Archive for the ‘banking’ Category

Vietnam in quandary over inflation, global economic downturn

November 16, 2008

Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.

With a small and relatively insulated banking sector, Vietnam was not directly exposed to the subprime crisis that sparked the Wall Street meltdown and the subsequent worldwide credit crunch and financial turmoil.

But the wider economic repercussions of what has been called the worst global economic crisis since the Great Depression are already being felt in Vietnam, especially in the crucial export sector.

Containers are seen piling up at Saigon port in Ho Chi Minh ...
Containers are seen piling up at Saigon port in Ho Chi Minh city in June 2008. Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.(AFP/File/Hoang Dinh Nam)

Amid slackening overseas demand, Vietnam’s monthly exports have steadily fallen from US$6.5 billion (US$1 = RM3.59) in July, to US$6 billion in August,US$5.1 billion in October.


And, although it’s too early to say foreigners are pulling out of financial markets, in the past month they have been net sellers of bonds and stocks.

Inflation has been in double digits all year and stood at 26.7 per cent in October, a slight fall after a drop in global energy and commodity prices. The government’s target is to bring annual inflation down to 23-24 per cent in 2008, and to less than 15 per cent in 2009.

Aiming to reduce liquidity to fight inflation, the government had raised interest rates and bank reserve requirements several times this year. But this has also starved businesses of credit for investment and working capital, forcing the central bank to reverse its monetary policy as both local and international factors have slowed economic growth in Vietnam.

A farmer throws a net to catch fish on a flooded paddy field ... 
A farmer throws a net to catch fish on a flooded paddy field in Phuong My village, 25 km (16 miles) outside Hanoi November 12, 2008. Hanoi reported 22 deaths from the worst inundations in more than three decades, officials said.REUTERS/Kham (VIETNAM)

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Global Economic Mess Makes G-20 Summit Sober, Serious, Anti-Junket

November 14, 2008

There are no plans for sightseeing tours, shopping sprees or three-anything lunches when leaders from 20 countries, accompanied by large delegations of officials, business people and journalists, visit the capital during the next two days for a world economic summit.
By Pamela Constable 
Washington Post Staff Writer

Instead, the event promises to be brief, sober and businesslike, in keeping with the grim financial outlook facing every country at the summit, including the host, and the timing of the meeting during a power lull between administrations in Washington.

“There will not be much time. Our delegation will arrive at 6 p.m. tomorrow and leave right after the meeting and possibly a press conference Saturday,” Emanuel Lenain, a spokesman for the French Embassy, said yesterday. Between formal discussions, he said, President Nicolas Sarkozy “will work and work.” His glamorous wife, former model Carla Bruni, will not be with him, and he will attend tonight’s White House dinner alone.

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G-20 To Consider Monitoring World Banking Among Proposal

By Anthony Faiola and Glenn Kessler

Washington Post Staff Writers
Friday, November 14, 2008; Page A01

Nations are close to adopting a series of measures aimed at combating a global recession and laying the groundwork for a broad reconstruction of the international financial system, as world leaders arrive in Washington for a major economic summit this weekend.

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Iran Now Sees ‘World Without America’ as Attainable

October 14, 2008

By Clifford May and Jay Carafano
The Washington Times

Which world leader is on record musing about “a world without America” – a goal he calls “attainable”? Iranian President Mahmoud Ahmadinejad.
President Mahmoud Ahmadinejad of Iran, right, watches President Bush address the 63rd session of the United Nations General Assembly at UN headquarters, Tuesday Sept. 23, 2008. Seated with him is his UN Ambassador Mohammad Khazaee, left, and Foreign Minister Manouchehr Mottaki. Associated Press.

Above: President Mahmoud Ahmadinejad of Iran, right, watches President Bush address the 63rd session of the United Nations General Assembly at UN headquarters, Tuesday Sept. 23, 2008. Seated with him is his UN Ambassador Mohammad Khazaee, left, and Foreign Minister Manouchehr Mottaki. Associated Press.


Until recently, it was possible to believe that whatever Mr. Ahmadinejad’s intentions, Iran was a long way from acquiring the capabilities it needs to achieve its goals. But a blue-ribbon commission has reported to Congress on what appears to be an Iranian drive to obtain the means to carry out an EMP (electro-magnetic pulse) attack.

An EMP attack is produced by launching a ballistic missile with a nuclear weapon attached — and detonating it high above the Earth. This produces a massive pulse of ionized particles that could damage or even wipe out many electrical and information systems. Such an attack would disrupt telecommunications, banking and finance, fuel and energy, food and water supplies, emergency and government services and much more, threatening millions of lives.

