Confidence is down, down, down. Fear is up, up, up. Apparently, Americans are lining up with the latest news of economists. Bleak economic times appear to have become self-reinforcing. 18 per cent think their local economy will strengthen in the next six months. Who they polled is certainly a question. Regardless, if you listen to the latest round of economic predictions, the bad news is expected to run through almost 2010 without any economic reprieve.

Crunch is up and finances are down because the world has come to rely on credit to do business instead of the generation of real profits or earnings in the business world. During tough times, even the hardiest firms have to look hard at the brass tacks of any purchase. Most Americans aren't involved in any of this speculation. They live in the real world of constrained budgets and impinging joblessness. Wall Street is having another round of bear as reality continues to hit home. There is always hope. Wall Street is still working on a new cash machine as they prepare for a new European Union stock exchange. One can always hope.

By Molly Greaves

"Precious metals have had value in all civilizations, have survived all financial crises, and can be expected to do the same in the future. However, it is to all investors' interests that they know what they are doing before investing in precious metals." - Bill Haynes, President of Certified Mint, Inc.

Any precious metal investor before he/she buys gold or silver coins or bullion has to learn to separate truth from hype, and to discern what is a good price for their investment. Today we look at one such myth all investors must be aware of.
Many precious metals sellers actively promote (or at best, choose to actively ignore) many widespread myths and misunderstandings regarding the purchase of precious metals, like gold, silver and platinum. In general, these misconceptions and falsehoods foster the public notion that the government may yet again "call-in" or confiscate gold as it did in 1933, and that requiring purchases of precious metals to be reported are a major prelude to confiscation. When such unfounded fears in run rampant in the minds of precious metal investors, unscrupulous precious metals firms can sell larger volumes of expensive (and often overpriced) gold and silver coins, and ingots.

Investors who believe those stories will invariably pay too much for, or buy the wrong coins. And that is certainly something at any savvy investor should avoid, or at least be wary of.

This is a preview of "Understanding the Myth of Government Gold Confiscation". To read the full entry, go to http://finegoldsilver.com/information/understanding-the-myth-of-government-gold-confiscation/2008/05/18/

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proclitic(verb): Sack mean for unveil in full measure(inasmuch as on in passage to eject) plus as an instance headed for grow implacably entrenched(exempli gratia twentieth-century as far as interest birthplace)

Links
See into my air lock for Wiktionary being autoantonym.

This week's economic reports showed little signs of relief as the
consumer confidence index fell even lower than expected. Consumers
continue to be concerned over rising unemployment rates, historically
high gas prices, and the housing slump. On a brighter note, sales of
existing homes were up for the month, albeit still far below
historical averages. In other news, the Federal Reserve Board's Open
Market Committee met this week and kept the target funds rate at 2.0%,
putting an end to an eight-month-long string of rate changes. For the
week, the S&P 500 Index fell 3.0% to 1,279 (for a year-to-date total
return of –12%). The yield of the 10-year U.S. Treasury note fell 17
basis points to 3.99%.

To read Vanguard(R) Economic Week in Review in its entirety, go to:
http://www.vanguard.com/visit/econweek062708

If you can read a nutrition label or a baseball box score, you can learn to read basic financial statements. If you can follow a recipe or apply for a loan, you can learn basic accounting. The basics aren’t difficult and they aren’t rocket science.

This week we will be discussing the basics of corporate financial statement. It will be designed to help you gain a basic understanding of how to read financial statements. Just as a basic CPR class teaches you how to perform the basics of cardiac pulmonary resuscitation, we will explain how to read the basic parts of a financial statement. It will not train you to be an accountant (just as a CPR course will not make you a cardiac doctor), but it should give you the confidence to be able to look at a set of financial statements and make sense of them.

Let’s begin by looking at what financial statements do.

“Show me the money!”

We all remember Cuba Gooding Jr.’s immortal line from the movie Jerry Maguire, “Show me the money!” Well, that’s what financial statements do. They show you the money. They show you where a company’s money came from, where it went, and where it is now.

There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time. Income statements show how much money a company made and spent over a period of time. Cash flow statements show the exchange of money between a company and the outside world also over a period of time. The fourth financial statement, called a “statement of shareholders’ equity,” shows changes in the interests of the company’s shareholders over time.

