Ce film investigateur montre en détail les rôles joués par le cartel Anglo-Allemand d'opérations bancaires (notamment la banque de l'Angleterre commandée par Rothschild et la chasse National Bank commandé par Rockfeller aussi bien que Harriman/Bush' banque de s) par BRI la banque du règlement international non seulement avant la guerre mais pendant la guerre. BRI a été à l'origine établi en mai 1930 par des banquiers et des diplomates de l'Europe et des Etats-Unis pour rassembler et débourser les paiements de réparation de la Première Guerre Mondiale de l'Allemagne (par conséquent son nom).
Sur son conseil étaient les nazis principaux tels que la trouille et le Hjalamar Schact de Walther le président de BRI était un Américain, Thomas McKittrick, qui a aisément eu une vie sociale avec de principaux nazis. Non seulement BRI, mais d'autres banques alliées ont fonctionné de pair avec les nazis. Une des plus grandes banques américaines (banque de chasse) a maintenu une branche ouverte à Paris occupé et, avec la pleine connaissance des directeurs aux États-Unis, a gelé les comptes des juifs français. Privé de l'argent pour échapper à la France, beaucoup ont fini vers le haut dans des camps de la mort.
Selon le journaliste investigateur Edouard Epstein, « quoiqu'un congrès isolationniste ait officiellement refusé de permettre les États-Unis Réservation fédérale à participer au BRI, ou pour accepter les parts dans lui (qui ont été à la place détenues en confiance par la première banque nationale de ville [possédée près William Rockefeller]), le Président du Fédéral tranquillement a glissé plus d'à Bâle pour des réunions importantes. »
Les cinq plus grandes banques de Wall Street ont donné dehors un disque $39 milliards dans les bonifications l'année dernière, selon des données rassemblées par le service de nouvelles de Bloomberg. Après conduite des centaines de milliers de familles dans la forclusion, entraînant une crise financière affectant des centaines de millions, et poussant les USA et les économies mondiales plus près de la récession, il est évident que Wall Street se récompense pour un travail bien cuit.
The banks announced record losses in the fourth quarter, wrapping up the financial industry’s worst year since 2002. All in all, Wall Street wrote off more than $90 billion in bad debt for the year, and the five largest banks saw their profits drop more than 60 percent. Three of the five firms posted losses in the fourth quarter.
For all that, the bankers made out like bandits. Despite the firms’ abysmal performance, Wall Street buffered its traders from any shocks to their incomes by increasing the ratio of compensation relative to revenues. Typically, banks try to keep compensation below 50 percent of revenues; in 2006, when the five firms paid out some $36 billion in year-end bonuses, the figure was approximately 45 percent. In 2007, it jumped to more than 60 percent, according to figures released by the New York State Comptroller’s office.
While the $39 billion was divided among 186,000 workers at the five firms—averaging $211,849—the lion’s share was reserved for a few thousand high-level managers, traders, and senior executives, who took in multimillion-dollar bonuses in addition to their salaries. Rank-and-file clerical workers took home a few hundred dollars. Bonuses for traders in subprime-related securities are reported to be about 30 percent lower this year in comparison to other sectors.
Morgan Stanley wrote down some $10.3 billion in bad debt in 2007, but increased its bonus pool by 18 percent all the same. Its CEO, John Mack, declined his bonus last year after collecting a $40 million bonus in 2006.
E. Stanley O’Neal, the former chief executive of Merrill Lynch, collected a severance package worth some $161 million, or 3,500 times the yearly income of a typical US household, after losing his job in October. Merrill Lynch wrote down some $20 billion in subprime debt during the fourth quarter of 2007, and saw its value reduced by some 43 percent.
Charles O. Prince II, the former CEO of Citigroup, which announced similar losses, will walk away with some $68 million. Lloyd C. Blankfein, the Goldman Sachs CEO, set a new record with his bonus of $60.7 million. The firm put its chips on different numbers than the other banks and had a good year overall. The firm’s two co-presidents, Gary Cohn and Jon Winkelried, each collected a stock bonus of about $40 million, in addition to as-yet undisclosed amounts of cash.
Ike Suri, the managing director of a Finance Executive recruitment firm, told the Los Angeles Times that “compensation in the brokerage industry is increasingly tied to volatility—so the more volatility in the markets, the more investors are trading and the more they make.” He continued, “The marked increase in volatility in the markets in 2007 really benefited the brokers.” Volatility, we might add, which bankers created themselves by gambling—and losing—on risky securities.
The absurdity of this standard is self-evident. But, for all that, no major public figures have called for the leaders of these banks to be held liable for the destruction they caused, much less even called for hearings into their massive pay. Executive compensation, we are told, is a private affair between shareholders and executives, whatever its effect may be on the rest of the population.
Outside the mass media, however, these issues are being hotly debated. In a widely discussed Financial Times column dealing with the issue of banker pay, former IMF chief economist Raghuram Rajan writes that executive compensation practices among Wall Street firms “probably contributed to the ongoing crisis” in the financial sector. Rajan goes on to explain the means by which bank managers systematically underpriced and hid risk with the intent of inflating their personal compensation.
Securities trading, according to Rajan, rests on the ability of funds managers to generate returns over and above market expectations, while minimizing overall risk. Rajan notes that differences between a security’s real yield and its evaluated growth potential “are quite hard to generate since most ways of doing so depend on the investment manager possessing unique abilities—to pick stocks, identify weaknesses in management and remedy them, or undertake financial innovation. Such abilities are rare. How then can untalented investment managers justify their pay? Unfortunately, all too often it is by creating fake alpha—appearing to create excess returns but in fact taking on hidden tail risks, which produce a steady positive return most of the time as compensation for a rare, very negative, return.”