We’ve seen a blacked-out South Texas in the wake of Hurricane Ike. We’ve seen New Orleans after Katrina. Now imagine that scenario over most of the continental United States. There would be a “world without America” – at least as we know it.

No one disputes that Iran is developing a robust long-range missile force. Few question that Mr. Ahmadinejad’s regime is working on nuclear weapons development. Less well-known is that Iran has conducted missile tests from sea-based platforms, detonating warheads at the high-point of the missile trajectory, rather at the aim point over the target. These facts have now been documented in official government reports.

Connect the dots, and you find the picture of a workable research program for developing a covert means to deliver an EMP attack against the United States.

A short-range ballistic missile could be carried on one of the thousands of commercial freighters sailing under “flags of convenience” that sail around U.S. waters every day. Without ever piquing the interest of the Navy, the Coast Guard, or the Customs and Border Protection, that ship could sail within range and deliver its payload over American territory. Even a modest warhead placed at the right spot over the East Coast could take down 75 percent of the electrical grid.

The genius of such a covert attack is that it doesn’t come with an obvious “return address.” The ship might be registered in Liberia. The crew might be Lebanese. The ship might disappear into the night – or be scuttled quietly.

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U.S. Is Investing $250 Billion in Banks: Bush Addresses Financial Crisis

October 14, 2008
WASHINGTON — President Bush, speaking from the Rose Garden Tuesday before the markets opened in New York, called the government plan to invest up to $250 billion in banks essential to help assure stability in the nation’s financial system.

Under the proposal that is similar to those initiated by European governments on Monday, President Bush said the Treasury Department would invest up to $250 billion in banks, receiving an equity stake in return.

“This is an essential short-term measure to ensure the viability of the American banking system,” Mr. Bush said.

The United States would also guarantee new debt issued by banks for three years — a measure meant to encourage the banks to resume lending to one another and to customers, officials said.

The Federal Deposit Insurance Corporation would also offer an unlimited guarantee on bank deposits in accounts that do not bear interest — typically those of businesses — bringing the United States in line with several European countries, which have adopted such blanket guarantees.

In addition, Mr. Bush said the Federal Reserve would start a program to become the buyer of last resort for commercial paper, a move intended to help businesses get the money they need for day-to-day operations.

Mr. Bush’s comments were the latest in series by administration officials and government leaders around the world to try to calm the financial turmoil and help stave off a deep recession. And markets around the world have rebounded on news of the coordinated efforts by various governments. The Dow Jones industrial average gained 936 points, or 11 percent, the largest single-day gain in the American stock market since the 1930s and future indexes were substantially higher. European markets were up at least 5 percent on Tuesday after rising nearing 10 percent Monday.

The president described the four measures as “unprecedented and aggressive.” Each of the new programs protects taxpayers and is “limited and temporary,” Mr. Bush said.

“These measures are not intended to take over the free market,” he said, but to safeguard it.

It will take time for our efforts to have their full impact,” Mr. Bush said, “but the American people can have confidence about our long-term economic future.

As the White House has done since the House rejected the initial bailout legislation, Mr. Bush sought to assure Americans that the efforts were necessary to protect their savings and retirement.

“I recognize that the action leaders are taking here in Washington and in European capitals can seem distant from those concerns,” he said. “But these efforts are designed to directly benefit the American people by stabilizing our overall financial system and helping our economy recover.”

Treasury Secretary Henry M. Paulson Jr. outlined the plan to nine of the nation’s leading bankers at a meeting Monday afternoon d. He essentially told the participants that they would have to accept government investment for the good of the American financial system, according to officials.

Of the $250 billion, which will come from the $700 billion bailout approved by Congress, half is to be injected into nine big banks, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase, officials said. The other half is to go to smaller banks and thrifts. The investments will be structured so that the government can benefit from a rebound in the banks’ fortunes.

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Lure of Pakistan banks overcomes riot fears

January 7, 2008
By Farhan Bokhari in Islamabad 
Financial Times
Jamuary 7, 2008

Pakistan‘s political turmoil has failed to deter investors from pursuing the country’s fast-growing banking sector.

“We may have had turbulence recently but as you can see investors are coming to buy out or establish banks in Pakistan
“The growth in the banking sector appears to have still outpaced political uncertainty,” said Muhammad Suhail, of Karachi‘s Jehangir Siddiqui Brokerage house.

