Sunday, 23 March 2008

Save Your Souls You Greedy Bankers!

Photo of Bishop Michael Nazir-Ali courtesy of The Times

THE SUNDAY TIMES: Britain's richest men and women must curb their greed and begin sharing their wealth to save their souls, one of the Church of England’s senior bishops has warned.

Dr Michael Nazir-Ali, the Bishop of Rochester, singled out high-earning City traders such as hedge fund managers as the kind of people who must swap their desire to “make a quick buck” for a commitment to “share [their] wealth generously”.

He said the crisis gripping the world’s money markets was “almost certainly” due to amoral forces pursuing their own wealth-creating agenda and warned that without action the less wealthy might suffer disproportionately from the fallout.

“What is required is a change of heart, of disposition, of attitude,” he writes in his Easter message, published in The Sunday Times today.

“From possessiveness we need to move to gratitude for what we have, from ‘cutting corners’ to make a quick buck to that integrity for which business in this country was celebrated, and from mere accumulation of wealth to a generosity of spirit.

“When that happens, hedge fund managers and directors of companies can, indeed, go into the kingdom of heaven ahead of the chief priests and elders.” Bishop of Rochester: Save Your Souls You Greedy Bankers >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Friday, 21 March 2008

Slump Moves from Wall Street to Main Street

NEW YORK TIMES: In Seattle, sales at a long-established hardware store, Pacific Supply, are suddenly dipping. In Oklahoma City, couples planning their weddings are demonstrating uncustomary thrift, forgoing Dungeness crab and special linens. And in many cities, the registers at department stores like Nordstrom on the higher end and J. C. Penney in the middle are ringing less often.

With Wall Street caught in a credit crisis that has captured headlines, the forces assailing the economy are now spreading beyond areas hit hardest by the boom-turned-bust in real estate like California, Florida and Nevada. Now, the downturn is seeping into new parts of the country, to communities that seemed insulated only months ago.

The broadening of the slowdown, the plunge in home prices and near-paralysis in the financial system are fueling worries that what most economists now see as an inevitable recession could end up being especially painful.

Indeed, some economists fear it will last longer and inflict more bite on workers and businesses than the last two recessions, which gripped the economy in 2001 and for eight months straddling 1990 and 1991. This time, these experts say, a recession in which economic activity falls over a sustained period and joblessness rises across the board could even persist into next year. Slump Moves from Wall St. to Main St. >>> By Peter S. Goodman | March 21, 2008

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Saturday, 15 March 2008

Radio Show: The Weekly Gathering Storm Report

For those who couldn’t listen in to yesterday’s Weekly Gathering Storm Report Radio Show with Always and WC because of time constraints or simply because it was broadcast in your country at an inconvenient time, here’s a direct link to the show:

Walid Shoebat and Yours Truly as Guests of Always and WC

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Friday, 14 March 2008

Dollar erstmals weniger als einen Franken wert

NZZ Online: Der Dollar ist am Freitag erstmals weniger als einen Franken wert gewesen. Am Nachmittag kostete ein Dollar vorübergehend 0,9986 Franken. Auch gegenüber anderen Währungen kam er wegen schlechten US-Wirtschaftsnachrichten stark unter Druck.

(ap) Erstmals in der Währungsgeschichte ist der Wert des amerikanischen Dollars am Freitag unter einen Franken gefallen. Ein Dollar wurde zeitweise zu 99,86 Rappen gehandelt. Der Euro, gegen den sich der Franken ebenfalls stärker zeigte, buchte mit 1,5690 Dollar einen weiteren Höchstwert.

