Imagine a group of people being stranded amidst deep amazon forests with nothing to eat except insects and lizards, with nothing to cover their heads, being tugged out into the wilderness of discomfort and agitation. After days of extensive and tireless operations, rescue officers ultimately landed with loads of food and all the amenities they can offer. But there was a tragic turnaround: rescue officers decided not to take the stranded people out of the claws of death; on the contrary, they agreed to continue their operations as long as they can.

This is what Greece is going through. Over the year of crisis, it has been observed that whatever the assistance mechanism (in terms of bailouts and loans) designed and amended so far contributed more towards fiscal chaos and debasement of the economy, affecting the lives of millions of people and its image as a whole.

Assistance extended so far allowed Greek government to spend,  since the engine of the economy has bottomed-out and domestic resources dried away.

Bailouts and loans just sway a nation back and forth in ravines of debt and despair. Bailouts may help a worn-out engine run, but it can’t help reduce deficits. It is very uncommon to witness that after years of crisis, authorities failed to restructure deficits, failed to frame rules concerning public expenditure, failed to eradicate to fiscal illness, and failed to bridge the fiscal gap and move on.

For example, how far have measures taken to stabilize Argentina debt crisis been successful? Ten years after the Argentinean sovereign debt default, the world seems to have ignored or fizzle out lessens learned in South America. Even today, after a decade of financial fall-out, litigation are continuing; debtors are still hopeful that one day they might get their money back.

On the other hand, austerity measures help curtail expenditure. They assist in lowering the possibility of the further accumulation of debt, but in no sense do austerity measures help reduce previously accumulated debt. This is where action by the International Monetary Fund and European Central Bank turns folly.

A system has to be put in place that brings public expenditure under an axis of regulation, under the barricades of the financial capability of a nation to spend, rather than printing stacks of money to purchase government bonds. Institutions aiding financially are just acting like a cushion, instigating or backing-up nations to carry on reckless spending patterns no what matter whether they can withstand the debt burden or not!

Institutions that promote spending cuts followed by hybrid doses of bailouts partly shift responsibility back to themselves from a debt-laden nation, and continue the legacy of fiscal fallacy.

Legal framework on a systematic platform has to be implemented at a global level, so that in the future we live in a debt free world, a world where fiscal discipline matters and budget surpluses are a reality for all. At least in the case of Europe, a fiscal institution has to overlook the fiscal affairs of all the member nations, capping public spending based on the country’s own financial health and current debt.

The situation where Greece is currently dwelling is very close to people stranded in Amazon forest. What is needed is effective fiscal management. International institutions can play a much bigger role with technical guidance on budget management and by discounting policies that hardly bring any substantial change.

The need of the hour is to lift people away from the woods, not to let them survive being the weakest!

Image Courtesy of   Ververidis Vasilis / Shutterstock.com

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London, United Kingdom — June proved to be a bullish month for stock markets, with investors buying back into the market after three previous months of declines as Central Banks looked to stimulate a slowing global economy.

In June, the FTSE 100 gained 251 points or 4.7%. However, having hit resistance at the 5700 level at the end of last week, will the FTSE’s charge start to run out of steam? By close of play in the UK on Friday (July 6), all the major indices were firmly in the red, with the Dow Jones leading the way as it fell by over 150 points (over 1%) by 4.40pm (BST). Major indices in the UK and Europe recorded falls too, with the FTSE 100 shedding 30 points and Germany’s DAX 30 sliding by over 125 points to close the week at 5662.6 and 6410.1 respectively.

Luckily for some, spread betting is a viable alternative to conventional trading, making it possible for traders to profit from rising as well as falling markets – an excellent option during volatile market conditions such as the present.

More falls expected this week?

Last Friday’s dip in market sentiment was caused largely by the release of worse than expected non-farm payroll data in the US, which showed the country’s unemployment rate remaining unchanged at 8.2% in June but the number of new jobs was disappointing, with a total of 80,000 new payrolls being added to the economy against expectations of 90,000. Private payrolls also failed to recover, adding just 84,000 jobs against expectations of 102,000.

In the UK, meanwhile, the Barclays Libor scandal continued to fray nerves after the Serious Fraud Office launched an official investigation into the rate-fixing controversy.

Globally too, sentiment was sombre, with International Monetary Fund chief Christine Lagarde revealing that the IMF will be revising its growth forecast for the global economy lower from the current 3.5%.

With spread betting, it is possible to profit irrespective of whether the markets are moving up or down, meaning that traders can net a profit even when markets are on the decline.

All you have to do is determine whether you expect market prices to rise or fall in the coming days. If  prices are expected to rise, one should take a long position and if the prices are expected to fall, one should go short.

Spread betting is a leveraged product which can result in losses greater than the initial deposit. Individuals should be sure that they fully understand the risks.

*Spread betting is exempt from UK stamp duty and Capital Gains Tax (CGT). However, tax laws are subject to change and depend on individual circumstances.

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Princeton, U.S.A. — A recent ORC International survey of American adults has found that awareness of the Occupy Wall Street movement is unchanged since the intense media coverage of the movement’s events through fall and winter of 2011 but that support for the movement has declined.

ORC International updated a series of questions about Occupy Wall Street asked in late 2011 and found that seventy-one percent of Americans remain aware of the movement, even while media coverage has significantly declined. Protesters have largely dispersed from the parks and fronts steps of the world’s financial capitals.

