The surrender of free-market capitalism



The de facto nationalisation of a huge swath of the American financial sector this past week has left many commentators marvelling at the failure of free-market capitalism in the US. The New York Times reported on Monday that the investment banks Goldman Sachs and Morgan Stanley are being allowed by the Federal Reserve to turn themselves into bank holding companies following the collapse of Lehman Brothers and the Fed's bailout of the insurance giant AIG last week. "The firms requested the change themselves, even as Congress and the Bush administration rushed to pass a $700bn rescue of financial firms. It was a blunt acknowledgment that their model of finance and investing had become too risky and that they needed the cushion of bank deposits that had kept big commercial banks like Bank of America and JPMorgan Chase relatively safe amid the recent turmoil," the paper reported. "It also is a turning point for the high-rolling culture of Wall Street, with its seven-figure bonuses and lavish perks for even mid-level executives. It effectively returns Wall Street to the way it was structured before Congress passed a law during the Great Depression separating investment banking from commercial banking, known as the Glass-Steagall Act. "By becoming bank holding companies, the firms are agreeing to significantly tighter regulations and much closer supervision by bank examiners from several government agencies rather than only the Securities and Exchange Commission. Now, the firms will look more like commercial banks, with more disclosure, higher capital reserves and less risk-taking." The rescue package agreed by the treasury secretary Hank Paulson and the Federal Reserve chairman Ben Bernanke was examined closely by Democrats in Congress, who want to make sure that none of the taxpayers' money ends up in the pockets of rich Wall Street bankers. The International Herald Tribune reported that congressional Democrats are demanding greater oversight of the rescue package, and with Bush administration officials eager to get a bill passed authorising the package, it seems likely that they will. "'Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers' interests,' the house speaker Nancy Pelosi said," according to the Tribune. "She added that the administration's proposal did 'not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.' "'We will not simply hand over a $700bn blank cheque to Wall Street and hope for a better outcome,' she said. "Congressional Republicans, too, put the Bush administration on notice that they would not simply rubber-stamp the bailout proposal but would insist on a number of changes, including specific protections for taxpayers. Those would include a requirement that any profits from the programme be returned to the Treasury and not be used for any other purpose. "Aides to senior House Republicans said that lawmakers would also insist on greater oversight of the programme and were proposing a joint select committee, consisting of lawmakers of both parties and from both chambers of Congress." The Tribune warned in an editorial that the US government had to be careful to balance the interests of Wall Street with those of beleaguered American homeowners who are struggling to keep up with their mortgage payments. "How will Congress balance the bailout of Wall Street and the needs on Main Street? Congress must do more to provide direct help to struggling families. Lawmakers should use the bailout legislation to extend unemployment benefits, bolster food stamps and provide aid to state and local governments to provide other services," the paper reported. The article ended with a warning that Americans needed to be told that the current economic crisis was due to the failure of the Bush administration to regulate the marketplace: "Finally, Americans need to be told a more fundamental truth: This crisis is the result of a systematic failure by the government to regulate the activities of bankers, lenders and other market players. "The regulatory failure was grounded in the Bush administration's belief that the market, with its invisible hand, works best when it is left alone to self regulate and self correct. The country is paying the price for that delusion."

The Bush administration's plan to save Wall Street firms and banks is now being extended to include foreign banks with significant US debt exposure. "Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic US mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks," reported the International Herald Tribune. "On Sunday, the treasury secretary, Henry Paulson, indicated in a series of appearances on morning talk shows that an original proposal introduced on Saturday had been widened. 'It's a distinction without a difference whether it's a foreign or a US one,' he said in an interview with Fox News. "The prospect of being locked out of the bailout set off alarm bells among chief executives of overseas banks whose American affiliates also hold distressed mortgage-related assets, like Barclays and UBS. The original text provided access to the $700 billion bailout for any financial institution based in the United States. "As the day wore on, some raised their concerns with the Treasury Department, arguing that foreign institutions were both big employers and major players in the American capital markets. By Saturday evening, the language had been changed to allow any financial institution 'having significant operations' in the United States." But several US politicians and bankers told the Tribune that the US government should not be bailing out foreign banks. "'I'm sceptical of the bailout, the whole bill is only a couple of pages long,' said Representative Scott Garrett, a republican from New Jersey, who is a member of the House Financial Services Committee. As for the participation of foreign banks, Garrett said: 'I have a concern with it, they probably should be treated differently, but Congress is really not getting any say.' "Christopher Whalen, a managing partner at Institutional Risk Analytics, said that Paulson needed to justify why a wider bailout was in the national interest. "'Can you imagine the Congress floating a bailout for Deutsche Bank or UBS? It is the responsibility of the German or Swiss government,' he said. 'We shouldn't be bailing them out.'"