Keep reading this week as we take a look at each of the first three financial statements in more detail and you can make more sound financial moves and better growth stock analysis .

-------------------------------------------------------
Economic Week in Review: Some bright spots, no fireworks
--------------------------------------------------------
This week's economic news painted a picture of an economy struggling
with surging oil prices and a general slowdown. While jobs continued
to be lost, the unemployment rate held steady. Private construction
spending was down, but public sector spending increased. And growth
stalled in the service sector while factory activity increased
slightly. For this holiday-shortened trading week, the S&P 500 Index
fell 1.2% to 1263 (for a year-to-date total return of –13.2%). The
yield of the 10-year U.S. Treasury note fell 1 basis point to 3.98%
(for a year-to-date decrease of 6 basis points).

To read Vanguard(R) Economic Week in Review in its entirety, go to:
http://www.vanguard.com/visit/econweek070308

Sri Lanka won by 100 runs
Man of the match: A Mendis
Man of the series: A Mendis

Nifty watch:-

July 07^th 2008

MARKET is very much in range 3824 and 4119 . any break out will establish the trend. Trend decider is again 3977. resistance levels are 4085 – 4198 and 4316. Support is again 3814 ( peak of 2006). Break will would bring nifty to support levels of  3740 and 3568. lower levels will prove to be an opportunity to invest in value stocks for long term. What other options are, BANKS are offering 10% : inflation is 11.63% : tax is 35%. Are we gaining or losing, if parking money at BANKS . OH! Man , there is peace at least. Rethink. …..  there are many more products . just start hunting …….Kotak Mahindra Bank has launched Ace Deposit.  If one invest in the monthly interest term deposit, the interest from the deposit is invested systematically in an equity mutual fund. Capital is at least SAFE. Or value stocks at lower levels for long term( FIND STOCKS THOSE AT LEAST CAN BEAT INFLATION). Its risk reward ratio only that works. Finance Minister said “for every entrepreneur willing to take a risk, there should be a banker on the other side of the table willing to take risk , i.e, in lending credit. 2^nd is the appetite of every individual and his/er temperament.

American markets will open today after long weekend. More global clues will start flowing.  

STOCK WATCH:-  PIVOT ARE THE TREND DECIDER for the day

i-flex :-

We still maintain buy with s.l of 1360/- . recommended at  1383 on july 3^rd.

Colgate :- in spite of that NOKIA replace COLGATE as no.1 brand , colgate hold 50% market share of oral care industry. They have spent a lot on brand building. In result dominates the industry  as a leader under stiff competition.

New buying signal emerged @ 365/- with s.l of 342/- with target of rs. 387/- & 401/-

Intra day strategy  : buy at decline with s.l of 350/- target 374/- and 382/-.

Pfc :- National Thermal Power Corporation Ltd (NTPC) has announced that the Company has signed a loan Agreement of Rs 10000 crores with Power Finance Corporation ... Power Finance Corporation (PFC) has indicated that the traction in business growth would continue following the strong loan sanction book. However, MTM provision on foreign current loans worth $181 million would have marginal impact on full year profitability going forward.

New buying triggered @ 103/- with s.l of  85/- with target of rs.116/- and 131/-

Intra day strategy :- buy at decline with s.l of rs.90/- with target of 112/- and 118.

Bhel :-

Trading strategy: buy on intra day declines target of rs.1544 and 1589.

Strtech. :- Sterlite Technologies bags contract worth Rs.107 crore from BSNL one can invest for long term. Q4 net profit was at rs.34 crores verses rs.19 crores. Dr. anand agarwal, dir. & ceo, said ebitda margins should improve to 14% in current year. The business is on up way to expanding fibre cable capacity to 12 million kms  

intra day support & resistance:-

Trend decider : 188.45.

Crompton g :=- reported a 21% growth in sales and 44% growth in NET profit on a consolidated basis for year 2007-8

Buy at decline for target of rs.250/- and rs.260/-

Derivative strategy: -

Risky proposition: build short straddle :-

Sell call and put of strike rate of 4000 of NIFTY

MAX. PROFIT : premium earned : app. Rs. 350/-

Loss : unlimited .

