Tuesday, June 28, 2011

An idiotic post, this time from no less a firm than McKinsey

The actual item is titled: "How the growth of emerging markets will strain global finance" and is available at: http://e.mckinseyquarterly.com/105845d9dlayfousubmvaymqaaaaaa7vxpx3slu6teiyaaaaa

The basic argument is that all the theoretically-required new roads, ports and other infrastructure projects in developing countries will need a huge amount of of money: something like USD 24 trillion, in fact.

As a result, by 2030, we will see global savings decline, argues the McKinsey Global Institute, because of the reduction in household saving rates which generally has taken place in mature economies at least for the last three decades; and we have an ageing global population, as well as China’s apparent attempts to rebalance its economy toward increased consumption.

Therefore, the amount of capital available will fall short of demand to the tune of $2.4 trillion-slowing global GDP growth by one percentage point a year.

So businesses and investors must adapt to a new era in which capital costs
more and most of it goes to the world’s developing regions, argue McKinsey.

This is nonsense: supposition is piled upon supposition, till the whole superstructure not only teeters but collapses.

Consider that the whole argument is based on the following:

- China will succeed, at least to some degree in encouraging consumption. That assumes that there is no political problem in China till 2030. A fair assumption?

- the reduction in household saving rates, which has taken place in mature economies in the extraordinary last three decades, will continue; is it safe to believe that Americans, for example, have learnt nothing? The evidence is that they are already saving more after the 2007 crash

- all the theoretically-required new roads, ports and other infrastructure projects in developing countries will come off the drawing boards; rather, if capital is not available, and if growth rates decline, or if there are political problems, these plans will ossify on the drawing boards

- we are in for "a new era in which (most) goes to the world’s capital goes to developing regions"; if global growth rates decline (as the consensus now is, at least for the foreseeable future), then it is doubtful whether the current craze for emerging market risk will continue; as one of my senior colleagues used to say: "Emerging markets are markets from which it is difficult to emerge in an emergency". Lenders will demand even more of a premium from emerging markets, which they may not be in a position to afford. Sphere: Related Content

Argentina, here I come! Or: a possibly apocryphal fact regarding Victoria Ocampo

As I have to travel to Latin America (actually, only Argentina) later this year for the first time in my life, I am doing the occasional sally into Argentinian history (I did look at this briefly some years ago, but I'm afraid my memory needs refreshing, now that I am retired!).

One item of information (possibly apocryphal)that I have come across is that when the family of the novelist Victoria Ocampo used to undertake their annual visit to Paris, they used to take 2 Argentinian cows with them, so that they could enjoy good quality Argentinian milk, rather than the thin version they could buy in France!

Possibly, this is a story put about by the Argentinian farm lobby in order to increase the reputation of Argentinian milk and beef (primarily beef, I am afraid, which is supposed to be of the absolutely best quality in the world).

But possibly this is a true story: rich families from Latin America had legendary lifestyles.

More interesting stuff on Argentina as I discover it... Sphere: Related Content

Shocking report from the UK's Financial Services Authority

The UK's Financial Services Authority (FSA) has gone public with the shocking accusation that the UK's banks have failed to strengthen processes to limit money laundering, in spite of having had 9 years in which to do so.

The FSA report is titled "Banks’ management of high money-laundering risk situations:
How banks deal with high-risk customers (including politically exposed persons), correspondent banking relationships and wire transfers".

According to the report, UK banks are making profits at the risk of being involved in money laundering. There are serious weaknesses in banks' systems and controls and a willingness to turn a blind eye to profitable business relationships with high-risk customers and regimes. Around three quarters of the bank's reviewed by the FSA - including the majority of major banks - failed to take adequate measures to establish the legitimacy of the source of their customers' wealth and the source of the funds to be used in the business relationship. So "it is likely that some banks are handling the proceeds of corruption or other financial crime".

Well, the FSA may bluster all it wants but it is only when institutions that persistently go the wrong way are disciplined that things are going to improve.

