News of the finance

You have now given up work so you can prepare for your training to become a school teacher, starting in two weeks.

In honour of this, on your last day you baked a cake for your colleagues which, owing to a kitchen accident, enjoyed the twin flavours of chocolate and pesto. You also attended the leaving party of a group of Chinese teachers whose professional development course you had been dabbling in a bit. There is now video footage of you waving your hands in the air and wiggling your bottom energetically to selected songs of the Beach Boys while adjudicating a closely fought game of musical statues.

Thank goodness the Chinese don't belong to the same Internet the rest of us do, is all you have to say about that.

Next week you are actually having a holiday, so this week is devoted to catching up on the reading list, writing a couple of pre course essays and dealing with the ongoing Funding Saga, now in its second month.

You may decide to share this with the world at some point, but you are not sure the rest of the world would appreciate the bad language you would employ were you to go into it now.

So instead you are going to write about the enjoyment you had when you were first back in the UK from dealing with banks.

You were calm for the first six months of trying to open B and yourself a joint bank account.

You recognised that the banks have to do something to pretend that they give a hoot if Roman Abramovitch is laundering money though their hallowed halls (oh, wait, I bet they gave him a bank account pretty smartish), and you managed not to grind your teeth too obviously when, when presented with a parade of address bearing bits of paper they smiled brightly and told you it has to be on BLUE paper, not PINK; in Comic SANS not Times New ROman; stamped and signed by god alMIGHty, not the head of the ANGlican church. You must have stormed out of every major High Street bank before one of them reluctantly admitted that official documents from the Inland Revenue might count, although not until they'd spent thirty minutes on the phone to Head Office.

It was, you suppose, your fault for having rented a flat that had all bills included apart from the phone bill. And why couldn't you use the normally acceptable phone bill? Because BT were baffled by the fact that you and your husband, following Russian convention, have a one letter difference to your surnames and took to addressing letters to you with 'Mrs [Solnushka's surname] and Mr.'

And every time you phoned them up to get it put right they changed the address instead.

Your favourite bit of ID which the banks claimed would have been ok was a statement sent from B's (non-existent) bank account in Russia to his address in the UK. Except then he would have had to prove his Moscow address for some reason, and, you've guessed it, would they accept things like the Russian national identity card equivalent - an official stamp in his internal passport confirming his residency? Anyone who is answering 'yes' at this point has not had sufficient exposure to the banking system in Britain.

Anyway.

You did not become more than normally sarcastic when, having spent two hours filling in forms and waiting while they stood around sucking their teeth over whether a LIGHT blue piece of paper with your address on it could substitute for a DARK blue one, you thought you had finally succeeded, only to find out a few days later that in fact the account wasn't open, never had been open, and because there was no computer record of any such event taking place, it CLEARLY had never happened.

So two hours more of filling out forms, head scratching, and general faffing about and finally you had, apparently, a working bank account.

With actual money in it and everything.

Much to your surprise, the chequebooks and cash cards turned up bang on schedule.

But you think you can be forgiven a rather impressive amount of eye rolling when, just as you were being lulled into a false sense of security, a letter arrived stating that they couldn't activate your card, as your signature was wrong.

And you know why it was wrong? It turns out that they scanned into their computer (repeat after me "It's on the computer. It must be right") not your actual signature, but the name you carefully printed under your signature.

Of course, says the bank, you must have written your signature in the wrong box.

The fact that you could just see the bottom of your signature at the top of the scanned in bit was neither here nor there.

You considered pointing that out and waving their own application form at them to show the relative positions of the two boxes, but in fact by this stage all you were capable of was standing at the bank's information desk producing faint but indignant splutters.

I suppose that's the point of the 45 minute wait in the queue, watching the information desk clerk trying to find some other luckless customer's cards. They were supposed to be sitting waiting for her at the bank, and computer records showed they had, in fact, arrived.

But the fact that they had been cunningly placed next to each other in the box meant that it was clearly impossible to find one of them.

After that, you were too worn out from trying to suppress your killing instincts to protest.

Anyway, your card was now activated.

Your husband's was not.

"Well, it should be. I can't imagine what's happened. You must have forgotten to send both slips of paper back."

Cue such immoderate rage that you were forced to leave immediately or you would have forgotten yourself and actually said something rude.

