us who have expressed views on Nuclear Bombs, Big Dams, Corporate Globalization and the rising threat of communal Hindu fascism - views that are at variance with the Indian government’s - are branded ‘anti- national.’ While this accusation doesn’t fill me with indignation, it’s not an accurate description of what I do or how I think. Because an ‘anti-national’ is a person who is against his or her own nation and, by inference, is pro some other one. But it isn’t necessary to be ‘anti-national’ to be deeply suspicious of all nationalism, to be anti-nationalism. Nationalism of one kind or another was the cause of most of the genocide of the twentieth century. Flags are bits of colored cloth that governments use first to shrink-wrap people’s brains and then as ceremonial shrouds to bury the dead. [Applause] When independent- thinking people (and here I do not include the corporate media) begin to rally under flags, when writers, painters, musicians, film makers suspend their judgment and blindly yoke their art to the service of the “Nation,” it’s time for all of us to sit up and worry. In India we saw it happen soon after the Nuclear tests in 1998 and during the Cargill War against Pakistan in 1999. In the U.S. we saw it during the Gulf War and we see it now during the “War Against Terror.” That blizzard of Made-in-China American flags. [Laughter]

Recently, those who have criticized the actions of the U.S. government (myself included) have been called “anti-American.” Anti-Americanismis in the process of being consecrated into an ideology.

The term “anti-American” is usually used by the American establishment to discredit and, not falsely - but shall we say inaccurately - define its critics. Once someone is branded anti-American, the chances are that he or she will be judged before they are heard, and the argument will be lost in the welter of bruised national pride.

But what does the term “anti-American” mean? Does it mean you are anti-jazz? Or that you’re opposed to freedom of speech? That you don’t delight in Toni Morrison or John Updike? That you have a quarrel with giant sequoias? Does it mean that you don’t admire the hundreds of thousands of American citizens who marched against nuclear weapons, or the thousands of war resisters who forced their government to withdraw from Vietnam? Does it mean that you hate all Americans?

This sly conflation of America’s culture, music, literature, the breathtaking physical beauty of the land, the ordinary pleasures of ordinary people with criticism of the U.S. government’s foreign policy (about which, thanks to America’s “free press”, sadly most Americans know very little) is a deliberate and extremely effective strategy. It’s like a retreating army taking cover in a heavily populated city, hoping that the prospect of hitting civilian targets will deter enemy fire.

But there are many Americans who would be mortified to be associated with their government’s policies. The most scholarly, scathing, incisive, hilarious critiques of the hypocrisy and the contradictions in U.S. government policy come from American citizens. When the rest of the world wants to know what the U.S. government is up to, we turn to Noam Chomsky, Edward Said, Howard Zinn, Ed Herman, Amy Goodman, Michael Albert, Chalmers Johnson, William Blum and Anthony Amove to tell us what’s really going on. [Applause]

Similarly, in India, not hundreds, but millions of us would be ashamed and offended if we were in any way implicated with the present Indian government’s fascist policies which, apart from the perpetration of State terrorism in the valley of Kashmir (in the name of fighting terrorism), have also turned a blind eye to the recent state-supervised progrom against Muslims in Gujarat. It would be absurd to think that those who criticize the Indian government are “anti-Indian” - although the government itself never hesitates to take that line. It is dangerous to cede to the Indian government or the American government or anyone for that matter, the right to define what “India” or “America” are or ought to be.

To call someone “anti-American”, indeed to be anti-American, (or for that matter, anti-Indian or anti-Timbuktuan) is not just racist, it’s a failure of the imagination. An inability to see the world in terms other than those the establishment has set out for you. If you’re not a Bushie you’re a Taliban. If you don’t love us, you hate us. If you’re not Good, you’re Evil. If you’re not with us, you’re with the terrorists.

Last year, like many others, I too made the mistake of scoffing at this post- September 11th rhetoric, dismissing it as foolish and arrogant. But I’ve realized it’s not foolish at all. It’s actually a canny recruitment drive for a misconceived, dangerous war. Everyday I’m taken aback at how many people believe that opposing the war in Afghanistan amounts to supporting terrorism, of voting for the Taliban. Now that the initial aim of the war - capturing Osama bin Laden (dead or alive) - seems to have run into bad weather, the goalposts have been moved. It’s being made out that the whole point of the war was to topple the Taliban regime and liberate Afghan women from their burqas, we are being asked to believe that the U.S. marines are actually on a feminist mission [laughter, applause]. (If so, will their next stop be America’s military ally Saudi Arabia?) [Laughter] Think of it this way: in India there are some pretty reprehensible social practices against “untouchables”, against Christians and Muslims, against women. Pakistan and Bangladesh have even worse ways of dealing with minority communities and women. Should they be bombed? Should Delhi, Islamabad and Dhaka be destroyed? Is it possible to bomb bigotry out of India? Can we bomb our way to a feminist paradise? [Laughter] Is that how women won the vote in the U.S? Or how slavery was abolished? Can we win redress for the genocide of the millions of Native Americans upon whose corpses the United States was founded by bombing Santa Fe? [Applause]

None of us need anniversaries to remind us of what we cannot forget. So it’s no more than co-incidence that I happen to be here, on American soil, in September - this month of dreadful anniversaries. Uppermost on everybody’s mind of course, particularly here in America, is the horror of what has come to be known as 9/11. Nearly three thousand civilians lost their lives in that lethal terrorist strike. The grief is still deep. The rage still sharp. The tears have not dried. And a strange, deadly war is raging around the world. Yet, each person who has lost a loved one surely knows secretly, deeply, that no war, no act of revenge, no daisy-cutters dropped on someone else’s loved ones or someone else’s children, will blunt the edges of their pain or bring their own loved ones back. War cannot avenge those who have died. War is only a brutal desecration of their memory.

To fuel yet another war - this time against Iraq - by cynically manipulating people’s grief, by packaging it for TV specials sponsored by corporations selling detergent and running shoes, is to cheapen and devalue grief, to drain it of meaning. What we are seeing now is a vulgar display of the business of grief, the commerce of grief, the pillaging of even the most private human feelings for political purpose. It is a terrible, violent thing for a State to do to its people. [Applause]

It’s not a clever-enough subject to speak of from a public platform, but what I would really love to talk to you about is Loss. Loss and losing. Grief, failure, brokenness, numbness, uncertainty, fear, the death of feeling, the death of dreaming. The absolute relentless, endless, habitual, unfairness of the world. What does loss mean to individuals? What does it mean to whole cultures, whole people who have learned to live with it as a constant companion?

Since it is September 11th we’re talking about, perhaps it’s in the fitness of things that we remember what that date means, not only to those who lost their loved ones in America last year, but to those in other parts of the world to whom that date has long held significance. This historical dredging is not offered as an accusation or a provocation. But just to share the grief of history. To thin the mists a little. To say to the citizens of America, in the gentlest, most human way: “Welcome to the World.” [Applause]

Twenty-nine years ago, in Chile, on the 11th of September 1973, General Pinochet overthrew the democratically elected government of Salvador Allende in a CIA-backed coup. “Chile should not be allowed to go Marxist just because its people are irresponsible,” said Henry Kissinger, Nobel Peace Laureate, then the U.S. Secretary of State.

After the coup President Allende was found dead inside the presidential palace. Whether he was killed or whether he killed himself, we’ll never know. In the regime of terror that ensured, thousands of people were killed. Many more simply “disappeared”. Firing squads conducted public executions. Concentration camps and torture chambers were opened across the country. The dead were buried in mine shafts and unmarked graves. For seventeen years the people of Chile lived in dread of the midnight knock, of routine “disappearances”, of sudden arrest and torture. Chileans tell the story of how the musician Victor Jara had his hands cut off in front of a crowd in the Santiago stadium. Before they shot him, Pinochet’s soldiers threw his guitar at him and mockingly asked him to play.

In 1999, following the arrest of General Pinochet in Britain, thousands of secret documents were declassified by the U.S. government. They contain unequivocal evidence of the CIA’s involvement in the coup as well as the fact that the U.S. government had detailed information about the situation in Chile during General Pinochet’s reign. Yet, Kissinger assured the general of his support: “In the United States as you know, we are sympathetic to what you’re trying to do,” he said. “We wish your government well.”

Those of us who have only ever known life in a democracy, however flawed, would find it hard to imagine what living in a dictatorship and enduring the absolute loss of freedom means. It isn’t just those who Pinochet murdered, but the lives he stole from the living that must be accounted for too.

Sadly, Chile was not the only country in South America to be singled out for the U.S. government’s attentions. Guatemala, Costa Rica, Ecuador, Brazil, Peru, the Dominican Republic, Bolivia, Nicaragua, Honduras, Panama, El Salvador, Peru, Mexico and Colombia - they’ve all been the playground for covert - and overt - operations by the CIA. Hundreds of thousands of Latin Americans have been killed, tortured or have simply disappeared under the despotic regimes that were propped up in their countries. If this were not humiliation enough, the people of South America have had to bear the cross of being branded as people who are incapable of democracy - as if coups and massacres are somehow encrypted in their genes.

This list does not, of course, include countries in Africa or Asia that suffered U.S. military interventions - Vietnam, Korea, Indonesia, Laos, and Cambodia. For how many Septembers for decades together have millions of Asian people been bombed, and burned, and slaughtered? How many Septembers have gone by since August 1945, when hundreds of thousands of ordinary Japanese people were obliterated by the nuclear strikes in Hiroshima and Nagasaki? For how many Septembers have the thousands who had the misfortune of surviving those strikes endured that living hell that was visited on them, their unborn children, their children’s children, on the earth, the sky, the water, the wind, and all the creatures that swim and walk and crawl and fly? Not far from here, in Albuquerque, is the National Atomic Museum where Fat Man and Little Boy (the affectionate nicknames for the bombs that were dropped on Hiroshima and Nagasaki) were available as souvenir earrings. Funky young people wore them. A massacre dangling in each ear. But I’m straying from my theme. It’s September that we’re talking about, not August.

September 11th has a tragic resonance in the Middle East, too. On the 11th of September 1922, ignoring Arab outrage, the British government proclaimed a mandate in Palestine, a follow-up to the 1917 Balfour Declaration which imperial Britain issued, with its army massed outside the gates of Gaza. The Balfour Declaration promised European Zionists a national home for Jewish people. (At the time, the Empire on which the Sun Never Set was free to snatch and bequeath national homes like a school bully distributes marbles.)

How carelessly imperial power vivisected ancient civilizations. Palestine and Kashmir are imperial Britain’s festering, blood-drenched gifts to the modern world. Both are fault lines in the raging international conflicts of today.

In 1937, Winston Churchill said of the Palestinians, I quote, “I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place.” That set the trend for the Israeli State’s attitude towards the Palestinians. In 1969, Israeli Prime Minister Golda Meir said, “Palestinians do not exist.” Her successor, Prime Minister Levi Eschol said, “What are Palestinians? When I came here (to Palestine), there were 250,000 non-Jews, mainly Arabs and Bedouins. It was a desert, more than underdeveloped. Nothing.” Prime Minister Menachem Begin called Palestinians “two-legged beasts.” Prime Minister Yitzhak Shamir called them “grasshoppers” who could be crushed. This is the language of Heads of State, not the words of ordinary people.

In 1947, the U.N. formally partitioned Palestine and allotted 55 per cent of Palestine’s land to the Zionists. Within a year, they had captured 76 per cent. On the 14th of May 1948 the State of Israel was declared. Minutes after the declaration, the United States recognized Israel. The West Bank was annexed by Jordan. The Gaza strip came under Egyptian military control, and formally Palestine ceased to exist except in the minds and hearts of the hundreds of thousands of Palestinian people who became refugees. In 1967, Israel occupied the West Bank and the Gaza strip.

Over the decades there have been uprisings, wars, intifadas. Tens of thousands have lost their lives. Accords and treaties have been signed. Cease-fires declared and violated. But the bloodshed doesn’t end. Palestine still remains illegally occupied. Its people live in inhuman conditions, in virtual Bantustans, where they are subjected to collective punishments, twenty-four hour curfews, where they are humiliated and brutalized on a daily basis. They never know when their homes will be demolished, when their children will be shot, when their precious trees will be cut, when their roads will be closed, when they will be allowed to walk down to the market to buy food and medicine. And when they will not. They live with no semblance of dignity. With not much hope in sight. They have no control over their lands, their security, their movement, their communication, their water supply. So when accords are signed, and words like “autonomy” and even “statehood” bandied about, it’s always worth asking: What sort of autonomy? What sort of State? What sort of rights will its citizens have?

Young Palestinians who cannot control their anger turn themselves into human bombs and haunt Israel’s streets and public places, blowing themselves up, killing ordinary people, injecting terror into daily life, and eventually hardening both societies’ suspicion and mutual hatred of each other. Each bombing invites merciless reprisal and even more hardship on Palestinian people. But then suicide bombing is an act of individual despair, not a revolutionary tactic. Although Palestinian attacks strike terror into Israeli citizens, they provide the perfect cover for the Israeli government’s daily incursions into Palestinian territory, the perfect excuse for old-fashioned, nineteenth-century colonialism, dressed up as a new fashioned, twenty-first century “war”.

Israel’s staunchest political and military ally is and always has been the U.S. The U.S. government has blocked, along with Israel, almost every U.N. resolution that sought a peaceful, equitable solution to the conflict. It has supported almost every war that Israel has fought. When Israel attacks Palestine, it is American missiles that smash through Palestinian homes. And every year Israel receives several billion dollars from the United States - taxpayers money.

What lessons should we draw from this tragic conflict? Is it really impossible for Jewish people who suffered so cruelly themselves - more cruelly perhaps than any other people in history - to understand the vulnerability and the yearning of those whom they have displaced? Does extreme suffering always kindle cruelty? What hope does this leave the human race with? What will happen to the Palestinian people in the event of a victory? When a nation without a state eventually proclaims a state, what kind of state will it be? What horrors will be perpetrated under its flag? Is it a separate state that we should be fighting for or, the rights to a life of liberty and dignity for everyone regardless of their ethnicity or religion?

Palestine was once a secular bulwark in the Middle East. But now the weak, undemocratic, by all accounts corrupt but avowedly nonsectarian P.L.O., is losing ground to Hamas, which espouses an overtly sectarian ideology and fights in the name of Islam. To quote from their manifesto: “we will be its soldiers and the firewood of its fire, which will burn the enemies.”

The world is called upon to condemn suicide bombers. But can we ignore the long road they have journeyed on before they have arrived at this destination? September 11, 1922 to September 11, 2002 - eighty years is a long time to have been waging war. Is there some advice the world can give the people of Palestine? Should they just take Golda Meir’s suggestion and make a real effort not to exist?

In another part of the Middle East, September 11th strikes a more recent cord. It was on the 11th of September 1990 that George W. Bush, Sr., then President of the U.S., made a speech to a joint session of Congress announcing his government’s decision to go to war against Iraq.

The U.S. government says that Saddam Hussein is a war criminal, a cruel military despot who has committed genocide against his own people. That’s a fairly accurate description of the man. In 1988, Saddam Hussein razed hundreds of villages in northern Iraq, used chemical weapons and machine guns to kill thousands of Kurdish people. Today we know that that same year the U.S. government provided him with $500 million in subsidies to buy American farm products. The next year, after he had successfully completed his genocidal campaign, the U.S. government doubled its subsidy to $1 billion. It also provided him with high quality germ seed for anthrax, and helicopters and dual-use material that could be used to manufacture chemical and biological weapons. So it turns out that while Saddam Hussein was carrying out his worst atrocities, the U.S. and the U.K. governments were his close allies.

So what changed? In 1990, Saddam Hussein invaded Kuwait. His sin was not so much that he had committed an act of war, but that he had acted independently, without orders from his master. This display of independence was enough to upset the power equation in the Gulf. So it was decided that Saddam Hussein be exterminated, like a pet that has outlived its owner’s affection.

The first Allied attack on Iraq took place on January ‘91. The world watched the prime-time war as it was played out on T.V. (In India in those days you had to go to a five-star hotel lobby to watch CNN.) Tens of thousands of people were killed in a month of devastating bombing. What many do not know is that the war never ended then. The initial fury simmered down into the longest sustained air attack on a country since the Vietman War. Over the last decade American and British forces have fired thousands of missiles and bombs on Iraq. In the decade of economic sanctions that followed the war, Iraqi civilians have been denied food, medicine, hospital equipment, ambulances, clean water - the basic essentials.

About half a million Iraqi children have died as a result of the sanctions. Of them, Madeleine Albright, then U.S. ambassador to the United Nations, famously said, “It’s a very hard choice, but we think the price is worth it.” “Moral equivalence” was the term that was used to denounce those of us who criticized the war on Afghanistan. Madeleine Albright cannot be accused of moral equivalence. What she said was just straightforward algebra.

A decade of bombing has not managed to dislodge Saddam Hussein, “the Beast of Baghdad”. Now, almost 12 years on, President George Bush, Jr. has ratcheted up the rhetoric once again. He’s proposing an all-out war whose goal is nothing short of a regime change. The New York Times says that the Bush administration is following, quote, “a meticulously planned strategy to persuade the public, the Congress, and the Allies of the need to confront the threat of Saddam Hussein.” Andrew. H. Card, Jr., the White House Chief of Staff, described how the administration was stepping up its war plans for the fall, and I quote, “From a marketing point of view”, he said, “you don’t introduce new products in August.” This time the catch-phrase for Washington’s “new product” is not the plight of Kuwaiti people but the assertion that Iraq has weapons of mass destruction. “Forget the feckless moralizing of peace lobbies”, wrote Richard Perle, a former advisor to President Bush, “We need to get him before he gets us.”

Weapons inspectors have conflicting reports of the status of Iraq’s weapons of mass destruction, and many have said clearly that its arsenal has been dismantled and that it does not have the capacity to build one. However, there is no confusion over the extent and range of America’s arsenal of nuclear and chemical weapons. Would the U.S. government welcome weapons inspectors? Would the U.K.? Or Israel?

What if Iraq does have a nuclear weapon, does that justify a pre-emptive U.S. strike? The U.S. has the largest arsenal of nuclear weapons in the world and it’s the only country in the world to have actually used them on civilian populations. If the U.S. is justified in launching a pre-emptive strike on Iraq, why, then any nuclear power is justified in carrying out a pre- emptive strike on any other. India could attack Pakistan, or the other way around. If the U.S. government develops a distaste for, say, the Indian Prime Minister, can it just “take him out” with a pre-emptive strike?

Recently the United States played an important part in forcing India and Pakistan back from the brink of war. Is it so hard for it to take its own advice? Who is guilty of feckless moralizing? Of preaching peace while it wages war? The U.S., which George Bush has called “the most peaceful nation on earth”, has been at war with one country or another every year for the last fifty.

Wars are never fought for altruistic reasons. They’re usually fought for hegemony, for business. And then of course there’s the business of war.

Protecting its control of the world’s oil is fundamental to U.S. foreign policy. The U.S. government’s recent military interventions in the Balkans and Central Asia have to do with oil. Hamid Karzai, the puppet President of Afghanistan installed by the U.S., is said to be a former employee of Unocal, the American-based oil company. The U.S. government’s paranoid patrolling of the Middle East is because it has two-thirds of the world’s oil reserves. Oil keeps America’s engines purring sweetly. Oil keeps the Free Market rolling. Whoever controls the world’s oil, controls the world’s market. And how do you control the oil?

Nobody puts it more elegantly than The New York Times columnist, Thomas Friedman. In an article called, “Craziness Pays”, he said, “The U.S. has to make it clear to Iraq and U.S. allies that…American will use force without negotiation, hesitation or U.N. approval.” His advice was well taken. In the wars against Iraq and Afghanistan as well as in the almost daily humiliation the U.S. government heaps on the U.N. In his book on globalization, The Lexus and the Olive Tree, Friedman says, and I quote, “The hidden hand of the market will never work without the hidden fist. McDonalds cannot flourish without McDonnell Douglas…and the hidden fist that keeps the world safe for Silicon Valley’s technologies to flourish is called the U.S. Army, Air Force, Navy, and Marine Corps.” Perhaps this was written in a moment of vulnerability, but it’s certainly the most succinct, accurate description of the project of corporate globalization that I have read.

After the 11th of September 2001 and the War Against Terror, the hidden hand and fist have had their cover blown - and we have a clear view now of America’s other weapon - the Free Market - bearing down on the Developing World, with a clenched, unsmiling smile. The Task That Never Ends is America’s perfect war, the perfect vehicle for the endless expansion of American imperialism. In Urdu, the word for Profit, as in “p-r-o-f-i-t”, is fayda. Al Qaida means The Word, The Word of God, The Law. So, in India, some of us call the War Against Terror, Al Qaida versus Al Fayda - The Word versus The Profit (no pun intended.)

For the moment it looks as though Al Fayda will carry the day. But then you never know…

In the last ten years of unbridled Corporate Globalization, the world’s total income has increased by an average of 2.5 percent a year. And yet the numbers of poor in the world has increased by 100 million. Of the top hundred biggest economies, 51 are corporations, not countries. The top 1 percent of the world has the same combined income as the bottom 57 percent and that disparity is growing. And now, under the spreading canopy of the War Against Terror, this process is being hustled along. The men in suits are in an unseemly hurry. While bombs rain down on us, and cruise missiles skid across the skies, while nuclear weapons are stockpiled to make the world a safer place, contracts are being signed, patents are being registered, oil pipe lines are being laid, natural resources are being plundered, water is being privatized, and democracies are being undermined.

In a country like India, the “structural adjustment” end of the Corporate Globalization project is ripping through people’s lives. “Development” projects, massive privatization, and labor “reforms” are pushing people off their lands and out of their jobs, resulting in a kind of barbaric dispossession that has few parallels in history. Across the world, as the “Free Market” brazenly protects Western markets and forces developing countries to lift their trade barriers, the poor are getting poorer and the rich richer. Civil unrest has begun to erupt in the global village. In countries like Argentina, Brazil, Mexico, Bolivia and India, the resistance movements against Corporate Globalization are growing. To contain them, governments are tightening their control. Protesters are being labeled “terrorists” and then being dealt with as such. But civil unrest does not only mean marches and demonstrations and protests against globalization. Unfortunately, it also means a desperate downward spiral into crime and chaos and all kinds of despair and disillusionment which as we know from history (and from what we see unspooling before our eyes), gradually becomes a fertile breeding ground for terrible things - cultural nationalism, religious bigotry, fascism and of course, terrorism.

All these march arm-in-arm with corporate globalization. There is a notion gaining credence that the Free Market breaks down national barriers, and that Corporate Globalization’s ultimate destination is a hippie paradise where the heart is the only passport and we all live happily together inside a John Lennon song. (”Imagine there’s no country…”) But this is a canard.

What the Free Market undermines is not national sovereignty, but democracy. As the disparity between the rich and poor grows, the hidden fist has its work cut out for it. Multinational corporations on the prowl for “sweetheart deals” that yield enormous profits cannot push through those deals and administer those projects in developing countries without the active connivance of State machinery - the police, the courts, sometimes even the army. Today Corporate Globalization needs an international confederation of loyal, corrupt, preferably authoritarian governments in poorer countries to push through unpopular reforms and quell the mutinies. It needs a press that pretends to be free. It needs courts that pretend to dispense justice. It needs nuclear bombs, standing armies, sterner immigration laws, and watchful coastal patrols to make sure that it’s only money, goods, patents, and services that are being globalized - not the free movement of people, not a respect for human rights, not international treaties on racial discrimination or chemical and nuclear weapons, or greenhouse gas emissions, climate change, or god forbid, justice. It’s as though even a gesture towards international accountability would wreck the whole enterprise.

Close to one year after the War against Terror was officially flagged off in the ruins of Afghanistan, in country after country freedoms are being curtailed in the name of protecting freedom, civil liberties are being suspended in the name of protecting democracy. All kinds of dissent are being defined as “terrorism”. All kinds of laws are being passed to deal with it. Osama bin Laden seems to have vanished into thin air. Mullah Omar is supposed to have made his escape on a motorbike. (They could have sent TinTin after him.) [Laughter] The Taliban may have disappeared but their spirit, and their system of summary justice is surfacing in the unlikeliest of places. In India, in Pakistan, in Nigeria, in America, in all the Central Asian republics run by all manner of despots, and of course in Afghanistan under the U.S.-backed, Northern Alliance.

Meanwhile down at the mall there’s a mid-season sale. Everything’s discounted - oceans, rivers, oil, gene pools, fig wasps, flowers, childhoods, aluminum factories, phone companies, wisdom, wilderness, civil rights, eco-systems, air - all 4,600 million years of evolution. It’s packed, sealed, tagged, valued and available off the rack. (No returns). As for justice - I’m told it’s on offer too. You can get the best that money can buy.

Donald Rumsfeld said that his mission in the War Against Terror was to persuade the world that Americans must be allowed to continue their way of life. When the maddened king stamps his foot, slaves tremble in their quarters. So, standing here today, it’s hard for me to say this, but “The American Way of Life” is simply not sustainable. Because it doesn’t acknowledge that there is a world beyond America. [Applause]

But fortunately, power has a shelf life. When the time comes, maybe this mighty empire will, like others before it, overreach itself and implode from within. It looks as though structural cracks have already appeared. As the War Against Terror casts its net wider and wider, America’s corporate heart is hemorrhaging. For all the endless, empty chatter about democracy, today the world is run by three of the most secretive institutions in the world: The International Monetary Fund, the World Bank, and the World Trade Organization, all three of which, in turn, are dominated by the U.S. Their decisions are made in secret. The people who head them are appointed behind closed doors. Nobody really knows anything about them, their politics, their beliefs, their intentions. Nobody elected them. Nobody said they could make decisions on our behalf. A world run by a handful of greedy bankers and C.E.O.’s whom nobody elected can’t possibly last.

Soviet-style communism failed, not because it was intrinsically evil but because it was flawed. It allowed too few people to usurp too much power. Twenty-first century market-capitalism, American style, will fail for the same reasons. Both are edifices constructed by the human intelligence, undone by human nature.

The time has come, the Walrus said. Perhaps things will become worse and then better. Perhaps there’s a small god up in heaven readying herself for us. Another world is not only possible, she’s on her way. Maybe many of us won’t be here to greet her, but on a quiet day, if I listen very carefully, I can hear her breathing. Thank you. [Applause]

Thank you.

I just want to say that, you know, I was so terrified of coming to America, because, when you read the papers and when you watch whatever you get to see on TV, which is Fox News, you know, in India [laughter], you know… this corporate media just makes out as if everybody in America is, you know, a clone of George Bush. [laughter] I’m just so glad that I came because it just reaffirms my faith in humanity to see you here and to not have tomatoes thrown at me.

Thank you. [Applause]

Ken Heebner, manager of CGM Focus fund, is warming up to financial stocks according to this WSJ article. Heebner, who has one of the best performing mutual fund records over the last decade, has been loading up on financials. According to his fund’s Sept. 30% portfolio report, the fund held 40% in financials although the current exposure is not has high. He uses two less known metrics when analyzing finance companies. One is the “price-to-tangible book value”, while the other is “price-to-preprovision earnings”. An interesting tidbit is that Heebner launched a private partnership he started in June called Wayfarer Capital LP. It will be worthwhile keeping an eye on this investment vehicle given his impressive track record.

Financial stocks were also the highlight of a New York Times article today. Well known fund manager Ron Muhlenkamp “expects regulators to move to a system where valuations are less sensitive to day-to-day price fluctuations but provide better estimates of long-term worth.” The result, says Muhlenkamp, will be higher stock prices for many financial firms.

These are contrarian-like calls from two successful fund managers. Sometimes the most money is made by looking in areas of the market that no one wants anything to do with — but only time will tell if Heebner’s and Muhlenkamp’s bullishness on financials will pay off.

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http://seekingalpha.com/article/109210-the-manipulation-of-gold-prices?source=front_page_most_popular_articles

There is no other leveraged commodity market where short sellers increase their positions, materially, as the price rises, and increase them even more when prices are exploding, except gold and silver. The reason traders don’t normally do that is that it exposes short sellers to unlimited liability and risk. Yet, in both March and July 2008, and on countless occasions over the past 21 years, vast numbers of new gold and silver short positions were temporarily opened up, with the position holders seemingly unconcerned about the fact that precious metals had just risen exponentially, and that there was a very real potential they would bankrupt themselves with unlimited upside potential. Normal traders would not expose themselves to such unlimited risks.

I conclude, therefore, that over the last 21 years or so, “fake” precious metals supply in the form of promises of future delivery have habitually been increased when prices increase until increased “supply” managed to overwhelm increased demand, leading to a temporary price collapse. This is compounded by the fact that the futures prices on COMEX tend to dictate the “official” report price for the precious metals elsewhere.

After the market is broken, shell-shocked leveraged long market participants have always been thrown out of their positions by margin calls, and/or have been happy to sell contracts back to the short sellers at much lower prices. This process has always allowed short sellers to cover short positions at a profit. If for some reason naked shorts needed to deliver, they could always count on various European central banks (and some say the Fed basement repository) to backstop them, releasing tons of physical gold into the market. It seemed that there were always another 34 tons or so of gold dumped at strategic times to bring down fast rising prices. Meanwhile, huge physical market demand in Asia and severe shortages buffered the downside. Because of the physical demand, prices steadily increased but, perhaps, at a much slower pace than would have been the case in the absence of market manipulation.

Rarely was there ever a serious short-squeeze. Rarely, that is, until Friday of last week when the deliveries demanded by non-leveraged long buyers reached record levels. In spite of an avalanche of complaints from gold and silver investors, the CFTC (Commodity Futures Trading Commission) has never bothered to audit even one vault to see if the short sellers really have the alleged gold and silver they claim to have. There is a legal requirement that, in every futures contract that promises to deliver a physical commodity, the short seller must be 90% covered by either a stockpile of the commodity or appropriate forward contracts with primary producers (such as miners). Inaction by CFTC, in the face of obvious market manipulation, implies a historical government endorsed price management.

Things, however, are changing fast. As previously stated, the first major mini-panic among COMEX gold short sellers happened last Friday. As of Wednesday morning, about 11,500 delivery demands for 100 ounce ingots were made at COMEX, which represents about 5% of the previous open interest. Another 2,000 contracts are still open, and a large percentage of those will probably demand delivery. These demands compare to the usual ½ to 1% of all contracts.

The U.S. economy is in shambles. Both commercial and investment banks are insolvent. European central banks no longer want to sell gold. China wants to buy 360 tons of it as soon as humanly possible, and as soon as it can be done without sending the price into the stratosphere. A close look at the Federal Reserve balance sheet tells us that Ben Bernanke eventually intends to devalue the U.S. dollar against gold. There has been a vast expansion of Fed credit, which has risen from $932 billion to $2.25 trillion in the last two and a half months. The Fed has bought nearly all toxic bank assets that were supposed to be purchased pursuant by the $700 billion Congressional bank bailout.

Official bailout funds have been used to buy equity interests in the various banks instead. By avoiding the use of monitored Congressional funds, the Fed has embarked on a secretive campaign to buy toxic assets. They have refused to give any accounting of their activities, even though they are using taxpayer money to do this. The Fed has refused, for example, to comply with a “freedom of information act” request from Bloomberg News. That refusal is now the subject of a major lawsuit.

The Federal Reserve has embarked on the biggest money printing surge in history, though the world economy has yet to feel its effect. To prevent newly printed dollars from causing immediate hyperinflation, these newly printed dollars have been temporarily sequestered into the banking industry’s reserves, rather than being released for general use. This was done in a number of creative ways.

First, the number of “reverse repurchase agreements” has been increased to $97 billion. A “repurchase agreement” is a non-recourse method by which the Fed increases the money supply by paying dollars for collateral. The collateral, in this case, are toxic defaulting mortgage bonds that banks want to be rid of. The cash enters the system and theoretically stimulates the economy because it supplies banks with money to make loans with.

A “reverse repurchase agreement” is the exact opposite. It is a method of reducing the money supply by selling bonds to the banks, and taking the cash back out of the system. In this case, the Fed gave banks cash for toxic defaulting mortgage bonds. Then, it took the same cash back by selling the banks new treasury bills just received from the U.S. Treasury. The Fed, in turn, bought these T-bills with the newly printed dollars. The banks, having gotten rid of toxic assets, were allowed to transfer private risk to the taxpayers. This process bolsters bank balance sheets by privatizing bank profits, and socializing bank losses.

At the same time, the U.S. Treasury has been very busy selling newly printed Treasury bills to anyone foolish enough to buy them. To a large extent, the fools reside overseas, but some reside inside this country, and the sale of these U.S. bonds has resulted in a substantial inflow of foreign reserves to the Treasury. Banks have also been offered favorable interest rates on both reserve and non-reserve deposits held at the Fed.

This was combined with what is probably a tacit agreement by which the banks were given the money and led to redeposit most newly printed cash back into the Fed, in a category known as “Reserve balances with Federal Reserve Banks”. This category has ballooned from $8 billion in September to $578 billion on November 28th.

On October 9, 2008, the Federal Reserve began paying interest on deposits at Federal Reserve Banks. The overnight rate happens to have dropped way below the “official” federal funds rate. Meanwhile, rates paid by the Fed on required deposits are only .1% less than the federal funds rate, and on voluntary deposits only .35% less than the federal funds rate. Accordingly, U.S. banks can engage in a dollar based one-nation carry trade, which further sequesters the newly printed dollars.

Banks are borrowing from the Fed, then taking the same money, redepositing it, and earning a spread on the interest rate differential. Banks can also deposit newly printed dollars into a category known as “Deposits with Federal Reserve Banks, other than reserve balances.” This category also earns interest in a similar way, and has risen from $12 billion to $554 billion in the same time period. The funds will eventually be used for direct lending from the Fed to open market borrowers, at huge levels of risk that even the free-wheeling cowboys who run things at America’s private banks are not willing to accept.

That being said, most money center banks in America are certainly NOT risk averse, even now. People who are bailed out of foolish decisions never become risk averse. They are, however, very insolvent, and, aside from the non-recourse provisions of Fed repurchase agreements, they would prefer, for bad publicity reasons, not to default on their obligations to the Fed. Aside from the newly printed dollars given to them by the Fed and the recent transfer of all risk to the taxpayers, they have no liquidity of their own with which to make new loans. That is why they aren’t making any. The Fed will eventually make the loans itself and take all the risk, while using the private banking system as merely a means for delivery.

Right now, however, the Fed wants to sequester the new dollars, until the U.S. Treasury has finished the major part of its funding activities. That will allow the Treasury to borrow money at very low rates. The Fed intends to feed money into the system, but at the minimum rate needed to prevent the DOW index from staying under 8,000 for any significant period of time. Right now, most measures are designed simply to stop U.S. banking laws from automatically requiring the closure of most big banks.

The extent of manipulations engaged in by this Federal Reserve is mind numbing. The total number of sequestered dollars has now reached well in excess of $1.2 trillion dollars. That means that Fed credit, so far, has been effectively increased only by about 10%, over the last 2.5 months, rather than 150% that appears on the surface of the Fed balance sheet. The rest is temporarily sequestered.

Back in July, the U.S. Treasury, through the ESF (Exchange Stabilization Fund), sold billions of euros and, I believe, established a dollar sequestering “derivative” by paying interest, perhaps in Euros, to foreign money center banks. This was designed to keep dollars out of circulation, overseas. It was the beginning of the dollar bull back on July 15th.

I had thought, at the time, with good reason, that the U.S. would run out of foreign exchange and would be forced to close down the operation within a few months. I underestimated Ben Bernanke.

Instead, the Fed managed to establish currency swap lines with various foreign nations, under the guise of supplying them with dollars. This need for dollars arose partly as a result of the actions of the Fed, in sequestering Eurodollars in July, and partly as a result of the multiple credit default events which triggered over $2.5 trillion worth of selling in the stock and commodities markets, as 50 to 1 leveraged players were forced to cover about $50 billion worth of credit default insurance obligations.

In truth, the Fed needs the foreign currency more than the foreign central banks need dollars. The Fed is using its new foreign currency resources, in part, to control the value of the dollar, and to ensure that U.S. bailout bonds are sold for the highest possible prices at the lowest possible long term costs. Anyone who buys long term Treasury bills is going to lose a fortune of money in the long term.

The Fed has also taken a number of steps beyond those already discussed to restrict aspects of the normal money supply which most strongly affect exchange rates. For example, they only allowed “currency in circulation” to rise by $33 billion in aggregate, while at the same time increasing foreign reverse repurchase agreements to reduce foreign availability of dollars by $30 billion, and reducing the “other liabilities” category dollar availability by another $7 billion. Since it is likely that “other liabilities” involve foreign held dollars, this resulted in a net deficit of $4 billion on foreign exchange markets, as compared to September, 2008.

All these actions, taken together, have supported the dollar overseas, and led to a breakdown of the commodities markets. The adverse effect of a paradoxically rising dollar has been especially severe in dollar dependent commodity producing nations, such as Ukraine.

The net effect is that the U.S. dollar, in spite of terrible fundamentals, is now King of the Currencies once again, at least temporarily. The rising value of the dollar happens also to support naked short sellers of gold and silver, on COMEX, and these are old friends of the Federal Reserve. Supply and demand ultimately determine the price of gold but, in the shorter term, it is inversely tethered to the dollar. When the dollar is artificially high, gold prices will often plunge artificially low.

But, in short, the Fed currently has gained complete control over the value of the dollar. It can now adjust and micromange the dollar on a day-to-day basis. All it needs to do is open and close the “dollar spigot.” When they want the dollar to rise, the Fed can reduce the number of sequestered dollars. When they want it to fall, they simply ease up, releasing dollars into the financial markets. There is only one problem. Real investors are fleeing the stock market, and stock indexes are becoming more and more dependent upon government cash in order to avoid collapse.

People are liquidating holdings in mutual funds, and redeeming against hedge funds at a fantastic rate. This has created heavy downward pressure on stock prices. If the DOW falls below 8,000 for any significant amount of time, most big American insurance companies will be forced to recognize huge losses on their portfolios, and will become insolvent. Insolvent insurers, like insolvent banks, must be closed by their regulators as a matter of law. Obviously, mass insurer bankruptcies would be yet another major destabilizing slap in the face to an increasingly unstable economy.

The Fed now has only two ways to stop this. One is by brute force. It can buy securities directly, through its primary dealers, thereby supporting and pumping up stock prices. It has done a lot of that in the past few weeks, but this method is highly inefficient and costly. It is better to catalyze upward market movement rather than force it. Catalysis of markets involves opening up the money spigot a bit, allowing some of the sequestered funds to bleed back into the system. This allows the stock market to rise or stabilize naturally, as the equivalent of inflation is created mostly in the stock market without substantial bleed through. At the same time, however, opening the money spigot reduces the value of the dollar and causes gold prices to rise. Rising gold price adversely affects COMEX short sellers who are, as previously stated, old friends of the Federal Reserve.

Gold buying enthusiasm, everywhere but at the COMEX, is at record levels, whereas stock market investing appetite is low. For this reason, when the Fed tried to constrict the money supply on Monday, it caused more damage to the stock market than to the price of gold. Gold declined by over 5%, but the S&P 500 collapsed by over 9%. The next day, the Fed eased up on the money supply spigot, allowing the dollar to fall and the stock market to reflate. If the Fed repeats this performance over and over again, stock investor psychology will be seriously harmed. Withdrawals from mutual and hedge funds will accelerate. The stock market will sink at an uncontrollable rate, and the world will surge onward toward Great Depression II, much worse than the first. At some point, there will be nothing the Fed can do about it, no matter what manipulations it attempts. Hopefully Ben Bernanke is aware of the dangerous nature of the game he is playing.

The Federal Reserve must now make a tough choice. In the past, Federal Reserve Chairmen may have felt it necessary to support regular attacks on gold prices to dissuade conservative people from putting a majority of their capital into gold. Now, however, the world economy needs much higher gold prices in order to devalue paper money, not against other currencies in a “beggar thy neighbor” policy, but against itself. This can jump start the system. If the Fed continued to support gold price suppression, that would collapse the stock market far deeper than they can afford, most insurers will end up bankrupt, and there will be no hope of avoiding Great Depression II.

I think Ben Bernanke is aware of this. Gold shorts will be abandoned, to avoid financial catastrophe. In commenting, I take a practical view, accepting what appears to be so, without passing judgment on the acts and omissions of the last 21 years.

Anyone who reads the written works of our Fed Chairman knows that Bernanke’s long term plan involves devaluing the dollar against gold. This is the exact opposite of most prior Fed Chairmen. He has overtly stated his intentions toward gold, many times, in various articles, speeches and treatises written before he became Fed Chairman. He often extols the virtues of former President Franklin Roosevelt’s gold revaluation/dollar devaluation, back in 1934, and credits it with saving the nation from the Great Depression. According to Bernanke, devaluation of the dollar against gold was so effective in stimulating economic activity that the stock market rose sharply in 1934, immediately thereafter. That is something that the Fed wants to see happen again.

It is only a matter of time before gold is allowed to rise to its natural level. Assuming that about half of the current increase in Fed credit is eventually neutralized, the monetized value of gold should be allowed to rise to between $7,500 and $9,000 per ounce as the world goes back to some type of gold standard. In the nearer term, gold will rise to about $2,000 per ounce, as the Fed abandons a hopeless campaign to support COMEX short sellers, in favor of saving the other, more productive, functions of the various banks and insurers.

Revaluation of gold, and a return to the gold standard, is the only way that hyperinflation can be avoided while large numbers of paper currency units are released into the economy. This is because most of the rise in prices can be filtered into gold. As the asset value of gold rises, it will soak up excess dollars, euros, pounds, etc., while the appearance of an increased number of currency units will stimulate investor psychology, and lending and economic output will increase, all over the world. Ben Bernanke and the other members of the FOMC Committee must know this, because it is basic economics.

Many venerable names in banking agree, although none have gone so far as to take their thoughts to the natural conclusion. Both JP Morgan Chase’s and Citibank’s analysts, for example, are predicting a huge rise in the price of gold. That is interesting because GATA has come up with fairly compelling evidence that JP Morgan Chase (JPM) and HSBC (HBC) may have been big COMEX naked short sellers in the past.

Goldman Sachs (GS) is also a huge bullion bank, which allegedly is heavily involved in downward gold price manipulation. However, this month, both HSBC and GS took lots of deliveries of gold from COMEX. Given the size and bureaucracy at such firms, it is certainly possible for the majority of traders to be entirely honest, while others, at the same firm, may be totally corrupt.

More important, however, than dwelling on the accuracy of conspiracy theories is the fact that huge international banking firms normally do not take metal deliveries from futures markets. They normally buy on the London spot market. The fact that they are demanding delivery from COMEX means one of two things. Either the London bullion exchanges have run out of gold, or these firms are finding it cheaper to buy gold as a “future” than as a spot exchange.

Smart traders at big firms may be buying on COMEX to sell into the spot market, for a profit. This pricing condition is known as “backwardation”. Backwardation is always the first sign that a huge price rise is about to happen. In the absence of backwardation, there is no rational explanation as to why HSBC, Bank of Nova Scotia (BNS), Goldman Sachs, and others are forcing COMEX to make large deliveries.

The fact that this backwardation is hidden from the public eye is not surprising. In spite of the ostensible existence of a so-called “London fix”, 96% of all OTC transactions are secret and unreported. The transactions happen solely between two parties, and are done opaquely, in complete darkness. The current London fix may well be just as fake as the bank interest rate reports that comprised LIBOR proved to be, just a few months ago.

It won’t matter much if you purchase gold at $750, $800, $850, $900 per ounce, or even much higher. All of these prices will be looking extraordinarily cheap in a few months. The price of our pretty yellow metal is about to explode, and it is probably going to soar, eventually, to levels that not even most gold bugs imagine. COMEX gold shorts will be playing the price a bit longer, in an attempt to shake out some remaining independent leveraged longs. Once that is finished, however, and it will be finished soon, the price will start to rise very quickly.

Disclosure: The author holds physical gold and is long positions in GLD and gold futures.

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Jomo K.S. was professor in the Applied Economics Department, University of Malaya, and founder chair of IDEAs, or International Development Economics Associates. In 2007, he was awarded the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. In 2008, he was appointed to the United Nations High-Level Expert Commission to Study the Reform of the International Monetary and Financial System chaired by Nobel laureate Professor Joseph Stiglitz.

Question: The stock markets in developing countries - the “emerging markets” - are tumbling. What are the consequences for ordinary people? Does it matter?

Jomo: So far, stock markets in emerging economies have plunged by about 50% on average, some by more than 60% (China, Russia, for example) - much more than the average drop of about 30% in the rich countries.

It does matter to ordinary people. In most emerging markets, not only rich people, but many middle income households own equities. The losses in equity markets will have direct impact on their income and wealth.

For the poor, who don’t own any stocks, the indirect impact may also be significant: As stock markets plummet, the solvency of banks and firms depend on how much capital they own. If the value of their capital plunges, even solvent firms will suddenly look overleveraged and face problems.

Banks are trying to shore up their capital positions and many have stopped lending. This leads firms to cut investment spending and use remaining earnings to cover operational costs, which may lead them to start laying off workers.

So, the overall impact will be felt by all. Much will depend on how governments respond with counter-cyclical and social protection policies, and following the economic liberalisation of recent decades, the latter is unlikely to be a major policy priority.

Is there a rational explanation for why international financial capital is pulling out from developing countries?

Yes, there are a few explanations. When there is a global crisis, international investors (pension funds, mutual funds and hedge funds) become more risk averse, reducing exposure to emerging markets, which are considered to be riskier than other investments (such as the US Treasury notes).

Some international institutional investors are forced to withdraw by “margin calls” at home: their losses in developed country markets force them to withdraw some of their investments from emerging markets.

More fundamentally, the global crisis will seriously weaken growth worldwide. As a consequence, earnings in emerging markets will fall, reducing investor interest in emerging market stock.

In light of the financial crisis, what trends do you expect to see in foreign direct investment (FDI) in developing countries in the next one to two years? What impact will this have on developing country economies?

Shrinking economies in the US and other rich countries seem certain to shrink export opportunities for developing countries. How will this affect them, and how do you suggest they adjust? Are there lessons about relying so heavily on exports to drive economic development?

Fifty percent of US imports are from developing countries. So, shrinking demand in rich countries will have significant impacts on developing countries. In fact, a slowdown in exports of developing countries, particularly in Asia, is likely to lead to a significant slowdown in industrial production, as well as GDP, in many developing countries. In Latin America and Africa, export growth has mainly been driven by primary commodities.

Various issues of the UN’s World Economic and Social Survey have reiterated the risks of heavy dependence on exports which do not have strong linkages with the domestic economy, particularly primary commodities. Such economies tend to be vulnerable to external shocks.

High commodity prices, responsible for the last half-decade of rapid growth in many developing countries, have begun to decline in the last half-year, with the price of oil dropping by almost 70% in the last four months.

In the short run, developing countries should stimulate domestic demand, so as to offset weakening foreign demand, as China has been doing. For the poorer countries, the scope for doing so is more limited; they may need more foreign aid to cope with the drops in export earnings because of weakening commodity prices and global recession.

