Will the latest NYSE computer trading error that resulted in a thousand-point drop of the DOW in Thursday’s trading eventually undermine investor confidence in our post credit crunch world?
By: Ringo Bones
The incident is somewhat reminiscent of the Black Monday Stock Market Crash of October 19, 1987. The NYSE computer trading error that resulted in a thousand-point plunge of the DOW in Thursday’s trading that eventually resulted in the global stock sellout rout even though the global markets has since stabilized after that unfortunate May 6, 2010 trading fluke. Given that there is that on-going Greek debt crisis that threatens the euro, is this latest computer trading error looking more like the financial equivalent of the Cuban Missile Crisis of October 27, 1962?
Some old timers who have much at stake in this latest stock market crash probably have memories of being rudely awakened at 2 A.M. in to be prepped up for pre-breathing pure oxygen at 2 p.s.i. in order to purge excess nitrogen from their blood as they hurriedly slip on into their partial-pressure suit came flooding in. With the on-going Greek debt crisis being labeled as a “Contagion” by leading financial pundits, it is no wonder that the NYSE computer trading error can now be safely compared as the financial equivalent of the Cuban Missile Crisis of 1962. Even though the Greek debt crisis having very little – if nothing – to do with the latest NYSE stock market crash.
Unfortunately, the resulting stock price plunge had resulted in a panicky knee-jerk reaction in the global markets. Imagine Exxon Mobil stocks suddenly plunging from 66 US dollars a share to 58, or Procter and Gamble suddenly falling from 62 US dollars a share to 39, while Accenture PLC was probably the worst affected after their shares priced at 42 US dollars each suddenly becoming into penny stocks. When a Blue Chip-priced stocks suddenly turning into penny stocks in a single trading session managed to raise alarms that there in something terribly wrong – as in a major computer trading error.
Preliminary investigations have revealed that a certain overworked sleep-deprived trader manning a certain computer workstation at the NYSE has been blamed for mistakenly typing in a “B” for billion instead of an “M” for million. The resulting pricing error had made a trillion dollars worth of funds virtually disappear into thin air. Looks like humans are still the be-all-end-all link of our contemporary heavily computerized global stock markets. But will this weak link undermine investor confidence in our post global credit crunch world?
Friday, May 7, 2010
Goldman Sachs: Capitol Hill’s Financial Scapegoat Du Jour?
With the US government and the American public desperately seeking the financial reform of Wall Street, has Goldman Sachs just become another scapegoat of the 2008 financial crisis?
By: Ringo Bones
After surviving relatively unscathed from the 2008 global financial crisis, Goldman Sachs was once again put under the US Securities and Exchange Commission’s microscope. Most likely due to the financial firm’s publicly revealed promise to pay exorbitant executive bonuses after profiting a little over 3-billion-dollars during the first three months of 2010 that revealed anomalies in the financial firm’s proprietary trading of derivatives. After the SEC filed fraud charges, the UK financial watchdog immediately followed suit to investigate Goldman Sachs’ affiliates on British soil. Despite of the financial firm’s somewhat questionable reputation when it comes to shady dealings of derivatives like CDOs, has Goldman Sachs just became Capitol Hill’s latest financial crisis scapegoat?
The primary reason why Goldman Sachs got further SEC scrutiny is probably due to the Obama Administration’s proposed Wall Street reform on financial regulations. The gist of which includes: 1) Consumer protection for stock investors, 2) More SEC oversight on derivatives trading and 3) Set up a fund to lessen the of a large-scale financial meltdown in case it happens again. Will this proposed White House financial reform of Wall Street nothing more than biting the hand that feeds then albeit gently? After all, it is primarily the capital gains tax collected from Wall Street financial firms – and contributions come presidential election time - that made the periodic titanic political battle between the Democratic Party and Republican Party a possibility.
The Capitol Hill versus Goldman Sachs saga just went into another unexpected plot twist when the firm’s CEO, Lloyd Blankfein, was summoned before the Capitol Hill’s investigative committee after allegedly placing the financial firm’s profits before their clients. Senator Carl Levin (D-Michigan), Governmental Affairs Subcommittee on Investigations chairman, managed to add color to the proceedings after his expletive-laden grilling of Goldman Sachs’ executives over the e-mails pertaining to the “Shitty Timberwolf Deal”. Ironically, Senator Levin could be blamed for the current Goldman debacle because he further enabled the laissez-faire policy of the US government when it comes to a genuine Wall Street financial regulation reform after he fully endorsed the Gram-Leach-Bliley Act back in November 4, 1999. Passing the Gram-Leach-Bliley Act more than likely made Goldman Sachs the “evil” financial firm that it is today.