Which of course would be wrong, as the only proper response to all this uselessness is "Oh that's all right" as repeated over and over by the two card inconveniencer of the bank in front of you.

Still, it was all sorted out in the end.

And it only took you another four months to get the online banking working.

well, well, well... a big giant like Home Depot is actually starting to feel the heat from the housing market. hmmm... pretty interesting.

---

Home Depot Unit Sees Price Plunge in a Tight Market

By ANDREW ROSS SORKIN and MICHAEL J. de la MERCED - August 27, 2007

Home Depot was forced to drop the sale price of its commercial supply business by nearly $2 billion yesterday, according to people involved in the negotiations, one of the first big buyouts to be renegotiated as a result of the recent tightening of credit and problems in the housing market.

The refashioned deal cut the sale price roughly 18 percent, to $8.5 billion. Because the deal relies heavily on debt, investors and bankers have been watching it closely for signs of how new limits on credit could affect other large buyouts that are still pending and are worth nearly $400 billion collectively.

Still, this deal is different in that the fortunes of Home Depot Supply, as the division is called, are tied closely to the housing market, which has also been weakening.

After a series of all-night negotiations to save the deal, Home Depot and the participating banks and buyout firms were all forced to put up more money to shore up the financing. The parties involved in other pending deals could find themselves in a similar position as buyout firms drag sellers back to the negotiating table. That could put a damper on the buyout boom that has been a major factor in the runup in stock prices over the last few years.

Home Depot’s board approved the deal in principle during a meeting yesterday afternoon, people involved in the negotiations said, and the company plans to announce the transaction today.

The Home Depot deal involves some of Wall Street’s biggest players. The buying consortium includes the Carlyle Group, Bain Capital and Clayton Dubilier & Rice, and the banks financing the deal include Lehman Brothers, JPMorgan Chase and Merrill Lynch.

The reworked transaction raised the curtain on the complicated relationships between investment banks and some of their biggest clients: the private equity firms who shower them with billions of dollars in fees annually. In the Home Depot negotiations, however, those normally friendly relationships quickly turned cold, as all the players eventually demanded heavy concessions from one another.

By the time Home Depot’s board reached its agreement, some of Wall Street’s most powerful executives had stepped in to personally negotiate the deal:

James Dimon, chief executive of JPMorgan Chase, pulled several all-nighters, ordering in pizza with his colleague, James B. Lee, a vice chairman; Richard S. Fuld Jr., the chief executive of Lehman Brothers, was sending e-mail messages from his BlackBerry at 5 AM; and E. Stanley O’Neal, chief executive of Merrill Lynch, was taking calls on the golf course, against the club’s rules.

Kenneth D. Langone, a prominent Home Depot board member and a fixture on Wall Street, found himself uncharacteristically locking horns with some of his good friends. And even John F. Welch Jr., the former General Electric chief executive, was brought in by Clayton Dubilier, where he works as an adviser.

As part of the deal, each buyout firm increased the amount of equity that it will commit to the deal by $150 million each, to $800 million. In a major concession to the banks, Home Depot agreed to finance $1 billion of debt and take up to 12.5 percent of the equity in the supply company.

What has emerged is a tale of bare-knuckled brinksmanship, as the three private equity buyers — Bain, Carlyle and Clayton Dubilier — initially demanded concessions from Home Depot.

In announcing the possible repricing of the sale earlier this month, Home Depot said it would trim the price it was offering in a stock buyback, initially worth about $22.5 billion.

Even so, the buyout firms threatened to walk away from the deal, declaring that the housing market’s decline had created what is known as a material adverse change. Such clauses are common in deals, allowing buyers to walk away. In this case, however, it was not clear whether the declines in the housing and credit markets qualified as deal breakers.

Still, Home Depot buckled and agreed to lower the price to about $9 billion. Then the three investment banks demanded a better deal as well, setting off a marathon of conference calls as the banks threatened to walk away from their financing commitments.

By balking at financing the transaction, Lehman Brothers put itself in an especially difficult position. One of Lehman’s most senior bankers, Andrew Taussig, had advised Home Depot on the sale at the same time that it was also providing financing to the buying group. Suddenly, Lehman was turning around and threatening to scuttle a deal it had advised one of its most important clients to accept.