The boom of Collateralized Debt Obligations and other risky mortgage-based securities was probably exacerbated by bankers’ attempts to, in Rajan’s words, “create fake alpha,” that is, to buy securities whose risk was nominally underrated and therefore paid disproportionately high returns. The foreseeable prospect of the real estate market cooling down, resulting in the writing off of billions of dollars of bad debt, massive losses for shareholders, and turmoil in the wider economy, paled alongside the bankers’ own grasping for massive amounts of compensation.
For the bank managers themselves, it made perfect sense. Once the racket that they had been running came to light and the securities they bought rendered worthless, the managers would simply lose their jobs, collect millions in compensation, and move on to some other firm. This is exactly what happened at Bear Stearns, Merrill Lynch, Citigroup, and others.
The more farsighted representatives of the establishment recognize—at least in part—the dangers posed by unmitigated greed to the long-term stability of the capitalist system. Martin Wolf, the associate editor of economics at the Financial Times, recently wrote in response to Rajan’s article: “I now fear that the combination of the fragility of the financial system with the huge rewards it generates for insiders will destroy something even more important—the political legitimacy of the market economy itself—across the globe.”
Wolf proposes that the US government step in to regulate banker pay so as to prevent such discrediting spectacles as those seen on Wall Street in 2007. But such action would require an unimaginable sea change in the policies of the US ruling elite, which has sought for the past three decades to break any restrictions on its own blind pillaging of society.
As the Wall Street speculators raked in their bonuses, recent government statistics demonstrate that, for average working people in the US, 2007 spelled a further decline in living standards as consumer prices driven by fuel and food rose sharply and the paltry growth in wages recorded the previous year stalled. Average weekly wages last year fell approximately 1 percent.
The combination of record bonuses for Wall Street’s wealthiest and a drop in real wages for hundreds of millions recorded in 2007 is only the latest episode in the protracted process of transferring wealth from masses of working people to a tiny financial elite. The outcome is a level of inequality that is politically and socially unsustainable and which makes open class struggle inevitable. This is what is meant by the destruction of “the political legitimacy of the market economy itself.”
[Seminole County, Florida, is a hotbed of opposition to teaching evolution]
AD AGE - “This is a good day for parents and children in Seminole County and anyone who believes that corporations should not prey on children in schools,” said Dr. Susan Linn, director of the Campaign for a Commercial-Free Childhood. “We are pleased that McDonald’s is listening to parents all over the country who believe that report cards should not be commercialized.”
The fast-food giant had agreed to sponsor the report-card jackets for the county’s elementary schools to cover a printing fee of $1,600. There are 27,000 children in the school district.
On the jackets, McDonald’s offered a free happy meal to any student with all A’s and B’s, two or fewer absences, or good behavior in a given academic quarter. Susan Pagan, an area parent, notified the Campaign for a Commercial-Free Childhood, and an all-out public-relations battle ensued by early December. According to the campaign, the school district received more than 2,000 calls of protest. . .
“It was McDonald’s decision to remove our trademarks from report-card jackets in Seminole County, Fla., because we believe the focus should be on the importance of a good education,” said Bill Whitman, a spokesman for McDonald’s USA. “McDonald’s, not the school district, will cover the cost to reprint the report-card jackets.”
CONSUMERIST - The school district that approved McDonald’s-sponsored report cards has a hot new partnership with Bus Radio, a friendly company that advertises to kids as they ride to school. The company serves a sonorous mix of inoffensive music, public service announcements (buckle up, kids!) and a few harmless advertisements (maybe McDonald’s?) to over 1 million children in 23 states. Bus Radio is based in Needham, Massachusetts, but lost its contract with the Needham school district after uppity parents objected to the crass commercialization of something as innocent as a bus ride. Seminole School Board members said the benefits of the radio show seem to outweigh any drawbacks, but they will evaluate Bus Radio’s performance during the test run.
The U.S. public holds Big Business in shockingly low regard.
A November 2007 Harris poll found that less than 15 percent of the population believes each of the following industries to be “generally honest and trustworthy:” tobacco companies (3 percent); oil companies (3 percent); managed care companies such as HMOs (5 percent); health insurance companies (7 percent); telephone companies (10 percent); life insurance companies (10 percent); online retailers (10 percent); pharmaceutical and drug companies (11 percent); car manufacturers (11 percent); airlines (11 percent); packaged food companies (12 percent); electric and gas utilities (15 percent). Only 32 percent of adults said they trusted the best-rated industry about which Harris surveyed, supermarkets.[1]
These are remarkable numbers. It is very hard to get this degree of agreement about anything. By way of comparison, 79 percent of adults believe the earth revolves around the sun; 18 percent say it is the other way around.[2]
The Harris results are not an aberration. The results have not varied considerably over the past five years — although overall trust levels have actually declined from the already very low threshold in 2003.
The Harris results are also in line with an array of polling data showing deep concern about concentrated corporate power.
An amazing 84 percent told Harris in a poll earlier in 2007 that big companies have too much power in Washington. By contrast, only 47 percent said that labor unions have too much power in Washington (as against 42 percent who said labor has too little power), and 18 percent who said nonprofit organizations have too much power in Washington.[3]
These results have proven durable. At least 80 percent of the public has ranked big companies as having too much power in Washington since 1994. In 2000, Business Week and Harris asked a broader question: Has business gained too much power over too many aspects of American life? Seventy-four percent agreed.[4]
The November 2007 poll also asked about support for measures to control corporations. These results are eye-opening as well, though perhaps not in the expected way.
