The number of banks with risky levels of bad loans rose only slightly in the last quarter of 2009, partly because the FDIC closed so many failing banks, according to federal data analyzed by the Investigative Reporting Workshop at American University in Washington.

Four ways to check your financial institution:

A total of 389 banks had “troubled asset ratios” above 100 at the end of December, up slightly from 369 banks in September, according to the analysis. A ratio above 100 means a bank had more troubled loans than money set aside to cover potential losses.

The FDIC closed 140 failed banks in 2009, including 45 in the fourth quarter alone. Nearly all had very high levels of bad loans.

The new analysis relies on information reported by banks to the Federal Deposit Insurance Corp. as of Dec. 31. Journalists at American University calculated each bank’s troubled asset ratio, which compares troubled loans against the bank’s capital and loan loss reserves.

Troubled assets include loans that are 90 days or more past due, loans on which the bank is no longer collecting interest and real estate the bank already owns, usually through foreclosure. A similar measure, known as a Texas Ratio, is commonly used by bank analysts as an indicator of stress on a bank, though such ratios can’t capture all the nuances of a bank’s condition.

The number of banks with ratios above 100 has risen sharply, from 24 at the end of 2007 to 163 in the last quarter of 2008 and 389 currently.

During that same period, the number of banks has fallen by more than 500, from 8,542 banks at the end of 2007 to 8,008 banks at the end of 2009. Therefore, the percentage of banks with high ratios has climbed sharply to 4.9 percent, or one out of every 20 banks.

The FDIC said 702 banks were on its troubled bank list at the end of 2009, up from 552 just three months earlier. That list is secret. Analysts often use shorthand measures such as the Texas Ratio for one clue to the banks on that list.

“Recovery in the banking industry tends to lag behind the economy, as the industry works through its problem assets,” FDIC Chairman Sheila Bair said in the FDIC’s quarterly summary.

Depositors are protected
The rising troubled asset ratios show the increasing pressure that the recession and bad loans, particularly on commercial real estate, have placed on the nation’s banks.

The American Bankers Association opposes the sharing of ratios like these with the public, and cautions that a heavy debt load does not ensure that a bank will fail.

While the troubled asset ratio is not a predictor of bank failure, most of the banks that have failed do have high ratios. Still, banks with high ratios can recover, as borrowers resume making scheduled payments or the bank is able to raise more capital.

Even when a bank does fail, no depositor has lost a dime in insured deposits since the FDIC was created in 1934. That protection has its limits. The basic limit had been $100,000 per depositor per bank but has been increased to $250,000 through Dec. 31, 2013. The FDIC has more detailed information and a calculator to help you determine your level of protection.

In short, the FDIC’s advice boils down to this: If your deposits are under the FDIC limits, you’re protected even if your bank should fail. If your deposits exceed those limits, the best protection is to move deposits into smaller accounts at more than one FDIC-insured bank.

Along the same lines, the national median for the troubled asset ratio continued to rise: At the end of 2007, the median ration was 5 percent — half the banks in the U.S. were above that level, and half below. The midpoint rose to 9.9 percent at the end of 2008 and hit 14.5 by the end of 2009.

The total of badly past due loans and foreclosed properties at all banks reached more than $367 billion in December, up from $348 billion in September and $237 billion at the end of 2008. More details of the overall pattern are in the American University report.

Limitations of the ratio
The troubled asset ratio was devised in the early 1980s by journalist Wendell Cochran, now senior editor of the Investigative Reporting Workshop at American University Others do similar calculations.

The reports in most cases do not include the billions in federal money injected onto the balance sheets of bank holding companies in the form of so-called TARP funds.

The ratio does not include the value of non-loan assets that have caused so much trouble in the past year, particularly for some larger banks that moved away from traditional commercial banking. Nor does it reflect mortgage-backed securities, collateralized debt obligations, etc. In this way, the ratio may underestimate the real depth of problems.

And no ratio can get at all the detailed information — such as the individual loan files, quality of management, potential for raising other capital — that a regulator would use to evaluate a bank’s safety and soundness.

URL: http://www.msnbc.msn.com/id/35754096/ns/business-economy_at_a_crossroads/

Gold Is The Ultimate Asset Bubble

Robert Lenzner

Forbes – It must still be early in the gold bubble. Two masters of the hedge fund universe, George Soros and John Paulson, have vastly increased their bets on gold.

