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Posted: 6 December 2009 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

 

  •   CALVIN TRILLIN

 

Published: October 13, 2009

“IF you really want to know why the financial system nearly collapsed in the fall of 2008, I can tell you in one simple sentence.”

 The statement came from a man sitting three or four stools away from me in a sparsely populated Midtown bar, where I was waiting for a friend. “But I have to buy you a drink to hear it?” I asked.

“Absolutely not,” he said. “I can buy my own drinks. My 401(k) is intact. I got out of the market 8 or 10 years ago, when I saw what was happening.”

He did indeed look capable of buying his own drinks — one of which, a dry martini, straight up, was on the bar in front of him. He was a well-preserved, gray-haired man of about retirement age, dressed in the same sort of clothes he must have worn on some Ivy League campus in the late ’50s or early ’60s — a tweed jacket, gray pants, a blue button-down shirt and a club tie that, seen from a distance, seemed adorned with tiny brussels sprouts.

“O.K.,” I said. “Let’s hear it.”

“The financial system nearly collapsed,” he said, “because smart guys had started working on Wall Street.” He took a sip of his martini, and stared straight at the row of bottles behind the bar, as if the conversation was now over.

“But weren’t there smart guys on Wall Street in the first place?” I asked.

He looked at me the way a mathematics teacher might look at a child who, despite heroic efforts by the teacher, seemed incapable of learning the most rudimentary principles of long division. “You are either a lot younger than you look or you don’t have much of a memory,” he said. “One of the speakers at my 25th reunion said that, according to a survey he had done of those attending, income was now precisely in inverse proportion to academic standing in the class, and that was partly because everyone in the lower third of the class had become a Wall Street millionaire.”

I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge — earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks.

“That actually sounds more or less accurate,” I said.

“Of course it’s accurate,” he said. “Don’t get me wrong: the guys from the lower third of the class who went to Wall Street had a lot of nice qualities. Most of them were pleasant enough. They made a good impression. And now we realize that by the standards that came later, they weren’t really greedy. They just wanted a nice house in Greenwich and maybe a sailboat. A lot of them were from families that had always been on Wall Street, so they were accustomed to nice houses in Greenwich. They didn’t feel the need to leverage the entire business so they could make the sort of money that easily supports the second oceangoing yacht.”

“So what happened?”

“I told you what happened. Smart guys started going to Wall Street.”

“Why?”

“I thought you’d never ask,” he said, making a practiced gesture with his eyebrows that caused the bartender to get started mixing another martini.

“Two things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place. That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.”

“But you still haven’t told me how that brought on the financial crisis.”

“Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”

“Why do I get the feeling that there’s one more step in this scenario?” I said.

“Because there is,” he said. “When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”

“So having smart guys there almost caused Wall Street to collapse.”

“You got it,” he said. “It took you awhile, but you got it.”

The theory sounded too simple to be true, but right offhand I couldn’t find any flaws in it. I found myself contemplating the sort of havoc a horde of smart guys could wreak in other industries. I saw those industries falling one by one, done in by superior intelligence. “I think I need a drink,” I said.

He nodded at my glass and made another one of those eyebrow gestures to the bartender. “Please,” he said. “Allow me.”

Calvin Trillin is the author, most recently, of “Deciding the Next Decider: The 2008 Presidential Race in Rhyme.”


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Posted: 4 December 2009 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

Deutsche Bank: Beware Sovereign Defaults And The End Of The Dollar Carry Trade In 2010

dbreportDeutsche Bank is out with an outlook for 2010, which includes various themes and risks investors need to watch out for.


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Posted: 4 December 2009 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news
Rumors That Japan May Dump $100 Billion In Treasuries

This morning, this message popped up on Bloomberg:

"MARKET NEWS SAYS 'RUMORS' ARE JAPAN MAY TELL OF PLANNED SALE"

Said sale in question is rumored to be a U.S. Treasury sell off by the Japanese government.

Adding fuel to the fire is the U.S. and the Federal Reserve. Today, the Fed conducted a reverse repo (repurchase) test that could help with the Japanese UST sale.

On the other hand, this wouldn't seem to jibe with reports that the country's main concern is the rising yen. If anything, you'd think they'd be snapping up more treasuries. So something is amiss.

The Houston Chronicle reports Japan could be selling off as much as $100 billion worth of treasuries.


