NEWS,22.09.2012

Afghanistan in flux as U.S. surge troops exit

The U.S. military says it has now fully withdrawn the last of the 33,000 "surge troops" sent to pacify Afghanistan two years ago, but they are leaving behind an uncertain landscape of rising violence and political instability that threaten to undo considerable gains in security, particularly in the former Taliban strongholds in the south and southwest.As the troops head for home, a good week ahead of schedule, the U.S. coalition and its Afghan partners are bedeviled by a host of problems.The tempo and audacity of Taliban attacks have increased. Insider killings of Americans by Afghan troops have raised tensions between the allies, forcing severe cutbacks in strategically vital training programs. Both governments are arguing publicly over whether to keep battlefield prisoners locked up without trial, while nervous officials on all sides are worrying that riots over an inflammatory anti-Muslim video, which have killed dozens in other countries, will break out in Afghanistan.Friday's milestone, which still leaves 68,000 U.S. troops in Afghanistan, was announced on the other side of the planet by Defense Secretary Leon Panetta, during a trip to New Zealand, while both U.S. and Afghan officials in Kabul studiously ignored the moment, at least in public.Some pro-government Afghans boasted it showed their own forces were ready to take over, while pro-Taliban forces exulted that they were not, but most Afghans just worried about what it would really mean for the final two years of the U.S. presence in the country."What did the surge give us?" a senior U.S. official reflected Friday, speaking anonymously as a matter of military policy. "We're going to hit a point where, I won't say that's as good as it gets, but now it's up to them to hold what we gave them. Now, really, it's Karzai's turn."No one claimed there was not a great deal yet to be done against an insurgency that its foes describe as tenacious and determined. "They're not going to go away for years," the senior official said. "Every fighting season the Taliban, or some number of them, come out of the corner and they're ready to fight again."Both U.S. and Afghan officials have acknowledged the seriousness of the green on blue attacks, which this year have seen the killings of more than 50 U.S. soldiers at the hands of their Afghan allies.

US Navy's new floating base gets a workout in Gulf 

A new, key addition to American-led naval efforts to ensure Mideast oil keeps flowing has emerged as an unusual mix of a ship combining decades' worth of wear and tear with state-of-the-art technology and a largely civilian crew.After winning a reprieve from the scrapyard, the USS Ponce was reborn through a rush retrofit earlier this year and turned into a floating base prowling the waters of the Persian Gulf. It is now getting its biggest workout since refurbishment as the centerpiece for sweeping naval exercises under way that serve as a very public warning to Iran. The Islamic Republic has threatened to shut the Gulf's entrance at the Strait of Hormuz, the route for a fifth of the world's oil supplies, and would likely use mines to do so.Anti-mine divers on practice drills deployed in small boats off the Ponce's stern gate early Saturday, and MH-53 minesweeping helicopters launched from the ship kicked up sea spray as they hauled mine-detecting equipment through the water. Later in the day, a U.S. destroyer pulled alongside, fighter jets roared past and gunners fired thunderous rounds from .50 caliber machine guns during a simulated encounter with a hostile vessel.Senior Navy officials in the Gulf are quick to downplay talk of conflict with Iran, which is locked in a dispute with the U.S. and its allies over Tehran's disputed nuclear program. The West suspects Iran aims to develop a nuclear weapon; Tehran denies the charges.U.S. military officials in the region insist the exercises, which include forces from more than 30 countries, are defensive and not directed at any country. They prefer to focus instead on the Ponce's role as an innovative new tool to help ensure security in the region, and on the need to train with allies to keep sea lanes open.Still, the message is clear."Any extremist group, any country that puts mines in the water would be cautioned" by the exercises, said Marine Gen. James R. Mattis, the U.S. Central Command chief, during his first visit onboard the Ponce since it deployed June 1. "We do have the means to take mines out of the water if they go in. We will open the waterways to freedom of navigation."Military leaders believe the Norfolk, Va.-based Ponce is central to that mission.More than half the length of most U.S. aircraft carriers, the Ponce can accommodate multiple helicopters on deck and small boats in a well deck below.The ship was originally an amphibious transport dock built at the height of the Vietnam War. Those types of vessels are typically used to carry landing forces of Marines.It's now known as the Navy's first "afloat forward staging base-interim," a name given because the Ponce is meant to be a stopgap until a similar base built from scratch is delivered. That won't happen until at least 2015."This will more or less act as a test for using floating platforms in the sea for military operations," Riad Kahwaji, chief executive of the Dubai-based Institute for Near East and Gulf Military Analysis, said of the reconfigured Ponce. "There'll be a lot of defense industry officials observing the performance of this."Much of the original ship remains, including the tight Marine-style bunks stacked four high from floor to ceiling in some parts of the ship. But there are plenty of 21st Century additions too.Berths for around 100 people were removed and replaced with a high-tech joint operations center, where streaming video and data feeds can be shown on flat-screen displays.Powerful MK-38 guns installed during conversion include remotely controlled digital cameras that let operators zoom in on far-off targets of interest. And a ScanEagle surveillance drone launched from and recovered by the ship keeps an eye on the sea for miles around all day long.In its new role, the Ponce is initially intended to be a close-to-the-action support hub for mine-clearing ships, coastal patrol vessels and helicopters. Ships can take on fuel and supplies without having to return to port, and a wide range of repairs can be handled by machinists onboard. That means far less downtime for minesweepers and other vessels using the Ponce as a stopping-off point, according to analysts and Navy officials.The Ponce's Spartan accommodation can also handle hundreds of additional personnel, such as the French anti-mine divers in distinctive camouflage shorts currently onboard. In theory, special operations forces could also fill bunks aboard the Ponce, which is able to launch the small boats and helicopters they often use.There is also the benefit of not needing to secure approval from allied countries where U.S. troops are based before conducting operations from an offshore staging base such as the Ponce."A country that's believed to be friendly to the U.S. could overnight become hostile to the U.S., and this could pose a threat to U.S. operations," Kahwaji said, citing recent violence directed at American embassies in response to an anti-Islam film.Although it is under the command of a Navy captain, most of the Ponce's crew are civilians. It has more than 155 civilian crew members from the Military Sealift Command and 55 Navy sailors, according to the ship's commanding officer, Capt. Jon Rodgers. The number of civilian crew can fluctuate depending on who is onboard.The MSC is normally responsible for running about 110 supply ships and other non-combat vessels for the Navy, but the Ponce's hybrid crew is unusual.Visitors arriving by helicopter are met on the flight deck by some crew in uniform and others in civilian coveralls. Civilian employees keep the floors and toilets clean, and dish out corned beef hash and French toast on the mess deck. Some of the MSC crew members have dreadlocks  a no-no for enlisted sailors and many are in their 40s or beyond. A handful are older than 60.It's not just the civilian crew that's showing its age. The Ponce is among the Navy's oldest ships. Construction began in 1966, and it was commissioned during the Nixon administration in 1971.Rust is prevalent throughout the ship, and many of the fittings retain a Cold War feel."Just walk around and you can see," said Kevin Chavis, 45, a retired Navy electronics specialist from Brooklyn who is now part of the Ponce's civilian crew. "Yeah, it's old. But just like a car, if you change the filters and the oil, it'll keep running."

