Saturday, April 12, 2008

Siemens Worked With German Intelligence Agency, Spiegel Reports

By Patrick Donahue
April 12 (Bloomberg) -- Siemens AG, Europe's largest engineering company, cooperated closely with Germany's top spy agency for over a decade, Der Spiegel reported.
Germany's Federal Intelligence Service, or BND, had a representative on the management board, Spiegel cited unidentified former managers as saying. The BND used Siemens's communication technology for espionage purposes, while the Munich-based company became the spy agency's top supplier.
The BND's role in Siemens could mean it has knowledge of access codes the company uses to conduct maintenance work on communications systems, Spiegel said. Siemens engineers also gain exposure to construction sites that aren't visible by U.S. satellite photography, according to the magazine.
Siemens supplies surveillance and wiretap technology to countries such as Russia, Egypt and Oman. Intelligence specialists within Siemens worked at ICM Voice & Data Recording, on a site separate from the company's headquarters, Spiegel said.
Siemens spokesman Andreas Schwab declined to comment on the report. The BND didn't immediately respond to a message seeking comment that was left on the press department's answering machine. The government's main press department couldn't supply any additional phone numbers when contacted by Bloomberg.
To contact the reporter on this story: Patrick Donahue in Berlin at at

Cramer says gold headed to $1,600

Cramer, Yamana CEO Talk Gold
In this April 10 'Mad Money' clip, Jim Cramer and Peter Marrone discuss why the market has put gold and the gold stocks in the sell block.
Fri 04/11/08 19:33 PM EST -- Jim Cramer
Stocks in this video: AUY

The just released a video showing Cramer extremely bullish on Gold. He sees it at $1600. He doesn't say when this price will be reached, but knowing Cramer and how he trades, I bet he thinks that won't take too long.
In this video, Cramer interviews the Yamana's CEO.
He mentions at least two great catalysts for gold:
The weakness of the dollar
Uncertainty in this year's election time
He added that there is not enough gold and that the IMF gold will be absorbed immediately as we don't have enough of this PM.
We may like Cramer or not, but I think this event is important to mention for two reasons:
He seems to agree with you and gave exactly the same target price as you. Looks like he is a CIGA member!
I believe he has a pretty big influence among small investors.
You may find the video on the following link: Click here to view the video

IMF warns of 'fire and ice' threat to the world

By Edmund Conway in Washington
Last Updated: 1:14am BST 13/04/2008
The head of the International Monetary Fund has warned that the world economy is trapped between "fire and ice" - the threat of slumping growth and of rising inflation. Opening the IMF's spring meetings, Dominique Strauss-Kahn told ministers coming to Washington that there was only limited time to repair the financial system after the worst crisis since the Great Depression. Speaking with oil prices at record highs, he declared that "inflation may be back" and warned the relentless rise of food prices would hit efforts to reduce poverty in Africa and Asia.
News and analysis of the UK and world economy
ECB hawks defiant as storm gathers
In a final blow to the so-called "Goldilocks theory" that developing nations' growth will help keep the world economy supported in the coming months, he debunked the idea that rich and poorer countries could "decouple".
However, he added that while the economic impact of the financial crisis would be more severe than that of the dotcom bubble, it would leave a smaller dent on growth than in previous crises.
He said: "Rising global food prices may undermine gains in reducing poverty," adding that food prices had increased by 48pc since the end of 2006. The warning coincided with another from World Bank president Robert Zoellick that rising food prices threaten to set back development efforts by seven years.
Mr Strauss-Kahn added: "The world is caught between ice and fire - slower growth and inflation. Inflation is back. It is a key concern. I think there is no such thing as decoupling, but [instead] there is a delay."
The IMF this week slashed its figure for global economic growth to 3.7pc, forecast a US recession this year and warned of a one-in-four chance of a global recession. It also cut its UK growth forecast to just 1.6pc this year and next.
Mr Strauss-Kahn said the fund was ideally placed to play a key role in the rescue mission following the crisis, since it was one of the few institutions to analyse the links between the financial markets and real economies. He acknowledged the IMF was "not able to make people listen" when it warned on the possibilities of a major financial crisis 12 months ago.
Alistair Darling will today risk putting himself at odds with the IMF by urging further major overhauls to the fund. He will suggest it sets up a new department to analyse how problems in one part of the world affect other economies; a new "early warning system" for the global economy and replacing the IMF's main decision-making committee with a council of finance ministers.
He will say: "The critical point is that all long-standing organisations need to be ready to change. Without change, without reform and without the ability to demonstrate leadership and innovation, they will become marginalised and ineffective in supporting the co-operation needed to deal with global events and issues."
Mr Strauss-Kahn yesterday insisted: "The IMF will soon be the first institution created after World War Two which will prove itself able to reform itself."
Fed backs overhaul
Federal Reserve chairman Ben Bernanke said regulators must move ahead on ways to prevent a future financial crisis, even as they battle one that threatens to plunge the US into recession.
“We do not have the luxury of waiting for markets to stabilise before we think about the future,” he said, offering a strong endorsement of a proposed broad overhaul of financial regulation under which he would gain oversight of securities firms which now have access to the Fed’s emergency lending facilities.

