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Posts Tagged ‘Forbes’

Is this the biggest crisis of all?

Posted by Admin on March 31, 2011

Proportion of CDSs nominals (lower left) held ...

Credit Default Swaps held by U.S.A Banks

http://in.finance.yahoo.com/news/Is-biggest-crisis-equitymaster-812900507.html

On Thursday 31 March 2011, 8:30 AM

We seem to be living in rather fragile times. There is too much going on in the world that can yet again derail the global economy. There’s the oil price and then there’s the Middle East turmoil. The Japan earthquake was a sorry addition to the list. And not to forget, the US economy is still not completely out of danger, trillions of dollars worth of injections not withstanding.

Clearly, the battle seems to be on as to what will really upset the applecart this time around. But what if we say the most likely candidate is not even in the list of events that we just discussed. It has somehow got pushed to the backburner.

But perhaps not anymore. Forbes adds that a severe escalation in Europe‘s credit crisis has the capacity to cause a repeat of the 2008 meltdown. Indeed, the chance that anyone or all of the so called PIIGS nations could default keeps rising by the day.

Not a week goes without something nasty taking place in any one of these nations. The latest issue to flare up has its roots in Portugal. Apparently, the parliament of the peripheral European nation recently voted against austerity measures of any kind. Not surprisingly, the ratings agencies swung into action and promptly downgraded the country’s sovereign debt ratings.

Other of the PIIGS may not be far behind. Already, Greece, Ireland and Portugal are commanding a heavy premium over the other two in the highly punitive Credit Default Swaps (CDS) market. CDS is nothing but an instrument that helps insure against defaults by corporate or sovereign bonds. Higher the premium, greater is the probability of a default.

Forbes adds that if Italian or Spanish CDSs start being grouped alongside Ireland and Portugal, it could signal a tipping point of sorts. This will then lead to a problem that will not be solvable by tossing another 100 billion Euros at the problem. And it will be not just sovereign bonds that will be on the line. It can have a huge impact on the European banking system. Not to forget the flight to safety attitude of investors that could spark a global sell off.

Thus, there you go. For the next few weeks, do not worry about the Japan tragedy much. Neither do fret about how high oil is headed next. Keep an eye on those troubled Euro nations. Particularly the risk premium they are commanding in the default market. And this would be the key to unlocking the mystery of the direction of the global economy.

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Exclusive: WikiLeaks Will Unveil Major Bank Scandal

Posted by Admin on November 30, 2010

First WikiLeaks spilled the guts of government. Next up: The private sector, starting with one major American bank.

In an exclusive interview earlier this month, WikiLeaks founder Julian Assange told Forbes that his whistleblower site will release tens of thousands of documents from a major U.S. financial firm in early 2011. Assange wouldn’t say exactly what date, what bank, or what documents, but he compared the coming release to the emails that emerged in the Enron trial, a comprehensive look at a corporation’s bad behavior.

“It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume,” he told me.

Read Forbes’ full interview with Assange and our cover storyon what he and WikiLeaks means for business here.

“You could call it the ecosystem of corruption,” Assange added. “But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest.”

WikiLeaks recent priority has clearly been the publication of hundreds of thousands of government documents: 76,000 classified documents from the war in Afghanistan, another 392,000 from Iraq, and on Sunday, the first piece of an ongoing exposure of what will likely be millions of diplomatic messages sent between the U.S. State Department and its embassies.

But that government focus doesn’t mean WikiLeaks won’t embarass corporations, too. Since October, WikiLeaks has closed its submissions channel; Assange says the site was receiving more documents than it could find resources to publish. And half those unpublished submissions, Assange says, relate to the private sector. He confirmed that WikiLeaks has damaging, unpublished material from pharmaceutical companies, finance firms (aside from the upcoming bank release), and energy companies, just to name a few industries.

Whether and when those secrets come out is solely a matter of Assange’s discretion. “We’re in a position where we have to prioritize our resources so that the biggest impact stuff gets released first.”

For more, read our cover story on Assange’s plans, how a legendary hacker is working with the Pentagon to stop him, and how Iceland hopes to spring a flood of leaks worldwide.

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