Dear ATCA Colleagues

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

We are grateful to:

. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA, and The ATCA Research & Analysis Wing (RAW), based in Canary Wharf, London, UK for "Central Banks' Intervention and Europa;"
. Hamid Hakimzadeh, Hedge Fund Specialist, based in Buckinghamshire, England, UK, for "The Physics of Humpty Dumpty;" and
. Nigel Reed, Senior Analyst, Financial Markets, based in Cornwall, England, UK, for "China, Japan & US T-Bonds."

Dear DK and Colleagues

Re: Central Banks' Intervention & Europa

At the Jackson Hole, Wyoming, gathering of the world's central bankers, Federal Reserve Chairman Bernanke made a long, balanced presentation of reasons to remain cautious and reasons which might require action. His presentation was followed by Fed Governor Mishkin's, his long-time friend and close Fed associate, who asserted that the US central bank might have to cut rates even more aggressively than conventional monetary thinking would suggest, and even before hard evidence had become available to justify such action. There can be little doubt that Messrs Bernanke and Mishkin were trying to demonstrate by their parallel presentations that there was a wide range of possible outcomes in the next few weeks. As for the gathered participants, many of the distinguished speakers and attendees painted a dark picture of gloom about the US economy and about the negative consequences of a US slowdown for the global economy.

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Best wishes

Harald Malmgren and The ATCA Research & Analysis Wing

Dr Harald Malmgren is Chief Executive of Malmgren Global and also currently the Chairman of the Cordell Hull Institute in Washington, DC, a private, not-for-profit "think tank" which he co-founded with Lawrence Eagleburger, former US Secretary of State. He is an internationally recognised expert on world trade and investment flows who has worked for four US Presidents. His extensive personal global network among governments, central banks, financial institutions, and corporations provides a highly informed basis for his assessments of global markets. At Yale University, he was a Scholar of the House and Research Assistant to Nobel Laureate Thomas Schelling, graduating BA summa cum laude in 1957. At Oxford University, he studied under Nobel Laureate Sir John Hicks, and wrote several widely referenced scholarly articles while earning a DPhil in Economics in 1961. His theoretical works on information theory and business organization have continued to be cited by academics over the last 45 years. After Oxford, he began his academic career in the Galen Stone Chair in Mathematical Economics at Cornell University.

Dr Malmgren commenced his career in government service under President John F Kennedy, working with the Pentagon in revamping the Defense Department's military and procurement strategies. When President Lyndon B Johnson took office, Dr Malmgren was asked to join the newly organised office of the US Trade Representative in the President's staff, where he had broad negotiating responsibility as the first Assistant US Trade Representative. He left government service in 1969, to direct research at the Overseas Development Council, and to act as trade adviser to the US Senate Finance Committee. At that time, he authored International Economic Peacekeeping, which many trade experts believe provided the blueprint for global trade liberalisation in the Tokyo Round of the 1970s and the Uruguay Round of the 1980s. In 1971-72 he also served as principal adviser to the OECD Wise Men's Group on opening world markets, under the chairmanship of Jean Rey, and he served as a senior adviser to President Richard M Nixon on foreign economic policies. President Nixon then appointed him to be the principal Deputy US Trade Representative, with the rank of Ambassador. In this role he served Presidents Nixon and Ford as the American government's chief trade negotiator in dealing with all nations. While in USTR, he became known in Congress as the father of "fast track" trade negotiating authority, which he first introduced into the historically innovative Trade Act of 1974. He was the first official of any government to call for global negotiations on liberalisation of financial services, and he was the first US official to call for the establishment of an Asian-Pacific Economic Cooperation arrangement, known in more recent years as APEC.

In 1975 Dr Malmgren left government service, and was appointed Woodrow Wilson Fellow at the Smithsonian Institution. From the late 1970s he managed an international consulting business, providing advice to many corporations, banks, investment banks, and asset management institutions, as well as to Finance Ministers and Prime Ministers of many governments on financial markets, trade, and currencies. He has also been an adviser to subsequent US Presidents, as well as to a number of prominent American politicians of both parties. Over the years, he has continued writing many publications both in economic theory and in public policy and markets.

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Dear DK and Colleagues

Re: The Physics of Humpty Dumpty

Paul Krugman has described the current turmoil as a "non-bank bank run." Given the systematic shift of liabilities from banks to non-banks, that is both accurate and unsurprising. Surprising is the surprise of authorities, institutions and investors, in that order. After all, it was not a secret that derivatives and securitised debt comprise some 90 percent of global liquidity, and competent commentators such as the mi2g Intelligence Unit and Independent Strategy elaborated the risks well in advance. Given the complex subject matter, their arguments were unusually uncomplicated and therefore accessible. Yet, the party went on and the hangover inevitable.

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Respectfully

Hamid Hakimzadeh

Hamid Hakimzadeh is specialised in Hedge Funds. He is a UK citizen of Persian origin, who grew up in Germany and Switzerland, and subsequently studied mathematics and philosophy at the Massachusetts Institute of Technology. His first career consisted of senior executive positions in his family's engineering, manufacturing and service businesses, one of Iran's prominent conglomerates known as the Yazdbaf-Philver Group. Subsequent to the Iranian revolution in 1979, he established and managed several private investment partnerships, including the Navigator Fund and Summit Capital hedge funds. Since the conclusion of his active investment management career, he focuses on global asset allocation models, with particular emphasis on the identification of under-performing asset classes and the reflection of probable outcomes in partially diversified portfolios.

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Dear DK and Colleagues

Re: China, Japan and T-Bonds

It seems that the recent turmoil in the US sub-prime mortgage market followed and was probably caused by a sharp rise in the yield on US Treasury bonds a few weeks beforehand. Indeed the Financial Times reported on June 7th 2007 -- the day the T-bond yields jumped -- that the 10-year Treasury is widely used to hedge risk associated with fixed income securities such as mortgages.

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Regards

Nigel Reed

Nigel Reed is a Senior Analyst of Financial Markets. He graduated in economics from Leeds University, England, and qualified as a chartered accountant with Price Waterhouse (now PwC). He gained industrial experience with Rowntree Mackintosh (now Nestle' Rowntree) and qualified as an investment analyst with the Scottish Provident Institution's Head Office in Edinburgh. After a career in accountancy, industry, fund management and leisure sector analysis in the stock broking and investment banking environment with Kitcat & Aitken (Royal Bank of Canada) and BNP Paribas -- Paris and London -- he now lives in Cornwall, England. His activities include economics, current affairs, photography, writing books for children, sailing and skiing in France in the winter.

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