DEBKAfile Special Report March 28, 2012, 6:19 PM (GMT+02:00)
Two suitcases crammed with counterfeit $100 bills were seized in Kuala Lumpur this week from two Iranian traders who flew in to the Malaysian capital on direct flights from Tehran. One contained 153,000 forged dollars and the second 203,000. The traders claimed they were issued the bills by tellers at the Iranian central bank CBI to finance their business transactions and had no notion they had not been dealt genuine greenbacks.
debkafile’s sources report that alert local businessmen spotted the fake currency despite its quality workmanship when they used it to pay for their purchases.
According to a Malaysian source, the bills were finely printed on special paper. The initial investigation identified the paper as made in China especially for use in printing currency and a supply recently reached Iran.
Malaysian authorities have not identified the Iranian traders who were taken in custody except by their initials – H.M. and A. G.
Kuala Lumpur finds itself in the middle of an international scandal developing around the affair and involving the US, China and Iran. The Iranian embassy is leaning hard on the government to keep it hushed up, threatening to cut off commercial ties if the story is made public, or if the two traders are forced to stay in the country until the legal proceedings take their course.
Tehran fears the embarrassment attending disclosure of its suspected traffic in counterfeit US currency as the April 13 date approaches for important nuclear negotiations with the six world powers. Iran would find itself badly compromised on world financial markets on top of the difficulties it already faces as a result of the tough international financial sanctions clamped down by America and Europe...
An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246
Pento Portfolio Strategies
Posted Mar 29, 2012
The prevailing notion among the main stream media and economists is that interest rates are rising because of improving economic growth. But like many of the readily accepted tenets of today’s world of popular finance, this too has its basis in fallacy.
Interest rates have increased by nearly 40 basis points on the Ten year note since the first week of March and that is being offered as proof that the economy has healed and GDP growth is about to accelerate. But in truth, the recent spike in Treasury bond yields is only the result of a temporary ebbing in the fear trade that brought about panic selling in Euro denominated debt, which had previously caused U.S. Treasury prices to soar.
The head of the European Central Bank, Mario Draghi, just finished printing over a trillion Euros in an effort to calm the bond market. This new liquidity predictably found its way into distressed Eurozone debt and has mollified bond investors; for the moment. Since a Greek exit from the Euro in no longer perceived an imminent threat, investors have sold their recent purchases of U.S. Treasuries and piled back into Eurozone sovereign debt. For example, the yield on the Italian 10 year note took a rollercoaster ride above 7% at the start of this year, before plunging south of 5% by the beginning of March.
However, in contrast to what passes for the economic wisdom of today, an increase in the rate of sovereign bond yields would be a function of deterioration in their credit, currency and inflation risks...
European governments moved to bolster their rescue funds, seeking to shield Spain and Italyfrom the fallout of the debt crisis without alienating bailout-weary voters in wealthy countries.
Finance ministers neared an agreement to run the temporary and permanent funds in parallel until mid-2013, potentially raising the upper limit on emergency lending to 940 billion euros ($1.3 trillion). Amounts immediately available would range between 340 billion euros and 640 billion euros.
“I can imagine that both instruments run in parallel so that automatically we have a higher sum overall,” Austrian Finance Minister Maria Fekter told reporters before a meeting of European finance ministers in Copenhagen today.
European policy makers are trying to strike a balance between meeting international demands for a more powerful war chest and opposition in donor countries led by Germany to providing additional aid for underperforming economies on the region’s fringes.
“Nobody had expected the dimensions of this program,”Stark said in an interview with Bloomberg Television in Cernobbio, Italy, today. While it was appropriate to consider these operations, the ECB is now on the hook for three years and it will take time to shrink its balance sheet, he said.
The ECB lent banks more than 1 trillion euros ($1.3 trillion) in two three-year operations that have calmed financial markets and won governments time to address the region’s debt crisis. ECB policy makers also cut the benchmark interest rate in November and December, taking it back to a record low of 1 percent.