In the long run, however, they need to engage in active investment and technology policies to diversify their economies and reduce dependence on commodity exports.

What lessons does the financial crisis hold for proponents of financial liberalisation in developing countries? Do you think pressures for financial liberalisation will abate - and if so, for how long?

For developing countries, at least three things are important.

First, affordable financing should be available for productive long-term investments not disrupted during downturns. Development banks can help ensure long-term, large-scale investments which rely heavily on government resources. Commercial banks should also have incentives to support productive investments. Deeper financial markets, especially bond markets, can also play useful roles in emerging market economies.

Second, financial regulation should be strengthened. Existing approaches to regulation should be appropriate to new conditions and challenges. Now, in most countries, banks have to increase provisioning against bad loans after they encounter problems. Such requirements are pro-cyclical, tightening credit when it is needed most. Regulatory frameworks need to be counter-cyclical, in this case, building capital reserves during good times to provide resilience for bad times.

Third, countries should have appropriate capital controls in place to avoid undesirable and excessive capital inflows when not needed, and to stem sudden, disruptive large outflows.

Thankfully for the US, the Fed has a broader mandate than most other central banks today, which are often required to focus almost exclusively on containing inflation, whereas the Fed is obliged to sustain growth and employment.

Is there a developing country perspective that is distinct from the general commentaries in rich countries?

Once again, developing countries will have to bear the brunt of the global financial crisis originating in the US and other developed countries. The financial positions of many developing countries are much stronger than they were at the time of the financial crises in Asia and Latin America, given their strong foreign reserve positions and generally better fiscal balances.

Yet, this does not mean these countries are immune to the crisis as suggested by those who claim that the larger developing countries have “decoupled” from the US economy.

The financial crisis is likely to lead to a severe and possibly protracted downturn in the global economy which will depress commodity prices and foreign investments once again.

Further, the US dollar is likely to continue to depreciate. The brief resurgence this fall is not likely to last, given the huge US trade and budget deficits. As most reserves of developing countries are held in dollars, those with strong foreign reserve positions will incur massive losses.

First, let’s remember what Sharia is and is not.

But now American taxpayer dollars are being used to promote products based on Sharia?

In fairness to AIG, there are many who do not understand the political Islamic supremacist nature of Sharia.

AIG’s Jim Crain told me that he had no comment on AIG’s Sharia product linkage to the Islamic supremacist Sharia ideology, but stated that with “this business venture” it was not AIG’s intent “to enter into the political arena at all.” Jim Crain stated that he did understand that Sharia is viewed as a political ideology, and commented “that is becoming more apparent as the days go on.” (I would conclude from this that I was not the first person who has called Jim Crain about this.) He stated that “it is entirely possible” that the public is going to think that AIG is taking a political position that is pro-Sharia. Jim Crain concluded our discussion by stating “I am going to pass your concerns on to our senior management and legal.”

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This opinion piece was written by Bonnie Erbe. I’m copying it up onto here so those of you who didn’t read it in the paper can see it in its full…glory…here.

It will be years before we know whether the government bailouts of financial institutions were a good idea or not. While we’re in the midst of bailing out the planet (or so it seems) one question comes to mind. If Citicorp, why not GM?

Congress will hear from the big three automakers today on whether to bail out the auto giants and meanwhile, their executives are devising a business plan to explain to members of the House and Senate how taxpayers’ dollars will keep the companies, including GM, alive. But if the U.S. government is going to bail out Citicorp, the once-largest bank in the country, why not do the same for GM, the once-largest automaker in the world?

JOB IMPACT HUGE

Former Labor Secretary Robert Reich has some great thoughts on the topic. In a commentary for Marketplace Radio, he notes Citicorp has lost a huge chunk of market valuation, which hurts the company’s executives, shareholders and creditors. But if it went into Chapter 11, mutual fund shareholders and people holding Citicorp CDs would have their assets protected. If GM tanks, on the other hand:

“…General Motors has a far greater impact on jobs and communities than Citigroup. Add parts suppliers and their employees, and the number of middle-class jobs and blue-collar jobs dependent on GM is many multiples of Citi. And the potential social cost of GM’s demise, or even major shrinkage, is much larger–including entire communities whose infrastructure and housing may become worthless.”

As we have heard by now, the ramifications through the U.S. economy would be massive if GM were to collapse.

Jobs–high-paying factory jobs–would leave our now service-oriented economy never to return to the U.S. Job losses, with parts suppliers and other subcontractors included, would number more than 2 million. Those jobs would be resurrected in developing countries where labor is much cheaper. Why help other countries to feast on the carcass of our once-strong manufacturing sector? Congress should not go easy on GM if it does approve a bailout, but Congress has shown no sign of going easy on the auto giant. [Note that the word 'but' is used where the word 'and' should be.] The idea of setting auto executives scurrying to produce a business plan is nothing short of brilliant. I’ve got suggestion for what such a plan should include. But first and foremost it should be focused on one word and one word alone: green. [Green, the very kind of vehicle which loses the American auto industry the most money.]

No more SUVs and gas-guzzlers. Even in truck division, GM could make its heavy-duty vehicles much more fuel-efficient and price them so that they could only be purchased by commercial ventures. [THAT'S really in the American spirit! Also, trucks are the American manufacturers most purchased vehicles...]

Private citizens who want to drive guzzlers should be priced out of the market [Again, such a pro-freedom attitude.] and should instead be forced [FORCED! Where are we, the USSR in 1970?] into low-mileage cars. GM created this mess when it chose to cater to America’s sick addiction to gas-guzzlers instead of leading the market in the proper (i.e. green) direction. [What exactly are Bonnie Erbe's qualifications to suggest what the auto-industry ought to do?] Now’s the time to lead, not cave in. [Yes, business should never do what the market wants...that makes NO sense.]

Dan Beuke of BusinessWeek writes:

“End of discussion about higher mileage rules. For years, honest efforts to boost fuel efficiency were snuffed out in Washington by Detroit and its fellow travelers in Congress. Enough. I say we build right into bailout legislation a 40-mpg average for cars by 2020. That’s up from 27.5 today, and a big step up from the 35 mpg goal that Detroit is supposed to achieve. I don’t care how they get there: Build cars that burn corn cobs–or For Sale signs, for that matter. Just get there.”

NATION CAN’T AFFORD LOSS

America cannot afford to have GM go under any more than it could afford to lose Citicorp, AIG, and all the rest. And the stock market seemed to understand that this week as GM stock went up by 30 percent in midday trading on Wednesday on hints that Congress was closer to acceding to GM’s come hither pleas.

I know there’s no such thing as fairness when it comes to business and money, but what’s sauce for Citicorp ought to be sauce for GM, too.

Also, I copied this exactly as it is in the newspaper. It is in the 12-02-2008 Herald and News on page A6. Any spelling mistakes are my typos. Anything in brackets are my inputs and thoughts.

AVP level profile with a multinational financial services company. The candidate will be heading the city and will be responsible for the business numbers to be achieved from all th branches in the city. Requires at last 5-6 years of prior experience in handling multiple products and teams across branches.

Candiadtes should possess sound knowledge about Indian Capital markets, investment advisory skills and should be well versed with selling of equity products, equity mutual funds and Insurance.

For: the President-Elect, Mr. Barack Obama.

From: Uri Avnery, Israel.

The following humble suggestions are based on my 70 years of experience as an underground fighter, special forces soldier in the 1948 war, editor-in-chief of a newsmagazine, member of the Knesset and founding member of a peace movement:

1. As far as Israeli-Arab peace is concerned, you should act from Day One.

2. Israeli elections are due to take place in February 2009. You can have an indirect but important and constructive impact on the outcome, by announcing your unequivocal determination to achieve Israeli-Palestinian, Israeli-Syrian and Israeli-all-Arab peace in 2009.

3. Unfortunately, all your predecessors since 1967 have played a double game. While paying lip service to peace, and sometimes going through the motions of making some effort for peace, they have in practice supported our governments in moving in the very opposite direction. In particular, they have given tacit approval to the building and enlargement of Israeli settlements in the occupied Palestinian and Syrian territories, each of which is a land mine on the road to peace.

4. All the settlements are illegal in international law. The distinction sometimes made between “illegal” outposts and the other settlements is a propaganda ploy designed to obscure this simple truth.

5. All the settlements since 1967 have been built with the express purpose of making a Palestinian state – and hence peace - impossible, by cutting the territory of the prospective State of Palestine into ribbons. Practically all our government departments and the army have openly or secretly helped to build, consolidate and enlarge the settlements – as confirmed by the 2005 report prepared for the government (!) by Lawyer Talia Sasson.

6. By now, the number of settlers in the West Bank has reached some 250,000 (apart from the 200,000 settlers in the Greater Jerusalem area, whose status is somewhat different.) They are politically isolated, and sometimes detested by the majority of the Israel public, but enjoy significant support in the army and government ministries.

7. No Israeli government would dare to confront the concentrated political and material might of the settlers. Such a confrontation would need very strong leadership and the unstinting support of the President of the United States to have any chance of success.

8. Lacking these, all “peace negotiations” are a sham. The Israeli government and its US backers have done everything possible to prevent the negotiations with both the Palestinians and the Syrians from reaching any conclusion, for fear of provoking a confrontation with the settlers and their supporters. The present “Annapolis” negotiations are as hollow as all the preceding ones, each side keeping up the pretense for its own political interests.

9. The Clinton administration, and even more so the Bush administration, allowed the Israeli government to keep up this pretense. It is therefore imperative to prevent members of these administrations from diverting your Middle Eastern policy into the old channels.

10. It is important for you to make a complete new start, and to state this publicly. Discredited ideas and failed initiatives – such as the Bush “vision”, the Road Map, Annapolis and the like – should by thrown into the junkyard of history.

11. To make a new start, the aim of American policy should be stated clearly and succinctly. This should be: to achieve a peace based on the Two-State Solution within a defined time-span (say by the end of 2009).

12. It should be pointed out that this aim is based on a reassessment of the American national interest, in order to extract the poison from American-Arab and American-Muslim relations, strengthen peace-oriented regimes, defeat al-Qaeda-type terrorism, end the Iraq and Afghanistan wars and achieve a viable accommodation with Iran.

13. The terms of Israeli-Palestinian peace are clear. They have been crystallized in thousands of hours of negotiations, conferences, meetings and conversations. They are:

13.1 A sovereign and viable State of Palestine will be established side by side with the State of Israel.

13.2 The border between the two states will be based on the pre-1967 Armistice Line (the “Green Line”). Insubstantial alterations can be arrived at by mutual agreement on an exchange of territories on a 1:1 basis.

13.3 East Jerusalem, including the Haram-al-Sharif (“Temple Mount”) and all Arab neighborhoods will serve as the capital of Palestine. West Jerusalem, including the Western Wall and all Jewish neighborhoods, will serve as the capital of Israel. A joint municipal authority, based on equality, may be established by mutual consent to administer the city as one territorial unit.

13.4 All Israeli settlements – except any which might be joined to Israel in the framework of a mutually agreed exchange of territories - will be evacuated (see 15 below).

13.5 Israel will recognize in principle the right of the refugees to return. A Joint Commission for Truth and Reconciliation, composed of Palestinian, Israeli and international historians, will examine the events of 1948 and 1967 and determine who was responsible for what. Each individual refugee will be given the choice between (1) repatriation to the State of Palestine, (2) remaining where he/she is living now and receiving generous compensation, (3) returning to Israel and being resettled, (4) emigrating to any other country, with generous compensation. The number of refugees who will return to Israeli territory will be fixed by mutual agreement, it being understood that nothing will be done that materially alters the demographic composition of the Israeli population. The large funds needed for the implementation of this solution must be provided by the international community in the interest of world peace. This will save much of the money spent today on military expenditure and direct grants from the US.

13.6 The West Bank, East Jerusalem and the Gaza Strip constitute one national unit. An extraterritorial connection (road, railway, tunnel or bridge) will connect the West Bank with the Gaza Strip.

13.7 Israel and Syria will sign a peace agreement. Israel will withdraw to the pre-1967 line and all settlements on the Golan Heights will be dismantled. Syria will cease all anti-Israeli activities conducted directly or by proxy. The two parties will establish normal relations between them.

13.8 In accordance with the Saudi Peace Initiative, all member states of the Arab League will recognize Israel and establish normal relations with it. Talks about a future Middle Eastern Union, on the model of the EU, possibly to include Turkey and Iran, may be considered.

14. Palestinian unity is essential for peace. Peace made with only one section of the people is worthless. The US will facilitate Palestinian reconciliation and the unification of Palestinian structures. To this end, the US will end its boycott of Hamas, which won the last elections, start a political dialogue with the movement and encourage Israel to do the same. The US will respect any result of democratic Palestinian elections.

15. The US will aid the government of Israel in confronting the settlement problem. As from now, settlers will be given one year to leave the occupied territories voluntarily in return for compensation that will allow them to build their homes in Israel proper. After that, all settlements – except those within any areas to be joined to Israel under the peace agreement - will be evacuated.

16. I suggest that you, as President of the United States, come to Israel and address the Israeli people personally, not only from the rostrum of the Knesset but also at a mass rally in Tel-Aviv’s Rabin Square. President Anwar Sadat of Egypt came to Israel in 1977, and, by addressing the Israeli people directly, completely changed their attitude towards peace with Egypt. At present, most Israelis feel insecure, uncertain and afraid of any daring peace initiative, partly because of a deep distrust of anything coming from the Arab side. Your personal intervention, at the critical moment, could literally do wonders in creating the psychological basis for peace.

My sister and brother-in-law were down this weekend, and the conversation turned to the money they lost   stock market this year.  They had an investment in Vanguard’s Target 2020 fund, within an IRA, and it is down quite a bit this year, along with most every other mutual fund.

He had impulsively pulled out the money about a month or two ago, not being able to stomach any more declines.  The problem was that because this was in an IRA, and since he is not 59 1/2 yet, he had to pay a penalty and will be taxed on it as well.  So now he is second-guessing himself.  He kept asking me, “should I put it back in?  And if so, when?”.

I gave him the common sense advice that one often hears in the personal finance world: if you are a long term investor, you shouldn’t have taken it out in the first place.  He is 51, and wants to retire in the next 7-10 years.  I suggested to him that he may want to consider just constructing a CD ladder out of the remaining money with ING Direct or another online bank, as this will allow him to sleep more soundly at night.  Why did I give him such conservative investing advice?  Because he really doesn’t NEED the money for retirement anyway, as my sister works for the state, makes good money and has solid job security, and will receive a large pension and health insurance for life once she retires.  Plus, he will also receive a pension from the electrical union to which he belongs.  And their house is paid off, with minimal other expenses, and no children living home or in college.

He is not convinced though.  We were looking at Vanguard’s site, and he noticed that the intermediate term gov’t bond fund has done well this year.  So he said to me, “maybe I should put it all in that fund”.  I talked him out of that, pointing out that he was making the classic case of chasing performance.  Simple, prudent diversification is the key, and again, if he can’t stomach the drops, he should be invested in a conservative FDIC-insured investment like CD’s. Here is a great primer on CD laddering from Trent Hamm over at The Simple Dollar.

So, he wants to think about it for a couple of weeks.  I understand his hesitation to get back into the market and his general sense of “what do I do now?”  This type of bear market has not been seen since the Great Depression, and it is causing a lot of anxiety among investors.  I think the only thing to do, if you are a long term investor, is to continue to dollar cost average, keep your eye on your goals, and DON’T make any impulsive decisions without thinking it through first.  Maintain a nice emergency fund of 6-12 months living expenses, control your spending and debt, and focus on the important things in life, like family, friends, and good health.

If we believe in capitalism and the long term prospects for America, then we can assume the market will go on to new heights over the longer term.  I do happen to believe this, and am going to continue to maximize my 401(k) contributions and also my contributions to savings and investments outside of my 401(k).

WHEN WORD OF THE INTERNAL REVENUE Service decision came to Thomas Daschle’s Capitol Hill office the Friday afternoon before Thanksgiving, the South Dakota Democrat was deep in debate on the Senate floor, and the celebration had to begin without him. On returning to his office, with its rustic decor of buffalo hides and Indian headdresses, he found the members of his staff literally jumping with joy.

For 18 months, Daschle had been the point man in the campaign to win tax breaks for a substance called ethyl tertiary butyl ether, or ETBE. When added to gasoline, its developers claim, the catalyst can reduce automotive carbon monoxide emissions by 20 to 30 percent.

Aside from its environmental promise, however, what gives ETBE its special political charm is that 40 percent of the catalyst consists of ethanol - and virtually all of America’s ethanol comes from corn. Over the past decade, a coalition of farm-state legislators, grain processors and trade groups has successfully fought to keep in place a generous, highly controversial ethanol tax credit. And the I.R.S. announcement is a giant step on the road to extending that tax credit to ETBE.

The campaign for the ethanol derivative illustrates how a little-known lobby for an obscure farm byproduct can deploy formidable clout in Washington. Tens of thousands of farmers called, wrote or faxed their support for the tax credit. Endorsements arrived from four Cabinet secretaries, the Environmental Protection Agency administrator and 75 senators. ”I’ve never seen anything like this,” says Douglas Durante, Washington representative of the Clean Fuels Development Coalition, one of ETBE’s most active supporters. ”To get 75 senators to agree that it’s summer and not winter is nearly impossible.”

Yet the tax credit was not universally popular. Senator Bill Bradley attacked both the proposal itself and the notion that it should be accomplished by means of an I.R.S. ruling. ”This is an issue for Congress to decide here on the floor,” the New Jersey Democrat told his colleagues, ”under the clear-eyed scrutiny of the American taxpayers, who once again see the long arm of the Government reaching deeper and deeper into their pockets to benefit a handful of special interests.”

The Treasury Department’s support of ETBE is only the latest chapter in a political saga that dates back to the gas lines of the mid-70’s. Seeking to reduce the nation’s dependence on imported oil, the Carter Administration touted gasohol - a mixture of gasoline and 10 percent ethanol - as one answer. But when the first plants went on-line in 1978, wholesale ethanol cost 80-cents-a-gallon more than wholesale gasoline. Federal and state tax exemptions - the Federal credit alone now equals 60 cents for each gallon of ethanol sold to gasoline blenders - helped make up the difference; gasohol now accounts for 8 percent of the 110 billion gallons of gasoline sold annually.

While public concern about imported oil has waxed and waned, gasohol producers have received more than $4.6 billion in Federal and state tax exemptions since 1980. A major benefactor has been Archer Daniels Midland Company, based in Decatur, Ill., which produces 75 percent of the nation’s ethanol. The company is the largest agricultural processor in the United States, with 1989 sales of $10 billion on products ranging from pasta to pet food. Over the years, critics have charged that the tax breaks amount to nothing more than ”corporate welfare” for A.D.M. and its chairman, Dwayne O. Andreas, a generous contributor to both political parties. But efforts to trim these favors have fallen victim to the ethanol lobby.

Today, the ethanol industry has reached a crossroads. The introduction of ETBE could expand the market for ethanol. On the other hand, state tax credits have been reduced in recent years, and the construction of new ethanol plants has halted. Even more critical, the Federal tax credit is due to expire in 1992, and without it the ethanol industry will die. With several tax bills being debated in Congress, and legislators seeking ways to reduce the nation’s deficit, the ethanol credit is coming under increased scrutiny.

There are even growing signs of dissension within the ethanol lobby itself, which has split into pro-A.D.M. and anti-A.D.M. factions. Says John E. Ford, director of Congressional relations for the American Corn Growers Association: ”It’s a nasty little war and it’s going to get nastier.”

THE TAX EXEMPTIONS GRANTED TO GASOHOL producers in 1979 were not the only steps taken to nurture the ethanol industry. Congress passed a series of bills providing protective tariffs as well as investment credits and loan guarantees for new ethanol plants. Another alcohol fuel, methanol - most of which comes from natural gas - had also been promoted as a gasoline alternative. But methanol made from natural gas received no tax credits or protective tariffs.

The oil companies, concerned that methanol and ethanol would steal market share, fought them both. They attacked methanol as being only half as fuel- efficient as gasoline. With ethanol, they raised an issue that would be repeated over the years - that it requires as much energy to produce a gallon of ethanol from corn as that gallon will yield as fuel. The oil industry also complained that ethanol was impractical for nationwide distribution since it could not be transported by pipeline. (Because ethanol would absorb water in a pipeline, gasohol must be ‘’splash-blended”; the ethanol is added directly to gasoline in a tank truck.) But ethanol provided corn growers with a new market for their crop. The farmers argued that it would reduce the need for commodity price supports that paid them either to leave their fields fallow or to stockpile surplus harvests. The corn growers had the enthusiastic support of large, grain-processing operations like Archer Daniels Midland, which were well-positioned to enter the market; the same wet-milling technology that produces high-fructose corn syrup can be used for ethanol.

In the political battle between oil and agriculture, the farmers won through sheer numbers. ”Give an ethanol lobbyist a sack lunch and a quarter and you’ll have 18,000 corn farmers generating telegrams within 24 hours,” says David E. Hallberg, founding president of the Renewable Fuels Association, ethanol’s first trade group. Within two years, starting from scratch, A.D.M. and the other ethanol processors were turning out 75 million gallons of the alcohol fuel. Eighty-seven percent of that output was from A.D.M. facilities.

I WAS RAISED TO BELIEVE YOU’RE supposed to support your mayor and your Congressman and your politicians,” says Dwayne Andreas. In his sixth floor office at A.D.M.’s Decatur headquarters, the tanned, elfin Andreas, 72, works among the mementos of a lifetime spent rubbing shoulders with the power-elite. On the wall hang photographs of Andreas in the White House with Ronald Reagan. On the desk sits a recent letter from Richard Nixon. A glowing three-foot-wide globe has been marked with Andreas’s intinerary for a trip to the Soviet Union, where he has frequent business dealings with President Mikhail S. Gorbachev.

Since becoming a confidant of former Vice President Hubert Humphrey more than 40 years ago, Andreas has assiduously cultivated his political connections among Democrats and Republicans alike. ”The only people who have carried any weight,” Andreas says, ”are the ones who deal with both sides.” He has another rule for businessmen, based, he says, upon advice Humphrey gave him: ”Never suggest anything to a politician. They’re scared to death they’ll be caught doing something.”

In the 1970’s, Andreas met a young Kansas Republican Representative named Robert Dole, who would become A.D.M.’s staunchest ally on Capitol Hill - and today is the Senate Minority leader. Dole sponsored an amendment providing a Federal tax break for gasohol in 1978 and has since sponsored about a dozen other bills designed to promote and protect ethanol. In 1980, for example, Dole introduced and pushed through the Senate a trade bill amendment to impose a tariff on Brazilian ethanol. Five years later, he led the successful fight to reverse a Customs Service ruling that allowed certain blends of Brazilian ethanol to enter the United States without import duties. Explaining his position at the time, he told a reporter, ”I’m a farm-state Senator.”

Meanwhile, A.D.M.’s Political Action Committee, along with Andreas and his relatives, were contributing more than $130,000 to Dole campaigns. The company’s private plane has flown Dole to Midwest speaking engagements, and for a time A.D.M. sponsored Dole’s commentaries over the Mutual Radio Network. The Senator and his wife, Elizabeth Dole, currently Secretary of Labor, purchased an apartment from Andreas in 1982 at the Sea View, a Bal Harbour, Fla., hotel in which residents hold shares. They paid $150,000 - less than the apartment’s market value. Andreas was chairman of the Sea View Corporation and its largest shareholder. Also at the Sea View: Robert Strauss, a former chairman of the Democratic party; Tip O’Neill, the former speaker of the House, and Howard Baker, White House chief of staff in the Reagan Administration.

Andreas insists that his relationship with the Senate Minority Leader is strictly personal. ”I haven’t discussed ethanol with Bob Dole twice in 20 years,” he says today. ”There’s no reason for it. The farmers have been after him for years on end.” Senator Dole has declined to be interviewed for this article.

In keeping with his role as bipartisan benefactor, Andreas contributed $150,000 to Humphrey in the 1972 Presidential primaries and gave Nixon $122,000 in the general election. (Part of the Nixon gift - $25,000 in cash - ended up in the bank account of one of the Watergate burglars.) Between 1975 and 1977, Andreas gave $72,000 in A.D.M. stock to the children of David G. Gartner, then Humphrey’s administrative assistant. When Gartner was appointed by President Carter to the Commodity Futures Trading Commission, in 1978, word of the gifts came out. Carter urged Gartner to resign, but Gartner chose to stay on. After the brouhaha subsided, A.D.M. bought Carter’s peanut warehouse for $1.2 million and named Robert Strauss, who was Carter’s trade representative, to A.D.M.’s board. None of these A.D.M. activities were shown to violate Federal laws.

Andreas has not slowed his pace as a political contributor. According to the Federal Election Commission’s most recent records, during the 1987-88 elections Dwayne Andreas gave at least $31,000 to individual candidates and more than $100,000 to the National Republican Party. A.D.M.’s political action committee spent $160,550 on candidates ranging from Utah Republican Senator Orrin Hatch to Washington Democrat Thomas S. Foley, the Speaker of the House. The list of other donations by members of Andreas’s family, as compiled by the Federal Elections Commission, goes on for seven computer printout pages.

”If a fellow is willing to devote his life to public service, and a fellow like me has more money than I ever dreamed existed in the whole world, wouldn’t I be an ass if I didn’t respond to requests?” asks Andreas, who has likened campaign giving to tithing. ”Suppose a friend of ours at Coca-Cola is raising money for a Georgia senator. We have no choice. We don’t even ask who it is. This is the way business operates.”

ANDREAS ROSE TO THE C.E.O.’s OFFICE AT A.D.M. from modest roots. Born in Minnesota in 1918, he dropped out of Wheaton College in order to help with Honeymead, the family’s Iowa grain and feed elevator business. In 1945, he sold Honeymead to Cargill Inc., the Minneapolis-based grain processor, and soon became an executive in its oil-seed division. Nine years later, A.D.M. invited Andreas and his younger brother Lowell to join A.D.M.’s board.

Dwayne Andreas became C.E.O. in 1970 and, with his brother, transformed A.D.M. into one of the world’s largest soybean processors and flour millers, currently with 117 processing plants; subsidiaries in Europe and Canada; a shipping company and a commodity brokerage firm. (Lowell retired more than 10 years ago, but Dwayne’s son, Michael, and his nephew, Martin, are now executives in the company.) Dwayne Andreas sees the Government’s tax credits for farm products as a quid pro quo. ”We endeavor to be on the Government’s wavelength to see what they want done,” he explains. ”Some years they want more soybeans. Some years they want to do something big in China. Who can do it for them? We’re in 50 countries. We can do anything.”

A periodic guest at White House dinners during the Reagan Administration, Andreas has known the former President since ”Dutch” was a lifeguard at a swimming pool in Dixon, Ill. In 1984 Reagan, seeking to curry favor with farmers, paid a visit to A.D.M.’s Decatur headquarters. Soon thereafter Andreas erected a life-sized bronze statue of the President in the company parking lot.

Each year, A.D.M. budgets $7 million to $8 million for advertising. Much of that is devoted to ”Face the Nation,” ”Meet the Press” and ”This Week with David Brinkley” - shows that are de rigueur viewing for Washington lawmakers.

Such moves helped make ethanol a potent force in Washington. Between 1984 and 1986, when the demand for ethanol dropped as oil prices skidded from $30 to $10 a barrel, many ethanol producers feared they would have to shut down. They appealed to Richard Lyng, then Secretary of Agriculture, for the right to receive cut-rate corn, which was being offered to farmers to help them through the agricultural depression. Lyng balked at the notion.

Shortly thereafter, Andreas met with Lyng and Martin Sorkin, then an A.D.M. lobbyist, for breakfast at Washington’s Madison Hotel. When questioned later by reporters, Lyng described the men as ”personal friends.” To this day, Andreas maintains that the discount corn program was not discussed. But, two days after the breakfast, Lyng removed the restriction that would have kept ethanol processors from receiving corn. In early 1986, A.D.M. received $29 million worth of corn - more than half of the entire $54 million Federal program.

Gasohol’s tax subsidy, which goes to companies that buy ethanol to blend with gasoline, comes out of the Federal Highway Trust Fund. During the first five of President Reagan’s eight years in office, Elizabeth Dole, then the Secretary of Transportation, proposed that the ethanol tax exemption should be ended. Each time, the tax break was restored in the Senate Finance Committee by her husband.

”We often wondered whether they ever talked about that in the evening,” says Francis Francois, director of the American Association of State Highway and Transportation Officials. ”It’s the Secretary of Transportation doing things the way she thinks they should be done and a powerful Senator doing what he thinks is right for his people back home. But it makes an interesting situation where Mrs. Dole says ‘no’ and Mr. Dole says ‘yes.’ And they both come out looking like heroes.”

AMONG THE FARM GROUPS that have labored on ethanol’s behalf are the National Corn Growers Association with members in 22 states, the American Farm Bureau Federation and the American Agriculture Movement. The National Farmers’ Organization has conducted regular ”legislative fly-ins” to bring farmers from 30 states to Capitol Hill to promote ethanol and other agricultural issues.

These groups argue that the $500 million Federal subsidy for ethanol creates new markets for corn. But some agricultural economists believe that the subsidies are counterproductive. A 1986 report issued by the U.S.D.A.’s Office of Energy said that the subsidies, by driving up the demand for corn, increase consumer food costs. (In 1989, ethanol production consumed 350 million bushels of corn, or about 5 percent of the total harvest. That demand raised the price of corn by 15 to 20 cents, to $2.60 a bushel.) The report further stated that any benefits to corn growers would come at the expense of soybean farmers, whose prices would drop because livestock feed, a byproduct of ethanol production, competes with soybean meal. ”Direct cash payments to corn growers,” the report concluded, ”would be more economical than attempting to boost farm income through ethanol subsidies.”

The report set off a furor in the ethanol industry. ”There were significant attempts to have me removed from office,” says Earle E. Gavett, the director of the U.S.D.A.’s Office of Energy and the author of the report.

In response to the Gavett report, Dole led a Congressional campaign to urge the U.S.D.A. to set up a special task force on ethanol. Eighteen months later, the task force, consisting primarily of ethanol industry representatives, issued its own report. Its conclusion: it cost less to subsidize ethanol than to subsidize corn. The report did not address the impact on consumer costs and soybean farmers. Ethanol lobbyists declared that the two contrary reports amounted to ”a wash.”

In 1988, with the ethanol tax credit due to expire four years later, A.D.M. increased its support of congenial trade groups such as the National Corn Growers and the Renewable Fuels Association, which share office space on Capitol Hill. Dues for the R.F.A. are based on the amount of ethanol a company produces, and A.D.M. is far and away the largest producer. A.D.M. is also the major contributor to a foundation run under the auspices of the R.F.A. to provide technical information on fuels. How closely entwined are A.D.M. and the R.F.A.? A 1984 invoice to the R.F.A. from William McMurtrie (a former Andreas son-in-law and a lobbyist), requesting a $2,000 fee and reimbursement for a $240.85 dinner with three Congressmen, was forwarded to Archer Daniels Midland for payment. David Hallberg, who departed the R.F.A. to become executive vice president of Revolution Fuels of America, says he left the trade group in large part because of interference by A.D.M.

What constitutes a registered lobbyist in Washington is spelled out by law. But according to Ann McBride, the senior vice president of program operations for Common Cause, many people lobby who are not technically lobbyists. She says, ”The law was passed in ‘47. Everybody knows that it’s a joke.”

The law office of Robert Strauss and Covington & Burling, the city’s largest legal firm, are both listed under the heading for A.D.M. in ”Washington Representatives,” a directory of Washington lobbyists. But A.D.M., which produces many agricultural products, claims that none of its Washington representatives lobbies for ethanol - despite reports to the contrary.

According to C. Boyden Gray, who was Vice-President Bush’s counsel, Robert Strauss talked with George Bush before the Presidential primaries of 1988 and suggested that the candidate would win extra farm-belt votes if he would tone down his support of methanol and imported ethanol. Bush held fast. Gray also recalls running into Dwayne Andreas at a dinner in early 1988 at which Andreas offered advice on winning votes for candidate Bush. Gray quotes Andreas as saying, ”You know, you really ought to tap the environmental benefits of ethanol.”

Strauss, for his part, admits he did have a meeting with Bush before the primaries, but says that he never discussed ethanol. He maintains that he has never lobbied on behalf of A.D.M., that other lawyers in the firm work on A.D.M. projects. ”I’m not above it,” he says, ”but I don’t represent them.”

Referring to the ethanol-A.D.M. relationship, Douglas Durante, the Washington representative of the Clean Fuels Development Coalition, says, ”There’s no industry in the world that’s so dominated by one company.” Durante’s group was formed in 1988 to promote the expansion of the industry outside of A.D.M.’s traditional Midwest territory. Another trade group - the American Corn Growers Association, created by disgruntled members of the National Corn Growers Association - has begun organizing for the same purpose.

Washington policy makers have occasionally expressed some impatience with the ethanol tax breaks. When a drought hit the nation’s farm belt in 1988, and pushed up the price of corn, Senator Dole asked that ethanol producers be allowed to participate in another Agriculture Department corn giveaway. Bill Holmberg, former director of the Energy Department’s Office of Alcohol Fuels and now a C.F.D.C. consultant, recalls standing in a Capitol corridor during the debate and hearing Congressmen walk by whispering, ”Nothing for A.D.M. Nothing for A.D.M.”

House and Senate conferees decided to provide limited aid to small producers and allow nothing for the two largest ethanol producers, A.D.M. and A. E. Staley, also of Decatur. But U.S.D.A. Secretary Lyng had discretionary authority over whether to implement the program, and he never did. In short order, 18 ethanol plants shut down. ”If A.D.M. wasn’t going to be a part of the program, the industry was going to have no program,” observes Frederick Potter, president of Information Resources Inc., a consulting firm that covers the alcohol fuels industry.

WITH ETHANOL LOSING ITS allure as an agricultural commodity, industry lobbyists began to trumpet its environmental benefits. Ever since 1970, when the Environmental Protection Agency mandated the removal of lead additives from gasoline, the oil companies had sought other octane-producing additives to replace lead. MTBE, a methanol-based additive developed in 1978, was competitively priced, but it derived primarily from imported fuels and was toxic. In 1988, ethanol researchers at American Eagle Fuels Inc., in Lincoln, Neb., announced the development of ETBE, an additive that has an ethanol content ofabout 42 percent.

Unlike ethanol, ETBE could be mixed with gasoline at the oil refineries and moved through pipelines to gasoline distributors. Like ethanol, however, ETBE would be expensive. While MTBE cost 60 cents per gallon to produce, and was in plentiful supply, ETBE’s price tag was 30 percent higher, and the additive was still experimental. What was needed, proponents said, was a tax break.

Although ETBE was not invented when the original ethanol subsidy was passed in 1978, ethanol lobbyists claimed that Congress would have approved the application of the credit to ethanol derivatives. And ETBE had some surprising new supporters. Oil companies, under increasing pressure from the Environmental Protection Agency to improve emission levels, jumped on the bandwagon. Arco Chemical was the original petitioner to the Treasury department for ETBE.

For a time, however, Archer Daniels Midland held off endorsing the new product; more than twice as much ethanol goes into gasohol as into gasoline with ETBE. The Clean Fuels Development Coalition asked Senator Dole to lead the battle for ETBE on the Hill, but he declined. Senator Tom Daschle took on the role, circulating a ”Dear Colleague” letter.

While ETBE supporters worked Capitol Hill, C. Boyden Gray urged first the Reagan, then the Bush administrations to back the cause. Gray, who drives a methanol-powered Chevrolet, believes that using alcohol fuels like ethanol and methanol is preferable to ”the regulatory nightmares that would cascade around us if we don’t clean up our air.”

Gray says he discussed ETBE with ”every Cabinet Secretary.” The ETBE tax break - whose impact would be felt not by the Highway Trust Fund, as is the case with gasohol, but by the Treasury Department - eventually won endorsements from five Cabinet-level officials: Nicholas F. Brady, the Secretary of the Treasury; William K. Reilly, the Administrator of the Environmental Protection Agency; Samuel K. Skinner, the Secretary of Transportation; James D. Watkins, the Secretary of Energy, and Clayton K. Yeutter, the Secretary of Agriculture.

Last June, President Bush lent his support to ETBE with a swing through Lincoln, Neb., where he visited American Eagle Fuel’s ETBE research facility and was photographed driving a demonstration car powered by E85, an experimental mix of 85 percent ethanol and 15 percent gasoline. But five months after the trip, the Treasury Department still had not made a decision on ETBE. According to a legislative aide, the Treasury Department’s tax attorneys initially opposed extending the credit, given the steep Federal deficit. But in early October, Daschle proposed an amendment to a budget bill to extend ethanol’s credit to ETBE legislatively, and the Senate Finance Committee passed the provision by a margin of 12 to 8.

Meanwhile, Dole was active on behalf of ethanol itself. In late November, during Senate floor debate on the unrelated Steel Import Bill, he blocked further action on the measure. With a recess looming, Dole offered to lift his hold on the steel bill . . . if ethanol’s excise tax credit, mandated to expire in 1992, were extended to the year 2000. ”Without hearings, publicity and on just about the last day of a session,” says a methanol lobbyist, ”Dole was trying to push through a seven-year multi-billion-dollar tax expenditure. It was shameless.”

Eventually, Dole agreed to a compromise: he would lift the hold on the steel bill if hearings were scheduled for the next legislative session on ETBE and extending the tax break to the year 2000. At the same time, he expressed sudden interest in supporting Daschle’s ETBE amendment to the House-Senate budget bill. But before Congress could act, the Treasury Department announced its decision in favor of ETBE. The resistance within Treasury had been overwhelmed, a legislative aide says, ”by ethanol politics.”

TODAY, WITH THE 101st CONGRESS back in session, the various ethanol lobbies are engaged in new Washington battles. The House and the Senate are considering a measure to strengthen the 1970 Clean Air Act, which calls for support of alcohol fuels such as ethanol and methanol to help combat air pollution. Legislators are also debating a new farm bill that could extend ethanol’s tax credit until the turn of the century. A vote on the farm bill is expected before Memorial Day.

Meanwhile, schisms remain in the ranks of ethanol supporters. The A.D.M.-backed Renewable Fuels Association is against expanding the industry through new plant construction, the importation of ethanol and through methanol development. Not so the Clean Fuels Development Coalition, which wants to see a broader ethanol industry. Publicly and privately, members of both lobbying groups continue to snipe at each other. ”The ethanol industry is probably the best in the city at circling up every morning and shooting at one another,” says Eric Vaughn, the current R.F.A. president.

Most ethanol trade groups see ETBE as the natural successor to gasohol. Says Bill Holmberg, the ethanol lobbyist: ”Ten years from now, ethanol in gasoline will only be 10 percent of production, ETBE will be 75 percent and 15 percent will be for other industrial uses.” Proponents hold that ETBE, as a new product, deserves its turn at the tax subsidy trough.

A.D.M. continues to brew ethanol. Ironically, considering the ethanol lobby’s efforts on behalf of tariffs against imported ethanol, A.D.M. signed a contract in January to sell 100 million gallons to Petrobras, the state oil company of Brazil. And, anticipating that Treasury’s ETBE decision will become final, Andreas has been in touch with oil executives. ”The oil companies will become our allies,” he predicts.

Yet opposition to the ETBE tax break continues. C. Eugene Steuerle, an economist and senior fellow at the Urban Institute in Washington, feels that the I.R.S. is making a costly mistake. ”The whole alcohol fuels credit is just a very inefficient form of subsidy,” Steuerle says. ”For the amount of money we’re spending, we don’t get much benefit at all.”

Some Congressmen are openly hostile. ”The Treasury Department says that if these subsidies continue and expand to include ETBE,” Senator Bradley says, ”we’re looking at another $5.5 billion in the 1990’s. At a time of huge deficits, when worthy programs that enjoy broad public support are going begging, spending $10 billion on the ethanol industry - in which a single company accounts for over 66 percent of the operational capacity in the U.S. - is frankly unconscionable.”

For his part, Andreas says he will not lose any sleep if A.D.M.’s ethanol plants simply shut down. After 12 years in the business, he insists that A.D.M. has made less than a 6 percent return on its investment - ”less than all our other divisions” - and that ethanol represents less than 10 percent of A.D.M.’s business. ”If they cancel ethanol,” he says, ”do you think I’m worrying?”

Photos: Douglas Durante, right, the Washington representative of the Clean Fuels Development Coalition, briefs Scott Fleming, an administrative assistant to Rep. Nita M. Lowey, D-N.Y., in the Longworth House Office Building, across from the Capitol; Dwayne O. Andreas, chairman of Archer Daniels Midland, with a statue of President Reagan at company headquarters in Decatur, Ill. (John Loengard); an A.D.M. television ad for ethanol (Alan Haywood); President Bush driving a car powered with ethanol last June in Lincoln, Neb. (Journal-Star Printing Company) (pgs. 18 & 19); Eric Vaughn, left, president of the Renewable Fuels Association, with Christopher A. Novak, assistant to Senator Charles E. Grassley (R.-Iowa) (John Loengard) (pg. 40); table lists U.S. ethanol production and Federal and

I looked around to see if I’ve missed out on anyone. I still had one glass of Fanta and a paper plate of the critically reviewed potato chips and sweet.

I scanned the faces in the room, one by one.

Two Elderly Aunties, who had sacrificed their evening brisk walk for this social cause.

An Elderly Man who was holding sheets of the previous two ‘minutes of the meeting’. While the ladies were busy chit-chatting on their tailors and trinkets, he was constructively highlighting the pending jobs with his ‘Reynolds Bold’.

A young Smiley man who provided evidence of his presence, by breaking into a smile everytime he felt someone was looking at him.

An even younger Oriya software dude, who was a first timer in these meetings, all set to outshine the others with ‘out of the box’ suggestions.

A ‘School Principal Faced’ lady who had her hands folded and looked at her watch periodically to indicate her displeasure, on any loose talk.

Her teenage daughter who had momentarily stepped out of ‘Riverdale’, to join this meeting. She had equipped herself against any likely boredom, by carrying an archie comic, and also a backup - her mobile, on which she furiously kept typing away smses to her tribe.

And of course the Four Ravishing Young Ladies in the centre who had no doubt that this evening belonged to them.

Everybody had had their refreshments, except the Princi-Face, because she still had not cracked how to eat with her hands folded. ‘Riverdale’ had avoided the sweet by tossing the imaginary hair that she had lost in her previous haircut. “I hate sweets” she declared with pride, certified by a customary nod from her mama.

The excitement in the Four Ladies’ corner was dying down. The novelty of their fineries was beginning to fade away.

The Smiley gauged the situation, gathered courage and announced in a nervous tone “Shall we start?”.

The Elderly Man jumped at this opportune moment, adjusted his spectacles, referred to his notes and began with the point that affected his life the most.

“The overtank continues to overflow. Bahadur does not switch off the motor on time….. The water comes straight to our balcony where we dry our clothes…..all our washed clothes are getting dirty everyday” he concluded, looking around for empathy.

Riverdale just got an sms. The Oriya had no idea that the apartment had an overhead tank. The Smiley transferred the problem to the rest of the audience by rotating his head. The Princi-Face looked at her watch. The Two Elderly Aunties broke the silence by crunching their ‘potato chips’. The Four Ladies expressed disgust that their fine conversation had to be interrupted by such a trivial problem.

Afterall, this was a meeting to discuss ‘common problems’ and not someone’s common problem.

“Why don’t you ask Bahadur to stop the motor on time?” retorted one of The Four Ladies.

The Elderly Man refused to accept that a problem of such magnitude had such a simple solution. He protested by keeping a straight face and only moved his eyeballs across the silent audience, hoping to find takers who could escalate it to greater heights.

The Smiley decided to add some weight to the discussion by compounding the nature of the problem. “No no…the problem is with the watchman. He is negligent towards his duties. He is not doing his job right. There is no proper security. He allows anyone and everyone inside the premises. He should be given a list of people he can allow without questioning…like the newspaperman, milkman, flower lady ….”

One of the Elderly Aunties found the hint she’d been waiting for and butted in “I must tell you one thing. Why does the flower lady not give fresh flowers to everybody. Some people get fresh flowers and some people get old flowers. Why? Why?”

(A little background on the flower lady: Since most of the members in Kumbha were religious, they had engaged a flower lady to deliver jasmine flowers early in the morning to every house. She had limited stock of fresh jasmine garlands, and when she ran out of them, she would hang one from the previous evening’s leftover, on the door. She followed a regular route beginning from the top most flat and making her way down. So invariably the ones on the top got the fresh ones and the others got the stale ones)……phew!!

Unlike the previous one, this problem seemed mutual enough for a discussion.

“We must install CCTV” suggested The Oriya confidently, expecting the audience to lap it up.

“Oh yeah!! They’ve got one in my college now.” said Riverdale excited with the idea of Kumbha making it’s foray into cutting-edge arenas.

The Four Ladies blinked. The Elderly Man continued to hold on to his expression, hoping that the discussion would retrace itself to the question that started it off. The Princi-Face chose to reserve her opening dialogue only for a matter that concerned her or her daughter. The Other Elderly Aunty made a hurried exit the minute she heard her favourite serial’s title tune blare out from the neighbouring flat.

The silence pressurised The Smiley to come up with a response.

After some pondering The Smiley replied ‘It’s very costly’.

For some reason, he chose to reject it on the grounds of economy than irrelevance. Also, The Smiley knew his audience better, since he was the previous Secretary. He had faced a lot of flak for spending a small portion of the fund money on refilling the sand pit with fresh sand, without consent.

Riverdale fingered a random page on her comic and poured into it, now that the topic had steered away from exciting gadgetary discussions.

After a little debate, they chose a non-glamorous way out. The flower lady will change her path everyday, so that everybody takes turns in getting their share of stale flowers, till such time The Secretary finds another flower lady who has a greater stock of fresh flowers.

The Elderly Aunty went back to her ‘chips’ feeling content on her perfect understanding of democracy.

Since one problem had been sorted out, The Four Ladies felt that they now had earned the right to indulge in some stray talk. One of them had spotted the flower lady’s husband cleaning cars in the neighbouring street shamelessly, while he had clearly refused all offers made by her, stating that he was sick. The Other Three Ladies lent their support and threatened to seek revenge by terminating her flower contract. The Oriya was touched by this camaraderie and pledged that he would spare the future driver of his future car for this purpose. The Four Ladies looked at him with compassion and mentally decided to reciprocate this gratitude, by excluding him from their idle gossip.

The Princi-Face looked at her watch twice, sending out a strong signal to move on the next problem on the list.

To be contd…….

Thanks to Vyshnavi and Ramesh for helping me modify the title to a more suitable form.

this is delicious… can’t wait for the next one.