Harris asked which industries “should be more regulated by government — for example for health, safety or environmental reasons — than they are now?” Only oil companies (53 percent), pharmaceutical companies (53 percent) and health insurance companies (52 percent) crossed the 50 percent threshold. Even the tobacco industry managed to escape in the survey with only 41 percent favoring greater regulation. These data trend significantly negative — against greater regulation — over the last five years.
Does this show that while people distrust Big Business, they equally distrust the government to constrain corporate power?
No.
The U.S. skepticism to regulation is only skin deep. When polls present specific regulatory proposals for consideration, U.S. public support is typically strong and often overwhelming — even when arguments against government action are presented.
For example:
After hearing arguments for and against, 76 percent favor granting the Food and Drug Administration regulatory authority over tobacco, with 22 percent opposed.[5]
After hearing arguments for and against, 75 percent favor legislation that would significantly increase energy efficiency, including auto fuel efficiency standards, and the use of renewable energy.[6]
Eighty-five percent favor country-of-origin labeling for meat, seafood, produce and grocery products, and three quarters favor a legislative mandate.[7]
Seventy-one percent say it is important that drugs remain under close review by the FDA and drug companies after they have been placed on the market.[8]
And, from a Harris finding a week after the poll showing skepticism about industry regulation in general, the polling agency found that those who think there is too little government regulation in the area of environmental protection outpaced those who think there is too much by a more than 2-to-1 margin (53 to 21 percent).[9]
What the Harris findings on attitudes to regulation do show is that the business campaign against regulation as an abstract concept has been very successful.
It highlights the need for consumer, environmental, labor and other corporate accountability advocates to defend the concept of regulation, and to connect the rampant corporate abuses in society with the deregulation and non-regulatory failures of the last three decades. There’s little doubt that the general public attitude toward regulation significantly affects the willingness of politicians — none to eager to offend business patrons in the first place — to take on corporate power.
The dollar rose slightly against the euro and pound on Friday, benefiting from nervous currency investors withdrawing from risky “carry trades.”
A slumping Wall Street, which fell more than 300 points on Friday, drove traders away from those trades.
Carry trades involve borrowing currencies from countries with low interest rates, such as Japan and Switzerland, and investing the funds in higher-yielding assets elsewhere. Carry-trade beneficiaries are usually the euro and currencies of countries with high interest rates, such as the New Zealand kiwi.
The 15-nation euro was worth $1.4785 in late New York trading, a little below the $1.4793 it was worth Thursday after Federal Reserve Chairman Ben Bernanke said the U.S. central bank would act aggressively in confronting economic woes - signaling more interest rate cuts - and the European Central Bank sounded a hawkish note on interest rates. Those announcements drove the dollar lower.
Lower interest rates can jump-start a country’s economy, but may weigh on the currency as traders transfer funds to countries where they can earn higher returns.
The British pound dropped to $1.9573, down from $1.9609. On Thursday, the Bank of England kept its own rate unchanged, but signaled a cut was likely in February.
The dollar was down to 108.91 Japanese yen from 109.54 yen and 1.1010 Swiss francs from 1.1045 Swiss francs.
Also on Friday, the U.S. Commerce Department reported that the country’s trade deficit surged to the highest level in 14 months in November, reflecting record imports of foreign oil. The deficit with China declined slightly while the weak dollar boosted exports to another record high.
In other New York trading, the dollar rose to 1.0206 Canadian dollars, up from 1.0108 Canadian dollars.
Almost every news network did a story in 2007 about foreigners coming to the states to shop and invest, even in real estate. What compelled this behavior?
Among the many troubles confounding Fed Chairman Ben Bernanke during this credit crisis is the steady decline of the U.S. dollar. He and the Fed have reduced the federal funds target rate, which now stands at 4.25, attempting to stimulate lending by the country’s major banks. But as ”Helicopter Ben” tries to save the credit business, he has put more dollars on the street. With more supply out there, the dollar has lost value, and investors see the possibility higher of inflation or even a currency crisis on the horizon.
Currency exchange works like a see-saw. The U.S. dollar sits on one side and another currency, like the Euro, sits on the other. In a perfectly equal world, the two players would be balanced: one dollar equals one Euro. But this never happens as financial and political conditions tilt the board up and down. So they see-saw. But they never go beyond a certain point. One player cannot shoot herself up into space or propel her friend through the ground. They hit a point where going further would ruin the game.
Let’s say you make Gucci sunglasses in Italy. You don’t want the exchange rate to get to a point where Americans will stop buying your sunglasses. If the Euro gets too expensive, you lose business. This effect creates the see-saw game.
Economists say the U.S. dollar will approach that nadir in 2008. Economist Adolfo Laurenti, of Mesirow Financial Holdings Inc., said the dollar should continue to decline in 2008, but will eventually level off. The U.S. dollar closed at 0.6781 Thursday against the Euro and lost value to many other major currencies in ‘07. Market conditions will tug the dollar back up in the New Year. And there are 20 reasons why the falling dollar is good for Americans.
But, sorry Ben, you can’t sleep soundly yet. The low dollar makes imports more expensive. What’s the most notorious import? Oil. Light, sweet crude broke the $100 a barrel mark on Wednesday. Even the Iowa Caucus could not drown this story. To illustrate the problem, the U.S. imports more oil from Canada than any other country. And in September, the Canadian loonie became more valuable than the U.S. dollar for the first time since 1976.