In the latest development, Saudi Pak Commercial Bank (SPCB) is due to be bought in a $200m deal….

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Vietnamese Don’t Use, Trust Banks

January 7, 2008
By Ben Stocking, The Associated Press
January 7, 2008
HANOI — Foreign banks trying to gain a foothold in booming Vietnam face a tough cultural barrier: Most people don’t use banks, and many don’t trust them.

Instead, they stash their money at home and rely on informal lending networks of family and friends for loans.

“Banks require too much paperwork, and the charges are too high,” said Cao Thi Dong, 40, a housekeeper. “If I borrow from people I know, I can get a much better interest rate.”

Banks coming to Vietnam quickly learn that the fast-developing country is a striking blend of the ancient and the modern, a place where the traditional and the trendy exist side by side.

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How Others See America: Interesting Times Part II

December 25, 2007

25-Dec-2007 Melbourne – By Les Lothringer 

The accusation of endemic, pervasive corruption that foreign critics of China, particularly Americans, level at it is now rendered passe, unfashionable in light of the systemic, widespread and criminal fraud that defines the American financial system and its manipulations of securitized mortgage debt.  Bonused senior banking executives, commissioned valuation officers and just about everybody in-between, including the rating agencies, have operated and co-operated to manipulate the mortgages system for their own financial gains.  And the evidence is in the documentation trails in every part of the American banking system.

The properties that ultimately back the value of those mortgage financial instruments are declining in value.  Goldman Sachs recently forecast a 40% decline in Californian house prices!  China and other Asian sovereign and bank investors have been very large buyers of these securitized debt instruments.  Yet they remain noticeably quiet about the extent of their doubtless considerable holdings, publicly that is.  It is probable that their investments have become, or will become, a fraction of the worth that they were rated at and so paid for.  What might they do about that?

The fundamental problem in the American mortgage market is not that mortgage rates will reset and so force even more defaults and distressed property sales – problems nonetheless and profit opportunities for finance market traders who saw the recent decline [AKA working both sides of the street].  The problem is something else and one well understood by finance industry insiders, as they scramble to extricate themselves from the real possibility of criminal charges and jail.

That problem is origination fraud and thus where fraudulent misrepresentation formed a part of securitized debt sales, mortgage debt investors could well force these banks to take back their bonds.  Naturally those banks do not want to do that.  Nor quite possibly the sovereign fund bond holders either.  These bonds may be now worth or will become a fraction of their “value” and as there is so much of this toxic debt, a mark to market valuation would render those banks insolvent with some bank executives looking at “Enron” like prosecutions.  Sarbanes-Oxley proved useless, but that should have been obvious to anyone who read it.

Obvious too is that integrity is no longer a part of a finance industry executive’s job specification and even the big external auditing firms have worked within their usual low standard of not being paid to detect material fraud, no matter how large or obvious.  Ditto the executive recruiters who are likewise pretty well useless at assessing integrity and honesty in job candidates and both these professional groups fail to approximate to the slightest degree their relentless self promotions of professional excellence.  This makes them natural partners to a delinquent American finance system.

Interest rate reductions by the US Federal Reserve can not fix this.  Interest rates will be heading up because the increase in the money supply is causing inflation.  The argument now is not about a US recession but whether it is to be a soft one or a hard one.  I would not be banking on a soft one.  This boom will come to an end soon enough now.

 Does China now hold an even stronger hand of cards? – a positive trade deficit and a trillion plus US dollars which it is keen to convert to US equity investments – and now a holder of fraudulently promoted and priced mortgage bond investments.  Just how do they deal with a US Treasury Secretary who was heading up a bank that was also involved in mortgage debt origination?  Or the major New York banks that are also being relied upon to solve the sub-prime problem, being the ones who both created it and profited immensely from it?  It is not all that difficult to work out.

Of course the banks that sold these faulty instruments should take them back and revalue them.  Bank bankruptcies and jail for their executives should result, so they will not do that.  Might Chinese bond holders litigate?  The possibility of successful legal action and staggeringly large liabilities, the drawn out and very public displays of how financial markets have corruptly operated and the debilitating impact on the banks is enough to make them very negotiable.

At the most basic level and with their usual regard for self-preservation, Main street bankers have started selling equity to foreign sovereign funds.  It cannot possibly stop here for the write-downs will continue through 2008.  Their stellar twenty year plus off-balance sheet manipulations have reached their zenith and, right now, banks just no longer trust each other to lend.  They ought to know.

Interesting times indeed.