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Posted: 22 January 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

British bank shares fall after Barack Obama targets Wall Street

Shares in major British banks fell this morning after Barack Obama's dramatic decision to call time on Wall Street's risky trading practices.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7050781/British-bank-shares-fall-after-Barack-Obama-targets-Wall-Street.html


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Posted: 26 January 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

European economies thrive in ‘shadows’

RALPH ATKINS

Published: 2009/12/29 06:30:22 AM

UNOFFICIAL, or shadow, economies can help shield European countries during a recession, but they need illicit activity on a sizable scale, according to a report by Germany’s Deutsche Bank.

Countries with a high incidence of moonlighting builders, unrecorded cash transactions, missing invoices, tax evasion or other illegal activities such as drug dealing, underwent smaller contraction during Europe’s worst downturn since the 1930s than more honest neighbours, researchers at the Frankfurt- based bank have concluded.

The relationship works, however, only if the “shadow economy” is large, such as in Greece, where Prime Minister George Papandreou this month acknowledged widespread corruption in the public service.

In spite of its mounting fiscal problems, the Greek economy shrank by only about 1% this year, compared with about 4% for the European Union.

At the other extreme, Deutsche Bank found that countries with a “particularly honest” population, such as Austria, France or the Netherlands, had also fared relatively well during the crisis.

Indicating its research was not to be taken entirely seriously, Deutsche Bank said the countries faring worst included Germany, where inhabitants “are neither impeccably honest in their work ethic, such as the Austrians, nor do they expend so much effort in circumventing the state as, for instance, the Greeks”.

The “most unfavourable level of shadow market activity”, according to Deutsche Bank’s calculations, was precisely 14,3318% of official gross domestic product.

At 14,6%, Germany “is on the brink of the worst-case scenario”, the bank concluded.

As a result, Germany faced two options: either to follow the example of “successful countries”, such as Greece, and “not just employ a moonlighting painter to do the living room, but to build the entire house”; or to choose the path of virtue.

Sebastian Kubsch, the report’s author, admitted that he “couldn’t find a straight answer” to explain why a large — or tiny — shadow economy had helped shore up economies in the past year.

One explanation could be that a well-functioning unofficial sector provides a viable alternative, for instance, for the officially unemployed.

But pervasive honesty also creates better outcomes. Financial Times

 


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Posted: 27 January 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

Steve Jobs: iPad

 

 

The iPad, which resembles a giant iPhone, has a 9.7in full-colour touch-screen, and can be used to watch movies, surf the internet, listen to music, view photos, and read ebooks and digital versions of newspapers and magazines. Jobs described the device as a "truly magical and revolutionary product".

He confirmed speculation that the iPad could be used to read ebooks, newspapers and magazines. "Amazon has done a great job of pioneering books with the Kindle," said Jobs. "We're going to stand on their shoulders and go a bit further."


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Posted: 14 March 2010 - 1 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

'Market abuse is unacceptably high', says FSA boss

Financial Services Authority to be transformed into an intrusive, interventionist regulator, says Hector Sants, the chief executive.

 
Hector Sants: 'The idea that London can make its own rules is an idea of the past' 

 

 

In his first interview since announcing his intention to step down in the summer after three years at the helm, Mr Sants also reveals that the FSA is to expand by more than 10pc and hire another 460 staff to perform its new investigatory role.

The expansion will be funded by a £41m increase in the regulator's budget to £455m.

"There is an unacceptably high level of market abuse in the UK," he says on insider dealing and market manipulation. "We need to work to reduce that.

"There's no evidence that the UK marketplace is worse than other major financial centres but I don't think that should be our benchmark.

"Our benchmark should seek to have a market that participants really believe to be clean and fair and, as a general test, I think that if you were to ask the market participants, they would share my view that there is too much market abuse."

Mr Sants' comments come after the FSA secured a 21-month jail term for Malcolm Calvert, a former head of market-making at stockbroker at Cazenove, following his conviction for insider trading in the FSA's largest prosecution to date.

The FSA is currently prosecuting two further insider dealing cases and Mr Sants says there are others in the pipeline.

The FSA's chief executive will lay out how the regulator will use the new staff in the launch of its business strategy this week.

The staff will be made up of investigative lawyers as well as experts in capital requirements and macro-prudential regulation.

The plans will reveal that the FSA will become much more pro-active and will also tackle what Mr Sants has described as the high-risk "culture" of the financial services sector - a potentially whole new area of regulatory activity.

Last Angela Knight, the chief executive of the British Bankers' Association, warned that although banking was keen on reform, the pendulum should not be pushed too far.

"The UK has made more rule changes than any other country," she said in an article for The Sunday Telegraph.

"In part this has been a response to public and political concern. And partly it's over-compensation: for several years the UK lectured the world on the merits of our regulatory system but, when push came to shove, it was found wanting.