As more news about Benazir Bhutto’s assassination comes out, clearly implicating the Musharraff regime in the murder, our tax dollars are going toward paying Lockheed Martin for weapons to Pakistan.
“Washington, Jan 1 - The US Defence Department has awarded a $498.2 million contract to Lockheed Martin Corp to supply 18 F-16 aircraft to Pakistan just ten days after the US Congress slapped restrictions on military aid to Islamabad.
Lockheed will sell 12 F-16C plus six F-16D planes to Pakistan under the contract, the department announced in a list of defence contract awards Monday, but did not say how soon the fighter jets would be delivered.”
Pakistan -under the Musharraf regime - continues to given aid and comfort to Osama bin Laden and al Qaeda, the very people who attacked this nation on 9/11. Prior to the attack on my country, Pakistan’s then-chief of the ISI wired money to one of the 9/11 hijackers and had an American journalist murdered:
“If the 9-11 Commission is really looking for a smoking gun, it should look no further than at Lieutenant-General Mahmoud Ahmad, the director of the Pakistani Inter-Services Intelligence (ISI) at the time.
In early October 2001, Indian intelligence learned that Mahmoud had ordered flamboyant Saeed Sheikh - the convicted mastermind of the kidnapping and killing of Wall Street Journal reporter Daniel Pearl - to wire US$100,000 from Dubai to one of hijacker Mohamed Atta’s two bank accounts in Florida.”
Let’s run down some of the facts about Pakistan for a moment:
An ISI agent murdered an American journalist.
An ISI chief financed the 9/11 hijackers, who murdered over three thousand Americans.
Musharraf and his regime have created a haven for al Qaeda, who continue to murder American soldiers.
The pro-Democracy candidate running against Musharraf was just assassinated
And yet nearly half a billion dollars of OUR money is going toward paying Lockheed Martin to deliver yet more weapons to the ISI-Musharraf regime. It is bad enough that Lockheed is selling weapons to a regime that has such close ties to terrorism, but that we have to pay for this purchase is absolutely astonishing.
It is even more shocking considering that just 10 days ago, Congress put restrictions on military sales to Pakistan. Someone clearly put some pressure to get this deal passed despite growing concern of Musharraf’s violent actions and Congressional restrictions to aid. Who brokered this deal?
Was it Jack Abramoff from behind his prison cell who was a paid lobbyist (with our money) to Pakistan? After all, he was helping out with the F16 issue before 9/11. Somehow, maybe the prison element, rules Abramoff out.
Was it Lynn Cheney, the Vice President’s strange other half, who helped push this deal through? After all, she was on the Board of Directors for Lockheed Martin right up to 9/11. But she has moved on to penning lesbian soft porn, which likely keeps her rather busy.
No, I think Dick Cheney likely called up HIS State Department and HIS Defense Department to help US part with OUR money. Because how else are we to account for the billions in aid to Pakistan, pushed through by Dick Cheney during the tenure of the Bush administration?
Lockheed Martin, as well as the other Cheney affiliated companies like Halliburton, have long profited from un-American activities, anti-Democratic activities, all out human rights abuses the world over.
Enough is enough. If the ISI and Musharraf want those jets, then they will have to purchase them on their own dime. Unless al Qaeda is no longer a threat (I may have missed the memo) or Pakistan has given their house guests the boot (another memo I may have missed), then the continued funding of the Musharraf-ISI is treason. I think we, the citizens of America, have a right not to be forced to fund treason. I would even say we have a duty to prosecute traitors. But what do I know? I am just an American citizen, a tax paying citizen. Why should I have a say in what other people do with my money?
The US dollar declined against the euro and the pound on Friday as traders continued to hotly debate whether the US Federal Reserve would continue cutting interest rates amid economic uncertainty.
The euro was swapping hands at US$1.4378 in late afternoon trading in New York, up from US$1.4320 late on Thursday.
The British pound was quoted at US$1.9841, up from US$1.9830 a day earlier.
Although the pound gained ground it has dropped below two dollars of late, marking its lowest levels against the US dollar since August.
The US dollar was meanwhile trading at ¥114.09, up from ¥113.09 on Thursday.
The US currency’s value has risen and fallen in the past week as traders have either bet up or discounted the odds of a fresh Fed rate cut.
The Fed has cut borrowing costs three times since September in a bid to underpin US economic momentum in the face of a prolonged housing slump, but analysts say rising inflationary pressures may soon put an end to the rate cuts.
The US Commerce Department reported earlier on Friday that a core US inflation gauge, which excludes volatile food and energy costs, bounced up an annual 2.2 percent last month, above the Fed’s comfort zone of between 1 percent and 2 percent.
In late New York trading, the US dollar stood at 1.1551 Swiss francs from SF1.1581 on Thursday.
The U.S. dollar index goes all the way back to March of 1973. However this 30 year chart of the index shows how the U.S. dollar is holding up against a basket of currencies. It’s weighted against 6 currencies (Euro, Japanese yen, Great British pound, Canadian dollar, Swedish krona and Swiss franc).
Click on the chart below to see an enlarged version of it. You’ll find that the index has bounced off of 30 year lows and is heading higher for once in a very long time. Should the bounce continue, it could go some 1600-2000 pips upward before reaching any multi year resistance. That would be huge. This typically happens within 6-12 months historically. So if history repeats itself, we could be in for quite a surprise.
In the short term, the index has already broken some near term downtrend lines as it has rallied over 200 pips. While it still has some ways to go for sure..it’s the first signs of life the buck has had in quite some time.
