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Asymmetric Risk -- Insurance Lessons for Sub-Prime Contagion

London, UK - 24 August 2007, 08:36 GMT

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:

* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Asymmetric Knowledge Risk -- Insurance Lessons for Sub-Prime Contagion;"
* Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "High Credit Ratings and Breakdown of Trust;" and
* John Pickering, Vice-Chairman, Labour Finance and Industry Group, based in London and Tunbridge Wells, UK, for "Role of Auditors;"

in response to the ATCA QUERY: Role of Credit Rating Agencies.

Dear DK and Colleagues

Re: Asymmetric Knowledge Risk -- Insurance Lessons for Sub-Prime Contagion


In the present global subprime credit crisis, we have entered an era in financial markets when knowledge -- trustworthy information -- becomes much more valuable than money or prevailing monetary conditions. Consider two interrelated questions:

[CONTINUES]
[ATCA Membership]

Best wishes


ATCA Research & Analysis Wing
____________________________________________________________________________

Anthony Whitehouse, based in Switzerland, has substantial experience in trust creation and administration and the management of offshore structures, especially as they relate to the administration of intellectual property. In addition, he has expertise in the business management of high net worth individuals in the entertainment sector. He has recently given up business to enter into the public ministry of his Church. Anthony entered the trust business as a senior manager with the Lausanne-based branch of a Bahamas Trust company in 1978 before leaving to join a major international bank in 1988 as manager of Fiduciary Services Operations in Geneva. Together with Richard Bittiner he set up Bittiner Whitehouse, an accounting and trust administration practice, in 1992. Bittiner Whitehouse was acquired by the Maitland Group in 2003. Anthony qualified as a Chartered Accountant in England in 1968. He obtained his MBA from IMD in 1973 and was one of the founding members of STEP in the French-speaking area of Switzerland. He speaks English and French. He writes:

Dear DK and Colleagues

Re: High Credit Ratings and Breakdown of Trust

Whether we can rely on rating agencies is symptomatic of a deeper issue of what levels of trust are available in all walks of life. With regard to the issue of whether we can trust rating agencies I must recount a short anecdote. A professor from my own business school, in a conference I attended, advised that one of the issues in the Enron case, which assisted those of its officers engaged in fraud was that one rating agency gave triple AAA ratings to some of its off balance sheet vehicles helping them finance some of the scams they thought up. And the reason? 25 vehicles at USD 25,000 a pop involves a great deal of income for a rating agency. And there were that number of vehicles involved.

[CONTINUES] [ATCA Membership]

Sincerely


Anthony Whitehouse
____________________________________________________________________________

John Pickering is the Vice-Chairman of the Labour Finance and Industry Group (LFIG) as well as being an industrialist. LFIG is a UK Labour loyal think tank that draws on the experience of senior managers, providing a practical filter for legislation. He is a graduate of Cambridge University in physics and engineering, Cranfield Business School as well a being a Fellow of the Institution of Electrical Engineers. He has gained worldwide experience in general management in the power field and spent a number of years managing power construction projects in Nigeria, Sudan and Iran financed by the World Bank. Since then he has been in telecommunications joining BT plc at privatisation to become their first head of commercial management. In more recent times he has been a director investor in a number of global enterprises. He writes:

Dear DK and Colleagues

Re: Role of Auditors


I would like to suggest we also raise the question of the role of auditors at Banks, in particular, in relation to recent financial indiscipline. Auditors have a duty to highlight to company directors any weaknesses in management control systems.

[CONTINUES] [ATCA Membership]

Yours sincerely


John Pickering

[ENDS]

We are grateful to:


* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Asymmetric Knowledge Risk and Market Deadlock;"
* Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "High Credit Ratings and Breakdown of Trust;"
* John Pickering, Vice-Chairman, Labour Finance and Industry Group, based in London and Tunbridge Wells, UK, for "Role of Auditors;"
* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "ATCA QUERY: Role of Credit Rating Agencies;"
. Peter Tasker, Founding Partner, Arcus Investment, based in Tokyo, Japan, for "Resilience of Corporate Profits & Sub-Prime Fiasco -- Global View from Japan;"
. Daniel Morler, Head of Middle East, LGT Private Bank, based in Vaduz, Liechtenstein, for "Human Factor, Information Lag, Geo-Politics and Central Banks;"

