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To: Jim Willie CB who wrote (5870)9/6/2002 12:49:42 PM
From: Softechie  Respond to of 89467
 
you're right! everyone has a price tag...



To: Jim Willie CB who wrote (5870)9/6/2002 1:11:38 PM
From: Sully-  Read Replies (3) | Respond to of 89467
 
U.S. banks' derivatives top $50 trillion

By Greg Morcroft, CBS.MarketWatch.com
Last Update: 1:01 PM ET Sept. 6, 2002


NEW YORK (CBS.MW) -- U.S. banks and their customers continued to pour money into derivatives in the second quarter, as the total value of the specialized contracts passed $50 trillion.

Derivative investments generally rise during times of economic uncertainty, and the recent scandals, concerns about a possible war with Iraq and volatile share prices all inspired investors to hedge risk through derivatives.

In a report issued by the U.S. comptroller of the currency, the total amount of derivatives in U.S. insured commercial bank portfolios rose by $3.8 trillion in the second quarter, to $50.1 trillion. See the OCC report.

Bank earnings from derivatives rose to $3.4 billion in the second quarter, a 7.1 percent jump from the first quarter, and a highly unusual move according to the OCC's Michael Brosnan.

"This is the first time we've been looking at the data that second-quarter revenues increased from the first quarter," Brosnan said, adding that the large rise in total value of derivative positions caused the jump.

The top seven banks accounted for 85 percent of total trading revenue, compared to 84 percent in the first quarter.

During the second quarter of 2002, banks charged off $25 million from derivatives, or 0.005 percent of the total credit exposure from derivative contracts, the report said. That compares to banks' second-quarter charge-offs totaling 0.82 percent of loans.

Seven commercial banks account for about 96 percent of the total amount of derivatives, with more than 99 percent held by the top 25 banks, the report said.

The banks with the largest derivative positions were J.P. Morgan (JPM: news, chart, profile), with $25.9 trillion, up from $23.5 trillion in the first quarter; Bank of America (BAC: news, chart, profile), with $10.3 trillion, compared to $9.8 trillion last quarter; and Citigroup's (C: news, chart, profile) Citibank, with $7.4 trillion, versus $6.7 trillion in the first quarter.

For all banks, the fair value of contracts past due 30 days or more totaled $31 million, or .006 percent of total credit exposure from derivatives contracts, the report said.

Interest rate contracts increased by $3.4 trillion, to $42.7 trillion during the second quarter. Foreign exchange contracts rose by $183 billion to $5.8 trillion, excluding spot foreign exchange contracts, which increased by $332 billion to $504 billion, the report said.

Equity, commodity and other contracts jumped $85 billion, to $1.1 trillion, and credit derivatives increased by $54 billion, to $492 billion.

Interest rate contracts accounted for 85 percent of the total amount of derivative positions, foreign exchange made up another 12 percent and the balance comprised equity, commodity and credit derivatives.

The number of commercial banks holding derivatives increased by 12, to 391, the OCC said.

Greg Morcroft is New York news editor of CBS.MarketWatch.com.

marketwatch.com



To: Jim Willie CB who wrote (5870)9/6/2002 2:25:41 PM
From: abuelita  Read Replies (1) | Respond to of 89467
 
jim

i've been watching goldcorp inexorably
creep upwards for the last three weeks

what do your charts say? its due for a
pull back of sorts, yes/no?

rose



To: Jim Willie CB who wrote (5870)9/7/2002 11:39:18 PM
From: pogbull  Read Replies (1) | Respond to of 89467
 
John Mauldin Article from Sept 6th, Worth Reading.

2000wave.com

Didn't dare to past it due to the warning at the bottom.



To: Jim Willie CB who wrote (5870)9/8/2002 12:09:39 AM
From: pogbull  Read Replies (1) | Respond to of 89467
 
Global Reverberations Stephen Roach

Sept 06, 2002

morganstanley.com



To: Jim Willie CB who wrote (5870)9/9/2002 8:46:08 AM
From: stockman_scott  Respond to of 89467
 
ONE YEAR AFTER

The hunt for Al Qaeda

Probe highlights weaknesses in US intelligence gathering

By Indira A.R. Lakshmanan and John Donnelly
Boston Globe Staff
9/9/2002

ABUL, Afghanistan - US intelligence reported a tantalizing discovery a few weeks ago: Many vehicles and armed men had converged on the remote eastern Afghanistan village of Narizah. Perhaps, officials theorized, they were Al Qaeda troops. Perhaps, considering the swarm of activity, even terror mastermind Osama bin Laden or a top operative was there.