Der Absturz des Dollars begann kurz nach 14 Uhr. Um 15 Uhr 05 landete er bei 0,9986 Franken, dem bisher tiefsten Kurs aller Zeiten. Am späteren Nachmittag stand er bei 1,0048 Franken, verglichen mit 1,0145 Franken am Vorabend. Die US-Währung sackte nicht nur gegen die Schweizer und die Europa-Einheitswährung ab, sondern auch gegen den japanischen Yen, gegen den er mit 99,56 Yen den tiefsten Stand seit rund 13 Jahren erreichte. Dollar erstmals weniger als einen Franken wert: Amerikanische Währung auf historischem Tief

Mark Alexander (Paperback)
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Dollar Nosedives

THE TELEGRAPH: The dollar has plummeted against all major currencies on dire US retail sales and fears that the Federal Reserve may need to slash interest rates further to stop the downward spiral in the credit markets.

The greenback broke below 100 yen in a day of wild trading, setting off alarm bells at Japan's Keidanren industry lobby. It touched a record $1.5620 against the euro and came within a whisker of parity with the Swiss franc for the first time in history.

The plunge came amid an investor flight into commodities, seen as a way of insulating wealth from the dollar's decline. In the US, crude oil reached a record $111 a barrel despite rising inventories. US Dollar plunge sets off global alarm bells >>> By Ambrose Evans-Pritchard | 14/03/2008

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Tuesday, 11 March 2008

United Kingdom: House Prices Are Falling at a Record Rate

DAILY MAIL: House prices are falling in many parts of the country at their fastest pace since records began in 1978, a report has warned.

Across England and Wales, prices are dropping in every region.

And the speed of the decline is at record levels in East Anglia, the South-West, Yorkshire, Humberside and the East Midlands.

The report, from the Royal Institution of Chartered Surveyors, is the latest to confirm that the decade-long house price boom is over.

Soaring numbers of homes are being put up for sale but failing to find a buyer.

The average estate agency has 92 homes on its books, the highest level for a decade. Over the last year, the average number of unsold properties has risen 49 per cent.

Potential buyers are being put off by the fear that a property which they buy today will be worth less tomorrow.

Other would-be buyers are struggling to find a mortgage as banks and building societies introduce more stringent lending criteria. House prices are falling at record rate confirming the end of 10-year boom >>> By Becky Barrow

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Sunday, 9 March 2008

You Don't Have to Invent Things or Industries to Become the Richest Man in the World

THE INDEPENDENT: The bad news for Bill Gates is that, after 13 years at the top, he has just lost his ranking as the richest man in the world. The good news is that he has been overtaken by his bridge partner. That man is Warren Buffett, a friend of the Microsoft boss since 1991, when they began to play bridge together – and also to discuss business a little.

In a way, their friendship is an obvious one. As Buffett told the Wall Street Journal eight years ago: "It's hard to have friends when everybody around you wants money. Bill hasn't sold me a computer and I haven't sold him candy. Neither one of us wants anything from the other."

Bill did get something from Warren, however. In 2006, Buffett, then 76, announced that he would be giving almost his entire fortune – which now stands at $62bn (£30.8bn) – to the medical foundation set up by Bill Gates and his wife, Melinda. It is a bequest of almost unimaginable scale, more mindboggling still when added to what was already the world's largest charitable foundation.

The bracketing of Buffett with Gates now seems complete. Yet as businessmen they are very different – and Buffett is much the more unusual type of multi-billionaire. Bill Gates, although in his own way unique, is more typical of the sort of businessman who makes (rather than inherits) a gargantuan fortune.

Such people tend either to develop some entirely new industrial process – or, at the very least, a better form of mousetrap. If they can add to their technological creativity the nerve and courage to retain financial control of their industrial process, then the money just cascades into their pockets faster than they can count it.

For Gates, the process was the mass use of digital language. For John Rockefeller, it was the vertically integrated oil industry, from well-head to end-user. For Henry Ford, it was the mass production of motor cars. Yet Warren Buffett has invented nothing, not even a slightly better mousetrap. All he does is invest in other people's businesses – but with a skill unmatched in the long and turbulent history of capitalism.

Buffett has expressed this more bluntly than anyone else could (or would), saying: "I was born at the right time and place, where the ability to allocate capital really counts. I'm adapted to this society. I won the ovarian lottery. I got the ball that said 'capital allocator--United States'."