Logic : its on observation that market will remain range bound

             From 3800 to 4200..

Same straddle can be build in RELIANCE IND. ALSO.

DISCLAIMER :- We can’t dictate the market. Its an observation only. May , may not hold good. Much depend on govt. policies ,economic & political scenario. Its more of an informatics’ article only. Presenter /writer is not liable or responsible for any personal or financial losses or profits. 

https://cid-1aa26630dccde52d.skydrive.live.com/

July 5, 2008


Iranian army soldiers march during the Army Day military parade in Tehran - April 18, 2007

Iran’s military chiefs warned on Saturday that the Islamic republic would shut down the Strait of Hormuz vital for oil exports and use "blitzkrieg tactics" in the Gulf if it came under attack.

"All the countries should know that if Iran’s interests in the region are ignored, it is natural that we will not allow others to use it (the strait)," said army chief General Hassan Firouzabadi, quoted by the Fars news agency.

However, Iran’s armed forces joint chief of staff stressed his country’s priority was that the Strait of Hormuz remain open.

Speculation has been rife that Israel could be planning a military strike against Iranian nuclear sites, using force to halt Tehran’s controversial atomic activities.

The chief of Iran’s elite Revolutionary Guards militia, General Mohammad Ali Jafari, meanwhile, warned that his forces would use "blitzkrieg tactics" in the Gulf if his country came under attack.

"The Guards are equipped with the most advanced missiles that can strike the enemies’ vessels and naval equipment with fatal blows," Fars quoted the Guards chief as saying.

In case of attack, "blitzkrieg tactics and operations of the Guards’ boats will not leave a chance for the enemies to run away."

"These words do not mean that the prerequisites of war are being set but these are the strategies that our alert armed forces have prepared for any hypothesis," he added.

The new commander of the US Fifth Fleet, Vice Admiral William Gortney, said on Saturday that the American naval presence in the region was "a very clear message that we are here to maintain security and to provide stability."

"The chief of naval operations wanted me here, I think, because of my experience," Gortney, who was navy chief during the US-led invasion of Iraq in 2003, told reporters in Bahrain where the fleet is based.

His predecessor, Vice Admiral Kevin J. Cosgriff, has warned that Fifth Fleet would not allow Iran to close the Strait of Hormuz.

The strait between Iran and Oman is a vital conduit for energy supplies, with as much as 40 percent of the world’s crude passing through the strategic waterway.

US President George W. Bush has not ruled out using force in the nuclear standoff between Iran and the West, but emphasised that he preferred a diplomatic solution.

Iran insists its atomic drive is peaceful, but Western powers fear Tehran is using the programme to develop nuclear weapons.

Iran Says Attack on Atomic Sites to Be `Start of War’

Bloomberg
July 4, 2008

Iran will view an attack on its nuclear facilities as an act of war and will respond, the head of the country’s Revolutionary Guard Corps said.

“Any act on Iran will be considered the start of war,” General Mohammad Ali Jaafari told reporters yesterday in response to questions about the threat of an Israeli strike on Iranian atomic sites, according to remarks carried today on the state-run Islamic Republic News Agency. Jaafari also said he thought it is unlikely such an attack would be carried out.

The U.S. and many of its allies accuse Iran of trying to develop nuclear weapons. Iran insists the program is aimed at producing electricity. Iran today will present its response to incentives from world powers intended to persuade the country to suspend work to enrich uranium, Agence France-Presse reported. The material can fuel a power station or arm a nuclear weapon.

Reports that Israel may attack Iran have boosted oil prices. If attacked, Iran will “impose control” on the Strait of Hormuz, Jaafari said on June 28. About 20 percent of the world’s daily supply of oil passes through the strait. Crude for August delivery rose $5.08, or 3.6 percent, to $145.29 a barrel this week on the New York Mercantile Exchange. Futures reached $145.85 a barrel yesterday, the highest since trading began in 1983.

Iranian Oil Minister Gholamhossein Nozari, who was in Madrid for the World Petroleum Congress, yesterday reiterated his nation’s pledge to respond to any strike.