“In my view, one rate cut was sufficient,” said Stark, who left the Executive Board prematurely at the end of 2011. “I didn’t want to go to 1 percent. We have seen so far that the inflation rate has remained at a higher level than expected.”
Stark resigned over the ECB’s bond-purchase program, which has since been halted after banks used some of the three-year cash to buy the sovereign debt of countries like Italy andSpain. While Stark said the loans are “closer to the mandate of the ECB” than bond purchases, he has criticized the quality of the collateral the ECB is accepting from banks in return for the funds.
By Jerry Bowyer
Last August I wrote a short series for Forbes.com on valuation techniques for gold, (Some Thoughts For The Gold Bulls, The Case Against Buying Gold, and At $1,850/Ounce, Does Gold Still Glitter?) . At the time I concluded that gold prices at $1,850 an ounce had been far too high; then in a follow-up piece after a large decline in gold prices, I suggested that gold even at $1,700 was still above a proper valuation range. I argued that although it is widely held to be impossible to put a valuation on gold (it has no inherent value, it is completely emotionally driven, etc.), gold in fact has a value and the value can be calculated.
The confusion about gold valuation is a symptom of a larger confusion about valuation in general. We don’t understand any longer what things are worth, because we don’t understand any longer what ‘worth’ means. Worth is merit: the medieval book “The Nine Worthies” was a series of portraits of men of merit. To assign worth to something is to properly rank its attributes in relation to the attributes of another object...
In the previous article in this series I pointed out that even after recent dramatic sell-offs gold prices are still higher than one would expect if one saw them as being driven only by money creation. And this state of affairs has been sustained for a period of years, which suggests that it is not driven by a panic reaction, because panics by definition tend to last for a short period of time.
Having noticed that although gold did fall to the top end of my expected value range using money metrics, I wondered why it did not fall at least to the middle range.
Trying to solve the puzzle, I reasoned that perhaps gold is not just a function of domestic money creation, but of international money creation as well. In other words, gold prices might go up in dollar terms even more than the excess creation of dollars alone would dictate. If other countries also debased their paper currencies, the citizens of those countries would similarly demand gold as a hedge against inflation. And since much of the world seemed to be at least partially following the U.S.’s lead in weakening their currencies, perhaps global gold demand was driving gold even higher than dollar devaluation would suggest....
By Reese Ewing
SAO PAULO | Fri Mar 30, 2012 9:00am EDT
SAO PAULO (Reuters) - In its latest bid to slow dollar inflows in a "global currency war," Brazil has dealt an unexpected blow to its own commodity exporters, choking off medium-term trade financing at a vulnerable time for the sector.
Brazil - a source of much of the world's sugar, coffee, soy, beef and iron ore - has imposed a series of taxes on foreign capital over the past year to slow what President Dilma Rousseff called a "tsunami" of cheap money flowing from the rich world.
But exporters say the central bank went a step too far on March 1, when it quietly implemented a 6 percent financial transactions tax on medium-term loans offered to exporters by banks, a critical tool used by major commodity producers across the globe to finance their operations.
That 6 percent tax has shifted demand to one-year credit lines in dollars, known as ACCs, driving up the costs as trading houses and raw materials exporters rush to shift financing needs...
“The scale of the Iranian nuclear program is expanding,”Ryabkov said yesterday in an interview in New Delhi. This “is in direct violation of UN resolutions.”
The so-called BRICS group of major emerging nations that met yesterday in India said the situation in Iran can’t “be allowed to escalate into conflict,” according to a communique. Iran faces growing economic and financial sanctions over its nuclear program, which the U.S. and its allies say is a cover for making atomic weapons. Iran says it’s for civilian purposes.
A military confrontation over the nation’s nuclear plans would trigger a new global economic crisis, Ryabkov said, adding that he doesn’t rule out strikes against Iran by countries such as Israel.
Supporters of the Jumpstart Our Business Startups Act (Jobs) said it would help firms to "crowdfund" capital from small investors.Raising money for start-ups via the internet is set to become easier after a new bill was backed by the US House of Representatives.
However, critics have warned the measures could lead to increased levels of fraud.