By: Ringo Bones
After surviving relatively unscathed from the 2008 global financial crisis, Goldman Sachs was once again put under the US Securities and Exchange Commission’s microscope. Most likely due to the financial firm’s publicly revealed promise to pay exorbitant executive bonuses after profiting a little over 3-billion-dollars during the first three months of 2010 that revealed anomalies in the financial firm’s proprietary trading of derivatives. After the SEC filed fraud charges, the UK financial watchdog immediately followed suit to investigate Goldman Sachs’ affiliates on British soil. Despite of the financial firm’s somewhat questionable reputation when it comes to shady dealings of derivatives like CDOs, has Goldman Sachs just became Capitol Hill’s latest financial crisis scapegoat?
The primary reason why Goldman Sachs got further SEC scrutiny is probably due to the Obama Administration’s proposed Wall Street reform on financial regulations. The gist of which includes: 1) Consumer protection for stock investors, 2) More SEC oversight on derivatives trading and 3) Set up a fund to lessen the of a large-scale financial meltdown in case it happens again. Will this proposed White House financial reform of Wall Street nothing more than biting the hand that feeds then albeit gently? After all, it is primarily the capital gains tax collected from Wall Street financial firms – and contributions come presidential election time - that made the periodic titanic political battle between the Democratic Party and Republican Party a possibility.
The Capitol Hill versus Goldman Sachs saga just went into another unexpected plot twist when the firm’s CEO, Lloyd Blankfein, was summoned before the Capitol Hill’s investigative committee after allegedly placing the financial firm’s profits before their clients. Senator Carl Levin (D-Michigan), Governmental Affairs Subcommittee on Investigations chairman, managed to add color to the proceedings after his expletive-laden grilling of Goldman Sachs’ executives over the e-mails pertaining to the “Shitty Timberwolf Deal”. Ironically, Senator Levin could be blamed for the current Goldman debacle because he further enabled the laissez-faire policy of the US government when it comes to a genuine Wall Street financial regulation reform after he fully endorsed the Gram-Leach-Bliley Act back in November 4, 1999. Passing the Gram-Leach-Bliley Act more than likely made Goldman Sachs the “evil” financial firm that it is today.
Monday, April 19, 2010
Vulture Funds: Threat to an Egalitarian Globalization?
The clarion call of globalization preaches that every nation deserves economic prosperity, will vulture funds ruin this egalitarian economic idealism?
By: Ringo Bones
In a perfect world, any country wishing to embrace globalization is guaranteed economic prosperity. In the real world, through the rigmarole-like machinations of a globalization-based economy, poor countries often get the bad end of a business contract. Vulture funds had gained the attention of the mainstream press when poor countries in Africa – first Zambia then Liberia – wind up using their international aid money to service debts they don’t even know that they have. Sadly, the financial misery was hatched up by unscrupulous Wall Street types during the turbulent “nation building” phase of a number of poor African countries during the 1970s and the 1980s.
When these poor African countries where still under the stranglehold of their respective megalomaniac dictators, they racked up massive debt via their respective military built-up programs. When the dictators got deposed, Wall Street speculators managed to pick up almost worthless debt bonds that enabled these unscrupulous entrepreneurs via the rigmarole of gray area business contracts to later collect the sovereign debt of these starving African countries. And these unscrupulous Wall Street types do intend to collect their debt – even via international development aid money – at the expense of those poor countries’ starving citizens.
Recently, Number 10 Downing Street had initiated an international ban on the trade of vulture funds. But a Wall Street based financial firm trading in vulture funds called F.H. International fell under investigation when its CEO Eric Hermann had taken advantage of Liberia’s international debt reduction program. Through the Hamsah Fund transfer, Mr. Hermann supposedly made a Vulture Fund on Liberian sovereign debt seem official. Before the vulture fund debacle was uncovered, a significant portion of international aid money destined for the rehabilitation of post civil war Liberia was diverted to service vulture funds. Globalization was supposed to help poor countries attain economic prosperity, instead it had a legal loophole that made vulture funds a reality. Making vulture funds probably the most unethical and the most socially irresponsible way to make money. Vulture funds could probably turn out to be very useful to repressive regimes, just imagine what it could do if the Beijing governments communist party functionaries would use it against the Uyghur uprising, the Free Tibet Movement, or organizations spreading awareness of the June 4, 1989 Tiananmen Square Massacre, Google, etc.