The Pentagon decided to go in big. Instead of inserting a few CIA officers or Special Forces troops, officials launched Operation Mountain Sweep. Helicopters descended. Two thousand troops fanned out.

Where was Al Qaeda? Not in Narizah. Not then, anyway. Instead of pouncing on bin Laden, the soldiers found a line of old men, local elders, waiting to greet them with offers of sweetened tea. Someone, maybe the Americans themselves, had blown the troops' cover.

Back in Washington, several former CIA clandestine service officers fumed. ''The Americans are a huge lumbering elephant that broadcasts every move well in advance,'' said Robert David Steele, a former CIA officer who maintains close ties with those on the inside. ''The operation in Afghanistan was blown by loose lips over open circuits. The US military and ... its flag officers are so arrogant that they don't believe bin Laden has an intelligence service. You have to assume bin Laden has very sophisticated intelligence.''

Now, a full year after the Sept. 11 attacks, one of the most persistent questions in capitals around the world is why US intelligence and its military operations haven't been more successful not just in capturing bin Laden but in breaking open Al Qaeda terror cells. If bin Laden is dead - as some senior US military officials believe - the military and intelligence communities will be able to claim a significant victory. But that still doesn't obscure the gradual disintegration of the US clandestine service during the 1980s and 1990s. Current and former intelligence officers believe it will take years to build it back.

In hindsight, the weaknesses seem hard to believe.

Before Sept. 11, CIA officers made only quarterly visits to northern Afghanistan to meet with anti-Taliban forces. And once there, they talked more about controlling the heroin and opium trade and buying back missiles than about capturing bin Laden, according to the Afghan leaders who took part in the discussions.

Afghanistan, of course, wasn't the only trouble spot. During much of the 1990s, the number of CIA case officers in foreign countries shrank dramatically because of a hiring freeze and attrition. The result is that CIA officers now stationed in some Arab countries do not speak Arabic. Even in Germany today, the CIA does not have case officers who speak German, according to two former intelligence officers - an assertion disputed by the agency.

And in Washington, morale among veterans in the clandestine service has plummeted because few policymakers listen to them; an atmosphere of blame persists that makes many reluctant to take gambles in the field; and the former cowboys who once roamed with a free hand believe that restrictive rules on what they do and to whom they speak severely limit their effectiveness.

''CIA officers are still prisoners of embassies, where your contact with foreigners is very limited,'' said Robert Baer, who left the agency in 1997. ''Since I resigned, I can mix it up with anybody I want. It gives me a certain access I never had with the CIA, where they have to approve every contact. I can go Europe, see some arms dealers. If I asked the CIA to give me a credit card to spend time with Persian arms dealers, they would laugh me out of the place and say the whole idea of James Bond and the whole cowboy thing doesn't exist.''

Frustration is also commonplace for those sitting behind desks around the Washington area analyzing information. In the most prominent example, a Defense Intelligence Agency analyst named Kie Fallis quit on Oct. 12, 2000, immediately upon hearing of the attack on the USS Cole in Yemen, which killed 17 US servicemen. For a week before the attack, Fallis had been trying to convince his bosses that terrorists were about to attack the United States.

Fallis had seen what he considered evidence of an impending strike: Just three weeks before the Cole bombing, bin Laden, in a rare news conference at an undisclosed location in Afghanistan, said that there would be an attack on the United States. Many analysts wonder why the military wasn't already mobilizing offensively against Al Qaeda. US intelligence had known since at least 1998, when US embassies in Kenya and Tanzania were attacked, that bin Laden had called for a holy war against Americans.

Inside CIA headquarters in Langley, Va., there are signs that change is on the way. In the past year, 136,000 people applied for jobs at the CIA, up from 60,000 the year before. In the most recent graduating class of new Directorate of Operations officers - the clandestine officers who will gather human intelligence - 70 percent spoke a second language. In all, new officers spoke 22 different languages, including Asian, Middle Eastern, and Slavic languages. The CIA also says its number of Arabic speakers has tripled in recent years. While the agency would not give a specific number, one official said it was in the ''three digits.'' A second official said it was well under 200.

Yet the bottom line, many experts say, is that United States will remain greatly exposed to terror attacks for a long time ahead because of the errors of the past.

''We are still vulnerable,'' said former senator David Boren of Oklahoma, who is a close friend of CIA director George J. Tenet and who led intelligence reform efforts in the 1980s. ''We need to somehow patch through the next two or three years especially and better coordinate every resource we've got. But we are going to depend a lot on shared intelligence from other friendly intelligence services around the world.''

A US intelligence official agreed.