The continued awareness is in part to the ongoing social dialogue that continues by both supporters and protesters of the movement. According to ORC’s social analytics product, Social Buzz, Occupy Wall Street conversations continue to steadily appear with an average of 156,000 posts daily in the social universe since mid-December. This is mostly driven by specifically timed events including the six month anniversary to re-occupy Zuccotti Park in New York City on March 17-18, mass arrests on March 22, and a May Day Protest.

Overall agreement with the movement’s position regarding the financial inequities continues to hold steady at thirty percent since the fall, however, those who disagree has risen seven percentage points to twenty-eight percent over the past six months.

While levels of coverage in both social media and traditional media have varied, the combination has continued to keep this movement in front of the American public. Long-term sustainability of the movement, however, remains a question.

The poll was conducted using ORC International’s CARAVAN service from June 9-11, 2012. The poll interviewed 1005 US Adults by telephone.

ORC International is a leading global research firm with offices across the U.S.A., Europe and Asia Pacific. The company has been a partner of CNN on the CNN/ORC International poll since 2006 and is a founding member of the CASRO.

Image Courtesy of  Atomische • Tom Giebel

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Washington, U.S.A. – Despite a downward revision to economic growth in the first quarter, moderate growth is expected to continue for the remainder of 2012, according to Fannie Mae’s (OTC Bulletin Board: FNMA) Economic & Strategic Research Group. However, risks to the economic outlook have tilted to the downside. Factors such as a decelerating trend in hiring, potential contagion in the euro zone from fiscal issues in Greece, and the potential of a massive fiscal drag in the U.S. indicate that the balance between upside and downside risks has diminished.

For all of 2012, growth is projected to come in at 2.2 percent. Consumers remain key to the overall outlook, as attitudes appear to be reaching a plateau after a few months of improvement early in the year. Loss of momentum in labor market conditions, sluggish income growth, and decreasing saving rates suggest that consumers may need to moderate spending unless income picks up.

“For the third year in a row we are experiencing a spring lull in economic activity,” said Fannie Mae Chief Economist Doug Duncan.”Our view is that the underlying resilience of the economy and of consumers in particular that has been demonstrated during the past couple of years will persist. However, the magnitude of the uncertainties surrounding the European debt crisis and our fiscal condition here in the U.S. implies that the risks to the outlook are clearly tilted to the downside.”

The housing market has performed relatively well in the current environment supported by record affordability and very low interest rates, with home sales up 8 percent year over year, but from very depressed levels in numeric terms compared to 2011. In turn, cautious optimism remains in place for continued gradual healing of the housing market, albeit in the face of various headwinds, including weak employment growth, rising student loans, and a continuing stream of foreclosed households.

Main measures of home prices have firmed in recent months, as the share of distressed sales has declined in a strong seasonal period. Despite this recent encouraging trend, the Group continues to expect that home prices on a national basis will show a slight additional decline before bottoming in the beginning of next year.

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Los Cabos, Mexico – G2012 Mexico is partnering with Ashoka Changemakers to launch the G2012 Mexico Financial Inclusion: Innovative Solutions for Unlocking Access challenge, an online competition to find groundbreaking initiatives from around the world that make financial services accessible to under-served and excluded communities.

“Promoting greater financial inclusion is a key focus for the Mexican Presidency of the G20 this year,” said Jose Antonio Meade, minister of finance and public credit of Mexico. “Equipping underserved and excluded households with the basic tools of economic empowerment—such as, affordable loans, secure savings and payments, and insurance—is key to economic development and raising standards of living. Financial inclusion is also critical to the strength and stability of the greater global financial system.”

The competition seeks solutions that create access to valuable, affordable, secure, and comprehensive financial services. Today, 2.7 billion adults—more than half of the world’s working-age population—do not have access to financial services that would allow them to save money securely, borrow money affordably, make payments knowledgeably, and insure themselves against potential hardships or risk.

All private sector individuals, organizations, or partnerships are eligible to enter from now until September 12, 2012 at changemakers.com/financialinclusion. Details about the guidelines and assessment criteria can be found on the website. The best solution will win a 100,000 USD award sponsored by Banco Nacional de Mexico (Banamex) and BBVA Bancomer. ”Ashoka has a long history of expertise in sourcing and scaling-up social innovations that promote economic empowerment and financial inclusion,” said Ashoka President Diana Wells. “We are thrilled to partner with G2012 Mexico and to leverage the experience and tireless passion of our network to support this critical challenge.”

Secretary Jose Antonio Meade announced on June 18 the launch of the G2012 Mexico Financial Inclusion: Innovative Solutions for Unlocking Access competition at the G20 Leader´s Summit in Los Cabos, Mexico.

Under the Mexican G20 Presidency the financial inclusion agenda has focused on the promotion of having more inclusive financial systems and accompany those efforts with actions on financial education and financial consumer protection. In this sense, the most important challenges for moving from ideas to actions are: building a modern regulatory framework, innovation regarding new business models and technology, and strong coordination especially with the private sector.

Image Courtesy of  G20

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According to a government report by Japan, the Japanese population will by 2060 only be 87 million, down one third from the current level of 128 million people. It means that within 1000 years, the Japanese could be faced with extinction, according to researchers at Tohoku University Graduate School of Economics in Sendai. Therefore, if the number of children born keeps declining, Japan may celebrate “Kids Day 5/5/3011 with only one child,”  said Hiroshi Yoshida, a professor at Tohoku University. But what is the fundamental cause behind this decline?