President Barack Obama is expected to sign the bill soon.
The proposals were supported overwhelmingly in the House with members voting 380-41 in favour. It was backed earlier in the week by the Senate.
Crowdfunding has become an increasingly popular way for small companies to gain early investment using the internet.
US-based site Kickstarter has raised millions of dollars for mostly arts and media projects.
The biggest of these, a video game called Double Fine Adventure, raised more than $3m (£1.9m) from over 80,000 backers.
However, while sites like Kickstarter provide funds on a philanthropic basis, the Jobs Act intends to allow small-scale investors to own equity in companies they back.
Up to $1m can be raised via crowdfunding, or $2m for companies that provide investors with fully audited financial statements.
Currently, small businesses with more than 500 investors must open up their books to US financial regulators.
In the proposed bill, that threshold is raised to 2,000. It would, backers said, reduce red tape and cut the costs of running a business.
The bill has been largely welcomed by start-up companies looking to secure vital funding in a year when lending by US banks is expected to drop.
Michael Lipton, founder of digital firm Breakfast, told the BBC the measures meant a wider array of businesses could be created.
"If someone believes in an idea and believes in a company's strategic vision, they should be able to put their capital behind it," he said.
However Jesse Eisinger, a finance reporter for the US news website ProPublica, described the proposals as a "petri-dish of fraud", and dismissed pledges it would lead to significant job creation.
"It's a bad deal for the retail investor," he told the BBC.
"They're going to get solicitations online, they're going to be asked for small investments.
"The only jobs that are really going to benefit from this are fraudsters, shills and Wall Street analysts."
March 30, 2012, 11:21 a.m. EDT
By dlevine[at]marketwatch[dot]com (Deborah Levine), MarketWatch
NEW YORK (MarketWatch) — Treasury prices edged up Friday but are still heading toward a second straight month of steep losses as economic data and comments from monetary policy officials have signalled an improvement in the economic outlook while the debt crisis in Europe is seen as less urgent.
“Europe settled down as the quarter proceeded,” said Jim Kochan, chief fixed-income strategist at Wells Fargo Funds Management. “That results in less foreign buying of dollar securities, particularly Treasurys.”
Yields on 10-year notes /quotes/zigman/4868283/delayed 10_YEAR -0.55% , which move inversely to prices, fell 1 basis point to 2.15%. A basis point is one one-hundredth of a percentage point.
European finance ministers agreed to raise the so-called 'firewall' to 700 billion euros to curb the region's debt crisis, while some fear it may not be enough. Photo: Reuters
A month ago, the benchmark security yielded 1.98%. Yields are up from 1.87% at the end of 2011.
Yields on 5-year notes /quotes/zigman/4868109/delayed 5_YEAR -1.28% slipped 1 basis point to 1.01%, up from 0.88% a month ago.
Thirty-year bond yields /quotes/zigman/4868063/delayed 30_YEAR -0.21% declined 1 basis point to 3.27%. They’ve risen from 3.09% at the end of February, for the biggest monthly increase since October....
By Angus McDowall
RIYADH | Fri Mar 30, 2012 1:11pm EDT
RIYADH (Reuters) - U.S. Secretary of State Hillary Clinton met Saudi Arabia's king and foreign minister in Riyadh on Friday to discuss the Syria conflict against a backdrop of tension with Iran and oil policy differences.
The world's main superpower and its top oil exporter have been strategic allies since the 1940s, but discord over how to respond to Arab popular uprisings strained relations last year.
"Both sides have recognized that their common interests are much more significant than the issues that have recently been dividing them," said Robert Jordan, U.S. ambassador to Riyadh from 2001-03, citing anti-terrorism cooperation, concerns over a nuclear Iran and wider Middle East stability.
Pictures broadcast on state television showed Clinton meeting King Abdullah as other officials, including Foreign Minister Prince Saud al-Faisal, Defense Minister Prince Salman and Intelligence Minister Prince Muqrin, looked on.
Although the two states have mended the rift, differences persist on regional policy and how to tackle high oil prices.