Mr. Fuld, Lehman’s chief executive, spent hours in person and on the phone with Home Depot’s management and some of its directors trying to explain the firm’s position. Mr. Taussig was mortified, people briefed on the negotiations said.

Because of Lehman’s conflicted position, Goldman Sachs was brought in as Home Depot’s new adviser to mediate among the private equity firms and other banks to reach a deal.

Over the last two years, banks have climbed over each other to lend billions of dollars — and reap lucrative fees along the way — to private equity firms as they have swept up an unprecedented number of companies. To recoup their capital, banks resold the debt as high-yield bonds and loans in the credit markets.

But when the credit markets froze because of the implosion of the subprime mortgage market, investors started refusing to buy nearly all forms of debt not backed by the federal government.

Because of concern about heavy losses in the market for subprime mortgage securities, the stock market has become volatile recently, falling sharply after peaking in mid-July. Credit markets have also been in turmoil. Lenders have cut back on all kinds of loans, not just mortgages but also loans to help finance corporate takeovers by private equity firms.

The financial markets calmed a bit last week after the Federal Reserve stepped in with measures to stimulate lending, but uncertainty over the extent of problems in the credit markets have left many investors unnerved. If the Home Depot deal had fallen apart altogether, that might have been interpreted as a particularly bad sign for the market.

One potential victim of the Home Depot deal is stapled financing, the practice of advising the seller while lending to the buyers. Though the practice has become almost routine in recent years, it is riddled with conflicts and may soon fall out of favor, some bankers have predicted.

Still, by reaching an agreement, Home Depot, the private equity firms and the banks may have saved themselves from a potentially worse fate: years of contentious lawsuits.

The stock prices of companies involved in other pending buyouts are near their deal prices, suggesting that investors expect them to be completed as originally agreed upon. However, when one participant in the Home Depot battle was asked what would happen to the next series of deals, he said: “Study what just happened here. You’ll see this movie again soon.”

Source: NYTimes - Business

ரூபாய் முழு மாற்றம்-தேவை நிதானம்

எஸ். கோபாலகிருஷ்ணன்

நல்லதோ, கெட்டதோ, உலகமயமாக்கலின் தாக்கம், வேறு எந்த தொழிலில் தெரிகிறதோ இல்லையோ, முதலீட்டுத் துறையில் நன்றாகவே தெரிகிறது!

அண்மையில், இந்திய பங்குச் சந்தையில், கடுமையாக ஏற்பட்ட சரிவுக்குக் காரணம், அமெரிக்காவில் வீட்டுக் கடன் வழங்குவதில் ஏற்பட்ட வீழ்ச்சி என்றால் விந்தையாகத்தான் உள்ளது. அது மட்டுமல்லாமல், இந்தியாவில் இதுவரை அதிகம் கேள்விப்பட்டிராத ஓர் ஆங்கிலச் சொல்லாடல் ஒரே நாளில் முதலீட்டாளர்கள் முதல், இல்லத்தரசிகள் வரை அனைவருக்கும் பரிச்சயமாகிவிட்டது! ஆம். "சப்-பிரைம்' (Sub-Prime)) கடன் என்றால் என்ன? தர நிர்ணய அடிப்படையில், நிதிவலிமை குறைந்த தரப்பினருக்கு வீட்டுக் கடன் கொடுப்பதைத்தான், "சப்-பிரைம்' (Sub-Prime)) அடமானம் என்கிறார்கள். இந்த பிரிவினருக்கு ஏன் கடன் கொடுக்கிறார்கள் என்றால், இது போன்ற கடன்களுக்கு அமெரிக்காவில், கூடுதல் வட்டி விகிதம் வசூலிக்கும் பழக்கம் நிலவுகிறது.

இப்படி கூடுதல் வட்டி விகிதத்தில் சற்று நலிவடைந்த பிரிவினருக்குக் கொடுக்கும் வீட்டுக் கடன் பத்திரங்களை அந்த வங்கிகள், "ஹெட்ஜ் ஃபண்டுகள்' என்னும் நிதி அமைப்புகளிடம் விற்று விடுகிறார்கள். இந்தக் கடன் வாராக் கடனாக மாறினால், வங்கிகள் மட்டுமல்லாமல் "ஹெட்ஜ் ஃபண்டுகள்' போன்ற, நிதிச் சந்தையின் இதர பிரிவுகளையும் பாதிக்கிறது.