Across developed countries, there is a general trend among women that they keep working more and marrying later. There are generally three possible reasons why the desire to have children is diminishing: financial worries, employment problems, and lack of family support. Meanwhile, financial worries seem to affect Japan the most as many Japanese men prefer to stay single because of economic difficulties. French newspaper La Croix mentioned that due to economic difficulties, many Japanese men are afraid of the prospect of getting married. This situation leads to increased rates of singles and a decline in birth rate in Japan. The phenomenon of an aging population is now accelerating with people over 65 years of age amounting to 22.9% of the Japanese population. A new Japanese government survey which was conducted by the National Institute of Population and Social Security Research (NIPSSR) showed that about 61% of single men aged 18 to 34 have no girlfriend and 45% of women are unmarried.

Notably, many people cannot marry even if they want to because of the weak financial situation. According to La Croix, this situation is a consequence of the speculative bubble in Japan of the 1990s and the prolonged economic crisis after that. One expert said, “Many young employees lost their long-term labor contract. Therefore, many people believe that marriage is too risky”. Another reason is that the Japanese society is still emphasizing a lot on the importance of the men earning the household income and the role of okusan, meaning “person in the back of the house,” which reflects the image of the Japanese wives staying at home.

In addition, many women want to find a husband that has a stable job and good income to ensure the material life of a family. However, it is not easy to find such a man with national economic conditions like this. At the same time, having a child out of wedlock is considered a taboo in Japanese society, so the number of these children accounts for is only 2%. In contrast to reproductive problems, the average life expectancy of Japanese people is up to 83 years, leaving Japan with the world’s oldest population. It also takes a lot of money to raise a child and many women are afraid of losing their job during pregnancy. According to Dr Kuniko Inoguchi, former minister of Social Affairs and Gender Balance, about 70% of pregnant women in small and medium enterprises quit their job and if they return to work, so things can be very difficult to balance.

The next hurdle is raising children. “Families used to live with all the generations together,” said one Tokyo pensioner. “That was good for everybody, as there were more people around to provide support.” In rural areas, this is common; birth rates are higher than the national average. But many couples who live in a city far from their relatives lack the family support they often need when a baby is born. They are also too busy with their work to perform the responsibilities of parents to child. So, many Japanese couples decide to have only one child.

In recent years, the Japanese government has worked hard to introduce family-friendly policies to help young families. There are now more day care places available for children of working mothers. Primary schools are running after-school programs for children who have busy parents. There is a desire to stifle the current development, but it may take a generation or two to match tradition with modern needs. Therefore, it is encouraged of the Japanese Government to introduce more policies to improve the birth rate.

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German Chancellor Angela Merkel met with the English Prime Minister David Cameron to discuss the Eurozone crisis. Both leaders support a two-speed approach to the future of Europe.

Several leaders outside of the Eurozone, such as U.S. President Barack Obama, have urged Germany and the other participating nations to take immediate action on the crisis. Cameron stated, “I’m very clear that urgent action is needed to deal with the market uncertainty… [it] is about building firewalls and recapitalizing the banks.” Although Cameron has urged the Eurozone to solve this crisis, he has made it quite clear that he expects them to solve their own problems.

The United Kingdom and Denmark, although members of the European Union, negotiated agreements in 1992 to be excluded from the euro. Both countries wanted to maintain their own currency, which now appears to have been the best course of action.

Merkel has already admitted that the Eurozone crisis has been building over the last ten years and will not be solved in a day. Merkel stated, “now it will also take a few years to get things right again.”

Many economic experts have claimed that the Eurozone structure is faulty because seventeen nations are connected through a currency but are not coordinated with their budget plans. This lack of budget coordination is not a problem until a crisis such as the 2008 recession arises; now the weaker economies are dragging down the whole system. Merkel agrees that something must be done to integrate these nations better. “We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy,” she said.

European Union officials in Brussels want Germany, the strongest economy in the Union, to accept jointly guaranteed European debt and allow the European Central Bank to issue eurobonds. These eurobonds would help to regain some of the debt for the other countries as well as Germany, but Merkel worries that issuing these eurobonds would harm the German people and the German economy more. Before any kind of fiscal union is created in Europe, Merkel is insistent that there needs to be more stability from other European Union countries. Some experts claim that the integration cannot wait.

Another suggestion from the European Commission and European Central Bank is the creation of a central banking authority that would help alleviate concerns of excessive debt. Currently, Spain’s finance minister has claimed that credit markets are “effectively shut” to Spain at this time, making it impossible for them to get the billions in euros to rescue their banks. As of 6 June 2012, the European Commission has announced a plan for a “bank union” in Europe that would make it easier for countries like Spain to get credit.

Although many worry that Spain will need a bailout, Spain insists that they will not. Merkel has stated that Germany will not pressure Spain to take a bailout although the funds will be there if they are necessary.

The European Central Bank cannot provide bailouts due to the ‘no bailout’ clause of the Maastricht Treaty of 1992. However, starting in July there will be a 500 billion euro rescue fund known as the European Stability Mechanism.

Merkel has insisted on austerity measures in bailout countries such as Greece, but these measures have been met with great opposition. Many claim that what governments should be focusing on is growth. Merkel claims, “budget consolidation [aka austerity measures] and growth are two sides of one and the same coin.”

Currently a budget-discipline agreement is being discussed across Europe and has already been ratified in some countries. The Irish referendum vote in the previous week affirmed the agreement. Merkel’s coalition government in the German Parliament is working to get the two-thirds majority necessary to approve the agreement. However, the opposition party – which believes the debt crisis can only be solved by spending for growth – has also requested a financial transaction tax be added to the agreement or at least followed by Germany.