Both men have substantially raised their holdings in a Canadian mining enterprise, NovaGold Resources. Precious metals entrepreneur Tom Kaplan, through his private family concern, New York-based Electrum Strategic Resources, holds about 40% of NovaGold shares. Kaplan also has a large position in Gabriel, a Toronto-listed gold miner with operations in Romania that the company boasts as one of the largest gold mines in the world.
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Then there’s Frank Giustra, a close friend of former President Bill Clinton, who is waging a takeover battle to gain control of a Guinean gold company named Crew. Crew is also a target of Russian business mogul Alexey Mordashov, who controls Severstal, a large Russian steel concern.

Here’s a compelling factoid in support of the early bubble thesis. Gold ETFs, led by SPDR Gold Shares, hold assets equal to only 1.5% of all the assets of money market funds. That indicates the public and the mutual fund industry, except in their precious metals funds, are still very small participants in gold.

I’ve met privately with veteran investment managers like Morris Offitt of Offitt Capital Advisers and learned that gold is fast becoming a more highly weighted asset in portfolios.

The gold bubble is a function of the growing unrest about the debasement of currencies, not only the dollar, but also the euro and other European currencies whose nations have too great a debt load and must raise gobs of money or risk default.

Gold’s investment glimmer is also a function of growing unease, specifically about the ability of the Obama administration to reduce the budget deficit and finance the extension of health care. The rising interest in gold reflects a concern about America’s place in the world, an expectation of slower growth in comparison to more dynamic economies in China, India and other developing nations.

In the spirit of the Greek historian and chronicler of the rise of Rome, Polybius, Kaplan, a 47-year-old precious metals entrepreneur with a Ph.D. from Oxford, tries to understand the life cycle of nations in terms of stages: first growth, then stagnation and finally decline. “Globalization,” he says, “has accelerated this cycle for the U.S.”

The attributes of gold are that it is a precious metal without a counterparty or credit risk. It should not trade in as volatile a fashion as oil, copper or other commodities dependent on the health of the economic cycle, suggests Kaplan.

The enigmatic Chinese should be considered a positive factor for the gold price, too. China, however, wants to avoid buying vast amounts of gold on the open market, and becoming the cause of the bubble is becoming dangerous. Yi Gang, vice governor of the People’s Bank of China and director of China’s State Administration of Foreign Exchange, indicated recently that China would face serious constraints if it wanted to increase its gold holdings. Supply is limited and aggressive Chinese buying would push up the price. China has indicated it can acquire gold more cheaply from domestic production and doesn’t want to push the price up in a way that will “hurt Chinese gold consumers.”
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There is a good deal of misunderstanding in the gold market, because many financial experts don’t believe gold is anything more than a volatile fad. They thought Soros was dissing gold when he called it some weeks ago “the ultimate bubble.”

Bubbles are thought to pop sooner or later, so timing is everything. In this instance, Soros’ point is that we are not at the “ultimate” stage yet, and buying gold early in the stage of a bubble is eminently rational.

Source Article

“All of our revenue is completely consumed by entitlements,” Bowles said. “This is today, not some forecast into the future. Every dollar we spend on the military, homeland security, transportation, education and research is borrowed,” and half of that comes from foreign sources, he said. “That is a recipe for disaster.”

Bowles Says Deficits Will Make U.S. ‘Second-Rate’

By David Mildenberg

March 9 (Bloomberg) — Erskine Bowles, co-chairman of the commission on U.S. deficit reduction, said entitlement programs such as Social Security will turn the nation into a “second- rate power” if their costs aren’t reduced.

“We’re going to mess with Medicare, Medicaid and Social Security because if you take those off the table, you can’t get there,” Bowles said today in a speech to North Carolina bankers in Greensboro. “If we don’t make those choices, America is going to be a second-rate power and I don’t mean in 50 years. I mean in my lifetime.”

President Barack Obama created the commission last month, and named Bowles, 64, former Clinton White House chief of staff, and former Wyoming Republican Senator Alan Simpson, 78, to lead the panel. The commission’s recommendations to bring the budget deficit down to 3 percent of the economy by 2015 are due Dec. 1.

“All of our revenue is completely consumed by entitlements,” Bowles said. “This is today, not some forecast into the future. Every dollar we spend on the military, homeland security, transportation, education and research is borrowed,” and half of that comes from foreign sources, he said. “That is a recipe for disaster.”