Impact on Markets

“Iran’s stance in this connection against enemies is clear, vivid and strong,” Nozari told the Iranian news agency before leaving Madrid. “Oil is an energy and industry for peace and its durability depends on peace and security. So, any tension in any region, especially in the Persian Gulf, which is the major supplier of the main part of the world’s energy, will have an impact on the energy market which is principally unpredictable.”

Read Full Article Here

Resolution calls for embargo against Iran

Recently, have you run across a growing number of references to the virtues of being a "committed" investor instead of a "speculative" trader? I know that I have.

Here is a typical statement: "You cannot succeed if you trade a lot. You can only succeed by being an actual investor. You must realize that by owning a share of stock, you are in fact a partial owner of a real business. No business owner wants skittish investors. Corporations want committed, interested investors who are going to look to the long term, support the company through thick and thin, and not sell the stock at the first sign of short-term problems or bumps in the road."

Well. As they say in The Godfather, "It's business, not personal." Let's look at a few facts.

First, many of the points in the statement above are true. If you buy a share of stock, you are, in fact, part owner of the business. Corporations generally would prefer committed, long-term shareholders. A long-term view does look beyond mere bumps in the road.

But other ideas are false or misleading. For one thing, many active traders are, in fact, successful. You can succeed or fail if you trade stocks. It is probably true that the majority of hyperactive individual traders do not beat the market, but that simply means they have faulty strategies, or that they execute their strategies poorly, or both. Many traders do beat the market, handily and consistently. Poor traders are often people who have insufficient knowledge, don't do their homework, do not have a strategic approach that suits their goals and personality, and are impatient.

The "trading versus investing" dichotomy sets up a false premise, that there are only two ways to participate in the market, by being a "buy and holder" or by being a "trader." "Trader" often carries a negative connotation while the "investor" wears a halo (as in the quotation in the second paragraph of this article).

Where does one cross the line from being a "trader" to an "investor"? Must you only buy--but never sell--to be an investor? If I turn my portfolio over ten percent per year, does that make me a trader? Twenty percent? One hundred percent? If I buy a stock and then sell it ten days later because its CEO just got indicted, does that make me a trader rather than an investor? Or does it make me a smarter investor? If I hold most of my stocks at least a year, does that make me an investor? Three years? Five years?

The fact is, there are places all along the spectrum between the extremes of "buy and holder" to "trader." It does not advance the analysis to force any person into one category or the other. And reckless investment decisions are not limited to traders. Sometimes the most reckless thing you can do with an investment is hold onto it. The dot.com bubble proved that.

To me, the most sensible approach to being an investor is to establish a set of rules and principles that are intelligent and fact-based, and then execute them according to plan. Every so often, take a step back to re-examine your goals and strategies to see whether they still make sense. So I take a long-term view, but that sometimes leads to short-term activity. There is no logical contradiction in that.

The net result is that the Sensible Stock Investor holds some stocks for a relatively short time (measured in days or weeks) and other stocks for years. What label should be put on that? I would suggest a label like "sensible." Or "buy-to-hold," meaning that the intent when purchasing a stock is to hold it for a long time, but that I will sell it when it stops achieving the goals I set for it. The main goal is to follow Warren Buffet's Rule #1, "Don't lose."

From the corporation's point of view, what I (as a small investor) do with my shares of stock is irrelevant. Owning a tiny share of a business is not the same thing as having an influence on the business. If I buy 100 shares of AT&T, I own .00016% of the business. My ownership of those shares gives me zero control over how the business is run. I don't have a seat on the Board, and management doesn't listen to anything I say.

Now if I were just starting out my own business, and I had five angel investors, of course I would want them to be committed to my business, stand behind me, and not pull their investments out at the first sign of trouble. They would want me to do well, and they would recognize that the best chance for me to do well is for them to help me.

But with a large public corporation, the trading of their shares in the stock market does not affect the running or financial foundation of the corporation in the slightest. The corporation got its capital at the IPO, via secondary offerings of its stock, or by borrowing. If you and your neighbor trade the shares back and forth, the corporation isn't affected and shouldn't care. There is nothing morally virtuous about being a buy-and-holder. Trading is morally neutral. The question whether to trade or not is a business decision that you make for your own purposes, pure and simple.