The Black Death of financial collapse

The Black Death of financial collapse
By James Cumes 11/04/08 "Asia Times" -- -- The financial and economic crisis now upon us is by far the most menacing of the past century - even more so than the Great Depression of the 1930s. It is not just a "subprime" crisis; it is systemic - affecting the entire financial system. It is also global, affecting various countries in various ways but affecting them all. In achieving a certain "globalization", we have been uniquely successful in globalizing collapse, chaos and misery. It is a globalization which, in our short-sighted negligence, we never envisaged. In this crisis, even a country such as Australia is no more than a subordinate, neo-colonial, financial and economic dependency. In essence, we have reverted to what we were before and during the Great Depression of the 1930s, when Whitehall, Westminster and the Bank of England played the tune to which we jigged. Then, from 1945 to 1969, for the first time, we played our own tune of full employment and stable economic growth. Wild radicals such as minister Eddie Ward in the governments of John Curtin (1941-45) and Ben Chifley (1945-49) warned us to be wary of Wall Street. The cynics might now say that Eddie, who died in 1963, was right. After 1969, we forgot his warning. Indeed, the Americans themselves forgot to guard against the chicaneries of Wall Street, where eternal vigilance should always be the watchword. They forgot what the mania of Wall Street can do to the reality of Main Street; and we shared their amnesia. From 1969 and especially from 1971, when the United States cut the dollar link with gold, Australia surrendered any worthwhile independence in its economic and financial thinking. We swallowed American financial and economic formulae, whether we were academics or policymakers, industrial entrepreneurs, banks or providers of "financial services." We did not entirely switch off tunes played by Britain, the more so as its prime minister Margaret Thatcher formed her slapstick band with US president Ronald Reagan to drum up support for "free" markets, "free" trade, privatization, globalization and the free flow of almost everything, including speculative capital in unqualified pursuit of private profit. Corporation and consumer greed marched in step towards global disaster. Rational economics based on real investment, productivity and production died in favor of speculative and often Ponzi pretensions. The cowboy junk-bond merchants of the 1980s metamorphosed into respectable, mostly young and usually idolized financial wizards who "perfected" sophisticated, highly complex credit devices. From the 1990s, these highly leveraged instruments took the form of derivatives, private-equity, hedge-fund and mortgage securities, abbreviated to CDOs, SIVs and the rest. Allied with "free" markets, deregulation and the uninhibited flow of all kinds of finance, those financial devices destroyed industries and the jobs that go with them. With casual indifference, they also destroyed the self-reliant working and middle classes until then typical of robust free-enterprise economies. Theirs was not Joseph Schumpeter's "creative destruction" but wholesale destruction of their own economies and, eventually, their own financial "system". They destroyed personal savings and created massive indebtedness. They undermined the power and security of the United States itself as they "outsourced" real economic strength and stability to countries especially in Asia. The Asian Tigers, China and others grew into "powerhouses" whose creation, historically, would otherwise have taken them generations. Our eminently creditable aim of peaceful change through development of developing economies was distorted, largely through negligent inadvertence, into financial, economic and social self-destruction. Looming global collapse, with political and strategic uncertainties, are our inevitable legacy. Consumerism rages, industry guttedThe speculative, Ponzi mania spread especially to Anglo-Saxon countries and to other developed countries in lesser degree. Australia took to "free" markets, "free" trade, free-floating currencies, deregulation, privatization, globalization, derivatives, hedge funds, private equity, wildcat mortgages and leverage-without-limit as a duck to water. Consumerism raged. Industry was gutted. Debts ballooned. The value of