Chavez's record: an oil bonanza squandered?

 

On the streets of Caracas, vast slums blanket the hillsides while squatters hang laundry in the windows of abandoned buildings. Trash-strewn alleys are riddled with potholes and lined with broken streetlamps. The city's main waterway, the polluted Guaire River, is known more for sewage than swimming.While oil has ushered in spectacular construction projects for glittering Middle Eastern cities, including the world's tallest building in Dubai and plans for branches of the Louvre and Guggenheim museums in Abu Dhabi, it's brought relatively meager changes to Venezuela, which holds the world's largest proven oil reserves.Nearly 14 years after President Hugo Chavez took office, and despite the biggest oil bonanza in Venezuela's history, there's little outward sign of the nearly one trillion petrodollars that have flowed into the country.Venezuela has undoubtedly changed during Chavez's tenure. The populist president has used the oil wealth to buttress his support through cash handouts, state-run grocery stores and a gamut of other social programs. With more money in the economy, incomes are higher and the number of people living in poverty has fallen.Unemployment has dropped from more than 13 percent in 1999 to about 8 percent. The country has also achieved rapid improvement on the U.N. Human Development Index, which measures a range of indicators from living standards to life expectancy."We're applying a successful program successful politically, successful socially, successful economically," Chavez said at a news conference. "With flaws, of course, but it's successful. We're laying the foundations of a historic project that will take our entire lifetime."All of which makes him a tough incumbent to beat in the upcoming Oct. 7 election.Yet some experts say Chavez could have done much more to improve the country's infrastructure, boost its economy and invest in the very oil industry that keeps Venezuela afloat."It's overwhelmingly clear that Venezuela has wasted the windfall," said Francisco Monaldi, an economist and director of the International Center of Energy and the Environment at Caracas' IESA business school. "You should have had much greater economic growth, much greater reduction of poverty."Among Latin American countries, the economies of Brazil, Chile, Peru and Argentina all have expanded more rapidly than Venezuela's since Chavez took office in 1999, recording average growth between 3 and 5 percent a year.Venezuela, by contrast, averaged a 2.8 percent annual increase of gross domestic product between 1999 and 2011, according to International Monetary Fund figures. By that measure, the country was outperformed by every other member of the Organization of Petroleum Exporting Countries except Libya. Even war-torn Iraq posted higher growth.Some Venezuelans, such as tennis instructor Naybeth Figueroa, say Chavez has simply channeled money toward his "Chavista" supporters while neglecting deeply ingrained problems such as soaring murder rates, inflation, crumbling infrastructure and poor government services. Venezuela now ranks among the most violent and corrupt places on earth."The country is falling to pieces," Figueroa said. "Where is the oil money going?"On a rutted unpaved road in the countryside outside Caracas, unemployed housewife Moreli Gonzalez lives in a shack with a dirt floor and walls made of rusting sheets of zinc. She is thankful to Chavez that she now receives a $280-a-month cash benefit through a program called "Mothers of the Neighborhood Mission.""Now we have everything," said Gonzalez, who credits a government education program with helping her learn to read and a state-run grocery down the road that has made food more affordable."We eat better," she said, showing off cupboards filled with bags of rice and pasta. "My children didn't used to eat snacks. Now they eat well."

Finding Poland's sunken royal treasures

Capitalizing on low water levels in Warsaw's Vistula River, police are teaming up with archaeologists to recover gigantic marble and alabaster treasures that apparently were stolen from royals in Poland by Swedish invaders in the mid-17th century.A police Mi-8 helicopter hovered over a riverbed on Thursday, lifting ornaments such as the centerpiece of a fountain with water outlets decorated with satyr-like faces.For police, it was gratifying to provide the chopper and assist Warsaw University archaeologists in "this very important mission of retrievingpriceless national treasures,"saidMariusz Mrozek, a spokesman for Warsaw police.Archaeologists have long known that such well-preserved treasures were located in the riverbed in the Warsaw area, but not exactly where.The archaeologists and frogmen, led by Hubert Kowalski, have previously retrieved some of the stolen stone ornaments from the Vistula riverbed in three years of searching for the sunken treasures. Butonly now, with the river much lower than normal, thanks to recent heat waves and droughts, their findings have become spectacular."This is a precious find. These elements were stolen from Warsaw's royal residences and palaces," said Marek Wrede, a historian at the Royal Castle.The valuable artistic objects marble floor tiles, parts of archways and columns  were robbed from Warsaw by the Swedes who overran the nation in mid-17th century and took heavy loads of spoils from across the country. Today's items probably came from the Royal Castle and from a royal country residence, the Kazimierz Palace.The artifacts probably were being carried by a barge that sank, one of the many such vessels that ferried loot down the river to the Baltic Sea and to Sweden.The find is precious for Poland, which has been repeatedly plundered by neighboring armies over the centuries, including Nazi Germany and the Soviet Red Army during World War II.Kowalski said he knew about the hidden artifacts from 17th century letters that mentioned barges that had sunk in the area.First word of where the treasures might be came in 1906 when sand barge operators discovered some items, but could retrieve only a few.Kowalski said his team is now busy cleaning the newly retrieved items, which are "very well preserved, given the 350 years in water."

Iran accuses Siemens of nuclear sabotage

Iran accused Germany's Siemens on Saturday of implanting tiny explosives inside equipment the Islamic Republic purchased for its disputed nuclear program, a charge the technology giant denied.Prominent lawmaker Alaeddin Boroujerdi said Iranian security experts discovered the explosives and removed them before detonation, adding that authorities believe the booby-trapped equipment was sold to derail uranium enrichment efforts."The equipment was supposed to explode after being put to work, in order to dismantle all our systems," he said. "But the wisdom of our experts thwarted the enemy conspiracy."Siemens denied the charge and said its nuclear division has had no business with Iran since the 1979 revolution that led to its current clerical state."Siemens rejects the allegations and stresses that we have no business ties to the Iranian nuclear program," spokesman for the Munich-based company Alexander Machowetz said.Boroujerdi, who heads the parliamentary security committee, alleged that the explosives were implanted at a Siemens factory and demanded the company take responsibility.Any sale of nuclear equipment to Iran is banned under U.N. sanctions, raising the possibility that if it indeed has some, it may have been acquired through third parties. Boroujerdi did not say when or how Iran obtained Siemens equipment. Despite a wide array of international sanctions, Germany remains one of Iran's most important trading partners.The U.S. and its allies suspect Iran's nuclear work is aimed at producing weapons. Iran says it only wants to enrich uranium for peaceful purposes, and asserts it has been the target of a concerted campaign by Israel, the U.S. and their allies to undermine its nuclear efforts through covert operations.Some Iranian officials have also suggested in the past that specific European companies may have sold faulty equipment to Iran with the knowledge of American intelligence agencies and their own governments, since the sales would have harmed, rather than helped, the country's nuclear program.According to Iran, the alleged campaign has included the abduction of scientists, the sale of faulty equipment and the planting of a destructive computer worm known as Stuxnet, which briefly brought Iran's uranium enrichment activity to a halt in 2010.Iran's nuclear chief, Fereidoun Abbasi, said Monday that separate attacks on Iran's centrifuges through tiny explosives meant to disable key parts of the machines were discovered before the blasts could go off on timers.Abbasi also told the U.N. nuclear agency in Vienna that "terrorists and saboteurs" might have infiltrated the International Atomic Energy Agency, after the watchdog's inspectors arrived at the Fordo underground enrichment facility shortly after power lines were blown up through sabotage on Aug. 17.Iran has repeatedly accused the IAEA of sending spies in the guise of inspectors to collect information about its nuclear activities, pointing to alleged leaks of information by inspectors to U.S. and other officials.Five nuclear scientists and researchers have been killed in Iran since 2010. Tehran blames the deaths on Israel's Mossad spy agency as well as the CIA and Britain's MI-6. Washington and London have denied any roles. Israel has not commented.Boroujerdi said the alleged leaks of nuclear information to its adversaries by the IAEA may finally push Tehran to end all cooperation with the agency."Iran has the right to cut its cooperation with the IAEA should such violations continue," he said.