The Obama administration is prodding banks to lend more to small companies to stimulate the economy and provide jobs.

Public debt “is going to crowd small business out of the marketplace and they aren’t going to have capital to grow and create jobs,” Bowles said. People who say the U.S. must invest more in education, research and transportation should understand “there’s not going to be any money for that or anything else unless we get the spending under control,” he said.

Value-Added Tax

Bowles and Simpson have said a value-added tax should be considered.

“A value-added tax ought to be something that’s on the table,” Bowles said in an interview last month with Bloomberg Television’s “Political Capital with Al Hunt.” There are “no sacred cows,” Simpson said.

Political leaders who say the budget gap can be closed mostly by cutting fraud and abuse in government programs are wrong, Bowles said today.

“Don’t listen to them,” Bowles said. “We’re going to have to make some very tough decisions and we aren’t going to come out of this very popular.”

Political Risk

Bowles recently announced his retirement as president of the University of North Carolina system. During the administration of former President Bill Clinton, Bowles also served as director of the Small Business Administration.

House Republican leader John Boehner’s suggestion that the group report its findings before the November elections is misguided, Bowles said in an interview after his speech today. “Alan and I agreed that if this was completed before the election, it would become completely politicized,” Bowles said.

Illustrating the difficulty of the task, Bowles said his 90-year-old mother, Jessamine Bowles Morris, had expressed pride that Obama named him to co-chair the panel. Then she added, according to Bowles, “Don’t you mess with my Medicare.”

Article Source

Lost in the headlines over the dollar’s resurgence in 2010 is the fact gold is still rising in most worldwide currencies. It is also still faring well in dollar terms. Gold is trading at around $1,120 per ounce, up about $60 in the last month.

Frank Holmes, CEO and CIO of U.S. Global Investors, a long time gold bull sees no reason for this trend to end.

He tells Aaron in the accompanying clip, “there are many compelling factors both from a supply side and then from the demand side that looks like gold will trade higher.”

Holmes’ reasons to bullish on gold:

– Massive federal deficits and low interest rates in the United States and elsewhere will raise inflation risks and keep downward pressure on currencies.

– Rising incomes in Asia, where affinity for gold runs deep, will have a sizable positive impact on demand; Holmes tells Aaron that China is now the largest producer of gold in the world but that won’t drive down prices because the government is “using it as a reserve currency for themselves.” However, bulls should note China’s chief for exchange official said this morning they would limit their purchases.

– Peak Gold? Gold production from mines is not adequate to meet demand. Production is dropping around the world. Holmes notes worldwide production ell 10% in 2008 and is especially dramatic in South Africa – the world’s largest producer.

Holmes, however, does have a few words of caution for those looking to get rich on gold. He only recommends a 10% allocation in gold that would be divided evenly between bullion and stocks. Among his favorite gold stocks is Randgold Resources Limited, a stock he owns and has recommended here in the past for its strong management.

Article Source

Congressman Ron Paul interviewed on Fox Business.

“We are spending $1 Billion on an embassy in London…it makes no sense…”

Video:

Last week I had the opportunity to bring up spending and transparency in two important hearings.  On Wednesday I questioned Federal Reserve Chairman Ben Bernanke on some highly questionable uses of funds at the Federal Reserve, and on Thursday I asked Secretary of State Hillary Clinton about exorbitant spending at the State Department.

It is extremely important to continue bringing these issues up, especially in light of our difficult economic times, when so many are out of work, as I saw up close in my district at the Oceans of Opportunity Job Fair in Galveston two weeks ago.  Those who are working live with the fear of losing their jobs as they struggle to pay bills.  Meanwhile, Washington is talking of increasing their taxes, something voters were promised, clearly and adamantly, would not happen in this administration.

Government also struggles with money, but the struggle centers on how to get more of your money into government coffers.  Rather than expanding the Federal budget in the face of economic downturn, we should be focusing on eliminating waste and being the very best stewards of public funds that we can possibly be.  Most businesses have had to streamline and cut back in order to survive, and so it is only fair for our government to do the same.