By: Ringo Bones
In a perfect world, any country wishing to embrace globalization is guaranteed economic prosperity. In the real world, through the rigmarole-like machinations of a globalization-based economy, poor countries often get the bad end of a business contract. Vulture funds had gained the attention of the mainstream press when poor countries in Africa – first Zambia then Liberia – wind up using their international aid money to service debts they don’t even know that they have. Sadly, the financial misery was hatched up by unscrupulous Wall Street types during the turbulent “nation building” phase of a number of poor African countries during the 1970s and the 1980s.
When these poor African countries where still under the stranglehold of their respective megalomaniac dictators, they racked up massive debt via their respective military built-up programs. When the dictators got deposed, Wall Street speculators managed to pick up almost worthless debt bonds that enabled these unscrupulous entrepreneurs via the rigmarole of gray area business contracts to later collect the sovereign debt of these starving African countries. And these unscrupulous Wall Street types do intend to collect their debt – even via international development aid money – at the expense of those poor countries’ starving citizens.
Recently, Number 10 Downing Street had initiated an international ban on the trade of vulture funds. But a Wall Street based financial firm trading in vulture funds called F.H. International fell under investigation when its CEO Eric Hermann had taken advantage of Liberia’s international debt reduction program. Through the Hamsah Fund transfer, Mr. Hermann supposedly made a Vulture Fund on Liberian sovereign debt seem official. Before the vulture fund debacle was uncovered, a significant portion of international aid money destined for the rehabilitation of post civil war Liberia was diverted to service vulture funds. Globalization was supposed to help poor countries attain economic prosperity, instead it had a legal loophole that made vulture funds a reality. Making vulture funds probably the most unethical and the most socially irresponsible way to make money. Vulture funds could probably turn out to be very useful to repressive regimes, just imagine what it could do if the Beijing governments communist party functionaries would use it against the Uyghur uprising, the Free Tibet Movement, or organizations spreading awareness of the June 4, 1989 Tiananmen Square Massacre, Google, etc.
Monday, February 22, 2010
The Big Fat Greek Debt Crisis: An Epic Financial Saga?
Even though the country’s sovereign debt problems only started to threaten the stability of the euro in 2010, is the sovereign debt crisis that affected Greece long in the making?
By: Ringo Bones
It can only be described as somewhat shocking news to anyone with a vested interest to the monolithic European super-currency – not to mention countless Greeks with nary a financial safety net – but the sovereign debt crisis affecting Greece which recently became newsworthy seems to have started as far back as 2001. It had been revealed to the mainstream financial news providers in February 19, 2010 that Greece made a currency deal / currency swap with Goldman Sachs back in 2001 in order to cover-up the country’s budget deficit. Though perfectly legal under the EU rules back then, many financial experts had now blamed this move as the root of the big fat Greek sovereign debt crisis that now threatens the value and long-term stability of the euro. With this fiasco, could the role of banks in financial crises such as these put them under scrutiny once again?
The current Greek administration insists that the practice was above board. Even Prime Minister George Papandreou keeps reiterating that Greece needs financial aid – not financial bailout. Given I’m somewhat perplexed of this arcane financial maneuver I started asking the financial experts in our neighborhood. All of them say that the sheer complexity and rigmarole of such over the counter instruments deals – like a typical currency deal / currency swap can be a very effective way of covering up a typical budget deficit problems suffered by a typical country. Of countries and individual persons, it can also be a very effective credit rating booster in the short-term, akin to someone sporting a 2,000 US dollar Armani suit even though they earn less that 25,000 US dollars a year.
As a recently designated member of the PIIGS countries – i.e. the poorest performing economies in Europe as in Portugal, Ireland, Italy, Greece and Spain – Greece has been forced to take extremely draconian actions in order to pay its sovereign debt. Like a proposed pay-freeze on public sector workers that made many Greek government employees threatening to go on a strike. Such unpopular austerity measures will probably only anger your typical working-class Greek who view the “institutionalized corruption” - described by most working class Greeks as the "Octopus" - in some sectors of the government as the root cause of the sovereign debt crisis. Not to mention the unprovoked shooting of a young demonstrator by the Greek police is still fresh on everyone’s minds.