The good news is that two banks have already been referred to enforcement. More may follow. Sphere: Related Content

Monday, June 27, 2011

To wear or not to wear the burqa

Carnita Matthews from Woodbine, Sydney, apparently a Muslim woman, accused of lying about police trying to tear her burqa off, avoids jail because her identity couldn't be proved.

Another Muslim woman, a defendant in France, in the first trial under the "burqa ban" law is sent home from the trial – for wearing a burqa!

So now all that is necessary to escape the law in these countries seems to be to have a sex change operation (if necessary) and declare oneself to be a Muslim.

But beware: both of these are irreversible (so far as I am aware, at present - the first biologically, and the 2nd under sharia law which effectively bans anyone leaving the Muslim fold because the penalty for that is death).

BTW, several supporters of Mrs Matthews are reported to have attacked cameramen following the decision and jostled the police, while Mrs Matthews’ lawyer is reported to have defended their actions saying, “They are obviously happy with the result and are expressing it in a way that is culturally appropriate to them”.

Here's an idea: why should newly sex-changed now-Muslim women not start a new custom that would now be even more "culturally appropriate": burn the courts. Sphere: Related Content

The best liberal wisdom regarding the situation of the US in the world economy

is to be found in THE LAST ECONOMIC SUPERPOWER by Joseph P. Quinlan (recently published). Here is an excerpt from it: http://www.theglobalist.com/StoryId.aspx?StoryId=9194

As I say, this is the best that contemporary LIBERAL wisdom has to offer.

However, like most other assessment of global trends, it simply takes current trends and projects them forwards, without considering whether (and if so, what) may derail those trends.

For example, there is nothing here about whether China can continue to maintain at least 8% real growth while keeping inflation in check, nothing on whether Brazil will ever move out of the category of "a most promising country" (a category of which it has been a member since the Sixties to my recollection), whether Russia will continue to be politically stable (what happens if Putin dies - or, worse, falls sick?), whether Indian will finally start including the majority of its population in its "shining growth" or will fall victim to a revolt of the masses at the increasing gap between the rich and the scandalously poor....

For some reason, liberals focus on the right things that are being done by emerging nations (and it is of course right that that should be done) but do not focus on the wrong things that have been done by Anglo-American-style financial capitalism (which do need to be taken into account) - as well as the prospects for the US, UK and other Western countries to return to sanity - and what effect that may have on global economics.

As I write this, global regulators (led of course by the USA and other Western countries) have just agreed minimum capital requirements, including larger capital requirements for "systemically important" financial institutions. Of course, this still has to be okayed by the G20 and, deficient though the measure is (see my earlier posts on this topic), it is better than nothing. And if it is start of more sensible regulations to come, then it would be excellent. Naturally, the reverse if regulation stalls without creating a sufficiently comprehensive global framework for all aspects of financial services, money supply, and so on.

Meanwhile, with commodity prices falling sharply, and global growth set to be slow for the foreseeable future, the question is whether the huge Chinese bet on commodities will pay off or will itself create problems for the country. Sphere: Related Content

Saturday, June 25, 2011

How NON-serious is the Chinese government about fighting corruption?

This can be judged by asking whether anyone in their senses would authorise webstie for the purpose in which only a maximum of 1,000 people could make a complaint at the same time?http://www.blogger.com/img/blank.gif

No wonder the website crashed shortly after launching: www.bbc.co.uk/2/hi/asia-pacific/8117297.stm

This is inspite of the Chinese knowing that their web activities are monitored and that they are liable to prosecution - and intimidation.

An earlier version of the official nationwide tip-off system apparently generated 20,000 reports of official abuse in 2008.

What happened to that version of the system cannot be traced - at least by me at present! Sphere: Related Content

Tuesday, June 21, 2011

Hernando de Soto and the "destruction of economic facts"

Hernando de Soto, who I regard as a valued colleague, recently published a piece on the relationship between the rise of the West and the establishment of economic facts and records, and on the other hand, the relationship between the current http://www.blogger.com/img/blank.gifdecline of the West and the devaluation or ignoring of economic facts (click HERE to read the article in BusinessWeek: )

I left off commenting on the article, as I was due to see Hernando a few days ago.