Instead, the State Department is building a $1 billion embassy in London, the most expensive ever built.  The plans even include surrounding it with a moat!  I asked the Secretary of State about this massive expenditure, and she claimed the funds for this were coming from the sale of other properties.  If money can be saved, then save it!  Don’t spend it on such an extravagant structure overseas when people back home can’t find jobs or pay bills.  Not only that, but the administration has committed to doubling foreign aid.  That is one promise that is likely to be kept, despite our economic crisis.

I asked Chairman Bernanke about Federal Reserve agreements with foreign central banks and if he had had any conversations about bailing out Greece, which he flatly denied.  However, he recently announced that the Federal Reserve will be looking into Goldman Sachs’ derivative agreements with Greece.  Goldman Sachs, as we know, has “too big to fail” status with the Fed, so it is conceivable that any Greece-related catastrophic losses at Goldman Sachs will once again be passed on to taxpayers.

Perhaps most sinister are the revelations in Robert Auerbach’s book “Deception and Abuse at the Fed” that $5.5 billion was sent to Saddam Hussein in the 80’s – money that allowed Iraq to build up its military machine to fight Iran prior to the first Gulf War, the very machine turned against our brave men and women within just a few years!  I agree with Bernanke’s characterization of this – it is indeed “bizarre” to think that Americans at the Federal Reserve could engage in this type of behavior, which a some have called “criminal”.  However, Professor Auerbach served as a banking committee investigator, and as an economist at the Treasury Department and at the Federal Reserve.  His claims are hardly without merit.  In fact, they are solidly backed by court rulings and other evidence.

The lack of accountability and transparency in our leaders on government spending is appalling.  We simply must keep pressing these issues and voicing our objections if we are ever to reverse our failed policies.

How food and water are driving a 21st-century African land grab

Farming Ethiopia

An Observer investigation reveals how rich countries faced by a global food shortage now farm an area double the size of the UK to guarantee supplies for their citizens

We turned off the main road to Awassa, talked our way past security guards and drove a mile across empty land before we found what will soon be Ethiopia’s largest greenhouse. Nestling below an escarpment of the Rift Valley, the development is far from finished, but the plastic and steel structure already stretches over 20 hectares – the size of 20 football pitches.

The farm manager shows us millions of tomatoes, peppers and other vegetables being grown in 500m rows in computer controlled conditions. Spanish engineers are building the steel structure, Dutch technology minimises water use from two bore-holes and 1,000 women pick and pack 50 tonnes of food a day. Within 24 hours, it has been driven 200 miles to Addis Ababa and flown 1,000 miles to the shops and restaurants of Dubai, Jeddah and elsewhere in the Middle East.

Ethiopia is one of the hungriest countries in the world with more than 13 million people needing food aid, but paradoxically the government is offering at least 3m hectares of its most fertile land to rich countries and some of the world’s most wealthy individuals to export food for their own populations.

The 1,000 hectares of land which contain the Awassa greenhouses are leased for 99 years to a Saudi billionaire businessman, Ethiopian-born Sheikh Mohammed al-Amoudi, one of the 50 richest men in the world. His Saudi Star company plans to spend up to $2bn acquiring and developing 500,000 hectares of land in Ethiopia in the next few years. So far, it has bought four farms and is already growing wheat, rice, vegetables and flowers for the Saudi market. It expects eventually to employ more than 10,000 people.

But Ethiopia is only one of 20 or more African countries where land is being bought or leased for intensive agriculture on an immense scale in what may be the greatest change of ownership since the colonial era.

An Observer investigation estimates that up to 50m hectares of land – an area more than double the size of the UK – has been acquired in the last few years or is in the process of being negotiated by governments and wealthy investors working with state subsidies. The data used was collected by Grain, the International Institute for Environment and Development, the International Land Coalition, ActionAid and other non-governmental groups.

The land rush, which is still accelerating, has been triggered by the worldwide food shortages which followed the sharp oil price rises in 2008, growing water shortages and the European Union’s insistence that 10% of all transport fuel must come from plant-based biofuels by 2015.

In many areas the deals have led to evictions, civil unrest and complaints of “land grabbing”.

The experience of Nyikaw Ochalla, an indigenous Anuak from the Gambella region of Ethiopia now living in Britain but who is in regular contact with farmers in his region, is typical. He said: “All of the land in the Gambella region is utilised. Each community has and looks after its own territory and the rivers and farmlands within it. It is a myth propagated by the government and investors to say that there is waste land or land that is not utilised in Gambella.