ஆக, அமெரிக்க நிதிச் சந்தையில் ஏற்படும் ஒரு பின்னடைவு, இந்தியா உள்ளிட்ட பல நாட்டு பங்குச் சந்தையை கொஞ்சம் அசைத்துப் பார்க்கிறது என்பது என்னவோ உண்மை.

இன்னோர் உதாரணம் : 1997-ல் சில ஆசிய நாடுகளிடையே கடும் நிதி நெருக்கடி ஏற்படத் தொடங்கிய தருணம். பல நாடுகளுக்கு ஏற்பட்ட நெருக்கடி இந்தோனேஷியாவுக்கு ஏற்படாது என்று பொருளாதார வல்லுநர்கள் கூறினார்கள். காரணம், இந்தோனேஷியாவின் பொருளாதார அடிப்படைகள் அப்போது வலுவாக இருந்தன. பணவீக்கம் குறைவு; சர்வதேச வர்த்தகத்தில் சாதகமான நிலைமை; அந்நியச் செலாவணி கையிருப்பு உபரியாக இருந்தது. எல்லாவற்றுக்கும் மேலாக, அந்த நாட்டு வங்கிகள் வலுவான நிலையில் இருந்தன.

ஆனால், விரைவிலேயே பொருளாதாரம் சீர்குலைந்தது. கடும் நிதி நெருக்கடியின் விளைவாக, கலவரம் மூண்டது. இதில், சிறுபான்மையினரான சீன வர்த்தகர்கள் தாக்கப்பட்டனர். இறுதியாக சுகார்தோ அரசு கவிழ்ந்தது. நிதி நெருக்கடி எந்த நேரத்தில், எந்த நாட்டில் தலைதூக்கும் என்று சொல்ல முடியாது. அமெரிக்காவில் ஏற்பட்ட "சப்-பிரைம்' வீட்டுக் கடன் பிரச்னை, அமெரிக்க பங்குச் சந்தையை மட்டும் அல்லாமல், பல நாட்டுப் பங்குச் சந்தைகளையும் பாதிக்கிறது. ஐரோப்பா ரிசர்வ் வங்கிகள், ஜப்பானிய ரிசர்வ் வங்கி ஆகியவை விரைந்து செயல்பட்டு பணச் சந்தையில் பணப்புழக்கம் குறையாமல் பார்த்துக் கொண்டுள்ளன. ஒரு வேளை, பணப்புழக்கம் குறைந்தால், பொருளாதார மந்தநிலை தலைதூக்கி விடுமோ என்று அஞ்சுகிறார்கள்.

1997-லும் சில ஆசிய நாடுகள் சந்தித்த கடும் பொருளாதார நெருக்கடியைப் போல், இந்தியாவில், ஏதும் நேரவில்லை. அப்போது, அமெரிக்க டாலருக்கு நிகரான இந்திய ரூபாயின் மதிப்பு 9 சதவிகிதம் குறைந்தது. ஆனால் இன்று நிலைமையோ வேறு. 9 சதவிகிதம் அதிகரித்துள்ளது. அந்நியச் செலாவணி கையிருப்பு 200 பில்லியன் டாலருக்கும் அதிகமாக உள்ளது. 1997-ல் வெறும் 26 பில்லியன் டாலர்கள் மட்டுமே கையிருப்பில் இருந்தது. (ஒரு பில்லியன் என்பது நூறு கோடி).

கடந்த சில ஆண்டுகளாக, பரபரப்புடன் விவாதிக்கப்படும் விஷயம் - "இந்திய நாணயம் சர்வதேச அளவில் முழுமையாக மாற்றிக் கொள்ளப்படலாம்' என்பது. மூலதனக் கணக்கு முழு மாற்றம் (Full Convertibility of Capital Account)) என இது அழைக்கப்படுகிறது. இத்திட்டம் படிப்படியாக அமல்படுத்தப்படும் என்று மத்திய நிதியமைச்சர் ப. சிதம்பரம் அறிவித்துள்ளார்.