NEWS,21.09.2012

What Business Is Wall Street In? 

 

Wall Street doesn't know what business it is in. Regulators don't know what the business of Wall Street is. Investor/shareholders don't know what business Wall Street is in.The only people who know what business Wall Street is in are the high frequency and automated traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It's a platform to be exploited by every technological and intellectual means possible.The best analogy for traders? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, high frequency traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade or the rebate they are getting from the exchange because they provide liquidity to the market.I recognize that one is illegal, the other is not. That isn't the important issue.The important issue is recognizing that Wall Street is no longer serving the purpose that it was designed to. Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days?I started actively trading stocks in 1992. I traded a lot. Over the years I've written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.Over just the past five years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game that I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.So back to the original question. What business is Wall Street in?Its primary business is no longer creating capital for business. Creating capital for business has to be less than one percent of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn't shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which I think are always a mistake), than flows into companies in the form of equity.My two cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether it's through a use of taxes on trades (hit every trade on a stock held less than one hour with a 10 cent tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for one year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than five years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won't come from traders trying to hack the financial system for a few pennies per trade.And solutions won't come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks theymake will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the U.S. and world economy nearly enough for the risk of collapse they introduce into the system.Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The government needs to create simple and obvious incentives for this business and extract compensation from the traders/hackers for the systemic failure risk they introduce.There will be another flash crash, and probably a crash far worse than the May 2010 flash crash simply because there are too many players looking for the trillion dollar score. They can't all win, yet how many do you think wouldn't risk everything, even what is not theirs, for that remote chance to score big? Put another way, there is zero moral hazard attached to any trade. So why wouldn't traders take the biggest risk possible? There is value to trading automation. It is here to stay. There is absolutely NO VALUE to high frequency trading. None. We need to bring our markets back to their original goals of creating capital for business. It's impossible to guess how many small to medium size companies have been held back from growing and creating jobs and wealth because of lack of access to capital from the stock market. It's not impossible to know that our economy has suffered because Wall Street equity markets are no longer a source of equity for helping companies grow, it is not a platform for hackers and that needs to change. Quickly.

Iran parades military, warns Israel

Iran warned Israel and the United States against any aggression, as it proudly paraded its troops and military hardware on Friday under the gaze of President Mahmoud Ahmadinejad and top brass.The Tehran parade, involving thousands of military personnel, dozens of tanks and missiles borne on trucks, marked the anniversary of the start of the 1980-1988 Iran-Iraq war.Ahmadinejad, in a speech broadcast on state television, said that Iran was using "the same spirit and belief in itself" shown in that war to "stand and defend its rights" today against pressure from world powers.Top Iranian generals said the show of military might should be digested by Israel, which in recent weeks has ramped up threats that it could hit Iranian nuclear facilities."We do not feel threatened by the nonsense uttered by that regime's leaders," the chief of Iran's armed forces, General Hassan Firouzabadi, told the Fars news agency, adding that Iran's response to any attack would be "immediate and unstoppable".General Ataollah Selehi, the commander of Iran's army, told the ISNA news agency that "us holding a military parade is for deterrence and not a threat".US Navy war games He and other military leaders renewed their pledge that Israel would be annihilated if attacked.The head of the Revolutionary Guards' aerospace division in charge of missile defence, Brigadier General Amir Ali Hahjizadeh, repeated Iran's promise to close the strategic Strait of Hormuz if the Islamic republic were attacked or Western sanctions halted its crude exports."If one day the Strait of Hormuz has no benefit for us, then we will deprive others from benefiting from it," he said.However he added that "under current conditions, there is no problem".Hahjizadeh also dismissed navy war games currently being held by the United States and 30 other nations in the Gulf as "no threat to us".Iran is locked in a showdown with the UN Security Council over its controversial nuclear programme.Ahmadinejad on anti-Islam filmThe West, led by the United States, has tightened the vice on Iran by implementing crippling economic sanctions, while Israel - the Middle East's sole if undeclared nuclear weapons state - has underlined its threats of possible air strikes on Iranian atomic facilities, with or without US help.In his speech, Ahmadinejad also touched on an anti-Islam film made in America by an extremist Christian group that has fuelled violent protests in parts of the Muslim world.He said US government claims it could do nothing to censor the film was a "deception" exploiting the pretext of freedom of expression.He called the film an Israeli-hatched plot "to divide [Muslims] and spark sectarian conflict".Ahmadinejad implicitly referred to his often expressed opinion that the Holocaust never happened to lambast the West for perceived selective censorship."They stand against a question about a historical incident... they threaten and put pressure on nations for posing the question while at the same time in regards to the obscenest insults to the human sanctities and prophets... they shout adherence to freedom [of expression]," he said.Ahmadinejad's stance challenging the facts surrounding the killing of six million Jews by the Nazi regime during World War II is shared by Iran's supreme leader, Ayatollah Ali Khamenei, who is the country's commander-in-chief.Early this week, Khamenei told naval cadets: "In some Western countries, no one dares to question the unknown incident of the Holocaust or for that matter some of the morally obscene policies like homosexuality... but insulting Islam and its sanctities under the pretext of freedom of expression is allowed."