Each party in a stock trade acts in his or her best interest as each perceives it. It is true that many investors who trade a lot, or who react emotionally to short-term "noise" in the market, do worse than others who hold their investments longer. But so what? That does not mean that you have to make those mistakes. Neither approach is inherently better than the other.

The fact is, "investing" is the buying of a security. Or, to quote Buffett again, "Investing is laying out money now to get more money back in the future." No more and no less. If my security serves my purposes for a long time, I may well hold it for a long time, for years. But if the security fails to meet my reasonable expectations for it, or if the corporation that issued it screws up and starts to hurt me, I owe no obligation to continue to hold that security. I can sell it and look for a better place for my money. In fact, my fiduciary duty to myself demands that I do so.

Learn more about his step-by-step approach for individual investors at http://www.SensibleStocks.com . Or go directly to Amazon.com, where the book has a perfect 5-star reader rating: http://www.amazon.com/gp/product/059539342X/sr=1-1/qid=1155381420/ref=sr_1_1/002-5852738-5260830?ie=UTF8&s=books .

http://www.submityourarticle.com/articles/David-Van%20Knapp-1442/stock-market-16143.php

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More articles available:

http://onlineinvesting.fxforexguide.com/

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July 2, 2008

Gold Commodity Update, Citigroup metals analysts John H. Hill and Graham Wark also predicted that "longer term, we believe that gold is capable of doubling or tripling from current levels."

The Citi global metals forecasts have an upward bias, at $906/$950/1000 average in 2008/09/10.

The analysts said "secular and seasonal factors favor gold" during the second half of this year. "We remain positive on gold, based on macro and supply/demand factors. The forces that have propelled gold for 5 years are firmly in place."

During the second quarter of this year, gold has averaged $896/oz, up 34% from the same quarter of 2007 and down 3% from the first quarter of this year. "Following a series of downside fundamental tests gold appears to have found a floor, and quietly climbed back to $917/oz."

"Despite extensive hand-wringing, the ‘floor in the dollar’ has inflicted minimal damage," the analysts noted. "We believe the drivers of the gold bull market remain intact, heading into a favorable period."

"We see gold as well-positioned heading into Autumn, when fabrication tends to heighten the market," they added.

Nevertheless, Hill and Wark warned, "It will be important for seasonal/volatility dampened fabrication demand to recover, before gold can move higher." However, they added," Longer term, we would not be surprised to see gold double from current levels as the global policy prescriptions for the credit crunch remain powerfully and uniformly re-flationary."

Meanwhile, Citicorp suggested that slow de-hedging is unlikely to result in a gold market surplus, although they said it remains a key question. "We believe that the combination of wealth creation in China, petrodollars in Russia/Mid-East, and ETF inflows is likely to absorb possible additional ‘supply’ of 200-300 TPY," the analysts advised.

In the meantime, "real interest rates are still strongly negative, inherently favoring hard assets and gold," Citigroup noted.

Read Full Article Here

July 4, 2008

In thin trading in New York Thursday, with markets closed early at 1:00 pm Eastern for today’s July 4th holiday weekend, the big focus was on the June employment report on a day when crude oil breached the $145 a barrel level in both New York and London.

US nonfarm payrolls fell for a sixth consecutive month, dropping by 62,000 jobs in June. The month’s unemployment rate held at 5.5%, after rising sharply in May. A service-sector report also supported the gloomy outlook.

US lost 62,000 jobs in June - Six straight months of job losses total 438,000

Dr. Peter Morici: Crisis grips US Job Market: Economy sheds 62,000 jobs in June

The Institute of Supply Management said its index of service sector activity fell to a reading of 48.2 in June, below analysts’ expectation for a reading of 51.0. Any reading below 50 indicates contraction.

The Dow Jones Industrial Average closed 73.03 points, or 0.7%, at 11288.54, down 14.9% in 2008. Component General Motors rose 1.4%.

GM fell to a 54-year low on Wednesday and the stock closed Thursday at $10.17, down from $18 just a month ago.