This is characteristically modest of the unassuming Mr Buffett. The allocation of capital is an immensely competitive business, yet he has stayed at the top of the investment tree for more than 40 years. Others may flame out but old Warren keeps steaming on, beating the Dow Jones average for year after year... after year.

The reason for the astounding durability of Buffett's success at investment is also something which distinguishes him from almost all other people who are thought of as hotshot money managers. Warren Buffett is almost pathologically risk-averse. As he puts it: "I don't look to jump over 7ft bars. I look around for 1ft bars that I can step over."

Typically, he will spend months – or longer – scrutinising the balance sheets of mature and unfashionable companies. When he has finally decided that the stock market has greatly undervalued them, he moves in – with cash and on a vast scale.

Thus it is that his holding company, Berkshire Hathaway, has significant percentages of such emblems of middle-of-the-road America as Coca-Cola, Gillette, Procter & Gamble, American Express, Kraft and The Washington Post. You will look in vain through the immense Buffett portfolio for any hi-tech stocks – although for sentimental reasons he has retained 100 shares in Microsoft. Towards the end of the last century, Buffett was widely ridiculed for shunning the dotcom frenzy… >>> By Dominic Lawson

Mark Alexander (Paperback)
Mark Alexander (Hardback)
Islamic Finance Expands as Wealth Grows

KHALEEJ TIMES: DUBAI - The market for Islamic finance and banking is growing rapidly in the Gulf thanks to burgeoning wealth and attractive financial instruments.

Studies have put the total value of Islamic equity funds in the Gulf region at around 30 billion dollars (19.5 billion euros), said Khaled al-Masri, partner in asset management at Dubai-based Rasmala Investments.

“Investable wealth in the Gulf Cooperation Council is growing by one of the highest rates in the world ... This increase is being met with more product providers and products being launched in the GCC market,” he said.

The Islamic finance industry worldwide is worth around 700 billion dollars, Moody’s Investors Services estimated in a February report.

Economies of the six GCC member states -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- have been enjoying remarkable growth over the past few years on the back of record oil prices.

The robust economic performance has inflated local wealth in this Muslim region where many might prefer to seek profit through investments that do not contradict their beliefs.

The basic principle of Islamic finance is the prohibition of Riba (usury), which is correlated with interest in today’s banking.
Islamic funds are also banned from investing in companies associated with tobacco, alcohol, pornography, pork or gambling, all considered taboo by devout Muslims.

Some 125 Islamic equity funds are based in the GCC out of around 320 globally, said Mark Smyth, UK-based managing director of Failaka Advisors, an Islamic fund research company.

“Increasing familiarity with Islamic products combined with the presence of longer and more established funds seems to be driving the current growth, combined with strong returns,” Smyth told AFP.

Islamic finance provides a “solution for investors and consumers who want to adhere to sharia-compliant principles in their investment and consumption decisions,” said Masri, referring to principles in line with Islamic law.

He also pointed out that the sukuk (Islamic bonds) have become appealing at the corporate and government levels as a tool to raise finance, which in turn increased the size of the sector.

A report by the US-based Morgan Stanley investment bank published by the local press in February put outstanding issued sukuk at more than 90 billion dollars worldwide. Islamic finance expands as wealth grows >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Saturday, 8 March 2008

Australia Is Beginning to Catch a Cold as America Sneezes Into Recession

THE AGE: IT'S official. The collapse of the US housing market has hit the broader American economy — and Australia is about to feel the effects. The loss of 63,000 US jobs last month was the second consecutive fall — and the strongest indication so far that the world's biggest economy is in recession.

The news comes as Melbourne's property market hit its own rocky patch, with sales at an 18-month low yesterday and almost a third of properties failing to sell under the hammer.

The Real Estate Institute of Victoria blamed the 67% clearance rate on surging interest rates and the fact that the number of properties for sale was double that for the Labour Day weekend last year. The clearance rate is the lowest recorded for Saturday auctions since September 2006, and 16% below last year. We're feeling it as US economy worsens >>> By Peter Weekes and Chris Vedelago

Mark Alexander (Paperback)
Mark Alexander (Hardback)
UK: What Budget Changes Are There in the Pipeline?

