->PConnect(script.ftech.net,mi2gl,m4d2e,mi2gl)
 

Question of Trust; Monitoring the Monitors - Central Banking

London, UK - 03 October 2007, 10:53 GMT

Dear ATCA Colleagues

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

We are grateful to:

80+ The Rt Hon The Lord Howell of Guildford, President, British Institute of Energy Economics, based at The Palace of Westminster, London, UK, for "Question of Trust, Total Transparency and Extreme Volatility;" and
79* Prof Joseph Mason, LeBow College of Business, Drexel University, Philadelphia, USA for "Monitoring the Monitors -- Central Banking and Rating Agencies;"

Dear DK and Colleagues

Re: Question of Trust, Total Transparency and Extreme Volatility


Recriminations continue as to why the Norther Rock bank run incident occurred in the UK, whether the banking system is as sound as was believed, who will now pay for the government guarantee, to whom does it apply and for how long, and a thousand other questions. Some say that state rescue intervention merely rewards the imprudent and unwise and will simply lead to future excesses. Some say help should have been offered sooner.

[CONTINUES] [ATCA Membership]


David Howell

The Right Honourable Lord (David) Howell of Guildford, President of the British Institute of Energy Economics, is a former Secretary of State for Energy and for Transport in the UK Government and an economist and journalist. Lord Howell is Deputy Leader of the Opposition in the House of Lords and Conservative Spokesman on Foreign Affairs. He also Chairs the Windsor Energy Group. Until 2002 he was Chairman of the UK-Japan 21st Century Group, (the high level bilateral forum between leading UK and Japanese politicians, industrialists and academics), which was first set up by Margaret Thatcher and Yasuhiro Nakasone in 1984. In addition he writes a fortnightly column for The JAPAN TIMES in Tokyo, and has done so since 1985. He also writes regularly for the International Herald Tribune. David Howell was the Chairman of the House of Commons Select Committee on Foreign Affairs, 1987-97. He was Chairman of the House of Lords European Sub-Committee on Common Foreign and Security Policy from 1999-2000. In 2001 he was awarded the Grand Cordon of the Order of the Sacred Treasure (Japan). His latest book, 'Out of the Energy Labyrinth' has been described as 'a serious and thoughtful attempt to grapple with the complexities of the energy challenge and foreign policy', by James R Schlesinger, and as 'a terrific book, not least because of its topicality' by Sir Simon Jenkins.
____________________________________________________________________________

Dear DK and Colleagues

Re: Monitoring the Monitors -- Central Banking and Rating Agencies

Bank earnings continue to be released this week. Overall, results seem to be deteriorating, with UBS, Citi, and Deutsche Bank announcing losses or expected losses that make earlier announcements by Bear Stearns, Goldman, Lehman, and Morgan Stanley seem tame. Merrill Lynch, Bank of America, and JP Morgan-Chase warned to expect more in upcoming releases. The vernacular is dour, with Citigroup characterizing their results as a "clear disappointment," Deutsche Bank admitting "mistakes" during the credit boom, and UBSs' "unsatisfactory results caused by a portfolio (and they are not unique here, just the only ones to admit that fact) whose composition may be substantially unknown."

[CONTINUES] [ATCA Membership]


Joseph Mason

A Nationally Recognized Statistical Rating Organization (or "NRSRO") is a credit rating agency which issues credit ratings that the US Securities and Exchange Commission (SEC) permits other financial firms to use for certain regulatory purposes. The seven organizations currently designated as NRSROs are:

1. Moody's Investor Service
2. Standard & Poor's
3. Fitch Ratings
4. AM Best Company
5. Dominion Bond Rating Service
6. Japan Credit Rating Agency
7. R&I

Ratings by NRSROs are used for a variety of regulatory purposes in the United States and across the world. In addition to net capital requirements, the SEC permits certain bond issuers to use a shorter prospectus form when issuing bonds if the issuer is older, has issued bonds before, and has a credit rating above a certain level. SEC regulations also require that money market funds (mutual funds that mimic the safety and liquidity of a bank savings deposit, but without FDIC insurance) comprise only securities with a very high rating from an NRSRO. Insurance regulators use credit ratings from NRSROs to ascertain the strength of the reserves held by insurance companies.

