Monday, January 28, 2008

In Banks We Trust

Ever since the news of the Société Générale bank fraud spread around the world, bank depositors and the general public are now wondering whether banks are part of the solution – or cause of the problem – of our current global financial crisis?

By: Vanessa Uy

As the French bank Société Générale prepares to close its offices for the weekend last January 25, 2008. A 31 – year – old Junior Executive Trader named Jerome Kerviel now dubbed as the “rogue trader” managed to loose a little over 7 billion US dollars worth of Société Générale’s funds by trading on the European Equities Market. An amount equivalent to 15% of the bank’s total assets or the amount the bank earns in an average fiscal year. The Junior Executive’s questionable action was defined as a fraud under established trading laws. Now under custody, investigators have doubts whether Jerome Kerviel acted alone. If found guilty, Jerome Kerviel may face a 5 - year prison sentence and hefty fines. Since the incident happened, ordinary bank depositors around the world – i.e. you and me – now doubt whether commercial banks and related financial institutions can do their part in solving the current “financial turbulence”.

For as long as I can remember, banks are seen as “agents of economic progress.” This is so because in school our teachers had instilled in us that if we save our money in banks - as opposed to stashing it in our “secret cookie jar” - we will be contributing to the economic progress and welfare of our nation. But recent events, like the Société Générale bank “fraud” case introduced a worm of doubt on everyone’s perceived trust between their money and their bank.

As of late, top economists had been pointing their fingers on the culture of “savings disparity” as the primary cause of the US credit crisis that is now threatening the global economy. These economists point out that on average, typical Americans save an equivalent of about 10% of their annual income, while in China its 50%. The prevailing wisdom about the role of banks on a nation’s / state’s economy lead the economists to conclude that the phenomenon of “savings disparity” is the overwhelming reason why – at present – the US Economy is weakening. While China’s remained strong despite the “bad decisions” made by US banks and related financial institutions that lead to the credit crunch and sub prime mortgage crisis. But since – taken as a whole – the global economy is a relatively complex dynamic system that’s continuously in flux, only time will tell if the Federal Reserve chairman Ben Bernanke and the Bush Administration’s resort to John Maynard Keynes – style economics. Like the 145 - billion dollar “Economic Stimulus” package that will supposedly prevent the US Economy from sliding into a recession. Or should everyone of us prepare for a repeat of the “Banking Panic of 1857”, or the draconian credit control measures of the Roosevelt Administration that lead to the “Bank Holiday” of March 4, 1933. Just remember what John Maynard Keynes wrote early in his career: “In the long run we are all dead.”

Wednesday, January 16, 2008

Structured Settlements: A Barrier to Social Justice?

Now more than ever, governments worldwide are forced to choose between the welfare of their citizens or in maintaining the “bottom line” of corporate entities.

By: Ringo Bones and Vanessa Uy

American social justice crusader Michael Moore had criticized structured settlements in his documentary “Bowling for Columbine” citing that -in practice- it is pro-corporation and anti-corporate victim. In the recent Heiligendamm G8, ATTAC-the anti G8 pressure group-are very clear on where they stand on the issue of structured settlements with their motto that states: “The world is not for sale.” But what is a “structured settlement”? A structured settlement is a financial or insurance arrangement- including periodic payments- that a claimant accepts to resolve a personal injury tort claim or to compromise a statutory periodic payment obligation. Structured settlements were first utilized in the US and Canada during the 1970’s as an alternative to lump sum settlements. Structured settlement payments are sometimes called “periodic payments.” A structured settlement that is incorporated into a trial judgment is called “periodic payment judgment.” Almost instantly after being instituted by the major economic powers in their judicial system, structured settlements were later adopted by London, Australia and the rest of the “Industrialized West.” If this form of settlement is being widely adopted by the Western World, then conventional wisdom dictates that this is a good thing – right?

In practice, the equitability of structured settlements break down when the claimant has became terminally ill and doesn’t have much time to live. This works in favor of the corporation responsible for the said injury/damage to the health and well being of the plaintiff. Back in June 2007, the BBC reported on a court appeal in the US to pay compensation to Vietnamese citizens affected by the defoliant “Agent Orange” then in use during the Vietnam War. The claimants lost on the first round of court hearings, but they vow to persevere.