BBC: Even if Alistair Darling stood up on budget day, said nothing, and then sat down again, there would still be many changes to the taxation system this coming April.

More than 30 separate alterations were announced in last year's budget and also in last autumn's pre-budget report.
And nearly all will come into effect on 5 April.

Some are fairly minor, while others - such as the proposed simplification of capital gains tax - have been very controversial.

"This is the biggest set of changes to be implemented in any one year under Labour," said the Institute for Fiscal Studies (IFS).

These changes could be tweaked a bit by the chancellor on Wednesday, but this is how things stand at the minute. Budget changes - what is in the pipeline? >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)
Die reichsten Frauen der Welt

Foto von Liliane Bettencourt (Kosmetikkonzern L'Oréal) dank Google Images. Sie kommt aus Frankreich und besizt 22,9 Milliarden Dollar

SPIEGELONLINE: Der Club der Milliardäre mag von Männern dominiert sein - doch laut "Forbes" sind auch 99 Frauen dort Mitglied. Bei den meisten liegen die Milliarden in der Familie, andere haben sich ihr Vermögen hart erarbeitet. SPIEGEL ONLINE zeigt die reichsten Frauen der Welt.

Hamburg - Von der Talkerin über die Schriftstellerin hin zur knallharten Geschäftsfrau - der Club weiblicher Milliardäre birgt zwar eine bunte Mischung, ist dafür aber nur sehr dünn besetzt: Unter den Top 100 der reichsten Menschen weltweit listet das "Forbes"-Magazin gerade einmal neun Frauen auf, unter den Top 400 finden sich 39 mit reichlich Dollar gesegnete Damen. Insgesamt haben es 99 Frauen in das diesjährige Ranking geschafft.

Die reichste Frau der Welt kommt aus Frankreich: Liliane Bettencourt ist Haupt-Anteilseignerin am Kosmetikkonzern L'Oréal. Die "Grande Dame" im Club weiblicher Milliardäre besitzt laut Schätzungen von "Forbes" 22,9 Milliarden Dollar - und belegt damit Rang 17 in der Liste der Reichsten der Reichen. Damit verschlechtert sie sich im Vergleich zum Vorjahr um fünf Plätze, und das, obwohl die 85-Jährige um 2,2 Milliarden Dollar zulegen konnte. Weiblich und milliardenschwer - die reichsten Frauen der Welt >>> Von Alexandra Sillgitt

Mark Alexander (Paperback)
Mark Alexander (Hardback)
Liechtenstein Tax Evasion Scandal: Informant in German Investigation 'Fears' for his Life

Photo of Vaduz castle courtesy of SpiegelOnline International

SPIEGELONLINE INTERNATIONAL: The German man who sold officials data that has sparked the biggest tax evasion investigation in German history has requested another new identity out of fears he may be killed. The man is said to be concerned that powerful foreigners and despots who held accounts at the bank may retaliate.

Heinrich Kieber, the man who sold explosive customer data (more...) from LGT bank in Liechtenstein to Germany's foreign intelligence agency, the BND, is fearful for his life. Kieber, who has been bestowed a new identity as part of a witness protection program, complained in a letter to the BND about the fact that his name has been exposed and is demanding another change of identity.

Kieber first took up contact with the BND in January 2006 under the codename "Julia." And he eventally [sic] sold a DVD contaning [sic] the details of 2,000 client accounts worth more than €4 billion for a reported €4.2 million ($6.47 million.)

