Bid to use gold as collateral advances in Europe

INVESTORS are closer to being able to use gold as a trading security after a European parliamentary committee approved a proposal to allow clearing houses to accept gold as collateral.

The European Parliament's Committee on Economic and Monetary Affairs agreed unanimously to allow clearing houses to accept gold.

The proposal, under the under the European Market Infrastructure Regulation, will be passed to the European Parliament and the Council of the European Union for another round of voting in July.

The credit quality of traditional collateral assets such as European government bonds have continued to see a deterioration.

Gold's strong price gains in recent years have seen its appeal as collateral increase.

Clearing houses and other institutions have looked at introducing new sources of collateral since the financial downturn in 2008 highlighted inadequacies in counterparty risk management in the global over-the-counter market.







The G20 said it wanted to try to reduce financial market risks by putting more products into clearing houses, increasing the demand for collateral as security against risks.

At the same time, many traditional collateral assets, such as European government bonds, have continued to see a deterioration in credit quality as a result of the sovereign-debt crisis.

In October 2009, CME Group said it would allow physical gold to be used as collateral for margin requirements, a move that was followed by rival IntercontinentalExchange in late 2010.

In February this year, JP Morgan Chase announced its decision to accept physical gold as collateral in some financial transactions.

"It is very significant that the European Parliament is putting its weight behind the argument that the unique characteristics of gold make it an ideal form of high quality liquid collateral," said Natalie Dempster, director of government affairs at the World Gold Council.

Wall street Journal

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UN sees risk of crisis of confidence in U.S. dollar

UNITED NATIONS – The United Nations warned on Wednesday of a possible crisis of confidence in, and even a “collapse” of, the U.S. dollar if its value against other currencies continued to decline.

In a mid-year review of the world economy, the UN economic division said such a development, stemming from the falling value of foreign dollar holdings, would imperil the global financial system.

The report, an update of the UN “World Economic Situation and Prospects 2011” report first issued in December, noted that the dollar exchange rate against a basket of other key currencies had reached its lowest level since the 1970s.

This trend, it said, had recently been driven in part by interest rate differentials between the United States and other major economies and growing concern about the sustainability of the U.S. public debt, half of which is held by foreigners.

“As a result, further (expected) losses of the book value of the vast foreign reserve holdings could trigger a crisis of confidence in the reserve currency, which would put the entire global financial system at risk,” it said.

The 17-page report referred at another point to the “still looming risk of a collapse of the United States dollar.”

Rob Vos, a senior UN economist involved with the report, said if emerging markets “massively start selling off dollars, then you can have this risk of a slide in the dollar.

“We’re not saying the collapse is imminent, but the factors are further building up that we could quickly come to that stage if other things are not improving quickly on other fronts — like the risk of the U.S. not being able to service its obligations,” he told Reuters.

UN economists have for some time queried whether the dollar should continue to be the world’s sole reserve currency. Others have also expressed concerns about U.S. finances.

Standard & Poor’s threatened on April 18 to downgrade the United States’ prized AAA credit rating unless the Obama administration and Congress found a way to slash the yawning federal budget deficit within two years.

A downgrade would erode the status of the United States as the world’s most powerful economy and the dollar’s role as the dominant global currency.

Financial Post

MORE:
http://business.financialpost.com/2011/05/25/un-sees-risk-of-crisis-of-confidence-in-u-s-dollar/

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Netanyahu Israel would surrender some settlements

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Poor beast.....Next time take the BMW

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Obama's hidden war: US intensifies drone attacks in Pakistan

Editor's note: This is the first in a three part series reported from North Waziristan that looks into the issue of the continuing U.S. drone attacks on Pakistani soil. In the second part, locals in North Waziristan say that the drone attacks, which have killed hundreds of civilians, are sowing sympathy for the militants operating there and actually bolstering their ranks. In the third part, reporter Aamir Latif looks at how the United States and Pakistan, in the wake of Osama bin Laden's death, are cooperating like never before.

MIRAMSHAH, Pakistan — Based here in the remote, weathered hills of North Waziristan, is the Haqqani Network, a group of insurgents closely aligned with the Taliban that has long provided a safe haven for Al Qaeda.

The Haqqani Network is believed to be one of the greatest threats to U.S.-led NATO forces operating in neighboring Afghanistan.