“The foreign companies are arriving in large numbers, depriving people of land they have used for centuries. There is no consultation with the indigenous population. The deals are done secretly. The only thing the local people see is people coming with lots of tractors to invade their lands.

“All the land round my family village of Illia has been taken over and is being cleared. People now have to work for an Indian company. Their land has been compulsorily taken and they have been given no compensation. People cannot believe what is happening. Thousands of people will be affected and people will go hungry.”

It is not known if the acquisitions will improve or worsen food security in Africa, or if they will stimulate separatist conflicts, but a major World Bank report due to be published this month is expected to warn of both the potential benefits and the immense dangers they represent to people and nature.

Leading the rush are international agribusinesses, investment banks, hedge funds, commodity traders, sovereign wealth funds as well as UK pension funds, foundations and individuals attracted by some of the world’s cheapest land.

Together they are scouring Sudan, Kenya, Nigeria, Tanzania, Malawi, Ethiopia, Congo, Zambia, Uganda, Madagascar, Zimbabwe, Mali, Sierra Leone, Ghana and elsewhere. Ethiopia alone has approved 815 foreign-financed agricultural projects since 2007. Any land there, which investors have not been able to buy, is being leased for approximately $1 per year per hectare.

Saudi Arabia, along with other Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the biggest buyer. In 2008 the Saudi government, which was one of the Middle East’s largest wheat-growers, announced it was to reduce its domestic cereal production by 12% a year to conserve its water. It earmarked $5bn to provide loans at preferential rates to Saudi companies which wanted to invest in countries with strong agricultural potential .

Meanwhile, the Saudi investment company Foras, backed by the Islamic Development Bank and wealthy Saudi investors, plans to spend $1bn buying land and growing 7m tonnes of rice for the Saudi market within seven years. The company says it is investigating buying land in Mali, Senegal, Sudan and Uganda. By turning to Africa to grow its staple crops, Saudi Arabia is not just acquiring Africa’s land but is securing itself the equivalent of hundreds of millions of gallons of scarce water a year. Water, says the UN, will be the defining resource of the next 100 years.

Since 2008 Saudi investors have bought heavily in Sudan, Egypt, Ethiopia and Kenya. Last year the first sacks of wheat grown in Ethiopia for the Saudi market were presented by al-Amoudi to King Abdullah.

Some of the African deals lined up are eye-wateringly large: China has signed a contract with the Democratic Republic of Congo to grow 2.8m hectares of palm oil for biofuels. Before it fell apart after riots, a proposed 1.2m hectares deal between Madagascar and the South Korean company Daewoo would have included nearly half of the country’s arable land.

Land to grow biofuel crops is also in demand. “European biofuel companies have acquired or requested about 3.9m hectares in Africa. This has led to displacement of people, lack of consultation and compensation, broken promises about wages and job opportunities,” said Tim Rice, author of an ActionAid report which estimates that the EU needs to grow crops on 17.5m hectares, well over half the size of Italy, if it is to meet its 10% biofuel target by 2015.

“The biofuel land grab in Africa is already displacing farmers and food production. The number of people going hungry will increase,” he said. British firms have secured tracts of land in Angola, Ethiopia, Mozambique, Nigeria and Tanzania to grow flowers and vegetables.

Indian companies, backed by government loans, have bought or leased hundreds of thousands of hectares in Ethiopia, Kenya, Madagascar, Senegal and Mozambique, where they are growing rice, sugar cane, maize and lentils to feed their domestic market.

Nowhere is now out of bounds. Sudan, emerging from civil war and mostly bereft of development for a generation, is one of the new hot spots. South Korean companies last year bought 700,000 hectares of northern Sudan for wheat cultivation; the United Arab Emirates have acquired 750,000 hectares and Saudi Arabia last month concluded a 42,000-hectare deal in Nile province.

The government of southern Sudan says many companies are now trying to acquire land. “We have had many requests from many developers. Negotiations are going on,” said Peter Chooli, director of water resources and irrigation, in Juba last week. “A Danish group is in discussions with the state and another wants to use land near the Nile.”

In one of the most extraordinary deals, buccaneering New York investment firm Jarch Capital, run by a former commodities trader, Philip Heilberg, has leased 800,000 hectares in southern Sudan near Darfur. Heilberg has promised not only to create jobs but also to put 10% or more of his profits back into the local community. But he has been accused by Sudanese of “grabbing” communal land and leading an American attempt to fragment Sudan and exploit its resources.

