" In the US, the Agriculture Committee has debated limiting the CDS market to a straightforward hedge, and eradicating the use of ‘naked swaps’ – the holding of CDS contracts by investors other than the holders of the cash bonds. Isda’s Bob Pickel explains that such a measure is simply too simplistic and could cause the demise of the credit derivatives market as we know it. We also look at the stand-off between CDS market regulators and dealers over the creation of a central counterparty clearing house..."
Finally some serious action in limiting the free for all casino that was going on for the past decade. It is an open secret that this kind of limiting has to be extended to the commodity markets as well so that only end users and producers can buy and sell. Secondly the total outstanding in the market at any point in time should not exceed the actual capacity that is available for extraction for that particular commodity. with a 100% cash margin or BG for all sale and buy deals this would guarantee that we dont see commodities as an investment - hence making sure that the best price is attained with actual demand against actual supply as against the artificial demand when liquity is good and artificial supply when the liquidity dries up.
coming back to the reported news item - would the exchange for counter party clearing be allowed to be set up? readers can form their own opinion keeping the track record of the regulators in managing the financial markets from S&L,barings, enron, et al till date..
Thursday, March 19, 2009
Monday, March 16, 2009
it happens only in india?
is the following news item a portender of more denegeration (read in conjunction with what happened earlier with the failed sale of obama's senate seat!!)
"[T]he Louisiana Republican Senator David Vitter arrived Thursday evening at his United Airlines gate 20 minutes before the plane was scheduled to depart, only to find the gate had already been closed. Undeterred, Vitter opened the door, setting off a security alarm and prompting an airline worker to warn him that entering the gate was forbidden.Vitter, our spy said, gave the airline worker an earful, employing the timeworn "do-you-know-who-I-am" tirade that apparently grew quite heated.That led to some back and forth, and the worker announced to the irritable Vitter that he was going to summon security.Vitter, according to the witness, remained defiant, yelling that the employee could call the police if he wanted to and their supervisors, who, presumably, might be more impressed with his Senator's pin.But after talking a huffy big game, Vitter apparently thought better of pushing the confrontation any further. When the gate attendant left to find a security guard, Vitter turned tail and simply fled the scene. Adding insult to injury, the latest report is that the TSA is investigating the incident. If found to be in violation of TSA regulations, Vitter could face thousands of dollars in fines."
"another recent aviation incident, in which Sen. Charles E. Schumer persuaded a US Airways shuttle to depart New York early so he could make an important vote."
and to think that only in third world countries this kind of pulling rank happened? has the recession pushed america into a third world country too? SAVE america so that the teeming billions of the world can continue to aspire for living the "american dream" - for without this thirst from the teeming billions of the world there would be no demand for the dollar and hence no "dollar dreams" as well.
"[T]he Louisiana Republican Senator David Vitter arrived Thursday evening at his United Airlines gate 20 minutes before the plane was scheduled to depart, only to find the gate had already been closed. Undeterred, Vitter opened the door, setting off a security alarm and prompting an airline worker to warn him that entering the gate was forbidden.Vitter, our spy said, gave the airline worker an earful, employing the timeworn "do-you-know-who-I-am" tirade that apparently grew quite heated.That led to some back and forth, and the worker announced to the irritable Vitter that he was going to summon security.Vitter, according to the witness, remained defiant, yelling that the employee could call the police if he wanted to and their supervisors, who, presumably, might be more impressed with his Senator's pin.But after talking a huffy big game, Vitter apparently thought better of pushing the confrontation any further. When the gate attendant left to find a security guard, Vitter turned tail and simply fled the scene. Adding insult to injury, the latest report is that the TSA is investigating the incident. If found to be in violation of TSA regulations, Vitter could face thousands of dollars in fines."
"another recent aviation incident, in which Sen. Charles E. Schumer persuaded a US Airways shuttle to depart New York early so he could make an important vote."
and to think that only in third world countries this kind of pulling rank happened? has the recession pushed america into a third world country too? SAVE america so that the teeming billions of the world can continue to aspire for living the "american dream" - for without this thirst from the teeming billions of the world there would be no demand for the dollar and hence no "dollar dreams" as well.
Friday, March 13, 2009
be afraid - be very afraid
the competitive fiscal measures of governements to blow huge holes in their budgets with scant regard to demand pull inflation just shows that this may be the end of capitalism as we know it. or rather capitalism never had a chance once the politicians got into the act.
matters arent helped with china upping the ante to embaress the US with its side remark about the credit worthiness of the US treasury notes that its holds. as supply of the paper increases china does not see itself spending what it holds fast enough before the treasury notes becomes worthless pieces of paper. that brings us to the next question?
is the world economy ready to shift back to the gold standard from the current dollar standard?
what are the implications?
first and foremost - the price of gold will got through the roof to adjust for the increased supply of notes since governements went off the standard. for eg if the US had 1 trillion $'s in supply in 1950 and it now has say 20 trillion $'s then the price of gold has to be 20 times plus a minor adjustment for demand supply economics as it is also a commodity used in various medical equipments/ computers and most recently in nano technology.
this upward revision in the price of gold will suddently make every indian/ chinese etc who have traditionaly bought gold as a hedge against inflation to benefit as their gold would now come to its true value as against the paper monsters that they currently carry which has no real value backing it other than the "perceived" currency value in relation to other countries and also the "perceived" governenance value in relation to other countries.
matters arent helped with china upping the ante to embaress the US with its side remark about the credit worthiness of the US treasury notes that its holds. as supply of the paper increases china does not see itself spending what it holds fast enough before the treasury notes becomes worthless pieces of paper. that brings us to the next question?
is the world economy ready to shift back to the gold standard from the current dollar standard?
what are the implications?
first and foremost - the price of gold will got through the roof to adjust for the increased supply of notes since governements went off the standard. for eg if the US had 1 trillion $'s in supply in 1950 and it now has say 20 trillion $'s then the price of gold has to be 20 times plus a minor adjustment for demand supply economics as it is also a commodity used in various medical equipments/ computers and most recently in nano technology.
this upward revision in the price of gold will suddently make every indian/ chinese etc who have traditionaly bought gold as a hedge against inflation to benefit as their gold would now come to its true value as against the paper monsters that they currently carry which has no real value backing it other than the "perceived" currency value in relation to other countries and also the "perceived" governenance value in relation to other countries.