This is a region ruled by tribal law and allegiances, making it difficult for even a Pakistani from outside to travel freely. It is a Wild West where everyone is watching everyone else, a semi-autonomous region where, according to the country’s constitution, normal judicial and criminal laws don’t apply.

There are no police here, no army and no courts. Pashtunwali, a centuries-old tribal code, rules day-to-day life and is the law of land. All disputes are resolved through a Jirga, an assembly of community elders, whose word is final.

Security analysts say North Waziristan is the most important route for militants moving back and forth across the border between Pakistan and Afghanistan, where they persistently attack NATO troops. And before Osama bin Laden died in a neighborhood not far from Islamabad, North Waziristan is where many thought he would be hiding.

U.S. President Barack Obama has long claimed that winning the war in Afghanistan will require that this region — and the Haqqani Network that rules it from the shadows — be brought back into the fold. The Haqqani Network is thought to command about 3,000 trained militants.

“If America wants to stay in Afghanistan, or safeguard its interests in case of a proposed pull-out, it has to tame North Waziristan,” said retired Maj. Gen. Shafiq Ahmed, a Lahore-based security analyst.So Obama — who made winning the war in Afghanistan and catching bin Laden two of his central campaign promises in 2008 — has stepped up the use of unmanned drones in North Waziristan. The drones are operated by the Central Intelligence Agency and were first authorized by U.S. President George W. Bush in 2004.

Global Post

MOre:
http://www.globalpost.com/dispatch/news/regions/asia-pacific/pakistan/110520/al-qaeda-osama-bin-laden-north-waziristan

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Armageddon Proof: Marks and Bunkers

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Japanese superquake moved ocean floor 79 feet sideways and 10 feet up

The ocean floor shifted sideways by 79 feet in the Japanese earthquake in March - much further than scientists originally predicted.

And researchers are warning that immense amounts of seismic stress remain stored in the area, putting it at risk of further devastating earthquakes.

The journal Science has published three new papers about the effects and causes of Japan's March 11 mega-quake, which paints a picture of an earthquake hot spot much more complex and potentially dangerous than scientists had ever anticipated.


n one paper, the Japanese Coast Guard has released data from five geodetic instruments that in 2000-04 they had placed underwater along the fault line responsible for the colossal quake.


One of the instruments had actually been placed almost on top of the epicentre of the Magnitude 9.0 quake, at a station called MYGI.

Measurements taken in the week following the earthquake showed that at the MYGI site, the sea floor had moved about 79 feet to the east-southeast since the previous measurement in February. It had also risen about 10 feet.


Dr Mariko Sato, a geodesist with the Japan Coast Guard in Tokyo, believes almost all this movement happened during the quake.


The scale is almost double that estimated only from the terrestrial data,' Dr Sato told BBC News.

Under the seabed, the movement may have been even greater - perhaps 160 to 200 feet, by some estimates.

In another study sure to raise alarm in Japan, scientists from the California Institute of Technology have reconstructed how the Tohuku-Oki earthquake unfolded using GPS data recorded at more than 1,200 sites.

Their data showed that - contrary to previous opinion - the area had built up massive amounts of strain prior to the earthquake.

Earlier, there had been general agreement among researchers that the 'Miyagi segment' of the fault line was not under the stress of other segments along the Japan plate boundary, where large earthquakes occur at a regular basis. But Professor Mark Simons' team showed that this assumption was deeply flawed.

This raises questions about other sections of the fault line that had previously been considered low risk - including areas further south, closer to Tokyo.


This 'Ibaraki segment' of the plate boundary has been thought to behave in similar fashion to that of the Miyagi segment, and Professor Simons says it may likewise hold large amounts of seismic stress.


In recorded history, this southern area has experienced only one set of quakes larger than magnitude 8 - which means the region could be ripe for its own rupture.


The quake may also have destablised nearby areas of fault line, making them even more vulnerable to a catastrophic rupture.

'We have to entertain the possibility this area can produce a large quake,' Simons said. 'This area will warrant a lot of attention in the near future.'

The earthquake and subsequent tsunami left more than 24,000 people dead or missing, and wiped out entire towns.


Daily Mail
Read more: http://www.dailymail.co.uk/sciencetech/article-1389247/Japan-earthquake-Ocean-floor-moved-79-feet-sideways.html#ixzz1NCnuu9NI

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