I know it's easy to portray bankers as reluctant to budge and grimly hanging on to the status quo – but banking is at the table for change. However, we need to look before we leap."

The details of the FSA changes come after Mr Sants revealed a new approach to consumer protection, saying last week that it would test financial products to support, for example, mortgages or corporate debt, before they were launched rather than attempting to pick up the pieces after a crash.

On Friday night at a speech at the Said Business School at Oxford University he said the FSA would follow an "outcomes-based" approach to financial services regulation to replace the regime variously called "light-touch" or "principles-based" regulation.

Mr Sants admits that in the past the FSA was an essentially reactive regulator, relying on companies' managements to treat their customers fairly and providing redress and compensation for consumers when this
didn't happen.

Compensation efforts, which are currently focusing payment protection insurance, will continue, but Mr Sants also promised "intensive supervision", with the aim of stopping potential issues before they get out of control, through close involvement of FSA staff with new product plans and strategies.

"People tend to say the FSA made mistakes," he said. "But in reality the FSA just wasn't doing certain things. It wasn't that we were seeking to make judgments about the future and that those judgments were proved to be wrong; it was rather that we just weren't making any judgments at all.

"We were responding to the facts on the ground, to observable events. We weren't making judgments about the future.

"What we were doing in the past is completely different to what we're now doing.

"The problem in the past I think to a degree was that there was a mismatch between society's view of what the regulator was doing and what we were actually doing and that's been exposed by the crisis."

The new regime will be paid for by an increase in the FSA's budget from £414m in the financial year just finishing to £455m in 2010-11, funded by a 9.9pc rise in the fees that Britain's 29,000 regulated financial firms pay to the regulator.

Ten years ago, the FSA had just 2,030 staff and a budget of £196m but the latest expansion will increase employee numbers from 3,240 to 3,700, with Mr Sants saying the new approach requires different skills
and expertise to those traditionally found in its workforce.

The recruits will include both professional regulators with a "long-term institutional memory of regulation" and technical experts in quantitative analysis, risk modelling and business analysis and criminal lawyers and prosecutors.

About 100 new recruits will be required to assess the UK implications of the European Union's Solvency II insurance project, which will be the largest project the FSA has carried out, with an internal cost to the regulator of £100m-£150m over the next five years. Those costs will be borne directly by UK's insurers.

The FSA has come under attack for failing to foresee the biggest financial crisis since the 1930s, with the Treasury Select Committee chairman, John McFall, remarking in relation to Northern Rock that "the FSA appears to have systematically failed in its duty".

However, Mr Sants said at the Oxford event that the committee, like society at large, seemed to have a different concept of what
the FSA was meant to be doing than was actually its remit and strategy at the time.

"The Treasury Select Committee thought we were doing this and the man and the woman on the street thought that we were," he said of the demand for a more interventionist approach.

"So I said to my staff: 'If this is what they think we were doing, it's what we will do.' Then we can't get criticised for not doing it."

 

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Posted: 15 April 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

alt


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Posted: 17 April 2010 - 14 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

 

Rolling Stone - The Great American Bubble Machine

 

 

 

Then read about an instrument called ABACUS 207-AC1

 

"The SEC alleges that Tourre knew of Paulson & Co's undisclosed short interest and role in the collateral selection process. The deal closed on April 26 2007, with Paulson & Co paying Goldman Sachs about $15m for structuring and marketing ABACUS. By January 29 2008, 99% of the portfolio had been downgraded. The monster was designed to fail, and then die a horrible death, and so it did

The most terrifying part of the story, in the form of allegations, of course, is that investors in the liabilities of ABACUS lost more than $1bn, while Paulson & Co was sitting on the other end, shorting all the way to the proverbial bank.

As for the vampire squid part, the SEC alleges that Goldman Sachs "ailed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO".

 

Here's the Lex view:

 

From a moral point of view, the tale outlined in the complaint could scarcely be more damning. What pension fund or institution could possibly want to do business with a bank that behaves in the way Goldman is portrayed in the SEC’s suit? If this version of events stands up in court, then the damage to Goldman’s business will be severe – and so the market’s instant reaction on Friday looks justified.

 

I'm struggling to get my head around this.

 

All Goldman disclosed was the rating.

 

The people on the receiving end didn't know that Paulson chose the the portfolio and that they were betting against the rating.

 

This is wrong.

 

 

 


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Posted: 19 May 2010 - 2 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

"South Africa is a classic case of a country building buffers in the good times and using those buffers when the crisis hit," IMF economist Abebe Selassie told a briefing in Sandton on his organisation's outlook for sub-Saharan Africa for 2010.