Basing on what we currently know about the “Agent Orange” issue, the Vietnamese victims of the said defoliant face an uphill battle. Since the manufacturers of the “Agent Orange” used during the Vietnam War – DOW Chemical Corporation and Monsanto Corporation – have close ties to the powers-that-be on the Pentagon and Capitol Hill. Even though -at present- DOW and Monsanto are currently involved with structured settlements with American Troops who became chronically ill and developed cancer while being exposed to “Agent Orange” during their “Tour of Duty” in Vietnam during the 1960’s.

DOW and Monsanto’s “delay tactics” will only do the company favors since their yet-to-be-recognized claimants are slowly dying out. This might not pass as justice to most of us civilized folks, but it’s the law!

Thursday, January 3, 2008

Should We Be Investing in Gold

For the last 30 years or so, it’s a well-known fact that as the value of the US dollar decreases, the price of gold increases. In today’s post-US sub-prime mortgage economic climate, does it still make good fiscal sense to invest in gold?

By: Ringo Bones and Vanessa Uy

As the price of oil draws ever closer to the 100 US dollar-per-barrel mark, is our present (fiscal year 2007) global economy fast becoming into the economic climate that existed in 1980? Even though there are similarities like the Federal Reserve reigning in on credit and interest rates, the tumultuous political situations in the Middle East. The US$100 in 1980 is still higher in value after FTC algorithm-inflation-adjustments compared to US$100 circa-2007. Armed with this data, will the price of gold do a 1980 era repeat of reaching over the US$800 per-ounce price range?

With an aspect of Sharia Banking Laws fast becoming into vogue in Western financial sectors like the idea of financial institutions should only honor “concrete” or “tangible” forms of collateral, the lure of investing into precious metals –like gold- had recently become the hottest trend in high-yield investments. But the precious metals market is by no means strictly infallible and not immune from unlawful market manipulation. If anyone still remembers-or cares- about the “Hunt-silver debacle” will surely attest to this. At the beginning of the 1970’s the Hunt brothers – heir to the multi-billion dollar fortune of Texas oil/petroleum tycoon H.L. Hunt used their billions to purchase and hoard silver in an attempt to increase the price of silver to be comparable to that of gold. But near the end of March 1980, the Hunt brothers, along with a major Wall Street firm and U.S. securities and commodities markets came almost to the brink of financial disaster. Even though those were different times back then, if most of today’s current billionaires will do a “stunt” similar to what the Hunt brothers did -but to gold- the price of gold could reach US$10,000 per-ounce.

Our current allure of gold and its related retinue of precious metals, stemmed from the US sub-prime mortgage crisis that became news by the end of July 2007. During the succeeding months, the fallout of the US sub-prime mortgage crisis affected the global currency market – with their anchor – the US dollar weakened by inflation due to the Bush administrations current quagmire in Iraq. (At an average cost of US$1billion-per-week, it does seem like Uncle Sam is setting up a colony on a distant earth-like planet orbiting the star Alpha Centauri). Bonds and conventional bank savings accounts quickly lost their appeal as inflation drained their purchasing power. So investors and their dogs everywhere quickly began to turn to the oldest stores of value they can find – gold and related precious metals.

The novice investor may ask: “Why invest in gold?” Well, since the time paper money gained widespread appeal. These “paper money” –by common sense- should be worth just about or lesser than the paper on which it is printed on, unless the paper money’s value is backed-up by “tangible” or “concrete” assets namely gold, silver or the other related precious metals. But it is mainly the “gold standard” i.e. a monetary standard under which the basic unit of currency is defined via a stated quantity of gold circulating freely into the international financial system, hence the term “bank notes”. The reason we expend an almost excessive amounts of our mining expertise in obtaining this rare but almost useless metal, which even in “gold rush” days involves the “processing” of a ton of ore just to get 17 grams of gold. At present, even “processing” a ton of ore just to get 3 grams of gold is considered very economically viable. And also, it is because gold is what makes our paper money able to buy things i.e. purchasing power. The other uses of gold is in the jewelry industry, dental “bridgework” and electroplating electrical / electronic components to make them corrosion resistant.