Prof Joseph Mason is an Associate Professor of Finance at Drexel University's LeBow College of Business, a Fellow at the Wharton School, and a Visiting Scholar at the Federal Deposit Insurance Corporation. Professor Mason teaches in the areas of corporate finance, financial markets and institutions, and risk management and derivatives. He teaches the writing intensive course in Money and Banking and is a founding member of Drexel's Writing Intensive Curriculum Implementation Group. Prior to joining Drexel University, he was a financial economist with the Office of the Comptroller of the Currency and Adjunct Assistant Professor of Finance at Georgetown University School of Business. His research spans the fields of corporate finance, financial intermediation, financial history, and monetary economics, focusing on issues related to both theory and public policy. He is the recipient of research grants or awards from the National Science Foundation, the Federal Reserve Bank of St Louis, Drexel University, and the University of Illinois. He serves or has served as advisor and consultant to many agencies and firms, including the Federal Deposit Insurance Corporation, the Federal Reserve Bank of Philadelphia, The Conference Board, the G-30, the World Bank Group, and numerous private firms. He is a member of the American Finance Association, the Financial Management Association, the Cliometrics Society, the Economic History Association, Beta Gamma Sigma, and Omicron Delta Epsilon.

Prof Mason has published academic articles in the American Economic Review; Journal of Business; Journal of Money, Credit, and Banking; Journal of Banking and Finance; Pacific-Basin Finance Journal; Journal of Financial Services Research; Research in Banking and Finance; and Explorations in Economic History, and book chapters in Resolution of Financial Distress (World Bank Group, Stijn Claessens, et al, eds); Privatization, Corporate Governance and Transition Economies in East Asia (NBER, Takatoshi Ito and Anne Krueger, eds); and Too-Big-To Fail: Policies and Practices in Government Bailouts (Greenwood Publishing, Benton E Gup ed). Dr Mason's current research projects include investigating the micro and macroeconomic effects of bankruptcy and liquidation procedures; the incidence and cost of systemic risk; and the management of idiosyncratic risks posed by new forms of bank lending, asset-backed securities, collateralized debt obligations (CDOs) and securitization. His work has been cited or published in the New York Times, Washington Times, the Economist, Wall Street Journal, Associated Press, Reuters, Bloomberg, KnightRidder Syndicate, MarketWatch-Dow Jones Newswire, MIST News, Financial Times, Barrons, Business Week, die Zeit, Investment Dealers Digest, American Banker, BNA's Banking News, Realty Times, Toronto Globe & Mail, the Philadelphia Business Review, and on CNBC, NBC Nightly News. He has made numerous live appearances on CNBC, Bloomberg Television, Comcast CN8 News, WBBM Radio Chicago, WHYY Public Radio Philadelphia, and WWDB Talk Radio Philadelphia.

[ENDS]

The ATCA submissions can be accessed from here. We are grateful to:

78. The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "The Largest American and Swiss Banks hit by Sub-Prime Meltdown & Global Credit Crunch;"
77. The Rt Hon Lord Howell of Guildford, President, British Institute of Energy Economics, based at The Palace of Westminster, London, UK, for "New Variables in Oil Supply at USD 100;"
76. Hamid Hakimzadeh, Hedge Fund Specialist, based in Buckinghamshire, England, UK, for "The Credit Pyramid and Energy Crisis;" and
75. Ashutosh Sheshabalaya, CEO, India-Advisory, from Brussels, European Union, and Bassilly, Belgium, for "New India's Role in Global Energy Equation;"
74. The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Energy Crunch: The Overlay of Peak Oil and Peak Uranium on the Credit Crunch;"
73+ Rudi Bogni, Chairman, Medinvest, and Director, Old Mutual, based in London, UK, and Basel, Switzerland, for, "Transparency always Pays in the Long Run;"
72+* Mark Cliffe, Chief Economist, ING Group, based in London, UK, and Amsterdam, Netherlands, for "The Credit Crunch Blame Game -- Inevitable, Necessary... but Dangerous;"
71+ The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Stress Testing BoE and FSA System 10 Years post 1997 as Credit Crisis Winds 140 Years Back;"

70. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA, for, "The Fed's Bold Action confirms Multiple Threats to Financial Stability and Economic Growth;"
69. The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Asymmetric Solutions: Fed Cuts Key Rate;"
68. Prof Jean-Pierre Lehmann based in Ouchy and IMD Lausanne, Switzerland, for "Asymmetric Solutions: No War with Iran?;"
67+ Arthur Probert, Associate, & Mark Goyder, Founding Director, Tomorrow's Company, London, UK, for "Asymmetric Solutions: Restoring Trust after the Credit Crunch;"
66+ Jean-Yves Gresser, Vice-Chairman, Black Forest Group, New York, USA, based in Paris and Granville, France, for "Asymmetric Solutions: Enhancing Trust in Computing Platforms, Networks & Processes;"
65. Dr Philippa Malmgren, Founder, Policy & Markets, & President, Canonbury Group, based in London, UK, for "Geo-Political Risk & Inflation based Black Swans;"
64. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA, for "Greenspan's Double-Digit Inflation Shadow over the World's Central Bankers;"
63. The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Fiat Money and Northern Rock's Parallels with 1973-1975;"
62. The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Margin of Safety and The Bubble Phenomenon: Differentiating between Value Investment and Speculation;"
61. DK Matai, Executive Chairman, mi2g, ATCA, The Philanthropia, based in Canary Wharf, London, UK, for, "Predicting the Future: How does the 'wisdom based super-sensitive a priori knowledge' ATCA engine work?"

60* The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "In Goldman Sachs We Trust;"
59. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA, and The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Currencies Turmoil Ahead: Euro and Sterling Weakness around Point of Inflexion?;"
58. Eric Best, Founder and President, Best Partners SC, New York City, NY, USA, for "Captains' Priorities and Requisite Virtues in Deep Financial Storm;"
57. Andrew Hunt, Founder and Consultant Economist, Andrew Hunt Economics, City of London, UK, for "The UK's Non-Bank Banks and High LIBOR;"
56. The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Worst Financial Crisis in 20 Years and the 10 Day Debt Bomb;"
55+ DK Matai, Executive Chairman, mi2g, ATCA, The Philanthropia, based in Canary Wharf, London, UK, for "Breach-of-Trust in Computing Platforms: Systemic Risk & Black Swans;"
54+ The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "ATCA QUERY: The Question of Trust;"
53. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA, and The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK for "Central Banks' Intervention and Europa;"
52. Hamid Hakimzadeh, Hedge Fund Specialist, based in Buckinghamshire, England, UK, for "The Physics of Humpty Dumpty;" and
51. Nigel Reed, Senior Analyst, Financial Markets, based in Cornwall, England, UK, for "China, Japan & US T-Bonds."

