-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- ------------------------------------------------------------------------ Today's Lesson From Good Night, Sweet Prince: The Life and Times of John Barrymore by Gene Fowler Barrymore was capable of such immediate attunement to anyone's lifework, whether that of a dwarf newsboy or a scientist, as to seem a colleague. Einstein, for example, said after a visit with him: "Several mathematicians understand my theories, but of all persons it is an actor, John Barrymore, who discusses them the most intelligently." Similarly, Dr. David Starr Jordan, president emeritus of Leland Stanford University, corresponded familiarly with Barrymore. Their friendship arose from their mutual fondness for monkeys and apes. At a later time, Barrymore impressed Dr. Gustav Eckstein, celebrated physiologist and author, as "the most remarkable man I have met!" Dr. Eckstein kept numerous pet canaries in his laboratory, and each one would answer by name. ===== The Religion Business Bank of Dark Land May Cancel Robertson Deal The wankers won't stand for it THE Bank of Scotland was last night reviewing its business links with a Right-wing American television evangelist after he described Scotland as a "dark land" in the grip of homosexuals. Pat Robertson, who has been widely criticised for his extreme views on women, race and homosexuality, said Scotland had violated its Christian heritage by tolerating gays and lesbians. The bank, which is planning to set up a direct banking scheme in the United States with the preacher, said it was reconsidering its position, though it had "no definite plans to call off the deal". But as the bank's share price fell by four per cent, officials said that they were planning to meet Mr Robertson in America later this week. Around 500 customers have closed their accounts in protest, and politicians, union leaders and churchmen have called on the bank to end its relationship with the evangelist. During an interview on his Christian Broadcasting Network, the preacher said "in Scotland you can't believe how strong the homosexuals are". MSPs joined the protests yesterday after learning that the parliament account was with the bank. Andrew Wilson, of the SNP, described Mr Robertson's views as abhorrent, adding: "We cannot allow these kinds of views, which are utterly discriminatory, to be associated in any way with our new parliament." The bank began negotiations with Mr Robertson last year in the hope of selling direct banking to the 55 million viewers of his television channel. The scheme is due to be launched in the next few months, and the preacher's Christian Coalition is said to have paid around £30 million for a 25 per cent stake in the venture. Bill Speirs, of the Scottish TUC, called on the bank to stop debating the issue and withdraw from the deal. He said: "We believe his gratuitous and offensive attacks on Scotland and its people reinforce the message we have already given to the bank - Pat Robertson is bad news." The charity ActionAid said it intended to withdraw its affinity card contract, which earns it £83,000, and West Lothian council has threatened to withdraw deposits of around £250 million. The London Telegraph, June 4, 1999 Copper Market The Hamanaka Copper Scandal Continues! You should have bought those copper options from Barclays when you had a chance Sumitomo, the Japanese trading company, is suing UBS and Chase Manhattan Bank for a total of ¥91.7bn (£460m) in damages in connection with derivatives transactions by Yasuo Hamanaka, the former chief copper trader. Sumitomo, which has filed a lawsuit in Tokyo seeking damages of ¥27.9bn from UBS and another in New York seeking $532m (¥63.8bn) from Chase Manhattan, alleges that both banks used complicated copper derivatives transactions to make unauthorised loans to Mr Hamanaka. When Mr Hamanaka's activities came to light, Sumitomo repaid about ¥27.9bn to UBS and $532m to Chase Manhattan. However, its own investigations since March 1996 revealed that the derivatives deals were in fact unauthorised loans amounting to more than $250m from UBS and $500m from Chase Manhattan Bank. "The transactions look like derivatives deals but on closer examination we believe they were, in fact, loans to Mr Hamanaka," said Sumitomo. The company charges that Mr Hamanaka repeatedly borrowed funds from UBS and Chase Manhattan Bank to hide his expanding copper losses and believes UBS and Chase Manhattan were fully aware that Mr Hamanaka was not authorised to take out the loans. By providing financing to Mr Hamanaka for derivatives transactions that did not take place, the banks helped him continue his secret deals, Sumitomo charges. UBS said yesterday it "disputes Sumitomo's right to claim any amount whatsoever in connection with these transactions". Chase Manhattan was not immediately available for comment. Mr Hamanaka, once a star copper trader for Sumitomo, has been sentenced to eight years in prison for fraud and forgery related to illegal copper trades. Known as "Mr Five Per Cent", after the size of the copper market he was said to control, Mr Hamanaka continued his illicit trades for more than a decade until 1996. When the unauthorised trades came to light it wreaked havoc on the copper market and sent the price of copper plunging. Sumitomo incurred ¥285bn in losses as a result of the illegal copper trades and has