His latest letter was sent to the BND only a few days after prosecutors raided the home and offices (more...) of Deutsche Post Chairman Klaus Zumwinkel, who would step down from his post just days later. Kieber is said to be afraid of foreign potentates who belong to LGT's roster of customers. Members of the Saudi royal family are said to be among them as well as former Indonesian dictator Suharto, who died in January and who Indonesian justice authorities claimed illegally funneled more than a billion euros into foreign accounts. Waves of Germans Turn Themselves In >>>

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Mark Alexander (Hardback)
Cable, the Lib Dems’ Treasury Spokesman, Describes Government as “Spineless” Over Preferential Tax Treatment of ‘Non-Doms’

Photo of Vincent Cable, Treasury Spokesman for the Liberal Democrats, courtesy of The Guardian

THE GUARDIAN: 'If we are not careful, Russian and Ukranian oligarchs living in £80m houses might go somewhere else,' Vince Cable tells Lib Dem conference. 'That's tough. Let them go'

Gordon Brown was severely criticised by Vincent Cable today for allowing the "super-rich" to avoid having to pay their fair share of taxation.

Cable, the Liberal Democrats' Treasury spokesman, condemned what he described as "our spineless government" for allowing the rich to enjoy tax breaks not available to the poor.

"The idea that the super-rich should be elevated above taxation is immoral and deeply insulting to those on modest incomes who pay their full whack of tax," Cable said, in a speech to his party's spring conference in Liverpool.

The Liberal Democrats would make the so-called "non-doms" - foreign workers who enjoy tax breaks - pay full taxes after seven years of living in the UK, he said. Tax super-rich properly, Cable tells Brown >>> By Andrew Sparrow, senior political correspondent | Saturday March 8 2008

‘Non-dom’ peers face ousting By Francis Eliott

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Mark Alexander (Hardback)

Friday, 7 March 2008

The Fed Releases $200bn as Credit Crisis Hits New Depths

TIMES ONLINE: The global credit crisis plunged to new depths yesterday as persistent fears over the collapse of a large financial institution caused funding markets to dry up and forced the US Federal Reserve to make available up to $200 billion (£99.3 billion) of emergency financing.

The Fed said that a “rapid deterioration” in the credit markets in recent days had prompted it to begin a series of fresh cash injections in an effort to shore up the balance sheets of America’s stricken banks. Unemployment also shot up in the US last month, adding to the gloom. US stocks tumbled, dragging the Dow Jones industrial average down 138.40 points to 11.902.00. Treasury prices jumped and the dollar fell to record lows.

Bankers said that the moves underscored the deepening severity of the crisis, which was triggered last June by the collapse of the American sub-prime mortgage market and has got progressively worse since. One senior banker in London said: “This is the beginning of the real credit crisis and it’s not going to end without a major casualty.” US Fed releases $200bn as credit crisis hits new depths >>> By Siobhan Kennedy

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Thursday, 6 March 2008

The Risky Business of Islamic Finance

INVESTOR’S BUSINESS DAILY: Islamofascism: Shariah banking has come into vogue in the West, as even cash-strapped U.S. banks try to attract free-flowing Arab petrodollars. But it poses major risks. Wall Street beware.

With oil prices hovering around $100 a barrel, more than $1 trillion in petrodollars are now available annually for global investment. And major U.S. financial institutions, hit hard by the credit crunch, are hungrily eyeing them.

Citibank and Goldman Sachs, for example, are creating investment vehicles that cater to Muslim investors in order to grab some of the billions in management fees in the offing. These products include Shariah-compliant bonds, mutual funds, mortgages, insurance, hedge funds and soon REITs.

Dow Jones Corp. has even created its own index for Islamic-correct investments: the Dow Jones Islamic Index.

While the $800 billion global Shariah market is relatively small, it's growing at a 15% clip, thanks to the oil boom and a resurgence in Islamic fundamentalism, according to the Center for Security Policy. And it's expected to more than double over the next 10 years.

What's the fuss? Money is money, right? Not in this case.
Shariah-compliant finance involves investments and other transactions that have been structured to conform with the orthodox teachings of Islamic law.

That means they can't charge or earn interest — the cornerstone of our credit-driven economy. Nor can they take any stake in haram, or forbidden, industries, including meat and beverage producers (if they process any pork or alcohol); entertainment; gaming; and interest-based financing.