The United Kingdom, with London being the biggest financial center in Europe, is opposed to a Europe-wide financial transaction tax. Cameron stated that the tax would “simply [draw] those transactions offshore and to other places.”

On 7 June 2012 Merkel stated, “we need a political union first and foremost… step by step we must from now on give up more competences to Europe, and allow Europe more powers of control.” Although Cameron agrees that the Eurozone must become more integrated financially, his country is not a member of the Eurozone and would not have to deal with the consequences.

After meeting with Cameron, Merkel announced that she is tolerant of a ‘two-speed’ Europe, meaning that while the current Eurozone countries become more integrated fiscally and politically, other countries such as Denmark and the United Kingdom that use their own currency would still be a part of the Union but relegated to the edges. Merkel claims, “we have to be open. We always have to make it possible for everyone [to join]… but we must not stop because one or the other don’t want to come along just yet.”

Merkel says that one of the greatest aids for the European Union countries is to become more competitive. She claims that the economies will improve when they begin producing more on the global market.

An EU summit is planned for later in June and the leaders will discuss plans for a political union. However, according to Merkel, the decision and the arrangements will not be completed in one summit and more meetings will have to be planned.

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The 57^th annual Eurovision song contest occurred earlier this month in Baku, Azerbaijan. Like every year, the 2012 competition was a predictably showy camp-fest that featured prominent artists from a host of European countries competing within the realm of song and dance. The elected winner was Swedish songstress Loreen whose capoeira inspired act brought Sweden the honor of hosting the competition next year.

Despite the escapist themes of many Eurovision submissions, however, the event does not take place in a vacuum. This year, the financial crisis of the European economy had a noticeable impact on the purely European song contest.

Rambo Amadeus, the Montenegrin entry and a popular musical satirist, brought the economic situation to the fore with his song “Euro Nero” whose chorus features lyrics such as “give me chance to refinance” and “monetary break dance.” While the middle-aged performer and his symbolic trojan horse did not make it to the final stage of the competition, his witty rapping hinted at some of the considerations that would constitute the majority of the scandal surrounding the show as a whole.

In its preamble to the broadcast of the annual show, the international media doggedly introduced and reintroduced the question of who, should they win, would be fiscally capable of hosting Eurovision next year and whether this would effect the quality of contestants. One of the greatest conspiracy theories leading up to the competition was the rumor that the Spanish contestant, Pastora Soler, had been instructed to lose. The Herald Sun reports that Soler allegedly said “I think it is not the moment, neither for Spain nor for the Spanish public, to win Eurovision.” This claim was later denied by the singer herself.

Many felt that the participation of Eleftheria Eleftheriou for Greece, the country that has perhaps been most affected by the devaluing of the Euro, demonstrated a lack of economic responsibility on the part of the country’s politicians. Others argued that this was a necessary boost to Greek moral. Still others felt that the voting aspect of Eurovision would be used as an opportunity for countries to ally themselves. In particular, many believed that Greece might use Eurovision to influence Germany’s decision to spearhead an economic bailout.

Post-Eurovision, it is clear that the motivation for individual country’s voting was vastly more complicated than had been suspected. While many countries, including Portugal, Spain, Italy and Ireland, did vote along the lines of natural economic and political alliances, both Greece and Germany awarded each other zero points. Far from their original hypotheses of mutual understanding expressed through song approval, theorists now view the peculiar voting habits of this pair of countries as a kind of complicit revenge tactic or, as Charles Robinson explains in the Wall Street Journal, a form of “protest”.

Fortunately, Sweden, the eventual winner, appears to be fully capable of hosting Eurovision 2013 and has managed to escape relatively unscathed from the political furore that has surrounded some of its compatriot countries. What social changes might occur between then and now to reshape the complexion of this contest remains to be seen.

Image Courtesy of   http://www.eurovision.tv

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To choose to be a student right now in the UK is to place yourself in a very precarious situation. You can go the university route, where high tuition fees will hopefully be offset by strong career prospects, or you can go the technical college route as a means of earning a vocational skill which will result in more practical and accessible work experience.

Alternatively, you can choose to study abroad for the sake of your resumé, you can study part-time and find part-time employment to avoid incurring massive student loans, or if all else fails then you can take a gap year from your studies and attempt to find significant work experience which will potentially guide you onto the right academic path at a later date.

However, do a little asking around and you will soon find that a lot of people at different ages in these various positions are struggling to answer the question of, ‘Is education, in this day and age, and in this economic climate, even worthwhile?’.

What it all comes down to is all the statistics you have heard before: fees are up, the job market has narrowed, those already in employment are putting off retirement by a few more years, and so as a result the next generation of professionals are cast somewhat adrift.

Danielle Lavery, 24, attended both Belfast Metropolitan College and University of Ulster, and had the following to say about the attitudes of the staff in each institution:

When it comes to Uni, I think they get paid for nothing … [College] is a different story. They are dying to help in any way possible. I would study there forever.

This comment about being ‘paid for nothing’ is an echo of a point raised by many in the past – do university students get their value for money? Even before the fee increase became an issue, the majority of undergraduates were paying over £3,000 per year in tuition for less than a dozen hours of taught class per week.

At postgraduate level, the fees are higher and the taught class hours per week are lower, a structure which by its very design is becoming increasingly unappealing to younger students just starting out in higher education. Charlotte Hart, 18, is in her first year at Manchester Metropolitan University and said:

Joys = Getting to choose what you learn about more so than in previous education, and getting to move away (some people). Pains = lack of money.