the currency fell at home and abroad. Despite low-cost imports, inflation flourished. In 2008, the Australian dollar can perhaps buy as much in real terms as five or 10 cents did in 1969. A situation in which real public and private investment was replaced by "ownership investment", massive leverage and speculative finance, in which consumption grew and debts spread, could not persist, except so long as ever more money flooded in to support the insupportable. Once the flood slowed or stopped, a Ponzi-type collapse was inevitable. But few saw it that way. Warren Buffet belatedly called derivatives weapons of mass destruction; but most saw the financial devices as belonging to a "new era". They represented a "new paradigm". Far from being a threat to stable growth in a stable financial system, they "spread risk" and made everyone more secure and of course more wealthy. The wealth effect was a particular feature of the residential mortgage business. Funds were available from many new banking and non-banking sources, including hedge funds and private equity, as well as pension and mutual funds; and sources that, in their magnitudes, were new, such as the carry trade. Funds marketed wholesale and retail mortgages. Liability could be shifted even or especially for debt in the deepest sense sub-prime. Mortgages also enabled homeowners to expand consumption through mortgage-equity withdrawals (MEW). In a real sense, MEWs were symptomatic of multitudes of individuals - and, in effect, whole societies - high-living it off their capital. That enabled a process of growth that was both irresistible and inherently unsustainable. However, the Ponzi scheme to shame all others may yet be waiting to deliver its coup de grace. One commentator has drawn attention to "the bad news [which] is the US$500 trillion derivatives market". He says that "This is an area that the general public does not even know exists. Few professionals understand this market. There is no regulation as government just let it go ... and go it did. You must expect a 5% default problem. That is a $25 trillion number ... It can create insolvent institutions all over the world ... It is the making of the first global depression. The world is not ready." Unprepared for depressionAustralia is not ready either. Prime Minister Kevin Rudd told us late in March that Australia's economic prospects remain "sound, strong and good". The Reserve Bank of Australia shares that view. Eerily, they echo US President Herbert Hoover in 1929 immediately before the stock market crash of that year. Australia's situation contains some positive features. High commodity prices, it can be argued, are likely to persist, even though volatile, at least in the short term. A member of Iceland's central bank board recently said that "fears of a meltdown in my sub-arctic homeland are vastly overblown. True, the current account deficit was 16% of GDP last year, but that's an improvement from more than 25% in 2006. And while net private-sector debt is about 120% of GDP, there is virtually no public debt in Iceland. This is largely the result of unparalleled political stability and continuity." Australia's situation may not be as dire as Iceland's; or indeed as dire as that of the United States or New Zealand; but all three of us have some negatives like those of Iceland. Like all booms of such size and speculative character, the Australian housing boom must soon demand payment of its account. From their peak, prices could fall 30% to 50%. Industry researcher BIS Shrapnel does not agree; but we must expect that our housing boom, even more robust than the American, will collapse along the same general lines as the bust occurring right now in the United States. The high "unaffordability" of housing for the average home-seeker, as distinct from speculator, suggests that the bust will be savage. The real-estate, building and associated industries will suffer severely, with massive job losses. Simultaneously, profitable investment opportunities elsewhere may have vanished with the widespread collapse of the "financial services industry". How likely is such a collapse? So far, although some non-banking financial institutions have gone to the wall, the four major banks have seemed largely immune. "The take-up of the Australian economy is still good," Rudd said last week in New York. Australia had "limited exposure" to the subprime