Wall Street is jumping into this hot new market oblivious to the risks not just to the bottom line, but to national security. It knows little about Shariah law and is turning to consultants to create "ethical" products to sell.

Lost in the hype over these Muslim-friendly funds is that they must "purify" their returns by transferring at least 3% into Islamic charities, many of which funnel funds to terrorists. So the Street may unwittingly be helping the evildoers launder blood money.

Shariah law obligates that a sizable portion of zakat, or giving — one of the pillars of Islam — go to support jihad. So many of the purification donations generated from Shariah finance could wind up in the hands of our enemy.

Wall Street also knows little about who's advising these funds. Each has to hire Muslim scholars to bless the investments.
One such scholar is Yusuf Qaradawi, a member of the radical Muslim Brotherhood, which works for the establishment of a global caliphate, and an open supporter of suicide bombings.

Another is Muhammad Usmani, a radical Pakistani cleric who ran a madrassa that trained thousands of Taliban, according to the Washington-based Center for Security Policy.

Usmani sits on the Shariah supervisory board of the Dow Jones Islamic Index Fund, which is run by the North American Islamic Trust — a Saudi-tied alleged front for the Muslim Brotherhood that holds title to some of the most radical mosques in America. The Justice Department last year named the Islamic Trust an unindicted co-conspirator in a major terror-financing case.

It is this radical group, which may be using investment proceeds to finance new mosques in America, to which Dow Jones has lent its name — something the company, under the new management of Fox News founder Rupert Murdoch, may want to revisit. The Risky Business of Islamic Finance >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Wednesday, 5 March 2008

Is Time Running Out for Tax Havens such as Fürstentum Liechtenstein

Photo of Liechtenstein courtesy of the BBC

"Liechtenstein has existed for hundreds of years and weathered many storms" - Prince Max von und zu Liechtenstein

BBC: The bankers in their grey suits and silk shirts looked a bit bemused.

The annual press conference of LGT, the Liechtenstein bank at the centre of the tax evasion controversy, is usually a dull and dry affair.

But it wasn't this year. The room was packed.

And every question was about the scandal in which German intelligence purchased a data disc stolen from the bank, filled with details of Germans who allegedly tried to evade paying tax back home.

Fourteen other countries, including Britain, are conducting inquiries into their own citizens on the disc for tax evasion.

The head of the LGT, His Serene Highness Prince Max von und zu Liechtenstein, is a member of the principality's ruling family.

Speaking afterwards, when I pressed him on the £100m Britain expects to get back from UK taxpayers who used LGT to evade paying tax, he told me Liechtenstein was being treated unfairly - and that Britain, too, was a keen player on offshore finance markets.

"There is tax competition going on on a global basis. The British have positioned themselves very well in a number of areas - not only in their [dependent] territories, but also in the UK," he said.

The British government says it is keen to clamp down on people using other havens to hide their money.

But other critics also say Britain is being inconsistent, with tax havens such as Bermuda or the Cayman Islands operating from British dependent territories.

"Because of the number of places that the UK allows to operate as tax havens, our role in providing the secrecy spaces that these locations provide, which harbour crime, is greater than Liechtenstein's," says Richard Murphy, a campaigner on tax issues.

"We're the biggest tax haven operator in the world. They've been seen as useful. They've brought money into London, Switzerland and other financial centres, and for that reason, London has tolerated them." Is Time Running Out for Tax Havens? >>> By Ray Furlong, Vaduz

Mark Alexander (Paperback)
Mark Alexander (Hardback)
Zapatero’s Poll Lead Falters as Good Times Fade in Spain

TIMES ONLINE: New figures showing rising unemployment, sinking house prices and a stalling economy have rocked the Spanish Government in the final days of a bitterly fought general election.

Hours after being proclaimed the victor of the second televised debate José Luis RodrÍguez Zapatero, the Socialist Prime Minister, struggled to explain why more than 50,000 Spaniards lost their jobs last month.