Thus, the financial problem persists. Universities may offer a range of clubs and societies, and some may be developing world-class facilities, such as Queen’s University Belfast’s (QUB) McClay Library, but if students are not being compelled to make the most of these then the focus again turns towards the tangible benefits which students are receiving in turn for their tuition fees.

To go from a first year undergraduate to a PhD student, Amanda Krentzel, 23, spoke of the challenges and responsibilities that come from the mere development of one’s academic career. Having finished her undergraduate degree less than a year ago, Krentzel now finds that:

Suddenly, in the eyes of undergrads, you’ve aged a decade.

This point brings to light the academic hierarchy which is not nearly as well-documented as the financial burdens of student life. Pursuing academia through all of its stages means finding yourself becoming a relatively senior figure before you have reached your mid-20s. That routine of simply going to class, doing assignments, complaining about exams, and partying in the student union?

That is forgotten very quickly as the ‘student’ becomes a more active participant in the university community. Now, add together the personal responsibility and the workload, as well as the financial challenges, and the full extent of the pressures of student life become more apparent.

All this, however, is not to downplay the fundamental love of education that many students, even those in dire financial straits, manage to maintain. Sarah McBride, 25, is a postgraduate student at QUB and explained:

I’m pro-education. I’m here for the love of learning, not just for the job prospects.

Therein may lie the reason why so many young people continue to apply to higher education courses when they are well aware of the complete lack of guarantees of finding jobs: a love of learning.

In a year where recent graduates have emigrated from Europe to the United States, and vice versa, there are still plenty who believe that the student experience is still an invaluable and ultimately fulfilling endeavour to pursue. Yet for those who have emigrated to pursue their studies, the reasons are equally persuasive. James Hughes, a QUB graduate, moved to Maastricht to do his MA, and lists his motivations for doing do as:

The cheap fees, the potential employment prospects and the international atmosphere of the student body. Chance to live in another country is appealing and, for Maastricht specifically, it’s a great central ‘hub’ for travelling.

For those who remain at home, it remains to be seen whether the joys of education will continue to outweigh the pains, as another year goes by with more graduates than ever fighting it out for that one, elusive, perfect dream job.

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According to The Wall Street Journal, the Securities and Exchange Commission has warned a top banker that it may bring civil charges against him for his role in creating a risky collateralized debt obligation, or CDO, that exploded spectacularly as the housing market crashed. It’s the first public evidence that the SEC is considering charges against a top banking executive involved in CDOs, which fueled the financial crisis.

The CDO, from the end days of the boom in 2007, was one of dozens that had been created with the help of the hedge fund Magnetar. As Propublica reported with This American Life and NPR, Magnetar often pushed for riskier assets to be included in CDOs, and placed bets against many of the same investments so that it would profit if those risky assets went sour. (Magnetar has never been charged with any wrongdoing, and has always maintained that it did not have a strategy to bet against the housing market.)

Alexander Rekeda, the banker warned by the SEC, helped create a $1.6 billion CDO called Delphinus CDO 2007-1 for the Japanese bank Mizuho. Investigators allege that investors were not told Magnetar stood to profit if the investments failed. (Here’s the pitchbook for Delphinus.)

In a related matter, the Financial Industry Regulatory Authority, an independent Wall Street watchdog, has made a preliminary recommendation that Rekeda be disciplined for “alleged misrepresentations in the sale of” another type of security — we have the details here.

Delphinus is not the first deal involving Mizuho and Rekeda that the SEC has looked into. As The Journal reported last year, the agency has been investigating a CDO called Tigris that Magnetar created with Mizuho. That CDO was a collection of the riskiest bits of other CDOs — as we described it, they were “bundling up the dregs of a CDO,” a “rare, if not unprecedented” strategy. The Tigris deal has not yet resulted in charges.

We’ve reached out to Rekeda, who no longer works at Mizuho, but have yet to hear back. A Mizuho spokesman told The Wall Street Journal that it “has been asked by the SEC to provide related documents and information, and it’s currently dealing with it.” (We also have reached out to Mizuho.)

The warning sent to Rekeda, called a Wells notice, says that the SEC has made a “preliminary determination … to recommend charges based on alleged misrepresentations in connection with the structuring of a CDO.”

As we noted last fall, the SEC has also warned the ratings agency Standard & Poor’s that it also may face civil charges in connection with the Delphinus CDO. Standard & Poor’s abruptly downgraded Delphinus just a few months after the security was issued and received a top rating.

Other banks have been charged by the SEC and settled allegations involving CDOs. In 2010, Goldman Sachs settled with the SEC for more than $500 million. In June, J.P. Morgan agreed to pay $153 million, and in October, Citigroup reached a $285 million settlement.

by Cora Currier, ProPublica, Feb. 21, 2012, 1:49 p.m.

Image Courtesy of   http://www.flickr.com/photos/medilldc/

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More than three years after the financial crisis, Wall Street watchdogs are still uncovering questionable actions rooted in that time. The latest revelation involves one of the more creative packagers of securities who contributed to a trail of billions in soured deals, as well as a much-maligned rating agency.

The Financial Industry Regulatory Authority — an independent, non-governmental regulatory body — has recommended disciplinary action against two men for “alleged misrepresentations in connection with the sale” of a complex security.

The recommendation is preliminary. No civil or criminal charges have been filed. The men, Alexander Rekeda and Timothy Day, are both affiliated with Guggenheim Capital, a privately held, financial services company that does everything from trading securities to providing investment advice. According to its web site, the firm, headquartered in New York, has 1,700 employees in 25 offices located in 10 countries, and it manages about $125 billion.