Last week, I put it to him that the destruction of economic facts, to which he so tellingly draws attention, is related to the rejection of the notion of truth in philosophy and the social sciences (and now even in the physical sciences!), and the resulting post-modernism and amorality of our cultural leaders.

For any improvement in the situation, for any return to economic facts and "public truth", there has to be also a cultural return to the commitment to truth in public life as a whole (philosophy, social sciences, physical sciences, media, politicians, cultural icons....)

He was intrigued and said he would explore that chain of thought, which he had not thought about till then. Sphere: Related Content

Wednesday, June 15, 2011

Watch the propaganda war

The USA's Federal Deposit Insurance Corp has decided to hold big banks to the same minimum capital standards that community banks must meet. Surprise!!!

So the big banks have launched a propaganda salvo, arguing that the new capital standards will hinder lending and put them at a competitive disadvantage.

Putting big banks on the same footing as community banks creates for the big banks a competitive disadvantage? Who are they trying to fool?

And the availability of all the capital that they have had since the government decided to support the big banks does not seem to have enabled them to lend any astonishingly great amount so far.

"We're for higher capital standards, but we want to ensure that the banks have the ability to make loans," Scott Talbott, senior vice president of government affairs at The Financial Services Roundtable is reported to have said. But why should anyone believe that putting big banks on an equal footing with community banks for capital requirements is going to make the blindest bit of difference to the lending activities of big banks? Sphere: Related Content

Tuesday, June 14, 2011

New evidence that the 2007 crisis is not over

According to an Associated Press study, 60% of the states in the USA are having trouble with budgets as well as with revenue. Their general-fund budgets are still below 2007 levels, and they have not been able to bring spending to the levels before the recession.

In fact, 50 states are down 5% in revenue from fiscal 2008.

In many cases, the states are struggling - and are trying to cope by firing policemen, firemen, bureaucrats and even teachers and university professors.

Whether many of these States are in a better position than Greece remains to be seen.

One shudders to think what the real position is in China - it is shielded only by how difficult it is to look inside that apparently-gold box. Sphere: Related Content

What is the right approach to "regulatory arbitrage"

First, what is "regulatory arbitrage"? That is simply the tendency for companies to seek to move activities to locations where regulation is less stringent.

Since the start of the 2007 global crisis, one problem dogging improvied legislation and regulation anywhere is the suspicion, or threat, or regulatory arbitrage - in other words, if rules are too strict in say the USA, industries may move their activities to Latin America or Africa or Europe...

There are several ways around the problem of "regulatory arbitrage".

The most sensible system is of course to have global rules for global markets, so the question of regulatory arbitrage does not arise.

The next best is to build into the national regulations themselves the forbidding of regulatory arbitrage, keeping in mind that it is easier to talk of moving house than it is to actually move house.

The worst possible thing is to try, as Rep. Michael Grimm, R-N.Y., is apparently doing, to simply put off the implementation of the few and relatively weak new rules that have been put in place to govern at least part of the derivatives market which was so implicated in causing the crisi, and which is so implicated in the current yo-yoing of the global economy.

Putting off a cure does not help a disease. Sphere: Related Content

What to watch in valuing banks and other financial services institutions

Michael Krimminger, the chief counsel of the USA's Federal Deposit Insurance Corp., has said that all SIFIs (systemically important financial institutions) need to have workable plans in place for unwinding themselves if necessary, or they might need to restructure. "Ultimately, a SIFI could be required to restructure its operations if it cannot demonstrate it is resolvable in an orderly manner under the Bankruptcy Code," Mr. Krimminger is apparently going to tell a House Financial Services subcommittee.

What he will be telling them is simply the law as it stands at present.

The question is whether the House subcommittee will want to weaken the law by encouraging SIFIs to ignore or evade the law, or whether the subcommittee will seek to have that that provision actually implemented, for example by setting a deadline for all SIFIs to present such "resolution plans" for evaluation.

If the decision is to move in the second and more sensible direction, then the market will watch what plans are presented by which SIFI, or (if the submission is secret - as it should be), which plans pass muster and which do not.