Unemployment now tops 2.3 million, or 8.6 per cent, as struggling construction firms make workers redundant and the property bubble deflates.

The two main political parties this week began a final assault to capture undecided voters before Sunday’s poll. The Prime Minister and Mariano Rajoy, his conservative opponent, have clashed in two ill-tempered television debates over the slowing economy, rising immigration and the fight against terrorism.

The opposition leader repeatedly called the Prime Minister a liar and accused him of insulting the victims of Eta by holding peace talks with the Basque separatist group last year.

Polls showed that the Prime Minister was thought to have won both debates but neither candidate was able to land a knockout blow. Analysts said that the duels, which attracted record television audiences, had galvanised voters but failed to give either candidate a commanding lead. Jose Luis Rodriguez Zapatero's poll lead falters as good times fade in Spain >>> By Thomas Catan in Madrid

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Tuesday, 4 March 2008

Dhimmifinanciers: Home Ownership the Shari’ah Way

How Western companies are falling over themselves to become Dhimmifinanciers:

Mark Alexander (Paperback)
Mark Alexander (Hardback)
Oil Prices Near $104 a Barrel as US Dollar Falls to Historic Low Against the Euro

INTERNATIONAL HERALD TRIBUNE: NEW YORK: The price of oil rose Monday to nearly $104 a barrel after the dollar fell to a historic low against the euro, setting a record and exceeding the inflation-adjusted high reached in the early 1980s during the second oil shock.

Oil futures touched $103.95 on the New York Mercantile Exchange, topping the record set in April 1980 of $39.50 a barrel, a level that would translate to $103.76 a barrel at current values.

Oil prices are surging as investors seek refuge in commodities to offset a slowing U.S. economy and declines in the dollar.
Financial institutions, like pension funds and hedge funds, are also investing heavily in oil and other commodities as a hedge against a rise in inflation, analysts said.

That trend is expected to continue, especially after Ben Bernanke, the chairman of the Federal Reserve, signaled last week that he was ready to cut interest rates further to bolster growth despite rising consumer prices.

"When investors lose confidence in the central bank, they tend to look for hard assets," Philip Verleger, an independent economist and oil expert, said. "The Fed's capitulation on inflation is driving investors to commodities. The problem is there are no sellers. This means futures prices will keep rising." Oil prices near $104 a barrel as dollar falls to historic low against euro >>> By Jad Mouawad | March 3, 2008

Mark Alexander (Paperback)
Mark Alexander (Hardback)
Islamic Finance and the Square Mile

Image courtesy of Google Images

TIMES ONLINE: How does Sharia fit into the heated debate about the relationship between the British legal system and religious codes?

Here’s a thought. If all the sub-prime deals in the US had been governed by Sharia there would have been no massive defaults and the credit crunch would never have loomed over our shopping expeditions.

Instead, Islamic law’s requirements for prudent lending, the sharing of risk and a ban on the earning of interest would have insulated the borrowers and the world economy at large from the debacle of the past six months. And for that even the Archbishop of Canterbury’s harshest critics might have been a mite grateful.

So how does Islamic finance — now increasingly practised by law firms in London and New York — fit into the heated debate about the relationship between the British legal system and religious codes?

The Prime Minister in particular needs to have an answer to that. Last week he was quoted as saying that: “British laws must be based on British values and religious law should be subservient to British criminal and civil law.” How come then that Gordon Brown, when Chancellor, wanted “to make Britain the gateway to Islamic finance and trade”? And, to support that, government introduced changes to the taxation regime to accommodate Sharia-compliant transactions.

To appreciate the full impact of Sharia on City law and business you have only to go to Clifford Chance where Islamic finance is an important activity. The firm was named Euromoney Islamic finance firm of the year in 2007 and it has scores of lawyers both in the Middle East and in London practising Sharia. Habib Motani explains: “Doing deals that are Sharia compliant is a standard part of what we do. It’s part of the mainstream.”

