[Evms-devel] Here is Your August Mike Gasior Newsletter

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August 2005 Newsletter

Issue Eight, Volume Six

GREETINGS FROM SEPTEMBER 2010

By Mike Gasior

As another summer draws to a close, and children begin their transition
back to school, the year 2010 has already been a busy year even though
four months remain till the New Year.

Despite the promises of many world leaders, individuals and businesses
around the globe continue to struggle with the continuous shortage of oil.
 Although auto manufacturers are finally beginning to respond with more
fuel-efficient cars, the other transportation industries are still stuck
with older, less desirable trucks, trains and airplanes.  Americans
haven't seen gasoline at the pump under $5.00 for almost two years now,
and many people in Europe are paying nearly $10 USD for a gallon of
petrol.  I was just in Bermuda where I saw a pump price of $4.87 USD per
liter.  The result of the chronic shortage of oil has been a burden shared
by every industrialized country, but it has been the developing nations
that have been the hardest hit.

President Clinton had promised she would move the United States
aggressively toward alternative and renewable energy sources while
campaigning in 2008, but now, after being in office nearly 20 months she
is finding it a daunting task.  Her predecessor had proposed more nuclear
power plants and oil refineries, but it remains a fact that 1976 is still
the year America last saw a brand-new oil refinery.  While the majority of
Americans are in favor of anything that would help reduce the simmering
energy crisis, no one seems to want one of these facilities built in their
backyard.

The competition for imported oil has also intensified the growing tension
between the United States and its largest trading partner, China.  The
President has already sent Secretary of State Bill Clinton to Beijing on
two occasions to try to keep the world's two biggest oil importers on
speaking terms.

It has also been a challenge for the United States and Europe to cope with
the economic challenge given the continued threat of fanatic terrorism. 
England, Germany and Spain have been suffering nearly annual attacks,
although nothing of the scale of the crude nuclear device that detonated
in New York City just days after Hillary Clinton was sworn into office. 
It was fortunate that the device was only a "dirty bomb", which killed
just under 200 people, but the resulting radioactive contamination that
was scattered over half a square mile cost billions to clean up and
continues still in September of 2010.  Luckily, the response to the attack
was immediate and efficient thanks to vast improvements to Homeland
Security and FEMA after the debacle and embarrassment of Hurricane Katrina
in 2005.

President Clinton has recently promised that the final 10,000 troops
stationed in Iraq should be able to be withdrawn no later that 2012,
although the United States should be prepared to have at least a minor
presence there for the foreseeable future.  Although there is still some
insurgent activity and bickering between religious factions, the democracy
in Iraq continues to hold on and evolve, but is by no means a Jeffersonian
model.

Another initiative of President Clinton, where she is encountering various
pockets of resistance, is the rollout of the new "National Identification
Smart Card".  While this technology has already been implemented in
several smaller countries, Mrs. Clinton feels strongly that the United
States should be a leader in advancing any technology, which will make it
easier to do everything from slow down illegal immigration to making
identity theft effectively impossible.  Barely larger than a credit card,
this "Smart Card" contains a microprocessor that carries a digital photo
of the person, Social Security number, a retinal scan and even their DNA
coding.  Even more impressive is its capacity to also carry literally
every other piece of data that a person would ever need access to,
including all credit card numbers, bank information, medical records,
digital cash, passport, drivers license and more.  And if the card is
presented by anyone other than the person belonging to it, all the data
contained on it is instantly erased, while a new one is generated for the
legitimate owner.  It would literally be the only thing a person would
ever have to carry with them.  Of course the prospect of such a powerful
informational tool has troubled many privacy advocates and for others
smacks of an "Orwellian", big brother society.

All things considered, the U.S. and other major world economies are doing
fairly well, but are by no means robust.  Since so many of the negative
economic factors that exist are global problems, there is no shining star
for money to flow to, and it seems we continue to draw closer to a true
"world economy".

The U.S. markets have begun inching back upward after the implosion of its
residential real estate market during 2006 and 2007, and the subsequent
stock market crash in 2007.  With the Dow back above 10,000 as of August
31st, 2010, stocks have now rallied nearly 38% since the lows of January
2008.  The Asian markets, lead by Japan and Hong Kong, have been the most
rewarding for the past few years and the major European stock markets have
fared worse than the U.S.

One fact that continues to baffle and befuddle economists is the
continuous low level of interest rates in most of the industrial
countries.  While it is true that rates did begin a slow climb beginning
in 2005 and throughout most of 2006, the increase was relatively minor by
historic terms.  Since 2007, rates have crept downward, and the end of
2010 should show them near 45 year lows.  With the various pockets of
considerable inflation evident in the economy, the conventional wisdom
would be pressure on rates to go up.  The only plausible explanation is
vast sums of money around the world looking for a safe port in the storm,
and the bond market has become that port.

Although the commercial real estate market followed residential properties
downward, the damage was much less extensive and the recovery is nearly
complete already.  The same cannot be said for homeowners across the
country who are still waiting for property values to begin approaching
their 2005 highs.

Technology continues to dramatically alter the daily life of most people
for better and for worse.  On a bright note, the era of affordable and
readily assessable HDTV (high definition television) is finally upon us
and programmers are responding with an extensive array of things to watch.
 There is also an increasing number or virtual reality technologies, which
are greatly enhancing the home theater and gaming experiences.

One of the coolest products to be rolled out in years is the first "wrist
watch" cellular telephone.  Those of us old enough to remember the Dick
Tracy radio wrist watches can't help but wonder why it took so long, but
the age of true miniaturization of electronics is here.  The more
traditional palm-sized cell phone now features not just a digital camera,
but also a full-fledged computer processor, video camera, high-speed
Internet capability, personal organizer and calendar and enough storage
for over 1,000 MP3 music files.

