Dr M Khalid's global village blog

A plan to cap bankers' bonuses will be tested in Europe's top court after the U.K. government challenged the measure, claiming it would increase financial risks rather than reduce them. EU policymakers are hoping to  limit bonuses  for any banker earning more than 500,000 euros a year. The maximum payout would be equal to annual salary or twice salary if a majority of shareholders approve. The cap will apply globally to banks based in the EU, and to international banks operating within Europe. It could affect more than 35,000 bankers around the world, the vast majority of them in London. The European Commission believes the cap -- introduced as part of a  broader package of rules  aimed at making the financial system more stable -- will reduce short-term risk taking. But the U.K. is concerned that it will prompt banks to offer their high-flyers bigger fixed salaries to compensate for the cap, undermining initiatives already undertaken to link banker pay mor...

Fractional-reserve banking  (or  FRB ) is the widespread banking practice in which only a  fraction  of a  bank 's  demand deposits  are kept in reserve and available for immediate withdrawal (as cash and other highly  liquid assets ), whilst the remaining cash is lent out to borrowers (and so is never actually available for immediate withdrawal to legitimate deposit-holders). [1] [2] [3] [4]  The bank in effect lends out most or even all of the funds it receives in demand deposits, whilst  at the same time  guaranteeing that all deposits are available for immediate withdrawal upon demand. Fractional reserve banking is currently legal and practiced by all commercial banks. Example of deposit multiplication [ edit source  |  edit beta ] The table below displays the relending model of how loans are funded and how the money supply is affected. It also shows how central bank money is used to create commercial bank money f...

Germany’s Bundesbank Repatriating Gold from the New York Federal Reserve far, only countries that have a strained relationship with the US have resorted to gold repatriation. Now, Bundesbank will be seen as walking in Hugo Chavez’s footsteps. If gold repatriation becomes a worldwide trend, it will be obvious that both the US and UK have lost their credibility as gold custodians. http://www.globalresearch.ca/germanys-bundesbank-repatriating-gold-from-the-new-york-federal-reserve/5319048 Bundesbank confirms Germany's gold is in play 11:10a ET Monday, August 24, 2009 Dear Friend of GATA and Gold: Germany's central bank, the Bundesbank, today confirmed that much of its gold is held outside the country at "trading centers" where the bank conducts "its gold activities." The Bundesbank's statement, unsigned and issued by the bank's press office, came as an e-mailed reply to GATA consultant Rob Kirby of Kirby Analytics in Toronto...

 Top 50 Emitters Threaten Global Climate Effort, CDP Says Growing pollution at 50 of the world’s biggest-emitting companies threatens to undermine global efforts to contain rising temperatures, according to a report by CDP , formerly known as the Carbon Disclosure Project. Carbon emissions from the 50 top emitters in the FT Global 500, including ArcelorMittal (MT) , RWE AG, Wal-Mart Stores Inc. (WMT) and Exxon Mobil Corp., rose an average 1.7 percent a year since 2009 to 2.54 billion metric tons in 2012, the report shows. Those 50 pump out 75 percent of all emissions reported by the Global 500. Ref: http://www.bloomberg.com/news/2013-09-12/top-50-emitters-threaten-global-climate-effort-cdp-says.html ----------

Usmanov, a two-time Uzbekistan fencing champion in his youth, says the sport develops skills that have helped in life and in business. “The main thing in fencing is to score a touch without giving up a touch in return,” he says. “The sport teaches you to be patient, waiting for the right moment to attack.” He’s picked his moments well as an investor, Bloomberg Markets magazine will report in its October special issue on the 50 Most Influential people in global finance. In the late 1990s, with Russia’s economy in turmoil, Usmanov began to assemble a metals conglomerate that thrived when demand for commodities boomed and prices soared a few years later. Then he shifted money to technology companies such as Mail.ru Group Ltd., the largest social-network operator in Russia. With his partner, Mail.ru founder Yuri Milner , he bought a $200 million stake in Facebook Inc. in 2009 that was worth about $2 billion when the company had its initial public offering three years lat...

As much as 80 percent of homes in parts of Sydney are being sold to Chinese buyers, John McGrath, chief executive officer of the company that recorded A$7 billion ($6.5 billion) of property sales in the year to June 30, said in an interview in Sydney yesterday. Record-low interest rates and the biggest influx of investors in almost a decade are also fueling prices. Enlarge image Chinese tourists take photographs in front of the Sydney Harbour Bridge in Sydney, Australia. Photographer: Brendon Thorne/Bloomberg Sept. 12 (Bloomberg) -- In an exclusive interview, McGrath Estate Agents CEO John McGrath discusses the growth rate in the Australian property market that he thinks is unsustainable. He speaks on Bloomberg Television's "On...