''The rebuilding of the DO began in earnest back in 1998 - it was first time we were able to hire in eight or nine years,'' the intelligence official said, speaking on condition of anonymity. ''A lot of that talent was lost. A lot of it came back after 9/11, particularly a lot of that Afghan talent came back. But it does take time to train individuals. The agency is working hard at rebuilding, but it does take time.''

Starting from scratch

It is in Afghanistan where the most visible test unfolds. Here, as in several places around the world, US covert officers have started from scratch. Before Sept. 11, top Afghan defense and intelligence officials said in interviews, the CIA had no American undercover officers posted in the northern enclave of Afghanistan under the control of the anti-Taliban Northern Alliance.

After Soviet forces fled Afghanistan in 1989 and a US-supported mujahideen government took control in 1992, the CIA largely withdrew from the country, leaving intelligence gathering mainly to Pakistan, its partner and conduit for supporting the anti-Soviet jihad.

The fatal flaw of relying on Islamabad's intelligence, in the view of the current Afghan government, was that Pakistan sided with a number of unsavory Afghan leaders from the Pashtun ethnic group, which forms an important minority in Pakistan, and that Islamabad believed it could control them. As the Taliban rose to power in 1996, Pakistan supported the movement. That support colored its intelligence reports to the CIA.

Before Sept. 11, most of the contact between the CIA and Northern Alliance intelligence agents consisted of information-sharing over the cultivation of heroin poppies and narcotics trafficking, said General Mohammad Qasim Fahim, Afghanistan's vice president and defense minister. The CIA had also put together a small program to buy back Stinger missiles given to the mujahideen during the Soviet war, Fahim said.

''They didn't really gather intelligence through us; they did it with the Pakistani ISI,'' Fahim said, referring to that country's intelligence agency.

Only after the CIA perceived that the Taliban had ''grown really dangerous and that it was really late'' did agents get involved again, ''maybe one or two years before Sept. 11,'' said Mohammad Arif Sarwari, the Afghan intelligence chief who oversees 30,000 people in his new agency. ''I can tell you frankly,'' he said, ''it's so difficult for them to fill in the gap left by their absence between the jihad and Sept. 11.''

Before and after Sept. 11, those opposing the Taliban were able to intercept encrypted radio communications among bin Laden aides, former Afghan leader Mullah Omar, and Pakistani ISI agents.

''Our information was much deeper than the Americans' was, but they didn't pay attention, and you saw the result,''' said Lieutenant General Atiqullah Barialai, Afghanistan's deputy defense minister. ''Osama bin Laden was way ahead of the whole US government's and security apparatus' imagination.''

The shortcomings persist today, he said, noting, ''Even up to this point, the US has been unable to get a clear photograph of Mullah Omar.''

Sarwari recounted an incident that he says illustrates the weaknesses on the US side. In November, just before the fall of the Taliban, a military convoy carrying Taliban and Al Qaeda leaders fled Kabul, driving north toward Bamiyan. Resistance forces had intelligence operatives inside the convoy who alerted the United States to call in a strike, Sarwari said.

A US pilot, though, withheld fire because he was uncertain it was a military convoy.

''We really laughed at the Americans,'' Sarwari said, shaking his head ruefully. ''We said, `If your technology is that good, then look and see their weapons, or listen to them. Or you should believe our human intelligence.' ''

But should they? US Special Forces and CIA officers also have been accused of trusting intelligence that turned out to be faulty and that resulted in killing civilians, as in the case of a July bombing of a wedding in Uruzgan Province that killed 40 people.

Abdullah Abdullah, Afghanistan's foreign minister, said US intelligence should receive much of the blame for not aggressively seeking bin Laden in the late 1990s, but he conceded that there are now new difficulties in collecting intelligence that did not exist before. He acknowledged that his government does not control all of the country and doesn't know what is happening everywhere.

''Probably within six months, we will be able to bring everything together, and the government will be able to go to the Americans and say, `This is what we know, this is what we want you to do.' We cannot just blame the Americans,'' he said.

Robert P. Finn, US ambassador to Afghanistan, said intelligence gathering will not be easy in Afghanistan for some time. The search for Al Qaeda members was complicated because they consider themselves ''the cowboys of Islam, the ghazis,'' or Islamic holy warriors who go wherever they deem the best fight is, meaning they are always on the move.

Asked why a manhunt that has included hundreds of CIA officers, hundreds of Special Forces team members, and nearly 8,000 US troops couldn't locate bin Laden or Mullah Omar, Finn replied: ''People in America think everything is possible. That's why we're Americans. But that's not always real life. The geography is difficult, there are not always roads, sometimes just trails.''

In addition, another Western diplomat in Kabul added, bin Laden may be long gone from Afghanistan and new terror cells could be anywhere in the world.