Devlin Kuyek, a Montreal-based researcher with Grain, said investing in Africa was now seen as a new food supply strategy by many governments. “Rich countries are eyeing Africa not just for a healthy return on capital, but also as an insurance policy. Food shortages and riots in 28 countries in 2008, declining water supplies, climate change and huge population growth have together made land attractive. Africa has the most land and, compared with other continents, is cheap,” he said.

“Farmland in sub-Saharan Africa is giving 25% returns a year and new technology can treble crop yields in short time frames,” said Susan Payne, chief executive of Emergent Asset Management, a UK investment fund seeking to spend $50m on African land, which, she said, was attracting governments, corporations, multinationals and other investors. “Agricultural development is not only sustainable, it is our future. If we do not pay great care and attention now to increase food production by over 50% before 2050, we will face serious food shortages globally,” she said.

But many of the deals are widely condemned by both western non-government groups and nationals as “new colonialism”, driving people off the land and taking scarce resources away from people.

We met Tegenu Morku, a land agent, in a roadside cafe on his way to the region of Oromia in Ethiopia to find 500 hectares of land for a group of Egyptian investors. They planned to fatten cattle, grow cereals and spices and export as much as possible to Egypt. There had to be water available and he expected the price to be about 15 birr (75p) per hectare per year – less than a quarter of the cost of land in Egypt and a tenth of the price of land in Asia.

“The land and labour is cheap and the climate is good here. Everyone – Saudis, Turks, Chinese, Egyptians – is looking. The farmers do not like it because they get displaced, but they can find land elsewhere and, besides, they get compensation, equivalent to about 10 years’ crop yield,” he said.

Oromia is one of the centres of the African land rush. Haile Hirpa, president of the Oromia studies’ association, said last week in a letter of protest to UN secretary-general Ban Ki-moon that India had acquired 1m hectares, Djibouti 10,000 hectares, Saudi Arabia 100,000 hectares, and that Egyptian, South Korean, Chinese, Nigerian and other Arab investors were all active in the state.

“This is the new, 21st-century colonisation. The Saudis are enjoying the rice harvest, while the Oromos are dying from man-made famine as we speak,” he said.

The Ethiopian government denied the deals were causing hunger and said that the land deals were attracting hundreds of millions of dollars of foreign investments and tens of thousands of jobs. A spokesman said: “Ethiopia has 74m hectares of fertile land, of which only 15% is currently in use – mainly by subsistence farmers. Of the remaining land, only a small percentage – 3 to 4% – is offered to foreign investors. Investors are never given land that belongs to Ethiopian farmers. The government also encourages Ethiopians in the diaspora to invest in their homeland. They bring badly needed technology, they offer jobs and training to Ethiopians, they operate in areas where there is suitable land and access to water.”

The reality on the ground is different, according to Michael Taylor, a policy specialist at the International Land Coalition. “If land in Africa hasn’t been planted, it’s probably for a reason. Maybe it’s used to graze livestock or deliberately left fallow to prevent nutrient depletion and erosion. Anybody who has seen these areas identified as unused understands that there is no land in Ethiopia that has no owners and users.”

Development experts are divided on the benefits of large-scale, intensive farming. Indian ecologist Vandana Shiva said in London last week that large-scale industrial agriculture not only threw people off the land but also required chemicals, pesticides, herbicides, fertilisers, intensive water use, and large-scale transport, storage and distribution which together turned landscapes into enormous mono-cultural plantations.

“We are seeing dispossession on a massive scale. It means less food is available and local people will have less. There will be more conflict and political instability and cultures will be uprooted. The small farmers of Africa are the basis of food security. The food availability of the planet will decline,” she says. But Rodney Cooke, director at the UN’s International Fund for Agricultural Development, sees potential benefits. “I would avoid the blanket term ‘land-grabbing’. Done the right way, these deals can bring benefits for all parties and be a tool for development.”

Lorenzo Cotula, senior researcher with the International Institute for Environment and Development, who co-authored a report on African land exchanges with the UN fund last year, found that well-structured deals could guarantee employment, better infrastructures and better crop yields. But badly handled they could cause great harm, especially if local people were excluded from decisions about allocating land and if their land rights were not protected.