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Here is an excellent post by an active reader of The Wall Street Journall and The New York Times. Back in the days of mutual fund up-front loads, commission trails and such, the financial media colluded in the fleecing of individual investors by creating cults of personality around fund managers. The first article reviewed seems like it was written by someone who just refuses to adjust to the new reality. The others mentioned reinforce the idea that the big papers are often filled with articles written by idiots.

No need to listen to a round-table of talking heads discuss the decline of the mainstream media and plummeting circulation: just read this post.

When Newspapers Get Lazy

The wsj.com home page today features, prominently, an article on fund manager Ken Heebner, who’s long bank stocks, and I can’t for the life of me work out what it’s doing there. Heebner was a media star back when he was outperforming massively, but his fund has lost more than half its value so far this year, and in any case it’s impossible to mirror what he’s doing because, as the article itself notes, Heebner is known for his “rapid portfolio turnover”. In other words, you might be able to go long with him right now, but you’ll never know when he’s exited that position and moved on to something else.

I fear that this article will steer some retail investors into buying bank stocks — it is in the Personal Finance section, after all. And bank stocks, as we all should know by now, are very dangerous things. The WSJ should be providing less adulation of fund managers in general, and of Ken Heebner in particular: it does no one any good.

One good thing about this Bear market is that it has the power to clean up a lot of fees and expenses. Investors, and fair-minded advisers, could never seem to extend the clean-up beyond individual initiatives, while the government proved useless in this regard, tamed as it was by the lobbyists from the mutual fund industry.

On the other hand, if the environment continues to deteriorate, it could spur what I have called the “distressed telephone company effect,” in which fees actually increase as the pool of assets drains down to survivalist levels.

Price cuts coming to 401(k) fees

In an effort to maintain a tight grip on retirement assets, some major 401(k) providers — including The Charles Schwab Corp. — are considering lowering the investment management fees they charge to employers.

Executives at San Francisco-based Schwab, which is one of the nation’s largest providers of 401(k) services with more than $200 billion in retirement assets, are working with plan sponsors to come up with more “creative” deals.

While the company is being tight-lipped on whether those deals will result in lower fees, “there has been a trend to lower fees, including lower investment fees,” company spokesman Mike Cianfrocca wrote in an e-mail.

Malvern, Pa.-based The Vanguard Group Inc. is also in the midst of negotiating fees with plan sponsors, according to company spokeswoman Linda Wolohan.

Fidelity Investments of Boston, another big provider of 401(k) services to employers, declined to comment.

“Companies have limited budgets,” said John “Jamie” Kalamarides, a senior vice president at Newark, N.J.-based Prudential Financial Inc., which also provides 401(k) services. “They want to know that they’re getting a return for a secure retirement.”

These tax tips are listed in no particular order of importance but each will have a profound effect on how much you pay in income taxes for 2008.

If your employer provides health care using a health savings account and you have not made your full contribution, you may still do so. If you recently were allowed access to a HSA plan, you can still make the full year’s contribution. If you have a Flexible Savings Account or FSA, you may be able to set aside more for next year if you were unable to set aside enough for this year. HSA contributions are fully tax deductible.

It has been a rough year for investments. If your retirement plan is tax-deferred, you need not worry about the losses you faced this year. Smart investors took advantage and still are, of one of the cheapest markets in a generation. Increasing your contribution this year will help in the long-term.

If you have stock that lost a great deal, those loses, provided you sell it, can be spread out over the course of three years or used against profits you may have taken on previous sales. You can buy back the depreciated shares after 31 days.

This might be a good time to convert your traditional IRA to a Roth IRA. Just keep in mind that it will likely raise your adjusted gross income or AGI. So before doing so, consult with your tax preparer. If you are self-employed, set up a retirement plan for yourself.

Certain plan contribution limits have been adjusted.

You can always ask your employer to defer your bonus until the following year. Home improvements can make a difference and there are tax credits for hybrid vehicle purchases as well as the installation of energy efficient or energy generating equipment to your home.

Don’t forget the home business. It might seem like a hobby but the IRS might see it as something else entirely. Don’t miss out on the deductions that you may be eligible to receive.

For your business in your home to meet those requirements, it must be exclusive, regular, and for your business with the business part of your home as the principal place of business, place where you meet clients or customers or a separate structure you use in connection with business.

The deduction is calculated on a comparison of the size of your home office to your whole house - most common way to calculate is to divide the area length used for business by the total area of your home.

Do not fall prey to the quick filing return. If you get a return in excess of $300, consider adjusting your W-4 form at work to allow for fewer taxes to be taken from your check. That money is given to the government each pay period and held without any payment of interest to you, the taxpayer. Filing for a quick return only takes more of your money away. Make the adjustment this year.

You may qualify for a free preparer in your area. Qualified volunteers offer free tax filing help to low-income taxpayers.

Check out these free tax help programs:

Prepay your property taxes or pay the full amount (in many cases this will net you a savings as well). Make charitable donations. Prepay January’s mortgage in December.

And lastly, if you plan on buying into a mutual fund, wait until 2009. Year-end distributions in these funds will find you paying taxes for an investment year you were not involved in. If you are holding funds in a tax-deferred account, this problem does not apply.

The nonfinancial sector wants to hold risk-free short-term assets and issue risky long-term liabilities - Arnold Kling

The nonfinancial sector wants to hold risk-free short-term assets and issue risky long-term liabilities. To accommodate this, the financial sector does the opposite. If the financial sector suddenly contracts, the nonfinancial sector gets stuck with an asset mix that is riskier and more long-term than it wants and a liability mix that is less risky and shorter term than it wants. The reaction to this unwanted mix can cause a recession. That is how the financial sector affects the real economy.

Think of an economy where investment projects consist of fruit trees. It takes time for them to mature, and they are subject to risk, such as the risk of disease.

Other things equal, consumers would rather have riskless, short-term assets than shares in fruit trees. As a consumer, you might need money in a hurry. Or, you might not be able to deal with the loss of wealth that would come from disease ravaging fruit trees in your investment portfolio. Entrepreneurs, meanwhile, need long-term capital to back their fruit tree investments.

Ultimately, the market has to resolve the conflict between what Keynes saw as the propensity to hoard of consumers and what he called the animal spirits of the entrepreneurs. In the absence of financial intermediation, the growers of fruit trees have to persuade consumers to buy shares of stock in their enterprises. If consumers require a high expected return on these shares, then only a few fruit trees will be able to satisfy them. If they were willing to accept a lower expected return, then many more fruit trees would be profitable to plant.

Let us say that, given that consumers are wary of taking risk, the supply and demand for fruit tree investments are in balance when 100 fruit trees are planted. If fewer were planted, the expected returns would be so high that consumer would be willing to buy more shares in fruit trees. If more were planted, the expected returns would be so low that consumers would not be willing to hold shares in fruit trees.

Next, along comes a financial intermediary, which we will call a bank. Somehow (we’ll explain the magic shortly), the bank holds fruit trees as assets and issues short-term, risk-free liabilities (demand deposits, also known as checking accounts). Consumers are much happier with demand deposits than fruit tree shares, so they put up a lot more wealth than they would if they had to invest in fruit trees directly. The bank invests this additional wealth in fruit trees, which causes the required return on fruit trees to go down. This results in more fruit trees being planted.

With a bank, let us say that the entrepreneurs are able to plant 500 fruit trees. Before the bank came along, there were 100 fruit trees, with the shares in the fruit trees making up the liabilities of the entrepreneurs and the assets of the consumers. With the bank, there are 500 fruit trees, with the shares in the fruit trees making up the liabilities of the entrepreneurs and the assets of the bank. Consumers’ assets are demand deposits, which are the liabilities of the bank.

If consumers “see through” the bank, they will realize that their ultimate assets consist of shares in 500 fruit trees. They were not willing to hold that many shares before there was a bank, but now indirectly that is what they do hold.

How is the bank able to pull off this sleight-of-hand? On both sides of its balance sheet, the bank is using some combination of diversification, customer selection, and behavior modification.

Diversification means that the bank is counting on risks to be imperfectly correlated. For example, as a consumer, you have a risk that you will need your money to deal with a short-term crisis in your family, such as a medical emergency. The bank knows that, on average, only a fraction of its customers will be confronting emergencies. Perhaps on a typical day, 1 percent of customers need to withdraw their funds. On a really, really bad day, 10 percent of customers need to withdraw. So the bank decides to hold 10 percent of its deposits in a cash reserve, leaving the other 90 percent to invest in shares in fruit trees.

It is as if the consumers have gotten together and formed a mutual insurance company, under which they help each other out. When one consumer needs emergency funds, the others make the money available. Sooner or later, anyone is bound to have an emergency, but the emergencies do not all happen at once.

The bank could select its customers carefully. It might not want to have depositors who live hand-to-mouth and have a lot of money emergencies.

Diversification also works on the investment side. Suppose that fruit tree risk consists of “market risk” (the chance that every tree will be struck by disease) and “idiosyncratic risk” (risk that is specific to each fruit tree). For example, market risk could be 1 percent, meaning that there is a 1 percent chance that a disease will come along that damages every tree. Idiosyncratic risk might mean that each tree has a 20 percent chance of being struck by a disease that will not affect any other trees.

If you could only invest in one tree, then the risk of a damaged tree would be 1 percent plus 20 percent equals 21 percent, adding together market risk plus idiosyncratic risk. On the other hand, if you invest in two trees, then the chances of both trees falling to idiosyncratic risk is (0.2)(0.2) = 4 percent, so your risk of being totally wiped out is 1 percent + 4 percent = 5 percent. As the bank invests in more and more trees, the idiosyncratic risk gets smaller and smaller. Thus, the bank’s assets, while not completely risk-free, get to be quite safe. Moreover, the bank can protect depositors against the nondiversifiable market risk by holding capital.

Another strategy for the bank is underwriting, which is customer selection on the asset side. Individuals find it very costly to examine the prospects for each fruit tree, so they have to take a very conservative view of investing in fruit trees. The bank has an experienced, professional staff to examine trees. (Or, if you will, think of a bank that makes mortgage loans, using a professional staff to evaluate the borrower’s ability to repay and to appraise the home.; or think of business loans, with the staff evaluating the financial prospects of the business.) The skills and experience of its underwriting staff enable the bank to obtain shares in trees that have higher returns and lower risk than the trees that the average uninformed consumer could find to invest in.

Finally, the bank can use behavior modification. If it foresees a lot of demand for liquidity by its consumers, it can try to work with entrepreneurs to improve the short-term cash flows from the trees. On the consumer side, the bank can increase the penalties for sudden cash withdrawals and increase the rewards for consumers who maintain a high minimum balance in their accounts.

With all of these tools at its disposal–diversification, underwriting, and behavior modification–the bank works pretty well most of the time. When it works well, consumers develop confidence in the bank, and it is able to get by with greater leverage, meaning lower cash reserves and less capital.

Unfortunately, stuff happens. The bank may suffer a solvency shock, because of a really bad disease outbreak. Or, the bank may suffer a liquidity shock, because of an unusually high rate of withdrawals. It is easy imagine a slight solvency shock leading to a liquidity shock, because depositors may believe that the last one to withdraw will find that the bank is out of money.

If stuff happens, then the financial sector (the bank) will contract suddenly and sharply. This means that we no longer want 500 fruit trees, owned by a bank. Instead, the market tries to get down to a lot fewer fruit trees. Tobin’s q, which is the price of a fruit tree relative to the cost of planting a fruit tree, goes way down. That tells entrepreneurs to stop planting fruit trees.

Reconfiguring the economy to plant fewer fruit trees and instead to do something else is a long, painful process. While fruit tree planters look for other jobs, they cut back on consumption, creating multiplier effects. The economy goes into recession. Eventually, after enough wage reductions and enough workers have changed occupations, the economy returns to full employment. But that can take a long time.

What can government policy do about this? That is a good topic….

Compliment Of The Day

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Should you be interested please send me your,

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I periodically visit the DTCC [Depository Trust and Clearing Corporation] to see if they have any news. This appears ‘boring’ only if we don’t care to understand the underpinnings of our systems. Here is one news story that sent me out to try to figure out what the hell they are talking about:

www.dtcc.com:

So, we get more ’swaptions’?  I don’t know, this sounds very suspicious.  As usual, these stupid things that the DTCC wishes to expand are the exact same things that are destroying our financial systems!  After all, the people using these things are nearly all gnomes!  Yes, this is 100% gnome business.

Swaption - Wikipedia, the free encyclopedia

The participants in the swaption market are predominantly large corporations, banks, financial institutions and hedge funds. End users such as corporations and banks typically use swaptions to manage interest rate risk arising from their core business or from their financing arrangements. For example, a corporation wanting protection from rising interest rates might buy a payer swaption. A bank which holds a mortgage portfolio might buy a receiver swaption to protect against lower interest rates which might lead to early prepayment of the mortgages. A hedge fund believing interest rates will not rise by more than a certain amount might sell a payer swaption aiming to make money by collecting the premium. Major investment and commercial banks such as JP Morgan Chase, Bank of America Securities and Citigroup make markets in swaptions in the major currencies, and these banks trade amongst themselves in the swaption interbank market. The market making banks typically manage large portfolios of swaptions which they have written with various counterparties — a significant investment in technology and human capital is required to properly monitor the resulting exposure. Swaption markets exist in most of the major currencies in the world, the largest markets being in U.S. Dollars, Euro, Sterling and Japanese Yen.

The biggest, baddest of the gnome universe use these ’swaption’ deals to make deals with each other.  This way, they all get profits which grease the wheels for more derivative deals.  The floating currency game has created opportunities to make money appear magically in many mischievous ways.  It is a totally wretched system for international trade. 

But if one is clever, one can make oodles of money playing with the hazards, faults and quirks of this system.  It is extremely unstable in aggregate.  Like a wagon being driven along a cliff edge, all the horse has to do is take the bit or throw a shoe or the wheels hit a rock and everyone goes tumbling off the cliff.

Ever since the floating currency was created, the gnomes assured the public that they were sober and careful drivers and would never, ever whip the horses to go faster.  Then they whipped the horses and drove the carriage off the cliff!  I have this thing about hazards: if we protect people against all possible hazards, they will try very hard to find some reckless, stupid and dangerous thing to do just so they can do it.

It is human nature!  And trying to make money in funny ways is a lot more fun than working hard and slowly accumulating it over time.  Instead of transforming one’s labors in the physical world into something else like pulling up tree stumps to make a field that can be plowed, for example, people want to get rich placing bets.  

Swaption - Wikipedia, the free encyclopedia

There are three styles of Swaptions. Each style reflects a different timeframe in which the option can be exercised.

www.dtcc.com:

Well…in the Wikipedia article, J.P. Morgan is mentioned as one of the swaptioners.  This last Friday, they gave up on their Mortgage-Backed Securities.  Well, they held a lot of those!  And we wonder where it all went….

“What are Banks doing with the Bailout Money?” by Cliff Küle. FSO Editorial xx/xx/2008

A good graph from Mr. Küle.  I guess that the DTCC notice is all about this ‘deleveraging’ that is going on.  Namely, I suspect that all those darling little mortgage securities are not secure at all and so they were unceremoniously dumped into the stew pots of the Federal Reserve.  These mortgage securities are no longer being sold because they were exchanged for Treasuries.  Thus, J.Pirate Morgan is ‘recapitalized’ and is now expected to lend money to us.  Money which is OUR money.  For Treasuries are IOUs on future tax revenues!

As for the $30 trillion or even $100 trillion in losses: no one knows!  Küle talks about the Bloomberg lawsuit, we are all interested in this matter.  For the Treasury as well as the Federal Reserve are playing this kiss-and-don’t-tell game with a bunch of crazed gnomes!  They want desperately for us to look aside.

All the people at the top piously talk about being open and not hiding things from us…even as they hide a tremendous amount from us.  The owner of Bloomberg News is the mayor of NYC.  And he can’t get the information!  Who has it?

Ah!  The list of the guys in the Wikipedia article about ’swaptions.’  While rooting about the internet, I found this web page about options.  The investment house hosting this article has some very funny things to say:

Image Financial - Tutorials - Options Basics 

Options can be as speculative or as conservative as you want. This means you can do everything from protecting a position from a decline to outright betting on the movement of a market or index.   This versatility, however, does not come without its costs. Options are complex securities and can be extremely risky.

HAHAHA.  J.P. Morgan and Goldman Sachs didn’t invest with risk capital.  They did it with leveraged junk from the Bank of Japan!  And when the leverage flipped and the yen went strong, they were strung up, weren’t they?  Their mortgage securities went sour.  So what risks did they take?

SSRN-Risk Sensitivities of Bermuda Swaptions by Vladimir Piterbarg

Barclays Capital

November 1, 2002

Bank of America Working Paper

We present new theoretical results for risk sensitivities of Bermuda swaptions, and derive new representations for them. We apply these results to the problem of risk sensitivities computation and derive algorithms that perform the task much faster and more accurately than the traditional approach.

Computation of risk sensitivities to market and model parameters (deltas, gammas, vegas) is one of the most important applications for any model. In most practical situations, the Greeks are computed numerically by shocking appropriate inputs and revaluing the instrument.

The time needed to execute such a scheme grows linearly with the number of Greeks required. Our approach allows one to compute any number of Greeks for a Bermuda swaption in nearly constant time.

Computational advantages versus the standard approach are significant, with time needed to compute a large number of sensitivities reduced by orders of magnitude.

Our approach explores symmetries in the structure of Bermuda swaptions, and is essentially model-independent. The approach is based on a newly discovered set of recursive relations between different sensitivities.

The recursive relations allow us to represent sensitivities in a number of interesting ways, in particular as integrals over the “survival” density. The survival density is obtained as a solution to a forward Kolmogorov equation. This representation is the basis for practical applications of our approach.

I fear, alas [I couldn't access the entire paper to read it!] that these ‘new discoveries’ were actually DEFECTS or FLAWS in the systems analysis.  These were sensitive things meaning, once the wolves pounced on it and began to use it to rip out more wealth for the Bank of America, for example, it made the horse and carriage I talked about at the top, go off the cliff.  

And what is the ’survival density’?  I don’t know!  I didn’t get the paper to read.  But I fear it had something to do with things that can kill us.  I mean this: the banking system’s total failure to handle excess debt creation has caused a collapse of everything.  The hedges, the derivatives, the options, the over the counter and under the table things are all destroying wealth.  Very rapidly.  

And we see the seeds for all this in papers like the one above.  Even when weaknesses were located, instead of correcting them and preventing them from worsening, the bankers all tried to exploit them in clever ways!  And these ways were all dead ends.

Below is a news story from right after Lehman Brothers and AIG went bankrupt last September.  It is from the OTC Bulletin news web page, last October:

http://www.finra.org

OTC trades which are of dubious legality as is, were halted.  As I suspected, the derivatives market was DEAD.  They then rigged the game with the help of the Federal Reserve and the Treasury so it would look as if everyone could unwind the Derivative Beast’s mighty girth and thus, make things ‘normal’ again.

Only this failed utterly.  No one is really fooled.  This, as usual, reminds me of the Gods and Goddesses.  In ancient Norse tales, there is this queer story about Thor and the Ice Giants.  They made bets with him and one was to drink from a magic drinking horn. 

He couldn’t drink it all!  This was because it was the world’s oceans!  He did drop it by one inch.  Then, they bet he couldn’t pick up their pet kitty cat.  He could only move the cat’s belly upwards by one inch.  It threatened to claw him so he put it back down.

The cat was really the World Serpent, Ouroboros.  The snake that circled the planet.  So it is here: the gnomes made a magic deal with the computers and the math wizards.  If they would find flaws, interesting equations and other things, the gnomes would pay them a fair income while they, themselves, collect many billions of dollars, doing nothing but paying a bunch of computer geek wizards!

Only they all forgot something: no system works this way in reality.  So they ended up thinking Ouroboros, the world serpent, was merely a small kitty cat.  They though the Derivatives Beast was only a small drinking horn.  And now, we are expected to drink an ocean of red ink for them and pick up a monster that is bigger than the entire world’s GDP.

 FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net

CLICK HERE TO DONATE TO THIS WEBSITE

The Investor Advocate

The rapidly cascading mutual fund scandals have brought unwelcome attention to 11 major firms that manage about $1 trillion. For an industry that only six months ago was bragging that “We’ve never had a major scandal,” it’s been an astonishingly rapid comeuppance. Yet who could have imagined that the fund managers who aided and abetted the pervasive market-timing scandal would be brought to the bar of justice by “Blue Sky” laws? For most members of the financial establishment, these laws had been consigned to the dustbin of market history.

Long before the adoption of the federal securities legislation of the 1930s and ’40s, Blue Sky laws were adopted by states to protect the public against bogus sales of stocks of companies whose investment merits had no more substance than “the blue sky above.” One passed in 1921 — New York’s Martin Act — defines the “willful and knowing” commission of an illegal act as fraud, and the 1996 National Securities Markets Improvement Act specifically reaffirms the right of a state to bring such enforcement actions.

With that mandate, all that was required to give the fund market timing scandals the attention they deserved was a principled and aggressive state attorney general who cared deeply about the protection of the nation’s 95 million fund investors, and was willing to take the heat by appearing to pre-empt federal regulators. New York’s Eliot Spitzer turned out to be just such a person, and rightly deserves to receive (if such a medal were actually to exist), the first “Mutual Fund Shareholders’ Medal of Honor.”

To all appearances, the fund managers who ignored or condoned the market timing activity that resulted in the skimming of the assets of their trusting shareholders deserve the harsh financial penalties that the ancient Martin Act seems to contemplate. Indeed, in his Senate testimony, Mr. Spitzer suggested that the fund companies implicated in these nefarious schemes be required to disgorge all of the management fees that they’d been paid during the entire period in which the illicit timing activities took place, often dating back to the mid-’90s, easily hundreds of millions of dollars.

Important as they are in showing how a large portion of a giant financial sector has betrayed the trust of its investors, the timing scandals carry more important long-term implications. For they’ve illuminated the pervasive conflict between the interests of fund managers and fund shareowners that permeate the mutual fund industry — conflicts that, overwhelmingly, have long been resolved in favor of managers. These conflicts arise from the industry’s incestuous structure. Each mutual fund, in effect, concedes control to the supplier of the services it requires to exist — investment management, share distribution, and the administration of its affairs. This supplier dominates and controls its board of directors, names its chairman as the fund’s chairman, and dictates the contractual provisions that define the relationship, including the fees the fund pays for its services.

This bizarre structure has resulted in a total level of fund costs that destroys any chance that the industry can provide to its fund shareholders their fair share of financial market returns. In 2002, the total costs incurred by investors in stock, bond, and money market funds came to more than $130 billion. Since the record is clear that, over time, fund managers earn the markets’ gross returns before costs, that $130 billion approximates the amount by which fund net returns fall short of market returns.

Over long periods, the correlation between low fund costs and high fund returns (and vice versa) for equity funds is powerful. Even over short periods, it is powerful for bond funds. And it holds each day (how could it be otherwise?) for money market funds. In the mutual fund industry, “you get what you don’t pay for.” Yet even as the fund industry has grown, its appetite for higher management fees remains unsated. In their quest to gather assets, managers organize funds focusing on narrow objectives and market sectors, often capitalizing on the fads of the day at exactly the wrong time. Result: huge revenues to fund managers; staggering losses to fund investors.

While Blue Sky laws deserve great credit for their role in the scandal, it will take federal regulations to establish the safeguards necessary to bring the fund industry to heel. But it will take federal legislation to resolve the industry’s conflicts of interests. We need to put meat on the bones of the 1940 Investment Company Act, which calls for mutual funds to be “organized, operated, and managed” in the interest of shareholders, rather than in the interest of “officers, directors, investment advisers, and underwriters (distributors).” That principle may have prevailed in 1940, when this was a tiny industry, served by trustees and managers who focused on the profession of investing. But today, the fund industry is a colossus served largely by giant financial conglomerates focused on the business of marketing, and that simple early principle of stewardship has been subverted.

We need to amend the 1940 Act and establish a clear structure that puts fund shareholders in the driver’s seat by giving funds an existence separate from their managers, free to negotiate fees and to replace faltering or unethical managers, with an independent chairman, board, and staff. Another option is to facilitate the development of truly mutual mutual funds, operated at cost by their own organization and officers, managing themselves, solely in the interest of their own shareholders.

In its wisdom, the 1940 Act actually contemplated just such a mutual structure. While the two fund organizations that used this structure then have long since abandoned it, a new firm — mine, Vanguard — adopted it in 1974 and has stuck with it ever since. At the recent mutual fund hearings, Sen. Peter Fitzgerald picked up the cudgels for reform, suggesting that Congress consider “facilitating the creation of more funds that are truly mutual . . . where the funds actually run the firm.” The work in the trenches of state law, then, has called attention to broad principles that will require federal law for implementation. Restructuring the fund industry in favor of its shareowners is an idea whose time has come.

Note: The opinions expressed in this article do not necessarily represent the views of Vanguard’s present management.

©2008 Bogle Financial Center. All Rights Reserved.

If you have 10 or more years until retirement, do not touch your 401(k) or IRA.

I have a friend who is 52 and she panicked last week.  Her father, who is in his early 80’s, had been pressuring her to sell all of her mutual funds and she did it.  She had been invested in moderately safe investments and like the entire market were significantly down.

The problem with her decision was that she locked in her losses.  With only about 15 years until she will need to start withdrawing the money, it will be very difficult for her to make back the money she lost and then on top of that, obtain a decent return on her money.

I had been encouraging my friends and family to continue contributing to their 401(k) and individual retirement accounts.  The market, while in total turmoil, is extremely cheap.  Investments at these low prices will pay off in the long run.

I feel very bad for my friend, in addition to locking in her losses, she has discontinued to contribute to her 401(k).  I have tried with no luck to get her to change her mind.

For those of you with 5 to 10 years until retirement, my suggestion is to leave your money where it is… and as much as you can, continue to contribute.  I firmly believe your combination of new money, invested at these low prices, along with a rebounding market will enable you to grow your retirement account.  This is all assuming you have a well diversified portfolio… and not all invested in bank or auto stocks.

If you have 5 or less years until retirement, or until you have to start withdrawing money, I would strongly recommend you seek out professional advice before you do anything.  I would recommend that you speak with someone who can analyze your entire net worth, the equity in your home, personal property and anything else you own of value.

These are very trying times we live in.  If you feel like your panicking, STOP, seek out professional advice.  Don’t allow your emotions to direct your very important financial decisions.

If you need help finding a financial adviser go to www.adviserfinancial.com or you can go to www.advisorinvestment.net.

www.dtcc.com:

So, we get more ’swaptions’?  I don’t know, this sounds very suspicious.  As usual, these stupid things that the DTCC wishes to expand are the exact same things that are destroying our financial systems!  After all, the people using these things are nearly all gnomes!  Yes, this is 100% gnome business.

Swaption - Wikipedia, the free encyclopedia

The participants in the swaption market are predominantly large corporations, banks, financial institutions and hedge funds. End users such as corporations and banks typically use swaptions to manage interest rate risk arising from their core business or from their financing arrangements. For example, a corporation wanting protection from rising interest rates might buy a payer swaption. A bank which holds a mortgage portfolio might buy a receiver swaption to protect against lower interest rates which might lead to early prepayment of the mortgages. A hedge fund believing interest rates will not rise by more than a certain amount might sell a payer swaption aiming to make money by collecting the premium. Major investment and commercial banks such as JP Morgan Chase, Bank of America Securities and Citigroup make markets in swaptions in the major currencies, and these banks trade amongst themselves in the swaption interbank market. The market making banks typically manage large portfolios of swaptions which they have written with various counterparties — a significant investment in technology and human capital is required to properly monitor the resulting exposure. Swaption markets exist in most of the major currencies in the world, the largest markets being in U.S. Dollars, Euro, Sterling and Japanese Yen.

The biggest, baddest of the gnome universe use these ’swaption’ deals to make deals with each other.  This way, they all get profits which grease the wheels for more derivative deals.  The floating currency game has created opportunities to make money appear magically in many mischievous ways.  It is a totally wretched system for international trade. 

But if one is clever, one can make oodles of money playing with the hazards, faults and quirks of this system.  It is extremely unstable in aggregate.  Like a wagon being driven along a cliff edge, all the horse has to do is take the bit or throw a shoe or the wheels hit a rock and everyone goes tumbling off the cliff.

Ever since the floating currency was created, the gnomes assured the public that they were sober and careful drivers and would never, ever whip the horses to go faster.  Then they whipped the horses and drove the carriage off the cliff!  I have this thing about hazards: if we protect people against all possible hazards, they will try very hard to find some reckless, stupid and dangerous thing to do just so they can do it.

It is human nature!  And trying to make money in funny ways is a lot more fun than working hard and slowly accumulating it over time.  Instead of transforming one’s labors in the physical world into something else like pulling up tree stumps to make a field that can be plowed, for example, people want to get rich placing bets.  

Swaption - Wikipedia, the free encyclopedia

There are three styles of Swaptions. Each style reflects a different timeframe in which the option can be exercised.

www.dtcc.com:

Well…in the Wikipedia article, J.P. Morgan is mentioned as one of the swaptioners.  This last Friday, they gave up on their Mortgage-Backed Securities.  Well, they held a lot of those!  And we wonder where it all went….

“What are Banks doing with the Bailout Money?” by Cliff Küle. FSO Editorial xx/xx/2008

A good graph from Mr. Küle.  I guess that the DTCC notice is all about this ‘deleveraging’ that is going on.  Namely, I suspect that all those darling little mortgage securities are not secure at all and so they were unceremoniously dumped into the stew pots of the Federal Reserve.  These mortgage securities are no longer being sold because they were exchanged for Treasuries.  Thus, J.Pirate Morgan is ‘recapitalized’ and is now expected to lend money to us.  Money which is OUR money.  For Treasuries are IOUs on future tax revenues!

As for the $30 trillion or even $100 trillion in losses: no one knows!  Küle talks about the Bloomberg lawsuit, we are all interested in this matter.  For the Treasury as well as the Federal Reserve are playing this kiss-and-don’t-tell game with a bunch of crazed gnomes!  They want desperately for us to look aside.

All the people at the top piously talk about being open and not hiding things from us…even as they hide a tremendous amount from us.  The owner of Bloomberg News is the mayor of NYC.  And he can’t get the information!  Who has it?

Ah!  The list of the guys in the Wikipedia article about ’swaptions.’  While rooting about the internet, I found this web page about options.  The investment house hosting this article has some very funny things to say:

Image Financial - Tutorials - Options Basics 

HAHAHA.  J.P. Morgan and Goldman Sachs didn’t invest with risk capital.  They did it with leveraged junk from the Bank of Japan!  And when the leverage flipped and the yen went strong, they were strung up, weren’t they?  Their mortgage securities went sour.  So what risks did they take?

SSRN-Risk Sensitivities of Bermuda Swaptions by Vladimir Piterbarg

Barclays Capital

November 1, 2002

Bank of America Working Paper

We present new theoretical results for risk sensitivities of Bermuda swaptions, and derive new representations for them. We apply these results to the problem of risk sensitivities computation and derive algorithms that perform the task much faster and more accurately than the traditional approach.

Computation of risk sensitivities to market and model parameters (deltas, gammas, vegas) is one of the most important applications for any model. In most practical situations, the Greeks are computed numerically by shocking appropriate inputs and revaluing the instrument.

The time needed to execute such a scheme grows linearly with the number of Greeks required. Our approach allows one to compute any number of Greeks for a Bermuda swaption in nearly constant time.

Computational advantages versus the standard approach are significant, with time needed to compute a large number of sensitivities reduced by orders of magnitude.

Our approach explores symmetries in the structure of Bermuda swaptions, and is essentially model-independent. The approach is based on a newly discovered set of recursive relations between different sensitivities.

The recursive relations allow us to represent sensitivities in a number of interesting ways, in particular as integrals over the “survival” density. The survival density is obtained as a solution to a forward Kolmogorov equation. This representation is the basis for practical applications of our approach.

I fear, alas [I couldn't access the entire paper to read it!] that these ‘new discoveries’ were actually DEFECTS or FLAWS in the systems analysis.  These were sensitive things meaning, once the wolves pounced on it and began to use it to rip out more wealth for the Bank of America, for example, it made the horse and carriage I talked about at the top, go off the cliff.  

And what is the ’survival density’?  I don’t know!  I didn’t get the paper to read.  But I fear it had something to do with things that can kill us.  I mean this: the banking system’s total failure to handle excess debt creation has caused a collapse of everything.  The hedges, the derivatives, the options, the over the counter and under the table things are all destroying wealth.  Very rapidly.  

And we see the seeds for all this in papers like the one above.  Even when weaknesses were located, instead of correcting them and preventing them from worsening, the bankers all tried to exploit them in clever ways!  And these ways were all dead ends.

Below is a news story from right after Lehman Brothers and AIG went bankrupt last September.  It is from the OTC Bulletin news web page, last October:

http://www.finra.org

OTC trades which are of dubious legality as is, were halted.  As I suspected, the derivatives market was DEAD.  They then rigged the game with the help of the Federal Reserve and the Treasury so it would look as if everyone could unwind the Derivative Beast’s mighty girth and thus, make things ‘normal’ again.

Only this failed utterly.  No one is really fooled.  This, as usual, reminds me of the Gods and Goddesses.  In ancient Norse tales, there is this queer story about Thor and the Ice Giants.  They made bets with him and one was to drink from a magic drinking horn. 

He couldn’t drink it all!  This was because it was the world’s oceans!  He did drop it by one inch.  Then, they bet he couldn’t pick up their pet kitty cat.  He could only move the cat’s belly upwards by one inch.  It threatened to claw him so he put it back down.

The cat was really the World Serpent, Ouroboros.  The snake that circled the planet.  So it is here: the gnomes made a magic deal with the computers and the math wizards.  If they would find flaws, interesting equations and other things, the gnomes would pay them a fair income while they, themselves, collect many billions of dollars, doing nothing but paying a bunch of computer geek wizards!

Only they all forgot something: no system works this way in reality.  So they ended up thinking Ouroboros, the world serpent, was merely a small kitty cat.  They though the Derivatives Beast was only a small drinking horn.  And now, we are expected to drink an ocean of red ink for them and pick up a monster that is bigger than the entire world’s GDP.

 FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net

CLICK HERE TO DONATE TO THIS WEBSITE

Source : NEP (New Economics Papers) | RePEc

Stocks: More pain, more gains?

AMERICA’S MONEY CRISIS

NEW YORK (CNNMoney.com) — The worst monthly jobs report in 34 years failed to send stocks lower late last week, begging the question of whether the market has finally found that elusive bottom.

Not likely, analysts say. But the stock gains on Friday and over eight of the last 10 sessions, despite a barrage of increasingly awful economic news, are certainly notable.

The week ahead tests the trend, as investors digest reports on housing, inventories, jobless claims, the trade gap, producer prices, retail sales and consumer sentiment. All are expected to show weakness. (For details click here).

The week ahead also could bring a breakthrough for the automaker industry, with Congress expected to come up with some sort of proposition to help the Big Three. GM, Ford Motor and Chrysler went to Capitol Hill last week to plead for a $34 billion bailout for the troubled industry. (Full story)

Polls show a majority of Americans don’t want to see a government bailout of the automakers - not when so many other industries are ailing too. But economists say the impact to the economy and to the labor market should any one of the companies fail would be devastating.

And the last thing investors need is more abysmal news on the economy. On Friday, the government said the economy shed 533,000 jobs in November, and its September and October job-loss numbers were revised upward. In total, the economy has lost 1.9 million jobs in 2008, worse than what it lost in the 2001 recession. During the week, AT&T, JP Morgan and other companies announced more than 43,000 job cuts.

Early last week, the National Bureau of Economic Research confirmed what many have long assumed: that the economy is in a recession. NBER put the start date at around Dec. 2007.

“Given the economic environment we are in and the startling job loss in November, this would probably be as bad a time as I can think of to let the Big Three go without funding,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

Even with some sort of loan package, the companies will still restructure and shrink, but it’s the difference between an orderly slowdown and a fast retreat, he said. And the economy is in no shape for a fast retreat.

Alternately, “if the auto funding matters get resolved, that is going to be a big boost for both consumer spending and the market psychology,” said Tim Speiss, head of the Wealth Advisory Practice at Eisner LLP.

Stocks don’t need any more bad news. Between closing at an all-time high on Oct. 9, 2007 and the recent low on Nov. 20, the S&P 500 shed 52%.

“The big question is how much of the negative news has been priced in,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. “Was that 52% enough?”

Stocks have rallied 16% since that November low. While that’s encouraging, Detrick said investors are bound to sell into year-end, with both individuals and professionals looking to cash out.

Tuesday: The Pending Home Sales index for October is likely to add to evidence that the housing market hasn’t bottomed yet. Sales likely fell 2.3% in the month after sliding 4.6% in September, according to Briefing.com forecasts.

Wednesday: October wholesale inventories are expected to have risen 0.2% after falling 0.1% in the previous month.

Thursday: The October trade balance is expected to have narrowed to $54.0 billion from $56.5 billion in September.

Friday: The November Producer Price Index (PPI) is expected to have fallen 1.8% after falling 2.8% in the previous month. The so-called “core” PPI, which strips out volatile food and energy, is expected to have risen 0.2% after rising 0.4% in October.

Retail sales are expected to have fallen 1.4% in November after falling 2.8% in October. Excluding volatile autos, sales are expected to have fallen 1.7% after falling 2.2% in October.

Business inventories are expected to have dropped 0.1% in October after falling 0.2% in September.

And consumer sentiment is expected to improve modestly, with the University of Michigan’s index expected to rise to 58.0 from a previous read of 55.3.

Source

Just another WordPress.com weblog

Peter Suraphol Senavinin

National President

SSVP Thailand

On Saturday 20th September 2008, the FAMVIN group which comprises of Congregation of the Mission (CM), Daughters of Charity of St.Vincent de Paul (DC) , International Association of Charities (AIC), Association of the Miraculous Medal (AMM) and SSVP, The Archdiocese of Bangkok had jointly offered a thanksgiving mass to celebrate St.Vincent de Paul’s Feastday at Our Lady of Mercy Church, Nonthaburi province. After the service, the group had arranged luncheon activities for 90 children at St. Martin Child Development Center. There were altogether 80 members took part in the celebration.

The Conference of Mother of Perpetual Help at Baan Kheknoi, Amphur Khowkor, Petchaboon Province, requested fund support for 12 villagers for THB 30,000. The fund would be used in buying blankets, rice, dried food, and necessary medicine and as well as repairing the living quarters for the orphans, the aged, and those poverty that the community had deserted them. The Conference would contribute THB 3,000 and the rest of THB 27,000 was requested. National Council was to seek fund support from kind benefactors. The matter had been considered during the meeting and members agreed to support.

The Society would like to express our sincere gratitude towards our sponsors who had provided financial support for this 2008 school year, namely, SSVP Australia which had granted us with 700 scholarships and SSVP Singapore for supporting us with125 scholarships.

Diocese of Chantaburi currently has 4 Vincentian Youth Conferences, namely, The Holy Name of Jesus Conference, Cholburi Province, St. Paul Conference, Rayong Province, St. Lawrence Conference, Baan Nagnarm Chachoengsao Province and Our Lady of Rosary Conference, Sattahip, Cholburi province.

SSVP Thailand has the honor of hosting Asia Group 2 Meeting 2008 which will be held in Assumption University, Suvarnabhumi Campus on 27-30 November 2008. The theme of the meeting is Evangelization : A True Vincentians’ Spirit. The meeting is being organized every two years’ time which consists of 9 member countries, i.e., Thailand, Cambodia, Myanmar, Vietnam, Malaysia, Singapore, Brunei, Philippines and Indonesia. National Council members of the aforementioned countries had been invited to join the meeting. The objectives were to exchange ideas and work experiences in helping the poor, sharing goals and setting mutual directions for the future and updating news and the latest policies among delegates and members. Besides, it can also be taken as a good opportunity for members to renew their spiritual life of being true Vincentians. We had sent an honorable invitation to Bishops and priests who have high experiences in Vincentians’ work and evangelism to be our guest speakers. It is expected that the attendants for this meeting will be around120 people from 12 countries. The meeting is sponsored by SSVP Singapore, Australia and Catholic Business Executive Group ( CBEG), Thailand Convention & Exhibition Bureau Public Ltd. (TCEB) and Coca Cola (Thailand) Company, Ltd., who will support us with soft drinks during the meeting. Let us all SSVP members pray for the smooth and success of this meeting and may the Lord bless all donors and merciful-hearted people who have sacrificed their time and financial support anticipating for the occurrence of this fruitful meeting.

<TITLE>ED FRANKLIN’S Lottery Winnings Annuity sales get cash now</TITLE>

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Real Time Rewards brings you a look at prominent 17th century writer Charles Tickens. Born in London, Tickens quickly set to writing really good books that not everyone liked. His early works include A Tale of Two Settees, Our Mutual Fund, and All of Her Twists. He then disappeared for what seemed like weeks. After this clever absence, Tickens composed what would become his finest works, Grey Suspectations, Avid Copper Fields, and A Crisp Mascara. Because of his name, Charles Tickens was often confused with Charles Ives, the late great composer, but the two could not have been more different, unless they had different first names.

Investors pulled a net $12.1 billion from all equity mutual funds in the week ended Dec. 3, TrimTabs Investment Research said on Thursday.

The outflow followed an inflow of $10.4 billion in the previous week, TrimTabs added. Equity funds that invest primarily in U.S. stocks posted an outflow of $8.3 billion, versus an inflow of $6.8 billion in the previous week.

It is simple. As more redeem their failing portfolios, the market has not choice to decline. In 2004-2007, nearly every week people added money toward thier retirement.

Postion: 100% G Fund

and by the way it is illegal for a US citizen to travel to Cuba for vacation and there are some great beaches and resorts on the southern side of that island….I want to go legally…please…  :)

WASHINGTON, Dec 7 (IPS) - If U.S. President-elect Barack Obama wants to begin dismantling Washington’s nearly 50-year-old trade embargo against Cuba, it appears he will have widespread support for doing so.

Not only have some major foreign policy heavyweights recently called for ending the embargo if, for no other reason, than to create desperately needed goodwill elsewhere in the Americas and beyond.

But major U.S. business groups also appear more enthusiastic than ever for pushing the incoming administration and the most Democratic Congress in some 20 years in that direction, although they concede the process may be more gradual than they would like.

“We support the complete removal of all trade and travel restrictions on Cuba,” a dozen such business associations, including the politically potent Business Roundtable, American Farm Bureau Federation, National Retail Federation, and the U.S. Chamber of Commerce wrote, in a letter addressed to Obama Thursday.

“We recognize that change may not come all at once, but it must start somewhere, and it must begin soon,” they added, noting that Washington’s trade embargo and its long-standing efforts to isolate Havana for national security reasons during the Cold War have “far outlasted (their) original purpose”.

The letter, which was drafted by Jake Colvin, vice president for Global Trade Issues of the National Foreign Trade Council (NFTC), is the latest in a series of public statements by prominent foreign policy figures and institutions in favour of easing, if not abandoning, Washington’s efforts to isolate Havana.

Last May, a high-level bipartisan Latin America task force of the influential Council on Foreign Relations issued a 76-page report that, among other things, called for any incoming U.S. administration to repeal the economic and travel sanctions Washington has imposed against Cuba over the past 15 years and engage Havana on a range of issues of mutual concern with a view to ending the embargo and normalising ties.

And just two weeks ago, an inter-American commission sponsored by the Washington-based Brookings Institution, from which the new administration is expected to recruit key policy-makers, and co-chaired by former Mexican President Ernesto Zedillo and former U.S. U.N. Ambassador Thomas Pickering went further yet.

In addition to easing the embargo and directly engaging the government of President Raul Castro, it urged that Cuba immediately be removed from the State Department’s list of state sponsors of terrorism, end restrictions on humanitarian aid there, re-integrate Cuba into regional and global economic and political organisations, and lift all travel restrictions on the island.

The report noted that Washington’s decades-long hostility toward Havana had “disproportionately dominated U.S. policy toward the LAC region for years (and) have hindered Washington’s ability to work constructively with other countries.”

During this year’s presidential campaign, Obama himself had pledged to open talks with the Cuban government without preconditions and to relax the embargo — by repealing regulations promulgated by President George W. Bush — that limited both travel by Cuban Americans to their homeland and their ability to send remittances to their families there.

Those measures were the least popular of a series of measures taken by Bush since 2003 to tighten the embargo after Congress and former President Bill Clinton had loosened it the late 1990s to the extent of permitting sales of food and medicine to the island.

Beyond repealing the Cuban American measures, however, Obama said he would maintain the embargo, insisting that it provided “leverage” to encourage the Castro regime to adopt political reforms, a precondition “to begin normalising relations”. Still, his position was more forthcoming than that of either Sen. John McCain or his Democratic rival — and now his secretary of state-designate — Sen. Hillary Clinton, both of whom were eager to court the hardliners in the Cuban-American community in Florida, a key swing state.

In the event, Obama won Florida in the general election, suggesting that the vaunted political clout wielded by die-hard anti-Castro forces there may at last be on the wane and that the president-elect may have more room for manoeuvre than he might have expected.

“The demographics (in Florida) have changed,” noted Colvin, who just released a 42-page report, “The Case for a New Cuba Policy”, in his capacity as a fellow with the New Ideas Fund. “Republicans are now in the minority among Hispanics in Florida, and non-Cuban Hispanics don’t feel the same way about the embargo.”

Colvin and other experts expect that Obama will follow through on his pledges after his Jan. 20 inauguration to immediately lift restrictions on Cuban American travel and remittances and to begin bilateral talks on a number of issues, including migration and cooperation on drug-trafficking and the environment.

But he and the business groups hope he will go further. “These are excellent first steps,” the letter states, “but we urge you to also commit to a more comprehensive examination of U.S. policy.”

William LeoGrande, a veteran Cuba specialist who is dean of he School of Government at American University here, believes Obama could with little political cost repeal other measures taken by Bush, particularly those that restricted “purposeful” travel — as opposed to tourism, which is banned by law and thus requires Congressional action — by U.S. citizens to Cuba.

Lifting Bush’s restrictions on trade — specifically, that Cuba pay in cash for all U.S. exports of food and medicine before they leave U.S. ports — could also be repealed without much cost.

In its letter, the business associations calls for Obama to “immediately remove travel restrictions and allow Americans to act as ambassadors of freedom and American values to Cuba,” ease credit requirements on trade in food and medicine, and “exempt agricultural machinery, heavy equipment and other exports from the embargo which could provide the goods and technology needed to rebuild from recent storms” that have devastated the island.

In his new report, Colvin argues that Obama actually enjoys very broad discretion to lift many elements of the embargo just by issuing new regulations or modifying old ones.

“The idea that Congress has limited the president through legislation such as (the 1996) Helms-Burton (Act) is largely a myth,” according to the report which lays out a blueprint for what kinds of initiatives Obama could take on his own, particularly through the licensing authority of the Treasury Department which determines much of what can and cannot be done between U.S. businesses and individuals vis-à-vis Cuba.