''Obviously, the US has much more intelligence about Afghanistan now,'' said the diplomat, who spoke on the condition of anonymity. ''But maybe that's not the problem anymore. Maybe we need more intelligence in Indonesia, Philippines, Chechnya, Yemen.''

A gap in understanding

That may be true, but bin Laden's fate remains a magnet of attention.

''I'm surprised that he has been able to hide for so long,'' said Rahimullah Yusufzai, a Pakistani writer who interviewed bin Laden in late 1998. ''The whole area is full of informers. Modern technology is being used. The Pakistan government is looking for him. The Afghans are looking for him.''

Yusufzai believes the Americans will always have a difficult time making inroads.

''I don't know if the Americans can understand the local mind and local character,'' he said. ''It will take time. The British were here for 100 years, and even then they were not experts. The Americans have been here only briefly, and maybe they have a feeling that money can buy everything.''

The CIA and Defense Department have doled out several million dollars in cash to warlords willing to do their bidding in Afghanistan. In addition, the State Department has offered rewards of up to $25 million for information leading to the capture and arrest of several senior Al Qaeda leaders, including bin Laden.

''I've seen some leads that have potential,'' said a senior State Department official, adding that a few came from Afghans and Pakistanis sent in emails from Pakistan. But the official said no one has received a reward so far.

Amrullah Saleh served as translator between CIA officers and Northern Alliance leader Ahmad Shah Massoud, who was assassinated two days before the Sept. 11 attacks. He noted that for all the talk about the war on terror, hardly anything has been done to hold the masterminds responsible.

''As of today, only two senior Al Qaeda have been arrested or killed - Muhammad Atef and Abu Zubaydah,'' he said. ''Where are the rest? The war on terror should not lose its momentum. The world knows they are concentrated in the tribal areas between Pakistan and Afghanistan, but what are we doing there? Very little.''

Bard E. O'Neill, a professor of national security strategy at the National War College who has studied bin Laden's life, said it is important that the Americans also do not underestimate their opponents. He compared Al Qaeda with the Viet Cong.

''The Viet Cong always knew when we were coming, either because of informers inside the South Vietnamese establishment, or they had their own spies in place, or we made such a racket that you knew something big was in the air,'' said O'Neill, who served as an Air Force intelligence officer during the Vietnam War.

The problems in capturing bin Laden and other Al Qaeda leaders, he said, have to do with terrain, large geographical areas, and understanding local cultures.

''That accents the importance of human intelligence, doesn't it?'' O'Neill said. ''And we're playing a catchup game.''

Former and current CIA officers said in interviews that it takes six to eight years to properly train a new clandestine officer. That highlights the high-risk time gap the United States faces until the new recruits make a difference.

A former clandestine service officer said the CIA station chief job in Riyadh, Saudi Arabia, recently opened. ''If I took any assignment in the CIA today, it would be Riyadh,'' the former officer said. ''You could put me in a princess house in Riyadh, I could see how the Saudis interact, watch the US-Saudi relationship, it would be fascinating.''

One person applied, the ex-officer said.

Yet, like the aftermath of Pearl Harbor, which eventually led to the creation of the CIA, the weeks and months following Sept. 11 have presented great opportunities for change. For the first time in decades, there is a chance for a top-to-bottom shakeup in the work of the 14 different agencies that collect and analyze raw intelligence. Suddenly, there is money - billions of dollars in an emergency supplement bill for homeland defense. Overnight, there is political will to consider reform, despite the current logjam in Congress, where an astounding 88 committees or subcommittees claim to oversee parts of the effort to create a new Homeland Security Office.

''As far as our collective assets go, we are second to none, and that has been buttressed by unprecedented cooperation from international intelligence services,'' said Senator Pat Roberts of Kansas, who serves on the Select Intelligence Committee. ''I think everybody pretty well got it that from now on, there will be far better sharing than we had before.''

Some on the inside are calling for complete overhauls in the way things work. CIA analyst Carmen A. Medina, in an article in a classified CIA publication, for instance, wrote that the current model of analyzing information had failed and that experts should write ''things that are uncomfortable for the Pentagon or the State Department.''

Without taking risks, both inside Langley and in some of the world's most hostile neighborhoods for Americans, Medina and others believe, the shakeup from the Sept. 11 attacks will have little lasting effect.
___________________________________________________

Indira A. R. Lakshmanan reported from Afghanistan, John Donnelly from Washington. Lakshmanan can be reached at indira@netvigator.com, Donnelly at donnelly@globe.com.

This story ran on page A1 of the Boston Globe on 9/9/2002.

© Copyright 2002 Globe Newspaper Company.

boston.com