Crude oil rose to a record on concern conflict with Iran over its nuclear program would cut Persian Gulf supplies.

Brent North Sea oil for August delivery surged to a life-time peak of $146.34 per barrel in morning trade. In New York, oil touched a new record of $145.85. On the New York Mercantile Exchange, oil closed at $145.29. Brent closed at $146.08.

Alexei Miller, chief executive of Russia’s gas giant OAO Gazprom, added fuel to the fire by saying that Europeans would soon have to pay much more for imports of natural gas. Miller, who last month forecast that oil would rise to $250 a barrel in the near future, said Russian gas would be sold in Europe for $500 per thousand cubic meters by the end of the year - about a fifth more than the current price.

Read Full Article Here

World Must Brace For $150 Oil

AP
July 4, 2008

Oil’s meteoric rise since the start of the year to nearly $150 has distressed consumers and policy makers the world over, but the stark reality is prices are likely to rise higher still.

Read Full Article Here

July 1, 2008

Democrats in the U.S. Congress are gearing up to pass a second election-year economic stimulus package, but unlike the $152 billion measure that passed in February, they are not counting on getting the support of President George W. Bush.

Leaders in the House of Representatives and Senate are discussing with key committee chairmen the shape of another emergency spending bill that would again aim to spur the economy and help those hurt by the economic slowdown, several congressional aides said on Tuesday.

This comes on the heels of this week’s enactment of increased jobless benefits, another Democratic priority.

Infrastructure projects -- road and bridge building and other government-funded construction -- top the list, according to those aides. At least $8 billion in funds could be sought just for these projects, although aides said there were no firm cost estimates yet for any portion of the legislation.

Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, is hoping such a bill also would help deal with some problems related to the unfolding home mortgage crisis, especially if Bush vetoes a broader bill moving through Congress.

"The second stimulus package should include money to the states and cities to buy foreclosed properties," Frank told Reuters in a telephone interview.

If a second economic stimulus bill advances and it follows the formula of emergency measures enacted this year, the new stimulus would add to already steep deficits that worry fiscal conservatives.

Last week, Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters, "I think that we’re going to come back at a later time and do other things that are extremely important." He singled out the need for more money for disaster relief, law enforcement and a program that helps low-income families pay their heating and cooling bills.

Reid’s spokesman, Jim Manley, said Reid and House Speaker Nancy Pelosi of California have held several conversations on possible legislation.

"July might be a little quick to pull it off. September seems more likely" following a month-long August recess, said one House aide, who asked not to be identified.

Last January and February, the White House and congressional Republicans displayed rare bipartisanship when they worked to enact a $152 billion plan, mostly tax rebates, to stimulate the economy by trying to boost consumer spending.

In crafting that package, Democrats gave up, at least temporarily, on a series of initiatives they wanted, from more food stamps for the poor to expanded unemployment benefits and government-funded construction projects.

Bush opposed those add-ons, citing cost concerns.

Read Full Article Here

July 2, 2008

The euro may be nearing an ``explosive breakout,’’ reaching record levels against the U.S. dollar, according to a Citigroup Global Markets Inc. research note.

The trading pattern, including a so-called double-bottom that tested lows, resembles the one before Feb. 26 that preceded the surge to $1.6019 per euro, analysts Tom Fitpatrick in New York and Shyam Devani in London wrote in the note today.

`` We cannot help but feel that things might be about to get very bad again,’’ the analysts said, referring to the possible combination of falling bond yields and rising oil prices.

The exchange rate may approach $1.69 per euro by September if previous patterns are duplicated, the report said.

The dollar fell to a two-month low, trading at $1.5864 at 12:35 p.m. in New York, down 0.5 percent from $1.5793 yesterday. It earlier touched $1.5887, the weakest since April 24. The dollar reached an all-time low of $1.6019 per euro on April 22.

Read Full Article Here

China’s premier urges US to stabilise dollar

AFP
July 1, 2008

Chinese Premier Wen Jiabao has again called on the United States to stabilise the dollar, warning the greenback’s decline was posing threats to the global economy.

"China is taking measures to safeguard its stable economic development," Wen said during a meeting with visiting US Secretary of State Condoleezza Rice on Monday, according to a statement posted on the foreign ministry’s website.

