Trinidad and Tobago is set to be the second country in the world to produce all its electricity through natural gas, when the Cove Industrial Estate in Tobago converts from diesel power to gas “in a few weeks”, Energy Minister Kevin Ramnarine has said.

During his address at the opening ceremony of the Trade and Investment Convention at the Hyatt Regency (Trinidad) Hotel, Port of Spain, he said his ministry will commission a natural gas receiving facility in Tobago to convert the power plant at the Cove from diesel to natural gas.

The other country in the world that generates its electricity solely from natural gas is Qatar, which is also the world’s largest natural gas producer, he said.

Ramnarine also said a delegation from the Gas Authority of India Ltd (GAIL) will be visiting the country in July to build on talks held in January during the government’s trade mission to India.

“(GAIL) is one of India’s largest companies. In January we discussed how the NGC could partner with India, actually investing in projects. NGC is also investing in Tanzania and Nigeria, so we are moving outside of Trinidad and Tobago,” he said.

He said Cabinet has reaffirmed its commitment to the Eastern Caribbean Gas Pipeline.

Source

U.S. banks increased sales of protection against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the last quarter of 2011 as the European debt crisis escalated.

Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose 10 percent from the previous quarter to $567 billion, according to the most recent data from the Bank for International Settlements. Those guarantees refer to credit-default swaps written on bonds.

JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc., two of the top CDS underwriters in the U.S., say they have bought more protection than they sold, indicating they may benefit from defaults in the region. That outcome is called into question by JPMorgan’s $2 billion loss on similar derivatives, which shows that risks don’t vanish when offsetting bets are taken, said Craig Pirrong, a finance professor at the University of Houston.

“All these hedges trade one risk for another,” said Pirrong, whose research focuses on derivatives markets. “The banks say they’re flat on European risk, but that’s based on aggregated positions. We don’t know how those will hold off if the European crisis blows up.”

JPMorgan Chairman and Chief Executive Officer Jamie Dimonsaid last week that the bank was trying to reposition a portfolio of corporate credit derivatives and used a flawed trading strategy. The lender, the largest in the U.S. by assets, is believed to have sold protection on an index of corporate debt and bought protection on the same index to hedge its initial bet, according to market participants who asked not to be identified because their trading strategies aren’t public.

The two bets moved in opposite directions this year, causing losses and proving that even hedges that look perfect can break down, Pirrong said.

JPMorgan, Goldman Sachs

JPMorgan said in a regulatory filing that it purchased $144 billion of CDS related to the five European countries as of the end of the first quarter, while it sold $142 billion. Goldman Sachs (GS) bought $175 billion of protection and sold $164 billion, the firm said in its filing. Spokesmen for the two New York- based banks declined to comment. Bank of America Corp., Morgan Stanley (MS) andCitigroup Inc. (C) report only net CDS exposures.

The five banks together account for 96 percent of the credit-derivatives market in the U.S., according to the Office of the Comptroller of the Currency. JPMorgan has written a quarter of the total, the OCC data show.

Matched Protection

Not all protection sold by banks is matched exactly by protection bought. CDS purchased and sold on Spanish sovereign debt can have different expiration dates. Banks also can net a swap on a Spanish bank with one on another lender. Even if those two firms are in a similar condition at the time of the trades, one could deteriorate faster, increasing the cost of CDS.

Some of the swaps sold by U.S. banks were bought by European lenders trying to reduce exposure to the five so-called peripheral countries. Since it’s considered insurance, a German bank can subtract the value of the contracts it purchased on Spanish debt from the total value of its holdings, with the understanding that if Spain doesn’t make good on its payment, the CDS underwriter will pay instead.

British, German and French banks’ loans to the five countries were reduced by 5 percent in the fourth quarter to $1.33 trillion, according to the BIS data. That was a $73 million decrease compared with the $53 million increase in U.S. banks’ CDS exposure to the periphery.

Spanish Debt

The cost of insuring Spanish sovereign debt increased to a record 552 basis points yesterday, meaning it would cost 552,000 euros ($700,000) to insure 10 million euros of debt from default for five years, according to data compiled by Bloomberg. Contracts on Italy’s bonds climbed to a four-month high of 515 basis points. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

“As the JPMorgan example showed, these are all relative- value trades, and the legs might go in different directions,” said Paul Rowady, a New York-based senior analyst at Tabb Group LLC, a financial-markets research and advisory firm. “It’s not surprising that these relations are being tested today because of the dislocation in credit markets.”

JPMorgan and other banks rely on proprietary models to gauge the risks of such correlations in their derivatives positions. Dimon said last week that some of those models had proven wrong.

Bank Losses

More than half of the CDS related to Spain, Italy and Portugal were to protect defaults by companies in those countries, not the government, according to data compiled by the Depository Trust and Clearing Corp., which runs a central registry for over-the-counter derivatives. About a quarter of the total in each country was protection on bank debt.

As banks in the five countries face mounting losses and funding strains, it’s impossible to model accurately how the risk on different institutions will change, Rowady said. Government and central bank interventions in markets can also upset correlations in those models, he said.