“Given all the other things that Obama has on his plate, he probably won’t want to wage a big political battle in Congress to end the embargo,” said LeoGrande. “It would be much easier to dismantle the commercial embargo little by little, piece by piece, in sectors beyond food and medicine.”

He noted that Bush himself exempted cell phones and computers from the embargo after Castro legalised their ownership earlier this year. Bush also granted licenses to U.S. pharmaceutical companies to import Cuban bio-medical products to test them. These can be used by Obama as precedents.

For more general action, especially in Congress, “the question is whether these business associations are willing to really flex their political muscle on Capitol Hill and at the White House to get this done,” he added, noting that they have been reluctant to do so until now knowing that Bush would oppose them.

But Colvin, who described the letter as a “shot across the bow” for Obama and Congress, said the companies are “more optimistic” about prospects with Bush’s departure. “Going into next year, we’re going to take the temperature of our companies on this and then start setting up some meetings on the Hill and see where we go.”

The news on the economic front is grim. But there are strategies you can implement now to help make the best out of a bad year.

1) Beware of surprise taxes

Think twice before investing in mutual funds outside of your retirement accounts this month. That’s because you can get hit with a hefty tax bill. This is the time of year mutual fund managers pass along their capital gains tax obligations – and this year promises to be a lulu. That’s because small investors have been selling mutual funds all year long, forcing mutual fund managers to sell holdings to pay them back. Fund managers sell holdings they may have had for a long time, creating a gain – the tax bill is passed along to you even though you just bought the fund. If you’re considering investing in a fund this month, make sure you call the fund or check its Web site to see if it’s planning to make a year-end distribution.

2) Harvest your losses

If you’ve had massive losses outside your retirement account this year, there is a silver lining. You can use your losses to offset capital gains you may have had this year. If your capital losses are bigger than your gains—(or even if you don’t have any gains at all) you typically can deduct as much as $3,000 of net losses from your wages on your tax form. Additional losses get carried over to your tax return in future years and that can mean savings for years to come.

3) Make the switch…if you can

This year is a good year to convert your traditional IRA to a Roth IRA. That’s because the value of your traditional IRA is probably lower now, so you’ll pay less in taxes on the amount you convert. But there’s a catch. You have to make sure that you can pay for the tax hit out of your savings account. You don’t want to pay the tax out of your retirement money. It will erase any gains you’ve made.

For more of Gerri’s Top Tips, watch CNN weekdays at 11:15 am Eastern Time.

id="blog-title">Crikket’s Corner

id="tagline">Chirp! Chirp!

Next time someone says that “everyone is to blame” for the financial crisis, please do me a favor and trot out this chart. Indubitably, at the top of the Wall of Shame should be the custodians of the financial system since 2001, who aided and abetted the construction of this indefensible “house of cards.”

October 15, 2008

Credit default swaps can be understood in one of two ways: as insurance underwritten against the risk of default, or as “naked put options.” In either case, they are sold in order to collect the premium. Wizened traders call this picking up pennies in front of a bulldozer. This strategy, together with “securitization,” was a huge source of profit in recent years for the FIRE economy, more important than gaming the markets through inside information.

Unfortunately, the banks and insurance companies that pledged this protection did not have the capital to back up these claims in case of default. That responsibility now falls on you, Mr. and Mrs. Future Taxpayer.

The American International Group and Lehman Brothers collapses in September 2008 were especially important. Essentially, they threatened to destroy the “hedges” that other institutions had put on their various exposures.

“About six in 10 subprime mortgages were securitized in 2003, which became part of a much larger pool called residential mortgage-backed securities (RMBS). At the beginning RMBS were packaged by mortgage type, but subsequently all mortgage types (Alt-A, conventional, jumbo and FHA/VA mortgages) were mixed and matched. FDIC-insured institutions alone held $1.2 trillion of these in 2006.

These mortgage-backed securities, given AAAs rating until June 2007, are part of a much bigger pool called asset-backed securities. That market totaled $10.7 trillion in 2006 and included commercial mortgage-backed securities, auto loans, credit cards and student loans.

At the next level, the underlying assets are divided primarily into a debt-recovery pecking order into tranches — senior, mezzanine and equity — and then pooled. These are called collateralized debt obligations. A CDO can be backed by everything from corporate bonds to real estate investment trusts. A collateralized loan obligation is a CDO backed by bank loans. The CDO market in 2006 totaled $2 trillion.

At beginning of 2008, the notional value of contracts outstanding stood at $62.2 trillion, while replacement value eclipsed $2 trillion.

Most of the firms that took the biggest role in issuing asset-backed securities (e.g. Countrywide, Lehman Brothers, Bear Stearns, and Washington Mutual) are now defunct.”

“Jazz Therapy” is the name given to a new series of recordings by major artists who are donating their talent and time to a great cause: All the proceeds from sales of the CDs go to support the Dizzy Gillespie Memorial Fund of the Englewood Hospital and Medical Center in New Jersey.

The fund is affiliated with the Jazz Foundation of America, an organization on the front lines of providing help to needy jazz and blues musicians. The foundation enables free medical care, prevents homelessness and eviction by paying rents and mortgages, and organizes gigs to help musicians earn money from their art; since Hurricane Katrina, the foundation reportedly has helped more than 4,000 musicians and created gigs for another 1,000.

So, it’s a great cause.

And if Smile, the just-released first volume in the series,  is any indication , the music is offering its own brand of healing.

The project, a collaboration between veteran guitarist Gene Bertoncini and younger established six-stringer Roni Ben-Hur, is a joyful outing, with the two turning in imaginative renditions of a half-dozen standards and pop tunes, plus two originals by each musician.

Bertoncini, on nylon-string acoustic, and Ben-Hur, on electric, trade melodies, counterlines, comping, and solos, turning in sublime acoustic-electric textures, sans rhythm section. It comes off as a mutual-admiration society that sounds like … more is in order.

“Smile,” written by Charlie Chaplin (and recorded by Nat Cole), has always struck me as a gorgeous song that ought to be included in the repertoire of more jazz artists. Here it’s rendered beautifully, with the two variously bringing out the poignancy of the melody and trading solos.

The two achieve a similarly sense of melancholy on a creative redesign of Roberta Flack hit “Killing Me Softly,” which opens with a tricky prelude — all tightly clustered chords, major/minor tonalities, and long descending lines –before getting into the song proper.

“Besame Mucho” is done in a slow, languid, tropical-sunset  style, replete with bossa nova rhythms, while the Gershwins’ “I Concentrate on You” is similarly gorgeous.

The originals are impressive, too. Bertoncini’s “You Are a Story” is a quite pretty ballad, while his “Set Blue” is a take-off on jazz familiarity “Bluesette,” albeit built on alternate blues changes and capped with a counterpoint section and extended vamping. Ben-Hur contributes the charming tristeza “Anna’s Dance” (title track from his 2001 album) and bluesy bop piece “Sofia’s Butterfly.”

Smile, as promised, makes for great therapy; here’s to new sessions with the same musical physicians.

Side note: I had the opportunity to hear Ben-Hur when our paths crossed in 2007 during the 20th and final edition (what a shame) of the Child of the Sun Jazz Festival at Florida Southern College in Lakeland, Fla. - yes, my hometown. He led a  group that also included trumpeter Jeremy Pelt and bassist Santi Debriano. Debriano, a great New York player best known for his work on Latin jazz projects, wound up using my upright bass - a century-old Edmund Paulus, from Austria, I think - on the gig.

Dear Sir/Madam,

URGENT BUSINESS PROPOSAL.

Yours Faithfully,

Originally this post was going to be centered around the “Cyber Terrorism” hype that is going on around the world these days and somehow the Rockerfellers popped into this post. It’s kind of hard to report on anything these days without the name being involved.

Apparently the BBC is reporting similar stories:

The threat posed by cyber-terrorism has been overhyped and the net is unlikely to become a launch pad for terror attacks.

http://news.bbc.co.uk/2/hi/technology/2850541.stm

It all started when I was watching CNN today and I hear the mention of the growing problem of Cyber Terror and how it’s so out of control that today Washington is meeting to discuss someone who would be appointed as the “Cyber Czar” to combat this growing problem. Together with the Department of Homeland Security, they would rid the world of this horrible problem that is threatening our “National Security”.  I cringed a bit and wondered if Eric Holder, Obama’s choice for Attorney General would be the appointed czar.

Watch Eric Holder in action, a true fan of internet censorship, below are his words:

“The court has really struck down every government effort to try to regulate it. We tried with regard to pornography. It is gonna be a difficult thing, but it seems to me that if we can come up with reasonable restrictions, reasonable regulations in how people interact on the Internet, that is something that the Supreme Court and the courts ought to favorably look at.”  - May 28, 1999 NPR Morning Edition

http://politicalvindication.com/?p=3180 

The Rockefellar Family Part I

While researching the status of Cyber Terrorism in the world, I kept running across articles and text with the Rockefeller family name on it.  Apparently now the Rockefeller family wants to protect us. Great-grandson of oil tycoon John D.Rockerfeller and Nephew of banker David Rockefeller, Senator John Davison “Jay” Rockefeller IV (http://www.congress.org/bio/id/623) has been introducing bills in congress that are in his family’s interest.

Here Jay Rockefeller states:

“Let’s be clear. First, there is no automatic amnesty. All Americans, including corporate citizens, must follow the law and be held accountable for their actions. The bill authorizes case-by-case review in the courts only when the attorney general certifies that a company’s actions were based on assurances of legality, and the court is specifically required to determine whether the attorney general abused his discretion before immunity can be granted. ” - washington post

http://www.washingtonpost.com/wp-dyn/content/article/2007/10/30/AR2007103001821.html

Did you know that October 2008 was National Cyber Security Awareness Month? Apparently on September 30th Jay Rockefeller was making sure that the Senate supported this:

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:sr697ats.txt.pdf

Also, the Protecting Children from Indecent Programming Act (Reported in Senate) - John Mccain jumped in on this one as well. Again, the same bait and switch, the promise of “Protection” and more regulation in exchange for more of our freedoms.

This bill states:

“To require the FCC, in enforcing its regulations concerning the broadcast of indecent programming, to maintain a policy that a single word or image may be considered indecent“!!.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s1780rs.txt.pdf

More Censorship set up to create more big government and big brother in our lives. They have even created the National Cybersecurity Division http://www.dhs.gov/xabout/structure/editorial_0839.shtm and The Multi-State Information Sharing and Analysis Center http://www.msisac.org which shows a cyber alert level - Are you freaking kidding me!!!! No wonder since this department is associated with the Department of Homeland Security. There is also the Cyber Security Industry Alliance http://www.csialliance.org/ who is working together with the other aforementioned agencies, to fight cyber crime. Members include IBM and Semantic, nothing like the marriage of big corporations and government to take care of us.

Jay Rockefeller’s unintentionally revealing comments

http://www.salon.com/opinion/greenwald/2008/01/24/rockefeller/

Last but not least, figured I would just throw this one in there about ol’ Jay and Obama:

Obama fund-raiser at Sen. Jay Rockefeller’s mansion. A Great Gatsby of a pool report. But I digress…

http://blogs.suntimes.com/sweet/2008/07/obama_fundraiser_at_sen_jay_ro.html

Just a little peak of the companies that David Rockefeller has founded, is an officer of, or director of with links/news:

The Trilateral Commission:

http://www.trilateral.org/memb.htm

Federal Reserve

AT&T

Whistle-Blower Outs NSA Spy Room

http://www.wired.com/science/discoveries/news/2006/04/70619

http://www.securityfocus.com/brief/263

More Companies:

- list was published in 1976, ** Source: Federal Reserve Directors: A Study of Corporate and Banking Influence. Staff Report, Committee on Banking,Currency and Housing, House of Representatives, 94th Congress, 2nd Session, August 1976.

Part 2 of the Rockefeller Legacy next blog, featuring the Trilateral Commission, Obama and, Brezenski. It just keeps getting better and better.

There’s a sure fire way for you to take a complete loss on your money, and you can probably guess what I’m going to say next.  You’ve a better chance of becoming a millionaire by gambling in Las Vegas and betting it all on a long shot, than you do of becoming rich in utilizing our tumultuous stock exchange.  As a matter of fact, just about no mutual funds ever end up matching the returns of the S&P 500 Index.

Conventional investing advice goes something like: “To retire loaded you had better be committing ito stocks and mutual funds.” How many financial planners do you think relay this advice? Almost all of them.

Listen, that’s a load of garbage.  I happen to personally know that there are much more adept, more efficient formulas to expand your wealth.  Believe me when I tell you that the money isn’t in mutual funds and there’s no such thing as a guaranteed to win stock, particularly these days.

If your goal is to defend your present-day standard of living, or to be able to retire before you die, it is pressing that you relinquish customary investing wisdom. The established formulas of expanding wealth just aren’t doing it, and with retirement plans going broke, and the jam we confront with social security, it is clear-cut that to build up wealth we want to think outside the box.

If you have a banner day in the stock market, you might be fortunate enough to experience a slight gain, but is it really worth the overall, larger risk?  Are you willing to just blindly hand over your hard earned money and then cross your fingers?

Most Americans are sorely lacking financial training, and where would they have gotten good advice anyway? The traditional investment strategies don’t make people rich.  And when we do have a little bit of money, don’t we just worry about the future, and if we’ll have enough to pay for what’s really important? If you’re a parent this is an even more likely scenario.  We may tend to focus so closely on our immediate financial needs, that we convince ourselves that tomorrow we’ll begin saving.  Right after we pay the mortgage, or the car note, or the orthodontist bill.  Let’s face it, most of us need to rely on being as liquid as possible to get by in today’s economy.

Realistically speaking, the fiscal movements you conduct today, directly affect the riches you’ll experience tomorrow.   Investing intelligently isn’t just a good idea, it’s essential. And so here’s my fiscal advice: dismiss your financial planner.   Give up committing money into a riotous stock market, and stop waiting for tomorrow to begin your savings plan.  Look to fresh investing opportunities and do not trust the cookie-cutter stale investing strategies just because they were sported in the Wall St. Journal, or a financial genius cited them on last night’s news show.

id="desc">not all who wander are lost…

In August, Paul and I both took some work in California. I went to Northern California in quartz valley near the Marble Mountain Wilderness. It was beautiful land and I was working for a wonderful woman and her children. I enjoyed my relationship with them and the time and space I had to myself. I spent a lot of time in the garden and up at the top of the hillside doing Yoga to the rising sun. I found an area where a bear nested and tracked many dear through the landscape. It was a good chance to be by myself and explore what i wanted to create for myself.

In the meantime, Paul went to Balinas California and stayed with a mutual friend to do some work. We had met our friend in Pangaia. He is the person who taught Paul about the Primal Diet. This was a great opportunity for Paul to delve into the diet, make some funds for himself and explore what he wanted to create for himself. Paul gained 8 pounds while he was there. He loved putting on the weight.

After three weeks apart, we decided that what we wanted to do was be together and create a new vision for ourselves. Paul came and joined me in Northern California.

I finished up my work with the family and we moved to Ashland Oregon to explore the opportunities there. We made friends with a group of folks who had created a raw milk cooperative. They were a great bunch of folks. We moved in with one of them, Roy, while we explored our options.

Roy is a raw foodist as well. While he does not follow a particular diet, we found that our diets were quite similar in important ways. We enjoyed the opportunity to have meals together, play games and go to the warm ponds on occasion.

I applied for a job that I thought might be interesting while we were in Ashland. We thought we might benefit from settling down for the winter and looked for a place of our own to rent. We found that much of Ashland has the noise pollution of I 5 and felt very modern for our tastes. We envisioned what it would be like for us to follow through with these plans and found them lacking.

During our search, I stumbled upon information that a community was forming around the vision put forth in the books The Ringing Cedars of Russia. I was so excited!! This gave me hope!!!

If I told you last year at this time that the following organizations would cease to exist as we know them: Countrywide, Bear Stearns, Indy Mac Bank, Washington Mutual, Fannie Mae, Freddie Mac, AIG, Lehman Brothers and Wachovia you probably would have thought I was a St. Lunatic. As it turns out, that is exactly what happened and now a gaggle of formerly high flying investment bankers have gambled their way out of their jobs. Looks like there will be a flood of applications for I Want to Work for Diddy, Season 2.

So how did we get here? Well in short, we bought a bunch of houses that we couldn’t afford with money that the bank lent but couldn’t afford to lose, which was “insured” by another bank that couldn’t afford to pay up if something went wrong. Get it? Ok, let me explain it in another way.

Let’s say you let Tim borrow 500 bucks. You know you probably shouldn’t because Tim’s Cricket is always off for a few days at the beginning of the month, but he agrees to pay you back with a high rate of interest. You could use the extra money so you agree.

As you begin to realize how bad of a decision you just made, you talk it over with your good friend Trish. Trish thinks you are overreacting, but makes a bet with you, “Give me 20 bucks now and I’ll pay you what Tim owes you if he comes up short.” You think, “Wow, Trish doesn’t know Tim very well, but if she is willing to State Farm me against my potential losses let’s do it!”

The time comes to collect on the loan and, you guessed it, Tim’s Cricket is out of service and he is no where to be found. When you go to Trish to collect on your insurance, you find that while she always looks good and has her hair and nails done, she never had the 500 in the first place to cover you against deadbeat Tim. How do you think she always has her hair and nails done? You realize that you just got royally f’d by both Tim and Trish. Certainly not the kind of ménage a trois you had always fantasized about, huh? Welcome to the world of high finance!

Because of this fast paced wheeling and dealing, we’ve all been subjected to watching the stock market go up and down more than Kim Kardashian after a Saints victory (or loss or tie for that matter). But if we take a step back from the chaos, we can learn a lot from this situation. Here are 5 lessons that we should take away from this year’s financial meltdown:

Show Concern, Don’t Panic: It shouldn’t take a global financial crisis to make you realize that you need to pay more attention to what you are doing with your money. Sure, things are tough right now and it is difficult to read the paper or watch CNBC without freaking out, but you should also realize that the government has taken unprecedented steps (whether you agree with them or not) to avoid this becoming the second great depression. The biggest safety net for you? Your cash deposits and money market funds are protected up to $250,000.

Keep Saving: A lot of people are thinking of taking money out of their 401k plans and other investments. Hey, if you’re going to lose all of your money anyway, you might as well go to Vegas and have fun with it right? Wrong. Taking all of your money out at the bottom of the market is like putting on your seat belt right after you crash into the pole, it’s not terribly helpful. Learn from your mistakes so that you will be better prepared the next time.

Pay Your Bills: The days of the easy money are likely over. When things settle down, it is going to be a lot harder for financially unstable people to get loans. Now is the time to protect your credit rating by making sure that you pay your bills on time. You’ll want to be on the right side of the fence when the standards get tighter and you want to lease a new vehicle or buy a home, which brings me to…

Don’t Buy What You Can’t Afford: Even if some fool is willing to lend you the money to buy something, make sure you can pay the note now and in the future. This applies especially to big ticket items like your home. Even multimillionaire superstars like Ed McMahon and Evander Holyfield have had their homes foreclosed on in the last year. The size of your income is not as important as the manner in which you manage what you have.

When All Else Fails, Marry Madonna: Apparently pre nuptial agreements are really out of style. You would think that news of Michael Jordan’s, Bob Johnson’s, and Paul McCartney’s eye popping divorce settlements would strike fear into the hearts of any would-be celebrity bride or groom. But no, Madonna’s soon-to-be ex husband will reportedly walk away with about $60 million as a part of their divorce settlement. Not bad for 7 and a half years of work. With the right attitude and a little luck, you too can give up a few years of your life for your share of a fortune that you did nothing to help create.

….or at least, that’s what the U.S. Conference of Mayors says in their call for a Main Street Economic Recovery. In a report released today, the organization, which consists of the mayors of U.S. cities larger with more than 30,000 residents, outlines 11,391 jobs and infrastructure projects in 427 cities across the country that it says are “ready to go.” In total, the projects would create a $73 billion investment in the nation’s infrastructure, and would create nearly 850,000 jobs in 2009 and 2010.

Here’s a list of the projects Oakland threw into the ring. Together, they represent an investment of  over $87 million in the city, and would create over a thousand new jobs. We’ve seen many of these programs and projects before (and some exist today, but simply aren’t sufficiently funded). Others are brand new. My personal favorite: the Oakland Community Land Trust, which exists but not with much in the way of funding. I can’t think of a better step to take as the housing market spirals downwards; a land trust could help forestall the foreclosure crisis in the city’s hardest-hit neighborhoods while protecting affordability in those neighborhoods for future generations. (For a similar approach in another city, check out Boston’s Dudley Street Neighborhood Initiative and see how it’s weathering the housing crisis.)

Anyway, without further ado, here they are! (Note that I did not write these descriptions, so I am not responsible for the sentences that stop mid-thought or fail to explain the purposes of program for which they’d like tens of thousands of dollars! I’m giving them the benefit of the doubt and assuming the turnaround on this document was probably instantaneous and the word count strict—and that someone somewhere had the not-at-all-fun task of compiling the requests of 427 different cities, since it does look like other cities encountered the same truncating problem.)

OREO For 12 09 08

It’s about time.  Chicago and Illinois are a region with very strong union and labor history and traditions.  

Finally ‘officials’ are actually saying something about the rapid dismissal of 200 employees at the Republic Window and Doors company and Bank of America’s inaction in not extending credit to a small business with whom they had had a relationship.   Bank of America is one of the banks that got a$25 billion in tax supported funds from the Treasury to lend money and ‘free up the credit markets’. 

The governor wants the North Carolina-based bank to use some of its federal bailout money to resolve the protest by about 200 workers at Republic Windows and Doors.

The sit-in began Friday and has fast become a symbol of the sour economy’s impact on labor. The workers have promised to remain inside the plant in shifts until they get assurances they will receive severance and vacation pay.

“We hope that this kind of leverage and pressure will encourage Bank of America to do the right thing for this business,” Blagojevich said from outside the plant. “Take some of that federal tax money that they’ve received and invest it by providing the necessary credit to this company so these workers can keep their jobs.”

“We have been sending billions of dollars to banks like Bank of America and the reason we have sent them the money is to tell them that they had to loan this money out to companies just like Republic so that we can keep these companies in business and not lose these jobs here in the United States,” he said.”  http://tinyurl.com/6alorv.  Bank of America in February, 2007, in an effort to increase market share, “

In the latest sign of the U.S. banking industry’s aggressive pursuit of the Hispanic market, Bank of America Corp. has quietly begun offering credit cards to customers without Social Security numbers — typically illegal immigrants.

In recent years, banks across the country have begun offering checking accounts and, in some cases, mortgages to the nation’s fast-growing ranks of undocumented immigrants, most of whom are Hispanic. But these immigrants generally haven’t been able to get major credit cards, making it hard for them to develop a credit history and expand their purchasing power.

The new Bank of America program is open to people who lack both a Social Security number and a credit history, as long as they have held a checking account with the bank for three months without an overdraft. Most adults in the U.S. who don’t have a Social Security number are undocumented immigrants.”  http://tinyurl.com/2lz5zr

No wonder we’ve gone down the rabbit hole.   The US consumer has been on a spending binge in the past decade, cashing out on inflated housing prices, and swiping their credit cards has also been the key factor (2/3’s some say) for spurring economic growth.  Now that is passed. 

Meanwhile, what is Citigroup doing with it’s pile of taxpayer funded bailout dollars? Increasing the already usurious credit card rates on their credit card holders.  

[It's time to let Cerebus have at these geniuses at Citigroup.}

  "After pledging that it would no longer reserve the right to raise interest rates at any time for any reason, Citigroup now plans to start raising rates for customers who have not had an increase in at least two years. The move appears to backpedal from a commitment that Citigroup executives made to Congress in early 2007 when they tried to fend off greater regulation by promising not to raise rates until an account expires.

Citigroup attributed its decision to the “difficult market environment,” suggesting that the cost of the program — on top of sharp increases in its borrowing costs and severe anticipated losses — cut too deeply into profits. The bank said the policy change would only partly offset a $1.4 billion third-quarter loss for its credit card unit. However, it declined to provide specific figures. 

Credit card holders will be notified that the bank is raising their rates when they receive their November statements; customers with online statements will receive a separate mailing.

Citigroup cardholders will then have until the end of January to turn down the higher interest rates. If they decline the rate increase, they will pay down the balances on their accounts under the old pricing terms and will be able to continue to make charges until their credit cards expire.

After that, however, customers will have to reapply for a card or find a different lender. Citigroup said that, on average, it planned to raise its customers’ effective borrowing rates by two to three percentage points — a move that would cause some borrowers to pay more than 20 percent interest instead of 17 percent. Some rate increases could be much higher." http://tinyurl.com/5snqen

Cerberus has recently developed a taste both for Germany and the auto industry—it owns the financing unit of GM and several big rental companies.  Its last trip to the headlines was an insurance deal that failed because of Cerberus’ “abrasive and imperious manner.” Its founder is known for a propensity to renegotiate agreements that have already been reached.”   http://tinyurl.com/5nppmj. 

Dan Quayle, Dan Quayle??!??, you mean the former VP and ‘brainiac’ from Paradise Valley, in Arizona? 

While the loans may spare General Motors Corp., Ford Motor Co. and Chrysler LLC from collapse, shrinking their workforces would sap an already weak economy, said Paul Ballew, chief of consumer insight and analytics for Nationwide Mutual Insurance Co. in Columbus, Ohio, and an adviser to the Federal Reserve.

“The degree of restructuring is much broader and much deeper than people assume,” said Ballew, a former GM sales analyst….

Because the industry’s employees are among the best-paid in the U.S., the elimination of one auto worker amounts to erasing 1.7 jobs because of the loss of purchasing power, [economist Robert] Scott said…

GM told Congress it projects trimming its workforce by as many as 30,000 employees by 2012, or 33 percent. Dealers for the biggest U.S. automaker would fall to 4,700 from about 6,500.

Job losses at the dealerships might be 100,000, Scott said…..

Television stations and advertising agencies likely would suffer from GM’s strategy to focus on just four of its eight brands and Ford’s push to emphasize its namesake nameplate.

“If the dealers go out, that is the biggest local advertiser in virtually every market, with nothing obvious to replace it,” said Kip Cassino, research director at consulting firm Borrell Associates in Williamsburg, Virginia.

Local television stations get 25 percent or more of their advertising from automakers, dealers, and dealer associations…

Fewer brands and models will translate into more pressure on suppliers’ employment, which fell 18 percent through June to 590,000, according to the Motor & Equipment Manufacturers Association. Ford, the second-largest U.S. automaker, wants to pare its global purchasing base to about 750 companies from 1,600….

Cutbacks already are being felt at railroads such as Norfolk Southern Corp., the biggest U.S. carrier of vehicles and parts. Auto shipments by rail are down 20 percent in 2008.” http://tinyurl.com/5hefco

Unfortunately, what has transpired over the last five years in the financial markets has been a bubble. While the entire market obviously wont prove to be worthless, the declines in store for most securities will be tremendous.

The seeds of this bubble were sewn way back in 1980 when Congress passed the Depository Institutions Deregulation and Monetary Control Act calling for the phasing out of Regulation Q, which allowed financial institutions to compete with money market funds.

A piece of that legislation was financial cancer: raising the insured deposit maximum to $100,000.00. That seemingly innocuous change.., spawned brokered deposits, the primary driver of the reckless lending practices of the 1980s.

Money sought out the highest bidder with no regard as to how it might be used. As a result, we witnessed the funding of overleveraged LBOs and the overbuilding of real estate long after the 1986 Tax Act made it uneconomical to speculate in property. It is hard to overstate the significance of this legislation in creating the excesses of the 1980s, which set the stage for the even greater excesses of the 1990s.

It is important to realize that the 1990-1991 recession was not precipitated by the Fed. Yes, rates went up, but not enough to matter. The economic contraction was instead caused by two factors: one, the collapse of credit as banks and the S&L industry were destroyed by these bad loans and two, the subsequent newfound zeal with which the Office of the Comptroller of the Currency began to do its job.

Unfortunately Greenspan didn’t understand what was occurring, as he made painfully obvious in January 1990 when he stated, But such imbalances and dislocations as we see in the economy today probably do not suggest anything anymore than a temporary hesitation in the continued expansion of the economy.

However, once he finally understood what was happening, he got busy; ultimately cutting interest rates 24 times in a row, to 3%, which of course drove the public (which was only just beginning to focus on its retirement needs) out of CDs and money markets, and into stocks and bonds. It is ironic that the enormous reckless frenzy of the 1980s, which nearly ruined the banking system, did little apparent damage, and instead spawned a great bull market, and ultimately an even greater bubble.

The collapse of communism helped precipitate this stunning transformation as it set off a mad dash for capitalism around the globe, creating the first post-cold-war economic boom. The boom eventually forced the Fed to begin raising interest rates, thereby causing the implosion of the carry trade, Orange County, Mexico, etc. Of course, by then the deregulated banking system had discovered rocket scientists with computers and had begun loading itself up with derivatives. The combination of the Mexican peso collapse and the unwinding carry trade posed a grave threat to Wall Street and the banks so Greenspan and Rubin bailed them out.

In doing so, they didnt just spike the punch bowl, they put LSD in it, triggering a new round of speculation both domestically and globally that finally began to unwind in the summer of 1997 when the bubbles in Southeast Asia burst beginning with Thailand.

Naturally, the central bankers attempted bailouts, once again trying to postpone the ill effects of too many years of speculation. However, with so many countries collapsing at once the Fed (& Co.) could not prevent calamity from hitting those countries. Yet they did succeed in adding more fuel to the stock market frenzy raging here in America.

How was the Fed able to print money and create credit in unlimited quantities to manufacture this bubble? The absence of CPI inflation! Having learned nothing from the twenties or Tokyo either, the Fed and nearly everyone believes that nothing can be wrong if there is no CPI inflation. Yet it is only in a period of low inflation that the monetary spigots can stay open long enough to foment a bubble. Once created, the damage has been done and good policy options dont exist. You are then in the bubble-management business. (After 50 shots of tequila you will feel crummy tomorrow no matter what you do.)

We have created overcapacity and precipitated massive speculation, just as we did in the twenties. Inflation has been held in check not by prudent monetary policy but by a unique combination of events. In addition to the post-Cold War boom and NAFTA, the enormous productivity gains achieved by the massive invasion of powerful microprocessors into our lives conspired to keep CPI inflation in check, just as innovations such as autos, planes, and fractional horsepower electric motors suppressed inflation in the 1920s. Instead of CPI inflation we have created asset inflation in the form of the largest stock market bubble of all time.

I believe these bailouts since Mexico in late 1994 (when we crossed over from bull market to mania) have, in essence, socialized risk and are the principal reasons why the public feels that they cannot lose money in the stock market (over time). We have all seen the same surveys that show people expect compound returns from equities varying between high teens and 30 percent.

In addition to the Fed there are other catalysts that have precipitated the current craze. First, demographics have fostered a need to believe on the part of the public, and Wall Street has been happy to supply the rationalization and schemes with which to do so.

Secondly, technology. It is easy to see why technology is such a financial aphrodisiac. Life without television, fax machines or cellular phones would be far less enjoyable, and life without Prozac would be a boring life at book value. Yet nothing heretofore has so seemingly demystified and so dramatically altered the investing landscape the way the PC has. It has simultaneously empowered the masses to believe that they are in complete control and has deluded them into confusing information with knowledge. Most know the price of everything and the value of nothing.

Third, television (and here I mean CNBC primarily a/k/a Bubblevision) has helped seduce the public into an overconfident state bordering on arrogance. Folks are now certain that they possess the know-how and have earned the right to be rich.

Lastly, corporate America itself, the object of all this speculation has helped its own cause. Not so much through earnings, but through the creative expression of those earnings. The rascals in charge have enthusiastically and nearly unanimously elevated accounting into pure art via one-time charges, merger related write-offs, forward looking statements about the improvement in business since the end of the quarter, and of course stock options with their attendant absurd tax treatment. To show how acceptable outright fraud has become, Walter Forbes and windbag Al Dunlap are free and very rich men to this day. Having said all that about corporate America, it is not clear to me whether it actually has had a part in creating the euphoria or whether the euphoria has simply allowed it to occur. Collectively these factors have convinced todays speculators that the only real risk associated with equities is in not owning them…”  http://tinyurl.com/5ov4j4

The world can’t solve the problem of recession without mutual cooperation and that’s the honest truth. Too many countries are intertwined economically to say, “Fuck it, I’m going to handle the crisis on my own terms.”

Sure, some countries like the Super Powers America and China will have the biggest roles to play, but every country has their role to play. Think of it like the Army, every aspect needs to function like clockwork for the organisation to function effectively, from the clerk in Supply to the Commando who’s parachuting into enemy territory.

At present, I do believe that we cannot afford to adopt the German government’s policy when it comes to pumping in government funds. To err on that side of caution might work for their economy, but the Singaporean one is too open and small. After all, the Germans are if I’m not wrong, the third largest economy in the world.

In short, we’re in too much of a volatile situation, to not have immense investment.

Then there’s the age old question of tightening belts. In a recession is it that wise to really tighten the purse strings? I would ask the economists who beseige us to spend more, which in turn stimulates growth, “Where’s the cash to do so?”

After all, recessions tend to have increased inflation and reduced wages, so where’s the money going to come from? Even the rich are cutting spending in these bleak times.

So in that sense, their advice tends to fall on deaf ears eh?

On a parting note, I do hope someone buys over the Honda F1 racing team that’s just folded. If not, the glamour of F1 might lose its lustre and make the Singapore Grand Prix seem bleak admist the intense flood lights.

Press Release - Latest news from Indian Web Startups on Indian Tech and Web Forefront

Rediff MoneyWiz, the fast-growing, personal finance service from Rediff.com, has unveiled the ‘What If You Had Invested’ feature that helps users compare returns from stocks and mutual funds with a broad range of investment options over the past one year.

Full Press Release

Steve Coll of The New Yorker writes:

When this recession is over, the Chinese will still have trade surpluses, oil prices will rise again, and the global economy will be struggling with financial imbalances. If the Obama Administration plans and builds public-private-infrastructure financing institutions now, with an eye on the recession’s aftermath, it might help mitigate the next bubble (green mutual funds, anyone?) before it inflates—or at least ensure that some portion of the next bubbly brew of global capital is invested in support of American productivity. This is the true promise of the Obama Presidency—that his programs for economic recovery might be designed to create a generational transformation.

In American Free Thought, podcast number 13, there is some discussions regarding recent disasters that hit the Atlanta area around the time of its recording, in this case, a number of tornado strikes.  During the podcast, it was noted that during a TV interview, one of the people interviewed who had seen their home hit by one of the storms.  One of the quotes from the interview was “I guess God was looking out for me.”  

The hosts were incredulous about such typical utterances in light of devastating circumstances which prompted them to wonder why you never hear anyone say something along the lines of “guess God had it out for all the rest of ‘em!”

Of course the best and more direct way to address the current scandal of the church is a return to the Bible.  Bible reading, daily, deeply, discerning, is the quickest way to reform the church into believing the exalted nature of God and forsake the new-age grub of man’s importance.

If I were to script one of these interviews where the homeowner stands disheveled in front of the pile of sticks and rubble that hours ago was their safe and secure home, it would go something like this…

Reporter - “Mr. Doe, please tell us what happened leading up to the storm that has devastated your residence.”

Homeowner - “Well, we had heard that weather was coming our way so we headed to our basement for shelter…”

Reporter - “What did you do as it passed overhead?”

Homeowner - “Once I knew all my kids were safe and secure, we took time to pray for God’s mercy on our neighbors.” 

Reporter - “Guess it paid off, huh? “

Homeowner - “Too early to tell, sir.”

Reporter - “Well, Mr. Doe, I can let you know that according to the rescue personnel at the corner, all the residents on your street had been accounted for, so despite all of the destruction, no one was killed in the disaster around you.”

Homeowner - “Hmm…”

Reporter - “Isn”t that good news?”

Homeowner - “Well, again, I think it’s too early to tell, sir.  We have been blessed to live among these wonderful people around here.  They have been very accepting of us and we appreciate it.  However, it is quite clear that none has had their world rocked such that they see the depravity of their ways.  They seem to worship their manicured lawns, Mercedes-Benz’s and mutual funds.  Our family has desperately wanted to reach their hearts with the Good News of Jesus Christ but their hearts were stone cold to the message of God given that their lives had the appearance of perfect contentment.  Our prayer was not for divine protection but rather that God might bring attention to Himself in a way that His Majesty and Glory would be undeniable.  Guess I will have to see if they still deny His Majesty and Glory and return to worshiping their mute idols of homes, cars and money before I know if my prayers actually paid off.”

Reporter - “Live at 11, this is….”

Perfect market is the greatest instrument of human freedom I know of, and the ethical cornerstone of my entire idea.  A perfect market consists of  (courtesy of wikipeida)

People trading rationally, with all the information they need to make a decisions, with no distortions for big enough traders, something to trade, and no coercion to act or not act in anyway.   It’s something beautiful.  “Market place” doesn’t just mean the buying and selling of products, but also the grand market place of ideas.  The right to free speech is a component of the market place of ideas, as is the right to free press, and free assembly.  The right to practice religion as one sees fit guarantees numerous sects and religions competing for the hearts and minds of the people.  The right to keep arms of the US Constitution, and the right to security of person in the UN Bill of Rights are both to secure the right to act free of coercion.  Ultimately, the perfect market, be it for goods, services, ideas, or beliefs,  is the foundation of freedom.

A perfect market is, a direction, not a point one arrives at, but the more perfect a market, the more freedom for all.  I believe there is no more effective way to reduce pollution and birthrate (more on that later) than to work toward a perfect market.

In a perfect market, there is no legal theft, no  hidden payments, and no hidden costs.  I will use the existing market place of open pit coal mining to highlight an imperfect market.   No one breathes without trees, they are the lungs of the earth.   There are 6 billion people on earth.  Each tree is an oxygen factory, the output of which goes equally to each member of the population of earth.  If a person had a contract to receive a percentage of a factory’s output, then regardless of who owned the factory,the owner could not destroy the factory without consulting the person who owned a percentage of the output. (Note, I know that this example is somewhat weak, I use it because it is far easier to explain than the more correct ones.  Please feel free to argue this in the comment section.)  Property rights for the factory output are strong.  Property rights for organic oxygen output are nonexistent.

The open pit mining process begins by blasting the ground cover (largely trees) over the coal.  Stealing the future “oxygen income” of 6 billion people.  The coal industry is one of the most heavily subsidized on earth, particularly with reduced property tax.  The coal is loaded onto trains, the cost of transportation depending on diesel fuel, which is produced by other subsidized companies.  It is taken to a power plant, which if it is new, was most likely given property tax break to encourage it’s construction, and burned, putting CO2 into the air which effects everyone as much as the loss of the trees.  The worst pollutants are scrubbed out of the coal (the cost of the scrubbers often subsidized) and disposed of as industrial waste.  Due to radium as a fraction of the mass of coal, coal power plant reclaimed ash is actually more radioactive than nuclear power plant waste. Yet, it is disposed of as far cheaper industrial, rather than radioactive waste in tax supported, or privately owned and tax subsidized, waste management facilities (due to an EPA grandfather clause).

Thus, the real cost of coal would include the cash value of the lost oxygen, the cash value of the subsidy given to the extractor, the cash value of the subsidy given to the fuel producer of the transportation, the cash value of the subsidy given to the power plant, the cash value of the subsidy of the fuel for the fly ash transportation, and the cash value of the subsidy given to the waste management authority.

The complexity of calculating such a thing is made yet more difficult by the fact the subsidy would be different for each county, state, nation, company,  etc.  In reality, it is impossible to calculate such a thing.  The best numbers we have are educated guesses, on this free market phenomenon.  In defense of free market, as awful as the above sounds, it works towards the lowest price  in the end, as well as profit for the stock holders, because the company which uses the subsidies most effectively will sell the most. For the most part, this is good for everyone.  Coal is cheaper for everyone and the owners get rich.  Owners, means stock holders.  More than half of heavy industry stock is held by institutions in mutual funds.  Profit for heavy industry does not benefit primarily a small group of plutocrats.  It primarily benefits the small investor, working hard on his 401K or child’s college education fund.

The trouble is, as good as low cost products and profit for the stock holders are, (and those are truly good things) there are other important things that the free market doesn’t do so well, like resource management.  Though functioning planned economies have the worst pollution in the world (Russian and China), large free markets are a close second.  If people value resources, they can show their preference for companies that also value resources, but only in a perfect market.

In a perfect market, their are no hidden payments, so there is no subsidy.   Coal costs what coal costs.  It might be tempting to believe that subsidies do not follow market rules.  Sadly, this is not the case. Subsidies do follow market rules: companies get money from the government in exchange for providing services for members or sections of the government.  The companies compete fiercely for the subsidies.  Exxon Mobil spent 350 million on lobbying ( a form of advertising to the government decision makers) to get 3 billion dollars in subsidies in 2008 alone.

In a perfect market, the government would not be able to give any special treatment to any company, saving the stockholders of Exxon Mobil 350 million, but costing them 3 billion.  Thus, the incentive to keep the existing system is strong.   Three billion to one company is 10 times greater than the total subsidy spent on renewable power.  This leads some to say “Renewable power needs a bigger subsidy.”  I disagree.  Subsidy distorts the market, regardless of who gets it.  Money is what we exchange for our time on this eath.  The perfect market, like all other markets, is a place where human life is bought and sold, but unlike other markets it is where there is the least waste of this, the most valuable of all commodities.  As, such, a perfect market is as sacred as free speech, or free expression, for the same reason: human dignity.

Subsidies represent a lie about price.  The solution to lies is never more lies.  Humans can be trusted to make wise decisions under perfect market conditions.  To believe in human potential, to respect human dignity, means to work toward a perfect market.

All subsidy must go.  Every business must stand on it’s own.  If sounds like utopian, it’s not, at least to some.  No mater how deeply a person believes in perfect market for everyone else, few people believe it for them and their friends.  This is the reason, despite the fact people value it, we generally don’t work toward a perfect market.

A world without subsidy offers no tax breaks to religious organizations.  To allow tax free status to some service providers (churches and other non-profits) and not to others (business providing identical community assistance, lectures, concerts, elder care, and dating service) is unethical, and anti-religious.  Without tax breaks, the churches which provided the best service for the lowest tithe would immediately out compete the other churches.

A world without subsidy provides no benefit to being married.  Or owning a house.  Married people would have to compete in the open market for housing and employment just like everyone else.   Nor does it provide any tax penalty for being single, or childless.   This is the first step voluntarily reducing population.  Despite embracing the perfect market,  irresponsibility will still happen.  People will still have more children then they can afford, and buy larger houses than they need, but they can no longer profit by it.

(I am aware that these examples are controversial, and poorly supported here.  For brevity’s sake, I will argue specifics with anyone who chooses to, in the comment section.)

But how would even a perfect market deal with issues such as air pollution?  Real price cannot be calculated.  We know real price is impossible to calculate on the fly, because if it could be calculated, planned Soviet style economies would work better than free market ones. Only Adam Smith’s “guiding hand” can effectively determine price.   The fact you can rent your property freely for the price you wish and under the conditions you wish is why your living room isn’t full of toxic gas.  The fact that you cannot rent your 1/6 billionth of the earth’s air freely for a the price you wish under the conditions you wish, is why the air you breath is full of toxins.

The key to allowing the perfect market to solve the issue of pollution is obviously strong property rights, but how could 6 billion people share their air and common oceans without a tragedy of the commons?

I will address that in Part IV.

Wih asssets hollowed out by 30 to 40%, the mutual fund industry is forecast to raise fees by 10%. If active money managers cannot deliver alpha under the current cost framework, how will they reach it in a higher cost envronment?

Fund Fees Expected to Rise 10% in 2009

Personal financial columns are beginning to warn investors that fund fees could rise in 2009, as mutual fund companies try to grapple with fewer assets under management.

“It’s easy these days to forget about fees when your fund might have lost 40% or more in the past year,” writes the Baltimore Sun. “But fees matter over the long run, and you can end up with a lot less money, even if you’re paying what seems to be only slightly more for a fund.”

Thus, columnists are urging investors to be more careful in the coming year to ensure they are getting just due breakpoints, just as the reverse is true for fund companies; most will be all too happy to charge higher fees on accounts where breakpoints no longer apply.

Lipper Senior Analyst Jeff Tjornehoj predicts fund fees could rise 10% next year. Added to that, he warned, service providers are likely to increase their fees, and fund companies, in turn, will simply pass those along to shareholders. Added to that, international funds are in a disadvantageous position, since the dollar has been so strong.

Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm, hurt borrowers and generate more risky loans throughout the industry.

At Fannie Mae, top executives were told it was necessary to develop “underground” efforts to buy subprime mortgages because of competitive pressures, although there were growing risks and borrowers often didn’t understand the terms of the loans, documents show.

The House Committee on Oversight and Government Reform, which has the documents, is holding a hearing now to discuss Fannie and Freddie’s downfall. The companies were seized by the government three months ago after nearly collapsing in the wake of billions of dollars of losses on mortgages.

In a memo to former Freddie chief executive Richard Syron and other top executives, former Freddie chief enterprise risk officer David Andrukonis wrote that the company was buying mortgages that appear “to target borrowers who would have trouble qualifying for a mortgage if their financial position were adequately disclosed.”

Andrukonis warned that these mortgages could be particularly harmful for Hispanic borrowers, and they could lead to loans being made to people who would be unlikely to pay them off. “The potential for the perception and the reality of predatory lending with this product is great,” Andrukonis wrote.

The documents, which were released by the committee today, show that Fannie and Freddie, two linchpins of the nation’s mortgage market, continued to push into new, risky markets despite internal debate over whether the efforts were prudent.

Fannie and Freddie declined to comment yesterday, as did Andrukonis. In testimony today before the House oversight committee, Syron acknowledged he was warned about risky loans but said that executives thought they had made the right decision, balancing profit motives, public policy goals and safety concerns.

At the same hearing, Daniel Mudd, Fannie’s chief executive from 2005 to 2008, said that, if hindsight were 20/20 he would redo the way Fannie underwrote mortgage loans.

Mudd, Syron and two other former Fannie and Freddie executives were sharply criticized by lawmakers today. Rep. Darrell Issa (R-Calif.), the committee’s ranking member, said they needed to take responsibility.

“All four of you still seem to be in complete denial that Fannie and Freddie are in any way responsible for this,” Issa said. “Your testimony says your not accepting any blame for this at all. You’re telling us that in fact that everyone was doing it.”

When the government took over the mortgage finance giants, it announced it was installing new management and creating a $200 billion fund to support the companies in case they faltered further.

Fannie and Freddie’s distress has its roots in the new, risky mortgages the companies bought and guaranteed in increasing numbers, largely from 2004 through 2007. These new products included home loans made to people with blemished credit histories, called subprime loans, and mortgages made without verification of income, assets or employment, often called Alt-A.

As Mudd’s and Syron’s decisions have been called into question, they have described their push into these new areas of the mortgage business as an inevitable consequence of dueling mandates to support affordable housing and maximize profit for shareholders. And they’ve said that the collapse of the housing market was unforeseeable and the primary reason behind the company’s fall.