Plans that do not pass muster should mean that the particular SIFI will either have to submit a revised plan that does pass muster, or be required to begin its breakup more or less immediately.

In some cases, a few cases a breakup will reduce the value of the SIFI but in other cases a breakup will increase value in the SIFI, so far as shareholders are concerned. Sphere: Related Content

Banking industry to take new rule to court

When I was educated, I was taught that the job of courts was to implement the law, and not question it. Now it was always clear that sometimes "interpretation" of the law has in practice occasionally meant "interpreting it out of existence" or "interpreting the law to mean something quite different". But this has been rare or at least infrequent till now.

Now it looks as if, in the US, banks are going to be asked to decide whether a law sets market rates that are "too low". So the most important thing to see is: whether courts will accept this invitation to increase their own power yet more (the question of what actual limits they set is secondary).

But let me give you the background: the financial services industry has been opposed, as you might expect, to the Federal Reserve's proposed limit on debit card transaction fees. Having thrown everything in their power at the Fed and lost the argument with the expert authorities (as it appears), the banks are now waiting only for the issuance of the actual wording of the rule before they take the matter to the courts (which have of course much less expertise on financial and economic matters).

The argument is best summerd up as follows: The government should not set the price for the use of debit cards as "most prices in our economy are set by the market and that arrangement works pretty well" (in the words of a recent editorial in Bloomberg).

Bloomberg seems to have forgotten that it was the removal of too many rules that led market forces into the 2007 global crisis from which we have not yet escaped.

Just as "good fences make good neighbours", so "good rules make good markets".

In the guise of arguing that a specific rule is not good, industries really want once again to argue that we need no rules at all.

You might have thought that the crisis had taught us all some basic lessons about markets and rules. But of course industry lobbyists and CEOs are paid to try to bend rules in their favour.

You can make far more money by bending a rule in your favour, than you can by playing according to rules that are fair for card issuers as well as for card users. Sphere: Related Content

To create US jobs, the US corporate lobby wants to sink the USA to the level of Greece

The current level of understanding among corporate leaders in the US regarding the concept of "strategy" is, I'm afraid, desperately poor.

As evidence consider the following:

Job creation needs a "strategic view" to succeed, according to Jeff Immelt, chairman and CEO of General Electric, and Ken Chenault, chairman and CEO of American Express.
Both of them are also on the President's Jobs and Competitiveness Council.

They say: "By making it easier to visit the U.S. through improved visa processes, we can win back market share in travel and tourism and create hundreds of thousands of jobs".

First, let's ask whether "improving visa processes" will not also make it easier to enter the US, and will therefore increase security risks once again.will increased tourism create "hundreds of thousands" of jobs? So it will require a massive propaganda job on the part of the US Administration to convince its population that that "improved visa processes" do not mean greater threat to security - and all the expenditure of time, effort and money on the propaganda will be instantly undone by just one bomb or attack of any other sort (do note, by the way, that the Chinese and/or some other government is still hacking away at the computer facilities of corporations, organisations such as the IMF, and defence establishments).

Second, increased tourism will certainly restore some thousands of jobs that have been lost as a result, since 9/11, of the creation of the Big Brother State in the USA. And if tourism really booms, then of course several thousand more could be added.

But could tourism alone create "hundreds of thousands" of jobs?

I am sceptical.

How many motels and hotels can you have?!

Think too: How many countries are competing to be tourist destinations?

Finally, the "strategic vision" of Immelt and Chenault for the US seem to boil down to financial innovation and tourism, so the question is: can an economy rely on financial innovation and tourism alone for the bulk of its jobs, without any manufacturing?

There are of course countries that rely on financial innovation and tourism.

Countries such as Greece.

Their problems are now too well known to be repeated here.

But at least we now know the exact level to which the corporate lobby in the President's Jobs and Competitiveness Council wants to sink the USA. Sphere: Related Content

Sunday, June 12, 2011

I don't often publish anything very personal here, but

as it was my mother's 10th death anniversary recently, and as my 22 year old son, Suresh, has written the best of any of us for the occasion, I thought some of you might like to see it.