While platinum is far more useful than gold and the gyroscopes of modern bombsights are made from it. Unlike gold or silver, platinum doesn’t occur in its native state in nature i.e. free elemental form. Platinum, and its related metal siblings on the Periodic Table namely rhodium, iridium and palladium are usually refined via proprietary chemical process that is a highly guarded trade secret. Usually a batch of beige - colored mud (ore concentrate) is added with a “secret” chemical mixture to obtain the pure metallic platinum and its metal siblings.

A lesser known metal that is more useful expensive, and rarer than gold is gallium. The main user of gallium is the electronics industry where it is used in making semiconductors with high switching speeds and “solid state” night-vision goggles. Without gallium, the green-tinged Paris Hilton Sex Video would not have been possible. Yet gallium plays no part in backing the value of our paper currency.

So what does this all mean? Being closeted –but fiscally challenged – philanthropists that we are. We do believe in charity –only during those times that we are practically overflowing with money. We’ve read “The Politically Incorrect Guide to American History” by Thomas E. Woods, Jr., Ph.D.. And the part of that book that really speaks to us is about how charitable giving grew at a faster rate during the 1980’s, described as “the decade of greed” (after the movie “Wall Street”?). Statistics had shown that charitable giving during the 1980”s really grew at a faster rate than it had during the previous 25 years. A really “scary” proof to the saying that: “greed is good”. Because of this, its now in the best interest of major charitable organizations like Oxfam and the UN Food Programme for us to “become rich”. With skyrocketing grain / staple crop prices due to the hastily set-up biofuel industry, the United Nations Food Programs food / grain purchasing power has been drastically reduced. So they need more money just to maintain their existing / basic programs.

The Dot Asia Domain Name: Kickstarting the Region’s Economy?

The age of Internet domain name real estate has finally arrived, will you be the next I.T. billionaire?

By: Ringo Bones

There’s a new domain name in our “Internet Town”, it’s called dot Asia (.asia). One of the latest lines of domain names that’s named after an actual geographic location. Looks like we used up all of those little Pacific Island nations as a source of domain names.

Interested customers to the auction have 6 months to register, so register as soon as humanly possible because these things go out fast. Registration for “dot asia” opened on Tuesday October 9, 2007. Protection wanted from cyber-squatters?

Back in August 9, 1995, nobody knew that the dot com boom that started then will eventually go bust five years later. Now, Internet entrepreneurs are more wary on the promise of easy money. Even experienced Internet domain name developers are forever mindful that their “South Sea” domains like Tuvalu’s dot tv and Tokelau’s dot tk might mimic the “South Sea Bubble Burst of 1720”.

To me, the IT / Internet / computer industry – after recovering from the dot com bust of 2000 - has done so much good to those fresh out of college looking for gainful employment, especially those living in the impoverished parts of the world. The industry could essentially fulfil the promise of the Clinton Global Initiative of keeping every batch of fresh graduates securely employed by creating new jobs – like domain name developers – every 5 to 8 years. If all goes well, this mission would be a piece of cake for the industry.

Lexington Law: Prosperity Tool or Needless Rigmarole

Now that on-line banking services are now as secure as their traditional equivalent, does the Lexington Law Firm’s service (promise?) of improving one’s credit score help or hinder our goal towards financial security?

By: Ringo Bones and Vanessa Uy

Since the advent of on-line banking, meeting ones financial needs like e-loans is now only a mouse click away. Some on-line banks have even adopted the concepts of Nobel laureate Professor Muhammad Yunus’ “Banking for the Poor.” You can now avail to a socially responsible investing by providing small business loans to the needy via the Internet. But as one’s on-line business keeps on growing, sooner or later, one will encounter “credit report” problems. Fortunately, there are service providers on-line whose business is to provide solutions to these kinds of problems.

