Financial news from around the World

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PALESTINE: WAR ON TERROR OR A PRETEXT FOR BANK ROBBERY?

Israeli soldiers raided four banks in the West Bank city of Ramallah, and seized $9,000,000.00 as they emptied 400 accounts. Many of the accounts were individual accounts and charities. Palestinian Cabinet Minister Saeb Erekat said he was worried that the action could cause a run on banks in the area. "This is piracy aimed at undermining the people's confidence in the Palestinian banking system." Erekat said.

As Israel's troops curfewed downtown Ramallah and sealed off banks for the day, Israeli Defense Minister Shaul Mofax said the raid was based on "intelligence" and was aimed at those sympathetic to "terrorist" actions. Palestinian Prime minister Ahmed Qureia said: "It is like mafia except it wasn't the mafia, it was Israel's soldiers.

The raid targeted branches of the Arab Bank, the Cairo Amman Bank and the Palestine International Bank. Israel's Mofax ordered the seized money to be used to pay for humanitarian projects".

Economists and banking leaders from throughout the world are pondering the implications for this type of action in the name of "war on terror" and what it could mean to fragile banking systems throughout the world. Some believe that it could encourage people to keep funds out of organized financial institutions, and this could harm banking systems in dozens of nations, and even impact international banking relationships.

MONGOLIA: ASIAN DEVELOPMENT BANK GIVES GRANT TO MONGOLIA

The Asian Development Bank (ADB) announced from its Manila office, that it has approved a $500,000.00 technical assistance grant to help Mongolia's non-bank financial sector. The grant, financed by Japan, will help promote and develop non-bank financial institutions. The program is intended to strengthen governance, and regulatory standards. Mongolia has over 130 non-bank financial institutions. These loan companies do not take deposits, and lend smaller, and consumer loans to the public, often at rates from 24% to 38% annually. The non-bank sector has been one of the fastest growing sectors of the economy in Mongolia, filling a need for loans that larger commercial banks often avoid. Loss ratios have been low and success ratios high among well managed non-bank financial institutions. Some bank managers are increasingly considering the alternative of conversion of banks into non-bank financial institutions because of earnings implications and less stringent regulatory standards. Of course, lower regulatory standards can lead to losses through incompetence, poor practices, or unethical practices. 

INDIA: BIO-TECHNOLOGY, IT BOOM and POLITICS OF THE INTERNET

As Internet Technology continues to expand and India's young generation of highly educated technical oriented young people "shows its stuff" more attention is focusing on Bio-Technology. U.S. and European IT firms have increasingly outsourcing work from India's army of English speaking experts. Costs for Bio-Technology research are some 60% lower than in Europe or the USA. Many experts believe that the integration of computer technology with biological systems is the next great technical advance for mankind. This could be a huge emerging industry for India.

The power of the internet has not been lost on politicians. Following the example of U.S. Democratic Presidential candidate, Howard Dean, who raised over $50,000,000.00 on the internet, India's ruling party, the BJP has announced that it would aggressively use the internet, and cell phone promotions to promote its candidates. More than 10,000,000 Indians use the Internet, and the BJP's Prime Minister Atal Behari Vajpayee wants to "reach out and touch them". "It is expected that using IT, cell phone technology, and the internet, the e-campaign will reach 120 to 150 million people," said Pramod Mahajan, a BJP general secretary in charge of the campaign. This is quiet an advance from loudspeakers on cars and parades with drums beating in the streets.

U.S.A.: BUDGET PROJECTIONS WORSE THAN ADMITTED BY BUSH ADMINISTRATION

The non-partisan Congressional Budget Office disclosed that President Bushes budget would produce deficits totaling $2.75 trillion over the next decade, some $737 BILLION worse than the administration had admitted. U.S. Deficits are projected as follows:

• 2003 $375 billion
• 2004 $478 billion
• 2005 $356 billion
• 2006 $270 billion
• 2007 $242 billion
• 2008 $252 billion
• 2009 $258 billion
• 2010 $247 billion

Federal Reserve Chairman Alan Greenspan indicated that the deficits were such that he recommended cuts in Social Security benefits to ease cascading red ink. Democrats and Republicans alike have expressed alarm at the impact that Bush's tax cuts and increased spending are having. Don Nickles, R-Okla., the Senate Budget Committee Chairman is asking Bush to balance the budget and turn around this fiasco.

Democratic Senators, John Kerry of Massachusetts and John Edwards of North Carolina have called for a roll back of "tax cuts for the wealthiest Americans" to stop the bleeding. In the meantime, the U.S. is still not producing new jobs. Estimates indicate that 2.5 to 3 million Americans have lost jobs in the past 3 years. While large corporations seem to be showing some recovery in profits, few new jobs are being created.

Lehman Brothers economist, Drew Maus, commented on the U.S. economy saying: "It's all about job growth. That creates income and gets people buying things. How will equity markets react if there is no job growth in America? It's one of those things we are trying to figure out."