But does this mean that there is now a rival jurisdiction operating in London? Has Sharia sneaked into the Square Mile by the back door while the good Archbishop waits befuddled at the front? Well, in the spirit of Canterbury unclarity, the answer is Yes (and a little bit No). What is clear is that transactions hatched in London by UK lawyers are being reviewed by Sharia scholars in the Middle and Far East who judge whether or not they comply with Islamic law. If they do not, they do not go ahead. So in practice the jurisdiction of Sharia is now well established in Britain. Islamic finance and the Square Mile >>> By Edward Fennell

London risks losing its lead in Islamic finance: Reports that the Government has gone cold on plans to issue its own sukuk, or Sharia bond, is a blow for the City By Michael Herman

Mark Alexander (Paperback)
Mark Alexander (Hardback)
Europe vs the Super-Rich

THE INDEPENDENT: The European Union will declare war today on Liechtenstein, Monaco, Andorra and Switzerland. Weary of losing billions of tax euros, the EU's 27-strong high command of economics and finance ministers, Ecofin, is meeting in Brussels to agree a strategy aimed at bringing the continent's tax havens under control.

Their weapon of choice will be a strengthened version of the EU's 2005 savings tax directive, which has proved pathetically easy for armies of accountants, lawyers and specialist tax planners to outflank.

Urged on by Peer Steinbruck, the German Finance Minister, the new directive will seek to close the loopholes. Mr Steinbruck says tax evasion costs Germany about €30bn (£23bn) a year in lost revenue; the UK loses a similar sum; the EU may lose €100bn (£77bn) in all.

The stakes are high. But tax experts remain sceptical about the prospects for this new offensive. Mike Warburton, senior tax partner at Grant Thornton accountants, commented yesterday that, while he and his firm condemned tax evasion, which is illegal, "tax avoidance is the second oldest profession in the world, and just as difficult to control. The tax havens will survive. There are stacks of money out there. If they close down the ones in Europe, the money will move to Dubai and Singapore". Europe vs the super-rich >>> By Sean O'Grady, Economics Editor
| Tuesday, 4 March 2008

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Monday, 3 March 2008

Dollar Declines Spark Equity Sell-Off

FINANCIAL TIMES: US equity markets were lower on Monday, adding to pressure on European indices as fears about a potential recession in the world’s biggest economy intensified.

The dollar fell to fresh lows against the euro after Warren Buffett, the billionaire investor, warned that the US economy was in a recession and data showed manufacturing activity contracted last month.

The chief investment officer of Berkshire Hathaway and one of the most influential investors in the US also said he was withdrawing his offer to guarantee $800bn of municipal bonds backed by MBIA, Ambac Financial and FGIC.

The Institute for Supply Management February manufacturing report fell to 48.3 from 50.7 in January, although the fall was slightly better than a consensus forecast of 48. A reading of 50 marks the inflection point between growth and contraction.

“The ISM data was not nearly as soft as the Chicago and Philly Fed indices suggested, and is certainly better than the market’s worst fears,” Alan Ruskin of RBS Global Banking & Markets, said.

The benchmark S&P 500 index fell 0.4 per cent to 1,325.99, off earlier lows, while the Dow Jones industrial average slipped 0.5 per cent to 12,210.10. The Nasdaq composite shed 0.7 per cent to 1,732.84.

“It seems that equities are finally becoming aware that all other asset classes are in risk aversion mode,” analysts at BNP Paribas said.

“They are also recognizing that the prospects for profit growth in the near term could be constrained, given the procession of economic data highlighting the fragile state of the US economy.” Dollar declines spark equity sell-off >>> By Chris Bryant and Stacy-Marie Ishmael in New York, Michael Hunter in London, and Lindsay Whipp in Tokyo | March 3 2008

Stock Markets Fall on US Worries

Warren Buffett Declares America in Recession By Dearbail Jordan and Agencies

NZZ Online:
Aktienmärkte auf Talfahrt: US-Börsen im Minus – Banken unter Druck

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