Chenavari Investment Managers, has established a formidable reputation as an investor, Bloomberg Markets magazine will report in its October issue. Chenavari is one of a handful of firms that invest in capital relief trades, or CRTs. A bank pays a third party, such as a hedge fund or pension fund, to take on some of the risk associated with its loans. That makes it easier for the bank to meet regulators’ capital-to-risk requirements. Private Deals CRTs often involve complex structures in which special-purpose companies are set up to provide protection to the bank through a credit-default swap, a derivatives contract that pays the buyer if a designated bond or loan portfolio defaults, and are in turn funded through the sale of notes to investors. Before Basel III, banks had to hold only 2 percent in this so-called core tier 1 capital; by 2019, that will rise to 4.5 percent and total capital ratios will have to be as high as 13 percent. The Basel Committee estimates...

DeVry Lures Medical School Rejects as Taxpayers Fund Debt DeVry's Caribbean medical schools leave students with high debt -- financed by American taxpayers -- and fewer chances of getting jobs as physicians than graduates of U.S. institutions.   David Adams wanted to train to become a physician after graduating from the University of Utah with a bachelor’s degree in health promotion and education in 2009 but was rejected by two dozen U.S. medical schools. Three years later, he earned a Master of Science in medical health sciences from Touro University Nevada and applied again, Bloomberg Markets will report in its October issue. Adams was accepted to American University of the Caribbean School of Medicine, which is owned by Downers Grove , Illinois-based DeVry Inc. (DV) Adams, now 31, moved with his wife, Jessica, and their two young children to a two-bedroom apartment that smelled of dog urine and had a broken stove on the Dutch part of St. Maarten on Jan. 1....

Shikha wants to buy life insurance, so she contacts an agent to discuss available policy options. The agent arrives, buts seems more interested in plugging a policy than in informing her about other policy options and aspects of life insurance. He says, "Trust me, Ma’am. This will take care of all your insurance needs." So saying, he gathers his files and rushes off, probably to plug the same policy to another client. Also read: Why you should fill out your own insurance policy form The policy sounds like a good deal. But should Shikha purchase it right away? The answer is no. Before deciding to buy the policy, Shikha needs to ask the agent a few key questions, some of which are listed below.  Q1. Tell me about the insurance company. Agents typically represent multiple insurance companies. So Shikha must ensure that the plan he is selling is from a credible insurer. The agent must convince her about the insurer’s claim settlement ratio, number of years in business and ov...

 Stephen Roach , Senior Fellow at Yale University, was interviewed on CNBC this week and expressed his concern regarding a potential for contagion in the emerging markets that could lead to a global financial crisis. This could rival the influence of Europe’s sovereign debt issue, according to Roach. Countries with current account deficits include India, Indonesia, Brazil, Turkey and South Africa. Roach said the ending of QE is creating an arbitrage back to the developed world. Roach said the Fed’s QE2, QE3, and Operation Twist programs have done nothing but inject excess liquidity into financial assets. All blame can’t be placed on the Fed as the developing economies of India and Indonesia, in particular, should have been hard at work dealing with their structural problems, Roach said. When asked if these developments were already priced into emerging markets, Roach replied he didn’t know. Given that the Fed has shown some skittishness and backed off some of their taper...

August 15, 2013 The rupee's decline is a reminder of the crisis in the 1990s when the widening deficits in the budget and current account pushed the currency down 37 percent between 1991 and 1992. India increased efforts to stem the rupee's plunge and stop capital outflows that are pushing the economy toward its biggest crisis in more than two decades. The Reserve Bank of India, whose Governor Duvvuri Subbarao steps down next month, cut the amount local companies can invest overseas without seeking approval to 100 percent of their net worth, from 400 percent, according to a statement late yesterday. "I don't think this fixes India's problem, at best it restricts about $5 billion of flows annually, which doesn't make a dent," Bhanu Baweja, the global head of emerging market cross asset strategy at UBS AG, said in a phone interview from London yesterday. "The minute you restrict outflows, people will start legitimately speaking in term...

Sonjoy Chatterjee , chairman,  Goldman Sachs  (India), has been in the financial services sector for over two decades, both in India  and overseas, and has seen the economic crisis in 1998 and 2008, besides the current slowdown. After wearing a lender's hat in  ICICI Bank BSE 7.37 %  from 1994 to 2011, Chatterjee left it as its UK chief to head investment bank Goldman Sachs' India operations.  "The current environment is not optimal for equity issuances. Globally, due to volatility, the allocation of investments across emerging markets  is almost at a standstill. When you think of equity markets, India has seen approximately $16 billion of investments since January. Unlike countries in South East Asia, which have seen almost all their inflows leave, India has barely seen $3 billion of outflow and that too is predominantly over the past two weeks. I think this is something to take comfort in," he tells  ET . When you talk about outflows, it is pr...