My mother (his grandmother) was always "Ammachi" to my children.

Here is what he wrote:

When I think of Ammachi I can't think of many happy positive memories
Mainly I think of suffering
But when I consider all Ammachi went through I am amazed
Amazed that despite - or through - suffering, she fought, she lived, she laughed, she loved

Now I find myself appreciating that strength
Realising how admirable it is
And praying that in whichever hardships I go through in life,
I can do so following her legacy:
going through suffering walking with Jesus, giving thanks at all times,
unwavering in thankfulness, hopefulness, and faithfulness

I can understand why she loved the psalms,
when I thought them a repetitive cry,
oscillating between joy and tragedy
But they are full of the raw emotions of life.
Universal, human truths given meaning and purpose by Godly presence

And so it was with Ammachi.
The presence of God gave her life, in all its fulness - the ups and the downs - a meaning and purpose that transcended any mere human thoughts, and made all suffering bearable beyond any mere human well-wishing.
Sphere: Related Content

Thursday, June 09, 2011

Finally, light on why oil markets are suffering from "irrational exuberance" again

In his daily roundup of academic news ("whether Serious, Sublime, Surreal or otherwise"), Kevin Lewis of the US publication, National Affairs, reports the following research by Tamir Levy of Netanya Academic College and Joseph Yagil of Haifa University, Israel.

Air pollution affects mood, which affects stock prices:
Average daily returns on stock indexes for days with unhealthy air-pollution levels range from −0.45% to −0.26%, while on good days, returns are positive, ranging from +0.04% to +0.06%.

Well, what can I say?

Only that the air must be PARTICULARLY healthy at present. Sphere: Related Content

Wednesday, June 08, 2011

The markets have gone even madder than usual

Those of us who were brought up on the dogma that markets are always right (at least in the long run) are having a harder and harder time sticking to the faith.

Consider that OPEC's current infighting and disunity is supposed to mean the end of the quota system by which different countries have agreed how much oil they are going to produce.

That in turn means that Saudi Arabia and its allies are going to produce more than they did - which in turn means that the others too are going to produce more than they did - which will have the immediate consequence that the supply of oil will increase - which should of course mean a significant reduction in the price of oil.

But what has actually happened? The reverse! The oil price has actually shot up!!!

So much for faith in markets. Sphere: Related Content

Tuesday, June 07, 2011

Defense spending versus spending on humane and environmnental purposes

Recently, I was speaking at an international conference in China on the topic "Creating a Culture of Sustainability". During the Q&A session which followed, one of the participants questioned whether the measures I propose are not "too expensive".

My answer was that the cost would be very little when compared to the cost of all the unnecessary spending in the world, for example on war-preparations alone.

I did not have the figures in hand at the time, so I provide them now for China (as I was in China at the time; however, similar points could be made for each nation in the world).

The Chinese government's published 2011 military budget is about US$91.5 billion. That is the second largest in the world, and has gone up by just shy of 13% of the budget for 2010, when it was US$77.95 billion.

However, that is simply the figure published by the Chinese government, and we know that not everything that any government says can be trusted, so government statements always have to be checked against the statements of independent observers or at least other observers.

In 2010, the US Department of Defense's annual report to Congress on China's military strength estimated the actual 2009 Chinese military spending at US$150 billion, while the Stockholm International Peace Research Institute (SIPRI) estimated that Chinese military spending for 2009 was US$ 100 billion.

However, those sorts of dollar figures do not give us an accurate idea of what is involved. In 2003, the last year for which this sort of comparison is possible for me at present, the Chinese government's published budget was less than US$ 25 billion. In terms of purchasing power parity, SIPRI's estimate was that the figure was equal to US$ 140 billion in terms of what could be provided with that monehttp://www.blogger.com/img/blank.gify in China versus what it would cost to provide the same in the USA. If we ignore Chinese inflation, we could say that real Chinese spending on defense is scheuled to be, in PPP terms, something like 500 billion US dollars in this year alone.