faced a number of lawsuits since then. Although Sumitomo announced a total loss of ¥330bn as a result of the copper scandal and risked being barred from the US and UK commodities markets, the actual loss to Sumitomo is believed to be much higher. The Financial Times, June 4, 1999 The Lurker at the Threshhold Federal Reserve Puts Big Banks Under Watchful Eye A little too much risk, maybe? The Federal Reserve is intensifying its supervision of the largest US and international banks in an attempt to meet rising concerns about the risks they could pose to the banking system. Laurence Meyer, a member of the Fed's board of governors, yesterday said the Fed began "sharpening its supervisory focus" on 20 US banks and 10 international banks last year in response to their increasing size and complexity. Laurence Meyer, a member of the Fed's board of governors, yesterday said the Fed began "sharpening its supervisory focus" on 20 US banks and 10 international banks last year in response to their increasing size and complexity. In a speech to state bank supervisors, Mr Meyer also warned there were signs of "slippage" in bank lending standards. The volume of non-performing assets increased last year for the first time since 1991, particularly in commercial and industrial loans. Meanwhile, community banks are facing increasing threats from the rising number of bad agricultural loans. Mr Meyer suggested that the Fed's concerns about "systemic risk" were heightened by the growing power of the top 20 US banks, which control 82 per cent of the assets of the largest 50 banks. A decade ago the top 20 institutions controlled 68 per cent of those assets. The Fed is also concerned about the concentration of derivatives and securitisations - including consumer loans and commercial credits - among the largest banks, which the Fed now calls large complex banking organisations (LCBOs). Mr Meyer said the Fed increasingly favoured continuous monitoring of the largest banks, including online access to management information. Two of the largest banks already allow the Fed direct access to data on their internal audit processes. The Fed has faced strong criticism in Congress for its role in co-ordinating the private bail-out last year of the hedge fund Long-Term Capital Management. Members of Congress have attacked the Fed for appearing to back a "too big to fail" doctrine which would ensure the survival of any of the largest institutions. Mr Meyer also urged banks to improve their credit risk management, citing a "disappointing" recent visit by Fed officials to inspect the risk models used by a large number of banks. "Much more progress is necessary before most large banks, themselves, can gain a solid grasp on their risk exposures for risk management purposes," he said. A move to tighter regulation of the biggest banks had been predicted by Wall Street observers. Henry Kaufman, one of the most respected US economists, said this would happen last year, after the announcement of the merger of Citicorp with Travelers Group, the largest financial services merger to date. He said huge banks would need to be "treated more and more like public utilities" rather than entrepreneurially run private enterprises. He said that Citigroup, the company which resulted from the Citicorp-Travelers merger, would be "too big to fail" and would therefore need heavy and intrusive regulation to ensure that they were "too good to fail". Last year's hedge fund and proprietary trading crises mostly affected banks with large retail businesses in the US, increasing the systemic risks. Several of the largest banks, such as Chase Manhattan, reinforced their risk management processes in the wake of the 1997 Asian financial crisis. The Financial Times, June 4, 1999 Single Currency The Euro: Can't Get It Up The miracles of European socialism PARIS - During Jimmy Carter's presidency, when the dollar fell below 2 Deutsche marks for the first time, the causes seemed obvious: much higher U.S. inflation than in Germany, but just as damningly, a sense of groping political leadership and an American industrial complex that appeared to have rusted over. Back then, in 1978, the dollar's descent below 2.00 DM - a level it still occupies today - constituted in Europe a kind of psychological smudge of shame for the United States and was interpreted as signifying that the United States was losing its world economic primacy. Now, with the euro having slipped 11 percent since its introduction on Jan. 1 toward the symbolically charged frontier of one euro for a dollar, the circumstances in broadest outline are reversed but not dissimilar. There is an important technical factor currently favoring the dollar in the disparity in interest rates between the United States and the euro countries and a reflex in continental Europe to say the current exchange rates reflect more the dollar's strength than the euro's frailty. But, as European Union leaders gathered in Cologne on Thursday for a summit meeting, it was also clear that the markets' assessment of the euro reflected a lack of confidence in the economic leadership of the euro zone and a less than positive evaluation of the currency's future as an economic and political factor in the world. As much as any American gasoline-guzzler did 21 years ago, the euro's weakness now serves as a symbol for old methods and a lack of clear economic and political