Monday, March 9, 2009
admin
who are these "admin" guys?
in the good old days they were civil servants who held your life in those dusty files preserved for posterity in cavernous rooms and filing cabinets.
in todays world they are computer geeks who control the passwords to sensitive data centres. the issue is who has a right to control these passwords? how are these password keepers to be police(d)?
my personal experience has been to leave the admin password to the main server with the owner of the company and get all high level changes in the network code to be done only in the owners presence or his representative with proper background logging of all the activities to enable checking by a third party before the changes are accepted and allowed into the system.
now how would this work in a public system like say a government office? here in india most government offices are under the maintainance of NIC. staff employed there are the people with access to enormous amounts of sensitive data and a lot of them have in the past left government service and joined private sector companies. this puts the entire public record keeping system at risk as there is no visible public policy on password storage and its management issued by the government of india.
the risks of not having such a policy need not be repeated as a single breach of sensitive government records might compromise the security of financial/ personal data of millions of its citizens. i dont see the president or primeminister of a nation to be involved in this but technically as the owners to the data, they are ultimately responsible for the safekeeping of the data collected for "governmental work". big brother is watching - just we dont know which "admin" where is having a peek at your personal records!!
in the good old days they were civil servants who held your life in those dusty files preserved for posterity in cavernous rooms and filing cabinets.
in todays world they are computer geeks who control the passwords to sensitive data centres. the issue is who has a right to control these passwords? how are these password keepers to be police(d)?
my personal experience has been to leave the admin password to the main server with the owner of the company and get all high level changes in the network code to be done only in the owners presence or his representative with proper background logging of all the activities to enable checking by a third party before the changes are accepted and allowed into the system.
now how would this work in a public system like say a government office? here in india most government offices are under the maintainance of NIC. staff employed there are the people with access to enormous amounts of sensitive data and a lot of them have in the past left government service and joined private sector companies. this puts the entire public record keeping system at risk as there is no visible public policy on password storage and its management issued by the government of india.
the risks of not having such a policy need not be repeated as a single breach of sensitive government records might compromise the security of financial/ personal data of millions of its citizens. i dont see the president or primeminister of a nation to be involved in this but technically as the owners to the data, they are ultimately responsible for the safekeeping of the data collected for "governmental work". big brother is watching - just we dont know which "admin" where is having a peek at your personal records!!
Saturday, March 7, 2009
scam yuga
hardly had the world recovered from the "break in trust/ regulation scam" (Enron, Barings, LTCM etc) that the sub-prime has hit, the next one already is under action - THE BAILOUT - where is all the money actually going to roost? i am sure the answers would be very interesting and as tax payers worldwide have a right to know - waiting for the "true leader" among men to call out the emperors new clothes.
Thursday, March 5, 2009
IFRS and (un)fair value
Ever since the dialouge started in india on IFRS and the debate to converge was on, my recommendation is to allow it as an "analyst" tool and nothing more. Accounting is to follow the historical concept with asset writedown as and when the same is impacted in the opinion of the auditor/ management by a permanent event which has reduced its value.
The fair value concept allows more "ad hoc" methods to be adopted as there are multifarious methods of valuing various assets. It is heartening to know that the very advocates of "fair value" are now calling for a review of this concept as the current "credit crunch" forces banks and financial institutions to "write down" their assets as there is no liquidity for these investments and hence rather difficult to ascertain their fair value!!
The other major issue is that of ESOPS being charged to revenue - this is basically a revenue neutral transaction as far as the company is concerned and it only impacts the shareholders - so other than creating secret reserves and artificially reducing the profits in the books of companies this hasnt really helped.
The fair value concept allows more "ad hoc" methods to be adopted as there are multifarious methods of valuing various assets. It is heartening to know that the very advocates of "fair value" are now calling for a review of this concept as the current "credit crunch" forces banks and financial institutions to "write down" their assets as there is no liquidity for these investments and hence rather difficult to ascertain their fair value!!
The other major issue is that of ESOPS being charged to revenue - this is basically a revenue neutral transaction as far as the company is concerned and it only impacts the shareholders - so other than creating secret reserves and artificially reducing the profits in the books of companies this hasnt really helped.
who is James Otis?
"James Otis has set conditions before the Indian government in order to withdraw Gandhi's items from the auction, if the Indian government agrees either to spend more on healthcare for the poor or support educational events to promote Gandhi's principles of non-violence in 78 (the years Gandhi lived) countries across the world. He also wanted the Indian government to cut its military spending. The letter was sent to the Indian Consulate General in New York and forwarded to the MEA in India. The items that will go under the hammer include Mahatma Gandhi's metal-rimed spectacles, pocket watch, a pair of sandals, a bowl and a plate. The items have a reserve price of between $20,000 and $30,000."
The buzz for the past week has been this man James Otis - the more one hears and reads about him you have to but just wonder. The mysterious hand of "god" (fate) might just prove to be greater than the "hand" which has been with the "aam aadmi" in the upcoming elections.
James Otis for PM anybody?
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