But the documents show how top executives at both companies were told that the new subprime and Alt-A loans were dangerous both to the companies and to the borrowers they were charted by Congress to help.

At Fannie, chief credit officer Adolfo Marzol wrote to chief executive Mudd in March 2005 to warn that entering new areas of the mortgage market represented significant risks. The industry was pushing new types of loans, he wrote, including those that required little documentation and those that carried rates that would adjust in a few years.

“The combination of these risks may be difficult for subprime borrowers to understand,” Marzol wrote.

Marzol also warned that securities backed by these loans might not be as safe as they seemed. Fannie reported them as carrying the top grade given by credit-rating agencies, AAA, but Marzol cast doubt on that. “Although we invest almost exclusively in AAA rated securities, there is concern that rating agencies may not be properly assessing the risk in these securities,” he wrote.

Despite these concerns, Fannie continued to push into this new market. A business presentation in 2005 expressed concern that unless it didn’t, Fannie could be relegated to a “niche” player in the industry. Mudd later reported in a presentation that Fannie moved into this market “to maintain relevance” with big customers who wanted to do more business with Fannie, including Countrywide, Lehman Brothers, IndyMac and Washington Mutual.

The documents suggest than Fannie and Freddie knew they were playing a role in shaping the market for some types of risky mortgages. An e-mail to Mudd in September 2007 from a top deputy reported that banks were modeling their subprime mortgages to what Fannie was buying.

At Freddie, risk officer Andrukonis expressed concern about a new mortgage product called stated-income, stated-asset that the company was considering buying. The loans required borrowers to state their incomes and assets, but not prove them.

In a memo to Syron and others, Andrukonis warned that in 1990 Freddie called this product “dangerous” and stopped offering it. “I’m not convinced we aren’t leading the market into this product,” Andrukonis wrote.

Freddie offered to buy the stated-income, stated-asset loans anyway.

Andrukonis and others expressed concern about another type of mortgage Freddie was buying, where neither income nor assets were stated on the loan application. Andrukonis said these were popular with Hispanic borrowers, but the delinquency rates of 8 to 13 percent were much higher than on conventional loans. People familiar with the matter said Freddie was being pushed by advocacy groups to come up with new loan products to offer to low-income and minority borrowers.

Andrukonis acknowledged that getting out of this business could cost $50 million annually and draw criticism. “On the other hand, what better way to highlight our sense of mission than to walk away from profitable business because it hurts the borrowers we are trying to serve,” he wrote.

At times, Andrukonis grew frustrated with the response he got from Freddie leadership about his concerns as he registered worries about low-documentation loans.

In a message to colleagues, Andrukonis wrote that while he and others “make the case for sound credit, it’s not the theme coming from the top of the company and inevitably people down the line will play follow the leader.”

Andrukonis was joined by others expressing concerns. Don Bisenius, then a credit officer, wrote in an e-mail to Michael May, a top executive, that “the lack of verified information on a borrower’s income and assets could clearly influence the risk potential in a loan and the ultimate performance of the loans.”

In a separate e-mail, May wrote that he recognized the risks of the business. But he predicted “a different pattern [than] we did with no-doc lending before,” suggesting there won’t be big losses. He listed reasons including that Freddie had more information about borrowers’ credit-worthiness than before and other tools for accessing risk.

In October 2004, May ultimately recommended continuing no-income, no-asset loans, though with some changes. Through Freddie Mac, May declined to comment. Syron signed off on continuing with the loans. Bisenius, now part of new Freddie chief executive David Moffett’s inner circle, formally opposed the decision.

There is some mystery surrounding Andrukonis’s ultimate role. In one document sent to Syron, he joined a group of people neither supportive of nor opposing the decision to continue no-income, no-asset loans, but registered as “neutral.”

However, a person familiar with the discussions said Andrukonis and other risk officers continued to oppose the product until the very end. Freddie executives asked him to leave the company, according to people familiar with the matter, which he did in 2005.

HOUSE HEARING BEGINS ON FANNIE, FREDDIE DOWNFALL By Zachary A. Goldfarb, Washington Post, 12/9/08, http://www.washingtonpost.com/wp-dyn/content/article/2008/12/09/AR2008120901096.html?hpid=topnews

id="desc">Keeping you updated with client news and thier programs

Prepaid’ College Plans Attract Deposits as Conventional 529s Rack Up Stock-Market Losses

By JANE J. KIM and MELISSA KORN

As the stock market swoons and tuition costs soar, more families are deciding to pay for college in advance through their 529 plans.

For years, families have preferred the savings type of 529 plan — named for the relevant section of the tax code — salting away after-tax dollars, investing them in mutual funds and other investments, and then taking the money out, tax-free, when the time comes to pay for school. But as many of these accounts have been savaged by the market’s plunge this year, families are now turning to the prepaid variety of 529.

Prepaid plans allow families to lock in current tuition rates by making an upfront cash payment in exchange for tuition contracts or credits tied to current rates. They can prepay either the full tuition bill or a portion of it, typically based on the average tuition costs in the state. States usually manage the money, and when a student finally enrolls, he won’t have to pay more — no matter how much tuition costs have risen.

If investors buy only a portion, that same amount is credited toward future tuition bills. In general, the tuition guarantee applies only to state schools within that state, though you can use the money to pay for out-of-state schools. If a beneficiary elects not to attend a college covered by the plan, the investor can withdraw his contributions, usually with interest.

Directors of prepaid plans, which are offered by more than a dozen states, say they’re seeing renewed interest as families anticipate sharp tuition increases. Washington state, which offers only a prepaid plan, has seen a 50% increase in rollovers from state residents who had 529 savings accounts based in other states. Pennsylvania has seen a 43% increase in new account enrollment and a 19% jump in contributions from May through September over year-earlier levels in its prepaid plan. Other states, such as Virginia and Maryland, are seeing a pickup in calls from consumers interested in enrolling in their prepaid plans or rolling over their investments from their 529 savings plans.

Assets in states’ 529 prepaid plans were $16.3 billion as of Sept. 30, compared with about $103.4 billion in 529 savings plans, according to the College Savings Plan Network.

In most cases, the account holder or beneficiary must live in a state in order to invest in its prepaid plan. Two states — Massachusetts and Alabama — allow anyone to invest in their plans. There is also one private-school plan, managed by investment firm TIAA-CREF’s TIAA-CREF Tuition Financing Inc., that is open to anyone: the Independent 529 plan. It allows investors to lock in tuition at nearly 280 colleges, ranging from small liberal-arts schools such as Grinnell and Oberlin to larger universities such as Stanford, Princeton and Duke.

Some states are trying to make their 529 prepaid plans more attractive. In late October, Illinois waived the application fees for its prepaid plan and introduced new pricing plans. In September, Texas launched a new prepaid plan that is managed by a third-party investment manager. Because of legislation passed in 2007, the schools are assuming some investment risk and the program, known as the Texas Tuition Promise Fund, can charge only tuition and fees and a one-time $25 administrative fee. By contrast, the old prepaid plan used to charge premiums.

“If you expect tuition to go up in a rampant way — and if you can lock in future tuition units at today’s costs — then it’s a good deal,” says Andrea Feirstein, managing member of AKF Consulting LLC, a New York consultant to the 529 industry.

There are also some state tax perks. Michigan and Mississippi, for example, will allow the entire prepaid contribution to be deducted from state taxes, though they cap deductions for contributions to their 529 savings plan.

Although some prepaid plans have been around for years, they started falling out of favor over the past decade when investors flocked to 529 savings plans, which offer greater flexibility and the potential for higher investment returns. A number of states — including West Virginia, Ohio, Kentucky and Colorado — temporarily or permanently barred new participants in prepaid plans when poor market returns, paired with sharp tuition increases, bled reserves faster than expected after the dot-com bubble burst earlier this decade.

Howard Ackerman of Princeton, N.J., feels vindicated by his decision to invest in Massachusetts’s prepaid U.Plan, which he began doing in 2003 — a time when most other people were chasing investment returns in 529 savings plans. Today, he’s actually paring back his contributions because he’s already saved enough for his daughter to attend nearly any one of the more than 80 public and private universities that participate in the plan, which is run by the Massachusetts Educational Financing Authority.

“If tuition goes up 10% next year, we don’t care because we’re already locked in,” says Mr. Ackerman, a software developer. If his daughter, now 11 years old, decides to attend a college not covered by the plan, he can withdraw his contributions, plus annual interest. “When it comes time for our daughter to go to school, we basically told her that she can go to any of them [in the plan] and walk away debt-free,” says the 43-year-old.

Prepaid plans aren’t for everyone. For one, the tuition guarantee generally applies only to state universities. While you can get your money out if your child opts for an out-of-state school or private college, the account’s rate of growth is generally limited to increases in tuition as laid out in the plan.

There are some exceptions: Investors in Pennsylvania’s Guaranteed Savings Plan can choose from a variety of tuition indexes at different pricing levels when they open an account. One tracks average tuition at the eight Ivy League schools, while a less-expensive option keeps pace with the state’s private colleges.

Some state plans, including those offered by Pennsylvania, Nevada and Michigan, are secured by the plan’s investment fund — which means that investors can lose money if the fund runs out of cash. That risk is typically greatest for someone with a young child, says Ms. Feirstein.

Pennsylvania Treasurer Robin Wiessmann says the state’s Guaranteed Savings Plan has enough assets to cover the demands for the next decade. If there were any risk of a shortfall, she says, the plan would take preventive steps, such as charging premiums for tuition — which it did several years ago — and propose legislation to boost its reserve funds.

Many prepaid programs already tack on premiums to help build a reserve against potential shortfalls in the investment funds. Tennessee, for example, charges $65.66 a unit through Dec. 31 (100 units make up about a year of tuition), while the payout is $56.93 a unit this year.

But even if the prepaid plan you’re interested in does charge a premium, it still might be worth it. “If your child is very young, the premiums you’re paying may not be such a big deal,” says Joseph Hurley, founder of Bankrate Inc.’s Savingforcollege.com, a Web site providing independent information on 529 plans. “But if the child is in high school, it becomes more difficult to overcome that premium.”

Release here.

Counterparty risks and functional aspects

At present a lot is happening in the financial markets. Besides being in the midst of the current crisis, we are experiencing functional changes in the securities market. These changes can improve the workings of the market, which is particularly important in connection with financial turbulence. However, the changes also make greater demands on cross-border cooperation. One change, which began some time ago, is that the Swedish systems for handling securities are becoming increasingly integrated with systems abroad. Other changes are reducing the counterparty risks of financial players and making securities trading more transparent. In a discussion of changes in securities markets, it should be born in mind that an effective monetary policy also requires an efficient fixed-income market.

The vocabulary for my discussion of these changes and of the importance of a properly functioning fixed-income market is somewhat technical, particularly in the sections on integration and counterparty risks. That should not be a problem for my audience today. Many of you are occupied with precisely these matters.

Changes in the securities markets

I shall begin with a brief account of the financial infrastructure. It is made up of systems, instruments and routines that together constitute the conditions for making payments and securities transactions in ways that are safe and efficient. If the financial infrastructure does not function, payments and securities transactions cannot be made, which would bring the economy more or less to a halt. It would also prevent the Riksbank’s interest rate from exerting an impact on the economy.

This means that the financial infrastructure and the ongoing changes in securities markets are relevant for the Riksbank’s two primary functions, namely to safeguard both financial stability and price stability. It is therefore important that we closely follow developments in these respects.

Increased integration

As many of you are already aware, major changes are currently in progress in the securities markets and the financial infrastructure. In recent years we have seen a number of tendencies whereby trading in financial instruments is becoming more integrated. Such tendencies have also been evident recently in clearing and settlement – the processing of securities transactions that follows the trade as such.[Footnote 1 Clearing involves balancing mutual claims and liabilities. Settlement involves the transfer of money and securities between transacting parties.]

In a world conditioned by further globalisation, increased competition and advances in technology, companies use mergers and acquisitions to adjust. In the field of financial instruments, the creation of NASDAQ OMX Group in February 2008 has strengthened the links between Nordic, Baltic and American exchanges. The driving force behind this merger is primarily economic in that it confers considerable economies of scale.

The changes in securities markets are also connected with regulations. The EU directive MiFID aims to strengthen competition, improve client protection and promote the integration of the European securities markets. The directive has paved the way for new types of trading facilities in Europe.[Footnote 2 Multilateral Trading Facilities, which are not required to be a traditional exchange in order to organise trading.]

A reasonable assumption against this background is that the map for share trading in Europe will be re-drawn. Share trading will be channelled to the market places that offer the best rates and the lowest tariffs, which signifies good liquidity.

Distinct tendencies are also present in the clearing and settlement of securities transactions – the processing that follows a trade as such. An example of far-reaching integration in this field is Euroclear, which settles securities transactions in five markets in Europe and recently acquired Sweden’s central securities depository (VPC AB). Euroclear’s new system will be able to settle cross-border securities transactions just as smoothly as national transactions are settled today. Alongside market solutions, the European Central Bank is working on a completely new system for linking up the national systems for securities settlement.

In recent years, moreover, clearing services provided by central counterparties are being used to a growing extent. The role of central counterparties is a topical issue in the United States as well as in Europe, not least because the global financial crisis has highlighted the advantages. More about that later.

A number of central counterparties are already operating in Europe in clearing of derivatives as well as of shares and interest-bearing securities. In Sweden there is a central counterparty – NASDAQ OMX Derivatives Markets – for derivative instruments that are traded on OMX. There was until recently no central counterparty for spot transactions in Swedish shares and interest-bearing securities. With the creation of new trading facilities in Europe, however, clearance of Swedish shares through a central counterparty is now possible.[Footnote 3 One example is EMCF (European Multilateral Trading Facility N.V.), central counterparty for the clearance of Swedish shares that are traded on Chi-X and NASDAQ OMX Europe. Another is EuroCCP, central counterparty for the clearance of shares traded on Turquoise.]

In October it was announced that a central counterparty service will also be provided in future for spot share transactions on OMX Nordic Exchange Stockholm.

The tendencies I have just mentioned indicate an explosive development. What will be its consequences for the Swedish financial infrastructure? The Swedish systems will indeed be wholly or partly replaced by or linked up with systems elsewhere. This means that to a growing extent, securities trading, clearance and settlement will be arranged outside Sweden.

As integration increases, national securities markets and financial infrastructures will become more and more intertwined. For the Riksbank it is important that the systems in the Swedish infrastructure work safely and efficiently – even if they are in foreign ownership and located abroad.

Coping with the increased integration entails new and stronger demands for joint solutions and cross-border cooperation. There is much to be done in all these respects. In order to oversee the foreign systems that affect the Swedish infrastructure, the Riksbank will be cooperating with other central banks.

Counterparty risks and insufficient market transparency

In the light of what I have just described, it is clear that trading, clearance and settlement are changing rapidly. It is important that we as a central bank understand these changes. At the same time, the financial crisis has made us aware that there are matters to do with trading, clearance and settlement which need to be improved.

In the United States, two problems have stood out in connection with trading in American credit derivatives. They concern the credit derivatives that are traded on the over-the-counter market.[Footnote 4 Securities trading can be arranged on an established market or over-the-counter; in the latter case, the parties to the transaction settle it on their own.]

One problem is the counterparty risks. The parties in a credit derivative trade have a credit risk towards each other – the risk of a party losing the whole of the underlying value in a transaction. The counterparty risks have been difficult to understand, which makes them difficult to value. The other problem is the lack of market transparency, which has caused pricing problems and poor liquidity in credit derivative markets.

The question of how to reduce counterparty risks in over-the-counter derivatives trading has been raised by the US Federal Reserve and the European Central Bank. One way would be to clear credit derivatives with a central counterparty.

How would a central counterparty improve matters? Well, the central counterparty, who is a known player, functions as the counterparty to each of the parties to the transaction. The seller and the buyer then have a claim and a liability, respectively, with the central counterparty instead of with each other.

The advantages of a central counterparty are that securities settlement can be both safer and more efficient. The transactions can be netted out[Footnote 5 Netting involves offsetting transactions against each other with a view to making the transactions cancel out as far as possible.] and the counterparty is known. The counterparty risks can be managed by the central counterparty obtaining collateral. Moreover, the central counterparty has its own financial resources. The drawback with a central counterparty is that the market risks are concentrated to a single player – a high concentration of risk. Provided the operations are properly organised, however, this is not a problem. Still, the concentration of risk does mean that central counterparties are often systemically important. Supervision and oversight are therefore highly relevant.[Footnote 6 The Riksbank and Finansinspektion (the Swedish Financial Supervisory Authority) evaluate NASDAQ OMX Derivatives Markets in accordance with the international standards in Recommendations for Central Counterparties, published by CPSS and IOSCO.]

I shall leave counterparty risks for the moment and turn to the problem in the United States with insufficient market transparency. Many American credit derivatives are non-standardised products and have therefore been inherently difficult to understand and value. If attempts were made to cope with the lack of transparency, one way would be to use electronic trading because this enhances market transparency and reduces the risk that access to information is not uniform. Another important effect of electronic trading is that concentrating trading to one facility makes pricing more efficient. Each order can be matched with the best price. Moreover, new players can have better access to the market, which can improve market quality and strengthen competition.[Footnote 7 For more information about electronic trading, see The implications of electronic trading in financial markets, Report by a working group established by the Committee on the Global Financial System of the central banks of the Group of Ten countries, Bank for International Settlements, 2001.]

So what is the situation in Sweden? American credit derivatives have not had Swedish owners to any considerable extent. Neither is there a Swedish credit derivatives market of any size. This is mainly because the Swedish market for corporate bonds is small and without corporate bonds it is hard to trade in credit derivatives. So the problem with American credit derivatives that are traded over-the-counter does not exist in Sweden. That does not dissuade us from reviewing the Swedish securities market in the light of the problems that have been identified in the American market.

In Sweden, as in most other countries, the principle for all securities trading (shares, interest-bearing papers and derivatives) settled in VPC, is Delivery versus Payment (DvP). This eliminates credit risk. The remaining counterparty risk is known as replacement cost risk – the risk of having to pay more for a transaction that replaces a failed trade. This risk is normally just a fraction of the credit risk but can be sizeable when prices are volatile.

In Sweden, transactions in shares and interest-bearing securities are normally settled within three days after the trade. The replacement cost risk for such business largely depends on the state of the market. When market rates are notably volatile, failure to deliver can result in substantial replacement costs. The introduction of a central counterparty service next year will make it possible to manage the counterparty risks in share trading on the Swedish market. Moreover, it is now possible to trade Swedish shares on the new European trading facilities that are linked to central counterparty clearance. This points to a future reduction of the counterparty risks in Swedish share transactions.

The counterparty risks in the derivatives market are considerably larger and harder to manage than they are in the spot market. This is because the duration of risk exposures is longer in the derivatives market, often as much as several months. The Swedish derivatives market already provides the possibility of managing counterparty risks by means of a central counterparty.

Turning now to market transparency, what is the situation in Sweden? MiFID entails the introduction of rules for transparency before and after share trading. The requirement applies to all trading facilities and involves the publication of prices and volumes. So for shares there are no deficiencies concerning transparency in these respects. There may, however, be shortcomings in over-the-counter trading in interest-bearing securities and derivatives. A large proportion of fixed-income trading in Sweden is done by telephone rather than on a market. Derivative instruments can also be traded off-market.[Footnote 8 This refers to the derivatives that are not traded on exchanges, for instance swaps, futures and options.]

If trading is arranged instead with an electronic facility, each order is matched against the best price and market access can be improved for new players. Still, there may be financial markets whose functioning is not improved by increased transparency. It should therefore be up to each market, including the Swedish fixed-income market, to decide which approach is most effective.

What are the lessons from this argument? Well, in times like these, coloured by financial market uncertainty, there is much less propensity to take risks. Financial market participants are more interested in low-risk assets, low-risk markets and counterparties that they know and are safe. In a severe situation, this can mean that in certain cases trading ceases altogether because even small risks are perceived as too large. This is because the problems associated with counterparty risks and a lack of transparency become more tangible when markets are turbulent.

Every measure by which the financial markets can be made to function even in turbulent times is welcome. Some of those who stop trading when markets are unsettled would probably not do so if they had a known and safe counterparty with whom to trade in a properly transparent market. Conditions are then in place for arranging securities transactions in ways that are safe and efficient, so that financial stability can be more satisfactory.

The fixed-income market

I shall now say something about the fixed-income market. The fixed-income market in Sweden differs from its larger counterparts in Europe. There are considerably fewer participants and the market is shallower – less liquid. This presumably entails higher costs for transactions of a given size, as well as closer relationships between the players. These circumstances are liable to affect how the market functions, particularly in times of unrest. The risk propensity falls and with relatively few participants, market liquidity is easily eroded.

Trading in the Swedish bond and money market is still done mainly by telephone, over-the-counter, though some electronic trading has existed since 2001. This electronic trading is in three benchmark bonds. To work properly, electronic trading needs products that are highly standardised, as well as relatively high liquidity. In Europe, electronic trading is used for roughly 75 per cent of all transactions but they account for only about 50 per cent of the volume. Large orders are still traded by telephone.

The functioning of the fixed-income market is important for us as a central bank. It makes it possible to implement monetary policy and thus to fulfil our task of controlling inflation. We aim to influence economic activity and thereby inflation via the price for credit – the interest rate. For this to be possible, the payment system and the credit markets must function so that the Riksbank’s interest rate decisions show up in other interest rates. What does this require of the fixed-interest market?

A discussion of which characteristics the fixed-income market should have so that monetary policy can be as effective as possible must start from the answers to two questions: What is the objective of monetary policy? And, what instruments are at its disposal?

We have specified the objective for the Riksbank’s monetary policy as an annual rate of inflation of 2 per cent plus or minus one percentage point. Our aim in setting the interest rate is that inflation will develop in such a way that the goal is fulfilled. When the Executive Board has decided the level of the repo rate, it is up to the monetary policy steering system to ensure that the decision shows up in market interest rates.

The Riksbank’s steering system is constructed to influence the shortest market rate, the overnight rate. This is the rate at which the banks manage their daily liquidity surpluses or deficits with each other. Interest rates for somewhat longer maturities are to a large extent determined, as you know, by expectations of future short-term interest rates. The idea is that by steering the overnight rate we also can affect interest rates further out on the yield curve.

How do we steer the overnight rate in practice? First of all we lay down an upper and a lower limit – an interest rate corridor – for movements in the overnight rate. This we do via our standing facilities, which enable the banks to borrow or deposit funds overnight at the repo rate plus/minus 75 basis points.

In addition, to ensure that the overnight rate is close to the repo rate, we perform a fine-tuning operation, if necessary, on a daily basis. For this operation, at the end of each bank day we are prepared to lend funds at the repo rate plus 10 basis points or to accept deposits at the repo rate minus 10 basis points. Our aim is that after the fine tuning, the banking system as a whole will be balanced. That means that we only lend the equivalent of the banking system’s net borrowing requirement or accept deposits for the equivalent of the banking system’s net investment requirement. The steering system has been successful in the sense that overnight loans between the banks are arranged as a rule at the repo rate.

A potential drawback of the fine-tuning operations is that the operational risks grow with the volume of these operations. We therefore make a weekly offer of one-week Riksbank certificates at the repo rate. As this withdraws liquidity, the fine-tuning operations do not have to be so large.

The way in which we implement monetary policy means that we are active at two time horizons or, as we usually say, at two points on the yield curve. One is for overnight loans or deposits, where our fine tuning helps to keep the overnight rate at the repo rate; the other is for one-week certificates, likewise at the repo rate. As we are active in the market only once a week, with one-week certificates, we cannot steer the one-week rate as effectively as the overnight rate, which we steer on a daily basis. Neither do we intend to do so. Our operational goal is precisely to steer the overnight rate.

Which measures should be said to be connected with the implementation of monetary policy and which should instead be seen as more directed at assisting the performance of markets and promoting financial stability? There is no simple answer. Something that a financial crisis makes clearer is how monetary policy and financial stability interact. Neither of them can evidently function without the other. If forceful measures are not taken to deal with the financial crisis and maintain financial stability, there is a risk of the crisis also having major effects on inflation and growth. The fall in output and employment can then be both deep and prolonged and that in turn can worsen the financial crisis.

An efficient fixed-income market is a prerequisite for an effective monetary policy In other words, the monetary policy machinery I have described consists of two components. The first thing is to ensure that the repo rate does in fact affect the overnight market. Effects on this shortest rate must then spread to longer rates that are more important for economic activity. An effective monetary policy steering system is not enough by itself. We also need a fixed-income market that functions properly. So what are the fixed-income market’s functions?

The fixed-income market caters both for those who need funds for their operations and for those with funds they need to invest for a certain period of time. As investment in the market is not risk-free, one of the market’s primary tasks is to price risk correctly. That in turn leads to an optimal distribution of risks between the markets’ participants. In this way the market contributes to an efficient distribution of economic resources. What a central bank requires of the fixed-income market is therefore not all that different from what society in general requires.

If the fixed-income market is to perform its important function, more is needed than participants who set prices for the various assets. There must also be participants who trade actively at those prices. Neither must the counterparty risks be perceived as unduly high because that may deter participants from trading. Moreover, the market must be capable of handling large volumes without this by itself having an appreciable effect on prices. In other words, the market should be adequately liquid.

Why is liquidity important for monetary policy? The answer is that in a liquid market, relevant news shows up quickly in interest rates. An adjustment of the Riksbank’s repo rate, for example, has a rapid pass-through to the short market rates, as well as to somewhat longer rates. This applies, of course, in so far as the repo rate adjustment takes the market by surprise. If market participants instead understand how the Riksbank interprets new information in the form of macroeconomic outcomes, they can draw conclusions about the Riksbank’s future actions. News is then reflected in the formation of interest rates at the time when the macroeconomic outcomes are known. The relevant interest rates also react quickly to various forms of information from the Riksbank. Somewhat longer interest rates may be affected, for instance, when we publish a repo rate forecast, a so-called interest-rate path that presents the Riksbank’s assessment of the future development of the policy rate.

The conditions for good market liquidity include low transaction costs, management of counterparty risks and market transparency. In practice, access to information in most markets – including the credit market – usually differs between buyers and sellers. This is commonly referred to as information asymmetry and implies that the seller of a product knows more about it than the buyer does. A good example is the used car market.

In the credit market it is commonly the borrower who knows more about his own situation than the lender does. One approach to dealing with this problem is to have a company’s creditworthiness assessed by an independent organisation. A credit rating can aid an investor because it would cost too much for the investor to analyse every company whose securities might be of interest. Moreover, market efficiency can be enhanced by businesses that are dependent on income from the market and therefore strive for a good reputation as providers of complete and correction information.

Still, it is hard to ensure that the markets are liquid under every conceivable circumstance. If the participants suddenly become uncertain about asset values and if the counterparties are unfamiliar, a market can quickly become less liquid, which leads to high risk premiums. The current financial crisis has provided examples of this. Investors are averse to putting money into assets whose value is highly uncertain; they prefer the securities that are safest. Rather than doing business with unfamiliar counterparties, investors prefer counterparty risks that can be managed. Markets that are illiquid also have consequences for monetary policy because repo rate adjustments do not then have the intended impact. That brings me to this autumn’s financial market developments.

Events this autumn and measures by Swedish authorities

In mid September the Swedish financial markets became seriously disturbed and Swedish banks experienced growing problems with funding. An increasing share of bank funding was arranged at very short maturities. Moreover, any funding that could be achieved at longer maturities cost the banks considerably more than normal.

Prior to this, in 2007 and 2008, the Riksbank had no cause to take any extraordinary measures. Unlike the case in many other countries, the overnight rate in Sweden was stable and close to the policy rate, which meant that the intentions behind monetary policy were visible in the market. Moreover, Swedish banks still had good possibilities of obtaining funds, though this did cost more than before.[Footnote 9 ”Policy rate setting and the monetary policy steering system”, speech by Riksbank Governor Stefan Ingves at Handelsbank, 28 April 2008.]

When Lehman Brothers filed for bankruptcy, however, the international financial crisis worsened. In this situation the Riksbank and other Swedish authorities introduced a number of measures so that markets would function better.

The Riksbank’s measures in this respect have aimed at making bank funding easier and thereby assisting the banks in the provision of credit to companies outside the financial sector. In order to make corporate funding easier, during the autumn the Riksbank has lent more than SEK 200 billion and USD 25 billion.

Besides these measures, aimed at getting the credit market to function more efficiently, the Riksbank has taken more conventional monetary policy measures. The repo rate has been lowered during the autumn by a total of one percentage point – starting with 0.5 percentage points on 8 October in a joint action with the Federal Reserve, the Bank of England, the ECB, the Swiss National Bank and the Bank of Canada, followed by another 0.5 percentage points on 22 October. The purpose of these interest rate cuts was to mitigate the ongoing financial crisis’ effects on output and employment in Sweden while continuing to target 2 per cent inflation. With the autumn’s serious disruptions to financial markets, however, we probably should not expect that policy rate adjustments will have the usual effects. The adjustments have not affected market interest rates in the same way as they do under normal circumstances.

Conclusion

Let me now conclude.

Major changes are in progress in the securities markets and in the financial infrastructure. The systems for securities transactions in the Swedish financial infrastructure are becoming increasingly integrated with systems abroad. This places new demands on cross-border cooperation.

Two problems to do with the infrastructure have, moreover, come to the fore this autumn: counterparty risks and insufficient market transparency. Given a reliable counterparty and a transparent market, conditions are in place for making security transactions safe and efficient. As a central bank we naturally welcome every measure whereby the financial markets continue to function even in turbulent times.

Finally, the financial crisis has made it clearer that monetary policy and financial stability interact – if one does not function, neither does the other. For our monetary policy to be effective, it is therefore necessary that securities trading functions properly, with low transaction costs, managed counterparty risks and transparent markets.

Thank you.

Did you know that the word “coffee” is only mentioned on one page in the Big Book?

I’ve often felt that AA members should pool all of their savings and purchase shares in Tim Horton’s, Starbucks, Second Cup, and Bridgehead. Really - have you seen some of these places before or after a AA meeting?  Hell, we probably spend enough money at these places to form our own Coffee Index Mutual Fund, and all retire off the proceeds.

I remember how important it was when I stumbled into my first AA meeting for someone to put a cup of coffee into my hands. Swill though it was, it was hot, and it didn’t have booze in it. Mind you, it was also full, and with my shakey hands… well, you get the picture. When I bring a newcomer a cup of coffee these days, I try to remember to leave the cup only half full.

Of course, I had to be different - towards the end of my drinking, my attitude was more along the lines of “Who the hell needs a glass?” ***Sigh*** - from boxless thinking to glassless drinking - that’s where I was headed.

I’m still grateful for bad coffee on a cold night, although I am starting to learn to moderate my caffeine addiction and enjoy better coffee when I can.  And speaking of other addictions, I’m 26 days since my last cigarette - I was going to give up drinking and smoking the same day, but somebody said not to do that to my body. It’s too bad that it had to take me over 5 years to get to this point, but I have no regrets - the universe is unfolding the way it should…

Someone told me that chocolate was sinful recently, but hey, we’re not saints, right? I’ll deal with my addictive behaviours one at a time, one day at a time. In the meantime, I mean to enjoy life too. I’m just glad that no one around me sits in judgement - my friends and family have all been supportive, and never intolerant. Thank heavens, because the last thing this alcoholic needs is to be told not to do something:

Here is a case in point: One of our friends is a heavy smoker and coffee drinker.  There was no doubt he over-indulged.  Seeing this, and meaning to be helpful, his wife commenced to admonish him about it.  He admitted he was overdosing these things, but frankly said that he was not ready to stop.  His wife is one of those persons who really feels there is something rather sinful about these commodities, so she nagged, and her intolerance finally threw him into a fit of anger.  He got drunk. 

Of course our friend was wrong—dead wrong.  He had to painfully admit that and mend his spiritual fences. Though he is now a most effective member of Alcoholics Anonymous, he still smokes and drinks coffee, but neither his wife nor anyone else stands in judgment.  She sees she was wrong to make a burning issue out of such a matter when his more serious ailments were being rapidly cured. Big Book, Pg. 135

I don’t know about my “serious ailments… being rapidly cured”, but I do know that I feel better to be waking up to an espresso or latte than to a “scotch and coffee”, or that first cigarette of the day.  And just like the fact that since I came into AA, I’ve never said that I’ll never drink again, now I don’t have to say that I’ll never smoke again. I just know that I don’t need to today.

Interested in reading more about the federal government’s response to the current economic crisis?  Fordham Law Library has collected links to a variety of documents related to the financial crisis:

I’m always amazed and pleasantly surprised to hear stories from today’s leaders in the venture capital and private equity business testifying to the continuing legacy of Georges Doriot.

Case in point: This week I spoke to the co-founder and senior managing director of HarbourVest Partners, D. Brooks Zug. HarbourVest is one of the world’s largest fund of funds investors, with more than $30 billion of capital invested in various partnerships over the years. The Boston-based company began as an affiliate of John Hancock Mutual Life Insurance Co. in the late 1970s. In 1982, the firm created its first fund with $148 million of capital to invest in U.S. private equity partnerships and operating companies.

Zug, who told me had dinner with Doriot soon before he died in 1987, said the General and the venture firm he ran for 25 years, American Research and Development, played a key role in convincing John Hancock to support the creation of HarbourVest–thereby helping to spawn the fund of funds world.

The reason? John Hancock was one of the founding investors in ARD–the first venture capital firm to raise money from non-family sources such as pension funds, endowments and insurance companies. In fact, ARD worked out of the old John Hancock building for most of its existence.

Although most investors thought John Hancock and the handful of firms that backed ARD’s first $3.5 million venture fund were nuts, Doriot and ARD proved them wrong. John Hancock earned a 10,000% return on its investment in ARD, said Zug. “The firm’s support of ARD helped management be receptive to the idea” of backing HarbourVest, said Zug.

Today, institutional investors contribute the majority of capital to the private equity business, and the fund of funds world has become a major player in global capital markets. And for that, we can thank Georges Doriot.

Fundraiser in support of The Algonquins of Barriere Lake

Everyone is Welcome!

We will be showing 2 short videos on the blockade highway 117 taken place on Oct. 6th, 2008 (12 minutes) and Nov. 19th, 2008 (7 minutes).  Some members of IPSMO will recount their experiences as front-line activists, followed by storytelling featuring Algonquin Elder Albert Dumont, poetry and music by Loh, Mehdi, Horus, Christopher Herodier and other talented friends!

There will be Barriere Lake t-shirts available for sale.

All proceeds will go to the Legal Defense Fund for the 4 arrested Algonquins for their crime: Defending the Land.  The arrested Algonquins are:

Background Info:

“In 1991, Barriere Lake signed a historic Trilateral agreement with Canada and Quebec to sustainably develop our traditional territories – the United Nations called the plan an environmental “trailblazer.”  Yet in 1996, the federal government tried to hijack the agreement by replacing our legitimate Chief and Council with a minority faction who let the agreement fall aside.  A resolution was achieved in 1997 by Quebec Superior Court Judge Réjean Paul, who restored our legitimate Chief and Council and renewed the Trilateral agreement.  In 2001, the government pulled out of the Trilateral agreement and started favouring certain community members opposed to our legitimate leadership.  Judge Réjean Paul mediated again in 2007, concluding that the opposition to our Chief and Council was “a small minority” whose leadership challenge “did not respect the Customary Governance Code.”  But when this same minority group conducted another alleged leadership selection in January 2008, the federal government quickly recognized them.”

Barriere Lake Demands:

After exhausting all political avenues, the Algonquins of Barriere Lake and many non-native supporters blockaded highway 117 for the first time on Oct. 6, 2008.  The community, including Elders, youth and children, were met with a brutal police response. Riot cops used tear gas and pain compliance, instead of negotiators. The police response has drawn criticism from international human rights groups, the Chiefs of Ontario, and the Christian Peacemaker Team.

The second time, the Algonquins of Barriere Lake and allies blockaded the highway again on Nov. 18, 2008.  As a result, 4 Algonquins, including Acting Chief Benjamin Nottaway were arrested by the SQ riot squad.

For more info, please visit Barriere Lake Solidarity http://barrierelakesolidarity.blogspot.com web site.

Mrs. Harvey A. Stanard
Organizer of first Sunday School at Laxson Creek

James Hammond
Pastor when church was moved to Medina in 1889

The church remained the Medina Charge through 191C.” Preachers during these years, following Bro. Ryan, were A. C.Ge’ritte.,1913-1914; J. C.Apige,1914-1915; R. A. Waltrip, 1915-1916; and J. W. Childers served during World War 1 from 1916-1919. Sunday School superintendents during these years were J. T. Akin, and J. C. Gallant.

In September, 1954, Charles Runk was placed in a new appointment and Rev. E. A. Morgan was appointed to take his place as resident minister at Medina. Rev. Morgan remained the minister for the next nine years, until he retired in June, 1963.

As a result of the generous giving of so many, the building became a beautiful little church. However, something seemed to be missing. One Sunday morning the Sunday School Superintendent, Vernon Williams, made the remark that the thing that was missing was a steeple. At the next official board meeting, a motion was made to buy a steeple from the general fund. All were in favor of this. The steeple was bought and placed on the church. Now, the church building seemed complete, with its steeple pointing toward heaven.

Methodist Church in Centennial Year 1981

http://www.themomcrowd.com/7-ways-to-show-your-family-you-love-them

Fund Admin

Key Responsibilities:

Manage fund admin/fund accounting work

Requirements:

If you meet the requirement, pls send your CV and other related document to recruitment@bankbii.com at the latest December 31′08

Fund Admin

Key Responsibilities:

Manage fund admin/fund accounting work

Requirements:

If you meet the requirement, pls send your CV and other related document to recruitment@bankbii.com at the latest December 31′08

No comments yet.

id="blog_description">Simple Living = Frugality = Peace of Mind: Personal Finance and Stress Control

The Carnival of Personal Finance is up at Free from Broke. The “turning what you love” post was included in this round-up, which as usual is huge.  At this carnival, The Strump pushed my button with a report on how she got suckered into taking a contract at significantly less than the client’s going rate…been there, too! Everyday Finance predicts that many of us mutual fund holders will be rudely surprised at the capital gains taxes we’ll be paying for 2008, thanks to the current economic fiasco. LOL! I’ve become rude, all right, but I’m no longer surprised at anything emanating from the Bush economy. Mighty Bargain Hunter worries that the bailouts will ultimately harm everyone’s standard of living; this post offers several good points that add to my own slowly germinating theory that Big Auto, alas, should not be rescued by the taxpayer. 

Moving on, Simply Forties has posted the 93rd Make It from Scratch Carnival, always a boot. Whaa? “How to Make a Horseshoe?” Check it out at Midwest Neurotica! Who’d've thunk it? The proprietor of Frugal Antics of a Harried Homemaker had an end-of-season tomato extravaganza that involved a lovely spaghetti sauce. And don’t miss Simply’s amazingly delicious-looking parmesan and herb-crusted beef tenderloin (ohhh hunger! I shouldn’t be reading this stuff before breakfast…). Funny’s blurb on nabbing nice picture frames on the cheap appears in this round-up.

MSN  Smart Money picked up my discussion of long-term care insurance and is running it as a guest post today. Check out proprietor Karen Datko’s article, posted yesterday, about the long-term implications of the mentality instilled by the need for kids to go deep into debt to get a basic college degree.

This is bad, very very bad. Get ready folks.

http://biz.yahoo.com/ap/081209/meltdown_treasurys.html

`Down slightly is the new up’: To skittish investors, zero interest, even negative, looks good

NEW YORK (AP) — Investors are so nervous they’re willing to accept the same return from government debt that they’d get from burying money in a coffee can — zero.

The Treasury Department said Tuesday it had sold $30 billion in four-week bills at an interest rate of zero percent, the first time that’s happened since the government began issuing the notes in 2001.

“No one wants to run the risk of any accidents,” said Lou Crandall, chief economist at Wrightson ICAP, a research company that specializes in government finance.

At last week’s government auction of the four-week bills, the interest rate was a slightly higher but still paltry 0.04 percent. Three-month T-bills auctioned by the government on Monday paid poorly, too — 0.005 percent.

While everyday people can keep their cash in an interest-earning CD or savings account at the bank, institutional investors with hundreds of millions of dollars on their hands often use government debt as part of their investment strategy.

In the Treasury market, the U.S. government, considered the most creditworthy of borrowers, issues IOUs of varying durations to raise money.

The zero percent interest rate is no reason to panic. As recently as Monday, investors were plowing cash into stocks, and averages like the Dow industrials are off their lows.

And long-term government bonds, while near record lows, are still paying decent money considering the tumultuous climate. The yield on a 30-year bond on Tuesday was a little higher than 3 percent.

There’s good news in all this for taxpayers: Low interest rates on government debt mean the United States is financing its $700 billion bailout of the financial system very cheaply. The Treasury has sold mountains of debt to pay for it.

But the trend also underlines stubborn anxiety in the financial market that could keep the economy sluggish for years to come, and it translates into stagnant returns for people who have their money in places like money market funds.

“There’s a price for safety,” said Peter Crane, president of money market mutual fund information company Crane Data LLC. “Down slightly is the new up.”

As the stock market has taken its alarming plunge, people have been moving money from riskier assets to safer ones. According to Crane Data, funds invested purely in Treasurys have surged more than 150 percent over the past year, to $726 billion.

Earning zero percent on an investment for a short while may not seem that dire for the average person. But a zero percent rate has serious consequences for the complex credit markets.

Those markets have been dysfunctional since Lehman Brothers Holdings Inc. went bankrupt in September, scaring away investors who normally buy bonds from seemingly creditworthy borrowers. Lending, the lifeblood of the economy, has frozen up.

One corner of the credit markets is the repurchase markets, known as “repo,” where banks and securities firms make and receive short-term loans backed by collateral, usually Treasury bills.

When those T-bills are yielding nothing, there’s little incentive to deliver them on time. If the holder loses the interest, it’s no big deal.

“This is a particular problem in a time like this, because people are buying Treasury securities for their security, for their safety. It’s important that they’re delivered,” Crandall said.

And high demand for government debt rather than corporate debt could stifle economic growth.

Corporate bond rates have been surging to record levels compared with Treasurys, which makes it more expensive for companies to raise money. And when companies can’t raise money, they often have to cut costs, sometimes through layoffs.

Only a few corporate bond deals have been going through lately, and most have been through the government, which has agreed to guarantee financial institutions’ bond sales. American Express Co., for one, said Tuesday it has issued $5.5 billion through the government program.

Many worry that the government will become the most attractive lender and borrower in the market — crowding out others in the private sector.

“Because they have a printing press, they can borrow ever greater quantities,” said Howard Simons, strategist with Bianco Research in Chicago.

The 2-year note rose 6/32 to 100 25/32 and its yield fell to 0.85 percent from 0.94 percent late Monday. The 10-year note rose 25/32 to 109 17/32 and its yield fell to 2.65 percent from 2.75 percent. The 30-year bond rose 2 21/32 to 128 5/32 and its yield fell to 3.04 percent from 3.16 percent.

The three-month Treasury bill by late trading yielded 0.03 percent, up marginally from 0.02 percent late Monday. The discount rate was 0.02 percent.

And bank-to-bank lending rates slipped. The London Interbank Offered Rate, or Libor, for three-month loans in dollars fell nearly 0.03 percentage points to just over 2.16 percent, according to the British Bankers’ Association.

AP Economics Writer Martin Crutsinger reported from Washington.

Dec. 10 (Bloomberg) — Investors in money-market mutual funds that focus on U.S. Treasuries may lose money for the first time if the Federal Reserve cuts interest rates next week and yields become too small to cover expenses.

Record-low yields on government debt have already led money-market funds to waive fees to keep returns positive. If the Federal Open Markets Committee, as expected, cuts its target rate, some Treasury funds may allow returns to turn negative, said Peter Crane, president of Crane Data LLC, a money-fund research firm in Westborough, Massachusetts.

“No one has ever paid above and beyond their interest income to be in a fund,” Crane said. “But if we see another cut, we’ll likely see negative yields.”

During India’s 1999 Kargil war with Pakistan, Israel rushed military support to India, cementing the nascent defense relationship. Many expected India-Israel relations to cool after the Congress Party regained power following elections in 2004, but instead the Congress-led coalition has pressed ahead with expanding defense ties.

Given its fragile coalition, however, the Congress Party has to be cautious of jeopardizing the Left Front’s support.

On Feb. 12, India’s Foreign Ministry released a statement condemning Israel’s “use of force” in Gaza, calling on Israel to exercise restraint and pledging a package of humanitarian aid for the Palestinian Authority. Raja, of the Communist Party, attributed this move to Left Front pressure on the government.

Cognizant of political sensitivities, Lior Weintraub, a spokesman for the Israeli Embassy in New Delhi, said it was the embassy’s policy not to comment on military assistance and arms sales to India.

He defended Israel’s blockade of Gaza as justified by the ongoing rocket attacks from the Hamas-controlled territory but declined to comment on India’s condemnation, saying Israel expresses its sentiments to the India government “through the appropriate channels,” not “on pages of newspapers.”

As for the TecSar launch, Weintraub said it was “a commercial tie-up” between India’s Space Research Organization and Israeli Aerospace Industries Ltd., the defense contractor that built the satellite. He referred all further questions to the company.

Israeli companies clearly see more military sales to India in the offing. Israel Aerospace Industries, which built the TecSar satellite, announced a partnership this month with the Indian conglomerate Tata to develop and manufacture missiles, radars, unmanned drones and other defense equipment.

Israel Military Industries also is optimistic about further sales.

“I think the Indian market is a huge one,” said Zeevi, the spokesman, adding that Israeli companies offer “good products, good technology and combat-proven experience.”

India-Israel military relations have been given a boost by warming relations between the United States and India. The United States would like India to counterbalance Chinese influence in Asia, and as such it has approved of Israeli sales of advanced radars and missiles to India.

The United States exercises a de facto veto over such sales because many Israeli systems incorporate U.S. technology and also because of the exceedingly close strategic relations between the United States and Israel. Several years ago, Israel had to call off a huge arms sale to China at the last minute because of U.S. objections.

Israel and India only established formal diplomatic relations in 1991 with the Madrid Arab-Israeli peace process creating a favorable diplomatic context for New Delhi to move beyond informal contacts that existed before 1990. Then President Bush’s National Security Council staff worked closely behind the scenes with Prime Minister Rao’s embassy in Washington to make this happen. Military-to-military contacts and defense interaction followed.

In the 1990s, China was Israel’s most important arms export market. The signature weapons system in the relationship was the Phalcon airborne warning and control system (AWACs). This system used U.S. technology in its development and was thus subject to U.S. export oversight. As the 1990s developed and tensions rose in the Taiwan Strait, Washington pressed the Ministry of Defense in Tel Aviv to cut back on its ties to Beijing. The Phalcon became a bone of contention. Of course, this had serious economic costs for Israel.