Several American commentators were amazed and surprised by the scale of the bailout of Wall Street by the US government, calling it the end of free-wheeling capitalism and the defacto socialisation of America. "When Hank Paulson, a successful investment banker turned Republican treasury secretary, caps his career by nationalising two financial institutions so large that even Norman Thomas in his socialist heyday would have paused before taking them onto the government's balance sheet, and a conservative central banker agrees to bail out an insurance company to the tune of $85 billion, you know that a fundamental change is underway," wrote Irwin Stelzer in The New Republic. "The day when that engine of capitalism, the financial market, was allowed to operate more or less unimpeded by government has passed. We are entering an era in which a high tolerance for risk is being replaced by the eager embrace of regulation, and where the overriding imperative, efficiency, has been replaced by an increasing desire for equity." Bill Saporito writing in Time magazine likened the bailout to French socialist policies: "I never thought of the stocks and junk securities sold by Goldman Sachs and Morgan Stanley as unique, but clearly Washington does. Morgan's John Mack calls SEC boss Chris Cox to whine about short sellers and bingo, the government obliges. The elite serve the elite. How French is that?"

The New York Time's Cairo bureau chief Michael Slackman in an article on Monday highlights the doubts and challenges that young Arabs face living in Dubai. The openness in Dubai poses a challenge to young Arab men who, when they move there, have the choice of being religious and going to mosque regularly or living a more secular lifestyle. "In his old life in Cairo, Rami Galal knew his place and his fate: to become a maintenance man in a hotel, just like his father. But here, in glittering, manic Dubai, he is confronting the unsettling freedom to make his own choices," writes Slackman. "Here Galal, 24, drinks beer almost every night and considers a young Russian prostitute his girlfriend. But he also makes it to work every morning, not something he could say when he lived back in Egypt. Everything is up to him, everything: what meals he eats, whether he goes to the mosque or a bar, who his friends are."

Test

Director: S Sashikanth

Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan

Star rating: 2/5

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

The specs

Engine: 3.8-litre, twin-turbo V8

Transmission: seven-speed automatic

Power: 592bhp

Torque: 620Nm

Price: Dh980,000

On sale: now

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
The specs

Engine: 1.5-litre turbo

Power: 181hp

Torque: 230Nm

Transmission: 6-speed automatic

Starting price: Dh79,000

On sale: Now

UAE SQUAD FOR ASIAN JIU-JITSU CHAMPIONSHIP

Men’s squad: Faisal Al Ketbi, Omar Al Fadhli, Zayed Al Kathiri, Thiab Al Nuaimi, Khaled Al Shehhi, Mohamed Ali Al Suwaidi, Farraj Khaled Al Awlaqi, Muhammad Al Ameri, Mahdi Al Awlaqi, Saeed Al Qubaisi, Abdullah Al Qubaisi and Hazaa Farhan

Women's squad: Hamda Al Shekheili, Shouq Al Dhanhani, Balqis Abdullah, Sharifa Al Namani, Asma Al Hosani, Maitha Sultan, Bashayer Al Matrooshi, Maha Al Hanaei, Shamma Al Kalbani, Haya Al Jahuri, Mahra Mahfouz, Marwa Al Hosani, Tasneem Al Jahoori and Maryam Al Amri

The specs

Engine: Four electric motors, one at each wheel

Power: 579hp

Torque: 859Nm

Transmission: Single-speed automatic

Price: From Dh825,900

On sale: Now

Company%20Profile
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NO OTHER LAND

Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal

Stars: Basel Adra, Yuval Abraham

Rating: 3.5/5

Mountain%20Boy
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Zainab%20Shaheen%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Naser%20Al%20Messabi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3C%2Fstrong%3E%3A%203%2F5%3C%2Fp%3E%0A
In numbers: PKK’s money network in Europe

Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010

Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille

Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm

Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year

Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”

Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners

TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013 

BMW%20M4%20Competition
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E3.0%20twin-turbo%20inline%20six-cylinder%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%3C%2Fstrong%3E%20eight-speed%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E503hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20600Nm%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20from%20Dh617%2C600%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%0D%3C%2Fp%3E%0A
Remaining Fixtures

Wednesday: West Indies v Scotland
Thursday: UAE v Zimbabwe
Friday: Afghanistan v Ireland
Sunday: Final

UEFA CHAMPIONS LEAGUE FIXTURES

All kick-off times 10.45pm UAE ( 4 GMT) unless stated

Tuesday
Sevilla v Maribor
Spartak Moscow v Liverpool
Manchester City v Shakhtar Donetsk
Napoli v Feyenoord
Besiktas v RB Leipzig
Monaco v Porto
Apoel Nicosia v Tottenham Hotspur
Borussia Dortmund v Real Madrid

Wednesday
Basel v Benfica
CSKA Moscow Manchester United
Paris Saint-Germain v Bayern Munich
Anderlecht v Celtic
Qarabag v Roma (8pm)
Atletico Madrid v Chelsea
Juventus v Olympiakos
Sporting Lisbon v Barcelona

Company%20Profile
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Company%20Profile
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Skewed figures

In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458. 