The downside to this "always connected" world has been a slowly increasing
workweek for so many workers around the world.  Many thought the
information revolution would bring the advent of a utopian 15-hour
workweek, but many surveys in the U.S., Europe and Asia vividly show
exactly the opposite.  Workers at all levels of companies are finding
themselves working not only in their offices, but in their cars and homes
as well.  Worst off have been managers, and the more senior the manager,
the longer the hours spent focusing on the job.  With it possible to be
connected to email and phone literally 24/7 people now find it
increasingly difficult to actually be "away".

Improvements in healthcare, drugs and nutrition continue to expand the
lifespan of humans in 2010 with seemingly one major breakthrough every
year.  Prior to the year 2000, young people outnumbered old people in the
world's population.  In 2010 old people now outnumber younger people and
that trend is one that should continue now for many decades.  One of the
most fascinating is the looming introduction of "nanomachines".  These
microscopic machines are so tiny that they are measured by how many atoms
wide they are instead of millimeters.  Producers of these new
"nanomachines" promise they will soon have versions that can be injected
into the human body and will hunt down and kill cancer cells, while
leaving healthy cells alone.

The world of sports is once again focusing on Tiger Woods, and his quest
to surpass Jack Nicklaus as the holder of the most career Major
Championship titles.  Having won his sixth Masters this year, as well as
the U.S. Open in 2010, Tiger is now only two behind Nicklaus with 16
Majors.  With Tiger turning 35 years old this December all eyes will be on
the 2011 season to see if he can match or surpass the record next year.

In summary, heading into the autumn and winter of 2010, while there are
plenty of clouds on the horizon, the view of many people is one of hope
and optimism about the future.  Perhaps it is all the shared problems and
improvements that have made the world a smaller, more unified and more
peaceful place.

---------------------------------------------------------------

BACK TO 2005

UPCOMING HEDGE FUND PROGRAMS IN CAYMAN AND NEW YORK

I want to just take a minute to remind you that I will be presenting an
extremely timely and important session in both New York and in Grand
Cayman during October.  Our "Providing Services to the Hedge Fund
Industry" seminar has been very popular offshore and we are excited to be
offering it in the U.S. for the first time.

You can view a complete course description and register for either class
by visiting the following links.

New York Session:

http://r.vresp.com/?AmericanFinancialSer/94aa79f485/395968/97d394d6a8/b16db10

Grand Cayman Session:

http://r.vresp.com/?AmericanFinancialSer/fc6a197196/395968/97d394d6a8/b16db10

I look forward to seeing you at one of these programs.

THE NEW VIDEO CLIP IS UP

Many people have been waiting for me to get to the topic of derivatives,
and finally this is the subject for my new commentary.  I focus this month
on defining what makes something a derivative, what sorts of products are
available, and most importantly, what hedging is.

You can view both high-speed and low-speed versions of the clip by
visiting the homepage and looking for the TV set on the right hand side of
the page.  Also remember, you can download the clip for future viewing by
right-clicking the icon and choosing "Save Target As..".

The link for the homepage is:

http://r.vresp.com/?AmericanFinancialSer/8a0a56b834/395968/97d394d6a8/b16db10

A GREAT RADIO SHOW WITH ROGER LOWENSTEIN

I've really been enjoying doing my radio show on the VoiceAmerica network
every Wednesday night more than I expected to.  There have been some
terrific guests who have appeared and it has been my personal pleasure to
speak to all of them.

Two weeks ago I had on former Wall Street Journal columnist and author of
several books, Roger Lowenstein.  His book, "When Genius Failed",
chronicled the rise and fall of the hedge fund, Long Term Capital
Management, and is a book I strongly recommend to anyone interested in the
capital markets.  I consider Roger one of the best financial journalists of
his generation and you will really enjoy him telling some of the biggest
stories of the past 20 years.  You can click on the following link to
either listen to the show, or right-click on it to save the show for
later.  The link for this particular show is:

http://r.vresp.com/?AmericanFinancialSer/bb67e4a218/395968/97d394d6a8/b16db10

The archive page that contains links for all past video clips and radio
shows is up-to-date and you can view any commentary or listen to any show
by visiting the following page:

http://r.vresp.com/?AmericanFinancialSer/662299519e/395968/97d394d6a8/b16db10

FINALLY SOME USEFUL AND ACCURATE RESEARCH

According to a recent survey, men say the first thing they notice about a
woman is her eyes, and women say the first thing they notice about men is
they're a bunch of liars.

BRAINTEASER

This month finds me in a musical mood again and it was nice to receive so
many compliments about my question last month, which managed to combine
music and finance.  With the end of the summer season, you have plenty of
work to do already so I decided to make your question a fun one, but also
a witty musical history fact that might make you appear actually witty and
interesting at your next happy hour.

This month's question is:

"Who is the only musical artist who can make the claim that both the
Beatles and Rolling Stones have served as their opening act and that Jimi
Hendrix was their guitar player?"

At least try to figure out or research the answer before turning into a
weasel and clicking the following link for the answer:

http://r.vresp.com/?AmericanFinancialSer/e425d1326e/395968/97d394d6a8/b16db10

And the answer to LAST month's brainteaser is:
"In 1997 David Bowie issued asset-backed securities backed by the
royalties of his music catalog. They paid 7.9%, were rate "A" by Moody's
and were nicknames the "Bowie Bonds" 

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