In 2000, Prime Minister Ehud Barak pressed President Clinton for relief. Clinton came back with an idea — if the United States did not like Israeli-Chinese arms deals, it had no objection to Israeli-Indian arms sales since they did not raise the potential issues Taiwan raised. More explicitly, selling the Phalcon to India would not meet objections in Washington. Clinton made clear the United States would not raise concerns about the arms balance with Pakistan since it has no commitment to the defense of Pakistan and the conventional balance of forces was already tipped in India’s favor in 2000. The two leaders talked the issues through on the margins of the Israeli-Palestinian summit at Camp David in mid-2000. They reached agreement and Israel got a green light from Washington to court India.

Now, almost eight years later, India is Israel’s largest arms export market in the world. Sales in 2006 were $1.5 billion, roughly the same as in each of the preceding three years as well. This from Israel’s total arms sales of $4.2 billion in 2006; the India market comprised more than one-third. Sales included upgrades for MIG 21 aircraft and T72 tanks originally purchased from Russia, the Barak anti-missile ship defense system, communications equipment, laser-guided munitions and the Phalcon. The first of five Phalcon AWACs were delivered in 2007. Co-partnerships are now developing between Indian and Israeli firms.

Israeli arms experts are also seeking to sell the Arrow II anti-tactical ballistic missile system to India, which would require U.S. approval due to shared technology in the ATBM system. This would give India a significant missile defense system. The Green Pine radar system has already been sold to India which is a critical component of the overall ATBM system.

The Polaris satellite is Israel’s first equipped with synthetic aperture radar that allows it to take high resolution imagery in all weather conditions. The radar looks through clouds or fog to see objects on the ground. Launched from south India into a polar orbit it offers new coverage of sites in Iran for Israeli defense planners. According to Indian press sources, two more such satellites will be launched by ISRO for Israel in the next few years. The Iranian nuclear program will probably be the principal collection target for these systems. Israel retains full operational control of the Polaris system including what targets are imaged. It is unknown if any intelligence derived from the imagery is shared with third parties.

Critics of the Indian-U.S. civilian nuclear deal negotiated by President Bush and Prime Minister Singh have complained about India’s ties to Iran. India does have important equities with Iran, not the least because India has the second largest population of Shia Muslims in the world after Iran. But there is no comparison between the sophisticated military relationship between India and Israel and the weak connections between India and Iran on security issues.

According to ISRO officials I talked to in Bangalore in February the launch of the Polaris produced a serious protest from Iran to India. But they were clear ISRO would stick with its Israeli commercial connection. They also said India will launch its own first radar-imaging satellite later this year. The Indian Army Chief of Staff, General Depak Kapoor, has said publicly that India’s imagery satellite capability is now critical to the nation’s early warning capability with regards to both Pakistan and China.

On the basis of Ministry of Finance’s instructions issued on 31st January, 1989 relating to Indian Agents of foreign suppliers for all the Ministries & Departments under the Government of India, supplementary instructions were issued by the Ministry of Defence in April 1989 and in November, 2001 to regulate authorized Indian representatives & agents of foreign suppliers. The instructions provide for the regulation of representational arrangements through a system of registration, categorical and open declaration by the foreign suppliers of the services to be rendered by their authorized representatives & agents and the remuneration payable to them by way of fees, commission or any other method. So far no authorized Indian representatives /& agent has been registered by the Ministry of Defence in terms of these instructions.

Three Israeli-made balloon or blimp-held radar called Aerostat will be deployed around New Delhi after an intelligence alert of a threat from low-flying aircraft. An Aerostat is also being deployed in Agra for the Taj Mahal.

The Aerostat-based missile defence system is a generation behind the systems used by the US. India is in talks with the US and Russia to check out their more advanced missile defence systems (such as the Patriot III and the SV-300). Its Defence Research and Development Organisation (DRDO) is also carrying out trials for an indigenous Prithvi Air Defence system.

The Aerostat radar has been used along the international border in Punjab and in Gujarat (Kutch). The radar is currently in use in south India after the LTTE used aircraft to bomb Sri Lankan military facilities last year.

An official of the Indian Air Force said the decision was taken after defence minister A.K. Antony held a meeting last week and asked the service to mount an extraordinary vigil. Following that, security was beefed up at airports.

The deployment of the Aerostats is in line with that measure, the officer said.

The EL/M 2083 Aerostat radar was bought from Israel in 2004-2005. The blimps have a maximum altitude of 13,000 feet. They are tethered to the ground. The radar they carry has coverage of up to 300km.

The radar is used for surveillance and also has IFF (identification friend or foe) capability. For the national capital, the Aerostat will be connected to batteries of surface-to-air missiles (SAMs).

If the radar signals an unidentifiable aircraft approaching, it can be programmed to trigger the SAMs automatically.

However, the Indian Air Force usually alerts fighter aircraft squadrons in the vicinity of the capital — in Gwalior, Hindon or Ambala, for example — to be ready to scramble.

Israel and India partner up.(India to purchase arms from Israel)(Brief… 

On 20 January 2008, India and Israel successfully forged a partnership in the space sector when an Israeli spy satellite was launched into space by the Indian Space Research Organisation (ISRO). The Techsar satellite was launched 9:15 am local time (0345 GMT) from the Sriharikota space station in southern India.

The significance of the satellite launch is magnified by the fact that this launch was earlier stalled owning to intense objections by Arab states which viewed the satellite to be a direct threat to their defence integrity. An earlier report in an Indian news media claimed that the satellite launch vehicle was dismantled at the behest of American pressure. Such was the pressure on the Indian government to not support the Israeli space aspirations, that according to a senior Indian intelligence official, the launch was “dismantled” completely to prevent even a future launch if the government changed its mind (DNA, 4 December 2007).

The satellite launch is another feather in the growing cooperation between the Jewish nation and India, an alliance which has culminated in Israel becoming the second largest defence supplier to India.

It makes sense for the Indians and the Israeli’s to forge an alliance particularly in the space sector. India has been developing its space program as early as the 1950’s and while initially catering to civilian purposes; ISRO has also been involved in upgrading India’s military prowess. For example, the Agni missile is based on a successful civilian satellite launch vehicle. India can offer its space expertise in exchange for Israeli expertise in their Unmanned Ariel Vehicle Program or else work towards a commercial arrangement, which would significantly boost the international commercial viability of ISRO.

Indeed, the interest of Israel and India in space cooperation was broached when the two countries signed a cooperation agreement in November 2002. When visiting Israel in August 2003, Krishnaswami Kasturirangan, former chairman of the India Space Research Organization, expressed interest in the Israeli concept of small satellites and their employment, adding: ”Israel has much to offer in terms of cooperative programs for the future.” The Israeli Ofeq spy satellite had attracted Indian attention even before this visit.

Owing to Israel’s precarious security environment, the need for high resolution and timely imagery from enemy territory has led them to develop exceptional imaging technology. Indeed, the Israeli Spy Satellite Ofek-7 was instrumental in helping destroy a suspected nuclear bunker in Syria in September 2007.

The new satellite Tecsar is said to be technologically far superior to its Ofek predecessor. It would be the first satellite to incorporate Synthetic Aperture Capabilities. This feature allows the camera to take pictures of targets under cloudy and foggy conditions (Jerusalem Post, 20 September 2007). It would therefore place Israel in the small list of countries with imaging radar reconnaissance satellites able to distinguish camouflaged vehicles from rocky terrain, for example, and to see at night and through clouds and foliage. In addition, the aperture radar has 1-meter resolution and differing spot, mosaic and strip modes. These modes provide a multitude of different radar aspect angles to illuminate targets on the ground. And while further technical details of the satellite remain confidential, it is believed that the satellite also carries a powerful panchromatic camera.

According to some, the Israeli decision to use an Indian launch vehicle is based on the inability of the Israeli Shavit booster to fire the 600lb satellite into space. However, Israeli critics have observed that the decision can be traced to Israel strengthening ties with a major power other than the US. (ABC News, 27 September 2007).

The launch is a boon for India, for according to details of an agreement, Israel would be sharing the satellite imagery with India and in addition, it would provide a financial windfall for ISRO. The need for such a satellite is being felt by India, which was given a rude shock in 1999, when armed Pakistani intruders established bases deep inside the Indian territory in Kargil. When the Indian satellites were used to map the positions of the insurgents, the pictures were hazy and did not reveal any ground level movement - an intelligence failure which proved critical (DNA, 4 December 2007).

In addition, the launch of the satellite made ISRO richer by about USD$14 million. The launch provided an advertising impetus to the reputation of ISRO in the USD$2.5 billion global commercial satellite launch services (Hindustan Times, 22 January 2008).

There is a need to dispel the misplaced notion that the quantum of US arms sales will drop because the world is in the grip of a recession and the money supply is low.

According to American sources, US weapons sales to foreign countries in 2008 are higher by 45 per cent as compared to the year 2007. As the year comes to a close, the US would have offered about US$34 billion in weapons to Iraq, Pakistan, Saudi Arabia and other countries. This figure in 2007 was US$23.3 billion, also higher than the figure of US$21 billion for the year 2006. What is important to note is that the sales blitz had continued in the midst of the American sub-prime crisis which was visible from the middle of 2007.

The coalition supported regime in Iraq has emerged as the principle procurer of American weapons for whom more than US$12.5 billion in possible foreign military sales has already been processed. This does not include the demand for the F-16 combat fighter planes, which is still going through the indent, consideration, clearances, orders stages and so forth. But, a sale is a foregone conclusion. A factor much to the elation of Lockheed Martin, the Bethesda based weapons giant and the manufacturer of F-16s. The company in his annual report informed of a 13 per cent increase in profitability, from US$778 million last year to US$882 million in 2008.

With the deeply permeated American psychosis against Iran, which has permeated the Iraqi regime and its policy planners, Baghdad now clamours for Abrams tanks, attack helicopters, Hellfire missiles, heavy transport aircraft, and other weapon systems. The argument put forth is that only through the multi- billion dollar weapon acquisitions can his country reduce it’s dependence on the United States military. In Machiavellian realism, however, we would call it close interdependence in the exercise of political power.

As recently as September 2008, when the American crisis was in full bloom, weapons giants like Boeing, Raytheon, and BAE Systems, sponsored an ultra sales inspired conference to hold a thematic discourse on “Defense Priorities in an Age of Persistent Conflict.” A representative from the American Navy at the level of an undersecretary, a senior Pentagon Deputy Director, several weapons manufacturers, and defense representatives from France, the Netherlands, Canada, spoke on the occasion. That this group chose to extol on this ominous theme clearly indicates a concerted drive to promote weapon sales with ill conceived armed conflict scenarios. Amelioration of the conflicts on the other hand did not receive the same attention of the members of the American state. This is arms business at its best.

Who says that the American military is tightening its belt? The military budget will spiral: from an expenditure of US$316 billion in 2001, to more than US$515 billion for fiscal year 2009 commencing in October this year. This is over and above the annual funds needed for nuclear weapons and nearly US$150 billion for the “global war on terror,” The huge tally adds up to much more than the total money spent by the rest of world on their military. Theis syndrome will receive great impetus and proliferate as Barack Obama is on record espousing the cause of modernizing the American military for the 21st century and expanding the size of the armed forces. Obviously, we see a phenomenal rise in military spending, imminent in the very near future.

I found this article from the New York Times fascinating:

September 7, 2003

As I write this, there are news reports that Prime Minister Ariel Sharon of Israel will visit India in September. Also in the news: Islamist terrorists killed Hindu pilgrims on the way to Amarnath. An Islamist suicide bomber wounded the army’s top brass in an attack on a camp near Jammu. On a regular basis, Palestinian terrorists kill Israelis.

India and Israel are both victims of Islamist terrorism. Indians and Jews have been victimized by Islamists and Christians for millennia. The Jewish Holocaust in Europe is exceeded only by the twin Indian Holocausts: one perpetrated by Muslims in 711-1857 C.E., killing an estimated 80 million Indians, and the other perpetrated by Christian colonialists in 1757-1947 C.E. (through avoidable famines they killed 30 million Indians; see Late Victorian Holocausts by Mike Davis, Verso.).

Today, India and Israel are the only two states that are not caving in, in a giant Islamic crescent from West Africa to Indonesia: the only two states that defy dhimmitude.

Out of 148 nations in which Jews have lived, they have been oppressed in 147 of them, the lone exception being India. The Jews of Cochin, for instance, landed in 72 C.E at the great port of Muziris (Kodungalloor). They have lived there unmolested ever since, except when Portuguese invaded circa 1600 C.E. Today, visiting Israeli youth find this is one country where nobody hates them for being Jews.

After independence, the Nehruvian Stalinists in power deliberately kept aloof from Israel, but in the last few years, the relationship has thrived, and Israel has become India’s second largest supplier of weaponry. Israel had extended the hand of friendship earlier, but India rejected it. Just after they bombed and destroyed Iraq’s Osiraq nuclear reactor on June 7, 1981, the Israelis suggested doing the same to Pakistan’s reactors at Kahuta. This could have set back Pakistan’s “Islamic Bomb.”

By opposing Israel, India deluded itself that it would get preferential treatment from Arabs; however, all this goodwill and $32 still buys us a barrel of oil—no discounts there. And Arabs have not once (with the possible exception of Iraq) supported India in its quarrels with Pakistan. Supporting Palestine has brought India no dividends.

Working with Israel today should be beneficial to India, because there are opportunities for technical and military cooperation. Israelis are the world leaders in avionics and in security. They have plenty of experience in dealing with Islamic terrorism, too.

A strong India-Israel alliance does not seem to have too many negatives; on the plus side, the Arrow and Phalcon and similar weapons systems could help. Considerations of the national interest dictate such an alliance. The Sharon visit should kick this off.

Rajeev Srinivasan wrote this opinion from Trivandrum, India.

———————————————————–

An enemy’s enemy is a friend, seems to be the underlying logic in the recent flowering of Indian-Israeli relations. But are the two fighting a common enemy or different foes with little more than a superficial resemblance?

The bitterness of Indian-Pakistani relations contrasts with the respect (if not friendship) underscoring India’s relationship with Israel’s traditional enemies, Syria and Lebanon. The Indian avatar of Islamic terrorism is represented by various Al Qaeda-affiliated groups like Lashkar-E-Toiba, religiously anchored in Wahabi doctrine, a school so extremist that it clubs even Shia Muslims with the “kafirs.”

Israel’s bete noire is the Hizbollah, a Shia extremist group at loggerheads with various Sunni Palestinian groups fighting Israel. The Hizbollah has also practiced terrorism differently than Al Qaeda—its profusion of suicide bombers is in contrast to Indian Islamic terrorists attempting suicide sparingly (and often unsuccessfully). The lack of professionalism in the parliament house attacks are in stark contrast to the Hizbollah’s professionalism in attacking American barracks in Beirut.

Since Arab countries construe relationships with Israel no differently than bulls would a red flag, the repercussions on Indian-Arab trade relations are a matter of grave concern. Irrespective of volume, Israel can never replace the Arab bloc as a trade partner.

Courting the Israelis will adversely affect the more-than-million-strong Indian expatriate community in the Gulf, literally marooned in a sea of Arabs. The Indian government should ponder over the precarious situation into which Indian nationals would be plunged should Arab passions get inflamed as a result of an alliance with Israel. Memories of India’s pathetic failure in rescuing its nationals from Iraq during Gulf War I leave no doubts about the latter’s fate should they be accused of being “Zionist spies.”

India should also remember Israel’s extreme cynicism regarding loyalty and relationships. In the 1980s, Israel simultaneously trained the LTTE in guerrilla warfare while training the Sri Lankan army in anti-terrorism operations. Should Pakistan make overtures to Israel, one shouldn’t be surprised if an alliance were struck to sustain the insurgency in Kashmir while Indian-Israeli efforts focus on containing the same.

Changing partners mid-game is seldom easy; one can only hope that India will not emerge sadder and poorer from the experience.

S. Gopikrishna writes from Toronto on matters pertinent to India and Indians.

Page 1 of 1

South Asia 

(Posted with permission from Foreign Policy in Focus)

Close on the heels of Indian National Security Adviser Brajesh Mishra’s call for an India-United States-Israel strategic alliance, comes the confirmation that Israeli Prime Minister Ariel Sharon will visit India within the next few weeks. Some observers in New Delhi consider Mishra’s call, made at the annual dinner of the American Jewish Committee, as a curtain raiser for the Sharon visit. What they seem to ignore is that the India-US-Israel strategic alliance has moved beyond last call to center stage and that the plan for Sharon’s visit is some 15 months old.

It was an ironic coincidence that Brajesh Mishra was closeted in his office in New Delhi on September 11, 2001 with his Israeli counterpart Major General Uzi Dayan and engaged in what was dubbed a “joint security strategy dialogue” when the attacks on the World Trade Center and the Pentagon occurred. Their discussion had to be discontinued as they turned to the television news. Favored by the climate of the ensuing “war on terror”, the security relationship between India and Israel developed into a strategic alliance in tandem with the India-US strategic partnership.

The alliance between India and Israel - one an open member of the international nuclear club and the other a secret member - is based predominantly on military and intelligence cooperation. Israel has become the second-largest supplier of arms for India, next only to Russia. Israel has provided India with sea-to-sea missile radar and other similar systems, border monitoring equipment, and night vision devices. It also has upgraded India’s Soviet-era aircraft.

In the third week of February, an agreement was made to supply advanced Israeli avionic systems for the Indian Air Force’s new MG-27 combat aircraft. There are reports of Indo-Israeli plans to collaborate on the development of a missile defense system based on the Israel Arrow technology. Indian defense officials acknowledged the acquisition of two Israeli Elta Green Pine long-range radar systems, a component of the Arrow Ballistic Missile Defense Systems, according to some reports. A 2001 Pentagon review said that the defensive nature of the Arrow system exempted it from sales restrictions imposed by the Missile Technology Control Regime, an international agreement designed to stop the spread of offensive military technology.

Israel and India established a joint commission at the ministerial level back in 1999. During that year’s brief conflict with Pakistan, known as the Kargil war, Israel responded quickly to India’s desperate requests for arms, despite pressures from various quarters not to supply ammunition to a party engaged in war. Unmanned aerial vehicles for high altitude surveillance, laser-guided systems and many other items were provided within days of the request. Jane’s Defense Weekly, which gave details on the supplies, reported in March 2000 that Israeli security officers were regularly visiting the Kashmir border. Jane’s Terrorism and Security Monitor reported on August 14, 2001: “Israeli intelligence agencies have been intensifying their relations with India security apparatus and are now understood to be heavily involved in helping New Delhi combat Islamic militants in the disputed province of Kashmir.”

The Jerusalem Post reported on February 3 that India was sending four battalions of nearly 3,000 Indian soldiers to Israel for specialized anti-insurgency training. Their special assignment on return would be to employ newly learned techniques to stop infiltration of India by Pakistani terrorists in the contested Kashmir region.

Professor Martin Sherman published an article in the Jerusalem Post on February 28 entitled “From Conflict to Convergence: India and Israel Forge a Solid Strategic Alliance”. The alliance with India was important for Israel as it intended to develop sea-borne defense capability. In view of the miniscule territorial dimension of Israel, its defense planners are increasingly aware of the crucial significance of the marine and sub-marine theaters. The vulnerability of Israel’s land-based military installations grows with the acquisition of modern weaponry by other countries in the region. Strategic thinking in Israel tends to give prominence to the Indian Ocean as a location for logistical infrastructure. For the establishment and operation of such a maritime venture, cooperation with the Indian navy would be vital. The Post article said, “In this regard it is especially significant that in 2000, Israeli submarines reportedly conducted test launches capable of carrying nuclear warheads in the waters of the Indian Ocean off the Sri Lankan coast.”

Sherman added, “An alliance between India and Israel openly endorsed by the US would create a potent stabilizing force in the region, which together with like-minded regimes such as Turkey, could contribute significantly toward facing down the force of radical extremism so hostile to American interests in Western and Central Asia.” The article argued that considerations beyond regional stability made a vibrant India-Israeli axis a clear interest. “For example, in the growing balance of geostrategic power, the growing Chinese challenge to US primacy will almost invariably dictate the need for a regional counterweight to Chinese domination.”

It was in the context of the “war on terror” that the strategic relationship of India with Israel and the US developed dramatically though defense and security cooperation. It was just natural that both Israel and the US found a partner in the Indian government because of its ideological commitment to militaristic policy. Conveniently for them, at work in New Delhi was the calculated dismantling of the entire rationale of nonalignment and the edifice of an independent foreign policy.

The visit was the most visible sign of the new phase of the Israel-India relationship. Peres was immensely pleased with it. The Israeli cabinet communique of January 13, 2002 on Peres’ briefing about his trip billed it as a major achievement “emphasizing the good relations and special ties between Israel and India”. Sharon was pleased too. He told the cabinet that he attributed special importance to the deepening of relations with India. That was when he noted that he intended to visit India, giving the first clear signal of the plan. Apparently an invitation to India had been extended to him through Peres.

Mishra drummed up US support for the plan, finding a responsive audience for his skewed and cynical views on terrorism in the American Jewish Committee. Only a “core” consisting of democracies such as India, Israel and the US can deal with terrorism, he maintained. The alliance of the three would have the political and moral authority to make bold decisions in extreme cases of terrorist provocation, he claimed, adding that they would not waste time in defining terrorism or arguing about its causes. “Distinctions sought to be made between freedom fighters and terrorists propagate a bizarre logic,” he spouted. “Another fallacy propagated is that terrorism can only be eradicated by addressing the root causes.” He repeated the pet themes of India, the US and Israel being “prime targets of terrorism”, having a “common enemy” and requiring “joint action”.

His comments were underpinned by those of India’s Deputy Prime Minister Lal Krishan Advani, who, in an interview given to Fox News on July 9, 2002, said, “Terrorism in so far we have seen it on September 11 or December 13 has a common source and that common source has described the US, Israel and India as its three main enemies.” December 13, 2001 was the date on which the Indian parliament was attacked by terrorists. Advani implied that the three countries therefore have a common cause and could forge a common front against terrorism.

The India-Israeli alliance strengthens US strategic designs for India and the region. India holds a very prominent place in the September 20, 2002 National Security Strategy of the US, “a policy document that bears the personal stamp of President [George W] Bush,” according to Robert D Blackwill, outgoing US ambassador to India. The document states, “The United States has undertaken a transformation in its bilateral relationship with India. We are the two largest democracies. We share an interest in fighting terrorism and in creating a strategically stable Asia. We start with a view of India as a growing world power with which we have common strategic interests.”

In an article in the prestigious Indian daily The Hindu, Blackwill wrote, “Taken together our defense cooperation and military sales activities intensify the working relationships between the respective armed forces, build mutual military capacities for future joint operations and strengthen Indian military capability, which is in America’s interest.” He concluded the article: “An Indian military that is capable of operating effectively alongside its American counterparts remains an important goal of our bilateral defense relationship. What we have achieved since January 2001 builds a strong foundation on which to consummate this strategic objective, which will promote peace and freedom in Asia and beyond.”

Washington will ensure that the India-Israeli alliance will serve this strategic objective. As for the Indian government, it has already subjugated the country’s national interests to US designs in return for its designation as a world power.

Dr Ninan Koshy is a political commentator based in Trivandrum, Kerala, India and author of The War on Terror: Reordering the World (DAGA Press, 2002), and a regular analyst for Foreign Policy in Focus.

(Posted with permission from Foreign Policy in Focus) 

http://www.atimes.com/atimes/South_Asia/EF10Df03.html

The Israeli-Indian contretemps looked, at least at first, like the beginnings of a diplomatic headache. But then, even as Israel was burying its victims earlier this week, the controversy simply disappeared. Security types started backpedaling, and Israeli leaders like Prime Minister Ehud Olmert went out of their way to tamp down the criticism. Privately, Israeli Foreign Ministry officials were livid about the accusations. “These guys are mouthing off,” complained one senior Foreign Ministry source, who requested anonymity in order to speak frankly. “We’re really upset about these people.” Part of the reason for the frustration, aside from the desire to show solidarity during a difficult time: Israel is one of India’s top weapons suppliers—a lucrative relationship that has been growing rapidly since the early 1990s. “We’re talking about billions of dollars,” says the Foreign Ministry source.

For more than 40 years after the founding of the Jewish state, India—home to more than 150 million Muslims—resisted formal diplomatic ties with Israel. India wanted to preserve relationships with key Persian Gulf countries, and the Soviet Union took care of most of its defense needs. After the 1991 Arab-Israeli peace talks in Madrid, however, India softened its stance; the two countries formalized relations the next year. As the Soviet Union collapsed, India also needed to look elsewhere for defense links. (Israel and Russia now alternate as India’s top arms provider.) According to a report published this past summer by Harvard’s Belfer Center, in the five years ending in 2007, Israel sold India more than $5 billion worth of arms, including spy drones, motion sensors and AWACS planes. Last year, the two countries struck a $2.5 billion deal to jointly develop a surface-to-air missile system—the largest such contract in Israel’s history, according to the study.

The irony is that, until now, at least, Israel’s training of Indian forces in its defense specialty, counterterrorism, seems to have been limited. “The Israeli-Indian relationship is more about technology and equipment and less about other activities,” says Amnon Lipkin-Shahak, a former Israeli military chief of staff. Amos Yaron, a former director-general of Israel’s Defense Ministry who traveled frequently to Delhi, says there is “some intelligence cooperation” with India but no joint military training that he is aware of. Yet there are some signs of tightening ties. In 2002, the Israeli Foreign Ministry convened a body called the India-Israel Joint Working Group on Counter-Terrorism. This past September an Israeli general, Avi Mizrahi, also visited India to discuss the possibility of joint counterterrorism training.

For now, though, most of the Israeli-Indian counterterror talks are nongovernmental. Efraim Inbar, director of Israel’s Begin-Sadat Center for Strategic Studies, leads a regular workshop for a handful of Israeli and Indian security officials and academics. At the last meeting, in Delhi, they compared experiences dealing with low-intensity conflict, lessons of the 2006 Lebanon War and strategy and tactics for small wars. Still, Israel’s lessons don’t necessarily apply to Indian operations. “Part of their problem is that they’re dealing with locals who want to integrate into society,” says Inbar. “For us it’s usually outsiders.” He adds that Indian forces have a “more patient” and “defensive” approach than their Israeli counterparts.

Considering the religious sensitivities of the region, any actual military exercises would need to be developed in a “discreet framework,” says Lotan. “This kind of cooperation needs to be secret if it can be.” After last week’s Mumbai attacks, Israeli Foreign Minister Tzipi Livni called her Indian counterpart to offer Israel’s assistance, but Indian officials “said they don’t need anything,” according to Andy David, a Foreign Ministry spokesman. Lotan says he also sent word through “official channels” offering counterterror expertise but didn’t receive a reply. Some Israelis, for their part, are also wary of any kind of joint exercises. “I don’t think it will happen,” says Yaron. “It costs a lot of money and a lot of effort. It’s not the first priority right now.” In the meantime, as far as the Israeli Foreign Ministry is concerned, the most helpful thing the country’s counterterror specialists can do now? Simply hold their tongues.

The visit of Indian Secretary of Defense Vijay Singh to Israel three weeks ago as head of a high-ranking military delegation passed quietly and was barely mentioned in the local media. The press releases said the officials discussed security-related purchases, including the sale of three Phalcon aircraft radar systems, manufactured by Israel Aerospace Industries, as well as missiles, helicopters, maintenance equipment and unmanned aerial vehicles. In the past decade, India has acquired Israeli weapons systems to the tune of $8 million.

However, two other issues were also on the table which were no less important: cooperation between Israel and India against Islamic terrorism, and the two countries’ concern - along with that of other Western nations - over the expected dissolution of Pakistan, India’s historic enemy and the first, and so far only, Islamic nuclear power.

Diplomatic relations were officially established in 1991 during the long tenure of the Indian National Congress, but when the nationalist BJP party was at the helm, from 1998 to 2004, those ties blossomed. That period also saw the historic visit of then-prime minister Ariel Sharon to India in 2003.

The INC is now in power again, and continues to maintain warm relations with Jerusalem, but prefers to keep details of them discreet, partly because it has Muslim members. Singh’s visit, consequently, was decidedly low key.

Israel is prepared to do many things to maintain its relations with India. For example, in 2005, when the conversion in India of the Bnei Menashe community (residents of India’s northeast, who claim to be descended of the lost Israelite tribe of Menashe) sparked controversy among local religious leaders, the government was urged to stop the conversions abroad, and instead conducted them in Israel once the new immigrants arrived.

The harsh criticism leveled within India at the current government for its handling of the Mumbai attacks bode ill for the INC, which is likely to lose again to the BJP in general elections at the start of 2009. If that happens, relations between Israel and India will likely only grow stronger.

Related articles:

India declines Israeli offer of aid delegation to Mumbai

Israeli experts: Slow operation meant ‘no chance’ for hostages at Mumbai Chabad house

During the years since the establishment of diplomatic relations, much progress has been made on the bilateral level. India is increasingly becoming central to Israel’s policy, politically, commercially, in science and culture. Israel is appreciative of the fact thatJews in India were never persecuted.

Reciprocal visits between Israel and India indicate the growing mutual acquaintance and the strength of the relations. Israel’s President visited India in early 1997, following visits by its Minister of Foreign Affairs and other cabinet ministers. During 1998 and 1999 there have been visits in Israel of Indian cabinet ministers and MPs, Attorney General – Soli Sorabhjee, and the Prime Minister’s principal secretary – Brajesh Mishra. In the summer 2000, India’s Home Minister L.K. Advani and Foreign Minister, Jaswant Singh visited Israel. Close at their heels was the visit of West Bengal’s Chief Minister and CPI(M) leader Jyoti Basu. Deputy Chairperson of the Rajya Sabha Najma Heptullah, also visited Israel in 2000.  In December, 2001 a delegation of  the Knesset, led by Prof. Amnon Rubinstein, came to India. Mr. Shimon Peres, Minister for Regional Cooperation visited India twice, in August 2000 and January 2001. Mr. Peres visited India for the third time (January, 2002) as Dy. Prime Minister and Minister of Foreign Affairs. In the same year (February, 2002) Mr. Tzachi Hanegbi , Minister for Envionment visited India. Pramod Mahajan, Minister for Communication & Parliamentary Affairs, visited Israel in January, 2002. 

In September 2003 Israeli Prime Minister Ariel Sharon paid a two day state visit to India toghether with Dy.Prime Minister & Minister of Justice Joseph Lapid, Minister of Education Limor Livnat and Minister of Agriculture Israel Katz. During the visit India and Israel signed agreements on Environmental Protection, Cooperation in Combating Illicit Trafficking and Abuse of Narcotic Drugs and Psychotropic Substances, Visa Free Travel for Diplomatic, Official and Service Passport Holders, Cooperation in the fields of Health and Medicine, Cooperation in the field of Education and Cooperation in the field of Culture. The Delhi Statement of Friendship and Cooperation between India and Israel was issued.

In December 2003 Israel’s Minister of Science & Technology Eliezer Sandberg visited India and signed a MoU with the Indian Space Research Organization (ISRO) for the launch of the Israeli TAUVEX UV telescope on an Indian demonstrator Satellite GSAT-4.  In January 2004 Indian Minister of Commerce & Industry Mr. Arun Jaitly headed the Indian delegation to the Joint Economic Committee, which met in Israel.  In February 2004 Israel’s Dy. Prime Minister & Minister of Foreign Affairs Silvan Shalom and the President of Israel’s Supreme Court Chief Justice Aharon Barak visited India. Vice Prime Minister of Israel and Minister for Industry, Trade, Labour & Communications Ehud Olmert, with a large business delegation, visited India from 6th December to 9th December 2004.

The Minister for Science and Technology of India Mr. Kapil Sibal v

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ENVIRONMENTAL HEALTH CONCERN PROGRAMME (EHCP) OF THIN ORGANIZATION.

Indeed we have sometimes seemed to view man as outside the ecological system and to deal with various factors in the environment as though they were merely problems of the planetary property management. In truth, man, whatever else he/she may be, is part of nature, whose life is dependant upon the delicate balance within the ecological system of which he is part.

INTRODUCTION

To-day our nation is facing an environmental and ecological crisis which is being recognized as one of the major problems of our time. There are all forms of environmental degradation and pollution. A soaring population, urbanization, unplanned settlements, agriculture, and infrastructure has led to destruction of natural resources. Fantastic advances in science and technology and the mistakes of our past have produced biological, radiological and chemical contaminations of land, air, food and water, crowding noise and many other threats of human health and well being. And, the disruptions of ecological balances have come to the fore as a major international problem.

Mans survival depends on an infinitely complex system of relationships and balances among countless living organisms, existing in or on the extremity thin crust of the earth, or just before it. The system has remarkable capacity for adaptation and regeneration, but nature’s patience has a limit. If the current trends continue, the future of life on earth is endangered.

Now various aspects of the problem must engage the attention of interest groups in many diverse fields – Conservation, agriculture, transportation, urban planning, industry, commerce, health, consumer protection and others.

Environmental health concern Programme is a broad national programme to identify and document a wide range of problems relating to the environment on which modern man lives, works and spends his leisure time. EHCP is assuring that human environment needs are defined and enunciated as clearly as possible so that consideration of mans health and welfare may become a guiding principle through – out our society, in all actions affecting the environment. It also directs specific attention to such hazards as improper housing, noise, rodent and insect vectors, waste accumulation, improper sanitation and occupational disease and injuries.

THIN organization has integrated but functional programmes designed in partnership participation of local people supporting empowerment and social-economical development using healthcare delivery strategies as a positive receptacle for them.

To improve livelihoods through participatory generation and dissemination and application of knowledge in healthcare.

VISION

GOAL

Empowering rural communities, simple citizens, health professionals and all concerned with knowledge and technology for improved decision making and implementation.

AIM

The main aim of Environmental Health Concern Programme (EHCP) is to provide a scientific basis for the long – term use and conservation of natural and other resources to enable mankind to manage the natural resources of the biosphere more effectively.

To this end, the programme consists of networks of interdisciplinary field research, education, and demonstration and training activities in order to study and understand the impact of man on environment. Such studies are being carried out in close cooperation between natural and social scientists. Major community – based projects are already developed within community environs, regions and municipalities.

To strengthen the Environmental Health Concern project includes among its objectives the training of Scientists and Technicians in multidisciplinary teams in different zones as well as demonstrating and educating community groups, citizens and other stakeholders. This is achieved by means of international and regional training courses, fellowships and exchanges of personnel with special emphasis on on-site training in places where THINS’ activities are already in progress.

The Board outlines of THIN programmes were established in August 2003, at the first Board of Directors meeting (BOD) meeting of THIN, after the official registration of the organization in December 2001. The Environmental Health Concern Programme was to focus its research and training endeavor that would reflect a kind of analogy to the schools of agriculture and public health.

STRATEGIES IN IMPLEMENTATION

Since the major focus of EHCP programme is concerned with mans interaction with particular natures systems and geographical units, much of this work is being developed at the national, regional and community levels.

In each community or environmental zone, the Board of Directors defines and organizes research activities on particular national problems of health and development, which are related to the overall objectives and goals of THINS’ programmes. Special ad hoc advisory panels and committees and a number of temporary appointed consultants help to coordinate community contribution and to define overall core programmes ensuring that compatible methodology is used for various projects of THIN. Thus, THINS’ projects are integrated to work together on a series of health, environmental development so as to provide compatible results capable of generalization and synthesis.

NATIONAL PROJECTS

It’s fair to say that the music industry’s relationship with pop reached its peak just over 10 years ago. Music videos were nothing without a budget of a good £10,000 or more. Singles were a luscious, physical thing with posters, postcards and more non-album tracks than a fan could ever wish for. The charts actually stood for something and were still being fronted by ‘Top Of The Pops’, which anyone under the age of 16 watched religiously. And the icons of our musical affections were untouchable, carefully guarded objects that were forever outside a mere fan’s reach.

Nowadays, it’s a very different story. New acts have to shout the loudest on social networking websites to be heard, and personally spam thousands of potential listeners before any industry mogul or spin doctor considers going near them. If they don’t, then it’s “fuck ‘em, we don’t need them,” and off they go to try it themselves. Probably penniless, but at least they can actually meet their listeners face to face, and forever tell themselves that they were “keeping it real”. What is unusual, though, is to meet an artist who’s had firsthand experience in all the above. It’s even rarer to meet an artist who’s had firsthand experience in all this, but is still actively working and producing new music for a devoted fanbase who’s been with them every step of the way.

Back in 1996, a petite, striking and totally fearsome young woman slouched in a giant rotating dentist’s chair cooing out the seductive ‘6 Underground’, then sat on a toilet in a giant fur coat blasting out ‘Spin Spin Sugar’. She was tattooed, pierced and sported daring undercuts on her head, both terrorising and seducing with a single glance down a camera lens. For a time, she was ‘Top Of The Pops’, NME, Q. She headlined festivals across Europe, and even soundtracked the love scene between Val Kilmer and Elizabeth Shue in blockbuster movie ‘The Saint’.

For some, these are their last memories of Kelli Ali, former lead singer of ’90s trip-rock indie darlings the Sneaker Pimps before she was “asked to leave” in 1997 so the band could continue without any oestrogen getting in the way of their supposed cause (and thus cutting off their noses to spite their faces in the long run). There is a hell of a lot more to Kelli than just this though. The post-Pimps years have been quite a journey, the ins and outs of which we quickly get down to after swapping a mutual Brummie-twanged “Hi’yorr’rrright?!” as we meet at Rough Trade East for a chat and a cuppa.

“Well, for starters, the internet is the best thing that could have happened to music, it really is,” Kelli states adamantly. “I personally think that everything that’s happening to music is so exciting. When labels used to spend hundreds of thousands on videos etc., that just turns my stomach to think of it now to be honest. I’m thrilled that the onus is back on the artist to be creative. You can’t be a truly creative person if you have to pay a producer thousands of pounds to make a record and everyone’s got to make a video for, like, 300 grand, y’know. I understand. I was part of that.”

While she may have fallen off the radar for more chart-focused music lovers - I call them part-timers - for the fans Kelli picked up during her time with The Sneaker Pimps, a lot has happened. Cherrypicked by Marc Almond to write and duet on a song, she soon went on to work with everyone from Bootsy Collins to Linkin Park while finding her artistic feet. Tigermouth, her first solo album of infectious, sparkly electro-pop appeared in 2002, followed by a darker sophomore effort, Psychic Cat, in 2004. Since then, however, things have been relatively silent. Her label, One Little Indian, hadn’t renewed any kind of deal after Psychic Cat as they simply didn’t know what to expect from her anymore. So with no real reason to stay, Kelli and her partner upped sticks to America in search of inspiration.

Somewhere along this journey two things happened. First, she became a truly independent artist, embracing all the possibilities of the internet and never looking back. Second, she underwent a complete musical rebirth. “I felt really comfortable with electronic music and pop music and I felt I wanted to explore something new. I wanted a new challenge,” Kelli explains. “So I started learning acoustic guitar. I really just wanted a break from everything, and set off travelling to Mexico and California.”

The four years on the move seem to have done her the world of good. Sans trademark nose ring and the angular haircuts of yesteryear, today she’s wrapped up in winter woolies, casual jeans and a leather jacket, looking effortlessly lovely, utterly comfortable in her own skin, and a million miles away from her brief time on the Top 40 A-list. Not only this, her words are full of trustworthy wisdom and, more reassuringly, genuine contentment. “After the split with Sneaker Pimps, I felt really alone and the internet was nowhere near what it is now, so when I started making my own connections with the people who were listening to my own music, I thought it was something really special and something I’d never experienced before. Before, a record label could almost be like a barrier between you and your fans sometimes. So now I make sure I’m really in touch with them.”

Perhaps the most unusual thing about all the eras Kelli’s career has been through is how she has managed to maintain a working relationship with the same record label since day one, which has proved out to be a testament to how strong her new album is. “I took in my demos for Rocking Horse and Derek [Birkett, One Little Indian co-founder and MD], who’s one of my oldest friends, said “I love you to bits but I don’t see how it’s going to work after Psychic Cat.” I just don’t think he was expecting what I played him after I came back from travelling, and I think he was getting tired of me totally changing everything and he just couldn’t see it.” She giggles warmly.

“But this was before I approached Max Richter [producer of Vashti Bunyan's hiatus-slaying comeback, Lookaftering] to produce it. So I thought, well, I’m just going to do this because if Derek is not interested then nobody else will be in this climate either.” A hint of cold reality cracks in Kelli’s voice at this point and when asked if she thinks she is being a bit harsh on herself. “Well, you know what though, it’s true.”

I ask her if the thought of approaching another label even crossed her mind, which is shrugged off confidently. “No, because I decided that I was just going to do this completely the way I wanted then. So I approached Max Richter directly because I just love his work and we organised the whole thing. Recording in Scotland, the artwork…everything ourselves. I later played the final album to Derek, just as a mate. I did not expect him to drop me then be interested in actually putting it out, but I played it and he said, “Yeah, I really like this. Do you want to do a distribution deal?” So I am back on One Little Indian. They’re distributing it through the shops and online and everything, but I’m my own boss.” She grins. “About time really.”

With Kelli so confident that the grass is greener by her own hand, the obvious question is how she feels about the way things were back in 1996, and how they stack up the here and now. “That was a different ball game,” she says thoughtfully. “I think we were one of the most successful bands that One Little Indian had in that year, so they put a lot into and behind Sneaker Pimps. I think that must be what it comes down to at the end of the day. If you start getting the buzz around your release they’ll then decide to push you all the way forward. But what happens is that a lot of artists, then and now, probably feel they’re doing all they can and the record company should be there to motivate them all the way to the top, when the reality is there are so many people making music and unless you have the ability to somehow cut through yourself, the record company, especially independents, have to kinda back the right horse, if you like. They haven’t got an endless supply of money or funds or resources. So I think that’s what it comes down too.”

There’s definitely something to be said for Kelli’s wisdom, and it’s refreshing to hear a coinciding album that positively bubbles with it. Rocking Horse finds Kelli lost in an eerie, warm fairytale of expertly crafted, tender and ethereal guitar ballads and folkish sprinkles of Rhodes, woodwind and strings. Her silky, crystalline purr still has the power to effortlessly elevate goosebumps as she glides through each song. It’s a long way from the almost Minogue-esque pop of her previous solo efforts, and having touched on her own frequent reinventions herself, I ask if this is something she is conscious of, especially considering how vocal her loyal fanbase can be. Could a folk-inspired acoustic album be just too much for them to swallow?

She shakes her head. “I think that because I put so much into every record, and because I’m always really true to my vision and my way of writing, they will always enjoy it because they enjoy ‘me’ and the way I write. So in a way it’s quite good experimenting with genres, because if there’s always a core, or a thread that people can understand and trust, then most of those people, no matter what record I’ve made, will be really supportive, and that is beautiful. So I’m never really worried about that as I feel there’s a trust between me and my listeners. As long as I can keep making the best records I can, I think they’ll keep supporting me.”

She is, however, very aware of the potential pitfalls of too much change, but seems to be taking it all in her stride. “It’s not that I want to make every album consciously different. That’s kinda like suicide in a way for an artist, and I’ve always been heavily criticised for that. Just generally people saying that I haven’t found “myself” or my “sound”, or haven’t created anything with conviction. But none of that really matters to me. What does matter to me is that when I make an album it’s the best that I can make at that point in time, and I suppose not really thinking in terms of commercial success or my profile as an artist, or any of that stuff. I make the record I specifically want to make at that time, and that’s what’s happened every time. Every record I’ve made has been with complete 100% passion for it at the time, absolutely.”

The fact that Rocking Horse silenced any concerns her label may have had about her most dramatic reinvention yet should be enough to convince even the harshest of non-believers that she has indeed produced an album full of conviction here, and whether it be her “sound” or not, it’s certainly an impressive record. Although it won’t be filling any dancefloors anytime soon, it certainly caters for those more introspective moods when you might ordinarily reach for, say, Emilíana Torrini’s Fisherman’s Woman, or even Bat For Lashes’ Fur & Gold. And like those cult successes, Rocking Horse certainly isn’t all sugar and light. There’s plenty of darkness and heartache in there too.

“That was the idea for me in a rocking horse…like a pendulum, between light and dark. That’s what I wanted the album to be. It’s very much about both positive and dark forces, and existence really. So songs like the title track and ‘The Savages’ are very much the dark side of the album, addressing the questions on the darker side of human existence. Are we savages who just think we’re civilised, or just more civilised animals really?”

On a more personal level too, Kelli talks about how first single, ‘One Day At A Time’, has almost become the hinge of the album, sharing her theories on living up to her own expectations as an artist, let alone those of her fans, label or peers. “That really summed up how I felt about everything at that time, about making the album,” she says. “I was worried I’d lost my record label and we were out in the wildernesses camping and really not knowing when we were going to go back, what we were going to do when we got back, and how we were going to survive. I wrote that song to sort of give us hope, that if you just take it one day at a time you’re going to grow and learn.”

Her development and growth as an “independent” artist has certainly been influenced by the pros and cons of the internet. For every fan who she emails back, there is always a question in the back of her head about where they are actually getting her music from, and it is only now that she’s in full control of her work that she has realised the extent of the internet’s impact on artists themselves. “I’m realising now that it’s quite a big thing knowing your record is out on the 24th November, and then you see that, for example, ‘Oh…20,000 have just downloaded Rocking Horse on a file sharing site’ or whatever. I wonder if they’re going to buy it when it actually comes out, y’know?”

She giggles. “I’ve got quite an abstract point of view about making music and money and everything because a lot of my heroes died penniless in awful circumstances. I don’t want it to ever go back to those days or conditions, but it’s sad when people think that downloading songs illegally doesn’t affect the artist because it does, especially the more independent an artist is. It really does affect them.”

So where should the line be drawn between downloading being good exposure for smaller acts and it simply being theft? “I think if you’re responsible and…well, this might sound a bit irresponsible, but if someone’s dead then it doesn’t really matter…” Another giggle cuts through. “They can’t exactly do anything, can they? The copyright only lasts for so many years, etc. So it’s just some corporate giant who is going to get the money anyway. But, if you know the artist is alive or not that wealthy, or especially artists who fund their own records, like I did with Rocking Horse, then that’s where you should think and be a bit more responsible ideally.”

It’s almost hard to believe how the Kelli sat before me would ever have let her younger self become part of the giant, scary pop machine. But as CVs go, hers is indeed a good one, and every experience has contributed to her becoming a wonderfully grounded and thoroughly modern artist. Her humble, honest attitude towards her career and her genuine love of what she does couldn’t be further away from the Sneaker Pimps. There never seems to be any point in asking Kelli anything more juicy about her time with them, and you get the feeling that if someone offered her the chance to go back in time and to carry on with the band, she’d laugh in their face. Kelli has met far too many people and had far too many memorable experiences since then to ever go back. For example, finding an unlikely comrade in Shirley Manson when supporting Garbage on their 2003 UK tour. “That was really good fun,” Kelli smiles. “One Little Indian gave my name to Shirley and she totally wanted to do it. On the first night she came up to me in the dressing room and she was like ‘I hated what the Pimps did to you, how shit are they!?’, and I was surprised she even knew about it, y’know. She was ‘Sisters all the way’, a real comrade.”