In the GBP/USD pairing, it has brought the British pound down by over 1,100 pips. This is huge! It’s also brought the EUR/USD pair down by 600 pips. The buck has also rallied against the Canadian dollar (USD/CAD) by 1,000 pips. Yet no one is mentioning this stuff. It’s like it’s flying under the radar or something!
Now that everyone and their mama is on the short side of the dollar, the smart money (big interbanks and hedge funds) are covering their shorts quietly. They realize that the potential upside may very well outweigh the future downside potential in the index.
It’s much like the emotion at Nasdaq 5000. I couldn’t talk the friends or even fellow stock brokers out of selling their shares then. So I cashed out all of my stocks, stock options and 401k and watched it all fall.
I was able to talk some sense into a few people, but not many. When it’s a mania, you know you’re at or near a turning point.
Well history repeats itself….and we’re at another one of those emotional moments where people get adamant about being short the dollar. It’s at these times when it turns and it is a while before anyone notices.
This doesn’t mean the buck can’t have a pull back here and there or even trade in a wide range for a while…but it does likely mean the downtrend is over.
I’m sure this is one of the few places you’ll hear this from. I don’t try to be popular. For if I did the popular thing, I’d be broke. No, the professional has to think on their own unlike the masses that lose tons in the financial markets.
This bottom will take some time to complete more than likely but look for more upside potential in the buck than the downside potential.
So as Canada’s “Time Magazine” names the Canadian dollar as the “Person of the Year”…and the Economist puts the “falling dollar” on its magazine cover…it’s time for a change. The fall of the dollar has gotten too mainstream and now finally everyone is on board the short. That’s when it turns.
Only 40 Billion of the 150 - 300 Billions Sub prime debts has thus far been written off, what will happen when the other 110 - 260 Billion is written off?
NOTE: Sub prime debt - The BUSH crooks say the figure is 150 Billion, the bank of England says it is 200 Billion and we have conservative punters saying it is more likely 300 Billion.
Our Advice: Sell All of your Dollar stocks fast, buy YEN, Swiss Dollar & Euro, but even these have the Dollar as a reserve, so you can expect a rough ride any way you turn - perhaps gold would be better.
Anyway here is a little vid to keep them Sub prime spirits up eh?
Until late January this year, the hosiery town of Tirupur had been in a state of euphoria. Within days, its glee turned into a grimace.
Until late January this year, the hosiery town of Tirupur had been in a state of euphoria. Within days, its glee turned into a grimace. In February, the US dollar depreciated against the Indian rupee. The rupee value of the dollar slipped south from Rs 46 to Rs 44 and then to Rs 42 in June and the Tamil Nadu town’s euphoria evaporated. Ten months down the line, it is grappling with losses.
The performance of the 1,000-odd exporters in Tirupur, supported by 6,000 auxiliary units, including knitting units, dyeing and bleaching, fabric painting, garment-making and embroidery, had been impressive. From Rs 54 crore in 1984, exports had leapfrogged to Rs 11,200 crore in 2007. The Tirupur Exporters’ Association (TEA) gleefully set itself a target of Rs 25,000 crore by 2012, another five years hence—until its complacency was rudely shaken up by the dollar plunge.
Today, the dollar value hovers around Rs 39.50. With exports taking a big hit, and with jobs at risk, state Governments have already started writing to the Centre. They are a worried lot since the rupee’s hardening has begun having implications beyond textiles and handicrafts to aam aadmi sectors such as fisheries, plantations, cotton, jute, leather, plastic and linoleum.
While informing the Centre about the extent of job losses that have already taken place in their regions, Tamil Nadu, Jammu and Kashmir and West Bengal have sought the Union Government’s intervention. Apart from the states, field reports have begun pouring in from other Central ministries and departments dealing with these sectors.
The misery will surely be felt by the 2 to 5 crore people who the Commerce Ministry expects will lose jobs by March 2008. ‘‘We have got letters from a large number of people about shutdowns and job losses. We had asked departments concerned to seek field reports,’’ a senior Ministry official said.
‘‘This is a crisis situation. Exporters never anticipated this. We have to prepare ourselves for it,’’ said A. Sakthivel, President of TEA, which has 600 members. Like him, all exporters are hunkering down for a tough time, devising means to staunch the bleeding.
Saktivel’s Poppys Knit Wear, a Rs 190-crore company that mostly exports its product, is now trying to reduce production cost and minimise the use of raw materials. ‘‘We are also trying to increase production by using skilled engineers and by using computer-aided designs,’’ said Sakthivel. Companies are now hectically negotiating with raw material suppliers and processing units to bring down the costs and make up the profit margins somewhat.
‘‘Industry has to improve its productivity and bring down costs, but the rupee’s appreciation has happened so fast that there’s been little time for adjustment. Contracts can’t be renegotiated overnight, neither can prices be increased unless you have big bargaining power,’’ the Commerce Ministry official pointed out.
The implications of the dollar fall are serious. ‘‘The biggest casualty has been capacity expansion,” said Rajeev Gupta, director of Ludhiana-based Venus Garments. Gupta’s group, owner of brands like Duke and Neva, exports garments worth Rs 180 crore, primarily to the US. “Companies that have a strong domestic presence can still cope with the losses. But the worst hit are standalone garment units executing bulk orders to buyers based in different parts of the world. When I say that capacity expansion has taken a hit, it means that a lot of jobs that could have been created have been lost.”