perspectives. For continental Europe, what appears at hand is the uncertainty of a new currency that is not backed up by key governments and political leaders with a commitment to hard structural reform. The absence of this engagement means avoiding battles with big domestic constituencies, but the likelihood from the markets' standpoint is that the euro zone's 11 national economies will remain dormant. A former left-of-center finance minister from one of the EU's leading countries, talking privately about the decline of the euro, said: ''There's really a blatant incapacity on the part of European politicians to meet their obligations on reform. The markets just don't believe the German and French financial policies. ''Obviously, we are not talking about rust-belt factories or the Ruhr. It's the politically related structural problems, the social reforms, the taxes, the pensions, the size of the public sector, all things that can be solved by political decisions. That's 45 percent of the euro's troubles. The other 55 percent are interest rates and the other technical factors.'' This view was one often repeated among economists and traders. What the markets appear to have done in the euro's first five months is to make a parlay backing its descent. At a basic level, they see the interest-rate differentials and nothing that sustains the EU launch rhetoric that cast the euro as a rival to the dollar. They regard the economic policies of the euro-zone countries as either ill-defined or in contradiction to the more successful approach of the United States, and they consider the short-term policies of the euro zone likely to turn on party politics - as exemplified by its finance ministers' decision not to penalize Italy for failing in its budgetary obligations. In addition, there have been few signs of decisiveness coming from the European Central Bank strong enough to suggest to currency-market traders that they might want to hedge their bets. When Wim Duisenberg, the bank's president, said Wednesday that the euro had great potential for appreciation, the reaction from Chris Iggo, chief economist at Barclays Capital in London, quoted by Bloomberg News, was, ''Parity, here we come.'' He said the ECB could not raise rates to defend the currency and that intervention was ''not likely to be that successful,'' and he called the euro's economic background weak and its policy environment ''lacking in credibility.'' As a measure of how far Europe's politics seemed to be from the reality of creating basic change in the continental countries' economic life, the summit meeting in Cologne has been virtually ignored by the markets, with the employment pact it was scheduled to produce being described as a statement of good intentions. This pact was expected to bring a ''macroeconomic dialogue'' to life as part of the EU's strategy. But on the national level, in Germany, for example, discussions involving an Alliance for Work have produced no recommendations, and the government of Chancellor Gerhard Schroeder has not come up with reform plans for the pension, health or tax systems. To the extent that he has won no economic battles at home and has watched German growth projections for the year sink to about 1.5 percent, Mr. Schroeder is exercising somewhat limited credit when he says that the euro is a strong currency. His chief adviser for international economics, Klaus Gretschmann, has suggested that there are limits to this view, commenting on Wednesday that as long as the euro stayed above $1.03, there was no ''cause for concern.' In France, whose economy has fared better than Germany's after a burst of consumer spending last year, there is the 35-hour work week but nothing in the view of business and many economists that points to the overhaul of the country's statist habits and vast public sector. But since no one in the market has ventured to suggest that Europe is trying to talk down the euro, the French discomfort with the euro's decline is real. After saying in January that the currency's initial strength against the dollar was not significant because the size of Europe's dollar-denominated trade had diminished, the Finance Ministry has now argued that the decline of the euro ''accompanying the weaker remuneration of European investments'' improves the euro zone's competitiveness and favors its exports. Mr. Duisenberg has not been able to steer clear of contradictions either. His governing council insists that the euro's problem is a short-term development, but the remedies he suggests are not quick fixes, and they acknowledge instead the deeper problems seized upon by the markets. In saying that governments must take ''urgently needed'' structural reform measures, Mr. Duisenberg was clearly talking about arduous decisions and applying political efforts beyond the reach of his policy levers. If the euro's problem is in fact structural and political in significant measure, then the currency's recovery may be a long-term matter. The dollar's turnaround in the early 1980s depended on the United States getting a grip on inflation, a lessening interest-rate gap and two external developments - an oil shock and the Soviet invasion of Afghanistan - that affected Germany more than America. International Herald Tribune, June 4, 1999 DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! 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