As seen on their adverts, Lexington Law firm promises to improve your credit score and provide credit repair. Lexington Law firm has pioneered credit services over the Internet. Lexington Law firm has been providing credit repair services for many years and have a select group of experienced attorneys who specializes in credit repair. The law firm had helped over 90,000 Americans repair their credit by removing inaccurate, misleading or unverifiable items / information from their client’s credit reports. From bankruptcies to charge - off to tax liens, Lexington Law firm have challenged virtually every credit problem under the sun. They’re good at what they do because they believe in their work. Their attorneys enjoy what they do and are committed to their clients. This means they get you results that you –the client-can count on, results that can literally turn your life around.

Lexington Law firm ignited the consumer credit repair revolution in 1991 with their off-line credit repair services, and reinvented the consumer credit repair process in 1997 with it’s e-Client service. Lexington is committed to providing the best and most effective credit repair solutions to consumers through its innovative credit repair and Internet offerings. At present, Lexington has helped over 200,000 Americans repair their credit reports by removing inaccurate, misleading, or unverifiable information. The firm also promises 24 hour 7 days a week support, same day service, no hidden fees and their clients can cancel anytime.

Since their establishment in 1991, only a very small minority of Lexington Law firm’s clients experienced dissatisfaction of the services provided. Like the one client who voiced her opinion on, she said Lexington Law firm does “NOT” provide dispute letters to clients? Spam disputes only? While some of Lexington Law firms more extreme critics describe the firm as an “ENRON” waiting to happen.

From what I had observed so far, Lexington Law firm provides an invaluable service of improving one’s credit score especially in this age of on-line banking where prospective clients can only “meet” the bank manager in cyberspace. The service they provide could literally save your credit so that when the time comes when you need money in a hurry, there will be no problem asking your on-line bank for an e-loan i.e. to borrow money. I wonder if Lexington Law firm also includes credit counseling or a tip to reduce debt as part of their on-line service? Also, one can’t ignore the testimonials of thousands of their satisfied clients, which only serve to strengthen Lexington Law firm’s reputation.

Like all business related firms, only time will tell if Lexington Law firm will boom or bust in this new age of on-line banking where the primary goal of their clients is the acquisition of extra money. I just hope that they’ll survive the current July 2007 slowing down of America’s credit market.

Domain Names: The Internet’s Real Estate Bonanza?

From the 1990’s “Dot Com” boom to the bubble bursting in 2000, are domain names the magic bullet that will restore investor confidence on the Web?

By: Ringo Bones and Vanessa Uy

Touted as the “Real Estate Market of the Future” in the middle of the 1990’s, domain names are now a billion-dollar industry, not only for the major search operators like Google and Yahoo but also to a new breed of Internet real estate developers. Domain names have since become the “bread and butter” of the on line marketing and on line advertising business. Having outgrown the “dot com” slump of 2000, domain name – the real estate of the web – have been delivering far greater returns compared to it’s real world counterpart as reported on For those of you who have the resources to invest in the domain name development business yet don’t know what it is, here’s a primer.

Domain name refers to the first part of a URL - (URL stands for Uniform Resource Locator – the unique address of any Web document that can be keyed in a typical browser’s OPEN or LOCATION / GO TO box to retrieve a document) – on to the first / where the domain and name of the host or SERVER computer are listed. This is usually arranged in reverse i.e. name first, then domain. The domain name gives you the information on who (the origin of) “published” the page i.e. made it public by putting that page on the Web.

In the 1990’s – when the Internet evolved from a mere “academic curiosity” to a telecommunications medium with a promising economic viability – the exclusive right to use Internet domain names became a highly contested issue. Enterprising individuals knew that there’s money to be made in these unique sequences of letters that are divided – by convention – into segments separated by periods that correspond to the numerical Internet Protocol Addresses that identify each of the millions of computers connected to the Internet. Because domain name labels enable packets of information to be sent to their specific destinations across the Internet, the commercial implications are not lost to the world’s various advertising agencies.