And if this goes on any longer, the longer will Greece improve their sovereign credit rating from near-junk status as the world’s leading credit rating agencies downgraded the country’s credit rating since the crisis came to light. Remember back in 2008 when many highly paid non-American entertainers doing their shows in the US insisted on being paid in euro since the US dollar’s value kept on plunging? Now it’s the almighty euro that’s in trouble.
By: Ringo Bones
It can only be described as somewhat shocking news to anyone with a vested interest to the monolithic European super-currency – not to mention countless Greeks with nary a financial safety net – but the sovereign debt crisis affecting Greece which recently became newsworthy seems to have started as far back as 2001. It had been revealed to the mainstream financial news providers in February 19, 2010 that Greece made a currency deal / currency swap with Goldman Sachs back in 2001 in order to cover-up the country’s budget deficit. Though perfectly legal under the EU rules back then, many financial experts had now blamed this move as the root of the big fat Greek sovereign debt crisis that now threatens the value and long-term stability of the euro. With this fiasco, could the role of banks in financial crises such as these put them under scrutiny once again?
The current Greek administration insists that the practice was above board. Even Prime Minister George Papandreou keeps reiterating that Greece needs financial aid – not financial bailout. Given I’m somewhat perplexed of this arcane financial maneuver I started asking the financial experts in our neighborhood. All of them say that the sheer complexity and rigmarole of such over the counter instruments deals – like a typical currency deal / currency swap can be a very effective way of covering up a typical budget deficit problems suffered by a typical country. Of countries and individual persons, it can also be a very effective credit rating booster in the short-term, akin to someone sporting a 2,000 US dollar Armani suit even though they earn less that 25,000 US dollars a year.
As a recently designated member of the PIIGS countries – i.e. the poorest performing economies in Europe as in Portugal, Ireland, Italy, Greece and Spain – Greece has been forced to take extremely draconian actions in order to pay its sovereign debt. Like a proposed pay-freeze on public sector workers that made many Greek government employees threatening to go on a strike. Such unpopular austerity measures will probably only anger your typical working-class Greek who view the “institutionalized corruption” - described by most working class Greeks as the "Octopus" - in some sectors of the government as the root cause of the sovereign debt crisis. Not to mention the unprovoked shooting of a young demonstrator by the Greek police is still fresh on everyone’s minds.
And if this goes on any longer, the longer will Greece improve their sovereign credit rating from near-junk status as the world’s leading credit rating agencies downgraded the country’s credit rating since the crisis came to light. Remember back in 2008 when many highly paid non-American entertainers doing their shows in the US insisted on being paid in euro since the US dollar’s value kept on plunging? Now it’s the almighty euro that’s in trouble.
Thursday, January 21, 2010
Blue Chip Renewable Energy Stocks
In our increasingly environmentally conscious global economy, will blue chip renewable energy stocks be economically viable to be issued in the near future?
By: Ringo Bones
After seeing Gordon Johnson of Hapolim Securities discussing on Bloomberg TV back in January 17, 2010 about why solar stocks are still hot, I start to wonder if renewable energy stocks will ever become blue chip stocks. With the discussion centered on Germany’s shift from wind turbines to various solar photo-voltaic cell power generation due to the continually declining costs of manufacture. I’m probably not alone in starting to wonder if renewable energy stocks – like wind, solar thermal and solar photo-voltaic and other forms of carbon-neutral power generation – will ever become blue chip stocks in the near future.
Even though they are environmentally friendly because they never give off a single gram of carbon dioxide and other greenhouse gases as they generate electricity, renewable energy has always faced an uphill battle against coal fired power plants when it comes to the financial side of things. But with the increasing concerns of global warming wrecking havoc to our planet’s fragile climate system, various experts from the financial and power generating field are beginning to wonder if the apparent cheapness of coal as a source of electricity is a mere illusion. It makes no sense to keep on building cheap coal-fired power plants knowing that it could bankrupt a lot of insurance companies 50 to 100 years from now due to climate change catastrophe related pay-outs.
Stop-gap measures of cleaning up the energy production of coal-fired power plants, like carbon capture and sequestration are still “trapped” in the experimental phase due to every government’s foot-dragging when it comes to legislating environmentally equitable tax on excess greenhouse gas emissions. Polluters are not taxed high enough to start installing systems that remove excess carbon dioxide from their coal-fired power plants to be stored where they don’t cause global warming. Coal and other fossil fuel lobbyists on Capitol Hill may still have the upper hand for now. But if the global warming situation gets worse – i.e. when climate change refugees that number over a hundred million, other 190 countries around the world threatening the US will an all-out nuclear strike if it doesn’t clean up its act. The fat cats at Wall Street might find it more economically viable to start issuing blue chip renewable energy stocks within the next 5 years than to face the wrath of growing geopolitical pressure 50 to 100 years from now. Change must start somewhere you know.