One of the least noticed aspects of the global downturn had been the resilience of the sub-Saharan Africa region, he said.

"Previous global economic slowdowns had a much more damaging impact, but this time the global downturn was much sharper but the dislocation was far less."

Selassie said that as the global financial crisis started to unfold, economic policies were directed quickly and effectively towards ameliorating the impact of the external shocks.

"Most governments that anticipated the slowdown made plans to accelerate public spending growth, and on the monetary policy side, policy interest rates were also reduced."

Selassie predicted that South Africa's economy would grow by 2,6% for 2010.

"But I will be going back to Washington and revising it. It'll probably be a quarter of a percentage point higher. So growth will be expected to come in around 3% for South Africa in 2010," he said.

Earlier this month, Finance Minister Pravin Gordhan also said the country's economy might grow more than the 2,3% for 2010 that he had anticipated in February.

South Africa's economy contracted by 1,8% in 2009.

Selassie said the impact of the global crisis on countries in sub-Saharan Africa had varied.

"The countries most severely affected were middle-income countries (such as South Africa and Botswana) and oil-exporting countries ... however, the impact on low-income countries was relatively light."

However, in sub-Saharan Africa, job losses and reduced employment opportunities had affected millions of households.

"Just in South Africa 900 000 jobs were lost during 2009, further increasing the high level of unemployment, while elsewhere the impact of the slowdown on formal-sector job losses was probably proportionately less."

Risks
While South Africa and sub-Saharan Africa were bouncing back from the growth slowdown, risks remained, Selassie said.

These included a hiatus in the global recovery.

"There is very limited room left for policy manoeuvres in the advanced economies in the event of negative shocks."

There was also the risk that there would be shortfalls in official finance.

"Although bilateral aid held up well in the global recession, and international financial institutions ratcheted up their grants and lending, the outlook for official finance has been worsened by the permanent hits suffered by the economies of major donors."

Selassie said another risk could arise from volatile commodity prices.

"Even if the global recovery remains on track, renewed spikes or even sustained shifts in commodity prices -- particularly minerals and oil -- remain possible."

Selassie said internal risks included political unrest and a deterioration in financial systems in some countries.

"As developments in Guinea and Madagascar in 2009 showed, political instability can have strong negative effects on economic activity." -- Sapa


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Posted: 31 May 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

 

Most of us have kept an eye over the years on those titans of IT:  Apple, Google, IBM and Microsoft.

 

Remember IBM

…they were unbeatable. 

(2001’s HAL is a '1 letter early' play on the behemoth)

Then they ran into anti-trust

and gave away their PC software

 

Remember Microsoft

…they were unbeatable

Then they ran into anti-trust

and open source which is given away

 

Remember Apple

…they were unbeatable

and gave away their windows design

and their CEO was fired by a Pepsi bloke

Then got rehired.

 

Remember Google

…they were unbeatable

 

Have some fun

 

 

FIRST:

 

 

Under comments below: rank A: Apple G:Google I:IBM and M:Microsoft

  • -          By Market cap
  • -          By Sales
  • -          By Sales/employee
  • -          Net income

 

THEN look at the answer:

 

http://www.wolframalpha.com/input/?i=apple+google+ibm+microsoft

 


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Posted: 3 June 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

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Posted: 27 July 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

JOHANNESBURG (Reuters) - The Johannesburg Stock Exchange halted equity trade on Tuesday due to a technical problem, the second time this month that Africa's biggest bourse has been forced to suspend or delay trade.

A spokeswoman for the JSE said the bourse operator was still investigating the nature of the problem and declined to comment further.

The latest technical glitch comes as the JSE has been looking to court more overseas investors and market itself as a gateway to Africa's fast-growing capital markets.

Foreign investors have bought a net 23.9 billion rand of equities so far this year, according to the JSE's latest data.

"Everything's come to a grinding halt, we're not really sure what's going on," said Mitchell Gannaway, a trader at Thebe Securities.

"It's a bit unfortunate. What's this, the second time in a month?

Earlier this month equity trading was delayed for 90 minutes due to a network problem. That problem was due to the JSE's overseas network link, which is managed by MTN Group, Africa's biggest wireless phone operator.

It was not immediately clear whether Tuesday's suspension was caused by the same problem and no one was immediately available for comment at MTN.

In September 2008 the JSE halted trade for several hours due to connectivity problems. In March of this year its regulatory news service failed to update, also for several hours.


Any suggestions as to how we might help the poor JSE?


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Posted: 28 July 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

 

From: Singh, Herman – Standard Bank

Sent: 30 June 2010 06:07 PM

I wrote this on my blackberry in my personal capacity. First time that I’ve felt the need to share via email like this.  Feel free to share on.