A lawyer for Rekeda could not be reached for comment. ProPublica has learned that he is no longer with Guggenheim. Day, who is still at Guggenheim, did not respond to a request for comment. We will update this post when they are reached.

FINRA has been investigating the men over the sale of a type of security known as a collateralized loan obligation, or CLO. The investigation touches on a CLO called Nine Grade Funding II, although it remains unclear if this CLO is the main focus of the probe. FINRA’s filing did not elaborate on the type or character of the “alleged misrepresentations” it said were involved in the sale of the CLO it is investigating.

In a story published Monday evening, the Wall Street Journal reported that Rekeda was under investigation by FINRA for an unnamed CLO. The Journal also reported that Rekeda is being investigated by the Securities and Exchange Commission for a collateralized debt obligation, or CDO, he helped construct while employed by the Japanese bank Mizuho.

As Propublica detailed in the series the Wall Street Money Machine, Rekeda was involved in the creation of several CDOs with Magnetar, a hedge fund that helped put together more than $40 billion of the securities. Magnetar often lobbied for riskier assets to be put into the CDOs and then placed bets against many of the investments, reaping tremendous profits when the deals soured. (Magnetar has never been charged with any wrongdoing, and has always maintained that it did not have a strategy to bet against the housing market.)

The investigation into Rekeda is one of the few public signs that regulators are considering charges against a top banking executive involved in a Magnetar deal. Nine Grade Funding was a CLO comprised of other CLOs backed by corporate loans. It was issued at a time when few such securities were being sold.

The CLO was featured prominently in allegations by a whistleblower, Eric Kolchinsky, against the rating agency Moody’s. Kolchinsky alleged that Moody’s allowed bonds to be added to the CLO in January 2009 and that it allowed the CLO to keep its previous rating.

Moody’s took these actions, according to Kolchinsky, despite plans already in the works by the rating agency to downgrade all such securities. Moody’s denied the allegations. After Kolchinsky was forced out of the firm, he testified about the deal before the House Committee on Oversight and Government Reform.

by Jake Bernstein, ProPublica, Feb. 21, 2012, 6:59 p.m.

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The most faltering and tragic questions of the 21st century is how to manage the fiscal system of a country regardless of their level of economic growth. Leaders, politicians, lawmakers and ordinary citizens are deeply baffled and greatly offended by the scale of the problem in their domestic economy, and in the recent global economy.

The economy was still in its sick bed in late 2009 when the Greek government spilled the truth about their official figures being misrepresented for years. The most pronounced effect of the horrific level of public debt has been had the outcome of the unpopular austerity measures.

The unprecedented action to curtail and mitigate the dangerously high proportion of debt failed to bring in the amount of hope that the measures were designed for. Attempts to subsidize or fend-off the crisis were made by the European Commission, the IMF and the European central bank by setting-up a tripartite committee to prepare appropriate programs and economic policies.

A loan agreement was reached between Greece and the other Euro zone members, with an agreement settling on a total of 110 billion €. Greece, being member of the Euro zone, it cannot unilaterally stimulate the economy by expanding monetary policy. According to Vicky Pryce, senior director of economics at FTI, “we will see a haircut on Greek bonds, a recapitalization program of banks and increase in the size of the bailout”

Ultimately, nations under the hammer of fiscal congestion and monetary impossibilities will have fewer possibilities of revitalize the sluggish economy in order to gradually subside the debt debacles. President Obama said when German Chancellor Angela Merkel Visited the US, that “European Debt Crisis must be brought under control predicting disastrous results if there is an uncontrolled spiral and default in Europe”

According to the German Finance minister, Wolfgang Schauble, creditors holding soon-to-mature Greek bonds would need new bonds on similar terms that are payable for several years. But this plan doesn’t release Greece from the shackles of their staggering debt — it only shifts the burden to future generations, providing a short-term relief.

In another plan which has been accepted by the European Central Bank, a ‘no bond exchange’ requires that private creditors can cash in on maturity and be encouraged to re-lend some of their money. This plan is only viable if private creditors believe that re-lending to the government won’t put them back to previous risk levels.

Even so, Greece is not out of the woods completely, since it will also require paying interest with principal for those bonds. Some economists have echoed the option of Greece leaving the Euro zone. Greece has some good reason to leave the Euro zone. If it can devalue its currency, Greek exports will rise and provide a cushion for economic activity and bring in cash.

But it might push the inability of other members of the Euro zone to rescue a financially unstable member country and may endanger the whole financial system of the region.

If Greece withdraws itself from the Euro zone, the confidence in Europe would be tarnished, inviting catastrophic consequences to other debt laden nations like Portugal, Italy, and Ireland. Nevertheless, debt restructuring and beyond could be a possibility now the ECB has granted permission for exposed countries to have unilateral monetary policy.

 
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The daily increase in gold prices came to a halt last month. For more than a year, the price has been skyrocketing, knowing only one direction — up. On April 2010 the market price per ounce of gold was slightly over 1.100 dollars and on September 5^th 2011, it reached 1.900 dollars per ounce.

Gold had an astonishing 70 percent revaluation in less than a year and a half, while most of the financial market was crumbling. The main reason for this price increase was three-fold. Firstly, it points to the Libyan conflict and the aftermath in the Middle East which includes the main oil supplying countries.

Analysts were not expecting these revolutions all around the region and therefore it was harder for them to understand the consequences. Could the revolution spread to more countries? Could the oil supply be endangered? Oil shortage lead to higher prices and from there to higher inflation rates. That is why some people prefer to invest money in assets rather than currencies.