The loss hasn’t been restricted only in terms of new jobs. In fact, as the orders have dwindled, the companies haven’t been averse to laying off workers. The most-well known Ludhiana company, Oswal Woollen Mills, with annual exports of Rs 600 crore, has laid off around 500 workers in the past year. Executive Director Sandeep Jain says while software firms are better able to absorb the shock as they have margins of 30 per cent, even the most powerful textile firm cannot boast of margins beyond 10 per cent. This is serious because, unlike in the other sectors, competition is intense in textiles and a slight hike in prices leads the foreign buyer to turn to countries like Bangladesh, Vietnam, Taiwan, China, even Sri Lanka.
In a bid to cut his losses, Tirupur’s R. Sivaram, executive director of Royal Classic Mills, a Rs 225 crore company with exports worth Rs 125 crore, turned to “doubling” his company’s presence in the domestic market. It launched a premier trouser brand for men and increased the number of its showrooms across the country from 30 to 100 this year. A number of other companies, too, are looking at the domestic option and at new markets. Blue Mount Garments of Ludhiana, for instance, is planning outlets in the Middle East, which has a sizeable Indian population.
Living with diminishing margins is a prospect that exporters have to bravely face. ‘‘This is the new reality and we have to face it,” said A. Loganathan, who owns Victus Dyeings, a Tirupur-based Rs 85 crore company. ‘‘We are trying to reduce the turnaround time. My company achieved a delivery time of 45 days instead of the usual 75 days. This way, the cost of holding inventories is reduced. In fact, we are trying to reduce cost in all aspects…reducing stock holding periods and getting it right the first time with no quality issues and keeping to the delivery time.”
Devising his own strategy to bring down costs, Raja Shanmugam of the Rs 60 crore Warsaw International in Tirupur decided there would be no wastage henceforth. ‘‘Earlier, we would provide 5 per cent more fabric to provide for wastage and embellishments,” he said, adding that his company was “slowly stepping into hedging”.
Hedging, which many exporters are now using to cover losses, involves forward contracts and option dealing. The TEA has proposed to the Finance Minister that the hedging cost be compensated or that dual exchange rate be considered. The export body has pleaded that for exporters, the value of rupee should be frozen at Rs 42.
The Centre has announced two rounds of incentives, including additional subvention of 2 per cent in pre-shipment and post-shipment credit over and above the 2 per cent extended earlier. This is apart from the extension of the Technology Upgradation Fund Scheme (TUFS) which provides for 4-5 per cent interest reimbursement on investment by textile companies.
The Centre also hiked the duty drawback scheme from 7 per cent to 10 per cent with effect from April 1 to provide some succour. Exporters agree this has helped. ‘‘However, we would like it to go up to 15 per cent,” said Oswal’s Sandeep Jain.
‘‘We can export to countries like Italy and Germany, but there is a lot of competition and they are aware of our desperate situation. Hence they are negotiating very closely from a position of advantage,” says Sanjay Jain, whose company Blue Mount Garments exports shirts and womenwear to US-based retail giant Walmart and fashion major GAP. “In my 17 years in the business, I have never known such insecurity,” he added.
Tirupur’s exports are equally divided between the US and European markets. Unfortunately, however, many of the European companies continue to do their invoicing in dollars. While the US dollar lost 11 per cent value against the rupee in 2007, the euro and pound sterling lost only about 1.45 per cent and 6.9 per cent respectively but with no benefit to the exporters. ‘‘In fact, more European companies now want to do their invoicing in US dollars,” said Sakthivel.
But wouldn’t a decline in dollar also make imports cheaper? Also, isn’t it the right time, therefore, to modernise plants and increase capacity because getting machinery from outside is cheaper than ever before? Sandeep Jain replied, ‘‘Theoretically, these arguments are correct. But you need to get down to brasstacks to know the real situation. Who is interested in getting new machinery when capacity expansion itself is unviable? Why do we need to produce more when our existing goods are struggling to find markets?”
And if export margins have come down, import costs in certain sectors have escalated. Wool from Australia, for example. As Sandeep Jain pointed out, ‘‘The Australian dollar has appreciated. In the past year or so, it has gone up from Rs 32 to Rs 35. So here too our costs have gone up.”
With the dollar drop and the consequent escalation in production costs, the fear has been of losing clients to competitors like Bangladesh, the world’s largest exporter, and others like Indonesia and Turkey. ‘‘The biggest fight for exporters is to retain their clients. If they are not able to keep to time schedules and commitments, the buyers could well turn to our competitors and we will never get them back,” warns D.K. Nair, secretary general of the Delhi-based Confederation of Indian Textile Industry (CITI).
Amid all this chaos, there is a silver lining. ‘‘These are jolts that will make the hitherto somnolent industry into thinking fast on its feet,” said Rajeev Gupta. And for good measure, added, ‘‘You can whine perpetually. The Government is doing its bit. But these are the concomitants of global economy. If on the one hand you are asking for full capital account convertibility, then on the other hand you can’t complaint about declining currencies.”
Perhaps between these realities, exporters will learn to be leaner and meaner earners. That could be the lesson from the dwindling dollar.
A fallen greenback could mean economic turmoil, or it could trigger an economic crisis. Economists are having trouble predicting the outcome because investors are not behaving rationallyBy J. Bradford DeLong
The falling US dollar has emerged as a source of profound global macro-economic distress. The question now is how bad that distress will become. Is the world economy at risk? There are two possibilities. If global savers and investors expect the US dollar’s depreciation to continue, they will flee the currency unless they are compensated appropriately for keeping their money in the US and its assets, implying that the gap between US and foreign interest rates will widen. As a result, the cost of capital in the US will soar, discouraging investment and reducing consumption spending as high interest rates depress the value of households’ principal assets: their houses.