Renewable energy related blue chip stocks will probably first gain popularity in the United States after President Obama announced that he will create "green jobs" in the US that cannot be outsourced. Unfortunately, President Obama faces an uphill battle against seasoned Capitol Hill crude oil / coal / fossil fuel lobbyists for renewable energy blue chip stocks to become an economically viable trading tool anytime soon.
As the prerequisite for every existing blue chip stock is public confidence and stability, it seems that as of late renewable energy schemes are being shot down by powerful Capitol Hill – and in every major Western industrialized country - lobbyists with fossil fuel interest who are unwilling to relinquish their hold on the energy market. Add to the that the public’s lingering doubt over slickly commercialized green power generating technologies because of the green washing issue; especially when it comes to energy firms that are founded on the fossil fuel boom of the 20th Century pretending to prop-up some semblance of corporate social responsibility by supposedly being environmentally responsible despite of evidence proving the contrary. And there is also the lack of political will to legislate a tax system on excess greenhouse gas emissions that is more equitable to the environment and is congruent to the laws of physics. Blue chip renewable energy stocks thus still face an uphill battle before it can replace crude oil stocks.
By: Ringo Bones
After seeing Gordon Johnson of Hapolim Securities discussing on Bloomberg TV back in January 17, 2010 about why solar stocks are still hot, I start to wonder if renewable energy stocks will ever become blue chip stocks. With the discussion centered on Germany’s shift from wind turbines to various solar photo-voltaic cell power generation due to the continually declining costs of manufacture. I’m probably not alone in starting to wonder if renewable energy stocks – like wind, solar thermal and solar photo-voltaic and other forms of carbon-neutral power generation – will ever become blue chip stocks in the near future.
Even though they are environmentally friendly because they never give off a single gram of carbon dioxide and other greenhouse gases as they generate electricity, renewable energy has always faced an uphill battle against coal fired power plants when it comes to the financial side of things. But with the increasing concerns of global warming wrecking havoc to our planet’s fragile climate system, various experts from the financial and power generating field are beginning to wonder if the apparent cheapness of coal as a source of electricity is a mere illusion. It makes no sense to keep on building cheap coal-fired power plants knowing that it could bankrupt a lot of insurance companies 50 to 100 years from now due to climate change catastrophe related pay-outs.
Stop-gap measures of cleaning up the energy production of coal-fired power plants, like carbon capture and sequestration are still “trapped” in the experimental phase due to every government’s foot-dragging when it comes to legislating environmentally equitable tax on excess greenhouse gas emissions. Polluters are not taxed high enough to start installing systems that remove excess carbon dioxide from their coal-fired power plants to be stored where they don’t cause global warming. Coal and other fossil fuel lobbyists on Capitol Hill may still have the upper hand for now. But if the global warming situation gets worse – i.e. when climate change refugees that number over a hundred million, other 190 countries around the world threatening the US will an all-out nuclear strike if it doesn’t clean up its act. The fat cats at Wall Street might find it more economically viable to start issuing blue chip renewable energy stocks within the next 5 years than to face the wrath of growing geopolitical pressure 50 to 100 years from now. Change must start somewhere you know.
Renewable energy related blue chip stocks will probably first gain popularity in the United States after President Obama announced that he will create "green jobs" in the US that cannot be outsourced. Unfortunately, President Obama faces an uphill battle against seasoned Capitol Hill crude oil / coal / fossil fuel lobbyists for renewable energy blue chip stocks to become an economically viable trading tool anytime soon.
As the prerequisite for every existing blue chip stock is public confidence and stability, it seems that as of late renewable energy schemes are being shot down by powerful Capitol Hill – and in every major Western industrialized country - lobbyists with fossil fuel interest who are unwilling to relinquish their hold on the energy market. Add to the that the public’s lingering doubt over slickly commercialized green power generating technologies because of the green washing issue; especially when it comes to energy firms that are founded on the fossil fuel boom of the 20th Century pretending to prop-up some semblance of corporate social responsibility by supposedly being environmentally responsible despite of evidence proving the contrary. And there is also the lack of political will to legislate a tax system on excess greenhouse gas emissions that is more equitable to the environment and is congruent to the laws of physics. Blue chip renewable energy stocks thus still face an uphill battle before it can replace crude oil stocks.