Secondly was the instability of stock markets in both bonds and shares. Greece´s default crisis, the problems with peripheral countries in the European Union, and the sinking of the biggest share markets prompted investors to take the money out of these markets and invest in other assets with less volatility.

Third source of impact came from the weakening of the dollar. As gold is an asset exchanged within markets where the dollar is the main currency of reference, the weakening meant a higher cash per gold ratio and therefore a hit on the price. Since gold reached its peak on September 5, the market has sunk, dragging the price down along with it.

It is now 15 percent lower than the peak, slightly over 1.600 dollars per ounce. Once again there were three reasons; the dollar strengthening, a sale increase by people seeking to obtain cash to cover losses from other assets and the volatility of other markets has finally reached gold.

Still many analysts forecast a better future for gold, stating that this is only a temporary relapse. For instance Paul Blaxham, HSBC chief economist for Australia and New Zealand, stated a few days ago: “Our forecast for gold next year is 2.025 dollars per ounce… but it is difficult to ascertain where to set the lower limit now, because many tendencies currently happening are responses to political decisions.”

This opinion is backed by Ong Yi Ling, an analyst from Phillip Futures who believes: “in the long run, after the prices will have stabilized and they will get back to normal life, refuge values will come back slowly to lower prices. In 2012, still it is possible that gold reaches 2.000 dollars per ounce.”

So the fairytale story that gold is a secure value should be abandoned. It is a refuge value only for times of crisis, but it is not invulnerable in the greater and more permanent run. As all assets have their risks and benefits, it should never been considered a stronghold. Investors can be fortunate at times, but if they had invested last week, they would have withdrawn an investment with gross losses. Nobody is safe in these uncertain times.

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Federal Reserve Chairman Ben Bernanke painted a gloomy picture of the economy when he testified before the Joint Economic Committee on Capitol Hill. Bernanke told members of Congress that the economic recovery was “close to faltering.” He said that the Federal Reserve had taken great pains to promote economic growth, but it cannot be expected to singlehandedly avert a financial crisis.

“Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the U.S. economy,” he said. “Fostering healthy growth and job creation is a shared responsibility of all economic policy makers.”

The underlying theme of Bernanke’s testimony was that America’s economic growth had been diminished by world events such as the earthquake in Japan and the ongoing wrangle over European debt. The economy has also been undermined from within by domestic problems such as the weak housing market and depressed consumer confidence.

“Consumer behavior has both reflected and contributed to the slow pace of recovery,” he said. “Households have been very cautious in their spending decisions, as declines in house prices and in the values of financial assets have reduced household wealth, and many families continue to struggle with high debt burdens or reduced access to credit.”

Bernanke went on to say that, although prices have risen more sharply than expected over the past year, he expects the situation to stabilize soon. Until now, Bernanke suggested that the economy would recover as long as the government did not interfere. However, in today’s testimony, he appeared to advocate a more proactive role for the government, and he urged legislators to keep four goals in mind when crafting policy.

First, he urged the government to tackle the national debt in the hopes of securing long-term fiscal responsibility. While he welcomed the creation of a Joint Select Committee on Deficit Reduction, he cautioned that much more would need to be done in order to guarantee fiscal sustainability.

Second, Bernanke urged the government to avoid actions that might imperil the economic recovery, such as deep short-term spending cuts. Under the circumstances, legislators could be forgiven for wondering if this was not in conflict with his call to reduce the deficit, but Bernanke assured them that this was not the case.

“These first two objectives are certainly not incompatible, as putting in place a credible plan for reducing future deficits over the longer term does not preclude attending to the implications of fiscal choices for the recovery in the near term,” he said. The government’s third goal should be crafting policies that promote long-term growth and economic opportunity.

“As a nation, we need to think carefully about how federal spending priorities and the design of the tax code affect the productivity and vitality of our economy in the longer term,” he said. Finally, Bernanke called on the government to reform its budgeting process. He urged legislators to work out a system that was more transparent and less likely to cause market disruptions due to partisan wrangling.

Bernanke’s comments come amidst mounting pessimism regarding the state of the US economy. Last week, the Economic Cycle Research Institute warned its clients that America was headed toward a new recession. “If you think this is a bad economy, you haven’t seen anything yet. And that has profound implications for both Main Street and Wall Street,” they said.
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Soon after the so-called end of the depression period in the global economy, at a time when the global economy started a weak recovery, a more complex economic phenomenon emerged as the next bellwether to world economy.

Since 2009, the European economy has been struggling with slow economic growth rate and indomitable debt crisis that led to political disturbance in some countries of Europe. The crisis has dragged these economics back in to recession.

Years of heavy, unprecedented government spending in Greece and other countries of the Euro zone, led governments to go beyond available budgetary resources, and rely solely on borrowing to finance expenditures. This produced a series of risks to these economies and financial systems as a whole.

Leading economists warned that European debt crisis could spread across the continent in a major blow to the single currency system; further, the International Monetary Fund said turmoil in Greece, Ireland and Portugal may engulf the wider Euro zone despite billions of Euros already spent in emergency aid so far.

In an attempt to reduce dangerously rising levels of debt and forced and deep painful cuts in public expenditure — less government spending — drove up unemployment and put several nations back into recession. Many economists around the world claim that such immediate spending cuts are self-defeating in nature.

After much struggle in 2010 the EU and IMF combined to offer Greece a bailout package of 110 Billion Euros, followed by a broader contingency fund of 500 billion Euros. But the new loans came with the effect of austerity measures that apparently demanded a ceiling on public expenditure leading to widespread protests and political uncertainty in Ireland and Portugal.