 

 

 

NEWS,20.09.2012

China to help resolve eurozone crisis

Chinese Premier Wen Jiabao said on Thursday that Beijing will maintain its efforts to help resolve the eurozone debt crisis, after months of investing in European sovereign bonds."China will continue to play its part in helping resolve the European debt issue through appropriate channels," Wen told a business summit after political talks with European Union leaders in Brussels."In the past few months China has continued to invest in bonds of European governments... and discussed ways of cooperation with the ESM," Wen said, referring to the European Stability Mechanism, a new €500bn rescue firewall set up by eurozone leaders and due to become operational next month."Europe is on the right track in tackling its debt issue," Wen told the audience. "What is crucial now is to fully implement the reforms" it has agreed on economic governance, he said.Wen's remarks saw a shift in tone from the "serious concerns" about spillover effects hurting China that he had expressed just three weeks earlier when German Chancellor Angela Merkel visited Beijing.Almost half of all European exports to China come from Germany, and a quarter of all European imports from China are into Germany.Wen highlighted that China had pumped tens of billions of dollars into the International Monetary Fund this summer, as global economies joined forces in a bid to limit the damage from a global economic downturn.And he said this was done for "strategic" reasons, saying the "essence" of China's "stable" relationship with the EU bloc was "long-term" and "not affected by ideological differences or temporary setbacks."Having visited 18 EU member states since 2003 to cement a trading relationship worth a €1bn a day, Wen said the present challenges also presented "huge opportunities" on both sides.While the economic picture was at a "critical juncture," China and the EU were working on a host of levels to "scale-up" trade.The levers through which this would be achieved, Wen said, involved two-way investment with a "need to expand cooperation in infrastructure development" that could see Beijing invest in new EU project bonds.Likewise investment in technological innovation, where he cited nuclear energy or the information technology sector, or European offers of expertise whether in smart cars or sewerage as China steps up urban planning.

Mixed reaction to rate decision

 

SA Reserve Bank (SARB)'s decision to keep interest rates unchanged on Thursday afternoon met with a mixed reaction."From a household sector point of view, the SARB arguably made the right decision not to cut rates further," said FNB property economist John Loos.Given rising household indebtedness, SARB's decision was a good one, as it would preserve longer term residential market health.The household sector carried a high debt risk, and more rapid growth in credit to this group should not be encouraged, said Loos.The sector had improved its payment performance significantly, with insolvencies dropping. But the sector had relied on the SARB to maintain interest rates, which were at historically low levels.It had not made significant financial improvements itself, he said.The Independent Municipal and Allied Trade Union (Imatu) said it was disappointed by bank's decision to keep interest rates unchanged."An interest rate cut would have given our financially strapped members some much needed economic reprieve, and encouraged an increase in consumer spending," said Imatu spokesman Johan Koen in a statement.While the latest consumer inflation figures indicated only a mild increase in food, housing and transport costs, sharp increases in the cost of petrol and diesel would undoubtedly affect prices in the near future.The cost of a basic food basket had increased on average by 16% per year for the last five years. Electricity had effectively increased by 82.3% in the last three years and petrol prices by 11% per year on average for the last decade. Metrorail's ticket prices had effectively increased by 69% in the last three years."An interest rate cut would have given people the much-needed economic breather that is being afforded to other emerging economies," Koen said.The Monetary Policy Committee opted to leave interest rates unchanged, the bank's governor Gill Marcus said on Thursday."The monetary policy committee is of the view that a further reduction in the repo rate would not be appropriate at this stage," she said at a televised press conference in Pretoria.The repo rate would be left unchanged at 5% a year.This is the rate at which commercial banks can borrow money from the SARB. It is used to calculate the prime rate, which banks give their best customers.Marcus said the global growth outlook remained weak.South Africa's trade deficit in the balance of payments posed a risk to the exchange rate. If the rand weakened further, inflation was likely to increase as a result. Although consumer demand was unlikely to impact on inflation, supply-side shocks were possible.Higher food prices and resilient international oil prices could not only impact on inflation, but act as a drag on growth in the near term."This is a combination which poses enormous challenges for monetary policy," she said.The United Democratic Movement said the SARB had made a prudent decision."The SARB had to consider a number of economic performance indicators such as the slight increase in the inflation rate, an improved economic growth performance together with the Eurozone crisis, to keep the South African economy on a steady course," it said in a statement.

Strikes against retail reform rock India

Shopkeepers, traders and labourers in India blocked railway lines and closed markets on Thursday to protest against reforms allowing in foreign retail giants such as Walmart and Tesco.Opposition parties and trade unions called the strike after Prime Minister Manmohan Singh last week announced a raft of reforms designed to revive India's slowing economy, a move that has sparked a furious backlash.Thousands of policemen were deployed in Kolkata in West Bengal state to prevent violence as shops, markets and offices shut down for the 24-hour strike."Train services have come to a halt across West Bengal as strikers squatted on railway tracks," Samir Goswami, regional public relations officer, said by phone.Protesters demonstrated throughout Kolkata in support of the strike, with large rallies planned later in the day in New Delhi and many other cities.Police said that protesters also blocked some national highways.Activists from the main opposition Bharatiya Janata Party (BJP) and its allies gathered at railway stations across Bihar state in north India and forcibly stopped train services, leaving thousands of passengers stranded."Protesters have tried to target trains and bus stations and (we expect) they will also target shops and business establishments," Ravinder Kumar, a senior police officer in Patna, the capital of Bihar, said.All private schools in the state were closed because of the strike, but government schools and offices remained open.The Confederation of All India Traders (CAIT) forecast that 50 million people would participate in the protest against retail reforms unveiled by Singh.Many small business owners and workers fear that the arrival of large-scale foreign supermarket chains will lead to drastic job losses as India's supply chains and shopping habits are transformed.Singh has been buffeted by reaction to the reform package and a sharp rise in diesel prices, with a key West Bengal-based coalition party quitting the government and demanding the policies are reversed.The arrival in India of chains such as Walmart, Tesco and Carrefour is expected to herald a consumer revolution with shoppers moving from small, neighbourhood stores to large, out-of-town supermarkets.The government and many industry leaders argue that a modern retail system would improve value and choice for Indian consumers, create new jobs and enable farmers to reduce wastage.But Singh, weakened by the worst quarterly GDP figures in three years and a series of corruption scandals, faces a major challenge to push through the reforms and boost the economy before elections due in 2014.Truck and bus drivers are also expected to strike on Thursday over a 12% hike in subsidised diesel prices as the government tries to tackle its widening fiscal deficit.Mumbai, the country's financial capital, was largely unaffected by the strike as local political parties declined to support the action.