The United States and other consumer countries fear Saudi Arabia may cut oil output if they release emergency reserves, neutralizing their effort to cool world energy markets...
BEIJING - The scandal shaking China's ruling Communist Party just as it readies for leadership change was triggered by claims that the wife of one ambitious candidate was involved in the death of a British businessman, said a source. Full Article
By Jeff Mason and Roberta Rampton
BURLINGTON, VT/WASHINGTON | Fri Mar 30, 2012 3:13pm EDT
BURLINGTON, VT/WASHINGTON (Reuters) - U.S. President Barack Obama said on Friday he has determined there is enough oil in the world market to allow countries to cut imports from Iran, allowing Washington to begin sanctioning countries that continue to buy Iranian oil.
In his decision, required by a sanctions law he signed in December, Obama said in a statement that increased production by some countries as well as "the existence of strategic reserves" helped him come to the conclusion that sanctions can advance.
"I will closely monitor this situation to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran," Obama said.
The sanctions aim to pressure Iran to curb its nuclear program, which the West suspects is a cover to develop atomic weapons but which Iran says is purely civilian...
A euro-area finance ministers’meeting to bolster Europe’s crisis-fighting efforts was thrown into confusion as a spat between Luxembourg and Austria erupted over who got to brief journalists first on the outcome.
Jean-Claude Juncker, 57, who chairs the meetings, abruptly cancelled a press conference in Copenhagen today after Austria’s Maria Fekter stole the Luxembourg prime minister’s thunder and signalled to reporters that the group had limited new bailout lending to 500 billion euros ($667 billion).
“There was no point in having a press conference, because the Austrian finance minister announced it,” Juncker told reporters as he hustled into an elevator after the meeting.“I’m against babbling, so I wanted to make a point today,” he said in an interview later in the day.
Fekter, 56, apologized. The timing of her appearance“wasn’t optimal,” ministry spokesman Gregor Schuetze said. Asked after today’s meeting if the spat had been patched up, Fekter said: “Yes.”
NEW YORK - For the first time in over a decade, more of the $1.246 trillion represented by the 100 largest U.S. corporate pension funds is in bonds instead of equities, according to a pension consulting firm. Full Article
By Patrick Temple-West and Kim Dixon
WASHINGTON | Fri Mar 30, 2012 4:16pm EDT
WASHINGTON (Reuters) - The United States will hold the dubious distinction starting on Sunday of having the developed world's highest corporate tax rate after Japan's drops to 38.01 percent, setting the stage for much political posturing but probably little tax reform.
Japan and the United States have been tied for the top combined, statutory corporate rate, with levies of 39.5 percent and 39.2 percent, respectively. These rates include central government, regional and local taxes.
Japan's reduction , prompted by years of pressure from Japanese politicians hoping to spur economic growth, will give that country the world's second-highest rate.
This has triggered complaints from U.S. politicians and business groups.
"This isn't an April Fool's Day joke," said Senator Orrin Hatch, the leading Republican on the Senate Finance Committee.
"Every industrialized country around the globe understands that tax rates can determine whether or not businesses succeed or fail," Hatch said in a statement...
Ministers pressurised to invoke emergency powers giving 999 vehicles priority at filling stations after it emerged that ambulance drivers have been struggling to get hold of fuel.
Al-Qaeda will use Afghanistan to launch September 11-style attacks on West, says US ambassador to Kabul.
By Damien McElroy, Raf Sanchez in Washington
8:22PM BST 30 Mar 2012
In a move that risks infuriating China and Russia and punishing even friendly countries that buy oil from Iran, such as Turkey and India, President Obama said he would move to exclude Iran's trading partners from the US financial system.
Senior Obama administration officials said the decision represented "the strongest pressure we've had in place to date" to affect Iran's pursuit of a nuclear programme.
The legislation requires President Obama to produce a determination that the supply of oil to the world market would not be sharply reduced by the measure.
"There is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions," a presidential order said.
The move represents a significant blow against Iran's attempts to defy UN, US and EU sanctions imposed against its nuclear programme, designed to prevent Tehran from developing a nuclear weapon...