. Justin Urquhart Stewart, Director, Seven Investment Management, London, UK, for "Pride Before the Fall -- Those Who Don't Know that they Don't Know;"
. Martin Wolf, Associate Editor & Chief Economics Commentator, Financial Times, London, UK, for "To Cut or Not to Cut: Federal Reserve must Prolong the Party;"
. The Hon Al McDonald, Chairman and CEO, Avenir Group, from Michigan, USA, for "Balancing The Role of Management in Extreme Financial Turbulence."
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Subprime Crisis Spreads Across Regions and Financial Sectors;"
* Hervé de Carmoy, European Vice-Chairman, Trilateral Commission, based in Paris, France, for "Role of Large Financial Institutions in Fuelling Crisis;"
* Dr Jim Walker, Chief Economist, CLSA, based in Hong Kong for "China Chaos and Subprime Butterfly;"
. Ashutosh Sheshabalaya, CEO, India-Advisory, based in Brussels, EU, and Bassilly, Belgium, for "India turns History Upside Down;"
. John Elkington, Chief Entrepreneur, SustainAbility, based in London, UK, and returning from India, for "Mother Convulsion - India's Third Liberation;"
. Stephen Lendman, based in Chicago, Illinois, USA, for "Slow Motion Train Wreck" via Ashok Khosla, Chairman, Development Alternatives, New Delhi, India;
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Market Convulsions;"

. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Federal Reserve's Changed Focus;"
. Bill Emmott, Director, UK-Japan 21st Century Group, based in London and Somerset, UK, for "Japan's Strong Yen;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "The Asymmetric Loss of Trust and Chain Reaction;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Public Inquisition of Credit Rating Agencies may Accelerate Downturn;"
. Dr George Feiger, President and CEO, Contango Capital Advisors, based in Berkeley, California, USA, for "Watch out for Dramatic Winners;"
* The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Systemic Risk & Sectoral Meltdown: Heightened Correlation and Deleveraging;"
. Rudi Bogni, Chairman, Medinvest, and Director, Old Mutual, from Basel, Switzerland, for, "Non-Stop Central Banks' Intervention;"
. Dr Ravi Batra, Professor of Economics, Southern Methodist University, Dallas, Texas, USA, for, "Towards a Global Economic Crisis?;"
. Aurora Carlson, Founder, Open One Center, based on the West Coast, Sweden, for "The Coming Storm of Change;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Large Quake hits Quants as Computer-Driven Quantitative Hedge Funds Short-Circuit;"

* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Prolonged Credit Market Correction Ahead;"
. Prof Dr Norbert Walter, Chief Economist, Deutsche Bank Group, based in Frankfurt, Germany, for "Economic Consequences of The Sub-Prime Crisis;"
. Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "Regulators, Hedge Fund Lending and Cross-Selling;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Perfect Storm: Credit Freeze and Distress Selling by Hedge Funds;"
. Dr George Feiger, based in Berkeley, California, USA, for "Two Faces of the Same Coin;"
* The ATCA Editorial Team, based in Canary Wharf, London, for "Contagion and Systemic Risk? ECB Injects Record Euro 95bn post Major Disturbance;"
. The ATCA Editorial Team, for "Flight to Quality as Markets finally Appreciate Risk;"
. Robert McNally, Chairman, London Chamber of Commerce Property and Construction Group, for "Erosion of Commercial Real Estate as a Solid Asset Class;"
. Alexander Hoare, CEO, C Hoare and Co, Private Bankers, based in the City of London, for "Destructive Creativity, Leverage and The Derivatives Market;" and
. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, for "The Fear of Central Bankers -- Flight from Illiquidity, Derivatives and Heightened Risk of Contagion;"

in response to, "Are the Currency Markets Warning that there is Trouble Ahead? The Precipitous Decline of the US Dollar and its Impact on the World."

* Denotes ATCA QUERY: Role of Credit Rating Agencies

We look forward to your further thoughts, observations and views. Thank you.

Best wishes


For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency Alliance (ATCA)


ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. Please do not forward or use the material circulated without permission and full attribution.



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