Central bank governor Zhou Xiaochuan last month spoke out at the falling US dollar, saying it was driving up oil and other commodity prices, stoking inflation and causing pain for developing nations.

Factories hit worldwide as commodity prices soar

Reuters
July 1, 2008

Soaring commodity costs are denting manufacturing activity in Asia and Europe and the outlook looks bleak as new orders drop off in the face of rising prices, surveys showed on Tuesday.

Manufacturing activity in the euro zone contracted in June for the first time in three years while business confidence in Asia’s largest export markets is buckling and output has likely contracted further in the United States.

Read Full Article Here

Recent News:

Published: July 5, 2008

WASHINGTON — Federal officials say they are preparing to propose a series of regulatory changes to enhance American competitiveness overseas, attract foreign investment and give American investors a broader selection of foreign stocks.

“You are seeing a world now where everything is mobile,” said Ethiopis Tafara, center, S.E.C. director of international affairs.

The regulatory changes are on the agenda of Christopher Cox, chairman of the Securities and Exchange Commission.

But critics say the changes appear to be a last-ditch push by appointees of President Bush to dilute securities rules passed after the collapse of Enron and other large companies — measures that were meant to forestall accounting gimmicks and corrupt practices that led to those corporate failures.

Legal experts, some regulators and Democratic lawmakers are concerned that the changes would put American investors at the mercy of overseas regulators who enforce weaker rules and may treat investment losses as a low priority.

Foreign regulators are beyond the reach of Congress, which oversees American securities regulation through confirmation proceedings, enforcement hearings and approval of the Securities and Exchange Commission’s budget.

The commission is preparing a timetable that will permit American companies to shift to the international rules, which are set by a foreign organization and give companies greater latitude in reporting earnings. Companies that have used both domestic and overseas rules have, on average, been able to report revenues and earnings that were 6 percent to 8 percent higher under the international standards, according to accounting experts.

Though foreign accounting standards are stronger in some ways than American accounting principles, they are weaker in some important areas. They enable companies, for example, to provide fewer details about mortgage-backed securities, derivatives and other financial instruments at the center of today’s housing crisis and that have troubled many Wall Street firms, including Bear Stearns.

The shift to international standards could also wind up eliminating the conflict-of-interest rules, adopted after the collapse of Arthur Andersen and Enron, that have limited auditors from performing both accounting work and consulting for the same client.

James D. Cox, a securities law expert at Duke Law School who returned this week from teaching corporate law in Europe, said the shift to international rules amounted to “outsourcing safety standards.”

“We would not for a moment tolerate having American auto safety standards set by China or India,” he said. “Why should we do it for financial safety standards? There has to be some accountability.”

The S.E.C. also plans to announce details of a pilot program that would enable foreign brokers to deal directly with American investors, while continuing to be largely regulated by the foreign country. The first country in the program will be Australia, although officials hope to eventually include other countries. In a third move, the Public Company Accounting Oversight Board, which works under the supervision of the S.E.C., is preparing a rule that would allow it to defer to foreign regulators for inspections of some of the 800 foreign auditors of overseas companies that sell stock in the United States.

The oversight board was created by the Sarbanes-Oxley law of 2002 in response to the accounting scandals at Enron and other large companies. The law requires the board to inspect regularly all accounting firms that certify the financial results of companies whose shares are sold in the United States.

Officials say the proposed changes reflect the decades-long push toward global markets. They say the changes are necessary to attract capital from abroad and will protect Americans as they increasingly look to invest overseas. In the decade ending last November, American holdings of foreign stock increased to $4.3 trillion from $1.2 trillion.

“You are seeing a world now where everything is mobile,” Ethiopis Tafara, director of international affairs at the S.E.C., said in an interview. “You have securities issuers that are mobile. Broker dealers can provide services from anywhere. Exchanges are mobile, and electronic trading platforms don’t need a physical location. You have capital that is mobile, it travels almost anywhere around the world.”

“When you have everything that is mobile, the way we think about our mandate — investor protection and enforcement — has to take this into account,” Mr. Tafara said.