The resulting recession might fuel further pessimism and cutbacks in spending, deepening the downturn. A US in recession would no longer serve as the importer of last resort, which might send the rest of the world into recession as well. A world in which everybody expects a falling US dollar is a world in economic crisis.
By contrast, a world in which the US dollar has already fallen is one that may see economic turmoil, but not an economic crisis. If the US dollar has already fallen — if nobody expects it to fall much more — then there is no reason to compensate global savers and investors for holding US assets.
On the contrary, in this scenario there are opportunities: the US dollar, after all, might rise; US interest rates will be at normal levels; asset values will not be unduly depressed; and investment spending will not be affected by financial turmoil.
Of course, there may well be turbulence: When US wage levels appear low because of a weak US dollar, it is hard to export to the US, and other countries must rely on other sources of demand to maintain full employment. The government may have to shore up the financial system if the changes in asset prices that undermined the US dollar sink risk-loving or imprudent lenders.
But these are, or ought to be, problems that we can solve. By contrast, sky-high US interest rates produced by a general expectation of a massive ongoing US dollar decline is a macroeconomic problem without a solution.
Yet so far there are no signs that global savers and investors expect a US dollar decline. The large gap between US and foreign long-term interest rates that should emerge from and signal expectations of a falling US dollar does not exist. And the US$65 billion needed every month to fund the US current-account deficit continues to flow in. Thus, the world economy may dodge yet another potential catastrophe.
That may still prove to be wishful thinking. After all, the US’ still-large current-account deficit guarantees that the US dollar will continue to fall. Even so, the macroeconomic logic that large current-account deficits signal that currencies are overvalued continues to escape the world’s international financial investors and speculators.
On one level, this is very frustrating: We economists believe that people are smart enough to understand their situation and capable enough to pursue their own interests. Yet the typical investor in US dollar-denominated assets — whether a rich private individual, a pension fund, or a central bank — has not taken the steps to protect themselves against the very likely US dollar decline in our future.
In this case, what is bad for economists is good for the world economy: We may be facing a mere episode of financial distress in the US rather than sky-high long-term interest rates and a depression. The fact that economists can’t explain it is no reason not to be thankful.
Security breaches that are allowing the financial details of tens of thousands of Britons to be sold on the internet are to be investigated by the country’s information watchdog.
Without paying a single penny, The Times downloaded banking information belonging to 32 people, including a High Court deputy judge and a managing director. The private account numbers, PINs and security codes were offered as tasters by illegal hacking sites in the hope that purchases would follow.
Richard Thomas, the Information Commissioner, will begin an investigation into the security breach today and Scotland Yard is also investigating. Experts said that the findings suggested that more personal data than ever before was going astray. The Times found: More than 100 websites trafficking British bank details A fraudster offering to sell 30,000 British credit card numbers for less than £1 each A British “e-passport” for sale, although the Government insists that they are unhackable.
The discovery comes as public alarm is growing about the dangers of identity theft. HM Revenue & Customs has yet to retrieve two lost CDs containing the banking details of 25 million Britons, which ministers admitted had vanished in the post a fortnight ago. At current underworld prices, these could fetch more than £100 million if they fell into the hands of hackers.
The News of the World disclosed yesterday that it had been handed two discs mislaid by the Department for Work and Pensions containing the national insurance numbers of 18,000 claimants.
Last year The Times discovered internet chatrooms where the hacked credit card details of 400 British people were being sold every day.
A spokesman for Mr Thomas said: “We will be looking at the evidence you have provided and investigating the circumstances. This looks serious and is a matter of genuine concern.
“We can take action against UK-based organisations that flout the Data Protection Act. If some of these websites are not UK-based we will work with our counterparts in the relevant country.”
Mr Thomas will address the Commons Justice Committee tomorrow on the addional powers that he says are needed to prevent breaches of data protection. He believes that reckless failure to protect information should result in prosecution and that his staff should have powers to raid government and business premises.
Hacking sites act as online bazaars for stolen personal information. They are well run, hierarchical groups structured like businesses. Some even have review sections where buyers can recommend a particular fraudster.
Geraldine Hernon, 30, of St Ives, Cambridgeshire, was shocked to hear that her credit card number, expiry date and security number were online with her address, telephone number and e-mail address. She said: “I can’t believe it. I will have to change my whole account. It is terrifying that people have the information. It is personal information. I feel really scared.”
The bank details of Robert Seabrook, QC, a deputy judge and former chairman of the Bar Council, were also freely available. He, too, described the breach as terrifying. “I am profoundly concerned,” he said. “One reads about the anxieties of data in the public domain but it is disconcerting to hear something so personal being available. If you can get this sort of thing for free who knows what is below the water line?”
Neil Munroe, the director of the credit reference agency Equifax and an expert on internet fraud, said that the depth of information obtained by The Times was greater than he had ever seen. “The detail you have got is very disturbing,” he said. “Normally we only see credit card numbers coming up but you have got e-mails, addresses, security and PINs. Everything. It is very scary.”
Senior police officers are concerned that current methods of dealing with large-scale data protection breaches are unworkable. Detective Chief Inspector Charlie McMurdie, of the Metropolitan Police e-crime unit, said: “At the moment people report internet crimes to a local police station but no one locally has the resources to investigate properly.”
Since April customers have been told to report card crimes to their banks rather than to the police. Mr McMurdie, backed by the main banks, has asked the Home Office for £1.3 million to fund a central e-crime unit.