Last week, Spain’s government took control of Bankia SA (BKIA), the country’s third-largest lender, and asked banks to increase provisions for souring real estate loans. Losses of Spanish banks could top 380 billion euros, according to the Centre for European Policy Studies. Moody’s Investors Service downgraded the credit ratings of 16 Spanish banks yesterday and 26 Italian lenders earlier this week.

Counterparty Failure

Counterparty failure is another risk for banks selling insurance on the debt of the five counties. When a swap is triggered by default, a bank could find that a client who sold the protection can’t pay. The firm still has to make good on its promise to pay whoever bought protection.

Lenders try to mitigate this risk by asking for collateral from their counterparties as the value of CDS or other derivative changes. Dexia SA (DEXB) failed in October when the bank faced 47 billion euros of such margin calls on interest-rate swaps it sold. If Dexia hadn’t been bailed out by Belgium and France, it wouldn’t have been able to put up the collateral, causing losses for its unidentified counterparties.

U.S. banks didn’t suffer losses when swaps on Greek sovereign debt were paid out in March because prices of CDS had surged and collateral was collected in advance, according to Francis Longstaff, a finance professor at the University of California Los Angeles. While collateral protects middlemen from counterparty risk, there could be unexpected losses if the price of CDS doesn’t rise to reflect an imminent default, he said.

“Sudden defaults would shock the market because then you wouldn’t have the collateral to cover the full payment,” Longstaff said.

Banks also may discover that collateral they hold might not be worth as much, said University of Houston’s Pirrong. That happened in 2008 when banks saw the value of mortgage-related securities held as collateral plummet.

“Collateral is a great way to protect yourself,” Pirrong said. “But when the financial system is in a crisis, you might end up holding an empty bag.”

Source

Leaders of major industrial economies meet this weekend to try to tackle a full-blown crisis in Europe where fears are growing that Greece could leave the euro zone bloc, threatening the future of the common currency.

President Barack Obama, the G8 host, has urged European leaders repeatedly to do more to stimulate growth, fearing contagion from the euro crisis that could hurt the U.S. economy and his chances of re-election in November.

British Prime Minister David Cameron, who has been increasingly vocal in urging Europe to do more to resolve the debt crisis, will tell leaders they must work together to stop it from spreading worldwide, an aide said.

No major economic policy decisions are expected from the talks but officials said Obama hoped to promote a discussion on a comprehensive approach to resolving the crisis.

He will seek to cement a bond with France’s new leader at the White House later on Friday before heading to Camp David for the talks.

Francois Hollande, sworn in this week as French president, has already made waves by challenging Europe’s austerity focus and saying he will pull French combat troops from Afghanistan by the end of this year.

Obama, 50, may use their introductory meeting in the Oval Office to encourage the 57-year-old Socialist to rethink his Afghanistan plans that put France on an earlier exit timetable than other NATO allies.

But the two leaders, who have both expressed support for pro-growth policies in Europe, are expected to form a common front on the euro zonecrisis that could dominate this weekend’s Group of Eight talks.

Obama’s administration spent heavily to tackle the 2007-2009 U.S. recession, and Hollande is seeking to take the edge off austerity with more job-creating infrastructure investments.

He is not alone. Cameron has become increasingly vocal in demanding Europe’s leaders act more decisively, Canada’s Stephen Harper has been a frequent critic, and of the euro zone G8 members, Italian premier Mario Monti was calling for profound growth measures even before Hollande did.

That could leave Germany’s Angela Merkel, who insists debt-cutting programs cannot be diluted, cutting a lonely figure.

The G8 summit comes as Greeks are pulling cash from banks amid growing fears that it might crash out of the single currency euro zone. Financial markets fear for the future of the entire currency zone, with Spain’s banking sector also under pressure.

The U.S. dollar climbed, world shares fell and German borrowing costs hit record lows on Friday as a deepening Spanish banking crisis, uncertainty about Greece’s future in the euro zone and lackluster U.S. data provoked a rush for safe-haven assets.

Heather Conley, a senior fellow at the Center for Strategic and International Studies, said Hollande and Obama “see things very similarly about the need for a better balance between fiscal consolidation, austerity and economic growth”.

One of Obama’s closest aides, National Security Adviser Tom Donilon, said the United States welcomed the evolving debate in Europe about the “imperative for jobs and growth”, but he said the president’s intention was not to drive a wedge between Europe’s two biggest economies,Germany and France.

“I don’t think that the nature of these conversations are going to be anything like taking one side or the other,” he told reporters on Thursday.

“The president looks forward to leading a discussion among the leaders about the imperative of having a comprehensive approach to manage the crisis and get on a sustainable path towards recovery in Europe.”

LIMITED POWER

Obama, a Democrat, has pitched a similarly “balanced” approach combining short-term stimulus and longer-term cuts to heal the U.S. economy and stoke hiring that has not recovered from the financial crisis.

His presumed White House opponent, