21 January 2009
Arab Unity Holds Key
to Middle East Peace
Predictably, Israel’s war on Gaza elbowed every other issue on the agenda at the Arab economic summit in Kuwait.
Which is hardly surprising given the unprecedented outrage and frustration in the Arab world over Israeli aggression and the Arab helplessness in stopping it.
In the end, the Arab leaders responded to the Arab street. The Kuwait summit largely witnessed the implementation of the agenda that was set at the Doha Arab summit convened by Qatar and boycotted by Egypt and Saudi Arabia as well as Palestinian president Mahmoud Abbas.
Interestingly, the cynosure of all eyes at the Doha summit had been Hamas chief Khaled Meshaal who was warmly hugged by the Amir of Qatar, a close US ally and a ‘moderate’ Arab state. But again in embracing Meshaal, the Qatar Amir might have responded to the popular mood across the Arab and Muslim world that has increasingly come to identify with the movement, along with the Palestinians, of course.
Which is why it is indeed heartening to see the Arab leaders finally close their ranks at the Kuwait summit after weeks of discord and disunity in their ranks preventing them from responding effectively and swiftly to the war on Gaza.
The Saudi move to reach out to Qatar and other estranged neighbours to “end the discord between all Arab brothers” is indeed welcome. Let’s hope Saudi Arabia, by the virtue of its eminence in the Muslim world, succeeds in these efforts to unify the Arab world.
It has been said before. But Arab unity holds the key to all the region’s problems, especially the Palestine question. The disunity in Arab ranks during the Gaza offensive once again, goes to the very heart of this conflict. If the Arabs had stayed united, the region wouldn’t be in the mess it is in now. Their repeated failure to confront their enemies and their inability to resist the ‘solutions’ imposed on them by outsiders are all spawned by their internal strife and dangerous divisions.
So the biggest threat facing the Arab world is not Israel or its deadly weapons. Their enemy is their own inability to unite on a shared agenda.
The Arabs can never prevent another Gaza if they do not speak in one voice and act as one bloc, if not as one nation.
The Kuwait summit was meant to push forward the process of Arab economic unification and tackle global challenges. Again, the Arab economic unity, a la European Union, will remain a hopeless dream if the Arabs do not first attain political unity and independence to act in their own interest.
Even a final peace settlement with Israel is unlikely to work if the Palestinians and Arabs first do not ensure unity in their ranks.
Saudi King Abdullah deserves kudos for reviving the Arab peace offer to Israel, despite what Israel has just done in Gaza. It took great courage of conviction to offer peace to the Jewish state at a time like this. But Israel is unlikely to respond to it with the matching seriousness and sincerity unless it is backed by strong and visible Arab unity and resolve.
Tuesday, January 27, 2009
Sunday, January 25, 2009
The Real Price of Oil: Dollars, Gold, and the Price of Tea in China ...
The Real Price of Oil: Dollars, Gold, and the Price of Tea in China
Oil, it’s the lifeblood of our society. It’s given us the freedom and wealth we have today. It’s given us automobiles and machinery and greased the wheels of the industrial revolution. It made old Jed a millionaire. But oil’s in trouble, the price is up and everyone thinks they understand it.
Oil, it’s the lifeblood of our society. It’s given us the freedom and wealth we have today. It’s given us automobiles and machinery and greased the wheels of the industrial revolution. It made old Jed a millionaire. But oil’s in trouble, the price is up and everyone thinks they understand it.
But what if the price of oil wasn’t really up? What if it were just an illusion?
“The price of oil is skyrocketing, and that means gas prices are up…”
That’s about the limit of what most Americans know and understand about the whole oil situation. But there are more complex issues at work, and they involve more than just Middle East politics and China.
The American Geological Institute (AGI) recently released a report looking at the price of crude oil in relation to the U.S. dollar and the price per ounce of gold. It highlights a fact that probably makes some folks at the Federal Reserve very nervous.
The 20 year average number one ounce of gold buys is about 15 barrels of crude oil. Over the most recent 10 years, the average has dropped to 10 barrels. The previous peak of 26 barrels was over 10 years ago when crude oil was under $20/Barrel. At the end of 2008, one ounce of gold buys over 22 barrels of oil. One of two conditions exist. Either gold is overvalued (ie should be valued at about $400), or oil is undervalued (should be in the $80 range). Either way, as the above chart shows, this imbalance should not persist for long. The US dollar is a poor indicator of the real price of oil.
If the US Dollar were still based on gold (as it was until Nixon eliminated the Bretton Woods system in 1971), then the price of oil would be just as stable as that purple line in the chart is.
So oil is worth the same, and the US dollar is just worth less. Maybe we need to shift our focus away from war and drilling; and towards a better economic policy at home.
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“The price of oil is skyrocketing, and that means gas prices are up…”
That’s about the limit of what most Americans know and understand about the whole oil situation. But there are more complex issues at work, and they involve more than just Middle East politics and China.
The American Geological Institute (AGI) recently released a report looking at the price of crude oil in relation to the U.S. dollar and the price per ounce of gold. It highlights a fact that probably makes some folks at the Federal Reserve very nervous.
The 20 year average number one ounce of gold buys is about 15 barrels of crude oil. Over the most recent 10 years, the average has dropped to 10 barrels. The previous peak of 26 barrels was over 10 years ago when crude oil was under $20/Barrel. At the end of 2008, one ounce of gold buys over 22 barrels of oil. One of two conditions exist. Either gold is overvalued (ie should be valued at about $400), or oil is undervalued (should be in the $80 range). Either way, as the above chart shows, this imbalance should not persist for long. The US dollar is a poor indicator of the real price of oil.
If the US Dollar were still based on gold (as it was until Nixon eliminated the Bretton Woods system in 1971), then the price of oil would be just as stable as that purple line in the chart is.
So oil is worth the same, and the US dollar is just worth less. Maybe we need to shift our focus away from war and drilling; and towards a better economic policy at home.
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Whisperings of a New Gold-Backed Global Currency From the BRIC Countries Could Decimate Both the U.S. Dollar and the Euro
Thursday, 25 September 2008
With the BRIC (Brazil, Russia, India, China) economies in much stronger shape domestically compared to the sickly U.S. and their respective markets already pricing in much of the coming collapse yet to really hit the U.S. stocks I wonder when these countries will band together to form a new currency of their own? They may as well, since many global financial instruments already treat them as an economic unit ( case in point).
And if these countries were to form a new global currency that’s 100% backed by gold (like the U.S. dollar was from 1792 to 1971) then I suspect we would witness a global stampede out of Euros and U.S. Federal Reserve Notes into this new golden currency backed by the strongest economies across the globe.
Why not call the new currency a bric? In English, the name alludes to something concrete, sound, stable, and badly needed in these uncertain times. The gold-backing shouldn’t be B.S., though. Any Tom, Dick or Harry needs to know he can go to the bank with a Bric note and know he can walk out with gold.
From Brazil: Although its stock market is beaten up, its domestic economy is still very strong.
Brazil expects the odd sniffle, but nothing serious
Brazil has not decoupled itself from the rest of the world: its stock market has fallen fairly much in line with other markets but, unlike in the past, the turmoil elsewhere has not been amplified.
Brazil has been able to maintain foreign reserves in excess of $200bn to help it weather the storm.
From Russia: Now a major player in the world energy scene, Russia’s central bank has recently been stockpiling gold.
Time for a gold rouble?
The decision by the US government to inject $700 billion into the financial system means that the already gigantic annual budget deficit of the American state (previously some $450 billion a year) will now rise by a factor of three. The total state debt of the USA will rise to well over $11 trillion. It is obvious that such a colossal debt can never be repaid.
Russian leaders might also consider making their own currency, the rouble, convertible into gold.
From India: The World Gold Council says that Indian citizens possess the most personally-owned gold in the world. And that love for gold is now stronger than ever.
From Brazil: Although its stock market is beaten up, its domestic economy is still very strong.
Brazil expects the odd sniffle, but nothing serious
Brazil has not decoupled itself from the rest of the world: its stock market has fallen fairly much in line with other markets but, unlike in the past, the turmoil elsewhere has not been amplified.
Brazil has been able to maintain foreign reserves in excess of $200bn to help it weather the storm.
From Russia: Now a major player in the world energy scene, Russia’s central bank has recently been stockpiling gold.
Time for a gold rouble?
The decision by the US government to inject $700 billion into the financial system means that the already gigantic annual budget deficit of the American state (previously some $450 billion a year) will now rise by a factor of three. The total state debt of the USA will rise to well over $11 trillion. It is obvious that such a colossal debt can never be repaid.
Russian leaders might also consider making their own currency, the rouble, convertible into gold.
From India: The World Gold Council says that Indian citizens possess the most personally-owned gold in the world. And that love for gold is now stronger than ever.
Indian customers lured by gold’s lower price
UBS, one of the largest gold exporters to India, says it has seen a spike in sales. John Reade, UBS metals strategist, says that the near-absence of jewellery demand in India between August 2007 and July left the local market largely de-stocked, “hence the tremendous pickup in demand over the past five weeks.”
UBS, one of the largest gold exporters to India, says it has seen a spike in sales. John Reade, UBS metals strategist, says that the near-absence of jewellery demand in India between August 2007 and July left the local market largely de-stocked, “hence the tremendous pickup in demand over the past five weeks.”
From China: Also big gold lovers, the Chinese government is now openly questioning the use of U.S. Dollars as the default world currency.
China paper urges new currency order after “financial tsunami”
Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.
Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.
“The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”
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Gold, Oil and the Middle East
Sunday, January 25, 2009
The "bargain" price of oil at the end of 2008 is well below 50% of the 10 year average price of oil if you price oil in terms of what 1oz of gold will buy. The unusual drop in price from June 2008 through December 2008 has been blamed on "demand destruction". However, the latest reports from the IEA indicate demand has fallen by only 2% on a global basis (drop of 2mbd from 87mbd to 85mbd global demand). This should not trigger a 70% crash over 6 months in the global price of oil. A more reasonable explanation is that oil was a victim of forced deleveraging by very large hedge funds or possibly a victim of oil swaps from the Strategic Petroleum Reserve (SPR). .
Assuming gold is conservatively priced at current levels, expect to see the price of oil rise to the historical average of 12 barrels per ounce of gold.
Expect Oil Exporting nations to continue to press for a gold backed currency to replace the US Dollar as the preferred currency for sale of Crude Oil. The (Arabian) Gulf Cooperation Council launched a 10 year plan in 2001 to replace the US Dollar as the medium of exchange for oil.
The group met as recently as January 2009 still on track to launch a united (Arab) currency by the end of 2009. It may not be prudent to assume our oil exporting friends are encouraged by US and European plans to inflate their currencies (using quantitative easing) in order to stimulate jobs and the economy.
We may see more reports similar to the recent headlines of Somali "pirates" holding Arab super-tankers hostage as the 2010 deadline of a United Arab currency approaches. Watch for Chinese, Russian, and EU naval exercises to intensify. Our friends in China, Russia and Europe are very familiar with the motives of the US in the Middle East. Watch what countries in the region DO, not what is SAID in the corporate media.
Another possible consequence of the artificially low oil price is more instability in the middle east. The large drop in oil revenues could be perceived by some oil exporting nations (Venezuela, Russia, Iran, Saudi Arabia, Mexico) as a financial attack by the US. Since the US is dependent upon most of these countries to purchase and retain US Treasury Debt, those countries may use their Treasury Bonds as financial weapons to restore the historical value of their oil in relation to the value of gold (not US Dollars).
The role of the US dollar as the medium of exchange for the purchase of oil in the world is not guaranteed. Gold should be a good tool to determine if oil is fairly priced in whatever currency is used.
We may see more reports similar to the recent headlines of Somali "pirates" holding Arab super-tankers hostage as the 2010 deadline of a United Arab currency approaches. Watch for Chinese, Russian, and EU naval exercises to intensify. Our friends in China, Russia and Europe are very familiar with the motives of the US in the Middle East. Watch what countries in the region DO, not what is SAID in the corporate media.
Another possible consequence of the artificially low oil price is more instability in the middle east. The large drop in oil revenues could be perceived by some oil exporting nations (Venezuela, Russia, Iran, Saudi Arabia, Mexico) as a financial attack by the US. Since the US is dependent upon most of these countries to purchase and retain US Treasury Debt, those countries may use their Treasury Bonds as financial weapons to restore the historical value of their oil in relation to the value of gold (not US Dollars).
The role of the US dollar as the medium of exchange for the purchase of oil in the world is not guaranteed. Gold should be a good tool to determine if oil is fairly priced in whatever currency is used.
Wednesday, January 21, 2009
Links - WTO
MONTERREY CONSENSUS ON FINANCING FOR DEVELOPMENT: RESPONSE SOUGHT FROM INTERNATIONAL ECONOMIC LAW (which explicitly includes the Doha Accord) US sees WTO Ministerial Talks key to Doha Success
A successful conclusion of the Doha Round can yield a double dividend.
WTO Looks to Boost trade, End Global Recession
Iraq seeks full WTO membership during conf. Monday
Lamy urges unity in efforts to conclude Doha Round next year
UNITED NATIONS AND WTO
Iraq participates on the World Trade Organization meeting aspiring full membership ~ and ~ WTO
WTO Doha Round Deal 'not Likely This Year'
Business Leaders are Demanding Trade Agreement in 2010
WTO chief holds talks with US officials, lawmakers
WTO Set to Take Stock of Doha Talks "2010 Not in the Cards" ...
Iraq - WTO - U.S. ~ Iraqi trade requests from the United States to support Iraq to join the World Trade ...
July ~ Doha Trade Deal Deadline Fixed 'for July'
WTO chief wants G20 push on Global Trade Deal ...
and interesting article from 2010 ~ Kuwait''s FM due in Jeddah city to head GCC Ministerial Council Meetings ...WTO Discussions ...
WTO ~ March 21-22 ~ ANNUAL 2011 SESSION OF THE PARLIAMENTARY CONFERENCE ON THE WTO
Emerson: conclusion to Doha Round urgent ...
World trade to grow 6.5pc by volume in 2011, says WTO ...
WTO a.k.a. Doha Round ~ Global trade talks: Doha is doable this year ...
WTO boss warns global trade talks face hurdles ...
IRAQ AND WTO ....
Monday, January 12, 2009
January 10th - 23rd Looks Interesting ~ Articles w/Links ...
**Jan 12th - In The Absence of Approving the Budget, the Government Would Resort to Exchange Rate Mechanism in the Next Week Adding "in the absence of ratification of the budget during these days Vstljo government to exchange rate mechanism, legal ~ The effect on 1-12 With a view to continuing the performance of ministries and government institutions and service productivity. "
January 13th? GLOBAL FINANCIAL OVERHAUL WILL BE SEEN IN 2010
"The first big headlines of the year on financial regulatory reforms will likely come on January 13, a key date on both sides of the Atlantic"
January 15th - Interesting Rumor? or Interesting Fact?
The the Coalition Provisional Authority issued a new Iraqi dinar between October 15th (2003) through and ending on January 15th (2004) and to celebrate this historic end date of the Iraqi Dinar transitional period, the Iraqi Dinar will now be open to all the world currencies markets on this date.The rate has not been set and will not be known until the currency markets open up on Friday the 15 January 2010.
RUMOR: BANK HOLIDAY JANUARY 15, 2010
The President will allow them to make as much as they can for the Christmas Holidays then Jan 15 there will be a Bank Holiday and their new currency will be issued with a devaluation of 6 to 10 to 1. Monday, January 18, 2010 Martin Luther King Jr. Day - U.S. Bank Holiday
Bank Holiday Coming? Prepare? Within 180 Days (January 2010)
But devalue against what? The euro? Doubtful. Gold? Maybe. Or vs. the IMF basket of currencies (which seems more likely)—& much in the news recently. Any kind of bank holiday will push the US$ lower, which may be a bonus benefit to their ongoing scenario of letting the $ fall. Such a fall would get the devaluation they want without having to declare it. In sum, the insiders want more bank & system control, fewer banks & a lower US$. A bank holiday would suit all their needs.
••• *PPS: A Bob Chapman subscriber reported overhearing 2 FEMA jacketed men talking to a police chief in Calif. They wanted to federalize the police across the US. They (govt) would be closing banks in late Aug, early Sept & that it will get ugly.” Prepare for worst case, as any good Boy or Girl Scout would do. J” ~
~ and look .. what "O" did ~
Executive Order -- Amending Executive Order 12425
By the authority vested in me as President by the Constitution and the laws of the United States of America, including section 1 of the International Organizations Immunities Act (22 U.S.C. 288), and in order to extend the appropriate privileges, exemptions, and immunities to the International Criminal Police Organization (INTERPOL), it is hereby ordered that Executive Order 12425 of June 16, 1983, as amended, is further amended by deleting from the first sentence the words "except those provided by Section 2(c), Section 3, Section 4, Section 5, and Section 6 of that Act" and the semicolon that immediately precedes them.
Zuhair Muhammad: House of Representatives Completed its Discussions on the General Budget (vote no later than Jan. 15th)
He pointed out that "the House of Representatives must approve the budget resolution Before the end of the current legislative session, indicating the hope that the parties agreed not to delay a lot and even if delayed, it will not exceed 10-15 days was up to the middle of the first month of 2010.
January 15th - Iraq is on Friday Next Partial Eclipse of the Sun
The first solar eclipse of 2010 Will Occur in the Maldives on January 15, 2010…
On January 15th 2010 an annular solar eclipse will be passing through a narrow corridor of the earth and creating a sight to behold for those in its path. It will be the LONGEST annular eclipse in the 3rd millennium – the duration will not be exceeded until the year 3043!
Monday, January 18, 2010 Martin Luther King Jr. Day - U.S. Bank Holiday
Martin Luther King Day was created in honor of Dr. King and his contributions to society. King was a leader during the Civil Rights Movement who encouraged minorities to stand up for their rights. His words still ring true today as they continue to inspire people of all races and creeds.
January 23rd - GCC Monetary Authority Will Officially Launch Their Monetary Union
"The monetary union will be enforced on January 23, a month after the fourth ratification document was deposited by the members with the GCC Secretariat," Qaoud told the Arabic-language paper Al Riyadh.
... will keep updating ~
Thursday, January 8, 2009
Video ~ U.S.- Iraq Business Investment Conference Hillary Clinton (October 2009)
This part of Hillary Clinton's speech on Iraq's progress was initially ommitted.
Saturday, January 3, 2009
The Federal Reserve Wednesday announced a currency swap arrangement of up to US$30 billion each with South Korea, Mexico, Brazil and Singapore
Bumped ~
2008 & 2009
WASHINGTON, Oct 30, 2008 (Asia Pulse) - The Federal Reserve Wednesday announced a currency swap arrangement of up to US$30 billion each with South Korea, Mexico, Brazil and Singapore to help ease dollar funding for major emerging economies amid the global financial crisis.
"These new facilities will support the provision of U.S. dollar liquidity in amounts of up to $30 billion each by the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore," the Fed said in a statement, adding the arrangements will stay in effect until April 30, 2009.
The Fed said it established the new facility with these "four large and ...
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10-30-2008 (this is the 1st one)
S. Korea Signs $30 Billion Currency Swap With US
The Federal Reserve Wednesday announced a currency swap arrangement of up to $30 billion each with South Korea, Mexico, Brazil and Singapore to help ease dollar funding for major emerging economies amid the global financial crisis, Yonhap News reported.
"These new facilities will support the provision of U.S. dollar liquidity in amounts of up to $30 billion each by the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore," the Fed said in a statement, adding the arrangements will stay in effect until April 30, 2009.
The Fed said it established the new facility with these "four large and systemically important economies ... to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well-managed economies."
With the deal, South Korea has become one of 14 countries having such a temporary reciprocal currency arrangement with the U.S. Washington maintains such arrangements with 10 of the world's major advanced economies _ Australia, Canada, Denmark, England, the European Union, Japan, New Zealand, Norway, Sweden and Switzerland.
The Fed's announcement came almost concurrently with the International Monetary Fund's announcement that it will set up a "Short-Term Liquidity Facility" to establish quick-disbursing financing "for some emerging market countries, even those that have maintained sound macroeconomic frameworks ... that are facing temporary liquidity problems in the global capital markets."
"Disbursement of Fund resources can be up to 500 percent of quota, with a three-month maturity," according to the lending agency. "Eligible countries are allowed to draw a maximum of three times during any 12-month period."
South Korea's IMF quota was raised to 1.413 percent, or about $4.4 billion, earlier this year.
South Korea's top financial authorities welcomed the swap deal, saying it will contribute much to stabilizing the wobbling local financial system.
Strategy and Finance Minister Kang Man-soo was quoted as saying, "The opening of the swap line with the U.S. will likely play a big role in stabilizing our foreign currency and financial markets." "The Fed's decision will help accelerate the move to expand similar currency swap lines with Japan and China, intensifying concerted efforts among the three nations to stabilize financial systems in the Asian region."
Central Bank of Korea Governor Lee Seong-tae said the deal will help ease the dollar shortage of local lenders and stabilize the local financial market.
"The currency swap deal with the U.S. Fed will help stabilize the local financial market," Lee said. "The swap deal will also contribute to stabilizing the currency market."
Despite ample foreign reserves of more than $240 billion, South Korea's currency has plummeted to a 10-year low against the U.S. dollar as foreign investors continued to pull a huge amount of money out of local stocks amid concerns that local banks may face difficulty repaying short-term foreign debts.
"South Korea has made the swap deal as part of efforts to secure secondary support measures, not because of a shortage of foreign reserves," Lee said, adding the temporary arrangement, which will be in effect until April 30 next year, may be extended, if necessary.
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S Korea, U.S. agree to extend currency swap by 6 months (2nd one)
2009-02-04
SEOUL, Feb. 4 (Xinhua) -- The Bank of Korea (BOK) announced on Wednesday that it agreed with the U.S. Federal Reserve to extend the currency swap deadline by six months in order to relieve market shake-ups over dollar shortages.
The central bank said that the deadline, which was set to expire on April 30, will be extended until Oct. 30. The size of the swap facility is left intact at 30 billion U.S. dollars.
"This action of extending its swap agreement with the Federal Reserve should contribute to improving the foreign currency funding conditions of banks and restoring stability to the financial market in Korea," the BOK said.
The arrangement is the Federal Reserve's move on continuous global market shake-ups over dollar shortages in the wake of Lehman Brothers' bankruptcy, according to Yonhap.
The Fed also decided to extend the currency swap deadline of 12 other central banks. The Bank of Japan will decide whether to apply the extension at its next monetary policy meeting.
Thus far, the use of South Korea's swap arrangement with the U.S. has helped alleviate market fears on declining foreign reserves in South Korea, Yonhap said.
"When necessary, the BOK will continue to offer dollar liquidity to banks through competitive auctions by tapping the swap facility," Ahn Byung-chan, head of the central bank's international bureau, said.
In a related move, South Korea in late December last year reached new currency swap deals with China and Japan to increase the size of its existing swap lines to 30 billion U.S. dollars.
The swap deal with China, which is still open to extension agreements, will be effective for three years, while that with Japan expires at the end of April.
"As the swap arrangement with the U.S. is extended, the BOK expects there will be no major difficulties in extending a deadline with the Bank of Japan," Ahn said.
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February 4, 2009
Fed extends currency swap lines to Brazil and Mexico
The Federal Reserve extended on Tuesday a line of credit with 13 central banks, including Brazil and Mexico in Latinamerica to October 30. The credit line was set to expire on April 30.
“The extension of the currency swap lines with the US central bank, to the amount of 30 billion US dollars, shows confidence in the fundamentals of the Brazilian economy at the same time that it increases the ability of the central bank to provide liquidity to the foreign exchange market” Meirelles said through the bank’s media department.
Brazil’s central bank has sold dollars on the spot foreign exchange market on a nearly daily basis to avert a massive plunge in the country’s currency and meet demand for greenbacks. The bank has also sold foreign exchange swaps and dollar repurchase agreements.
The Brazilian currency Real weakened nearly 33% since reaching a nine-year high in early August just before the crisis became global.
The Fed said it extended the currency swap lines because of “continuing substantial strains in many financial markets”.
Actually the Fed decision applies to five emergency-lending programs that provide funds or Treasury securities to securities brokers, money-market funds and companies that issue commercial paper, along with swap lines with 13 other central banks.
The move basically signals the Fed sees credit markets in the US and around the world taking longer to repair than previously thought. The lending programs are authorized under a provision allowing loans to non- banks under “unusual and exigent circumstances.“ Outstanding loans and swaps under the programs totalled 884 billion US dollars as of January 28.
More specifically the extended currency-swap programs applies to the central banks of Australia, Brazil, Canada, Denmark, UK, the Euro zone, South Korea, Mexico, New Zealand, Norway, Singapore, Sweden and Switzerland. The Bank of Japan will consider an extension when its policy makers next convene, the Fed said.
The dollar value of outstanding swaps has risen more than sevenfold since the Lehman Brothers Holdings Inc. bankruptcy in September to 465.7 billion US dollars as of January 28.
However the cost of borrowing in dollars rose this week to the highest level in more than three weeks as banks continued to balk at making loans. The London inter-bank offered rate, or Libor that banks say they charge each other for three-month loans, climbed to 1.23% from 1.08% on January 14, the British Bankers’ Association said.
Last week, the Fed reported for the first time the amount of currency swaps with other central banks after previously listing them as “other assets” on its balance sheet. The swaps had risen by 2.88 billion to 465.7 billion USD over the previous week, it said.
http://en.mercopress.com/2009/02/04/fed-extends-currency-swap-lines-to-brazil-and-mexico
AND .... PDF FILE EXPLAINS SWAPS AND WHICH BANKS ARE INVOLVED
[PDF]Extension of U.S. dollar swap arragements
http://www.boj.or.jp/en/type/release/adhoc09/un0902a.pdf
Friday, January 2, 2009
Currency - Determining value ...
Formula to determine a currency's value NOT consistantly applied to the dinar.
Foreign Currency and Gold Reserves divided by the amount of currency in circulation equals the value of one currency unit.
Not entirerly so with Iraq's currency though. In Febuary Iraq's reserves where worth 50.2 Billion USD with the exchange rate at 1170 per 1 USD. Later thier reserves dropped to 44 Billion yet the exchange rate remained at 1170.
The fact that Iraq is using a set Program Rate, means no matter what the ratio of Reserves vs Currency is, the Exchange Rate will be held at 1170!
In Iraq's letter note the phrase, "appropriate management of the exchange rate."
One of them being reducing the currency in circulation to a point where by conventional standards the value of the dinar would increase...after they released it from the Program Rate.
From the 2010 Letter of Intent to the IMF.
http://www.imf.org/external/np/loi/2010/irq/020810.pdf
II. DEFINITIONS
For CBI assets and liabilities denominated in SDRs and in foreign currencies other than the U.S. dollar, they will be converted in U.S. dollars at their respective SDR-exchange rates prevailing as of December 31, 2009, as published on the IMF’s website.
http://www.imf.org/external/np/loi/2010/irq/020810.pdf
Foreign Currency and Gold Reserves divided by the amount of currency in circulation equals the value of one currency unit.
Not entirerly so with Iraq's currency though. In Febuary Iraq's reserves where worth 50.2 Billion USD with the exchange rate at 1170 per 1 USD. Later thier reserves dropped to 44 Billion yet the exchange rate remained at 1170.
The fact that Iraq is using a set Program Rate, means no matter what the ratio of Reserves vs Currency is, the Exchange Rate will be held at 1170!
In Iraq's letter note the phrase, "appropriate management of the exchange rate."
One of them being reducing the currency in circulation to a point where by conventional standards the value of the dinar would increase...after they released it from the Program Rate.
From the 2010 Letter of Intent to the IMF.
http://www.imf.org/external/np/loi/2010/irq/020810.pdf
II. DEFINITIONS
For CBI assets and liabilities denominated in SDRs and in foreign currencies other than the U.S. dollar, they will be converted in U.S. dollars at their respective SDR-exchange rates prevailing as of December 31, 2009, as published on the IMF’s website.
http://www.imf.org/external/np/loi/2010/irq/020810.pdf
Thursday, January 1, 2009
Economist Edwin "Ted" Truman
Edwin M. Truman, senior fellow since 2001, served as assistant secretary of the US Treasury for International Affairs from December 1998 to January 2001 and returned as counselor to the secretary March–May 2009. He directed the Division of International Finance of the Board of Governors of the Federal Reserve System from 1977 to 1998. From 1983 to 1998, he was one of three economists on the staff of the Federal Open Market Committee.Truman has been a member of numerous international groups working on economic and financial issues, including the Financial Stability Forum's Working Group on Highly Leveraged Institutions (1999–2000), G-22 Working Party on Transparency and Accountability (1998), G-10-sponsored Working Party on Financial Stability in Emerging Market Economies (1996–97), G-10 Working Group on the Resolution of Sovereign Liquidity Crises (1995–96), and G-7 Working Group on Exchange Market Intervention (1982–83). Truman has also been a visiting economics lecturer at Amherst College and a visiting economics professor at Williams College. He has published on international monetary economics, international debt problems, economic development, and European economic integration. He is the author, coauthor, or editor of Sovereign Wealth Funds: Threat or Salvation? (2010), Reforming the IMF for the 21st Century (2006), A Strategy for IMF Reform (2006), Chasing Dirty Money: The Fight Against Money Laundering (2004), and Inflation Targeting in the World Economy (2003).