Meanwhile, you might like to note that, according to a report last year from a task force from one of China's top universities, Tsinghua, spending on internal security nationwide is equal to the official defence budget and is expanding much faster.

Put those figures together, and you see that Chinese security spending is approximately US dollars one trillion - more or less as much as the US, when everything is taken as a whole. For the US, see Robert Higgs, “Defense Spending Is Much Higher Than You Think,” The Beacon, April 17, 2010, available here: here Sphere: Related Content

A senseless tax on big financial institutions

At the height of the crisis, it became clear that there are some banks that are "too big to fail".

That means that these institutions have, in effect, a guarantee that the government will rescue them, since they are so large that a bankruptcy of that size would be intolerable because of the impact financially and socially (i.e. on unemployment).

In such a situation, there are two principal options that make sense:

1. Force or incentivise the institutions to break up, or

2. Socialise the banks (put them in government ownership - on the grounds that, as citizens must pay for any bankruptcy, it is citizens who should benefit from the profits made by such an institution)

Instead of these logical options, the global body responsible for banking supervision, The Basel Committee, proposed a capital surcharge of 3 percentage points on major banks.

You could think of this as a sort of insurance premium.

Two questions arise in relation to this: (a) on what ground is the 3% suggested: political or actuarial - in other words, is 3% too little or too much?; and (b) if the 3% surcharge goes to the government, does it end up in the government's general account to be frittered away on whatever the government fancies at any time, or is it put into a special account, so that it is clear at every point how much money is avaiable for any necessary rescue?

The answers to these questions are clear: (a) 3% is a figure that is snatched out of the air and has no logical or actuarial basis, and (b) the money collected by means of the surcharge will not be put into any special account and will indeed be frittered away.

In spite of all the above, now that Basel has pronounced on the issue, national governments will tend to go along.

The US Federal Reserve has apparently just come out in support of the proposal. When Fed Governor Daniel Tarullo recently discussed the proposed surcharges, observers interpreted his statement to mean they could be as high as 7 percentage points. My view is that this is mere politicking: it is unlikely that the eventual figure will be much higher than three per cent.

However, till the matter is settled, financial institutions will play safe - and are wise to do so. Sphere: Related Content

Why are markets slowing right now?

There are of course many reasons. An over-inflated market in China which is slowing down affecting sentiment regarding all emerging markets; governments coming to the end of the money they have permission to plough into the biggest institutions; the challenges for the Euro; the feeling that commodity prices may be already too high and equity and bond prices likewise....

Well, let's take a step back to consider another important factor:

One of the most important pieces of legislation passed by the Obama administration is the Dodd-Frank Act (sometimes called the Frank-Dodd Act).

If implemented according to the schedule set down in the Act itself, it would go a substantial way towards sorting out the crisis which started in 2007.

However, because of vigorous blocking action by the Republicans, and lack of will on the part of the Administration, there is almost no chance of the implementation commencing on schedule.

More than 100 new rules are supposed to take effect On July 16, but regulators do not seem to have finalised them, or at least have not yet announced them.

The result has been uncertainty for financial institutions as well as the players in the global shadow economy (no bad thing, the latter). Sphere: Related Content

Sunday, June 05, 2011

US unemployment and its relationship with NAFTA/ WTO

So it is official.

According to the Head of the Agency that compiles unemployment statistics in the US, the poor US payrolls data for May reflect a “general weakening in job growth” rather than any temporary distortion.

As I have argued earlier, employment in the US is highly unlikely to improve sustainably as long as the US subscribes to NAFTA and WTO agreements that create a playing field tilted against the US.

NAFTA and WTO agreements systematically privilege countries that pay less attention to environmental and human concerns.


Because it is cheaper to produce in countries that neglect, and so do not have to pay for, environmental and human concerns.

The result is that it is economically beneficial for production to migrate to such countries from countries such as the USA that pay at least marginally more attention to environmental and human concerns.

That is why employment is not going to return to the US and Europe as long as they subscribe to treaties such as NAFTA and WTO that neglect environmental and human concerns.