பொருளாதார வல்லுநர் எஸ்.எஸ்.தாராப்பூர் தலைமையில் அமைக்கப்பட்ட நிபுணர் குழு ஏற்கெனவே இத்திட்டத்துக்கு பச்சைக் கொடி காட்டிவிட்டது. தற்போது இந்த குழு, மாற்றத்துக்கான வழிமுறைகளையும், அதற்கான கால அட்டவணையையும் நிர்ணயிக்கும் பணியில் ஈடுபட்டுள்ளது.

அந்நியச் செலாவணி பரிமாற்றத்தில் பல காலமாக இருந்து வந்த கட்டுப்பாடுகள் படிப்படியாகத் தளர்த்தப்பட்டுவிட்டன. இதன் பயனாக, நடப்புக்கணக்கில் (Current Account)) இந்திய ரூபாய் நாணயம் மாற்றப்படுவதற்கு 1994-ம் ஆண்டு முதல் வழி செய்யப்பட்டு விட்டது. இதனால், இந்தியக் குடிமக்கள் மற்றும் கம்பெனிகள், கல்வி மற்றும் பயணங்கள் உள்ளிட்ட பல்வேறு காரணங்களுக்காக அந்நியச் செலாவணியை எளிதாகப் பெற்றுக் கொள்ள முடிகிறது.

வெளிநாடுகளில் முதலீடு செய்வதற்கும் வெளிநாடுகளில் சொத்துகளை வாங்குவதற்கும், ரிசர்வ் வங்கியின் முன் அனுமதி பெற வேண்டும். காரணம் இந்த நடவடிக்கைகள் மூலதனக் கணக்குத் தொடர்புடையவை எனக் கருதப்படுகின்றன. "மூலதனக் கணக்கு முழு மாற்றம்' அனுமதிக்கப்பட்ட பின்னர் வெளிநாடுகளில் முதலீடு செய்வதற்கும் வெளிநாடுகளில் சொத்துகளை வாங்குவதற்கும் ரிசர்வ் வங்கியின் முன் அனுமதி தேவையில்லை.

இதில் இன்னொரு முக்கிய அம்சத்தையும் நாம் கவனிக்க வேண்டும். இந்த முழு மாற்றம் நிகழ்வதற்கு இந்தியாவிலிருந்து ரூபாய் வெளியேறுவதற்கு நாம் அனுமதிப்பது எப்படி அவசியமோ, அதே போல், வெளிநாட்டவர்கள் தங்கள் மூலதனத்தில் ஒரு பகுதியை இந்திய ரூபாயாக வைத்துக் கொள்ள விரும்புகிறார்களா என்பதையும் பொருத்திருக்கும்.

வெளிநாட்டு நேரடி முதலீட்டாளர்கள் (Foreign Direct Investment)) முதலீடு செய்வதற்கு ஒவ்வொரு துறையிலும் ஒவ்வொரு விதமாக உச்சவரம்பு உள்ளது. மூலதனக் கணக்கு முழு மாற்றம் என்னும் கொள்கை அமல்படுத்தப்பட்ட பின்னரும், மேற்கூறிய கட்டுப்பாடுகள் தொடரும்; தொடர வேண்டும்.

மூலதனக் கணக்கு முழு மாற்றத்தினால் நேரக்கூடிய உடனடி அபாயங்களையும் கருத்தில் கொள்ள வேண்டும். முக்கியமாக, இது ஊக பேரப் புள்ளிகளின் (Speculators)) முறைகேடான போக்குகளுக்கு வழிவகுக்கக்கூடும். இதைத் தடுக்கும் முறைகளை வகுக்க வேண்டும். இந்தியாவில், வெளிநாட்டு முதலீடு எப்போது வேண்டுமானாலும் வரலாம். அல்லது வெளியேறலாம் என்ற நிலை ஏற்பட்டால், எதிர்பாராத வகையில் ஒரு நிதி நெருக்கடி ஏற்படும்போது, வெளிநாட்டு முதலீட்டாளர்கள், "அற்ற குளத்து அருநீர்ப் பறவை போல்' வெளியேறி விடுவார்கள். இன்று நாட்டில் நுழையும் முதலீடுகள் நாளையோ, நாளை மறுதினமோ வெளியேறினால், பங்குச் சந்தையில் நிகழும் திடீர் ஏற்ற இறக்கங்கள் போல், ஒட்டு மொத்த இந்திய நிதி நிலையில் திடீர் ஏற்ற, இறக்கங்கள் ஏற்படாது என்பது என்ன நிச்சயம்?