Water is also controversial. Local government officers in Ethiopia told the Observer that foreign companies that set up flower farms and other large intensive farms were not being charged for water. “We would like to, but the deal is made by central government,” said one. In Awassa, the al-Amouni farm uses as much water a year as 100,000 Ethiopians.

China ready to end dollar peg

The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual.

By Garry White

China ready to end dollar peg

At the annual session of the legislative National People’s Congress in Beijing, Zhou Xiaochuan, governor of the People’s Bank of China, said that the days of the “special yuan” policy were numbered. He described the dollar peg as a “temporary” response to the global financial crisis, but gave no timescale for any change in policy. The currency has been pegged at about 6.83 yuan per dollar since July 2008.

Many economists expect China to allow the yuan to appreciate slightly this year, but the cautious tone by Mr Zhou means that any change may not happen for some time. He said that the central bank would maintain the “basic stability” of the currency. So, despite the fact that the Chinese economy grew by 10.7pc in the fourth quarter of last year, the country’s loose monetary policy looks set to continue.

Translation: Consider that China is the only government in the world who is responsibly managing their finances (they just increased the minimum reserve requirement of their banks to 16.5%) – we must slander them in the eyes of the global community so maybe we can get them to budge.

“If we are to exit from irregular policies and return to ordinary economic policies, we must be extremely prudent about our choice of timing,” Mr Zhou said. “This also includes the [yuan] exchange rate policy.”

China’s currency policy has been subject of fierce debate, particularly in the US and Europe, with the country’s central bank accused of keeping the yuan artificially low to promote a domestic exports boom.

Translation: I am trying to convince you that if China wasnt being such a “bad” global citizen their currency would debase itself, all by itself, I mean, why would a currency want to retain any value anyways?

An artificially lower currency makes the country’s goods and services more competitive, leaving other exporters at a disadvantage. Jim O’Neil, Goldman Sach’s chief economist, thinks the Chinese should allow their currency to appreciate by as much as 5pc.

Translation: With a petulant stomp, I say ITS NOT FAIR! Why should someone else be at a disadvantage just because China wont debase the crap out of their currency with the rest of us idiots!

In recent week President Obama has been vocal on the issue of the artificially low currency. “China and its currency policies are impeding the rebalancing [of the global economy] that’s necessary,” Mr Obama told Bloomberg last month.

Translated: More petulant foot stomping, this time by the “Most Powerful man on the Planet”…is he really?

“My goal over the course of the next year is for China to recognize that it is also in their interest to allow their currency to appreciate because, frankly, they have got a potentially overheating economy.”

Translated: I am so out of touch with reality that despite the fact that my own country’s economy is imploding in the worse financial disaster in human history, I think I should be giving these silly Chinamen advice.

As for the rest of the article: More free advice from people with no pot to piss in.

The relative value of the dollar is important to China, as the country is the world’s largest holder of US government debt. According to data form the US Treasury Department, China held $894.8bn (£591bn) of US Treasury securities at the end of December. Roughly two-thirds of the country’s reserves are believed to be in dollars and dollar-denominated assets such as gold.

“The US dollar is still an extremely important currency, playing a key role in international trade, cross-border capital flows, direct investment as well as in determining whether we can smoothly overcome the global financial crisis,” Mr Zhou said.

When China eventually abandons the peg, the country will have to manage its exit strategy carefully. If the central bank allows a gradual appreciation of its currency, which would be the best strategy for its exporters, there could be an inflow of funds from speculators betting on further appreciation. However, a one-off revaluation could deal a severe blow to the country’s manufacturing sector.

My summary: These people have gone completely nuts.

Fed Audit Bitterly Opposed By Treasury

Ryan Grim

Tim Geithner’s Treasury is opposed to an audit of the Federal Reserve by the Government Accountability Office.

The Treasury Department is vigorously opposed to a House-passed measure that would open the Federal Reserve to an audit by the Government Accountability Office (GAO), a senior Treasury official said Monday. Instead, the official said, the Treasury prefers a substitute offered by Rep. Mel Watt (D-N.C.), and would like to see it enacted as part of the Senate bill.

The Watt measure, however, while claiming to increase transparency, actually puts new restrictions on the GAO’s ability to perform an audit.