"The headlines in RSA read the same old dismal news. World cup too expensive. No way to recoup investment. World cup over capitalized… and more in that vein.

I read this as I prepared for a journey across 5 continents in 5 weeks, flying in and out of Jhb, and at times being out during the world cup, much to my disappointment.

I had accepted all of these stories at face value until I started with my first flight to Uganda.

There I discovered that our African brethren we so proud of us for bringing the world cup here. They were praying for our success in hosting it (if not always rooting for our own soccer team). The excitement was palatable and people were clearly seeing us as the leading members of Africa. This fabulous continent with almost a billion people is perhaps more critical to our future well-being in terms of personal perceptions than the rest of the world!

It struck me then that the PR on South Africa outside the country was hugely positive and actually, you cannot BUY a positive spin like that. In RSA we complain about the cost of this world cup, yet the world now sees us as a positive and happy place to visit and do business with!

An amazing dichotomy!

Shortly after that I was in India and was amazed by the extremely great and positive reporting happening on our country. From airports and highway upgrades to the amazing stadiums that have become status symbols on our own continent.

The Indians were clearly impressed with our rapid progress as a unified nation and welcomed us as fellow serious fast-growing emerging market-players.

I flew via Dubai and the airport was blazoned with images of our country and the brand "South Africa" had become sexy and exciting in my mind. A transformation of amazing importance was taking place in the collective consciousness of the travelers around me. I often sensed envy in my fellow travelers when they heard were I was from, and more importantly where I was returning to.

I was then in Brazil where South Africa was emblazoned everywhere from billboards and airports to newspapers and TV ads in the soccer crazy nation.

Even the domestic airline had this amazing one-hour-video which they played on how well we and Africa had done in preparing for this event. Always positive, and promoting our country in the most positive way that I've ever seen or heard. Socially redeeming, nationally relevant, and inspirational was my summary.

I then flew SAA to the USA, and was quite moved to hear our pilots try to talk about

soccer over the intercom (and in Portuguese) to a resounding applause from the

Brazilian soccer fans on the plane. By now my chest was bursting with pride for my country, my team, my nation and my continent.

The trip to the USA, a country where soccer is not the most publicized sport, was the most amazing of all. Everywhere that I went, I was asked why I was out of my country at this incredible time in history (BBC even interviewed me on this point).

I lost count of the number of times that I saw the words “South Africa” from the east to the west coast of the USA. From mobile TV vans at central park, to pubs in San Francisco, and even in the sports section of USA papers that grudgingly referred to this event.

ESPN coverage was amazing as were the ads, and they all painted South Africa as a nation that was now a first world country and hosting one of the best world cups ever.

Praise was heaped on the country from our fans and united-population, to the fact that our team had done well (given their ranking prior to the event).

At JFK there were people proudly wearing bafana bafana shirts (a USA fashion accessory now in its own right – I think that it’s now the unofficial-world-cup-shirt WORLDWIDE).  And the dreaded and much-cursed vuvuzela was now becoming an American icon as I noted from fans at the airport returning to the USA.  I lost count of the numbers of those instruments that I saw there. What really knocked me flat was when I found a group blowing them in union square in San Francisco.

The top-of-the-pile belongs to the story of a baseball team handing out 15000 of these items to their fans before a game, to totally scare the living daylights out of their opponents!

The world of sports-noise will never be the same again!

I returned, humbled, by what we have accomplished as a nation.

Now I'm a senior executive, who is hard-nosed, and has been for 30 years or so, but I was very moved by all of this. So much so, that I thought that I would share this with as many South Africans as possible.

South Africans: Be proud, stand tall, hold your head high.

You have every reason to be very proud of yourself and we have honored the great Madiba in the best way possible.

There are a lot of issues in our country but when I see this, I dare to dream.

I see a nation that has high ambitions and hope, and punches WAY outside of its weight-limit. A nation unified to show the world what it can do.

A nation!!! Wow, that alone is enough!

So smile, my beloved country! You have done well"

 

 

 

 


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Posted: 10 August 2010 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Market news

Rupert Murdoch claims to own the 'Sky' in 'Skype'

 

 

By Kevin Rawlinson
 

Tuesday, 10 August 2010

    •  

 

Rupert Murdoch’s BSkyB is fighting a legal battle with the internet telecommunications pioneer Skype, claiming that it owns the “Sky” in “Skype”.

 

Skype yesterday announced that it plans to float on the Nasdaq stock exchange in New York. BSkyB’s legal challenge to Skype using its name within the EU was revealed in the 250-page document announcing the intended flotation.