எனவே, வங்கிகள் மேலும் வலுப்படுத்தப்படுவதும், முறையான நிதித் தகவல்கள் அறிக்கை பற்றிய விதிமுறையும் முழு மாற்றத்துக்கு முன்னோடியாக அமைதல் வேண்டும். தேவையான பாதுகாப்பு அரண்களை அமைத்துக் கொண்ட பின்னரே, மூலதனக் கணக்கு முழு மாற்றம், நிதானமாக, படிப்படியாக, அமல்படுத்தப்பட வேண்டுமே ஒழிய, இதில் அவசரத்துக்கு துளியும் இடம் அளிக்கக் கூடாது.

(கட்டுரையாளர்: முன்னாள் துணைப் பொது மேலாளர் - சென்ட்ரல் பேங்க் ஆஃப் இந்தியா).

Nice to see the Bank of Canada swinging into action the last couple of weeks, pumping many billions of dollars of liquidity into financial markets to ease the sub-prime-inspired credit crunch, and making very hard-nosed statements about its intention to "defend" its desired interest rate regardless of where the markets want to go.

Now that's my kind of central bank.

So how come the Bank's actions in this "crisis" (actually, I don't really think it's a crisis -- see related post for my views on that) are so different from their approach to another financial variable: the exchange rate?

Remember on that score, the Bank's line is that it only cares about the inflation rate.  Monetary policy can address only one thing: the inflation rate.  If markets (the same markets driving the credit crunch) drive the exchange rate to some unsustainable or harmful level, well that's an inevitable change we'll have to live with.

The contrast between action on the credit crunch, and inaction on the exchange rate-inspired manufacturing meltdown, says a whole lot about the nature of the Bank as an institution, and the inherent biases in its supposedly "neutral" policy of targeting inflation (and only inflation) with its actions.

Bank defenders could argue that its highly interventionist defense of its desired interest rate -- running explicitly against market pressures -- is justified because a credit crunch could create a recession which could push inflation below the 1-3% band.  Those are two very big "coulds" in that sentence.  There's not likely to be much real spillover from this current financial tempest-in-a-teapot (financial markets have hissy-fits all the time; not since 1929 have those tantrums ever caused an actual recession in North America).  And even if there was a recession, there's no predictable link between a downturn and a retreat in the inflation rate.  And current inflation conditions. if you took the Bank's rules seriously, should dictate a tightening of credit, not the opposite.

At any rate, you could make exactly the same arguments above to justify Bank intervention to soften the loonie: negative spillover from hundreds of plant closures could reduce aggregate demand enough to soften inflation.

What this contrast really shows is:

1. The financial industry (which has been calling for help, and getting it) is far more influential than real industry (whose equally desperate pleas have fallen on deaf ears on Wellington St.)

2. The Bank of Canada is a political institution, not a neutral technocratic guiding force.

3. The inflation targeting rule is not really the only thiing that guides the Bank's actions.

These are very important lessons for progressives to keep in mind as we go about imagining a monetary and financial policy that would address peoples' needs, rather than financiers'.

Here's my Globe and Mail column on this subject, including about 200 words that didn't appear in the print version:

Read the rest of this entry »

This caught my eye as the parent of a daughter with an HSBC account about to start university.

James Daley: Graduates' lesson is to ditch HSBC - Independent Online Edition > Invest & Save