Links to June 2010 Articles ...
June 3-4, 2010 - Korea-World Bank High Level Conference ...
June 4-5 2010 G20 Finance Ministers in Busan, Republic of Korea, to prepare for the June Leaders’ Summit in Toronto, Canada
June 4-5 Next Meeting ~ Text Of G-20 Finance Ministers, Central Bankers’ Statement April 23, 2010 ...
June 4th - 5th ~ G20 ministers face more wrangling over bank tax, and ... July ~ Obama may be signing into law ...
June 6-7-2010 ~ Vietnam to Host World Economic Forum on East Asia ...
June 7-8-2010 ~ OECD INTERNATIONAL TAX CONFERENCE
Iran - Wednesday Vote ~ U.N. Security Council to vote on tougher Iran sanctions
Thursday, June 10th ~ Senate panel to question Geithner on China ...
Friday, June 11th ~ National coalition and the rule of law will announce their merger in two days ...
June 13th? Kurdistan Alliance delegation to Baghdad next week to discuss government formation - Kurdistan Alliance will play great role in Iraq ...
Monday, June 14th Meeting GCC and EU ~ Politicial push needed for free trade deal, European official says ...
June 14-16-2010 Jeddah to host 4th GCC-India Forum
June 14th in Luxembourg ~ 20th EU-GCC Joint Council and Ministerial Meeting
June 15th or before UN and Iraq review - resolution 1483 ...
UN - Iraq Dates Scheduled: April 1st Iraq's Action Plan, June 15th Review, transition to a post-Development Fund mechanism by 31 December 2010 and ...
Tuesday, June 15th - 16th ~ Kurdistan Economic Conference in London "Kurdistan is open for business" ...
June 4-5 2010 G20 Finance Ministers in Busan, Republic of Korea, to prepare for the June Leaders’ Summit in Toronto, Canada
June 4-5 Next Meeting ~ Text Of G-20 Finance Ministers, Central Bankers’ Statement April 23, 2010 ...
June 4th - 5th ~ G20 ministers face more wrangling over bank tax, and ... July ~ Obama may be signing into law ...
June 6-7-2010 ~ Vietnam to Host World Economic Forum on East Asia ...
June 7-8-2010 ~ OECD INTERNATIONAL TAX CONFERENCE
Iran - Wednesday Vote ~ U.N. Security Council to vote on tougher Iran sanctions
Thursday, June 10th ~ Senate panel to question Geithner on China ...
Friday, June 11th ~ National coalition and the rule of law will announce their merger in two days ...
June 13th? Kurdistan Alliance delegation to Baghdad next week to discuss government formation - Kurdistan Alliance will play great role in Iraq ...
Monday, June 14th Meeting GCC and EU ~ Politicial push needed for free trade deal, European official says ...
June 14-16-2010 Jeddah to host 4th GCC-India Forum
June 14th in Luxembourg ~ 20th EU-GCC Joint Council and Ministerial Meeting
June 15th or before UN and Iraq review - resolution 1483 ...
UN - Iraq Dates Scheduled: April 1st Iraq's Action Plan, June 15th Review, transition to a post-Development Fund mechanism by 31 December 2010 and ...
Tuesday, June 15th - 16th ~ Kurdistan Economic Conference in London "Kurdistan is open for business" ...
Friday, June 25th ~ 100 firms take part int’l trade fair in Basra Friday ...
JUNE 25-26-2010 - PLANS FOR THE 2010 G8 MUSKOKA SUMMIT
June 26-27-2010 -The G20 Meets in Toronto, Canada
G20 Statements - 2009-2010 ...
Sunday, June 27th Allawi/Maliki meeting ...
Monday, June 28th Arab Summit in Libya ~ Talabani plans to invite the heads of Egypt, Libya, Qatar and Yemen to visit Baghdad ...
June 29th ~ *** BIS Annual Report: Rescue, recovery, reform – the narrow path ahead ...
Meetings (Past) Links November
NOVEMBER 8-10 WORLD ECONOMIC FORUM - NEW DELHI
Wednesday - APEC Finance Ministers Meet to Discuss Fiscal Policy, Growth Restoration
NOVEMBER 11, 2009 DECLARED VETERANS DAY
Islamic leaders meet to boost economic, trade cooperation Monday Nov. 9th
November 9-11-2009 LPGTRADE Summit, Doha, Qatar
OBAMA CHINA TRIP BEGINS NOVEMBER 12-18 - IMF MEETS WITH CHINA AND ASEAN COUNTRIES!! ...
Reform and the Global Financial Crisis Nov. 14th-16th
ASEAN-U.S. Nov. 15th Meeting to Discuss Disaster Control, Flu Prevention
Asia-Pacific Leaders open Final Summit Session (15th)
Talabani will meet with Sarkozy at the Elysee Monday - November 16, 2009
Paris, France - Iraqi Investment (November 16-18th)
Paris hosts a conference on Iraq Investment Paris, France (November 16-18th)
Wednesday - APEC Finance Ministers Meet to Discuss Fiscal Policy, Growth Restoration
NOVEMBER 11, 2009 DECLARED VETERANS DAY
Islamic leaders meet to boost economic, trade cooperation Monday Nov. 9th
November 9-11-2009 LPGTRADE Summit, Doha, Qatar
OBAMA CHINA TRIP BEGINS NOVEMBER 12-18 - IMF MEETS WITH CHINA AND ASEAN COUNTRIES!! ...
Reform and the Global Financial Crisis Nov. 14th-16th
ASEAN-U.S. Nov. 15th Meeting to Discuss Disaster Control, Flu Prevention
Asia-Pacific Leaders open Final Summit Session (15th)
Talabani will meet with Sarkozy at the Elysee Monday - November 16, 2009
Paris, France - Iraqi Investment (November 16-18th)
Paris hosts a conference on Iraq Investment Paris, France (November 16-18th)
UNITED NATIONS ~ Climate control and ~ 2010-2012 pdf - Meetings (STAR)
IISD Reporting Services - Link ages bringing you the latest news, information and analysis from international environment and sustainable development negotiations ~
http://www.iisd.ca/recent/recentmeetings.asp?id=9
November 2009
GEF COUNCIL ADOPTS NEW ALLOCATION FRAMEWORK The 36th meeting of the Global Environment Facility (GEF) Council took place in Washington DC, US, from 10-12 November 2009, and adopted a new allocation framework, the System for a Transparent Allocation of Resources (STAR), to be applied to the fifth replenishment of the GEF Trust Fund (GEF-5).
Resources in the focal areas of biodiversity, climate change and land degradation will thus be distributed following STAR criteria. Every country will receive a minimum allocation of $4 million, from whichUS$2 million would be used for climate change, $1.5 million for biodiversity, and $0.5 million for land degradation. The maximum a country may get is $300 million for these three focal areas. The Council also approved a work programme comprising 34 project concepts worth US$159.29 million, and decided its next meetings would convene the weeks of 29 June 2010 and 15 November 2010.
The fourth meeting for the GEF-5 Replenishment also took place in the same venue on 13 November 2009. Participants welcomed the Russian Federation as new donor to GEF-5, and continued discussions on the level of funding and focus of GEF-5.
The next meeting to discuss GEF-5 is, subject to confirmation, scheduled for February 2010 in Rome. On 12 November 2009 the Council of the Least Developed Countries Fund and Special Climate Change Fund (LDCF/SCCF) also met and approved projects in Brazil and Jordan. Links to further information ~
Council meeting summary of the ChairsGEF replenishment meeting summary of the ChairsGEF Council and LDCF/SCCF Council meeting and documents
http://www.iisd.ca/recent/recentmeetings.asp?id=9
pdf - 2012
Preparing the Summit
24 Oct 2009 ... Committee will have to decide on the formal modalities and organizational ... General Assembly at its sixty-fourth session, ... Even the Financing for Development (FfD) process which ... that was addressed at the high level policy dialogue in CSD17, ..... member states should consider postponing any ...
www.earthsummit2012.org/fileadmin/files/Earth_Summit_...
- Similar
http://www.earthsummit2012.org/fileadmin/files/Earth_Summit_2012/new_york/Summit_2012_Organizational_Issues_Rev_3_11_October__3_.pdf
http://www.iisd.ca/recent/recentmeetings.asp?id=9
November 2009
GEF COUNCIL ADOPTS NEW ALLOCATION FRAMEWORK The 36th meeting of the Global Environment Facility (GEF) Council took place in Washington DC, US, from 10-12 November 2009, and adopted a new allocation framework, the System for a Transparent Allocation of Resources (STAR), to be applied to the fifth replenishment of the GEF Trust Fund (GEF-5).
Resources in the focal areas of biodiversity, climate change and land degradation will thus be distributed following STAR criteria. Every country will receive a minimum allocation of $4 million, from whichUS$2 million would be used for climate change, $1.5 million for biodiversity, and $0.5 million for land degradation. The maximum a country may get is $300 million for these three focal areas. The Council also approved a work programme comprising 34 project concepts worth US$159.29 million, and decided its next meetings would convene the weeks of 29 June 2010 and 15 November 2010.
The fourth meeting for the GEF-5 Replenishment also took place in the same venue on 13 November 2009. Participants welcomed the Russian Federation as new donor to GEF-5, and continued discussions on the level of funding and focus of GEF-5.
The next meeting to discuss GEF-5 is, subject to confirmation, scheduled for February 2010 in Rome. On 12 November 2009 the Council of the Least Developed Countries Fund and Special Climate Change Fund (LDCF/SCCF) also met and approved projects in Brazil and Jordan. Links to further information ~
Council meeting summary of the ChairsGEF replenishment meeting summary of the ChairsGEF Council and LDCF/SCCF Council meeting and documents
http://www.iisd.ca/recent/recentmeetings.asp?id=9
pdf - 2012
Preparing the Summit
24 Oct 2009 ... Committee will have to decide on the formal modalities and organizational ... General Assembly at its sixty-fourth session, ... Even the Financing for Development (FfD) process which ... that was addressed at the high level policy dialogue in CSD17, ..... member states should consider postponing any ...
www.earthsummit2012.org/fileadmin/files/Earth_Summit_...
- Similar
http://www.earthsummit2012.org/fileadmin/files/Earth_Summit_2012/new_york/Summit_2012_Organizational_Issues_Rev_3_11_October__3_.pdf
NEXT: REGIONAL MONETARY ARRANGEMENTS
Bumped ~
Stiglitz Commission: New International Monetary and Financial Architecture
The following are some of the important recommendations of the Stiglitz Commission:
A Balanced Response to Global Recession:
Since we need a global response to the current global crisis, every country must have a
stimulus package. Since the developing countries do not have the resources for mounting such a package, they must have access to substantial additional funding, and whatever assistance is given to them should be without inappropriate conditionality.
A New Global Reserve System:
The Commission recommends the creation of a new global reserve system with the SDR as its anchor. Since the entire system will be based on the SDR, its issue on a once-for-all basis, as recommended by the G-20, will not suffice. The new system must be based on a greatly expanded SDR with regular or cyclically regulated emissions calibrated to the size of reserve accumulation. This is precisely what was recommended in the Keynes Plan.
A Global Reserve Currency:
The new multilateral reserve system should have its own reserve currency based on the SDR. This is the only way to overcome the inequities and instability inherent in a global reserve system based on a national currency, that is, the dollar. This concern was recently echoed by the chief of China’s Central Bank. The creation of a new international reserve currency has the support of both China and Russia.
Regional Monetary Arrangements:
Another important recommendation of the Stiglitz Commission is that the international reserve system should rely broadly on regional monetary arrangements and that the developing countries should actively cooperate to put such arrangements in place. This seems to be in direct line with the suggestion, made by the well-known economist Triffin in the late sixties, that the international monetary system should be based on regional monetary systems including regional reserve funds and reserve currencies.
An obvious example that comes to mind in the present context is the Chiang Mai Initiative of the ASEAN Plus 3. The Chiang Mai Initiative has recently been given a new impetus, but it is still far short of building a regional reserve fund and issuing a regional reserve currency. Given the importance of countries like India, Australia and New Zealand in any regional monetary arrangements in Asia, it is doubtful whether the Chiang Mai Initiative would suffice.
The optimum solution would be to have an Asian reserve system and an Asian reserve currency with the inclusion of all the countries participating in the East Asia Summit. This, however, very much depends upon China’s willingness to cooperate in building such a system.
The only other region where there is a possibility of making a viable regional monetary arrangement, is the Gulf Cooperation Council (GCC) region suitably enlarged. The enlarged GCC has sufficient currency reserves to be able to build such a regional arrangment. Recently, there has been a depletion in these reserves owing to the decline in oil prices. However, oil prices are likely to increase and the reserves of these countries likely to be further augmented, with the commencement of the process of recovery from the global recession.
Strengthening the Lending Capability of Multilateral Development Banks:
It is well-known that the World Bank and Regional Development Banks do not have adequate resources for financing development in the developing countries at the desired level. They have not proved effective in raising resources from the commercial market for or lending them at concessional rates to the developing countries. The question of restructuring and reforming these multilateral development banks to enable them to adequately discharge their statutory functions has been long pending.
It will be interesting to see what the Stiglitz Commission recommends on it. However, in the context of the current crisis, the Commission has recommended that a large scale programme for commercial lending to the developing countries should be launched and for this a new Credit Facility under the umbrella of the World Bank and Regional Development Banks should be created.
The Creation of a Global Financial Regulatory Authority and a Global Competition Authority:
The Stiglitz Commission is of the view that while the effective regulatory system must be national, there should also be a global regulatory framework to establish minimum standards and to govern the global operation of systemically relevant global institutions as well. According to the Commission, movements towards this global will be enhanced by taking steps to lay the groundwork for a Global Financial Authority and a Global Competition Authority.
The purpose of the Global Competition Authority will be to prevent financial institutions from growing to sizes that generate systemic risks and make them too big to fail. The Commission suggests that these global institutions should be democratically constituted without indicating how this will be done and how they will be related to the UN system. Perhaps the fuller version of this recommendation will be given in the final report of the Commission. The Stiglitz Commission has also suggested that financial institutions and practices should be vetted by a “Financial Product Safety Commission in order to curb excessive risk accumulation”.
The idea of a financial regulatory mechanism and a mechanism to curb monopolistic practices of the multinational corporations is not new to the UN system. The IMF itself was created as a financial regulatory mechanism at the global level, whereas the Havana Charter had a whole chapter on restrictive business practices. Subsequently, after transnational corporations came to dominate the world economy and trade, the UN established a Commission on Transnational Corporations and also started negotiating a Code of Conduct for such corporations.
However, in the beginning of the 1980s, under the influence of the neo-liberal economic policies pursued both at national and international levels, the TNC Commission was wound up and the attempt to negotiate the Code of Conduct for Transnational Corporations was given up. In a major non-governmental conference convened on the occasion of the 50th anniversary of the Bretton Woods Institutions, the idea of establishing an independent commission, to keep a surveillance on the activities of the transnational corporations with a view to curbing their non-competitive practices, was revived. However, it was not followed up at the inter-governmental level.
Coordination of Global Macro-Economic Policies:
Article 1(4) of the UN Charter provides that the United Nations will be a centre for harmonising the actions of nations in the attainment of the common ends mentioned in the Charter. Article 55 assigns to the UN the role to promote solutions of international economic and social problems.
The Economic and Social Council is vested with the authority to carry out this function. Subsequently, the Charter functions of the United Nations, particularly of the Economic and Social Council, in the economic field were transferred to the IMF, World Bank and the WTO.
Several committees, commissions and expert groups have made recommendations for restoring to the Economic and Social Council the Charter function of coordinating global macro-economic policies.
The Stiglitz Commission has made a similar proposal.
It has recommended the establishment of an elected and representative global Economic Coordination Council within the UN system, to meet annually at the summit level, to assess and coordinate development policies and lend leadership in socio-economic and environmental fields.
In the preliminary reaction to this proposal in the discussion at the Thematic Dialogue conducted by the General Assembly on March 27, 2009, on the financial and economic crisis, the question was raised as to why it was necessary to create a new body for this purpose when the Economic and Social Council was vested with this authority under the Charter. This issue is likely to be debated in greater detail when the consideration of the full report of the Commission is taken up at the proposed summit conference of the General Assembly in June this year.
What is important to note at this stage is that the current economic and financial crisis has led to the acceptance of the need for an objective and independent surveillance of developments in the world economy and of the impact of the policies of some member governments on others.
Whereas the G-20 would like this task to be entrusted to the IMF, the Stiglitz Commission has suggested the creation of a new special body within the United Nations for the purpose.
ARTICLE FROM April 18, 2009
Stiglitz Commission: New International Monetary and Financial ArchitectureThe following are some of the important recommendations of the Stiglitz Commission:
A Balanced Response to Global Recession:
Since we need a global response to the current global crisis, every country must have a
stimulus package. Since the developing countries do not have the resources for mounting such a package, they must have access to substantial additional funding, and whatever assistance is given to them should be without inappropriate conditionality.
A New Global Reserve System:
The Commission recommends the creation of a new global reserve system with the SDR as its anchor. Since the entire system will be based on the SDR, its issue on a once-for-all basis, as recommended by the G-20, will not suffice. The new system must be based on a greatly expanded SDR with regular or cyclically regulated emissions calibrated to the size of reserve accumulation. This is precisely what was recommended in the Keynes Plan.
A Global Reserve Currency:
The new multilateral reserve system should have its own reserve currency based on the SDR. This is the only way to overcome the inequities and instability inherent in a global reserve system based on a national currency, that is, the dollar. This concern was recently echoed by the chief of China’s Central Bank. The creation of a new international reserve currency has the support of both China and Russia.
Regional Monetary Arrangements:
Another important recommendation of the Stiglitz Commission is that the international reserve system should rely broadly on regional monetary arrangements and that the developing countries should actively cooperate to put such arrangements in place. This seems to be in direct line with the suggestion, made by the well-known economist Triffin in the late sixties, that the international monetary system should be based on regional monetary systems including regional reserve funds and reserve currencies.
An obvious example that comes to mind in the present context is the Chiang Mai Initiative of the ASEAN Plus 3. The Chiang Mai Initiative has recently been given a new impetus, but it is still far short of building a regional reserve fund and issuing a regional reserve currency. Given the importance of countries like India, Australia and New Zealand in any regional monetary arrangements in Asia, it is doubtful whether the Chiang Mai Initiative would suffice.
The optimum solution would be to have an Asian reserve system and an Asian reserve currency with the inclusion of all the countries participating in the East Asia Summit. This, however, very much depends upon China’s willingness to cooperate in building such a system.
The only other region where there is a possibility of making a viable regional monetary arrangement, is the Gulf Cooperation Council (GCC) region suitably enlarged. The enlarged GCC has sufficient currency reserves to be able to build such a regional arrangment. Recently, there has been a depletion in these reserves owing to the decline in oil prices. However, oil prices are likely to increase and the reserves of these countries likely to be further augmented, with the commencement of the process of recovery from the global recession.
Strengthening the Lending Capability of Multilateral Development Banks:
It is well-known that the World Bank and Regional Development Banks do not have adequate resources for financing development in the developing countries at the desired level. They have not proved effective in raising resources from the commercial market for or lending them at concessional rates to the developing countries. The question of restructuring and reforming these multilateral development banks to enable them to adequately discharge their statutory functions has been long pending.
It will be interesting to see what the Stiglitz Commission recommends on it. However, in the context of the current crisis, the Commission has recommended that a large scale programme for commercial lending to the developing countries should be launched and for this a new Credit Facility under the umbrella of the World Bank and Regional Development Banks should be created.
The Creation of a Global Financial Regulatory Authority and a Global Competition Authority:
The Stiglitz Commission is of the view that while the effective regulatory system must be national, there should also be a global regulatory framework to establish minimum standards and to govern the global operation of systemically relevant global institutions as well. According to the Commission, movements towards this global will be enhanced by taking steps to lay the groundwork for a Global Financial Authority and a Global Competition Authority.
The purpose of the Global Competition Authority will be to prevent financial institutions from growing to sizes that generate systemic risks and make them too big to fail. The Commission suggests that these global institutions should be democratically constituted without indicating how this will be done and how they will be related to the UN system. Perhaps the fuller version of this recommendation will be given in the final report of the Commission. The Stiglitz Commission has also suggested that financial institutions and practices should be vetted by a “Financial Product Safety Commission in order to curb excessive risk accumulation”.
The idea of a financial regulatory mechanism and a mechanism to curb monopolistic practices of the multinational corporations is not new to the UN system. The IMF itself was created as a financial regulatory mechanism at the global level, whereas the Havana Charter had a whole chapter on restrictive business practices. Subsequently, after transnational corporations came to dominate the world economy and trade, the UN established a Commission on Transnational Corporations and also started negotiating a Code of Conduct for such corporations.
However, in the beginning of the 1980s, under the influence of the neo-liberal economic policies pursued both at national and international levels, the TNC Commission was wound up and the attempt to negotiate the Code of Conduct for Transnational Corporations was given up. In a major non-governmental conference convened on the occasion of the 50th anniversary of the Bretton Woods Institutions, the idea of establishing an independent commission, to keep a surveillance on the activities of the transnational corporations with a view to curbing their non-competitive practices, was revived. However, it was not followed up at the inter-governmental level.
Coordination of Global Macro-Economic Policies:
Article 1(4) of the UN Charter provides that the United Nations will be a centre for harmonising the actions of nations in the attainment of the common ends mentioned in the Charter. Article 55 assigns to the UN the role to promote solutions of international economic and social problems.
The Economic and Social Council is vested with the authority to carry out this function. Subsequently, the Charter functions of the United Nations, particularly of the Economic and Social Council, in the economic field were transferred to the IMF, World Bank and the WTO.
Several committees, commissions and expert groups have made recommendations for restoring to the Economic and Social Council the Charter function of coordinating global macro-economic policies.
The Stiglitz Commission has made a similar proposal.
It has recommended the establishment of an elected and representative global Economic Coordination Council within the UN system, to meet annually at the summit level, to assess and coordinate development policies and lend leadership in socio-economic and environmental fields.
In the preliminary reaction to this proposal in the discussion at the Thematic Dialogue conducted by the General Assembly on March 27, 2009, on the financial and economic crisis, the question was raised as to why it was necessary to create a new body for this purpose when the Economic and Social Council was vested with this authority under the Charter. This issue is likely to be debated in greater detail when the consideration of the full report of the Commission is taken up at the proposed summit conference of the General Assembly in June this year.
What is important to note at this stage is that the current economic and financial crisis has led to the acceptance of the need for an objective and independent surveillance of developments in the world economy and of the impact of the policies of some member governments on others.
Whereas the G-20 would like this task to be entrusted to the IMF, the Stiglitz Commission has suggested the creation of a new special body within the United Nations for the purpose.
ARTICLE FROM April 18, 2009
JPMorgan Reshuffles Leadership in Succession Clue
"There have been reports Dimon might consider a career in Washington after his time on Wall Street. Last year, there was speculation he might be named U.S. Treasury secretary".
JPMorgan reshuffles leadership in succession clue
JPMorgan said Jes Staley, current head of the bank's key asset management unit, will become the chief executive of the investment bank.
"This sends the message that they have a deep bench and executives in place in the event Jamie Dimon were to depart," said Bill Fitzpatrick, an analyst at Optique Capital Management.
Making way for Staley to take over at the investment bank, co-CEO Bill Winters will leave the firm and the other co-CEO, Steve Black, will stay on only for the transition as executive chairman of the unit.
"Jamie is a little young to be thinking about succession at this point," said Nancy Bush, an analyst and founder of NAB Research.
Yet Dimon joins other Wall Street banks in firming up succession plans as the easing of the financial crisis gives him time to think about the future and as regulators step up scrutiny of bank governance.
"The timing was right to begin the succession process," Dimon said in a statement.
Staley, 53, has held high-profile roles since he joined the bank 30 years ago as an economics graduate from Bowdoin College. He spent 20 years in the investment bank -- including nine years in the Latin America division -- and headed equity capital markets before becoming CEO of the private bank and then taking on the asset management operation.
Among other achievements, Staley persuaded Dimon in 2004 to take a stake in hedge fund Highbridge Capital, which has seen assets under management triple over the past five years, Duff McDonald wrote in his recent book about Jamie Dimon, "Last Man Standing."
Mary Callahan Erdoes, 42, chief executive of JPMorgan's private bank, succeeds Staley as head of asset management.
WINTERS OUT
Winters and Black were deeply involved in the acquisition and integration of Bear Stearns Cos. Like Dimon, they did not receive a cash bonus for last year.
At a meeting behind closed doors in London last week, Winters blamed "greedy bankers, investors and borrowers" for the financial crisis, according to a U.K. newspaper.
Winters and Black have been investment bank co-CEOs since 2004 -- something of a record on Wall Street, where appointing co-heads often creates a power struggle, leaving just one head standing. Black focused mainly on credit and trading from the London office, while Winters, based in New York, focused on investment banking.
JPMorgan's investment bank largely avoided the complex debt securities linked to subprime mortgages that caused large losses for its rivals over the last two years. At the same time, it has become a major force for both debt and equity underwriting, topping third-quarter "league tables" according to preliminary data.
Winters' plans were unclear, but two people who have worked with him said his strong background in management and his experience during some of the worst days of the financial crisis will stand him in good stead if he seeks a management job elsewhere.
SUCCESSORS
Dimon, a former protege of Citigroup Inc architect Sandy Weill, is regarded as a star on Wall Street who has led JPMorgan through face-changing acquisitions, including Bear Stearns and failed Seattle thrift Washington Mutual last year.
Dimon, ousted unceremoniously from Citigroup in 1998, may be looking to avoid the errors of his former mentor. Weill said in McDonald's "Last Man Standing," "I think I made a very bad decision on succession." Citigroup has struggled since Weill's departure.
As regulators scrutinize the boards and management teams of banks in the wake of the financial crisis, other banks have recently laid out succession plans.
"I think for every large bank there clearly is an increased regulatory pressure to have some kind of succession plan in place," said Bush.
Morgan Stanley said earlier this month James Gorman, 51, will take over from John Mack as chief executive on Jan 1. At Bank of America Corp, Chief Executive Kenneth Lewis has lined up five possible successors.
In the past, JPMorgan Chief Financial Officer Mike Cavanagh had been tipped to take over from Dimon. Cavanagh was responsible for commercial banking before becoming CFO.
"(Today's move) clearly signals that Jamie Dimon's successor will come from the capital markets, not from commercial banking," said Bush.
There have been reports Dimon might consider a career in Washington after his time on Wall Street. Last year, there was speculation he might be named U.S. Treasury secretary.
"One of his regrets in life is never having served his country in an official capacity," wrote McDonald, referring to Dimon's possible interest in a political job.
JPMorgan shares closed 7 cents higher at $44.88 on the New York Stock Exchange.
JPMorgan reshuffles leadership in succession clue Tuesday, September 29, 2009
JPMorgan Chase & Co has reshuffled the leadership at its investment bank, naming a new chief executive who could eventually succeed Jamie Dimon as head at the No. 2 U.S. bank, in a shake-up that surprised many analysts and investors.
JPMorgan said Jes Staley, current head of the bank's key asset management unit, will become the chief executive of the investment bank.
Dimon, 53, is not expected to leave any time soon, but Staley's promotion makes him a front- runner to succeed him, a person close to JPMorgan said.
"This sends the message that they have a deep bench and executives in place in the event Jamie Dimon were to depart," said Bill Fitzpatrick, an analyst at Optique Capital Management.
Making way for Staley to take over at the investment bank, co-CEO Bill Winters will leave the firm and the other co-CEO, Steve Black, will stay on only for the transition as executive chairman of the unit.
"Jamie is a little young to be thinking about succession at this point," said Nancy Bush, an analyst and founder of NAB Research.