Skype notes that its applications “in respect of the Skype name are being opposed by BSkyB plc”.

The company says that it has won the right to use its name in Switzerland, Turkey and Brazil, but that the European Union has ruled against it. Skype intends to appeal the decision “if necessary to the General Court at the Court of Justice of the European Community”.

If defeated in court, the company could be barred from trading under its own name if it is found to be in competition with Sky. The two companies operate in the field of telephony and could, therefore, be considered competitors, leading to possible confusion in the market-place.

The Name Inspector, a company name analyst blog, told paidContent:UK: “On the Skype forum, an employee reveals that the name was derived from the expression sky peer-to-peer.

“Some people might interpret Skype as a more conventional blend of sky with something that rhymes with Skype, like hype–or pipe, ripe, type, wipe.”

A spokesman for Sky confirmed that the company has been involved in a “five-year dispute with Skype” over trademark applications filed by the telecomms company. These are, the spokesman added: “including, but not limited to, television-related goods and services.

“The key contention in the dispute is that the brands ‘Sky’ and ‘Skype’ will be considered confusingly similar by members of the public. This was supported by consumer research conducted by Sky, and which was taken into account by the relevant authorities when they recently found in Sky’s favour.

Sky pointed out that, at this stage it has not brought any proceedings for trade mark infringement against Skype and its action is aimed at seeking assurances that Skype will not register trademarks in areas where it would come into competition with Sky.

In the document, filed earlier this week, Skype noted that, if it were unsuccessful in registering its trademark, it “may have a material adverse effect on our business. Moreover, a successful opposition to our application in one or more countries might encourage BSkyB or other third parties to make additional oppositions or commence trademark infringement proceedings.”

The document also carried the warning that, if BSkyB were to pursue litigation, the defence could be “costly and time consuming even if we were ultimately to prevail.

“If we were not ultimately to prevail in any such litigation to prevent our use of the Skype name or logo, we could be precluded from using the Skype name or logo in one or more jurisdictions without obtaining a license from BSkyB or such other third parties, which license may not be available on commercially reasonable terms or at all, which could have a material adverse effect on our business.”

This newspaper reported yesterday that Skype, formerly owned by eBay, has 560 million registered users, and has logged 95 billion minutes of voice and video calls in the first half of 2010.

It was bought by a consortium led by Silicon Valley venture capitalists Silver Lake with Andreessen Horowitz, a fund which was set up by the web browser pioneer Marc Andreessen.

A spokesman from Skype was unavailable for further comment yesterday.

 

 

 

 

WHO OWNS THE TALK IN TICKERTALK?

 

Quick google finance search finds:

 

Elephant Talk

Voip Talk

Human Talkweb

Net Talk

Let's Talk

 

 

May as well shut down boys!!!!!


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New York Times

August 26, 2010

This Is Not a Recovery

By PAUL KRUGMAN

What will Ben Bernanke, the Fed chairman, say in his big speech Friday in Jackson Hole, Wyo.? Will he hint at new steps to boost the economy? Stay tuned.

But we can safely predict what he and other officials will say about where we are right now: that the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact.

The small sliver of truth in claims of continuing recovery is the fact that G.D.P. is still rising: we’re not in a classic recession, in which everything goes down. But so what?

The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down. Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead. Will the economy actually enter a double dip, with G.D.P. shrinking? Who cares? If unemployment rises for the rest of this year, which seems likely, it won’t matter whether the G.D.P. numbers are slightly positive or slightly negative.

All of this is obvious. Yet policy makers are in denial.

After its last monetary policy meeting, the Fed released a statement declaring that it “anticipates a gradual return to higher levels of resource utilization” — Fedspeak for falling unemployment. Nothing in the data supports that kind of optimism. Meanwhile, Tim Geithner, the Treasury secretary, says that “we’re on the road to recovery.” No, we aren’t.

Why are people who know better sugar-coating economic reality? The answer, I’m sorry to say, is that it’s all about evading responsibility.

In the case of the Fed, admitting that the economy isn’t recovering would put the institution under pressure to do more. And so far, at least, the Fed seems more afraid of the possible loss of face if it tries to help the economy and fails than it is of the costs to the American people if it does nothing, and settles for a recovery that isn’t.

In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small. True, it was enough to limit the depth of the slump — a recent analysis by the Congressional Budget Office says unemployment would probably be well into double digits now without the stimulus — but it wasn’t big enough to bring unemployment down significantly.

Now, it’s arguable that even in early 2009, when President Obama was at the peak of his popularity, he couldn’t have gotten a bigger plan through the Senate. And he certainly couldn’t pass a supplemental stimulus now. So officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism. But they’ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody. And the likely result in November — big gains for the obstructionists — will paralyze policy for years to come.