Stolen identities
Criminals use three main methods to extract personal information
- Viruses contained in e-mails that install malicious software to collect information such as login names, bank account details and credit card numbers. Make sure you use up-to-date antivirus software
- Handheld credit card readers are used to “skim” cards and copy data that is then used to clone another one. Check your accounts regulary for unusual transactions
- Bin raiders go through rubbish bins to find discarded bank statements and utility bills. Make sure that all personal documents are shredded before you throw them out
When Tapan Bose fell behind on his car loan repayments to the largest commercial bank in India he could not have known that it would leave his friend’s son requiring 12 stitches in his battered skull.
Mr Bose escaped a vicious beating by a gang of the country’s notorious debt collectors because he was inside a club when they came calling for 34,000 rupees (£400) owed to ICICI Bank. Instead, it was 21-year-old Vinod Kumar who was sitting in Mr Bose’s car, waiting for his father and his friend to emerge. Three men dragged him out and beat him with iron rods before seizing the car. He was in hospital for a fortnight with severe head and back injuries.
This week a Delhi judge condemned the savage attack carried out in the name of ICICI and fined the bank 550,000 rupees in a landmark case that comes as India’s banking regulator tries to reform the nascent debt-collection industry. The behaviour of rogue agents is of increasing concern in India, where the credit culture is new and interest rates are rising.
“No civilised society governed by the rule of law can brook such kind of conduct,” Justice J. D. Kapoor, the President of the Consumer Commission, said. Handing down the biggest fine yet in a consumer case, he said that the bank had allowed the agents to behave like robbers.
This is the first time that an Indian bank has been held accountable for the actions of third-party agents appointed to collect bad debts. In its defence, ICICI argued that it had not sanctioned any criminal conduct. It has since sacked the collection manager of the branch who appointed the agents and two men have been arrested by police. The bank was ordered to pay Mr Bose, a 42-year-old builder, 5,000 rupees’ compensation, write off the loan and deposit 50,000 rupees into a consumer welfare fund for court costs. ICICI said that it would abide by the judgment.
The economic boom in India has led to a surge in earnings and consumer aspirations. Commercial lenders have been quick to offer easy finance for homes, cars and other big purchases previously out of reach for most Indians. Banks have been accused of employing aggressive tactics, such as persistent cold calling, to win new business with little regard to a potential customer’s credit risk.
“In order to make more profits, these banks attract people who cannot afford a two-wheeler and encourage them to buy a four-wheeler,” Prashant Mehendiratta, Mr Bose’s lawyer, told The Times. “This is OK for most salaried employees but the cash income of the lower middle classes fluctuates. They don’t understand that it is easy to get a card but harder to pay it off.”
With the number of defaulters on the rise, Indian banks have come under pressure to collect more loans to protect their credit ratings. This has led to the outsourcing of the task to agents, who can employ thuggish tactics to earn their commission.
In some cases, the intimidation has had tragic consequences. Prakash Sarvankar, a father of three, hanged himself in Bombay two months ago because he was unable to repay a 50,000-rupee ICICI loan. In his suicide note he blamed the agents for threatening him and his family. The bank eventually agreed to pay 15,000 rupees compensation.
Borrowing ideas
— The Indian loan market has grown 11-fold in the past five years, partly because of aggressive marketing
— HSBC India advertises its personal loans for “when expenses arise, like your daughter’s marriage, furnishing your home or a family holiday”
— The bank claims that it is “just like borrowing money from a friend”
The supply of dollars is now so profuse that it is always higher than the banks’ purchasing capacity. Banks now buy dollars in dribs and drabs, as they do not have enough VND.
The volume of dollars flowing into Eximbank these days is 30% higher than the same period last year. In the first 10 months of the year, some US$2bil went in. In the last few days, the bank has purchased US$5-7mil every day.
Currently, Vietcombank, the biggest foreign currency trader in Vietnam, always quotes the dollar purchase price equal to the sale price, at VND16,048/USUS$1 (as of November 27), reflecting the bank’s desire to bring as few dollars as possible.
An official from Vietincombank said that the supply of dollars is very profuse but the bank is not able to purchase dollars in large quantities, as the bank does not enough VND.
The official said that banks are now incurring losses due to the devaluation of the dollar. However, banks still have to buy dollars at prices higher than the levels they want since they must adhere to the floor level set by the State Bank of Vietnam.
In principle, when there is an excess of foreign currency supply, the central bank would buy, in order to prevent devaluation which harms exports. However, the central bank has yet to interfere in the market. There are no signs that the central bank will buy up dollars from commercial banks.
People are now exchanging the dollar for VND at a tremendous rate to prepare for Tet shopping. Meanwhile, making dollar deposits in foreign banks is not profitable for Vietnamese banks, as the world’s interest rates are reducing due to the FED’s rate cuts.
The supply and demand imbalance of the dollar has become more serious as commercial banks cannot find borrowers. Import-export companies, the biggest clients, rarely borrow dollars at the end of the year; they need VND to pay local companies.
The Vietincombank official said that the demand for VND loans is increasing, but the bank is trying to limit outstanding VND loans. Meanwhile, the bank is ready to satisfy any and all dollar loan demands.
Ho Huu Hanh, Director of the HCM City Branch of the State Bank of Vietnam, acknowledged that dollars are now in excess. Nguyen Van Hung, Deputy Director of the Hanoi Branch of the State Bank, also said that banks are facing dollar abundance. However, he said that Hanoi’s banks would not bear insurmountable pressure as Hanoi is the banking centre.
Mr Hung said that there would be no significant changes to the VND/USUS$ exchange rate towards year end. Banks top priority now is to help curb inflation, he said.
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