NEWS,19.09.2012

Russia expels 'meddling' USAid

Russia on Wednesday said it had given USAid until 1 October to halt its work as the US aid agency was meddling in domestic politics, a move that risks sparking a new diplomatic crisis with Washington.The termination of the US Agency for International Development's activities may also harm the operations of a string of NGOs that rely on its funding, including the vote monitor Golos that showed up irregularities in recent polls.The unexpected move appears part of an increasing crackdown in Russia on civil society after President Vladimir Putin's return to the Kremlin for a third term in May amid an outburst of street protests"The decision was taken mainly because the work of the agency's officials far from always responded to the stated goals of development and humanitarian co-operation," the Russian foreign ministry said in a statement."We are talking about attempts to influence political processes - including elections at different levels - through its distribution of grants," it added.USAid's activities "must be halted from October 1", it added, giving a short deadline that had not been revealed by the Americans when the decision was first made public in Washington on Tuesday.'Heavy blow'Anxious Russian NGOs expressed fears for their future financing - more than half of USAid's annual budget in Russia had been spent on democracy and civil society programmes as well as a substantial chunk on health projects."I am very sorry that the USAid office is closing," said Arseny Roginsky, the chairperson of Memorial, Russia's best-known campaigner for human rights and the preservation of historical memory across the country."It is impossible not to see here the continuation of the isolationist policy" of the Russian authorities, he added. Without giving further details, he described the material help of USAid as "significant".Lilia Shibanova, the director of Golos, described the halt in USAid's operations as a "heavy blow".She said there was now serious concern for the funding of its monitoring of local elections on 14 October, two weeks after the deadline for the closure of the USAid office."The problem is that as soon as Russian business starts giving funds to monitor elections it comes under pressure," she said.No need of 'external leadership'Viktor Kremenyuk, analyst with the USA-Canada Institute at the Russian Academy of Sciences, said that while the move was not an outright U-turn in foreign policy, it was a Kremlin "gesture aimed at worsening relations between Russia and the US"."Russia wants to say 'we do not need your help, we can stand on our own feet'," he said.The foreign ministry statement said that Russian civil society was "quite mature" and the country - now itself a foreign donor - was in no need of "external leadership".The expulsion of USAid comes after Putin signed a law forcing NGOs that receive funding from abroad to register as "foreign agents". He has even compared organisations like Golos to the disciple Judas who betrayed Jesus.A senior US administration official said that Washington regretted the decision, which according to a US government source also affects the future of 13 US staff in Moscow and 60 Russian staff."This is a difficult day for USAid," said the official, who asked not to be named.Similar incidents It is unclear whether some if any US funding of the organisations can continue but the official said that President Barack Obama's administration was committed to promoting civil society in Russia."Over the coming weeks and months the Obama administration will be looking at ways to advance our old foreign policy objectives using new means," said the official.The United States had first learned of the measure when Secretary of State Hillary Clinton attended the Apec summit in Vladivostok earlier this month, the official said.The departure of USAid echoes the 2007 clampdown on the activities of the British Council cultural agency which poisoned relations between Moscow and London. The US Peace Corps had also been asked to leave Russia in 2002.

Japan cabinet approves plan to exit nuclear energy

Japan's cabinet has approved a new energy plan to cut the country's reliance on nuclear power in the wake of last year's Fukushima disaster, but dropped a reference to meet a nuclear- free target by the 2030s, ministers said on Wednesday.Since the plan was announced on Friday, Japan's powerful industry lobbies have urged the government rethink the nuclear-free commitment, arguing it could damage the economy and would mean spending more on pricey fuel imports.Trade Minister Yukio Edano, who also oversees the energy portfolio, said the cabinet had approved the new energy plan."But whether we can become nuclear free by the 2030s is not something to be achieved only with a decision by policy makers. It also depends on the will of (electricity) users, technological innovation and the environment for energy internationally in the next decade or two," he said.In abandoning atomic power, Japan aims to triple the share of renewable power to 30 percent of its energy mix by the 2030s, but will remain a top importer of oil, coal and gas for the foreseeable future.Finance Minister Jun Azumi told a separate news conference that there needed to be flexibility in the policy to avoid putting a burden on the public in a country where nuclear supplied 30% of electricity before Fukushima.All but two of Japan's nuclear 50 reactors are idled for safety checks after an earthquake and tsunami in March 2 011 devastated the Fukushima Daiichi plant, causing the worst nuclear disaster since Chernobyl in 1986.Under the new energy plan, there should be strict implementation of a 40-year lifetime for reactors. It also said existing reactors shut after Fukushima should be restarted only if a new nuclear regulator confirms their safety and there should be no construction of new reactors.The newly established Nuclear Regulation Authority (NRA) will decide whether reactors currently under construction are safe enough to start commercial operations, Edano said.Asked if newly built reactors could run beyond the 2030s, Edano said a decision on this would be decided later.Reactors currently under construction include the 1,373-megawatt Shimane No.3 unit of Chugoku Electric Power Co's and the 1,383-megawatt Ohma unit of Electric Power Development Co's.

Wealth surge for richest Americans

The net worth of the richest Americans grew by 13% in the past year to $US1.7 trillion, Forbes magazine said today, and a familiar cast of characters once again populated the top of the magazine's annual list of the US uber-elite, including Bill Gates, Warren Buffett, Larry Ellison and the Koch brothers.The average net worth of the 400 wealthiest Americans rose to a record $US4.2 billion, the magazine said.Collectively, this group's net worth is the equivalent of one-eighth of the entire US economy, which stood at $US13.56 trillion in real terms according to the latest government data.But the 13% growth in the wealth of the richest Americans far outpaced that of the economy overall, helping widen the chasm between rich and poor.Bill Gates, the chairman of Microsoft Corp, topped the list for the 19th year in a row with $US66 billion, up $US7 billion from a year earlier.Warren Buffett, chairman and chief executive of insurance conglomerate Berkshire Hathaway, stood second with $US46 billion, followed by Larry Ellison, head of software maker Oracle Corp, with $US41 billion; and the Koch brothers, Charles and David, who run the energy and chemicals conglomerate that bears their name, Koch Industries, were tied for fourth with $US31 billion, Forbes said.The ranks of the top five were unchanged from a year earlier.Two notable names dropped from the top 10, however.Casino magnate Sheldon Adelson, also active in conservative political causes, fell to the 12 spot from No. 8 last year, and financier George Soros dropped five spots to No. 12 from the No. 7 position one year ago.The disappointing stock market debut of Facebook also took a toll on the fortune of its founder and CEO, Mark Zuckerberg.His net worth fell by nearly half to $US9.4 billion, and he slid to the No. 36 slot from No. 14 a year ago, Forbes said.

NEWS,18.09.2012

Dangerous Misconceptions About Sanctions on Iran and Its Nuclear Program

 

On August 27, 2012, the Public Affairs Alliance of Iranian Americans (PAAIA), an organization whose stated goal is to serve the interests of Iranian Americans, released a report discussing the impact of U.S. sanctions on Iranians and Iranian Americans. The report, while laudable in its efforts, makes a number of unsupported conclusions about U.S. sanctions and Iran's nuclear program. The report provides an opportunity to highlight four major misconceptions the public has about Iran's nuclear program and the impact of sanctions on Iranians and Iranian Americans.

1: Iran has a nuclear weapons program

The PAAIA report initially stated that sanctions have created "challenges in developing nuclear weapons" and still notes that "many experts still doubt that severe and sustained economic pressure will be sufficient to persuade Iran to abandon its drive for nuclear weapons capability." These assertions create the underlying assumption that Iran is seeking a nuclear weapons program, a misperception commonly used by advocates of military strikes. The reality is far more complicated. Both Israeli and U.S. intelligence agencies have consistently found that Iran has not made the decision to pursue nuclear weapons. In remarks to the Senate Select Committee on Intelligence on January 31, 2012, James R. Clapper, the Director of National Intelligence noted that "We do not know . . . if Iran will eventually decide to build nuclear weapons." A few months later, in an interview with the Israeli newspaper Haartz, General Benny Gantz, the Chief of Staff of the Israel Defense Forces, explained that while "[Iran is] going step by step to the place where it will be able to decide whether to manufacture a nuclear bomb. It hasn't yet decided whether to go the extra mile." While Iran's nuclear hedging is certainly a cause for serious international concern, a nuclear program does not necessarily equate a nuclear weapon, a misconception created by the sensationalized statements in the report. That Iran has not decided to develop nuclear weapons also emphasizes the importance of exhausting all diplomatic means.