Technorati Tags: banks, UK, students

The Bolivian President, Mr. Evo Morales, on August 6 announced a universal crusade to put an end to the bank secret protecting account holders. The plan would mean a total exposure of account movements to anybody´s eyes. The idea came during a 3-plus hour long State of the Nation address in Sucre, the country´s constitutional capital, at an extraordinary congress session to pay homage to Bolivia´s national day. It won an outstanding applause from Mr. Morales followers but others in the congress audience raised brows. Mr. Morales grinned: “I don´t want to think that those who do not applaud me surely have bank accounts,” he said. Had somebody advised Mr. Morales properly, he would have known that no bank on earth would accept his supremely non sense initiative__ assuming he will propose it formally (where? And to who? What about a trip to Switzerland to meet UBS board?). No bank will shoot in its own heart. They should have told him that existing laws allow judges to order disclosing accounts under specific reasons. But that is far from making it universal. However, if Mr. Morales insists, it would be good to start at home: let´s have all Bolivian state-owned agencies to became transparent all the way. Let´s have chief holders (Comibol, YPFB, Central Bank, Ministries, Armed Forces, India´s Jindal etc.), including authorities and all government-paid officers, to open their accounts with no restrictions. Even better: let´s create and make public usernames and passwords of institutions and officials so that anyone could see them. How do you think they will react? Things get a little confused when one recalls that, only a few days before, Mr. Morales had said he expected Bolivia would equal Switzerland in about 15 years. Or that by 2022 Bolivians would enjoy at least similar standard of living of Swiss citizens, education, healthcare, punctuality in all public transportation networks, etc. And, of course, would also become adamant defenders of bank secrecy. The idea is baseless but it has the merit of at least showing Mr. Morales´ financial expertise. And, overall, that of his aides. Because if Mr. Morales has no financial education, his aides should know better. Supposedly the move would help detecting money-laundering, drug-trafficking originated money, but aides should know there are international treaties to fight money-laundering and eventually disclosing accounts. As to drugs, most reliable reports say coca plantations areas are expanding and illegal coca processing is increasing.

Three vehicles - all 4x4 due to there being no roads to speak of, all over 20 years old - sods law dictates that all 3 will break down at the same time!  The petrol land rover, obtained at great expense in Dar 6 months ago no longer has any body work to speak of and has to be driven in differental due to the front cam-shaft having fallen off somewhere in the bush. is now stuck outside the airstrip 14 kms away.  The diesel landy, bought on Ebay in May 2006 and stored in Erith until October then shipped to Dar and stored at the harbour whilst we argued that a 22 year old land rover bought for £900 in the UK could not possibly be worth $50,000 and warrent taxes of $12,000 dollars, eventually made it to Mafia and promptly decided that it didn't like going off road and went into a sulk and now refuses to move.  Lastly the Suzuki Samarai, bought from friends in Dar, lovely nippy little thing, can't be driven during the dry season - it gets stuck in sand, all the roads are sand...........................This morning i needed to go to town, i sailed, by Dhow, not romantic, WET and sloooooooooooooooow, and the money had not arrived despite the transfer having been put in place 10 days ago - it's been a very bad day, to cap it all we had a letter from the District Commisioner (a non-political position) asking for a $200 donation for the ruling party so they could hold an election meeting.  They want the money today - i haven't got any money - 'you are european, all europeans have money', 'we have no money in our account, it hasn't arrived', 'when will you have money', 'when the bank decides to accept the transfer', this could run for a while!!!

If your eyes glaze over at the mere mention of economics, read this article about what's really going on at your bank! (We love this Mr. Rothbard's picture - he looks like a cross between our Econ professor in college and our Grandad!)

By Murray N. Rothbard

It was a scene familiar to any nostalgia buff: all-night lines waiting for the banks (first in Ohio, then in Maryland) to open; pompous but mendacious assurances by the bankers that all is well and that the people should go home; a stubborn insistence by depositors to get their money out; and the consequent closing of the banks by government, while at the same time the banks were permitted to stay in existence and collect the debts due them by their borrowers.

In other words, instead of government protecting private property and enforcing voluntary contracts, it deliberately violated the property of the depositors by barring them from retrieving their own money from the banks.

.......

Our favorite line and the key to all of this -

Obviously, such a system, which is considered fraud when practiced by other businesses, rests on a confidence trick: that is, it can only work so long as the bulk of depositors do not catch on to the scare and try to get their money out.

Read the entire article here.

The Governor, Professor Chukwuma Soludo held a meeting with the executives of the Nigeria Labour Congress today, Friday August 17, 2007. During the meeting, the Governor explained the rationale for the "Strategic Agenda for the Naira" launched earlier in the week as well as allayed the concerns raised by the labour leaders.

The Governor, Prof. Chukwuma C. Soludo CFR, on Monday 27th August 2007, addressed staff on the development arising from the four-point "Strategic Agenda for the Naira". The Governor assured the staff of the commitment of Bank towards building a virile economy. Click here for the press statement