So what should officials be doing, aside from telling the truth about the economy?

The Fed has a number of options. It can buy more long-term and private debt; it can push down long-term interest rates by announcing its intention to keep short-term rates low; it can raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash. Nobody can be sure how well these measures would work, but it’s better to try something that might not work than to make excuses while workers suffer.

The administration has less freedom of action, since it can’t get legislation past the Republican blockade. But it still has options. It can revamp its deeply unsuccessful attempt to aid troubled homeowners. It can use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families — yes, Republicans will howl, but they’re doing that anyway. It can finally get serious about confronting China over its currency manipulation: how many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it’s time to act?

Which of these options should policy makers pursue? If I had my way, all of them.

I know what some players both at the Fed and in the administration will say: they’ll warn about the risks of doing anything unconventional. But we’ve already seen the consequences of playing it safe, and waiting for recovery to happen all by itself: it’s landed us in what looks increasingly like a permanent state of stagnation and high unemployment. It’s time to admit that what we have now isn’t a recovery, and do whatever we can to change that situation.

 


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IMF fears 'social explosion' from world jobs crisis

America and Europe face the worst jobs crisis since the 1930s and risk "an explosion of social unrest" unless they tread carefully, the International Monetary Fund has warned.

 

 

Duration of unemployment in the US - Bureau of Labor Statistics
Duration of unemployment in the US, Bureau of Labor Statistics.

"The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment," said Dominique Strauss-Kahn, the IMF's chief, at an Oslo jobs summit with the International Labour Federation (ILO).

He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. "We are not safe," he said.

A joint IMF-ILO report said 30m jobs had been lost since the crisis, three quarters in richer economies. Global unemployment has reached 210m. "The Great Recession has left gaping wounds. High and long-lasting unemployment represents a risk to the stability of existing democracies," it said.

The study cited evidence that victims of recession in their early twenties suffer lifetime damage and lose faith in public institutions. A new twist is an apparent decline in the "employment intensity of growth" as rebounding output requires fewer extra workers. As such, it may be hard to re-absorb those laid off even if recovery gathers pace. The world must create 45m jobs a year for the next decade just to tread water.

Olivier Blanchard, the IMF's chief economist, said the percentage of workers laid off for long stints has been rising with each downturn for decades but the figures have surged this time.

"Long-term unemployment is alarmingly high: in the US, half the unemployed have been out of work for over six months, something we have not seen since the Great Depression," he said.

Spain has seen the biggest shock, with unemployment near 20pc. Britain's rate has risen from 5.3pc to 7.8pc over the last two years, a slightly better record than the OECD average. This contrasts with the 1970s and early 1980s when Britain was notoriously worse. UK jobless today totals 2.48m.

Mr Blanchard called for extra monetary stimulus as the first line of defence if "downside risks to growth materialise", but said authorities should not rule out another fiscal boost, despite debt worries. "If fiscal stimulus helps avoid structural unemployment, it may actually pay for itself," he said.

"Most advanced countries should not tighten fiscal policies before 2011: tightening sooner could undermine recovery," said the report, rebuking Britain's Coalition, Germany's austerity hawks, and US Republicans. Under French socialist Strauss-Kahn, the IMF has assumed a Keynesian flavour.

The report skirts the contentious issue of whether globalisation lets companies engage in "labour arbitrage", locating plant in low-wage economies such as China to ship products back to the West. Nor does it grapple with the trade distortions caused by China's currency policy, except to call on "surplus countries" to play their part in rebalancing.

The IMF said there may be a link between rising inequality within Western economies and deflating demand.

Historians say the last time that the wealth gap reached such skewed extremes was in 1928-1929. Some argue that wealth concentration may cause investment to outstrip demand, leading to over-capacity. This can trap the world in a slump.

 

Boris has asked me to add the following graph to this blog:

 

alt


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Cosatu has radical plan for directing economy

 

 The strategy paper is almost like a textbook lesson on what not to do.

 Dennis Dykes

 

 

In its proposals for a new strategy on growth and development in SA, Cosatu wants:

 

- a state bank to have “control and ownership” over the balance sheets of the Reserve Bank, so that it can direct economic policies.

 

- a tax on capital inflows to curb the appreciation of the rand, a measure which is being considered by the Treasury and Reserve Bank.

 

- the ratio of tax to gross domestic product to 30% from the current 24%.

 

- foreign exchange controls to be tightened, to stem the capital outflows which could spark depreciation in the currency — a step which is at odds with official policy.

 

  - the African National Congress (ANC) to make its tax policy more “progressive” as part of efforts to speed up the redistribution of wealth, including the introduction of a tax on the “super rich”.

 

 - a “solidarity tax” to cap growth of earnings in the top 10% income bracket and to accelerate earnings of the bottom 10%.

 

-  a “land tax” to speed up land redistribution and “zero ratings” for tax on basic food, medicine, water, electricity and public education.

 

-  a rise in the secondary tax on companies. It says this is aimed at encouraging job creation and reinvestment, and reducing the “financialisation” of company assets.

 

-  both locally produced and imported luxury goods to be taxed — with a higher levy on those produced outside SA.

  

-  export taxes to be imposed on “strategic” minerals, metals and other resources, to support downstream industries in the country and boost value-addition.

 

- a comprehensive social security system, with redistribution the main aim. It said this should be financed by raising the ratio of tax to gross domestic product to 30% from the current 24%.

 

Commentary:

 

The strategy document shows a lack of progress in “dialectics” over the past 40-50 years, Citigroup economist Jean-Francois Mercier said. It is “tax, spend and control, they want to revert to a semicontrolled economy”, he said.

 

The problem is that SA’s economy does not have a large internal market that can afford to ignore international developments and be self-sufficient, Mr Mercier said.

 

Nedbank economist Dennis Dykes agreed. The strategy paper is “almost like a textbook lesson on what not to do”, he said.

 

“We went through a period of enforced trade sanctions and we know that it leads down the path of contraction in growth,” he added.

 

Cosatu also called for a basic income grant for the jobless — a scheme that has already been considered but rejected as unsustainable by previous ANC governments.

 

Mr Mercier said SA already has a “redistributive” welfare system that is generous by emerging-country standards.

 

Social grants for child care, old age and disability now benefit 14- million South Africans — which is about 25% of the population — and provide an effective source of income for many poor households.

 

Mr Mercier said rich South Africans are already subsidising the poor through the existing tax system, which would be hard to expand as SA has a small tax base.

  

But Cosatu was critical of this view. “Over the past 16 years, the state’s approach to social protection has been fragmented and narrow,” it said in its policy document.

 

It disagreed with the view that the problem of poverty is due to the fact that poor people have to be skilled to be employable. “We obviously differ with this view,” it said.

 

SA’s unemployment rate has climbed above 25% and more than 1- million people have lost their jobs since January last year. Half of young people are unemployed, which does not bode well for social stability.

 

 

 

 

 

 

 

 

Economists were alarmed by the suggestion that the Bank should lose its independence, which is enshrined in the constitution. They also said it was not clear that price stability could be achieved if the authorities doubted the “clout” of a strong inflation- targeting framework.

 

 

Standard Chartered’s regional research head for Africa Razia Khan said it was not clear there was anything a central bank could do about job creation with interest rates as its only tool.

 

 

 

 

 

 

Cosatu said it did not believe that “credible monetary policy is essential for a new growth path and more job creation”.

 

 

 

 

The federation also said the Reserve Bank must “monitor and enforce quantitative controls on commercial banks to ensure that a certain fraction of their loans goes to priority sectors that drive the growth path ” of the economy.

 

 

 

 

“Control over commercial bank loans suggests that profitability and ability to repay will not be the key criteria for lending decisions,” said Ms Khan.

 

“If realised — and this is doubtful — this could potentially be disastrous.”

 

 

 

 

The question was how much political clout the unions had in convincing the ANC to adopt their new strategies, economists said.

 

 

 

 

Political analyst Steven Friedman said the chances of these becoming ANC policy soon were zero.

 

 

 

“The left don’t have a majority in the ANC ... this has been demonstrated time and time again,” he said. Cosatu had probably drawn up the document because they had often been accused of being articulate about what they were against, but not what they were for.

 

 

Another point was that next week’s meeting would not take policy decisions, which could only happen at the national conference.

 

 

 

 

There has been much talk of nationalising the mines, but eyebrows were raised at Cosatu’s proposal to impose a “heavy quota on gold exports” and increasing public ownership of mines. By doing this SA could “begin a process of gold reserve accumulation, which can be used to purchase critical inputs that we need for industrial development.”

 

 

 

 

Nedbank economist Dennis Dykes said SA lacked savings, so had no choice but to attract foreign capital. “If we go the route of nationalising and confiscating, this would exclude any foreign participation. That is not the way successful countries have gone — including China.”

 

 

 

 

Citigroup economist Jean-Francois Mercier said Cosatu had a point in saying capital had been “misallocated” to financial transactions rather than production.

 

 

 


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