2: Iranian-Americans have not been impacted by sanctions

The report states that "Though there are many anecdotal stories about the effect of sanctions on Iranian Americans, there is minimal scientific data to support these stories." This unsupported finding is outright incorrect and is incidentally contradicted by PAAIA's own poll, which found 44% of Iranian Americans reporting that sanctions are "somewhat burdensome or a very burdensome impact on their ability to support their families." Indeed, the effect of sanctions on Iranian Americans is far more serious than that claimed by PAAIA. Companies have refused to sell goods and services to Iranian Americans, even when such sales would be permitted by law. Numerous banks have refused to open checking or savings accounts for Iranian Americans. Some U.S. employers require background checks and prior approval from the Department of Treasury before hiring Iranians (regardless of their citizenship status). Furthermore, Iranian Americans have become the target and victims of federal prosecutions and investigations for transferring innocuous goods or services to or from Iran, such as donations to assist impoverished children in Iran or family remittances. The impact the sanctions have had on Iranian Americans is real and significant. Minimizing the effects also supports a pro-sanctions approach while also preventing sorely needed remedial measures. Indeed, this was the effect when PAAIA first issued a press release discrediting claims of Apple's discrimination against Iranian Americans (a statement picked up by Fox News) even though it later demanded that Apple cease discriminatory practices

3: The impact felt by Iranian civilians is minimal

PAAIA's 35-page report minimizes the devastating effects sanctions have had on ordinary Iranians to a few sentences which concludes that Iranians are "reluctant to obtain much needed medical care" due to the soaring cost of basic procedures. The reality is far worse, as has been extensively documented by the International Civil Society Action Network (ICAN), the Iranian Hemophilia Society, and others. As Al-Monitor reported, "an ever more complex web of US sanctions is depriving Iranians with life-threatening conditions of the drugs and other medical products they desperately need." As ICAN noted, the costs of both domestic and imported medicines skyrocketed, becoming increasingly unavailable. The ICAN report notes the harrowing fact that "Patients with poorer prognoses or those who cannot afford it are forgoing treatments and opting for an early death so they don't burden their families financially." A report by the Financial Times similarly found that "cancer patients and those being treated for complex disorders such as hemophilia, multiple sclerosis and thalassemia, as well as transplant and kidney dialysis patients" are dying because of the sanctions. A comprehensive picture of the sanctions policy requires an analysis of its success in achieving its strategic goals and outlining its collateral effect on Iranian civilians.

4: Diplomacy has failed and/or will not succeed

The report states that evidence supports the view that economic sanctions are the only means, short of military action, that could persuade Iran to change its position on the nuclear issue "primarily because of the Iranian government's potential willingness to make concessions on the nuclear issue if the economic sanctions are removed." The Report notes "[h]owever, whether the Islamic Republic of Iran will reach an agreement and actually uphold the commitment remains to be seen and is unlikely based on the failure of the recent P5+1 negotiations." The report feeds into the perspective of pro-war pundits who allege that diplomacy has failed. PAAIA's own board member, former senior advisor to the State Department, Vali Nasr, has noted that "Obama's critics on the right will look for the slightest opening to dismiss diplomacy as having failed and again push for war." The Obama administration has disputed that misperception, noting as recently as last week that "there remains time and space" for diplomacy and sanctions "to bring about a change in behavior from Iran."

Whitewashing the effects the sanctions have on Iranians and Iranian Americans while also making unsubstantiated claims about Iran's nuclear program or that diplomacy is likely to fail only serves one purpose: it furthers misconceptions held by the public while paving the way for an unnecessary and preventable conflict with Iran. As tensions between Iran and the U.S. reach fever pitch and as the conflict in Syria threatens to spill onto the rest of the region, the need for an informed public is greater now than at any other time in recent memory. Tackling misconceptions is necessary to ensure we have an informed society before and not after another avoidable and tragic U.S. war in the Middle East.

Can Africa Feed Africa? 

 

Africa does not produce all the food it needs. In fact, as more Africans leave their rural villages and move into cities, more maize, rice, wheat and other staples have to be shipped in from outside the continent. The cost is huge well above $20 billion per year and demand is projected to double by 2020. Yet politicians tend to worry about this only during times of crisis, when the all-too-frequent drought or war unleashes those uncomfortable images in the media of sick children with bloated stomachs and hungry adults begging behind distribution trucks. By then, there is no alternative but to bring even more food from abroad. But, why is Africa so "food insecure"? Doesn't it have some 400 million hectares of agricultural land waiting to be cultivated? A new report shows that the problem is mainly man-made you can't really blame fate or nature. It has to do with laws, regulations, policies and institutions that shut African farmers, especially small farmers, out of the urban centers where consumers are.Mind you, that's even before you consider the old handicap that has held back agriculture in the region: a land ownership structure that makes it difficult for large agricultural enterprises to set up shop and deploy the kind of modern technology and equipment that small, individual farmers can rarely access.] The entire way from the farm to the kitchen table, red-tape, monopolies and corruption block food trade within Africa, even within each African country. Here is how.First, each country has its own system to certify seeds and takes, on average, a couple of years to approve new varieties. Result: better seeds get stuck at the border, and local farmers are stuck with lower yields and sometimes without any seeds at all. Something similar is true for fertilizers, which in Burundi, Nigeria or Senegal can be five times more expensive than in Argentina, India or Turkey. To make matters worse, some African governments give away fertilizers or sell them below cost. Generous as that may sound, these schemes have mostly turned into political and fiscal nightmares, as waste and corruption make them virtually unaffordable.Then comes the problem of carrying the produce to the market. In Africa, it can cost ten times more than in the average rich country to transport one ton of food one kilometer. Much of this is simply due to a lack of adequate roads the need for investment is enormous. But much also is due to monopolistic and usually politically connected trucking companies and "informal" checkpoints from Cameroon to Kenya, governments struggle to keep locals from setting up road-blocks and charging tolls. Is there any African country that has managed to cut through this Gordian knot and reduce transport prices? Yes, Rwanda did. Hats off to it.But once farmers reach the border if they ever do their troubles really start. From one week to the next, food exports may be banned or taxed you may not know until you are about to cross. Or the country you are trying to enter may want you to prove where your products come from, or that they meet a sanitary standard which, you guessed it, is different from the one you had to meet back home. They may just want a bribe that would wipe out your, by now, meager profit. Or they may bluntly abuse their authority. How badly? Half of female cross-border traders in the Great Lakes region report to have been physically or sexually harassed by officials at the crossing points grim odds if you have to cross every week. If there is so much risk, why bother to trade food across countries in the first place? Only large, powerful traders can survive that. That's precisely the issue. Uncertainty and graft at customs agencies kill the benefits of food trade for Africa's smaller and poorer farmers, most of who are women.This all points to the potential gains from African governments acting together to free food trade within the continent of taking "collective action" towards integration. A set of rules, standards and taxes that are stable, predictable and common across countries would go a long way to convince farmers that investing in food trade makes sense. And imagine the impact that a continent-wide "Charter of Basic Rights for Traders" could have. This is not as easy as it sounds it took decades for Europe to do it. But it is beginning to happen keep an eye on COMESA, the Common Market of Eastern and Southern Africa. By some estimates, lifting barriers to food trade, from the farm to the market, could double Africa's production of cassava and rice, triple maize, millet and sorghum, and quintuple wheat. Think of how, in just five years, Thailand tripled its exports of cassava to other East Asian countries, and picture that success in African proportions. The region could indeed feed itself. That means higher income for farming families, a more secure food supply for city dwellers, and better opportunities for women. A win-win-win opportunity, which begs the question: Why has it not yet been done? Well, that brings us back to politics.African governments have for years expressed their support for integration. Summits were held and grand free-trade agreements were signed. In some cases, customs unions were created within which people, goods and money are supposed to circulate unfettered these unions, on paper, still exist. There has been no lack of commitment in public. In practice, though, little has happened. Like any reform, freeing food trade within Africa will have winners and losers. The latter, which include intermediaries, favored companies and crooked civil servants, can stop change. The only antidote to this is a mix of enlightened leadership, participatory democracy, and lots of user-friendly information. In other words, it will take time but it will come.