As Kelli downs the rest of her coffee, I comment on how nice it is to hear a proper Brummie accent again, from one Midlander to another, having not heard one in about three years, and Kelli instantly adopts the role of ambassador for her hometown. “I’m from Bartley Green, Birmingham, near the centre, but now I’m based in Essex because we’re constantly on the move. But I do go back a lot. I used to hate Birmingham, it used to be really grey and horrible and I dreaded going back, but I love it now. It’s become a really great city, the new shopping centres, bars and everything; it’s just a much cooler place and a lot to do now. I love going back there.”

As we wrap things up, she practically goes weak at the knees when she talks about the future, and lays open an extended invite to the world and relishes in all the possibilities that could happen. Firstly though, she assures us that there won’t be another four-year gap. She’s fired up and striking while the iron is hot. “I’m writing again this winter, and definitely want to play loads for Rocking Horse. Hopefully we’ll be doing some festivals in 2009 and just more music really. I want to write some stuff with the band I’ve been touring with as they’re fantastic, and see how that evolves. I’m also looking at collaborating with people next year again.”

She turns around to compliment the café on their coffee and we head deeper into the store to have a good old browse around. But before the dictaphone and notepad get put away, she has one last thought to add. “The beautiful thing about music is that it’s open to explore, y’know? I love collaborating with people, so I’d never say I’d never join a band again or never do an electro record again. But what’s really important for me now is that even if I’m playing small venues, I just want to be playing. It’s not important to be playing the bigger places anymore. Just to be playing. So, open to offers, baby!”

There’s that giggle again. It’s safe to assume that if she had been asked her to perform right there and then, she’d have been genuinely thrilled to whip out a guitar and play her new songs. And just lovely it would have been too.

Léigh Bartlam

* * *

Before Wears The Trousers let Kelli out of our sight, we sent her on a little mission. Her challenge was to venture around Rough Trade East and pick out 10 CDs that have inspired her over the years, the twist being that at least five of them must be by female artists…

“Do you know Sufjan Stevens?? You’ve got to. Amazing! This album is one of the best albums ever made by anybody! Every time I listen to it I want to know how someone gets to become that much of a genius. You’ll hear it then you’ll just realise what I mean…he’s one of the visionaries of our time! This album in particular is just full of beautiful musical landscapes and so full of charm.”

“This is one of the first bands I heard when I got to California who were doing something really special and new with folk. They made me realise how you can really do a lot vocally with acoustic music, like Iron & Wine do a lot with harmonies and other things like that.”

“I grew up listening to The Stooges alone in my bedroom and just remember going over and over this album thinking that if I could ever be in a band as cool as The Stooges that would just make my life complete.”

“She was like a tiger, y’know? She was so inspiring in every way because she was just the superbitch and Miles Davis took direction from her! Amazing.”

“She was an absolute, real rebel who was never, ever afraid to just be herself. This album sums that up perfectly.”

“It didn’t originally feature ‘Hong Kong Garden’, that was an earlier single-only release that was later included on reissues of this album. But yeah, this was another album and song I listened to constantly…breaking up and making up to, loving her voice. I just wanted to be her when I was 16 and heard ‘Hong Kong Garden’. I was quite a punk before the Pimps, and was in a bit of a punk-pop band called The Lumieres. So yeah, big inspiration.”

“Loved this record, it was so inspiring in the sense that it was the first sort of dark electronic music that came just before - and definitely influenced - the whole synth-pop scene. Brilliant! I was used to bands like Sonic Youth who were screaming and really in your face, but Suicide were really laidback and really high on dope, and their message was just as dark but really cool and subdued.”

“Vespertine was an album I bought one Christmas, which is the perfect time to listen to it and it was just magical. Just perfectly creates its own magical little world.”

“Lookaftering was amazing, which Max Richter produced, and of course was her 35 years overdue comeback…but this was produced by Joe Boyd, who’s one of the most inspirational producers in the world, and this was full of beautiful songs. She was one of the first truly unique artists out there because she was just so recognisable. But, she also shows what we spoke about earlier, about certain artists being missed by the corporate radar of their labels who don’t know how to push people like her. Especially at that time! She did have a great following at the time, especially to have been working with Joe Boyd, but she was making all this work which was just falling off the radar and she just became really cynical about the whole business and just said “bye bye”. But it wasn’t until Just Another Diamond Day was re-released and turned a few heads that she realised she was actually missed. Devandra Bernhart became one of her friends around that time and he managed to finally coax her out.”

and finally, because Rough Trade had no Nico or Velvet Underground CDs in stock whatsoever (!)…

“Goldfrapp were on my stereo day in and day out for about a year probably when it came out because I could just listen to it all the time. It was just one of those records that could be on those ‘Best ever albums’ list. I understand her reinventions and need to keep challenging herself, and I do love them for that, and I love her honesty in her opinions…but this is definitely my favourite of theirs.”

* * *

Kelli recording the album in London

Bring Charitable Giving Into Your Estate Plan

In addition to the altruistic and goodwill benefits any charitable contribution brings, it can also have significant tax advantages. When deciding your estate-planning strategies, consider a charitable contribution to help the charity of your choice as well as provide you with a steady stream of income and potential tax benefits.

There are different options for setting up a charitable contribution through your estate plan. The easiest is a simple bequest through your will. Remember that charitable contributions are 100% deductible from estate taxes.

A CRT is an irrevocable, tax-exempt trust in which you place assets to provide income for you during a specific period of time (i.e., your lifetime or a term not to exceed 20 years). At the end of that period, the remaining assets will be turned over to the charity of your choice. The trust can be funded with a wide assortment of assets, including bonds, mutual funds, stocks, and real estate.

A CRT can offer benefits on a variety of levels. For instance, if you have appreciated assets like stock, you will likely pay a great deal in capital gains taxes when you sell the stock. But if you transfer the stock to a charity through a CRT, the trustee may be able to sell the stock with no gift, estate, or capital gains tax consequences for the donor. The trustee can then set up an investment that will provide an income stream for you, which will be subject to ordinary income taxes and capital gains. Finally, you’ll be able to take a charitable income tax deduction based on the present value of the trust’s remainder interest.

A unitrust is a more flexible but risky alternative. In a unitrust, the donor still receives a fixed percentage (not less than 5% or more than 50%) of the value of the assets in the trust, but the assets are valued annually, and the donor receives the fixed percentage of the current fair market value. This allows the donor to benefit from any growth in the investment; of course, there are no guarantees such growth will occur. The unitrust also allows for additional contributions to the trust, whereas the annuity trust does not.

A unitrust has better potential to keep up with inflation because the income payments will increase if the investment grows in value. However, if the value of the assets in the trust falls due to market conditions, the income also will decrease. In an annuity trust, the donor is guaranteed the same income payment regardless of current asset value and thus is protected from a possible market downturn. Ultimately, the choice between an annuity trust and a unitrust will be dictated by a number of factors as best determined by your advisory team.

Copyright © 2008, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved.

“It tough to make decisions, especially about the future.”  -Yogi Berra

“If you don’t know what the future holds, why lock yourself into a position for the indefinite future.” -Peter Bernstein

S&P 500 has returned -1.18% per year, for the last 10 years (Data ending 12/09/2008, Morningstar.com).  Think about that..-1.18% PER YEAR for the past 10 years!  Are you living in retirement?  Are you retired?

I t amazes me how many investors continue to passively asset allocate their monies.  We live in a world of change.  Wouldn’t it make sense to adjust your portfolio as market conditions change?  Think about the other areas of your life.  Do you passively raise a family?  Do you passively practice a faith?  What about your career…are you active or passive in accomplishing your goals?

Once-revered Legg Mason fund manager Bill Miller, who has been hit harder than perhaps any high-profile fund manager during the recent market plunge, tells The Wall Street Journal that he was “naïve” in believing that so many prominent companies couldn’t be done in by the credit crisis. “The thing I didn’t do, from Day One, was properly assess the severity of this liquidity crisis,” Miller told the Journal’s Tom Lauricella.

Miller beat the market in a remarkable 15 straight years from 1991-2005, but his Value Trust fund is down 58% over the past year, more than 20 percentage points worse than the S&P 500. Miller’s tendency to put big bets on contrarian picks — which for years earned his clients huge gains — failed him this year as companies whose problems he believed to be overhyped (including Washington Mutual, Citigroup, AIG, and Wachovia) all turned out to be in real distress.

Miller tells the Journal he’s now adjusting his stock screens for a new world in which investors will be more risk-averse for several years. (He’s also re-reading a biography of famed economist John Maynard Keynes, focusing on Keynes experience as a money manager during the 1930s.) Miller says he’s now on the hunt for industry-leading companies with big dividends, and says he thinks there are also opportunities in battered corporate bonds, according to the Journal.

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The title of this series is what we here at Wiser Wealth Management keep in mind when investing.  I wanted to explain this and show how these simple words can lead to great investment results. 

Diversification when investing is spreading your investments out to eliminate business risk.  Business risk is the risk one company, industry, or sector has.  This does not include the risk of the economy but the risk of a particular business model and the risk from management making poor decisions.  Proper diversification takes this risk away.  The other risk that can not be taken away is market risk.  Market risk is the risk of the overall economy on the stock market.  ‘Cashing out’ of the stock market is a common method of trying to eliminate this risk but the difficulties of forecasting downturns often makes this method hard to act on.  September 2008 showed how hard it is to avoid market risk.  When the giant, Lehman Brothers filed bankruptcy many money market funds’ value dropped below $1.  This means that what people thought of as cash lost value.  A dollar invested in cash became at that time $.98.  If you are following this, you know that a money market fund breaking a dollar is business risk gone badly.  This is a small example, and those holding any insurance or banking stock will know, business risk has been abundant in 2008.

In the past, it was thought that proper diversification could be found in 15 stocks, than it was 30 stocks.  Now, finance books report 50 stocks are needed to supply diversification.  So what does that mean, 50 stocks are needed to gain diversification?  It means that the there is no more additional benefit in adding one more stock.  However, William Bernstein has written about the research done by Burton Malkiel, author of “A Random Walk Down Wall Street.”  In Burton Malkiel’s research he shows that proper diversification requires a lot more than 15 stocks.  Berstein goes further to add that 200 stocks are not enough and that the only way is to hold all the stocks in the stock market.  This may be new to you but in affect, this is called indexing.  He does not provide a recipe for the weightings of all the stocks in the stock market but he is clear that there is no point where adding another stock is not beneficial.  It is clear by looking at all the research that there is the most addition benefit in adding stocks to a portfolio with less than 50 securities, however what this research says is that risk reduction can still be had by having highly diversified portfolio representing all the stocks available.  In affect, this is free and easy risk reduction.

To obtain and build a highly diversified portfolio is very costly for most investors, since they must incur trading costs.  Exchange Traded Funds (ETFs) can solve this problem.  ETFs are like mutual funds, except they make no management decisions, are designed to track an index like the S&P 500 or Russell 1000.  Investors can trade ETFs intraday like stocks.  ETFs can be considered investable indexes.  Investors wanting to use indexing or add an indexing component to their portfolios can utilize the benefits of constructing portfolios or different asset classes.  Building efficient portfolios can be done easily with knowledge of modern portfolio theory and its techniques.

Dear Friend

I am delighted to contact you for a mutual business transaction.

First permit me to introduce myself; I am Gerry Freeman, a banker in UK. I am contacting you to assist in the claim of some outstanding sum of money, which was left, by one of my very good clients who died in an AF4590 plane crash on his way to America after he left UK to Germany for business. This client Christian Eich was an engineer with one of the foremost construction firm here.

He left no known next of kin and all our attempts to trace someone related to him to whom we could pay the money proved abortive. I have now personally decided to contact you to stand on behalf of the family so I can present you as his next of kin using my influence as a Manager of this bank.

I have agreed that 35% of the entire sum would be for you if you agree to take part in this profitable transaction, 60% for me while the remaining 5% would be used to pay back the expenses that may be incurred during the course of the transaction by both parties after the fund has been claimed as the next of kin.

You should send me the following information:

Upon the receipt of the above information I shall send you more details.

I look forward to hearing from you ASAP.

————=_49269962.F857284A–

Scam of the day

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Investment in the gold market has consistently been a popular investment. The popularity has also been fuelled by the better performance of the gold market during the global financial crunch. The investors can invest in the gold market and take the possession of their gold in several different forms- gold coins, gold bullions, gold options, gold mutual funds, gold mining stocks, and gold futures. The gold in the form of bullions or coins are bought and sold in the gold market through the gold dealers or brokerage firms. However, they are the direct investment in the gold market. If you want to indirectly invest in the gold market, you can purchase stocks offerings of the gold mining companies.

Gold mutual funds are another way of investment in the gold market if the investors prefer not to pay high cost for storage and insurance. The gold market experts believe that gold investing is the best precaution against inflation. However, as the investors in the gold market receive no interest or dividend payment, the return of cash for gold is dependent upon rising market prices.

Despite the volatility of the gold market, Cash4Gold deals with any form of physical gold and allows you get the best price that your gold deserves. Whether you want to sell your unwanted gold or want to gather money during your economic crunch by selling your existing gold, Cash4Gold is your one-stop shop. All you need to do is to apply online for a free refiners kit inside which you can mail your gold jewelery or bar or coin that you want to sell. You can get the deserving price of your gold conveniently.

TORONTO (AP) — The largest leveraged buyout in history is dead after a group of buyers of the Canadian telecom company BCE Inc. said an audit found the proposed $35 billion deal to take the company private did not meet solvency requirements.

According to the AP.

An investment group led by the Ontario Teachers Pension Plan Board and several U.S. partners had expected to complete its deal for BCE, the parent of Bell Canada, on Dec. 11. It also would have been the biggest takeover in Canadian history.

But a review by accounting firm KPMG found that BCE would not meet the solvency tests of the privatization agreement, partly due to the amount of debt involved in the transaction and current market conditions. The company had to meet the solvency requirements for the acquisition to be completed.

The buyers announced the decision early Thursday.

“Because KPMG has concluded that a required test for the solvency opinion was not met, this mutual condition to completion of the acquisition could not be, and was not, satisfied,” said Thursday’s statement. “Accordingly, the purchaser terminated the agreement in accordance with its terms.”

Shareholders overwhelmingly approved the buyout group’s offer of 42.75 Canadian dollars per share in September of 2007.

BCE management had agreed to the deal in June 2007, just before credit markets began to unravel in North America.

The group said in the statement that no break-up fee will be paid.

The banks that agreed to finance the deal will now be off the hook for billions of loans. Citigroup was directly on the hook for at least $11 billion of the $35 billion in loans backing the deal. The Royal Bank of Scotland, Toronto-Dominion Bank and Deutsche Bank were to provide the rest. It could have meant billions of losses for the banks.

Some analysts speculated the banks would try to get out of the deal.

The Toronto-based Ontario Teachers’ Pension Plan — with assets of $108 billion Canadian ($87 billion) in 2007 — invests and administers the retirement funds for Ontario’s 353,000 active, inactive, and retired teachers. U.S.-based Providence Equity Partners and Madison Dearborn Partners LLC are also involved in the proposed buyout.

BCE, which has more than 54,000 employees, had annual revenue of $17.8 billion Canadian ($14.1 billion) in 2007. It had 5.8 million wireless subscribers, 8.64 million phone lines, 1.94 million Internet subscribers and 1.82 million satellite television subscribers in 2006. It is Canada’s largest communications company.

New Chief Executive George Cope took over on July 11 despite the deal not closing yet. Cope has refocused the Montreal telecom operator as it faces more intense competition in its wireless and Internet data businesses.

The deal has been in some doubt for a year for a variety of reasons, including the credit crisis and because a court ruling temporally put it in jeopardy. Earlier this year, Canada’s Supreme Court overturned a lower court ruling that said the sale of BCE didn’t adequately consider bondholders’ interests.

Canadian regulators also ordered some of aspects of the deal to change. BCE, the buyers and the banks also re-negotiated the deal in July so that the dividend would be eliminated and the closing would be put off until December.

Source of photograph.  Jack Norman’s photo page, http://www.acmeron.com/puhs/jack_norman.htm.  “Norman Nursery has been in Phoenix for over 100 years. Jack Norman’s father started the nursery in the late 1800’s on Central Ave. north of Van Buren Street. During the 1940’s Jack took photos, as any photo buff would, but with the amazing exception that he used a 4X5 inch Speed Graphic instead of a box camera. The photos below are very rare and mostly one of a kind view. The color photos were taken with a 35mm Exa camera in the 1950’s. There are photos of the famous ash trees on Central north of Bethany Home and the palm trees on Central north of McDowell, all planted by Jack’s father, a real pioneer.”

The Jarrett - Obama hookup enriched both of them while looting both the taxpayer coffers of the City of Chicago and looting non-profits that Obama controlled from his seat on the Board of Directors.

The infamous old “Chicago Way” was that when you wanted a favor, you had to pay for it. Obama played this game for twenty years.  Gov. Blagojevich only wanted to keep playing by the century-old rules and get paid for doing Obama a favor. In Chicago, in Illinois, this is perfectly acceptable inside the incredibly corrupt Democratic Party machine. 

Indeed, in Mayor Daley’s world, which is no different than Tony Soprano’s world in the Mafia television series, is that if you refused to “pay to play” you might well have a garbage truck drive over your car with your wife and kids in it.

And the Main Stream Media that selected and supported Obama as President have already joined the massacre of the innocent, and are referring to the Governor as “whacko”, “off his rocker,” “bi-polar,” and “insane.”  This is the utter personal destruction that the Democrats and the Clintons had perfected to discredit their enemies.

Obama has adopted those tactics of yester year, and is applying them not just to enemies, but to a Governor who merely refused, dared, to not follow Obama the God’s wishes.

But now that the media have annointed Obama as God Almighty, Barry believes that he is above “the Chicago Way” tradition that made him into the President Elect.

So now we finally have learned what Obama’s nebulous, undefined motto of “Change You Can Believe In” actually means.

Obama’s “Change” means instead of Obama paying to play, the new world order is Obama does not pay, he pays back.  If we do not do as Obama wishes, he will have us arrested.

As Illinois Gov. Rod Blagojevich has just learned, when Obama says “appoint Valerie Jarrett to my Senate seat” and you dare to ask for a favor back in return, Obama has you arrested.  Change you can believe in.

Sure Illinois Gov. Rod Blagojevich is a crook. That is totally irrelevant. So is every politician in the City of Chicago, and in all of Illinois, because all of Illinois is controlled by Mayor Daley, who appointed Barack Obama as President. To say the Gov. was arrested because he is a crook is naive. Nobody has arrested Mayor Daley of Chicago who makes the Gov. look like Mother Theresa

So I guess I had better stop criticizing them before the garbage truck drives head on into my car at a hundred miles an hour.

And this is all so hypocritical.

All Illinois Gov. Rod Blagojevich asked for is the same thing Obama got: a $350,000 a year no show job for his wife, just as Obama got the $350,000 no show job of Michelle Obama paid by the non-profit Hospital run by the University of Chicago.

In Illinois it is part of business as usual to abuse and loot non-profits. Of course, a few years ago Obama still paid to play. Just after his wife got the $350,000 a year no show job at the non-profit, Obama paid by granting a $1,000,000 earmark to the non-profit from the Illinois taxpayers.

But now that Obama has been selected as God Almighty by the media, Obama no longer pays in kind. If you do not carry out his divine will, he just arrests you for doing what he himself had done.

Change you can believe in.”

The Government Accountability Office released it’s report yesteday on the Troubled Asset Relief Program (TARP) - Additional Action Needed to Ensure Integrity, Accountability, and Transparency.  http://www.gao.gov/new.items/d09266t.pdf

If I am right that we are living in an Interregnum, then two events coming out of Chicago this morning are true signposts of the end of a dying era.

 Perecentage Change in S&P Markets Index by Year.

Wow - this begins to dramtize the dramatic swing we are living through.  Notice 2008, 2007, 2006, 2005, 2004, 2003.  Via Daily Kos, http://tinyurl.com/5nkbhr and The Consumerist, http://tinyurl.com/68djxy

Yeah, it’s from Wikipedia, but it helps to understand the S&P and the Dow.

List of companies on S&P.  http://en.wikipedia.org/wiki/List_of_S%26P_500_companies

The index is now float weighted. That is, Standard & Poor’s now calculates the market caps relevant to the index using only the number of shares (called “float”) available for public trading. This transition was made in two steps, the first on March 18, 2005 and the second on September 16, 2005. (For example, only the Class A shares of Google (”GOOG”) are publicly traded; thus, of the 207,096,000 total shares outstanding as of March 2006, only the 199,570,000 Class A shares were considered float, so only the value of the latter number of shares was used to incorporate Google into the S&P 500 on March 31, 2006.) Only a minority of companies in the index have a float value that is lower than their total capitalization. For most companies in the index S&P considers all shares to be part of the public float and thus the capitalization used in the index calculation equals the market capitalization for those companies.”

Pastor Chuck & Arlyn

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The news that AIG is now promoting Shariah-compliant products in America is spreading fast. Our friend and colleague Jeffrey Imm has been writing about this for some time now. His commentary below provides additional insight into this situation.

In his commentary he urges us, as taxpayer owners of AIG, to make our disapproval of AIG’s entanglement with Shariah known. We agree. Because of the government bailout of AIG we are all “shareholders” now.

There are two things you can do. First, read Mr. Imm’s commentary below. Second, either call AIG or sign the online petition - or both. The preferred course of action is to place a phone call. If you can’t make the time to call today, do so on Monday or Tuesday next week.

There are two people we can call. Peter Tulupman is AIG’s Public Relations Manager. His number is 212.770.3141. Jim Crain is listed on AIG’s press release as the person to call for more information about the Shariah-compliant insurance now being offered. Mr. Crain can be reached at 617.345.4105. When you call please be respectful but unequivocal in expressing your strong disapproval with how AIG is entangling itself with Shariah.

AIG needs to hear from us. Thousands of calls into AIG will not only send a message to AIG, it will send a message to other companies that are considering or beginning to wade into the morass of Shariah-compliant finance.

Let’s do what we do best! ACT! today!

——————————————————————————–

For two months, I have warned that AIG’s Takaful division was planning to expand to offer such AIG-specific Sharia products here in the United States. Now AIG has announced that it has Sharia-based insurance products for the United States, and AIG is promoting them.

On December 1, 2008, AIG announced that it was “introducing a Takaful Homeowners Policy, the first installment in Lexington Takaful Solutions, a series of Shari’ah-compliant (Takaful) product offerings in the U.S. The newly announced Takaful products are compliant with key Islamic finance tenets and based on the concept of mutual insurance.” Note that AIG indicates that such Sharia insurance products are the “first installment” in a series of Sharia products. In the AIG press release, AIG Takaful’s Abdallah Kubursi expresses his pride in AIG’s ability to promote Sharia within the United States, stating “This is truly a global effort on the part of AIG.”

This is our company, using our taxpayer dollars, to promote Islamic supremacist Sharia-based products in our country. As we are $40 billion owners in AIG, this is our problem as Americans. What is our government and AIG going to do about this?

First, let’s remember what Sharia is and is not.

Sharia is a legal codification of the political ideology of Islamic supremacism. This Sharia legal codification is intended to enforce discriminatory and segregationist practices against women and non-Muslims and to suppress the liberties of those living in Islamic theocracies. As a legal codification of a supremacist ideology, Sharia is incompatible with democratic values and the inalienable human right that “all men are created equal.” In 2001, nearly two months before the 9/11 attacks, the European Court of Human Rights determined that Sharia law was incompatible with democracy and human rights. The President of the European Court of Human Rights stated that “the Court found that sharia was incompatible with the fundamental principles of democracy as set forth in the Convention… Principles such as pluralism in the political sphere or the constant evolution of public freedoms have no place in it. According to the Court, it was difficult to declare one’s respect for democracy and human rights while at the same time supporting a regime based on sharia…”. Even British courts have ruled that Sharia is “discriminatory.”

In a nation such as the United States, based on the inalienable human rights of equality and liberty, why would American taxpayers seek to fund a business selling products that promote a discriminatory, segregationist, and supremacist ideology that is “incompatible with democracy and human rights”?

Sharia is not merely “cultural beliefs,” “religious beliefs,” or “social preference.” In the AIG press release, AIG’s Abdallah Kubursi would have Americans believe that the goal of promoting such Sharia products is to expand “social preference.” But America has rejected those who would label supremacist values as “social preference,” just as they rejected white supremacists who once called for racial segregation and discrimination. America’s society, businesses, government, and law rejects supremacist ideologies. Just ask President-Elect Barack Obama.

This is the same Sharia ideology that has been used by the Islamic supremacist Taliban to murder those who they believe have committed moral crimes, the same Sharia ideology that was used to murder a 13 year old girl last month who was raped in Somalia, and the same Sharia ideology supported by the Taliban, Al Qaeda, and Islamic supremacists around the world. It is the same Sharia ideology whose zakat charities have been used to fund jihadist terrorist organizations. On September 18, 2008, Congressman Tom Tancredo’s office introduced “Jihad Prevention Act” (H.R. 6975). According to the press release from his office on this bill, “the legislation would make the advocacy of Sharia law by radical Muslims already in the United States a deportable offense.”

But now American taxpayer dollars are being used to promote products based on Sharia?

In fairness to AIG, there are many who do not understand the political Islamic supremacist nature of Sharia.

Stop Sharia Now (FAQ item 17) provides a quote regarding an “Islamic Finance conference” in New York City where an attendee asked the meaning of Sharia. One of AIG’s Sharia advisors, Sheik Nizam Yaquby, ambiguously responded by stating that “Shariah is the path on which we walk, the water which we drink.” Those of us who are aware that Sharia is a legal codification for all aspects of Islamic supremacist life grasp what Yaquby was trying to communicate; certainly none of the supremacist aspects of Sharia was communicated by Yaquby. It is then reported that “Not one person in the room followed up with a question. The group went back to looking at flowcharts and graphs.” So it should be little surprise that few people involved with Sharia finance products actually understand the ramifications of promoting Islamic supremacist Sharia.

To give AIG an opportunity to respond to this, I called the individual listed on AIG’s press release for its Sharia Takaful Homeowners Policy, Jim Crain, and talked to him about the AIG product. My impression is that AIG’s Jim Crain is a businessman, and I got the distinct feeling that he was uncomfortable with being named as the AIG point of contact on a product with political connotations. I told AIG’s Jim Crain about the online petition signed by over 100 individuals calling for the Federal Reserve Board and the Department of Treasury to call for AIG to divest itself of its Sharia businesses. I also told AIG’s Jim Crain about how the Islamic supremacist Taliban and other groups are seeking to promote Sharia.

AIG’s Jim Crain told me that he had no comment on AIG’s Sharia product linkage to the Islamic supremacist Sharia ideology, but stated that with “this business venture” it was not AIG’s intent “to enter into the political arena at all.” Jim Crain stated that he did understand that Sharia is viewed as a political ideology, and commented “that is becoming more apparent as the days go on.” (I would conclude from this that I was not the first person who has called Jim Crain about this.) He stated that “it is entirely possible” that the public is going to think that AIG is taking a political position that is pro-Sharia. Jim Crain concluded our discussion by stating “I am going to pass your concerns on to our senior management and legal.”

Now it is your turn. American taxpayers own $40 billion worth of AIG stock. This is your company and your responsibility to contact AIG about both its Sharia finance businesses and its efforts now to promote Sharia-based insurance in the United States.

Let AIG’s Jim Crain know that the calls he has gotten thus far complaining about AIG’s Sharia based business is the tip of the iceberg. Jim Crain’s phone number and email address are provided on the AIG press release to discuss AIG’s Sharia-based Takaful Homeowners Policy. Let him know precisely what you think of it as a shareholder in AIG, and ask Jim Crain to make certain that his senior management also is aware of your concerns as well.

Sign our online petition demanding that the Federal Reserve, Securities Exchange Commission, and Department of Treasury carry out their fiduciary responsibilities under H.R. 1424 to act as the Financial Stability Oversight Board in America’s interest - and demand that AIG divest itself now of its Sharia businesses. This is an opportunity to make American commitment to human rights a part of how companies do business in America. It is our responsibility to let AIG know our concerns.

Low T-bill rates are going to roil Treasury-only money market mutual funds.  (WSJ.com also Money & Co.)

“The market for credit protection is now pricing munis as more likely to default than similarly rated investment grade corporate bonds…”  (Clusterstock)

The January Effect works in spades after really bad years for stocks.  (World Beta)

Everybody is pointing to these eight “scary” predictions for 2008.  (Fortune.com)

“It is my belief that many quants, hedge fund managers, and investment bankers came to believe—consciously or not—that, by explicitly embracing and accounting for chance, they had tamed it.”  (Epicurean Dealmaker)

The real implication of the concept of black swans.  (Condor Options)

“Markets can rally without all of their technical ducks in a row.”  (Barrons.com)

The inherent conflict in hedge fund performance.  (Economist.com)

Level 3 assets are on the rise on bank balance sheets.  (FT Alphaville)

“The denominator effect is very real, particularly when it comes to being able to make new alternative asset commitments.”  (peHUB)

Apollo and Cerberus wandered from their distressed investing roots into the morass that is private equity.  (breakingviews.com)

Endowments that followed a ‘Yale-lite’ approach may be hardest hit in this bear market.  (Economist.com)

Add Vanguard to the firms sponsoring international small-cap ETFs.  (IndexUniverse.com)

Did quantitative easing work in Japan?  (Odd Numbers)

Just what are the multipliers on tax cuts and spending increases?  (Mankiw Blog)

“As long as the economy is in a recession, the budget deficit will be ignored. But some day this will an issue again … and the numbers will be huge.”  (Calculated Risk)

An interesting interview with Hayne Leland, winner of the Stephen A. Ross Prize in Financial Economics.  (Bloomberg on the Economy)

The time is right for a gas tax. (Clusterstock)

If you are the subject of a blog post, don’t respond (at least publicly).  (Dealbreaker)

A dead cat bounce, illustrated.  (GuidePostings)

A clever way has been floated to kill the BCS.  (Deadspin)

Are you curious what other bloggers are saying about Abnormal Returns? So are we. Feel free to check out a compilation of reviews.

The ideas for new Home Business Opportunity are easy to identify, but difficult to assess. The empress is the identification and exploitation of opportunities that have not yet been exploited. A good opportunity has the potential to create value for the customer. Another way of looking at it is describing the problem or “pain” of the customer, which represents how much, is that customer need for a solution to his “pain”, need or problem. A greater problem, need or “pain”, the greater the value the opportunity to provide a solution to that client. Obviously, a larger number of customers who share the same problem, the greater the value of the solution. The first role of the entrepreneur is to identify and select the appropriate opportunity. The entrepreneur is usually a dreamer, visionary, who engages in a creative process of identifying opportunities and evaluate them. Choose the opportunity that has the greatest likelihood of success on the market. The key question is how do you evaluate and select the correct opportunity? The goal should be to seek an opportunity in an industry that the entrepreneur knows and that has a potential long-term growth.

Tom Stemberg, founder of Staples, conceived the idea of a supermarket for office in the mid-eighties. He does not like the politics of big business and wanted independence. He started his business with a shop in Brighton, Massachusetts. He made a complete analysis of the market and determined that it was $ 100 billion with a growth of 15% annually, with large profit margins.

A woman of 28 years receives a bonus of $ 20,000. What should you do with the money? Must invest in a mutual fund, use it as soon as the purchase of a property, use it to begin graduate studies, leave your job and start own business? It could be analyzed based on the expected return of the mutual fund of 10%, gain of graduate studies at 12%, business growth is in itself a 11% gain from a property at 9%. If we take as the main consideration the personal satisfaction of a university degree, this would be the alternative selected by some. Others might give more weight to the independence that means having own business and would opt for this alternative.

The purpose is to discard the less promising opportunities and to focus on those that are worthwhile. In general, they should discard those opportunities in markets or industries in which the entrepreneur has little experience. The characteristics of each opportunity will dictate the analytical effort and level of research needed to make a decision.

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By Eric Rosenbaum at Seeking Alpha

Javelin Investment Management, a newly formed exchange-traded funds company, has filed with the Securities and Exchange Commission for the first U.S. ETF to be based on an Islamic index.

The JETS (Javelin Exchange Traded Shares) Dow Jones Islamic Market International Index Fund is the latest example of an ETF manager hoping to find success in the crowded ETF market with a first-of-its-kind portfolio.

Copycats are out, and niche strategies are in, as more managers enter the ETF space. Global X Funds has plans to launch a series of country ETFs that face no direct competition, while Northern Trust’s NETS ETF family has launched a series of funds this year targeting previously untouched asset classes by U.S. ETF sponsors.

It is a fine line, though, between steering clear of the asset classes dominated by the big ETF companies, and creating portfolios so niche in nature that asset growth is a long haul.

What the JETS Dow Jones Islamic Market International Index Fund has going for it is not just the first-mover advantage with an Islamic ETF, but the overall size of the Islamic investment market. Various industry estimates put the size of Islamic investment at $700 billion currently, and project that the market is on its way to $1 trillion by 2010. It should be noted though that these estimates include a wide definition of “investment,” which goes well beyond mutual funds.

Failaka, the Chicago and Dubai-based Islamic fund consultant, says there are 425 mutual fund and fundlike products worldwide, with approximately $18 billion in assets.

They have been laughing all along, Giovanni wrote. From the time of Iraq war, where “the ghastly poet/statesman Dominique de Villepin stood up at the United Nations and blew Colin Powell and his vial of fake anthrax out the window,” and since then, “that tendency [had gotten] far worse.” Consider the conversations around dinner tables now included the Fall of America topics.

All of this smug has to do with the culutral and political resentment France has for Britain and America, she said, quoting a fellow journalist—French nonetheless. The friend said France’s resentment has to do with their own surrender to the German during World War II only to watch the Anglo and FDR triumphantly rescued the hapless Paris. Really?

There is some truth in this theory. World War II, in the words of Churchill, had ended the British’s imperialistic reign and handed that torch to the American ally. The same happened to France in Indochina. But the different between France and England is that the Londoners were prepared for their decline while the French struggled coming to term.

But I think the deep seeded resentment is much more recent, starting with Iraq. Seeing America got it all wrong was a gleeful moment because not only France was right all along, it correctly stayed out of the mess. What got personal was what the right-wing political forces of America did during the 2003 global debate. Fox News’ Bill O’Reilly called for the boycott against French goods. Sean Hannity called France a sick man of Europe, harping on its abysmal, 1 percent annual growth and socialistic programs like national health care and four-day work week. The right-wing maximized their mockery at the French for their allegedly elitist foie gras and brie. Five years, two wars, and a shrinking economy later, look who’s laughing now?

The reason why France experienced the growth int he third quarter is because their economy was designed for stabilize growth, much like that saving account in many American banks. Sure the interest rate is abysmal comparing to stock and mutual funds, but so is the risk.

This is why the French does not feel like cutting back from their normal behaviors as Giovanni has described. This is why Giovanni got wrong about who is envying who. It is not France but the rest of the West who are jealous that the French—gruyere-nibbing French!—could still hold winter parties and “shopping like mad.”

By Uri Avnery – Israel

For the President-Elect, Mr. Barack Obama.

The following humble suggestions are based on my 70 years of experience as an underground fighter, special forces soldier in the 1948 war, editor-in-chief of a newsmagazine, member of the Knesset and founding member of a peace movement:

(1) As far as Israeli-Arab peace is concerned, you should act from Day One.

(2) Israeli elections are due to take place in February 2009. You can have an indirect but important and constructive impact on the outcome, by announcing your unequivocal determination to achieve Israeli-Palestinian, Israeli-Syrian and Israeli-all-Arab peace in 2009.

(3) Unfortunately, all your predecessors since 1967 have played a double game. While paying lip service to peace, and sometimes going through the motions of making some effort for peace, they have in practice supported our governments in moving in the very opposite direction. In particular, they have given tacit approval to the building and enlargement of Israeli settlements in the occupied Palestinian and Syrian territories, each of which is a land mine on the road to peace.

(4) All the settlements are illegal in international law. The distinction sometimes made between “illegal” outposts and the other settlements is a propaganda ploy designed to obscure this simple truth.

(5) All the settlements since 1967 have been built with the express purpose of making a Palestinian state – and hence peace - impossible, by cutting the territory of the prospective State of Palestine into ribbons. Practically all our government departments and the army have openly or secretly helped to build, consolidate and enlarge the settlements – as confirmed by the 2005 report prepared for the government (!) by Lawyer Talia Sasson.

(6) By now, the number of settlers in the West Bank has reached some 250,000 (apart from the 200,000 settlers in the Greater Jerusalem area, whose status is somewhat different.) They are politically isolated, and sometimes detested by the majority of the Israel public, but enjoy significant support in the army and government ministries.

(7) No Israeli government would dare to confront the concentrated political and material might of the settlers. Such a confrontation would need very strong leadership and the unstinting support of the President of the United States to have any chance of success.

(8) Lacking these, all “peace negotiations” are a sham. The Israeli government and its US backers have done everything possible to prevent the negotiations with both the Palestinians and the Syrians from reaching any conclusion, for fear of provoking a confrontation with the settlers and their supporters. The present “Annapolis” negotiations are as hollow as all the preceding ones, each side keeping up the pretense for its own political interests.

(9) The Clinton administration, and even more so the Bush administration, allowed the Israeli government to keep up this pretense. It is therefore imperative to prevent members of these administrations from diverting your Middle Eastern policy into the old channels.

(10) It is important for you to make a complete new start, and to state this publicly. Discredited ideas and failed initiatives – such as the Bush “vision”, the Road Map, Annapolis and the like – should by thrown into the junkyard of history.

(11) To make a new start, the aim of American policy should be stated clearly and succinctly. This should be: to achieve a peace based on the Two-State Solution within a defined time-span (say by the end of 2009).

(12) It should be pointed out that this aim is based on a reassessment of the American national interest, in order to extract the poison from American-Arab and American-Muslim relations, strengthen peace-oriented regimes, defeat al-Qaeda-type terrorism, end the Iraq and Afghanistan wars and achieve a viable accommodation with Iran.

(13) The terms of Israeli-Palestinian peace are clear. They have been crystallized in thousands of hours of negotiations, conferences, meetings and conversations. They are:

a. A sovereign and viable State of Palestine will be established side by side with the State of Israel.

b. The border between the two states will be based on the pre-1967 Armistice Line (the “Green Line”). Insubstantial alterations can be arrived at by mutual agreement on an exchange of territories on a 1:1 basis.

c. East Jerusalem, including the Haram-al-Sharif (“Temple Mount”) and all Arab neighborhoods will serve as the capital of Palestine. West Jerusalem, including the Western Wall and all Jewish neighborhoods, will serve as the capital of Israel. A joint municipal authority, based on equality, may be established by mutual consent to administer the city as one territorial unit.

d. All Israeli settlements – except any which might be joined to Israel in the framework of a mutually agreed exchange of territories - will be evacuated (see 15 below).

e. Israel will recognize in principle the right of the refugees to return. A Joint Commission for Truth and Reconciliation, composed of Palestinian, Israeli and international historians, will examine the events of 1948 and 1967 and determine who was responsible for what. Each individual refugee will be given the choice between (1) repatriation to the State of Palestine, (2) remaining where he/she is living now and receiving generous compensation, (3) returning to Israel and being resettled, (4) emigrating to any other country, with generous compensation. The number of refugees who will return to Israeli territory will be fixed by mutual agreement, it being understood that nothing will be done that materially alters the demographic composition of the Israeli population. The large funds needed for the implementation of this solution must be provided by the international community in the interest of world peace. This will save much of the money spent today on military expenditure and direct grants from the US.

f. The West Bank, East Jerusalem and the Gaza Strip constitute one national unit. An extraterritorial connection (road, railway, tunnel or bridge) will connect the West Bank with the Gaza Strip.

g. Israel and Syria will sign a peace agreement. Israel will withdraw to the pre-1967 line and all settlements on the Golan Heights will be dismantled. Syria will cease all anti-Israeli activities conducted directly or by proxy. The two parties will establish normal relations between them.

h. In accordance with the Saudi Peace Initiative, all member states of the Arab League will recognize Israel and establish normal relations with it. Talks about a future Middle Eastern Union, on the model of the EU, possibly to include Turkey and Iran, may be considered.

(14) Palestinian unity is essential for peace. Peace made with only one section of the people is worthless. The US will facilitate Palestinian reconciliation and the unification of Palestinian structures. To this end, the US will end its boycott of Hamas, which won the last elections, start a political dialogue with the movement and encourage Israel to do the same. The US will respect any result of democratic Palestinian elections.

(15) The US will aid the government of Israel in confronting the settlement problem. As from now, settlers will be given one year to leave the occupied territories voluntarily in return for compensation that will allow them to build their homes in Israel proper. After that, all settlements – except those within any areas to be joined to Israel under the peace agreement - will be evacuated.

(16) I suggest that you, as President of the United States, come to Israel and address the Israeli people personally, not only from the rostrum of the Knesset but also at a mass rally in Tel-Aviv’s Rabin Square. President Anwar Sadat of Egypt came to Israel in 1977, and, by addressing the Israeli people directly, completely changed their attitude towards peace with Egypt. At present, most Israelis feel insecure, uncertain and afraid of any daring peace initiative, partly because of a deep distrust of anything coming from the Arab side. Your personal intervention, at the critical moment, could literally do wonders in creating the psychological basis for peace.

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id="blog-title">Frontier Markets

id="tagline">random macro musings centered around the frontier

It was relatively recent that both FTSE and MSCI added frontier markets to their global index families. Dow Jones, another major index provider, is dabbling in the area through its DJ Titans index family. Over the next few weeks and days we’ll profile each frontier market index, while also breaking down some specific mutual funds, hedge funds and ETFs that are frontier dominated.

First up is the FTSE Frontier 50 Index, charted below. The index, which was launched on July 29th, covers 23 markets. Banks constitute roughly 75% of the index, and from a net market cap weight percentage, Nigeria (21%), Qatar (18.5), Jordan (15.2) and Cyprus (12.5) receive the most attention. Finally, the Top 10 constituents, totaling around 60.5%, are as follows: (1) Arab Bank, Jordan (11.1%); Qatar Industries, Qatar (Chemicals); Bank of Cyprus, Cyprus; First Bank of Nigeria PLC, Nigeria; Zenith Bank PLC, Nigeria; Marfin Popular Bank, Cyprus; Qatar National Bank, Qatar; Intercontinental Bank PLC, Nigeria; United Bank for Africa PLC, Nigeria; Gulf Finance House, Bahrain (3.83%).

The Index highlights a common problem among frontier market indices and funds alike. Namely, they are often far too focused on one sector and/or country (in this case, Nigeria and banking) to be truly accurate indicators of the “frontier” as a whole. Assuming such indicators even exist, of course. But to argue, for example, that the state of frontier markets is floundering, merely by measuring a handful of banks scattered across several countries, would be inaccurate.

Recently I read an article about Legg Mason’s Bill Miller in the Wall Street Journal accessible here (free without subscription).  Miller is a stock-picking legend, famous for his bullish bets on technology, financials, and homebuilders.  By 2007, Miller’s funds had outperformed the S&P stock market index by a healthy fifty percent .  Unfortunately, Miller’s luck ran out at the start of the credit crunch, when he started accumulating shares of Washington Mutual, the housing Agencies, Citigroup, and other firms hit by the financial sector fallout.  Since then, his Legg Mason Value Trust fund lost sixty percent of its value, compared to roughly forty-five percent of other so-called “Value” funds.  The aforementioned article laments his fall from grace, believing that he could have avoided this fate under better circumstances. 

There are two ways to analyze Miller’s tumult: perhaps he was an innocent bystander of the credit crunch, hurt by “poorly functioning” and “broken” markets.  Had the market assigned a “fair value” to the financials and not driven them into bankruptcy via speculative selling, Miller would have triumphed.  Indeed, this is exactly what happened when he doubled down on financials and tech firms at the market nadir in 2002, grabbing shares of fallen angels like Amazon.com en masse and riding their recovery. 

Another point of view probably exposed by Burton Malkiel and Nassim Taleb would insist that Miller was just another fund manager subject to mean reversion.  In the end, stock prices move in a random walk.  Consistently beating the market is impossible.  If you play the game long enough, your returns will, on average, converge to the mean performance of the S&P over the same period in which you played.  In other words, it’s impossible to consistently beat the market forever.  To illustrate this, consider the below thought experiment:

Imagine a world where one million people were paid to flip a fair coin one million times.  Assume that a the rewards for this game pay +$1 for a heads and cost -$1 for tails.  Playing this game long enough, say until flip 400,000, most players would have logged roughly 200,000 heads and 200,000 tails.  But given the randomness inherent to coin flipping, some people might have gone on an incredible hot streak, logging 300,000 heads and amassing a full $200,000 of profit.  Let’s assume further that observers of this game are led to falsely believe that flipping a fair coin and receiving a disproportionate number of heads is a skill that deserves great financial reward (though we can’t forget about the poor soul who flipped 300,000 tails and only 100,000 heads - that poor guy!  This could be a blessing in disguise for this player, though, as he would then be free to pursue his real interest in oceanography or some unrelated field, working only forty hours a week (coin flipping is a time-consuming profession, after all) and marrying his high school sweetheart, teaching a class at the local community college, and volunteering at his son’s daycare on Friday mornings.)  Playing the game to its conclusion, the player with 300,000 heads at the 400,000th flip would, on average, finish the game flat money.

2007 was the equivalent to Miller’s 400,00th flip, and he had amassed an astounding 300,000 heads.  Given his streak of good luck, he falsely believed that he could time his entry into financials perfectly, tossing another 300,000 heads during the next 400,000 throws.  But what happened?  WaMu defaulted, Citi got a government guarantee of its debt, AIG was nationalized, the Agencies were put into conservatorship, and financial firms continued to slide. 

Ultimately, had Miller succeeded on betting on the financials, he would have lost money eventually.  Notwithstanding early retirement or “quitting while he was ahead,” I’m confident that Miller is yet another money manager who parlayed good luck into hoaxing average investors into believing he had a supreme skill - the much coveted ability to influence the outcome of a fair coin toss. 

Events marked by randomness always come masked in post-hoc explanations.  His run-up was the product of skill while his fall was sheer bad luck.  Next time you read about a fantastic mutual fund manager and his otherworldly skills, remember this article written about Miller at the height of his success.  And next time you’ve thrown 300,000 heads on your 400,000th flip, you might want to consider cashing out while you’re ahead, taking a certain smug satisfaction in your slight-of-hand in making people believe what was mere good luck was something more - irreplaceable skill.

-DH

So what do we do when we come to the conclusion that we can not effectively time the stock market and that constantly buying and selling stocks, bonds, ETFs, and mutual funds is not an effective strategy?  We diversify.  I want to also add that diversifying through ETFs is a very cost effective way to do this.  ETFs seem to be the most effective and complete way to maintain the investing strategy of indexing which in essence is creating a highly diversified, passively invested portfolio.