Domain name development profits does not only fill the coffers of unscrupulous entrepreneurs, but can also benefit an impoverished country because all countries are designated a top-level domain name on the Internet usually as a suffix to that country’s Internet Address. For example .be for Belgium, .hk for Hong Kong, .ph for the Philippines, .za for South Africa and so on. A number of these domain names have been featured on stamps. During the last few years of the 20th Century, a relatively poor Pacific Island nation of Tuvalu hit the jackpot when it received the .tv domain name, although initially Tuvalu’s citizens didn’t realize that they owned the most recognizable suffix of all, .tv.

Back in 1999, the .tv domain name gained “humanitarian / philanthropic” status when Jason Chapnik – a Canadian businessman- walked into a Tuvalu parliament meeting and pleaded his intentions to buy their domain name. After further negotiations, by the year 2000 Tuvalu decided to sign up with Chapnik to form a new company called Dot TV that’s currently based in Pasadena, California. Tuvalu owns 20% of Dot TV and received US$50 million from the lucrative deal which the country – via structured settlement – receives quarterly payments of US$1 million each over a period of 10 years. Tuvalu recently received a payment of US$18 million that instantly doubled the country’s GDP.

This sudden windfall of revenue allowed Tuvalu to achieve an economically independent status. Ever since gaining independence in 1978, Tuvalu could hardly afford the US$20,000 UN membership fee. It wasn’t until September 5, 2000 where Tuvalu could finally afford being UN’s 189th member nation. The domain name revenue enabled the various islands of Tuvalu the ability to upgrade their public infrastructure like roads, schools and water purification facilities. The upgrading of Tuvalu’s main airport to accommodate larger planes has allowed the country to export food for the first time in history.

Despite of the recently found wealth, the global community is now wondering whether Tuvalu can cope with the challenges of sea level rise due to global warming and the increased typhoons brought about by climate change with “dot com” funds alone. Is Tuvalu now in the front line for the global community’s battle against sea level rise?

On Line Social Money Lending Networks

Ever since Mohamad Yunus was awarded the Nobel Peace Prize for proving the fiscal viability of lending money to the poor, are the on line counterparts just as effective?

By: Vanessa Uy

My grandfather’s present financially secure status was due to some big-hearted soul who took a chance by lending him some money as capital for a business start-up. This is just one of the success stories/testimonials that extol the virtues of money lending. But more often than not: Does it help more than it hurts? When Mohamad Yunus was awarded the Nobel Peace Prize last year for his “Banking for the Poor” program. Many of the urban poor in the slums of Bangladesh were very grateful for receiving the much needed start-up money / small business loan, thus getting them out of “the red.”

On the web, you can do your own DIY banking with the help of “” This is one of the pioneering on line money lending sites, which started operating in England that lends money that is payable on the client’s own terms. A myriad of testimonials on Zopa’s website already professed that they benefited Zopa’s easy to pay terms. Since then, Zopa probably served as a vital lifeline to the majority of England’s “blue collar” population. Despite the risks of phishing, ID theft, and the proliferation of illegal key logging software that continually compromises on line security or just due to the relative lawlessness of the world wide web. “” still manages to provide material gains to their investors while offering a helping hand to those in need of extra cash. James Alexander CEO of Zopa says that his company has enough safeguards to minimize the risks.

If you want to help someone in a poor country to start his or her own enterprise, you should check out Kiva. Kiva is an on line social money lending site that allows you to sponsor an entrepreneur from a third-world country for as little as US$25. What I liked very much about Kiva is that they have a very good “transparency factor.” Thousands of charity cases, which have passed Kiva’s evaluation, are listed on their website. The short video clips contain individual business proposals. If you choose to invest, the maturation period of the loans are usually 6 to 12 months. And you, the investor are contacted via e-mail on your investment’s progress. One of Kiva’s success stories is Angel, a bicycle repairman from Rome, Bulgaria. Angel got booted out of the local bicycle repair shop in which he was previously employed due to “financial restructuring.” With Kiva’s helping hand, Angel now runs his own bicycle repair shop. With additional investments, you can help him expand his business and help to lessen the unemployment problem of his hometown.