Yet Dimon joins other Wall Street banks in firming up succession plans as the easing of the financial crisis gives him time to think about the future and as regulators step up scrutiny of bank governance.
"The timing was right to begin the succession process," Dimon said in a statement.
Staley, 53, has held high-profile roles since he joined the bank 30 years ago as an economics graduate from Bowdoin College. He spent 20 years in the investment bank -- including nine years in the Latin America division -- and headed equity capital markets before becoming CEO of the private bank and then taking on the asset management operation.
Among other achievements, Staley persuaded Dimon in 2004 to take a stake in hedge fund Highbridge Capital, which has seen assets under management triple over the past five years, Duff McDonald wrote in his recent book about Jamie Dimon, "Last Man Standing."
Mary Callahan Erdoes, 42, chief executive of JPMorgan's private bank, succeeds Staley as head of asset management.
WINTERS OUT
Winters and Black were deeply involved in the acquisition and integration of Bear Stearns Cos. Like Dimon, they did not receive a cash bonus for last year.
At a meeting behind closed doors in London last week, Winters blamed "greedy bankers, investors and borrowers" for the financial crisis, according to a U.K. newspaper.
Winters and Black have been investment bank co-CEOs since 2004 -- something of a record on Wall Street, where appointing co-heads often creates a power struggle, leaving just one head standing. Black focused mainly on credit and trading from the London office, while Winters, based in New York, focused on investment banking.
JPMorgan's investment bank largely avoided the complex debt securities linked to subprime mortgages that caused large losses for its rivals over the last two years. At the same time, it has become a major force for both debt and equity underwriting, topping third-quarter "league tables" according to preliminary data.
Winters' plans were unclear, but two people who have worked with him said his strong background in management and his experience during some of the worst days of the financial crisis will stand him in good stead if he seeks a management job elsewhere.
SUCCESSORS
Dimon, a former protege of Citigroup Inc architect Sandy Weill, is regarded as a star on Wall Street who has led JPMorgan through face-changing acquisitions, including Bear Stearns and failed Seattle thrift Washington Mutual last year.
Dimon, ousted unceremoniously from Citigroup in 1998, may be looking to avoid the errors of his former mentor. Weill said in McDonald's "Last Man Standing," "I think I made a very bad decision on succession." Citigroup has struggled since Weill's departure.
As regulators scrutinize the boards and management teams of banks in the wake of the financial crisis, other banks have recently laid out succession plans.
"I think for every large bank there clearly is an increased regulatory pressure to have some kind of succession plan in place," said Bush.
Morgan Stanley said earlier this month James Gorman, 51, will take over from John Mack as chief executive on Jan 1. At Bank of America Corp, Chief Executive Kenneth Lewis has lined up five possible successors.
In the past, JPMorgan Chief Financial Officer Mike Cavanagh had been tipped to take over from Dimon. Cavanagh was responsible for commercial banking before becoming CFO.
"(Today's move) clearly signals that Jamie Dimon's successor will come from the capital markets, not from commercial banking," said Bush.
There have been reports Dimon might consider a career in Washington after his time on Wall Street. Last year, there was speculation he might be named U.S. Treasury secretary.
"One of his regrets in life is never having served his country in an official capacity," wrote McDonald, referring to Dimon's possible interest in a political job.
JPMorgan shares closed 7 cents higher at $44.88 on the New York Stock Exchange.
Fight for Freedom - Legally and with Good Intention -
START - NAT'L CONSORTIUM FOR THE STUDY OF TERRORISM AND RESPONSES TO TERRORISM - A CENTER OF EXCELLENCE OF THE U.S. DEPARTMENT OF HOMELAND SECURITY BASED AT THE UNIV. OF MARYLANDRANDOM PROFILE OF A "PATRIOT"
About me ~ JUST A "PATRIOT ~ I am a student of Economics, American History and Esoteric Sciences.
Just a guy, willing to fight tyranny in governance.
I seek to expose the Criminals in Government and am dedicated to their removal from public office.
I refuse to run and hide and will stand right here and not hiding from anyone.
I am a member of many political activist groups and advocate the abolishment of the Federal Reserve Act and all Amendments to the Constitution of the US not in compliance with Article V.
I am the revolution and will not hide. I will stand. I've joined articles of freedom ~
Date: Tuesday, February 2, 2010, 1:29 PM
Greetings all. The works of the Continental Congress 2009 are here."The Articles of Freedom"
Bet you didn't know ~Terrorist Organization Profile:3rd Continental Congress
Forex - What is Currency Trading? (pt. 1)
Why is there is a push to get traders into the forex? Well, because every financial transaction that takes place will be taxed. The Tobin Tax/Financial Tax will be law by 2010 or very soon after. The taxes generated will be in the billions. Transactions taking place today are at about two to three trillion dollars traded per day.Tobin Tax ~ articles ~ link
LINKS TO ARTICLES - TOBIN TAX - FINANCE TAX
Its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
What is Currency Trading?
The Currency trading market is a multi trillion dollar market where world currencies are exchanged back and forth on a daily basis.
How is currency trading done?
Retail currency trading is typically done through brokers and market makers. Traders can place trades through their brokers who will in turn place a corresponding trade on the interbank market.
Why do currency values change?
Currency values can change for many reasons. Sometimes they react to political and economic news, sometimes they are driven by speculators, and sometimes they are driven by international business flows. If companies in the United States are importing large quantities of products made in Europe, they will need to exchange their US Dollars for Euros to pay for the products. When this is done in very large quantity over a short period of time, it raises the demand for Euros and the value of the Euro versus the US Dollar increases. This happens because dollars are being sold on the open market, while Euros are being bought.
Is currency trading risky?
Currency trading can be very risky. Currencies tend to be very volatile compared to other markets. The real key to success with currency trading is to use conservative risk management. There are many components to effective currency risk management, but the bottom line is to use caution and have a trading plan.
Who trades currencies?
Currencies are traded by individual retail investors, financial institutions, and corporations doing business. Retail investors and banks are trade to make profits and corporations usually trade in the normal course of the international business process.
Currencies are the money of different countries, and currency trading is the buying and selling of these currencies. There are almost as many different currencies as there are countries, but the most popular currencies for trading are the US Dollar, the Euro, the British Pound (Sterling), and the Japanese Yen. The currency markets are some of the most popular day trading markets, and they therefore have some of the highest volume (number of contracts) and liquidity. This high volume and liquidity makes the currency markets attractive to all types of traders, including individual day traders, trading companies, financial and non financial companies, banks, and governments.
There are several different ways of trading currencies, and even non traders are familiar with one form of currency trading. When people go on holiday to a different country they often need to exchange their local currency for the currency of the destination country. For example, a tourist from the US would need to exchange their US Dollars for Mexican Pesos if they went to Mexico on holiday. This exchange would be processed via a currency broker (such as a bank), and the transaction would become part of the currency markets. This type of currency trading is not suitable for professional traders, so two other forms of currency trading are used by day traders.
Forex (FOReign EXchange)
How is currency trading done?
Retail currency trading is typically done through brokers and market makers. Traders can place trades through their brokers who will in turn place a corresponding trade on the interbank market.
Why do currency values change?
Currency values can change for many reasons. Sometimes they react to political and economic news, sometimes they are driven by speculators, and sometimes they are driven by international business flows. If companies in the United States are importing large quantities of products made in Europe, they will need to exchange their US Dollars for Euros to pay for the products. When this is done in very large quantity over a short period of time, it raises the demand for Euros and the value of the Euro versus the US Dollar increases. This happens because dollars are being sold on the open market, while Euros are being bought.
Is currency trading risky?
Currency trading can be very risky. Currencies tend to be very volatile compared to other markets. The real key to success with currency trading is to use conservative risk management. There are many components to effective currency risk management, but the bottom line is to use caution and have a trading plan.
Who trades currencies?
Currencies are traded by individual retail investors, financial institutions, and corporations doing business. Retail investors and banks are trade to make profits and corporations usually trade in the normal course of the international business process.
Currencies are the money of different countries, and currency trading is the buying and selling of these currencies. There are almost as many different currencies as there are countries, but the most popular currencies for trading are the US Dollar, the Euro, the British Pound (Sterling), and the Japanese Yen. The currency markets are some of the most popular day trading markets, and they therefore have some of the highest volume (number of contracts) and liquidity. This high volume and liquidity makes the currency markets attractive to all types of traders, including individual day traders, trading companies, financial and non financial companies, banks, and governments.
There are several different ways of trading currencies, and even non traders are familiar with one form of currency trading. When people go on holiday to a different country they often need to exchange their local currency for the currency of the destination country. For example, a tourist from the US would need to exchange their US Dollars for Mexican Pesos if they went to Mexico on holiday. This exchange would be processed via a currency broker (such as a bank), and the transaction would become part of the currency markets. This type of currency trading is not suitable for professional traders, so two other forms of currency trading are used by day traders.
Forex (FOReign EXchange)
Forex trading is one of the most popular ways of trading the currency markets. Forex markets trade the actual exchange rate between two currencies. For example, the most popular Forex market is the Euro to US Dollar exchange rate (EUR to USD), which trades the value of 1 Euro in US Dollars. There are Forex markets for most of the major currencies, including the following :
EUR -> USD - The Euro to US Dollar exchange rate
GBP -> USD - The British Pound (Sterling) to US Dollar exchange rate
EUR -> GBP - The Euro to British Pound exchange rate
CAD -> USD - The Canadian Dollar to US Dollar exchange rate
AUD -> USD - The Australian Dollar to US Dollar exchange rate
EUR -> CHF - The Euro to Swiss Franc exchange rate
As the Forex markets are global markets, they trade 24 hours per day from Monday morning in New Zealand (Sunday night in the US) until Friday night in Asia (also Friday night in the US). Forex markets are different from most day trading markets in that they are not provided by an exchange. Forex markets are decentralized markets, where all trades are directly between two traders (or a trader and a Forex broker). This means that there could be several different exchange rates for the same currencies, depending upon factors such as the location of the traders, and the brokers being used.