What holds many back from having a very successful indexing strategy using ETFs is getting distracted by the interesting and exotic ETF offerings, giving the investor exposure to foreign and domestic niche markets and asset classes.  I think many of these newer ETFs provide value to a portfolio but too often become over-weighted because of the promise of historical performance and historical correlations to the overall market

Something that I think is flying under the radar is the introduction of iShares S&P Target Risk ETFs.  This is an area that has no previous ETF exposure.  The target risk ETFs, listed below, each track an S&P Target Risk Series Index.

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Now lets just understand, right from the start, that the following is purely a hypothetical example and none of the characters or organisations mentioned exist and any similarity to any real body or individual is purely coincidental, unintentional and just bad luck. I have no intent to malign anyone, slander anyone or misrepresent anyone. You know the standard disclaimer: “May contain traces of various nuts and seeds”.. …… oops, wrong one. How about “Any resemblance to real persons, living or dead is purely coincidental.” Or “The opinions expressed here are entirely those of the author, and do not represent a statement or position by any employer of the author, nor any organisation of which the author is a member.”, or …… anyway… you understand what I am saying. In fact,… read this….

The act of reading this document is in itself an acknowledgement that it in no way resembles or represents any actual, living (or dead) individuals or organisations. The article is considered private property and the copyright property of the author. Copying any parts of it will be considered a violation of international copyright laws.

Now then, …lets try a hypothetical scenario

Lets create an imaginary iwi group, endow them with funds, assets and the eager anticipation of a full and final settlement. But an iwi in that situation is ripe for disaster and the source of that disaster coul be closer to home than what one would suspect. The danger may even lurk within!

Well there would probably be numerous changes of personnel involved in the negotiation phase and settlement process, ostensibly with plausible and reasonable excuses, but realistically because of their disgust at the political manoeuvrings within the wider group.

Its lucky that this hypothetical situation hasn’t arisen though , because it would be the people of such an iwi that would suffer and the champions would live to fight another day. Tohungas would reinvent themselves in another form and profit from the knowledge gained.

When you next meet a champion.

Ask yourself:

Ask yourself and then look around at your champions.

Recently I read an article about Legg Mason’s Bill Miller in the Wall Street Journal accessible here (free without subscription).  Miller is a stock-picking legend, famous for his bullish bets on technology, financials, and homebuilders.  By 2007, Miller’s funds had outperformed the S&P stock market index by a healthy fifty percent .  Unfortunately, Miller’s luck ran out at the start of the credit crunch, when he started accumulating shares of Washington Mutual, the housing Agencies, Citigroup, and other firms hit by the financial sector fallout.  Since then, his Legg Mason Value Trust fund lost sixty percent of its value, compared to roughly forty-five percent of other so-called “Value” funds.  The aforementioned article laments his fall from grace, believing that he could have avoided this fate under better circumstances. 

There are two ways to analyze Miller’s tumult: perhaps he was an innocent bystander of the credit crunch, hurt by “poorly functioning” and “broken” markets.  Had the market assigned a “fair value” to the financials and not driven them into bankruptcy via speculative selling, Miller would have triumphed.  Indeed, this is exactly what happened when he doubled down on financials and tech firms at the market nadir in 2002, grabbing shares of fallen angels like Amazon.com en masse and riding their recovery. 

Another point of view probably exposed by Burton Malkiel and Nassim Taleb would insist that Miller was just another fund manager subject to mean reversion.  In the end, stock prices move in a random walk.  Consistently beating the market is impossible.  If you play the game long enough, your returns will, on average, converge to the mean performance of the S&P over the same period in which you played.  In other words, it’s impossible to consistently beat the market forever.  To illustrate this, consider the below thought experiment:

Imagine a world where one million people were paid to flip a fair coin one million times.  Assume that a the rewards for this game pay +$1 for a heads and cost -$1 for tails.  Playing this game long enough, say until flip 400,000, most players would have logged roughly 200,000 heads and 200,000 tails.  But given the randomness inherent to coin flipping, some people might have gone on an incredible hot streak, logging 300,000 heads and amassing a full $200,000 of profit.  Let’s assume further that observers of this game are led to falsely believe that flipping a fair coin and receiving a disproportionate number of heads is a skill that deserves great financial reward (though we can’t forget about the poor soul who flipped 300,000 tails and only 100,000 heads - that poor guy!  This could be a blessing in disguise for this player, though, as he would then be free to pursue his real interest in oceanography or some unrelated field, working only forty hours a week (coin flipping is a time-consuming profession, after all) and marrying his high school sweetheart, teaching a class at the local community college, and volunteering at his son’s daycare on Friday mornings.)  Playing the game to its conclusion, the player with 300,000 heads at the 400,000th flip would, on average, finish the game flat money.

2007 was the equivalent to Miller’s 400,00th flip, and he had amassed an astounding 300,000 heads.  Given his streak of good luck, he falsely believed that he could time his entry into financials perfectly, tossing another 300,000 heads during the next 400,000 throws.  But what happened?  WaMu defaulted, Citi got a government guarantee of its debt, AIG was nationalized, the Agencies were put into conservatorship, and financial firms continued to slide. 

Ultimately, had Miller succeeded on betting on the financials, he would have lost money eventually.  Notwithstanding early retirement or “quitting while he was ahead,” I’m confident that Miller is yet another money manager who parlayed good luck into hoaxing average investors into believing he had a supreme skill - the much coveted ability to influence the outcome of a fair coin toss. 

Events marked by randomness always come masked in post-hoc explanations.  His run-up was the product of skill while his fall was sheer bad luck.  Next time you read about a fantastic mutual fund manager and his otherworldly skills, remember this article written about Miller at the height of his success.  And next time you’ve thrown 300,000 heads on your 400,000th flip, you might want to consider cashing out while you’re ahead, taking a certain smug satisfaction in your slight-of-hand in making people believe what was mere good luck was something more - irreplaceable skill.

-DH

Chevening Scholarship

I am utterly shocked at this moment. Really. Though the details are few at this time, it appears Bernard Madoff was arrested today in a $50 billion Ponzi scheme. Madoff started a securities firm in 1960 and grew it by being innovative in the broker-dealer business. Some of his innovations were quite controversial at the time.

From the reports I have seen so far, Madoff has both an investment advisory business and a broker dealer business. In simplified terms, IA’s manage assets on behalf of others (simlar to the mutual fund business) while BD’s trade securities and execute transactions on behalf of customers. Accounts of the Madoff’s last days are fascinating.

Madoff had kept his office on a separate floor, with access to the books under lock and key. In the last days, he appeared extremely stressed to employees. When two senior employees questioned why his explanations of why he wanted to pay bonuses early, he admitted it was “all just one big lie” and “basically, a giant Ponzi scheme”. The business had been insolvent for years and had losses of some $50 billion with only $200 to 300 million left. There is no doubt it will take time to unwind the fraud and determine exactly what happened.

A Ponzi scheme or “robbing Peter to pay Paul” is when new investors’ money is used to pay off redeeming investors. The underlying “business” or “investment” is merely a charade. This requires increasing the amount of new investors faster than the old investors cash out. Obviously, it eventually becomes impossible to sustain. It is not clear how long the fraud was perpetrated and how exactly he was able to defraud regulators. IA’s and BD’s are heavily regulated and frequently examined. I am very surprised something of this magnitude was not caught and that at this point it appears he did it alone.

When more info comes to light on how this fraud was perpetrated, I will update you.

Well, just like all of you reading this post, I am stressing out hardcore! I got one of my finals out of the way, and got two more to go (doubtful that you really cared, but too bad, I’m telling you anyways). Now, before you go commit academic suicide, just know that the work you are doing could lead to something big in the future. Maybe even famous!

Before I did this, I walked around campus to see if I could get some influence on who the students wanted to see in the post.

“There are famous people who have graduated from St. John’s?” replied one student.

“How about Britney Spears?” replied another. (I really wish I could have made that one up)

Well, going into this, I felt the same way. Who really are some famous peeps who have graduated from our beautiful Jamaica, Queens university? Turns out, there are a pretty solid list of well respected, well-known people who have made it big out of here (alive). I could put them all down, but that would bore you, but if you are truly interested, follow this link.

For the meantime, this is a list of former St. John’s students who have found a way to make an impact on our social society over the years and even have made an impact on my life…

(please note, this list will be avoiding some of your favorite St. John’s sports athletes, such as Chris Mullin, Craig Hansen, and Mark Jackson)

The rest is history. The rap group would take over the pop-culture scene with their hard-nosed lyrics and Adidas Superstars (I work for Adidas, so i figured I’d drop a name). They also pushed the bar when they crossed genres and joined together with rock group Aerosmith to record Walk This Way. To this day, the band remains one of the foremost success in the rap game and they have influenced the entire hip hop scene. McDaniels is still in the game as he prepares to drop his second solo album along with updating his autobiography King of Rock : Respect, Responsibility, and My Life with Run-DMC (being updated because he has just found out recently that he was adopted as a child).

But, before he did all of that fun stuff, he was busy cramming for his massive economic final. Bent graduated from St. John’s back in 1961 with his bachelors in economics. He would then come back in 1979 to get his honorary masters. He now sits on the board of trustee for the university. Not to mention, has a hall named in his honor (Bent Hall, just in case you needed some help).

So, you see these three graduates and probibly think to yourself  “Hey Matt, how do I know I will ever make like these super-cool kids?” Well, I can’t guarantee anything. To be honest, there is a good possibility that all of you will never make it on television, in the Wall Street Journal, or on the big screen. But, If it gives you a sense of comfort, i leave you with a quote from history professor Michael Romano.

“All of my students are famous in my mind. If you come to this university and succeed, that’s pretty famous in my mind.”

~Matt Goulet

We are getting near the year end. Time to conside how your going to close our your year with a big loss or even bigger loss. Consider your mutual funds that you could take a loss on for the tax year and Long Term Capital Gains

I know it is a good day when I find a sandwich waiting for me in my classroom closet.

This sandwich inaugurates me into a new class of citizenship.  I am now a long term, moderately aggressive investor who considers domestic and global mutual funds which are diversified and rebalanced annually.  I know it’s true because the guy who left me the sandwich said so.

So there.

I checked under the bed, under the couch and under my chair. Nope, nothing scary there! Feeling better, I worked up the courage and finally logged in to my CIBC Investor’s Edge account to see how my portfolio is doing. Amazingly, it was doing ok! While I definitely lost some money, my entire portfolio is invested in a handful of stocks and a few general mutual funds. Basically it turned out that while a few of those stocks tanked, others .. slid. Overall it wasn’t total devastation and I left the house this morning smiling.

So apparently we’re in a recession. My morning alarm is set to NPR and for the last couple weeks there’s been repeated discussion on the disaster that is our economy, the global downturn and the 1 year recession. For the last month, the cover of Economist has been one scary picture after the next - a wounded tiger illustrating how capitalism has failed, a man peering into a giant black hole wondering where his savings are, etc.

My brain gets it. We’re in a recession. My gut though, is still confused. Recession?

It must be the laissez faire vibe of San Francisco though, because somehow, despite steadily increasing numbers on the techcrunch layoffs tracker, and the bad news every morning, it just doesn’t feel like a recession. In fact, there’s a part of me at times that doesn’t quite believe that things are so bad. You know, when those people come on the news talking about how they can’t buy christmas presents this year, and how they won’t be going home for thanksgiving because they can’t afford airfare, a few times my mental reaction has been “geez. They pull out these sob stories every year!”. (I realize that sentiment is a little cold hearted, but it’s true!)

You know, I was talking to a few friends about this and they and a few of my coworkers felt the same way as I do — shit is hitting the fan right now in a major way! Some people out there are seriously screwed! But here? It’s same old same old. In the back of my mind I have this worry that some new economic disaster is going to happen that’ll rock me and others like me out of our happy little boats.

I think I’m sheltered from a lot of the bad stuff going on because the oldest of my coworkers is probably under 45. In fact, I think my team members and most of the engineers are mostly below 40. These people have been through the tech bust in 2000 so they’re strong, and plus they’re still young enough to rebuild a destroyed portfolio. The whole stock market tanking issue is way more disastrous to older folks than it is to younger people who will benefit from a recovery regardless of how sustained it is.

Secondly, the collapse in housing values and the craziness of foreclosures hasn’t hit San Francisco proper in a big way and though it has hit some of the suburbs in the valley and east bay, prices haven’t collapsed to the extent they have in other parts of the country. There are definitely some people out there who have been hit by a double whammy of home value tanking AND stock market being wiped out. It really sucks to be those people. I can’t even imagine it. Luckily I don’t think I know anybody in that situation.

Sigh. Yeah. Overall, I am very happy to report that the recession hasn’t affected me yet and I really hope it won’t.

One final note: if you see online advertisements around the web with little 1800 numbers, CALL THEM! lol. that pays my salary ;)

For more Excerpts readout Interviews @ Financial Chronicle

Gefunden bei courierpostonline.com:

By MADLEN READ • Associated Press • December 12, 2008

The final number could be even higher, analysts say. Charlotte, N.C.-based Bank of America said it hasn’t yet completed its analysis for eliminating positions, and won’t until early next year. The company and Merrill have about 308,000 employees in total, and the cuts will affect workers from both companies and all types of businesses.

Bank of America is considered one of the country’s healthier banks, and its decision to slash so many jobs illustrates the breadth of the layoffs hitting the United States. The nation lost more than half a million jobs in November alone, and economists expect many more to come.

Bank of America’s action is a particularly hard blow for Charlotte — which is also home to the beleaguered Wachovia Corp., a once strong bank that is now being acquired by Wells Fargo & Co. in what amounts to a fire sale. Just three months ago, when the Merrill Lynch deal was announced, Charlotte was dubbed Wall Street South; now, the banking center is being hit as hard as Wall Street and other towns across America, where people go to work in the morning unsure if they will still have a job that night.

Thursday’s announcement of job cuts at Bank of America was hardly unexpected, considering the merger and the wave of job losses seen in the banking industry and in other sectors over the past few months. Bank of America and Merrill Lynch have already eliminated thousands of investment banking jobs over the past year, as have other banks, in an effort to lower costs as they face increasing defaults in mortgages, credit card debt and other loans.

With no end in sight yet to the economy’s troubles, Bank of America might have to slash even more jobs as loan losses mount, said Alois Pirker, a senior analyst at Boston-based research firm Aite Group. If the company’s earnings worsen from this year to next, “I think that might lead to more reductions.”

Other big banks — which have all received loans from the government’s bailout fund — have been cutting jobs as well.

New York-based Citigroup Inc. has been slashing jobs the most. By next year, Citigroup expects to have shrunk its work force by 75,000, or 20 percent, since its headcount peaked in late 2007.

JPMorgan Chase & Co. is shedding about 7,000 employees, or 10 percent, of its investment bank staff, and cutting 9,200 jobs at Washington Mutual Inc., the bank it acquired in September. Goldman Sachs Group Inc. and Morgan Stanley, meanwhile, are reducing their staffs by about 10 percent.

The massive layoffs have raised questions about executive pay: With so many people losing their jobs, should the companies’ executives still receive lucrative packages? CEOs at Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. have yet to reveal whether they will receive bonuses this year, but those at Merrill, Morgan Stanley and Goldman have announced that they will forgo them.

Some argue, though, that the shotgun deal between Bank of America and Merrill, valued at $50 billion when it was initially announced in September, may have saved jobs in the end. It was struck as the solvency of investment banks was in grave doubt, and kept Merrill from a complete meltdown like the one suffered by Lehman Brothers Holdings Inc., which was forced to file for bankruptcy. Shareholders of both companies voted to approve the deal last week and it is expected to close by Jan. 1.

Bank of America shares fell $1.78, or 11 percent, to close at $14.91 on Thursday, while Merrill shares fell $1.43, or 10 percent, to $12.67.

In after-hours trading, Bank of America shares rose 12 cents to $15.03, and Merrill shares rose a penny to $12.68.

Using 529 Plans to Invest for College and Manage Wealth

Paying for a child’s or grandchild’s college education is an expensive proposition, even for many high-net-worth Americans. Today’s elite institutions promise graduates a rewarding future, but at a cost that more often than not extends well into six figures. Enter the 529 plan, a tax-advantaged investment vehicle generally available to families regardless of their income level. For affluent parents and grandparents, a 529 plan offers a variety of potential benefits — including some that go beyond the scope of college planning. A 529 plan may in fact play an integral role in an estate plan.

Named for the section of the Internal Revenue Code that authorized them, 529 plans allow investment earnings to grow sheltered from federal income taxes, and withdrawals used to pay for qualified education expenses are tax free. But for parents or grandparents concerned about estate taxes, 529 plans may be even more valuable, supporting a long-term gifting strategy while still providing significant control over assets that have been removed from a taxable estate.

There are two types of 529 plans — prepaid tuition plans, which let you lock in tomorrow’s tuition at today’s rates, and college savings plans, which let you choose from a menu of investments and offer more return potential, as well as risk. Both types of plans are generally sponsored by a state government (although tax law permits certain educational institutions to sponsor prepaid tuition plans) and administered by one or more investment companies.

With a 529 college savings plan, the underlying investment options are typically managed by mutual fund companies. Many plans offer age-based asset allocation portfolios that become more conservative as the beneficiary grows older. Others let account owners choose from individual investment options to create a customized portfolio.

Originally, 529 plans offered the benefit of tax-deferral — taxes on earnings weren’t due until withdrawal and then only at the beneficiary’s rate. But qualified withdrawals are now federally tax free.

Eligibility to contribute to a 529 plan is not limited by age or income. In addition, total plan contribution limits often exceed $200,000.

Withdrawals can be used to pay for undergraduate or graduate school expenses. Withdrawals for purposes not related to paying qualified education expenses are subject to ordinary income taxes and a 10% penalty tax.

Finally, remember that you are not limited to participating in your home state’s 529 plan — you can participate in national plans sponsored by other states as well. Be aware that your home state’s 529 plan may have state income tax consequences. Consult with a tax advisor before investing in a plan.

That’s where 529 plans come in: The first $12,000 you contribute each year per beneficiary won’t come back to bite you, as long as you haven’t made any additional taxable gifts to the beneficiary in that year. You can also accelerate your gifting schedule by electing to make a lump-sum contribution of $60,000 to a 529 plan in the first year of a five-year period ($120,000 for a couple). Of course, you wouldn’t be able to make additional taxable gifts to that beneficiary during the five-year period. And if you use the five-year averaging election and die before the five years are up, a prorated portion of the contribution may be considered part of your taxable estate.

But the wealth transfer potential can be substantial: An individual who has five grandchildren could immediately remove up to $300,000 from his or her taxable estate by contributing the money to five separate 529 plan accounts. Five years later, he or she could do it again.

Also, some plans offer relatively few investment options, while others may give you a wide range of investment choices managed by specially selected sub-advisors. Evaluate the performance of the investment options offered by specific plans. Compare the fees and expenses each plan charges too. And finally, keep in mind that some states offer in-state residents a tax deduction when they make a 529 plan contribution.

When choosing a 529 plan, you’ll need to look beyond estate planning considerations. There are dozens of plans available and their features and rules can vary greatly. To help narrow down the choices, consider working with a qualified financial professional. And be sure to consult with an estate planning attorney or tax professional before making any decisions that could affect your tax liability.

Copyright © 2008, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved.

Oh yeah, our favourite big bank (not) just announced it will be laying off up to 35,000 employees.  “Bank of America Corp. said Thursday it will cut approximately 30,000 to 35,000 positions over the next three years as it absorbs Merrill Lynch & Co. and grapples with the soft economy and along with 9,200 jobs at Washington Mutual Inc., which it bought in September.

The bank said a final number of layoffs will not be determined until early 2009.  On Sept. 15, Charlotte, N.C.-based Bank of America said it was buying Merrill Lynch in a $50-billion US all-stock transaction.

As with other U.S. investment banks, Merrill Lynch was battered by the credit crisis brought on by problems in the American housing market, including rising defaults and falling home prices.

The cuts announced Thursday are the latest in the U.S. banking sector. Citigroup expects to have cut 75,000 jobs, or 20 per cent of its peak staffing level, by next year. JPMorgan Chase & Co. is cutting about 7,000 employees.  Goldman Sachs Group Inc. and Morgan Stanley have also moved to reduce their staffing by 10 per cent.”   http://tinyurl.com/5774bd

Medicare “Advantage” Profits.  The Government Accounting Office just released the report, Profits and Non-Medical Expenses Were Higher. 

Isn’t it lovely to see just how profit and medicine do NOT mix.  Another giveaway to the insurance companies by Bush and the gang.  These plans should be called the MEDICARE DISADVANTAGE PLANS.

CMS officials stated that changes in the mix and health status of projected versus actually enrolled beneficiaries may have produced differences between actual expenditures and projections. That is, organizations received higher-than-projected revenues because Medicare paid additional amounts to compensate for enrollees who were deemed potentially more costly because of their health status, who were disproportionately from counties with higher benchmarks.   http://www.gao.gov/new.items/d09132r.pdf

From the blog, Naked Capitalism, www.nakedcapitaism.com

 The Best and the Brightest Have Led America Off a Cliff.Chris Hedges, TruthDig. Not a rant, actually explains some of the conditioning processes (note: I am an old fart, and these patterns were operative, but at a considerably weaker level, when I was young. There was not much in the way of a sense of entitlement [certainly not among those who had not gone to prep school], not the conformity he describes, and much less career orientation, except among pre-meds. From what I can tell, that pattern kicked in starting in the 1980s and has increased over time. Even passing by college campuses, the dress code became more conservative. http://tinyurl.com/565moh

From The Best and the Brightest - “The multiple failures that beset the country, from our mismanaged economy to our shredded constitutional rights to our lack of universal health care to our imperial debacles in the Middle East, can be laid at the feet of our elite universities. Harvard, Yale, Princeton and Stanford, along with most other elite schools, do a poor job educating students to think.

They focus instead, through the filter of standardized tests, enrichment activities, advanced-placement classes, high-priced tutors, swanky private schools and blind deference to all authority, on creating hordes of competent systems managers. The collapse of the country runs in a direct line from the manicured quadrangles and halls in places like Cambridge, Mass., Princeton, N.J., and New Haven, Conn., to the financial and political centers of power.

The nation’s elite universities disdain honest intellectual inquiry, which is by its nature distrustful of authority, fiercely independent and often subversive. They organize learning around minutely specialized disciplines, narrow answers and rigid structures that are designed to produce certain answers.

The established corporate hierarchies these institutions service — economic, political and social — come with clear parameters, such as the primacy of an unfettered free market, and with a highly specialized vocabulary. This vocabulary, a sign of the “specialist” and of course the elitist, thwarts universal understanding. It keeps the uninitiated from asking unpleasant questions. It destroys the search for the common good. It dices disciplines, faculty, students and, finally, experts into tiny, specialized fragments. It allows students and faculty to retreat into these self-imposed fiefdoms and neglect the most-pressing moral, political and cultural questions. Those who defy the system — people like Ralph Nader — are branded as irrational and irrelevant. These elite universities have banished self-criticism. They refuse to question a self-justifying system. Organization, technology, self-advancement and information systems are the only things that matter.

“Political silence, total silence,” said Chris Hebdon, a Berkeley undergraduate. He went on to describe how various student groups gather at Sproul Plaza, the center of student activity at the University of California, Berkeley. These groups set up tables to recruit and inform other students, a practice know as “tabling.”…

I sat a few months ago with a former classmate from Harvard Divinity School who is now a theology professor. When I asked her what she was teaching, she unleashed a torrent of obscure academic code words. I did not understand, even with three years of seminary, what she was talking about. You can see this absurd retreat into specialized, impenetrable verbal enclaves in every graduate department across the country. The more these universities churn out these stunted men and women, the more we are flooded with a peculiar breed of specialist. This specialist blindly services tiny parts of a corporate power structure he or she has never been taught to question and looks down on the rest of us with thinly veiled contempt…

Intelligence is morally neutral. It is no more virtuous than athletic prowess. It can be used to further the rape of the working class by corporations and the mechanisms of repression and war, or it can be used to fight these forces. But if you determine worth by wealth, as these institutions invariably do, then fighting the system is inherently devalued.

The unstated ethic of these elite institutions is to make as much money as you can to sustain the elitist system. College presidents are not voices for the common good and the protection of intellectual integrity, but obsequious fundraisers. They shower honorary degrees and trusteeships on hedge-fund managers and Wall Street titans whose lives are usually examples of moral squalor and unchecked greed. The message to the students is clear. But grabbing what you can, as John Ruskin said, isn’t any less wicked when you grab it with the power of your brains than with the power of your fists.

Most of these students are afraid to take risks. They cower before authority. They have been taught from a young age by zealous parents, schools and institutional authorities what constitutes failure and success. They are socialized to obey. They obsess over grades and seek to please professors, even if what their professors teach is fatuous. The point is to get ahead.

Challenging authority is not a career advancer. Freshmen arrive on elite campuses and begin to network their way into the elite eating clubs, test into the elite academic programs and lobby for elite summer internships. By the time they graduate, they are superbly conditioned to work 10 or 12 hours a day, electronically moving large sums of money around.

“The system forgot to teach them, along the way to the prestige admissions and the lucrative jobs, that the most important achievements can’t be measured by a letter or a number or a name,” Deresiewicz wrote. “It forgot that the true purpose of education is to make minds, not careers.”

“Only a small minority have seen their education as part of a larger intellectual journey, have approached the work of the mind with a pilgrim soul,” he went on. “These few have tended to feel like freaks, not least because they get so little support from the university itself. Places like Yale, as one of them put it to me, are not conducive to searchers. Places like Yale are simply not set up to help students ask the big questions. I don’t think there ever was a golden age of intellectualism in the American university, but in the 19th century, students might at least have had a chance to hear such questions raised in chapel or in the literary societies and debating clubs that flourished on campus.”

Barack Obama is a product of this elitist system. So are his degree-laden cabinet members. They come out of Harvard, Yale, Wellesleyand Princeton. Their friends and classmates made huge fortunes on Wall Street and in powerful law firms. They go to the same class reunions. They belong to the same clubs. They speak the same easy language of privilege and comfort and entitlement. They are endowed with an unbridled self-confidence and blind belief in a decaying political and financial system that has nurtured and empowered them.

These elites, and the corporate system they serve, have ruined the country. These elite cannot solve our problems. They have been trained to find “solutions,” such as the trillion-dollar bailout of banks and financial firms, that sustain the system. They will feed the beast until it dies.

Don’t expect them to save us. They don’t know how. And when it all collapses, when our rotten financial system with its trillions in worthless assets implodes, and our imperial wars end in humiliation and defeat, they will be exposed as being as helpless, and as stupid, as the rest of us.” Chris Hedges, a Pulitzer Prize-winning reporter, is a senior fellow at the Nation Institute. His latest book is Collateral Damage: America’s War Against Iraqi Civilians.

Measuring the Effect of Infrastructure Spending on GDP. Mark Thoma. Useful, but the paper cited does not appear to consider that the “ready to go” projects that Obama is pushing may have a high purchased equipment component (at least that’s what well informed readers contend), which in many cases is imported, and thus does not contribute to domestic stimulus.  http://tinyurl.com/6lw7jq

Today was long, yet not slow.  We got up around 6:30 and I cut Chris’ hair (buzz cut, yo… I don’t think I have skills to do a real cut).  Allergies had me groggy and headachy, and I was anxious to get to work since I had an 8:30 meeting.  With my irritability I was probably a little impatient with Chris this a.m.  Sorry, Honey!  You’ll love this–one of my brakelights went out this morning; do I have good timing or what (since the car just got serviced yesterday…)??

We got to work around 8:15, I reviewed my shiz, got some coffee, and then got a call at 8:28 that my client was sick :(  Booo!!  This was the third appt with this client that I’ve tried to have in the last two weeks. 

Oh well, that meant I could eat my oatmeal sooner than later :)  I forgot to take a pic AGAIN :shock:  I had 1/4 cup steel cut oats, 1/2 cup unsweetened almond milk, a little water, tbsp+ of raisins, cinnamon, tbsp slivered almonds, and pinch of salt.  [imagine yummy oatmeal here]

Around 10 I took Lily to my grandma’s house to give her to my mom, who was there getting my g-ma’s flat tire changed w/some help from AAA.  Yay for roadside assistance.  I’ve never changed a flat by myself.  Is that bad?  I helped my bro do it a few times, but never all on my own. 

I was hungry like an hour later AT 1:45!  I guess I wasn’t that full from lunch, and the tummy wanted something else.  I busted out my snack of ff/lf cottage cheese, an apple, and Stacy’s Pita Chips.  mmmmmm.

Chris helped me with the cc, and I saved 1/2 the apple and some chips.  Thank goodness I did that, as I was hungry again around 3!  I was a bottomless pit today, I suppose. 

I ate these while reviewing the New Seasons catering menu for our next seminar.  I usually get some easy foods and set them up myself, but wouldn’t mind something a little more gourmet with less effort for about the same price.

Chris and I headed to Fred Meyer to buy stuff for the seminar, and then proceeded to do our usual set up routine in the general conference room in our office complex.  Here’s what my little spread looked like.  Guests started arriving right before I took this so I didn’t get in there to get a really good shot.

Our spread consisted of:  a veggie platter with ranch; grapes; whole wheat baguette slices; table water crackers; hummus; meats (roast beef, low fat salami, turkey, ham); kalamata and green olives; muenster and provolone cheese; red and white wine; and water.  I had a plate, and snacked some on top of that, after we were done.  Not sure what the caloric intake was here, but I didn’t eat until full. 

The only thing I didn’t eat some of was the broccoli and cauliflower.  I really don’t like raw broc (other than slaw!) or cauliflower in general.  Yesterday on Erin’s blog I forgot to mention one of the nastos I eat sometimes has been ranch dressing.  I hadn’t had it for a long time until tonight.  I used to love it on my fries at Red Robin :O  That cheese was so creamy and good, esp. the provolone.  Some of the grapes were HUGE–so much fun!

We chatted with Alex, the presenter at our seminar (we invite wholesalers to present topics and just do a brief opening and closing ourselves), and then headed out to get Lily at my mom’s.  She was so cute tearing around when we got there; she loves to run around on the deck outside between Chris and I. 

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TIME Magazine Cover: Adolf Hitler - Mar. 13, 1933 -

“National Revolution!” - TIME

When a Prussian Deputy tried to fly his country’s flag. Berlin police made him take it down. The Deputy’s country—the German Republic—was dying if not dead. Meanwhile out of the ballot box another Germany was being reborn. Its flag— black, white & red—the onetime Imperial Hohenzollern colors, flew in every street, floated majestically from Government buildings and was flaunted everywhere by shouting, cheering throngs. Goosestepping as smartly as when they were members of Germany’s Imperial Army, and with several Hohenzollern Princes in their ranks, 20,000 Stahlhelmers paraded down Unter den Linden. Strangely enough, no monarchical restoration loomed. Chancellor Adolf Hitler had merely gone to the German people under borrowed colors, had won a thundering cataclysmic victory with catchwords as loose as his slogan: “Rebirth or Bolshevism!”

Not dazzled by a promised “new deal” (for Chancellor Hitler made no specific election pledges whatsoever), Germans, hoping that somehow he will bring back “the good old times.”

To this day, in the deep south, one sees quite a few open displays of the Stars and Bars, the flag of the pro-slavery Civil War factions.  A lot of the things which the US South embodied back in 1933 were taken by the Germans to a further extreme.  Hitler was born in a very mixed-population empire, the huge, sprawling, multi-lingual, multi-religion entity called ‘The Austro-Hungarian Empire.’  

This peculiar empire gave birth to a wild, luxurious, massive cultural outpouring of amazing richness and tremendous passion.  To this day, in all the arts, intellectual as well as sciences of every possible sort, live off of the fertile foundation of this polyglot empire.  Thanks to it being not only a major crossroads in Europe, the multi-cultural nature of the empire was the basis of its tremendously rich culture.

WWI wrecked all of that.  One of the worst things to spiral out of that epic war was how the triumphant French and British empires chopped up Europe along ill-defined ethnic/religious lines.  Over the following 100 years, these divisions have become increasingly ugly and violent.  ’Purifying’ borders to match idealistic views of who should be a citizen has been one horrific, bloody mess.  

The most unfortunate part of all this, from the perspective of culture, has been the destruction of the entire concept of a multi-cultural stew.  And these lands in Europe are no longer a major wellspring for innovative thinking or interesting culture.  Across the globe, political parties are gaining power in Muslim lands, India, Europe, America, which are based on religious or ethnic bigotry.  There is a great desire to have a monotonous landscape where everyone is regimented.

On top of all this, the desire to ape the Norman upper-crust stock of pre-WWI Europe is still very strong!  Here is a screenshot from an ad from Netanyahu: I don’t want to rule in West Bank - Haaretz - Israel News:

The above article is all about how Netanyahu really doesn’t want to rule the West Bank.  He is very sly about this.  He just wants to make chopped liver of it and then give the Palestinians some sort of half-citizenship: 

“Through the framework of negotiations, [the Palestinians] will have all the privileges of citizenship, but Israel will have to make sure it is not taking steps that harm its security,” reiterated Netanyahu. 

Germany has one of the longest histories of being a socialist state.  The Nazis immediately attacked liberals and socialists, all the while, screaming about communists.  In America today, as we go into an economic collapse, the far right wing Republicans have tried the same trick: they even called an obvious non-socialist, Obama, a communist!  This silly campaign only made things worse for the GOP.  This is because, in times of job losses, people tend to give socialism a better perch in power. 

Unless socialists run things right before a global collapse.  All countries with ‘democracies’ have this same effect: whoever is in power is thrown out.  So if right wingers rule a nation, they are tossed and vice versa.  This is due to sheer desperation.  The Nazis didn’t let the people of Hamburg elect someone, they had a vicious coup, just for example.  Coups flourish in desperate times.  Uniformly, they hate social services and people just live with very nasty conditions until either there is a massive, destructive war or things fall apart so badly, the people manage to overthrow the dictators.

Mostly, people live in abject misery.  In Nazi Germany, Hitler refilled public coffers the old-fashioned way: he looted ethnic and religious minorities.  Over and over and over again, in European history, this has been choice #1 in economic emergencies.  This is why Jews demand to have a home base which they ethnically cleanse: so they can run away from these inevitable looting expeditions.  I can’t blame them at all!  It is just one of the worst ironies of history that they turned themselves into exactly the monster they fear, trying to carve out such a state for their own enjoyment and enrichment.

The US had a long period of ethnic warfare after the Civil War.  From 1890-1930, the KKK grew in power and even openly marched on DC in huge numbers, wearing their terrorist garb.

Luckily for the USA, a liberal took over during the Great Depression.  But FDR also had to wield the same draconian powers as Hitler or Stalin or the King of England’s agent, the Prime Minister of England.  All the major empires were ruled nearly totally by fiat to one degree or another.  In the case of the US, the rule was far less repressive as say, Germany or Russia.  But then, those are extreme examples of outright totalitarianism.  And so was Japan.

Into this toxic stew came Franklin Delano  Roosevelt .

Here is his first Fireside Chat right before he went to DC to be sworn in.  The horror of the transition between Hoover and him was so traumatizing for the nation, the date of taking over the government was moved forwards to early January, rather than mid-spring.  Just like, today, there was open talk in public about removing Bush and installing Obama right away.

The Time magazine article below is from the same issue as the Hitler cover story.  This week was when the US saw many state governors unilaterally closing all banks.  22 states did this right before Roosevelt became President.  The banking system was such a mess, the President had to restart the entire system on a totally different basis.  The one major mistake made was to not arrest the central bankers and close down the Federal Reserve.  Instead, the hopes were, to use this monster bank to set the system back into motion again.

Bottom - TIME

Way back then, newspapers openly talked about various ethnic and religious groups, by name.  Today, this is enforced only if we are talking about Tibetan Buddhists or any Muslims.  They get full ID every time they pop their heads in the news.  But of all ethnic groups around, the Jewish people have set into place this cloaking device which means, no one mentions them, ever, except when identifying and sympathizing with victims of ethnic/religious warfare.  But even funnier, the WASPs and in particular, the upper-upper ruling crust fellows, the Normans, have vanished from view, too!  

But even in 1933 America, this old tradition of describing various ethnic groups with names was quite common.   So were anti-mixed marriage laws.  And anyone who was even 10% black or Jewish was considered to be a Negro or a Jew.  As modern ethnic cleansing continues, the rigors of this are increasing, not decreasing.  There were even people who dared to suggest that Obama wasn’t black enough because he was only half-African.  On top of this, a group is seeking to pull his American citizenship in a bid to undo a fair election.  Even while this same group hasn’t gone after all the dual citizens who are Jewish and who hold positions of tremendous power in America.  Well…I am betting,t this will be next.

The banking system collapsed, in the Great Depression, long after the housing and stock market collapses.  This is different from this time around.  If we had no FDIC or other Depression era reforms like Social Security and unemployment insurance, etc, we would be already at the ‘dead bottom’ of this depression.  This depression saw an abrupt launch back in July, 2007 when the Japanese carry trade, the circulation system that liquified the planet and plunged it deep into debt, finally began to unwind.

The yen went from 120 to the dollar to 90 to the dollar today.  This is a complete catastrophe for the Japanese economy that saw its international trade profits and powers climb steeply during the 10 year ZIRP regime set by the Bank of Japan.  The Japanese lending greased the US import engine which is now seized up.  Back in the 1920’s, the equivalent of the Japanese carry trade was the US lending to Germany to pay for reparations for England, the Low Lands and France who then sent it all back to the US again.  When Germany stopped this, our banking system collapsed.

Bottom - TIME

At midnight they poured out of the Federal Reserve Bank and 16 of the biggest of them mounted into five waiting limousines, sped northward up silent lower Broadway past the slumbering warehouses of Lafayette Street, up Park Avenue, among the taxis of night-club-goers to the home of Governor Lehman who was patiently staying home for them, having given up his trip to the inauguration.

Meanwhile in Chicago a similar group had gathered in the Federal Reserve Bank: Melvin Traylor (First National). Stanley Field (Continental Illinois), Philip Clarke (City National), Solomon Smith (Northern Trust), Howard Fenton (Harris Trust), Charles G. Dawes and their fellows. Theirs were similar problems: $350,000,000 had been drawn from the Chicago banks in two weeks, much of it by banks in neighboring territory where the banking disease was bad. Governor Henry Horner of Illinois sat with them till 5 p.m., then retired to the Congress Hotel to sleep. At 1:45 a.m. he was aroused by telephone and taxied back to the Reserve Bank on South LaSalle Street. Shortly afterward a long distance telephone call announced that Governor Lehman had declared a two-day banking moratorium in New York. Governor Horner followed suit: the two Jewish Governors had the unhappy distinction of closing the banks of the country’s two largest financial centres.

But gentile Governors were not allowed to sleep. Before dawn that Saturday morning there were moratoria in Iowa. Missouri, Minnesota, with others following fast. Before 10 a.m. the closing of all the security and commodity exchanges of Chicago and New York had been announced— all except the Livestock Exchange in Chicago, for livestock is perishable, its distribution must go on. By that hour the three-block-long factory of the American Bank Note plant in The Bronx was roaring with activity, with police at the doors to keep the inquisitive away. At 1 :oo p.m. 100,000 citizens whose banks were closed saw Citizen Roosevelt transformed to President.

Again, the reporter for Time didn’t hesitate to mention ‘gentile’ and ‘Jewish’ when discussing politics and finance.  Actually, I think this is a good thing in the long run: note that many bankers were ‘gentiles’.  There are a lot of anti-semites who stupidly blame Jews for a banking system that was infested with Christian bankers!  DUH.  And there is NO ethnic group that has a hammerlock on stupid banking systems that crash.  

Whether Asian or European, whatever gods they worship, every religious and ethnic group can take their turn at screwing up banking.  For example, Japanese Buddhists/Shintoists run the Bank of Japan!  They ran it in 1933, too.  And before then!  So the lesson here is harsh: there is NO religion, NO ethnic group that doesn’t end up screwing up whatever banking system they run.

This is probably why I talk so relentlessly about the denizens who dwell in the Cave of Wealth and Death:  these are not modern gods born since 6,000 BC but rather are elemental creations set to describe and ‘humanize’ what are actually scientific natural forces.  No one has yet to devise a banking system that is both rational and safe.  All banks from their inception eons ago end up crashing on the same rocks of reality: once the manipulators of money figure out, this is really a magical piggy bank and money is made out of thin air and is controlled by the bankers, they go bonkers and run everything to infinity.

Whatever systems they set up to restrict the ability to run things to infinity or zero them out, these systems are knocked to the ground as fast as possible as bankers seek these vast, magical powers.  Pure greed takes over.  The bankers think, ‘I can juggle things with my bookkeeping or my money lending schemes or my moving things around in time so that all of the bills don’t come due all at once’.  Or they think, ‘If my fellow bankers and I insure ourselves against each others’ losses at the same time, we can all avoid ANY losses!’  Etc.  There are endless ways to try to evade the strict laws of the Guardians and inhabitants of the Cave of Wealth and Death.

AND THESE SCHEMES ALWAYS FAIL!  For there is no evading the iron rule of the golden cave!  The power there is overwhelming.  The more one seeks to circumvent or control these vast forces, the worse the collapse it causes!  This is why our grandfathers, back in 1933, openly wondered if they should have just stopped trying to save collapsing banks and just start all over again.   Which is basically what had to be done.  The same sorts of people today are thinking the same thing.  The IMF tells countries to NOT save their collapsing banks only to tell the US, Europe and Japan to do the exact opposite today!

And the caution of not trying to save hopeless banks was discussed in 1933 just as it is being discussed in 2008.  AIG should never have been saved.  Its collapse was inevitable when Lehman Brothers fell off the Derivatives cliff.  And this made the Beast hungry and it began to instantly devour all bank wealth.  The attempts at filling in the vaults of the bank who were part of this monster Beast simply added epic and dangerous debts to the US taxpayer’s future load!

Fed Refuses Bloomberg Request to Name Recipients of $2 Trillion in Lending

And so we don’t get to know the dire straits our biggest bankers are in.  And they, in turn, get to remain cloaked in darkness.  This darkness will spawn a new Hitler in the US as desperate people struggle to try to understand what the hell is going on.  Maybe various ethnic and religious groups, worried about their names appearing in public like the Jewish financier criminal who was arrested last night.  So they figure, ‘Let’s conspire to hide our own identity.’  This is foolish and stupid.  Just like pretending Israel isn’t committing crimes against humanity is dumb in the long and even short run.

Paulson is a ‘gentile’ and thus, he is operating just like his predecessors in the past: he is blithely ignoring the public right to know.  Anti-semitism will end up blaming the recipients of much of gentile Paulson’s largess.  This is why it is important to talk about all this: it is a multi-national, multi-religious scam game going on.  And it is planetary.  Muslims in Dubai are party to this just like Japanese nationals, etc.  I am angry about people who suggest there is any one group that screws around with the Cave of Wealth and Death.  This is a human problem!  All humans end up doing this if they find out how to get into the magic circle of wealth creation!

Back to keeping the mess secret: the Fed obviously is in a total panic.  Instead of assuring everyone and showing us exactly who is screwed, they are hiding this. SO WE MUST ASSUME THAT EVERYONE INVOLVED IN THIS MESS ARE BAD!  Um, this is very bad, of course.  This means no investors, no retirement fund officers, no foreign sovereign funds can trust ANYONE in the US banking system!  The only reason we are not having a 1933 run on all our banks is very simple: the FDIC, which has drawn down around half of their emergency funds, is still reassuring depositors.

Bottom - TIME

Preparing for record-quick-acting session of Congress, Speaker Rainey forecast some sort of Government guaranty of bank deposits. Problem : to make guaranty effective for good banks only.

Now, on to a very important topic: gold.  Back then, gold was the Guardian at the Gates.  But it was circumvented by the lending system…AS ALWAYS.  Gold is not able to control lending if regulators who are human don’t restrict lending!  Period.  The Great Depression grew out of the US efforts to fund England and France’s war with Germany.  Germany was the aggressor nation in this regard.  

But instead of negotiating peace, thanks to bottomless pits of lending, the three empires slugged it out in a bloody, awful mess until all three were ruined for the next 100 years.  Unless the US lent them even MORE money!  So more money was created out of the magical piggy bank.

Bottom - TIME

The dollar eventually was devalued and gold jumped in dollar requirements, nearly doubling the amount.  This mass-devaluation depressed all systems for another 7 years.  But starting in 1936, Europeans began to send their gold to NYC for protection from the Nazis.  So our gold situation improved greatly.  A lot of that gold is still being held in NYC to this very day.

Note also, that this gold was now used ONLY for INTERNATIONAL TRADE.  This kind of kills the theory that gold caused the depression.  The US had a huge store of gold and used it to guarantee bills of lading.  This was to uphold world trade.  The US wanted world trade.  But the world wanted ONE WAY TRADE.  This way, they could recapitalize their own gold reserves with US gold!  The US could not allow this so free trade was greatly restricted!  This was done to protect our gold reserves as well as our home industries.

Bottom - TIME

2) All banks regardless of condition were empowered to make loans necessary for the movement of food for men, feed for beasts.

3) All banks should allow free access to safety deposit boxes so hoarders could bring their hoardings back to light.

4) All Postal Savings banks should stay open.

5) All banks might cash checks drawn on the Treasurer of the U. S.

6) All banks should be allowed to receive payments due them.

7) In the exercise of all these privileges no bank should pay out gold coin or gold certificates. The nation’s gold supply must be conserved.

But this last rule was soon modified by permitting banks to pay out currency (not gold) for payrolls, medicine, the necessities of life. Many a bank was doing business on this basis Tuesday.

OK: warning to all gold bugs who imagine they are protecting themselves when hoarding gold.  It doesn’t work.  If you are forced to use it in public, the government considers this ‘flushing it out’ so it can be captured by the government!  DUH.  Heed this warning!  I have gold certificates issued in 1928.  These were rendered useless by these 1933 rules!  Right now, the government seriously doesn’t give a hoot what price gold is so long as the bankers go run to gold.  

Back then, to CONSERVE THE GOLD SUPPLY, the government resorted to confiscation of gold and the penciling out the word ‘gold’ from money certificates!  That’s all, folks!  Simple, isn’t it?  Another stark warning to everyone: if any trade power reinforced the ancient rule of using gold to guarantee bills of lading, watch out!  The confiscation of private gold at whatever rate the government sets will be absolute and swift.  And anyone trying to evade this will be punished!

When gold was being flushed out and confiscated in 1933, many a libertarian complained.  And some even talked about using guns.  But this fell apart as they were disorganized and too many right wingers were without jobs and lost all their savings so they were no longer allies of the gold bugs.  Indeed, in Europe as well as America, the gold bug’s most dangerous enemies were not liberals or socialists but fellow right wingers who owned no MORE gold and were furious with the collapse of the banking system!