50* The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Credit Card Debt Default - The Domino Crisis post Sub-Prime Overflow;"
49* Dr George Feiger, President & CEO, Contango Capital Advisors, based in Berkeley, California, USA for "Responsibility for Credit, Securitisation and Moral Hazard."
48. Anthony Whitehouse, Founder, Bittiner Whitehouse (now Maitland), Geneva, Switzerland, for "Blame and Sanctions in the Credit Crunch;"
47. Prof Prabhu Guptara, Executive Director, Organisational Development, Wolfsberg (UBS), Switzerland, for "Unique Problems with 1990s Japan;"
46. The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, and Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA, for "Central Bankers, Monetary Policy and Moral Hazard;"
45* William Sturge, Partner, Reinsurance, Lawrence Graham (LG) based in Central London, UK, for "Litigation Exposure and Insurances that may Respond;"
44. Peter Tasker, Founding Partner, Arcus Investment, based in Tokyo, Japan, for "Invaluable Lessons from 1990s Japan - Risks of Schadenfreude;"
43. Andrew Leung, CEO, AL International, London, UK, and frequent visitor to China for "The China Dimension of The Global Credit Crunch;"
42* The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK, and Dr Harald Malmgren based in Washington, DC, USA for "Off-Balance Sheet Conduits & SIVs Raise Wider Concerns;"
41* Prof Charles Calomiris, Columbia Business School, New York & Prof Joseph Mason, LeBow College of Business, Drexel University, Philadelphia, USA for "The Conflict of Rating Agencies and Regulation - We need a Better Way to Judge Risk;"

40. Dr George Feiger, President & CEO, Contango Capital Advisors, based in Berkeley, California, USA for, "Questioning the Views of a Nobel Laureate;"
39. Prof Joseph Stiglitz, Nobel Laureate in Economics (2001), Columbia University, New York, USA , for "Day of Reckoning for Americans who lived Beyond their Means;"
38. Dr George Feiger, President & CEO, Contango Capital Advisors, based in Berkeley, California, USA for "Suggestions for Resolving Sub-Prime Dilemma Step by Step;"
37* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Understanding Rating Agencies beyond the Sub-Prime Meltdown;"
36* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Asymmetric Knowledge Risk and Market Deadlock;"
35* Anthony Whitehouse, Founder, Bittiner Whitehouse (now Maitland), Geneva, Switzerland, for "High Credit Ratings and Breakdown of Trust;"
34* John Pickering, Vice-Chairman, Labour Finance and Industry Group, based in London and Tunbridge Wells, UK, for "Role of Auditors;"
33* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "ATCA QUERY: Role of Credit Rating Agencies;"
32. Peter Tasker, Founding Partner, Arcus Investment, based in Tokyo, Japan, for "Resilience of Corporate Profits & Sub-Prime Fiasco -- Global View from Japan;"
31. Daniel Morler, Head of Middle East, LGT Private Bank, based in Vaduz, Liechtenstein, for "Human Factor, Information Lag, Geo-Politics and Central Banks;"

30. Justin Urquhart Stewart, Director, Seven Investment Management, London, UK, for "Pride Before the Fall -- Those Who Don't Know that they Don't Know;"
29. Martin Wolf, Associate Editor & Chief Economics Commentator, Financial Times, London, UK, for "To Cut or Not to Cut: Federal Reserve must Prolong the Party;"
28. The Hon Al McDonald, Chairman and CEO, Avenir Group, from Michigan, USA, for "Balancing The Role of Management in Extreme Financial Turbulence."
27. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Subprime Crisis Spreads Across Regions and Financial Sectors;"
26* Hervé de Carmoy, European Vice-Chairman, Trilateral Commission, based in Paris, France, for "Role of Large Financial Institutions in Fuelling Crisis;"
25* Dr Jim Walker, Chief Economist, CLSA, based in Hong Kong for "China Chaos and Subprime Butterfly;"
24. Ashutosh Sheshabalaya, CEO, India-Advisory, based in Brussels, EU, and Bassilly, Belgium, for "India turns History Upside Down;"
23. John Elkington, Chief Entrepreneur, SustainAbility, based in London, UK, and returning from India, for "Mother Convulsion - India's Third Liberation;"
22. Stephen Lendman, based in Chicago, Illinois, USA, for "Slow Motion Train Wreck" via Ashok Khosla, Chairman, Development Alternatives, New Delhi, India;
21. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Market Convulsions;"

20. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Federal Reserve's Changed Focus;"
19. Bill Emmott, Director, UK-Japan 21st Century Group, based in London and Somerset, UK, for "Japan's Strong Yen;"
18* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "The Asymmetric Loss of Trust and Chain Reaction;"
17. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Public Inquisition of Credit Rating Agencies may Accelerate Downturn;"
16. Dr George Feiger, President and CEO, Contango Capital Advisors, based in Berkeley, California, USA, for "Watch out for Dramatic Winners;"
15* The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Systemic Risk & Sectoral Meltdown: Heightened Correlation and Deleveraging;"
14. Rudi Bogni, Chairman, Medinvest, and Director, Old Mutual, from Basel, Switzerland, for, "Non-Stop Central Banks' Intervention;"
13. Dr Ravi Batra, Professor of Economics, Southern Methodist University, Dallas, Texas, USA, for, "Towards a Global Economic Crisis?;"
12. Aurora Carlson, Founder, Open One Center, based on the West Coast, Sweden, for "The Coming Storm of Change;"
11. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Large Quake hits Quants as Computer-Driven Quantitative Hedge Funds Short-Circuit;"

10* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Prolonged Credit Market Correction Ahead;"
9. Prof Dr Norbert Walter, Chief Economist, Deutsche Bank Group, based in Frankfurt, Germany, for "Economic Consequences of The Sub-Prime Crisis;"
8. Anthony Whitehouse, Founder, Bittiner Whitehouse (now Maitland), Geneva, Switzerland, for "Regulators, Hedge Fund Lending and Cross-Selling;"
7. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Perfect Storm: Credit Freeze and Distress Selling by Hedge Funds;"
6. Dr George Feiger, based in Berkeley, California, USA, for "Two Faces of the Same Coin;"
5* The ATCA Editorial Team, based in Canary Wharf, London, for "Contagion and Systemic Risk? ECB Injects Record Euro 95bn post Major Disturbance;"
4. The ATCA Editorial Team, for "Flight to Quality as Markets finally Appreciate Risk;"
3. Robert McNally, Chairman, London Chamber of Commerce Property and Construction Group, for "Erosion of Commercial Real Estate as a Solid Asset Class;"
2. Alexander Hoare, CEO, C Hoare and Co, Private Bankers, based in the City of London, for "Destructive Creativity, Leverage and The Derivatives Market;" and
1. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, for "The Fear of Central Bankers -- Flight from Illiquidity, Derivatives and Heightened Risk of Contagion;"

in response to, "Are the Currency Markets Warning that there is Trouble Ahead? The Precipitous Decline of the US Dollar and its Impact on the World."

+ Denotes ATCA QUERY: The Question of Trust +

* Denotes ATCA QUERY: Role of Credit Rating Agencies *

We look forward to your further thoughts, observations and views. Thank you.

Best wishes


For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency Alliance (ATCA)


ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. Please do not forward or use the material circulated without permission and full attribution.



Intelligence Unit | mi2g | tel +44 (0) 20 7712 1782 fax +44 (0) 20 7712 1501 | internet www.mi2g.net
mi2g: Winner of the Queen's Award for Enterprise in the category of Innovation

mi2g is at the leading edge of building secure on-line banking, broking and trading architectures. The principal applications of its technology are: 1. D2-Banking; 2. Digital Risk Management; and 3. Bespoke Security Architecture. For more information about mi2g, please visit: www.mi2g.net

Renowned worldwide for the ATCA Briefings. Subscribe now.
 
Home - Profile - Values - People - Careers - Partners - Contact Us
D2 Banking - Bespoke Security Architecture - Digital Risk Management - Tools

Intelligence Briefings - Brochures - Case Studies -
SIPS Methodology FAQ (pdf)
Keynote Speeches - Articles - News Feeds - Glossary (pdf)
Terms and Conditions - Privacy Policy