Recently, the prime minister of Portugal said the government decided to ask the European Commission for financial help. According to economists, Portugal needs financial aid to the size of 80 Billion Euros.

After Greece and Ireland, Portugal became the third financially troubled country in the Euro zone to request financial assistance from Europe’s Bailout Fund and the IMF.

The era of financial trauma in the Euro zone began in December 2009, after newly elected Greek Prime Minister George Papandreou announced that his predecessors had hidden the actual size of the massive budget deficit. In a bid to regain the lost confidence in the region, the IMF urged European leaders to fix the banking problems and slash national deficits that have undoubtly led to stringent austerity measures.

Economists also say that strong policy responses so far that led to the weakening of Greek, Irish and Portuguese economies have contained the fear to some degree. However, markets are uncertain about the Greece capacity to pay back its debt of 285 million pounds, or $463.95.

As of now, Greece has more than 300 billion Euros of debt constituting to a sum of 140 percent of its total GDP. Recently, the EU and IMF Agreed to a 110 billion Euro bailout. According to Jose Manuel of the European Central Bank, a default would have extreme adverse consequences for the Greek economy.

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The current upheaval in Greece continues its unstable and fluctuating nature and while all eyes are on the next step, this report looks to convey in a discreet, convenient and beautiful way what concerns the restless population of Greece.

Is this possible? Maybe not simply because the truth, most of the times, is not discreet, convenient and beautiful. So, what’s going on outside of the Greek parliament in Athens, and in many other Greek cities these days? The answer is simple yet meaningful. This is going on: one of the biggest protests of the last decades of modern Hellenic history.

Let’s take it from the beginning. It obviously been a long time since the economy, as well as the political and social life of Greece, has been taken advantage off and ruined by the interests of Greek and foreign governments, multinational corporations and of course the International Monetary Fund (IMF) and the relevant support mechanisms.

This situation asphyxiated the people, figuratively. They saw themselves as qualified yet were incapable of getting a job. Some lost their jobs and others worked more hours for less salary, their pensions to be reduced tremendously while the daily cost of living was to grow rapidly. In addition the country these people live and the public wealth, has been literally sold out. On the other hand, as usually happens in such cases, corrupted politicians and the upper-class earn more and more.

Citizens from every corner of Greece felt the need to rise up and protest for their rights. They decided via social media to make a huge gathering, in which political parties and violence would be absolutely unwelcome. And so it happened, with a massive participation of people of all ages, occupation, and social class.

They decide to call their selves in Greek “οι ΑΓΑΝΑΚΤΙΣΜΕΝΟΙ”, in which is loosely translated to “the people who feel indignation” in English. With this name, they wanted to express their feelings about the situation they are experiencing. It started as you might expect at the center of Athens, the capital of Greece as well as Thessaloniki, the second largest city, on May 25, 2011.

This spontaneous, peaceful and independent movement of the people, made such a hopeful impression that from May 25 until today, the center of Athens is closed because the protest is repeating over and over, each day. Many people, most of them young, actually live there in tents so that the area can be constantly crowded.

From the afternoon until late into the night there music plays and a microphone is available for the public to voice their opinions. Also vendors of every kind, especially food, settled there to make the life of those who took up residence easier. The protest did not stop in Athens but it spread in many other cities of Greece.

The people who participate in the protest are friendly, helpful and willing to inform passersby about the country’s situation. I know because I was there with them. Their greatest motto is “Real and Immediate Democracy NOW.” There are, however, many more slogans like “Thieves” regarding of course the politicians, “We do not owe, we do not sell, and we do not pay.” Insulting slogans could not be missed targeting the prime minister of Greece George Papandreou, the banks and the IMF.

The goal is to bring about a fair and equal society, in which the people can expressed loud and free, and most of all, their needs and demands can become reality. The people of Greece grew tired of being cheated and ignored, and finally they started to resist in an undefeatable way: massively and peacefully.

The truth is that these Greek citizens may feel indignation, but, above all, they are aware of the situation the country got into. Finally, people can see the government’s game behind their backs and therefore rise up. Day by day, more citizens realize that this artificial economic crisis was carefully planned to satisfy specific interests – not theirs. Greeks refuse to be victims anymore.

This is an inside information i can give about this Greek protests: this protest has shook the Greek government, leaving the country’s leaders frightened for the first time. That is the reason the government had to find a way to prevent the people from gathering and protesting. The problem is that since the protestors are not using any kind of violence, the police forces are incapable to stop them.

So, the government created a reason to let the police use violence and break the protests: using a small amount of people, most likely undercover policemen to penetrate into the other peaceful protestors and cause trouble by throwing rocks or molotov cocktails against the police, or setting things on fire.

The Greek government has used this tactic in similar cases in the past. The protestors try to push this small group of people wearing hoods or helmets to hide their faces away, but since the protestors are unarmed and the others are not, the protestors can’t handle it in most of the cases.

The media, which is more or less controlled by people with the same interests as the government, shows pictures of violence and destruction from the protests to the viewers in order to scare them and prevent them from protesting. Imagine sitting on your sofa, watching images of police officers hitting innocent people on TV.

They are surrounded by huge clouds of fumigants, chemicals and fire. Would you feel compelled to go there? Media play this key-role and I am personally angered by the image being transformed and relayed in both national and foreign media.

I decided to write this article to express my opinion (and I hope the opinion of many others of my fellow countrymen), my intention is to help others to understand what is happening, not only in our country but worldwide. Do not always believe what you hear on the news – stay vigilant on checking up on information. The truth is not always that simple.

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