Mr. Tafara said that the mutual recognition agreement with Australia would continue to protect American investors because the S.E.C. would continue to have the authority to prosecute foreign companies under antifraud provisions of the law for what he called “lying, stealing and cheating.” The S.E.C. would continue to investigate accusations of illegal insider trading, for example, an area where the commission has been more vigorous than many foreign jurisdictions.

But the S.E.C. would not enforce many investor-protection laws involving issues ranging from the quiet period before a stock offering to market manipulation, financial disclosures and abusive trading tactics. Nor would foreign officials apply a panoply of American securities rules that are unique in that they are intended to protect minority shareholders. Instead, the commission would rely on its Australian counterpart to enforce its securities regulations, which often involve different standards.

In a speech earlier this year, Christopher Cox,
the agency’s chairman, said that working on the transition to
international accounting standards and reaching enforcement agreements
with foreign countries like the Australians were two of the most
important items on his agenda as his term comes to a close.
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Times Topics: U.S. Securities and Exchange Commission

“It is no longer possible for
the S.E.C. to do its work in the United States without a truly global
strategy — because, in large measure due to today’s instant
communications and technology, what goes on in other markets and
jurisdictions is now intimately bound up with what happens here,” he
said.

But critics say that the move toward harmonizing rules
and enforcement practices is fraught with problems and would dilute
American securities laws, generally considered to be the most
protective of investors in the world.

“The impetus for these
changes has been a generalized concern about competitiveness but the
results could very well be a weakening of rules,” said Senator Jack Reed,
the Rhode Island Democrat who heads the Senate banking subcommittee on
securities and investment, which has jurisdiction over the S.E.C. “The
notion that we’re becoming rapidly globalized is clear. There is a need
for harmonized rules. But the real question is, are the foreign rules
any good?”

“We’ve heard this argument about competitiveness for
the last two years,” Mr. Reed added. “But guess what? There are a lot
of lost jobs on Wall Street not because of competitiveness issues but
because our regulators have actually not been up to the task.”

Senator Carl Levin,
Democrat of Michigan, said the proposals would “weaken the pressure for
credible oversight” of the markets and their regulators.

“This is
a very, very serious problem,” Mr. Levin said. “We’ve had so many
losses to investors based on inadequate oversight. We can’t proceed to
give control of regulation — to delegate or cede control — to bodies
that are not accountable. If this is delegated to regulators overseas,
it weakens our ability to put pressure on the regulators to do what the
law requires them to do.”

Although the staff of the S.E.C. has
been working on the changes for many months, the agency has been
hampered by vacancies at the top. Those vacancies were filled last
week, when the Senate confirmed three new commissioners, including two
Democrats, to the five-member commission. To adopt the changes,
Christopher Cox, the agency’s chairman, will need to get the support of
at least two commissioners.

Industry groups have pushed for many
of the changes. Large international accounting firms, for example, have
complained that the emergence of a new generation of American and
foreign regulators inspecting them has led to onerous duplication.

Jeff
Willemain, global managing partner for regulatory and risk at Deloitte,
said at a roundtable discussion in Washington last week that the
emerging system of “multiple and duplicative” inspections of audit
firms by different countries has created “inefficiencies” that do not
result in greater investor protection.

But the track record of
foreign enforcement authorities indicates that they are generally less
aggressive than their counterparts in the United States, and that even
the most vigorous ones bring fewer cases and impose significantly lower
penalties.

“Few if any countries spend as much on — or devote as
much intensity of effort to — enforcement of financial reporting and
auditing as the U.S. does,” said Charles D. Niemeier, a member of the
Public Company Accounting Oversight Board, who has dissented from its
proposal to let foreign authorities inspect auditors. Referring to the
fact that foreign investigations are often not wide-ranging, he added,
“Even the most robust of those other regulators have faced scope
limitations and other challenges that we would not countenance.”

But foreign regulators say it is absurd to think that the United States has the ability to police markets alone.

“Let’s
be clear — no single jurisdiction can resolve all the problems of
globalization,” said Pierre Delsaux, a senior markets regulator at the European Commission. “We are all doing the same thing. No country has a monopoly on protecting investors.”

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