NEWS,17.09.2012

Billionaires score over millionaires

Many millionaires got poorer in the last year, but billionaires did just fine, using their heavyweight money management teams to ride out market and economic turmoil that hit the lesser rich, research company Wealth-X said on Monday.The ranks of people with at least $30m edged up to 187 380 but their total wealth fell 1.8% to $25.8 trillion - still a sum bigger than the combined size of the US and Chinese economies, Wealth-X said in a report.Hardest hit globally were those in the $200m to $499m range, whose numbers dropped 9.9% and whose fortunes shrank 11.4%, the World Ultra Wealth Report said, using data for the year through July 31.But the really, really rich got even richer as the number of billionaires rose 9.4% to 2 160 people and their wealth grew 14% to $6.2 trillion."Even at a billion or two billion, they have a much larger entourage, they have much more in the way of investment advice. They certainly get the attention of every major bank," Mykolas Rambus, Wealth-X's chief executive officer, told Reuters. "This was the issue about that mid tier, the $100m to $500m risk land. I don't think it appears these guys employ enough talent to help their own portfolios plus their holding companies to be successful."As Europe struggles and the US economy recovers fitfully, the affluent are shifting away from speculative investments into private companies, commodities and property, said Wealth-X, a Singapore-based firm that provides intelligence on the ultra-rich to banks, fundraisers and luxury retailers.Asia suffered the worst regional loss of wealth, with a fall of 6.8% to $6.25 trillion due to weaker equity markets and lower export demand from the West, it said.While wealth also shrank in Europe, Latin America and the Middle East, the rich saw their fortunes grow in North America (up 2.8% to $8.88 trillion) and Oceania (up 4.4% to $475bn) - much of that in Australia.But Asia's rich cannot be discounted, Wealth-X said, as the fall in wealth in Japan, China and India - home to 75% of ultra high net worth (UHNW) Asians - will reverse, based on the strength of the region's financial systems and economies."Total Asian UHNW wealth is forecast to surpass the US combined wealth by 2020," it said.

Private banks target the super rich

 

What do you get the client who has everything? An evening at a sleep school to get tips on how to beat insomnia? A chance to play cricket with former England star Andrew Flintoff? Advice on finding the right school?These are just some of the services offered by Barclays in its "Little Book of Wonders," underscoring the lengths to which the bank is prepared to go to win the custom of the super-wealthy at a time when its traditional businesses are struggling with weak economies and tougher regulators."There is more to wealth than managing one's assets," said David Hughes, Head of Affinity Partnerships at Barclays, which oversees the Little Book of Wonders. "This is a complement to the financial advice we give clients and a recognition of the world in which our clients exist."Attracting the business of wealthy clients, worth an estimated $42 trillion globally, is critical for banks seeking not only to maintain their profitability, but also to diversify their sources of funding and reduce their reliance on capital markets."Private banking, given the relatively lower capital requirements and the fee based nature of revenue is an area of growth and competition which is expected to increase," Jill Zucker, a partner at McKinsey's, told Reuters.Private clients pay on average 1 percent of assets under management in fees to their wealth managers each year, estimates specialist wealth management consultant Scorpio Partnership.Banks are keen to attract such fees as profits remain squeezed in other parts of their business, from high street lending to commercial and investment banking.For example, Barclays reported a 38 percent rise in adjusted pre-tax profit in its wealth and investment management division in the first 6 months of the year compared with a 15 percent rise in its retail and business banking and 11 percent rise in corporate and investment banking.Coutts, the 300-year old British bank which counts Britain's Queen Elizabeth among its clientele, is beefing up its non-financial services to hold onto elite customers.Ian Ewart, head of product, services & marketing, said the bank still loved to whisk away clients on horseracing jaunts and to a welter of events hosted in the social calendar of the glitterati - including the Cowes Quarter Ton sailing regatta and annual British Academy of Film and Television Arts awards bash.But as entrepreneur clients start to outnumber heirs and heiresses, who tend to have a different outlook, Coutts is spending more time, effort and money satisfying a thirst for intellectual "entertainment" and high-level networking in a business world where success increasingly depends as much on 'who you know' as 'what you know'.A new thought leadership series called Futurescope has been designed to help the bank's entrepreneurial customers analyse future macroeconomic issues and identify moneymaking opportunities in this decade and the next."Our clients can buy whatever they want for the most part. What they cannot buy - which is also what they really need - is to connect with people like them, to hear new ideas. The experience is far (more) important than a luxury freebie," he said.Tale of two millionaires But in expanding the breadth and depth of services offered, private banks will have to make sure the extra cost is worth their while as profit margins in wealth management buckle under the increasing cost of regulation, compliance and technology.The global wealth management industry is now paying $8 to generate every $10 of income, calculates Scorpio Partnership in its closely watched annual health check of the global private banking sector in July."The question of how you can continue to cater for clients that might be less profitable for you in the future is a difficult one," Coutts' Ewart said.In the case of its Little Book of Wonders, Barclays declined to disclose the cost of building and maintaining the online portal, saying it was part of its overall investment in its wealth management platform.In an attempt to offset the costs of providing the service, the bank has offered the luxury brands the opportunity to advertise, for a fee, on its Little Book of Wonders portal.Banks will pitch services such as Futurescope or the Little Book of Wonders to a select set of clients depending on their wealth and how they've made their money rather than offering blanket invites, to preserve the exclusivity of the offers.But as clients question the fees they pay, especially in an environment where investment assets are delivering lacklustre returns due to ongoing economic uncertainty, additional services not seen as essential to business needs might raise eyebrows."If there are fancy chandeliers and teacups, some clients might assume they are paying too much in fees," said Zucker.Such services are often tailored to the ultra high net worth individuals, with assets greater than $25 million, who are not only costing the banks more but are also not necessarily the most profitable.So-called 'Core Millionaires', with assets of between $1 million and $10 million, generate investment revenue margins on average two to three times higher than their wealthier counterparts, making greater use of more profitable banking and lending products, a survey by McKinsey estimates.These Core Millionaires are also projected to generate 60 percent of asset growth amongst all households with more than $1 million in assets by 2015."They're a bit of a lost set of clients," said Zucker. "Banks need to tailor their offering so there is growth in different market segments."So, where does this leave the Little Book of Wonders?A junior member of one of Britain's most successful entrepreneurial families, whose mother recently switched private banking allegiance, was sceptical that affluent individuals would be tempted to change banks based on free offers."Would clients be impressed by that? No way," said the family member, who declined to be named. "They just want to make sure that their banking is done, that their transfers happen, that they can speak to someone when they need to," he said.