Secretary Tim Geithner, Assistant Treasury Secretary Alan Krueger and Gene Sperling, a counselor to the secretary, held a briefing Monday with new media reporters and financial bloggers during which they discussed the Fed audit and other topics. Under the briefing’s ground rules, the officials could be paraphrased but not quoted, and the paraphrase could not be connected to a specific official.

HuffPost reporter Sam Stein lodged what he called a “formal complaint” against the ground rules. The complaint was noted and the briefing began.

Asked whether he supports the House-passed measure to open the Fed to an audit, which was cosponsored by Reps. Alan Grayson (D-Fla.) and Ron Paul (R-Texas), a senior Treasury official said he is intensely opposed to it.

The official said the measure would undermine the independence of monetary policy and could restrict the ability of the Fed to act in times of crisis. He said that the GAO already has audit authority and that the chairman routinely testifies before Congress.

He said he supports full disclosure when it comes to the scale of Fed lending and wouldn’t draw a bright line around auditing certain activities, but wants to make sure it maintained its independence.
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A lack of independence, he said, could lead to inflation and otherwise undermine progressive priorities.

He said, however, that he would be supportive of efforts that would help the Fed earn back some of the credibility it has lost over the past few years.

HuffPost asked if central bank liquidity swaps — foreign currency trades worth hundreds of billions of dollars — should be subject to an audit. The official said that the identity of the countries that received dollars was made public as was the amount each got. It worked well and was good policy, he said, and opening it to audit could undermine its future effectiveness.

The purpose of the swaps, he said, was to make sure that foreign central banks had enough dollars to meet their obligations. The effort kept interest rates low, he said.

A member of Congress, told of the unnamed Treasury official’s comment, asked not to be named and said that Geithner, a former Fed president, should recuse himself from Fed audit legislation discussions, given that the audit would cover his own actions during the crisis.

And Rep. Grayson said he finds Treasury’s opposition to the audit troubling. “There is a growing feeling on the part of real Democrats that the president is getting bad advice from people who have sold out to Wall Street,” said Grayson. “And opposing a measure that passed overwhelmingly in the House with bipartisan support at the [Financial Services] Committee level, based up on legislation that now has 317 cosponsors in the House, shows that the president may be getting bad advice.”

The idea that the Fed’s mission would be undermined by an audit, said Grayson, “is a scarecrow erected by people who want to cover up the actions of the Fed for their own purposes, including those who actually have worked at part of the Fed, to prevent accountability at any cost.”

Geithner served as president of the New York Fed during the financial crisis.

“It’s interesting that the Fed regards the simple fact that people find out what it does as somehow being unduly restrictive. We are a government of laws, not of men,” said Grayson.

“It’s certainly no surprise that banking insiders at Treasury don’t want transparency at the Fed,” said Jesse Benton, a spokesman for Rep. Paul. “They are wrapped up in the central bank shenanagins too, and do not want their wheelings and dealings out in the open any more than Alan Greenspan or Ben Bernanke,”

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These self same individuals seem to tend to have no history of understanding generational wealth, and are not in the mindset of “protecting wealth they own”, but more of the mindset of trying to become someone with wealth to protect.

The change in Central bank behavior from sellers to buyer marks a sea change that history shows took 15 years to run its full course, the last cycle gold rose from $35 / ounce to $850 / ounce (an increase of almost 2500%).

But hey, gold doesnt give any returns.

Venezuela Central Bank to Increase Gold Purchases, Khan Says

By Corina Rodriguez Pons

March 5 (Bloomberg) — Venezuela’s central bank will boost its gold reserves this year and will buy more than half the estimated 20 metric tons of domestic production, bank director Jose Khan said today at an event in Caracas.

The central bank, which has about $16 billion of its $30.6 billion of reserves in gold, purchased 1.08 tons of gold from domestic mines in the first two months of this year after buying just 2 tons in all of 2009, said Khan, one of five directors at the country’s monetary authority.

“We’re going to increase our gold reserves and buy more local production,” Khan said today. “Our objective is to increase reserves and help develop the local gold industry.”

Venezuela’s central bank is planning to provide $250 million of financing for gold production this year in an attempt to boost non-oil exports. The bank, along with the Mining Ministry, plans to build a gold refinery, bank President Nelson Merentes told reporters March 3, without providing details.

Gold futures for April delivery rose $2.10, or 0.2 percent, to $1,135.20 an ounce on the Comex division of the New York Mercantile Exchange. The metal gained 1.5 percent this week.