mortgage woes that erupted in the United States last year, he said. "We have excellent balance sheets in terms of our principal corporates and the banks themselves ... The default rate in Australia is minuscule by Organization for Economic Cooperation and Development standards." We don't know how far banks and other potentially exposed institutions have concealed their liabilities and to what extent and how soon they will be forced to reveal whatever bad news there is. Within this broad question, we also do not know how far they are exposed to losses from the massive and still largely mysterious menace of derivatives. In some measure, Australia's major banks have certainly been involved in the wide range of structured securities - CDOs, SIVs, and the rest. A report on April 4, 2008, that local councils in New South Wales have lost US$200 million and perhaps up to $400 million on investments in CDOs is a worrying sign that other and even bigger losses may yet be revealed in a variety of institutions, including banks. It seems scarcely credible that an economy which, for so many years, has absorbed so much of American theory and practice - so much of the American financial character - can be wholly immune from the penalties inflicted on its American model. The subprime crisis first hit the United States after a housing about-turn that began as far back as 2005 or 2006. An unequivocal downturn in housing in Australia has yet to check in; but non-bank lenders are already withdrawing from the market. Wholesale mortgage lenders are closing shop, perhaps as a prelude to a sharp housing decline. The carry trade which has presumably provided funds for mortgages and other financial services in Australia has been volatile for some time. If it unwinds completely, that could not only intensify mortgage problems but also impact on Australia's external balances. Our deficits have so far tended to persist at a less healthy level than the commodity boom might have encouraged us to hope. Our aggregate private overseas debt is said to amount to the order of half a trillion dollars. Against that background, the current depreciation of the United States dollar might foreshadow what awaits our own currency. Lagging impactEconomic and financial change in the United States tends to have a lagging impact on Australia. An acute awareness of the severity of our crisis may consequently not emerge before the second half of 2008. When it does, what will the Rudd government do? Currently, it seems as unaware of the magnitude of the challenge it faces as the James Scullin government was in 1929. So the present government might become just as bewildered as Scullin and stagger just as blindly and ineffectually when they are called on to act. In the 1930s, we listened to the likes of Otto Niemeyer of the British Treasury who was also a director of the Bank of England. Will the Rudd government this time listen to the Americans and the likes of US Federal Reserve chairman Ben Bernanke? If they do, catastrophic outcomes might not be in short supply. Our only real hope lies in clear, independent thinking by those not too steeped in the flawed policies responsible for our current crisis. We must see clearly that fundamental, comprehensive financial and economic reform is imperative. We must adapt that fundamental reform to our own needs, as the John Curtin and Ben Chifley governments did between 1941 and 1949. As we did then, we must simultaneously try to guide the international community out of the calamitous course that has evolved since 1969, and return it to the goal of stable, peaceful, global change which, as a primary objective, we pursued between 1945 and 1969. While we embark on this journey, a high level of political volatility in Canberra is inevitable. Rudd might succeed; but the Labor Party and government might split two or three ways as they did between 1929 and 1932. Another Joe Lyons, prime minister from 1932 to 1939, might emerge. Whoever he might be, the odds are that he will be even less likely to find quick or easy solutions than Lyons was during the long and bitter years of depression. Those years ended only in the even deeper tragedy of world war. James Cumes is a former Australian ambassador to the European Union and Australian representative at the United Nations. He is the author of among other works The Human Mirror: The Narcissistic Imperative in Human Behaviour.