Thursday, January 14, 2010
Will Google Move Out of the People’s Republic of China?
Famous for its company slogan “We don’t do evil”, will the Internet portal / search engine giant Google move out of the People’s Republic of China because doing business there just got too “Orwellian”?
By: Ringo Bones
Maybe the coordinated cyber-attacks by homegrown mercenary hackers hired by top Beijing communist party functionaries to disrupt its day to day online operations might have been easily shrugged off. But the overtly Orwellian snooping of top human rights activists’ G-mail accounts did prove the last straw that got the Internet portal / search engine giant Google to consider ending their corporate operations in the People’s Republic of China. Given that Mainland China is now the world’s largest and fastest growing Internet market, would Google eventually ending their corporate operations there due to the Beijing government's individual privacy rights violations that can make your typical ACLU lawyer squirm?
Criticized for betraying the idealism first put forth by Karl Marx and Friedrich Engels, the materialistic and power mad excesses of Beijing’s communist party functionaries has fueled a growing culture of political dissention since the brutal suppression of the Tiananmen Square protest rally back in June 4, 1989. With the Internet becoming a runaway global phenomenon for over a decade now, human rights activists in the People’s Republic of China were one of the first ones to reach out to the world and tell everyone. Especially the truth about the socialist idyll that the Beijing communist party functionaries portray their country to be is nothing more than a big fat propaganda. Given Google’s worldwide reach – especially in the socially conscious and principled societies of America and Western Europe – its no mystery that the Beijing government got Orwellian on the Internet portal’s online infrastructure. But will Google continue to keep their decade or so old reputation as an exemplar of ethical business governance by simply looking the other way as its online infrastructure in the People’s Republic of China is used to suppress the civil liberties of the general population?
Cyber attacks or not, everyone’s growing consciousness over corporate social responsibility was probably the main driving force behind Google’s decision to ditch the potentially profitable online business of Mainland China. With increasing censorship by the Beijing government over the search engine company’s operation and state sponsored snooping of the G-mail accounts of prominent human rights activists. It is probably prudent for Google to consider ending their corporate operations in the People’s Republic of China even if homegrown Internet portal rival Baidu think that its hypocritical for Google to do so. After all, the idealism of the Haight-Ashbury Flower Power Revolution of the late 1960s is still fresh in the minds of Google’s founders and bondholders. Google should set an example in the corporate world that principles are more important than profits.
By: Ringo Bones
Maybe the coordinated cyber-attacks by homegrown mercenary hackers hired by top Beijing communist party functionaries to disrupt its day to day online operations might have been easily shrugged off. But the overtly Orwellian snooping of top human rights activists’ G-mail accounts did prove the last straw that got the Internet portal / search engine giant Google to consider ending their corporate operations in the People’s Republic of China. Given that Mainland China is now the world’s largest and fastest growing Internet market, would Google eventually ending their corporate operations there due to the Beijing government's individual privacy rights violations that can make your typical ACLU lawyer squirm?
Criticized for betraying the idealism first put forth by Karl Marx and Friedrich Engels, the materialistic and power mad excesses of Beijing’s communist party functionaries has fueled a growing culture of political dissention since the brutal suppression of the Tiananmen Square protest rally back in June 4, 1989. With the Internet becoming a runaway global phenomenon for over a decade now, human rights activists in the People’s Republic of China were one of the first ones to reach out to the world and tell everyone. Especially the truth about the socialist idyll that the Beijing communist party functionaries portray their country to be is nothing more than a big fat propaganda. Given Google’s worldwide reach – especially in the socially conscious and principled societies of America and Western Europe – its no mystery that the Beijing government got Orwellian on the Internet portal’s online infrastructure. But will Google continue to keep their decade or so old reputation as an exemplar of ethical business governance by simply looking the other way as its online infrastructure in the People’s Republic of China is used to suppress the civil liberties of the general population?