NEWS,16.09.2012

JPMorgan, Bank Of America Probed Over Money-Laundering Allegations: New York Times

Regulators are investigating whether several major U.S. banks failed to monitor transactions properly, allowing criminals to launder money, according to a New York Times story. The newspaper cited officials who it said spoke on the condition of anonymity.The Office of the Comptroller of the Currency, the federal agency that oversees the biggest banks, is leading the money-laundering investigation, according to the Times. The report said the OCC could soon take action against JPMorgan Chase & Co., and that it is also investigating Bank of America Corp. Money laundering allows people to make money often obtained illegally appear like it came from another source.The OCC, JPMorgan and Bank of America declined to comment.The financial industry is struggling to mend its public image. Four years after the financial crisis, banks are getting closer scrutiny. And regulators are under pressure to show that they're not missing any questionable activity.This summer, British bank Barclays PLC settled charges that it had manipulated a key global interest rate. Standard Chartered PLC, also based in the U.K., agreed to settle charges that it had improperly processed money for Iran, brought by the New York Department of Financial Services after the bank voluntarily informed regulators that it was reviewing relevant practices. In the spring, JPMorgan surprised shareholders with an unexpected trading loss.If the OCC takes action, it could be similar to a cease-and-desist order that it filed against Citigroup in April. At the time, the OCC said that Citi had deficient internal controls and anti-money laundering procedures. In bank regulation, a cease-and-desist order doesn't mean that a bank has to shut down, but it is a serious sanction that requires a bank to change its practices. Citi had already told the regulator that from 2006 to 2010, it had "failed to adequately monitor" some of its transactions connected to "foreign correspondent banking."The order in April didn't make any new, specific accusations. But it did instruct Citigroup to tighten its rules so it could improve compliance with the Bank Secrecy Act and related regulations. The act requires financial institutions to report suspicious activity and to put rules in place to try to make money laundering impossible for customers.Last year, JPMorgan paid $88 million to settle charges from the Treasury that it had unlawfully processed money for Cuba, Iran, Sudan and Liberia.At the time, JPMorgan said it had had no intent to violate regulations. It pointed out that it oversaw "hundreds of millions of transactions and customer records per day, and annual error rates are a tiny fraction of a percent."It's not expected that banks would be accused of trying to show support for countries like Cuba and Iran. It's more likely that they would be accused of faulty oversight that made any unlawful transactions possible. The industry has maintained that such violations are almost always unintentional.According to the Times, the Justice Department and the Manhattan district attorney's office are also involved. The Manhattan U.S. attorney's office and the Manhattan district attorney's office declined to comment.

 

Iran's Nuclear Timeline

 

Iran is nuclear capable. If Iran's leaders decided they wanted a nuclear bomb, they could build one. They have the material, the technical ability, and likely have a design. They have had these capabilities for at least five years, when they accumulated enough raw material that could be converted into the core of a bomb.But Iran does not have a bomb now. U.S. intelligence officials have high confidence that Iranian leaders have not made the decision to build a bomb. There is much confusion  some of it intentionally spread about how long it would take Iran to build a weapon.An outstanding team of seasoned national security experts has just published a clear, detailed explanation of Iran's nuclear timeline. The report of the Iran Project was endorsed by 34 security leaders, including Brent Scowcroft, Sam Nunn, Gen. Tony Zinni, Adm. James Fallon, Gen. Frank Kearney, Carla Hills, Anne Marie Slaughter, Chuck Hagel, Adm. Joe Sestak, Jessica Mathews, Zbigniew Brezinski, Nicholas Burns and this author.Here is an excerpt from the report (on p. 22) that provides a sound basis for debating what actions should be taken to convince Iran not to build nuclear weapons. This report is intentionally conservative. There may be serious technical problems that make the timeline much longer. I have highlighted in bold key phrases.While there are differences of opinion on this issue, we believe it would be extremely difficult for Iran to hide a nuclear program devoted to weapons development. No monitoring and detection system is failure-proof, but Iran has little reason to be confident that it could get away with creating a secret program to produce fissile material for a weapon.Were Iran to attempt to produce a single bomb's worth of highly enriched uranium (HEU), it would take at least one month (although some experts believe the timeline could be as long as four months or more). It is important to note that while the ability to build a single bomb is a somewhat useful theoretical construct, it has little or no correspondence to how nuclear weapons programs function in the real world.Historically, no country in the nuclear age has sought as its goal to build one nuclear weapon; nor has any country adopted a strategy of building one weapon knowing that as a consequence, its program would be exposed. The timeline for producing a single bomb's worth of HEU is subject to change, depending on the number and type of operational centrifuges available as well as the size of Iran's stockpile of already enriched uranium, particularly 20% enriched uranium. Conservatively, it would take Iran a year or more to build a military-grade weapon, with at least two years or more required to create a nuclear warhead that would be reliably deliverable by a missile.In short, it is likely that the United States would receive some warning and have at least a month to make a decision on action -- military or other. Understanding the difference between the one-month timeline of producing sufficient fissile material in order to produce a weapon, and the two-year timeline of creating a nuclear warhead, is critical when considering the likely success of military action.After a month, the weapons-grade uranium (WGU) could be reduced significantly in size (25 kilograms); if properly encased, it could be easily hidden and would be highly mobile. This would be a very hard target to detect and destroy. While it would take some additional time for Iran to translate the WGU into a meaningful military capability, the ability for the United States or others to launch preventive military strikes would be reduced. In contrast, the facility used to enrich the WGU is immobile and large and therefore an easier and somewhat vulnerable target (unless deeply buried)....The more apparent the decision to make a weapon, the more persuasive the justification for military action would be to the international community, including the United Nations Security Council. While Israel's more limited military capabilities and earlier "red line" create a closing window of opportunity to take military action, the U.S. could afford to wait for its red line to be crossed Iran undertaking a dedicated weapons program before deciding whether to take preventive military action....Given the deepening mutual distrust between the U.S. and Iran; congressional sympathy for Israel's perspective on a nuclear-capable Iran; and the conviction among some parties that Iran has already secretly decided to build a nuclear weapon, we believe the most likely military scenario is one in which preemptive, unilateral action against Iran is initiated by the U.S. and/or Israel, under conditions of some uncertainty about Iran's real intentions.