Forex markets trade the currencies directly (rather than trading contracts), and the minimum amount that can be traded is known as a lot. The size of a lot is dependant upon the Forex broker being used, but is commonly at least $25,000. This amount is usually margined, so individual traders do not need to have anywhere near the lot size in their trading account, and will borrow most of the lot size from their Forex broker instead.
Currency Futures
EUR -> USD - The Euro to US Dollar exchange rate
GBP -> USD - The British Pound (Sterling) to US Dollar exchange rate
EUR -> GBP - The Euro to British Pound exchange rate
CAD -> USD - The Canadian Dollar to US Dollar exchange rate
AUD -> USD - The Australian Dollar to US Dollar exchange rate
EUR -> CHF - The Euro to Swiss Franc exchange rate
As the Forex markets are global markets, they trade 24 hours per day from Monday morning in New Zealand (Sunday night in the US) until Friday night in Asia (also Friday night in the US). Forex markets are different from most day trading markets in that they are not provided by an exchange. Forex markets are decentralized markets, where all trades are directly between two traders (or a trader and a Forex broker). This means that there could be several different exchange rates for the same currencies, depending upon factors such as the location of the traders, and the brokers being used.
Forex markets trade the currencies directly (rather than trading contracts), and the minimum amount that can be traded is known as a lot. The size of a lot is dependant upon the Forex broker being used, but is commonly at least $25,000. This amount is usually margined, so individual traders do not need to have anywhere near the lot size in their trading account, and will borrow most of the lot size from their Forex broker instead.
Currency Futures
Currency futures are futures markets that are based upon the currency markets. Currency futures markets trade futures contracts that reflect the exchange rates of two currencies. For example, the most popular currency futures market is the EUR futures market, which is based upon the Euro to US Dollar exchange rate. The most popular currency futures are provided by the CME Group (formerly the Chicago Mercantile Exchange), and include the following futures markets :
EUR - The Euro to US Dollar futures market
GBP - The British Pound (Sterling) to US Dollar futures market
CAD - The Canadian Dollar to US Dollar futures market
CHF - The Swiss Franc to US Dollar futures market
As they are futures markets, currency futures are provided by an exchange. This means that they have centralized pricing (and clearing), so the market price is the same regardless of the brokerage being used. Currency futures markets also trade 24 hours per day from Sunday night until Friday night in the US, so they are accessible to traders worldwide, even though all of the trades go through the same exchange.
Currency futures trade futures contracts that are worth a specific amount of the underlying currency. For example, the EUR futures contract is worth $125,000. The contract specifications for each currency futures market specifies the contract value, and other trading information such as the minimum price change (tick size) and the price change value (tick value).
Forex or Futures
EUR - The Euro to US Dollar futures market
GBP - The British Pound (Sterling) to US Dollar futures market
CAD - The Canadian Dollar to US Dollar futures market
CHF - The Swiss Franc to US Dollar futures market
As they are futures markets, currency futures are provided by an exchange. This means that they have centralized pricing (and clearing), so the market price is the same regardless of the brokerage being used. Currency futures markets also trade 24 hours per day from Sunday night until Friday night in the US, so they are accessible to traders worldwide, even though all of the trades go through the same exchange.
Currency futures trade futures contracts that are worth a specific amount of the underlying currency. For example, the EUR futures contract is worth $125,000. The contract specifications for each currency futures market specifies the contract value, and other trading information such as the minimum price change (tick size) and the price change value (tick value).
Forex or Futures
Even though both the Forex markets and the currency futures markets are based upon the same underlying financial markets, there are some significant differences that make one or the other the best choice for day trading. The Forex markets have very large liquidity (amount of money traded) so they can absorb very large trades (millions of dollars) without the market being affected, whereas the currency futures can only absorb a certain number of contracts (usually less than 100) before the market becomes affected by the trade. On the other hand, the currency futures markets are regulated markets, so they are not susceptible to price fixing (also known as market making).
Unless you have several million dollars that you want to trade with, or you want to convert one currency to another indefintely (i.e. not convert it back again), the currency futures markets are the best choice for individual day traders. The two most popular currency futures markets are the EUR (Euro to US Dollar futures market), and the GBP (British Pound to US Dollar futures market), and complete information about these (and other) markets (including their contract specifications) can be found in their market profiles.
Currency markets (also known as forex markets) are the largest day trading markets (in terms of volume and amount of money), trading approximately $2 trillion per day. Currency markets are the markets where one currency is traded for another currency, such as trading the Euro for the US Dollar. The majority of currency trading is between central banks, commercial banks, and large companies, with the largest currency trader currently being Deutsche Bank in Europe, but the currency markets are also traded by individual day traders.
Currency markets are unique in that they are not traded at exchanges, but are traded directly between traders instead. There are several large currency trading centers, with London in Europe, New York in the US, and Tokyo in Japan, being the largest.
Popular Currency Markets
Unless you have several million dollars that you want to trade with, or you want to convert one currency to another indefintely (i.e. not convert it back again), the currency futures markets are the best choice for individual day traders. The two most popular currency futures markets are the EUR (Euro to US Dollar futures market), and the GBP (British Pound to US Dollar futures market), and complete information about these (and other) markets (including their contract specifications) can be found in their market profiles.
Currency markets (also known as forex markets) are the largest day trading markets (in terms of volume and amount of money), trading approximately $2 trillion per day. Currency markets are the markets where one currency is traded for another currency, such as trading the Euro for the US Dollar. The majority of currency trading is between central banks, commercial banks, and large companies, with the largest currency trader currently being Deutsche Bank in Europe, but the currency markets are also traded by individual day traders.
Currency markets are unique in that they are not traded at exchanges, but are traded directly between traders instead. There are several large currency trading centers, with London in Europe, New York in the US, and Tokyo in Japan, being the largest.
Popular Currency Markets
Some of the most popular currency markets are the following :
EUR / USD - The Euro to US Dollar exchange rate
GBP / USD - The British Pound to US Dollar exchange rate (also known as cable)
USD / JPY - The US Dollar to Japanese Yen exchange rate
CHF / USD - The Swiss Franc to US Dollar exchange rate
EUR / GBP - The Euro to British Pound exchange rate
AUD / USD - The Australian Dollar to US Dollar exchange rate
CAD / USD - The Canadian Dollar to US Dollar exchange rate
EUR / CHF - The Euro to Swiss Franc exchange rate
Exchange Rate Spreads
EUR / USD - The Euro to US Dollar exchange rate
GBP / USD - The British Pound to US Dollar exchange rate (also known as cable)
USD / JPY - The US Dollar to Japanese Yen exchange rate
CHF / USD - The Swiss Franc to US Dollar exchange rate
EUR / GBP - The Euro to British Pound exchange rate
AUD / USD - The Australian Dollar to US Dollar exchange rate
CAD / USD - The Canadian Dollar to US Dollar exchange rate
EUR / CHF - The Euro to Swiss Franc exchange rate
Exchange Rate Spreads
Most people are familiar with the difference (or spread) between the buying and selling exchange rates that they get when they exchange foreign currencies at a bank (e.g. when they go on holiday). For example, using the EUR / USD exchange rate, the difference would be several percentage points, which in real prices could be from 1.2500 to 1.2800, which in currency trading terms would be 300 pips (calculated as (1.2800 - 1.2500) / 0.0001). Day trading spreads are much lower, and would be more like a fraction of a percentage point, or 1.2500 to 1.2503, or only 3 pips (calculated as (1.2503 - 1.2500) / 0.0001). Some traders are attracted to the currency markets by the difference between the retail and trading spreads, but note that the currency futures markets have an even lower spread (usually the equivalent of 1 pip).
Currency Brokers
Currency Brokers
Day traders can access the currency markets via the same direct access brokerages that they use for other markets, but should be aware that their trades are not being processed by an exchange, but by a currency broker instead. These currency brokers are allowed to make their own markets, which means that traders using one currency broker will not necessarily see the same prices as those traders using a different currency broker. In addition, some of the more unscrupulous currency brokers actively trade against their traders, and will prevent their traders from getting the best possible price, while taking the extra profit for themselves. It is common for currency brokers to not charge commissions for currency trades, as they will take some of the spread as their commission instead.
Symbols and Tick Values
Symbols and Tick Values
Currency market trading symbols are constructed using the two currencies that are being traded. For example, the trading symbol for the Euro to US Dollar market would be EUR/USD. Each currency market has a minimum price change (tick size), and a minimum trading amount, with which the value per minimum price change can be calculated. Continuing with the EUR/USD currency market, the minimum price change is 0.0001, and the minimum trading amount is approximately $25,000 (this varies depending upon the currency broker), so the value per minimum price change is calculated as 0.0001 X $ 25000 = $2.50. This means that for every 0.0001 in price change, a trade's profit or loss would change by $2.50. Even though the minimum trading amount is $25,000 or more, the currency markets are traded using leverage, so an individual day trader only needs to have a fraction of that amount in their trading account.
Trading Recommendation
Trading Recommendation
While the currency markets can be day traded, they have some features that make them a less preferred day trading market. If you want to trade the currency markets purely for day trading purposes, then the futures markets offer enough markets based upon currencies, that you should trade the futures markets instead. If however, you want to trade currencies to actually hold the other currency (i.e. if you want to keep some money in Euros), then the currency markets are the markets to trade.
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