Cyber attacks or not, everyone’s growing consciousness over corporate social responsibility was probably the main driving force behind Google’s decision to ditch the potentially profitable online business of Mainland China. With increasing censorship by the Beijing government over the search engine company’s operation and state sponsored snooping of the G-mail accounts of prominent human rights activists. It is probably prudent for Google to consider ending their corporate operations in the People’s Republic of China even if homegrown Internet portal rival Baidu think that its hypocritical for Google to do so. After all, the idealism of the Haight-Ashbury Flower Power Revolution of the late 1960s is still fresh in the minds of Google’s founders and bondholders. Google should set an example in the corporate world that principles are more important than profits.
Monday, December 21, 2009
In Search of Risk Free Banking
As the linchpin of the global financial system, can banks be ever run in a risk free manner?
By: Ringo Bones
Maybe it was the sage advice of Robert “Bob” Diamond, chief executive of Barclays Capital, on a BBC September 15, 2009 interview that there is no such thing as banking without risk. It readily cast a worm of doubt over governments’ frantic but somewhat futile attempts to formulate ways to prevent another global credit crunch from ever happening again. And the world’s leading economist still has a consensus that risks are an inherent part of a typical banking institution’s business structure. Given the somewhat inevitable status quo, can we even at least minimize banking risk down to as close to zero as humanly possible?
Our current version of the Basel Accord, in which a thoroughly studied financial research allows banking regulators to establish the right amount of minimum capital requirements to minimize inherent banking risks. Was set up to achieve a goal of globally interconnected banks whose inherent risk is as close to zero given our current financial systems know-how. Unfortunately, the accord’s current incarnation was set-up a few years before the US credit crunch went global and we’ll before we knew the root causes of. Thus making it likely that the current Basel Accord could be overhauled before the end of 2010 to make way for quantitative easing schemes and monetary policy guidelines that will prevent our current global recession from ever happening again. In other words, a better way to minimize overall financial risks of banks deemed to big to fail. But are there other ways to further minimize banking risks?
After consulting with the world’s leading economists, financial regulators had recently proposed the establishing of a “living will” for banks so that in case of a bank failure / bankruptcy, banks can be easily broken up – liquidated if you will – so that their assets can be more efficiently used elsewhere. Especially during the event of a major financial crisis like that event that brought down Lehman Brothers back in September 2008. A bank’s “living will” could be set up in advance to facilitate the fiscally expedient liquidation process of failed banks, so that there assets could be effectively used for keeping a major financial crisis from going out of control. A well-structured breaking up process of a failed bank when it files for bankruptcy could be a big help to governments during times of a widespread economic crisis. Where the speedy formulation of fiscally sensible quantitative easing and monetary policy schemes are needed to keep a major economic crisis at bay.
By: Ringo Bones
Maybe it was the sage advice of Robert “Bob” Diamond, chief executive of Barclays Capital, on a BBC September 15, 2009 interview that there is no such thing as banking without risk. It readily cast a worm of doubt over governments’ frantic but somewhat futile attempts to formulate ways to prevent another global credit crunch from ever happening again. And the world’s leading economist still has a consensus that risks are an inherent part of a typical banking institution’s business structure. Given the somewhat inevitable status quo, can we even at least minimize banking risk down to as close to zero as humanly possible?
Our current version of the Basel Accord, in which a thoroughly studied financial research allows banking regulators to establish the right amount of minimum capital requirements to minimize inherent banking risks. Was set up to achieve a goal of globally interconnected banks whose inherent risk is as close to zero given our current financial systems know-how. Unfortunately, the accord’s current incarnation was set-up a few years before the US credit crunch went global and we’ll before we knew the root causes of. Thus making it likely that the current Basel Accord could be overhauled before the end of 2010 to make way for quantitative easing schemes and monetary policy guidelines that will prevent our current global recession from ever happening again. In other words, a better way to minimize overall financial risks of banks deemed to big to fail. But are there other ways to further minimize banking risks?
After consulting with the world’s leading economists, financial regulators had recently proposed the establishing of a “living will” for banks so that in case of a bank failure / bankruptcy, banks can be easily broken up – liquidated if you will – so that their assets can be more efficiently used elsewhere. Especially during the event of a major financial crisis like that event that brought down Lehman Brothers back in September 2008. A bank’s “living will” could be set up in advance to facilitate the fiscally expedient liquidation process of failed banks, so that there assets could be effectively used for keeping a major financial crisis from going out of control. A well-structured breaking up process of a failed bank when it files for bankruptcy could be a big help to governments during times of a widespread economic crisis. Where the speedy formulation of fiscally sensible quantitative easing and monetary policy schemes are needed to keep a major economic crisis at bay.
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