In other words, creating a level playing field, in which all countries are equally obliged to pay some minimal attention to environmental and human standards, is in the best interests of all countries. Sphere: Related Content

In the best tradition of double-talk

People of my age recollect quite clearly the venerable tradition of double-talk by
Nazi and Communist regimes.

For example, the Soviet agency "Pravda" (that word is the Russian for "Truth") was an excellent organ of Soviet propaganda which paid no attention to any objective truth.

Chinese naval vessels were named "Peace Number 1", "Peace Number 2" and so on during Mao's time (are they still?).

It is in that excellent tradition of obfuscation that General Liang Guanglie, China’s defence minister, has rejected criticism that his country was acting belligerently in the South China Sea. In his view, and in the view of the Chinese government, China is pursuing a policy of ‘peaceful rise’.

By that, the world should understand that China wants to impose its wishes on the rest of the world, and that the only way to have peace is for the world not to stand in China's way. In other words, if the world wants to avoid having China totally imposing its will on the world, the only way seems to be war.

Well, I think it totally inappropriate that the waters are often called the South China Sea - in all international discussions, the waters should be called the South East Asian Sea.

So the South East Asian Sea has claims by all the nations that border it - the other nations involved being Taiwan, the Philippines, Malaysia, Brunei, Indonesia and Vietnam.

Given the geography of the area it seems to me clear that the strongest claims to the Spratly Islands are by the Philippines, Malaysia and Vietnam. Sphere: Related Content

The current state of the world's shadow financial system

Remember my post on this subject on May 12?

Apparently, the size of the shadow financial system continues to balloon.

According to one source, unregulated global OTC derivatives alone amount to USD 600 trillion (to provide a comparison, the total amount of regulated financial trading is about three trillion a day).

Though various rules have been proposed and discussed by global, US and European legislators and regulators, hardly any have been finalised.

The G20 ministers set a deadline for full implementation of reforms by the end of 2012, but not a single country is, less than 18 months from that deadline, in any position to comply with that deadline.

In spite of the problems affecting the Euro, reform of the global monetary system is not even being discussed any more, as far as I can see. Led by the US, most countries in the world, continue to print money in unjustifiable quantities, and interest rates continue to be unhealthily low.

So we have unrealistic and increasing asset, commodity and equity prices - specially in emerging countries such as Brazil, Russia, India and China; correlation of supposedly diverse asset classes; leverage in the global financial system; and inter-dependency between the world’s biggest financial institutions as well as elimination of middle-sized financial institutions.

Watch out for a yet another bursting of the bubble, this time the bubble that has been created since 2008 or so. Sphere: Related Content

Watch out for theft via Social Networking Sites' Terms and Conditions

I get a certain quantity of mails from friends (in addition to spam of course) inviting me to join this or that social networking site.

Well, I can hardly keep up with the ones to which I already belong!

But I regularly check out new sites (as I want to keep an eye on tech developments, for professional reasons).

Having checked out this particular site, I must say my increasing concern about the sorts of Terms and Conditions such sites ask you to sign has reached breaking point

That is why I share with you here my response to my friend:

dear Christoph

many thanks

but have you actually read their terms and conditions?

apart from paying them a subscription fee, you give away to them the copyright in anything you post on their system!

that means, technically, that if a large institution, say UBS, were to post something on chamber.com, they would find that their logo and the information they posted did not belong to them any more

in the case of UBS, they would certainly dispute that and, being so big and powerful, would probably end up being able to retain their logo etc.

but I am not sure that smaller entities would be able to retain their logos, ideas and concepts

here is the relevant bit of their terms and conditions: "License and warrant for your submissions: You do not have to submit anything to us, but if you choose to submit something (including any User generated content, ideas, concepts, techniques and data), you must grant, and you actually grant by concluding this Agreement, a nonexclusive, irrevocable, worldwide, perpetual, unlimited, assignable, sublicense able, fully paid up and royalty free right to us to copy, prepare derivative works of, improve, distribute, publish, remove, retain, add, and use and commercialize, in any way now known or in the future discovered, anything that you submit to us, without any further consent, notice and/or compensation to you or to any third parties"

so I would stay as far away from them as possible

P Sphere: Related Content