The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5

match info

Chelsea 2
Willian (13'), Ross Barkley (64')

Liverpool 0

Profile

Company: Justmop.com

Date started: December 2015

Founders: Kerem Kuyucu and Cagatay Ozcan

Sector: Technology and home services

Based: Jumeirah Lake Towers, Dubai

Size: 55 employees and 100,000 cleaning requests a month

Funding:  The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups. 

Emergency

Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

Rating: 2/5

At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

COMPANY PROFILE

Company: Bidzi

● Started: 2024

● Founders: Akshay Dosaj and Asif Rashid

● Based: Dubai, UAE

● Industry: M&A

● Funding size: Bootstrapped

● No of employees: Nine

CHELSEA SQUAD

Arrizabalaga, Bettinelli, Rudiger, Christensen, Silva, Chalobah, Sarr, Azpilicueta, James, Kenedy, Alonso, Jorginho, Kante, Kovacic, Saul, Barkley, Ziyech, Pulisic, Mount, Hudson-Odoi, Werner, Havertz, Lukaku. 

COMPANY%20PROFILE
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Our legal consultants

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

What can you do?

Document everything immediately; including dates, times, locations and witnesses

Seek professional advice from a legal expert

You can report an incident to HR or an immediate supervisor

You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline

In criminal cases, you can contact the police for additional support

Details

Through Her Lens: The stories behind the photography of Eva Sereny

Forewords by Jacqueline Bisset and Charlotte Rampling, ACC Art Books

Specs

Engine: Dual-motor all-wheel-drive electric

Range: Up to 610km

Power: 905hp

Torque: 985Nm

Price: From Dh439,000

Available: Now

The specs: 2018 Nissan Patrol Nismo

Price: base / as tested: Dh382,000

Engine: 5.6-litre V8

Gearbox: Seven-speed automatic

Power: 428hp @ 5,800rpm

Torque: 560Nm @ 3,600rpm

Fuel economy, combined: 12.7L / 100km

COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Sav%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Purvi%20Munot%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20FinTech%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%24750%2C000%20as%20of%20March%202023%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Angel%20investors%3C%2Fp%3E%0A
Have you been targeted?

Tuan Phan of SimplyFI.org lists five signs you have been mis-sold to:

1. Your pension fund has been placed inside an offshore insurance wrapper with a hefty upfront commission.

2. The money has been transferred into a structured note. These products have high upfront, recurring commission and should never be in a pension account.

3. You have also been sold investment funds with an upfront initial charge of around 5 per cent. ETFs, for example, have no upfront charges.

4. The adviser charges a 1 per cent charge for managing your assets. They are being paid for doing nothing. They have already claimed massive amounts in hidden upfront commission.

5. Total annual management cost for your pension account is 2 per cent or more, including platform, underlying fund and advice charges.

Results

International 4, United States 1

Justin Thomas and Tiger Woods (US) beat Marc Leishman and Joaquin Niemann (International) 4 and 3.

Adam Hadwin and Sungjae Im (International) beat Xander Schauffele and Patrick Cantlay (US) 2 up.

Adam Scott and Byeong Hun An (International) beat Bryson DeChambeau and Tony Finau (US) 2 and 1.

Hideki Matsuyama and C.T. Pan (International) beat Webb Simpson and Patrick Reed (US) 1 up.

Abraham Ancer and Louis Oosthuizen (International) beat Dustin Johnson and Gary Woodland (US) 4 and 3.

The specs
Engine: 4.0-litre flat-six
Power: 510hp at 9,000rpm
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
Price: From Dh801,800
Specs

Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request

Dengue%20fever%20symptoms
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Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
Company%20profile
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UAE SQUAD

 Khalid Essa (Al Ain), Ali Khaseif (Al Jazira), Adel Al Hosani (Sharjah), Mahmoud Khamis (Al Nasr), Yousef Jaber (Shabab Al Ahli Dubai), Khalifa Al Hammadi (Jazira), Salem Rashid (Jazira), Shaheen Abdelrahman (Sharjah), Faris Juma (Al Wahda), Mohammed Shaker (Al Ain), Mohammed Barghash (Wahda), Abdulaziz Haikal (Shabab Al Ahli), Ahmed Barman (Al Ain), Khamis Esmail (Wahda), Khaled Bawazir (Sharjah), Majed Surour (Sharjah), Abdullah Ramadan (Jazira), Mohammed Al Attas (Jazira), Fabio De Lima (Al Wasl), Bandar Al Ahbabi (Al Ain), Khalfan Mubarak (Jazira), Habib Fardan (Nasr), Khalil Ibrahim (Wahda), Ali Mabkhout (Jazira), Ali Saleh (Wasl), Caio (Al Ain), Sebastian Tagliabue (Nasr).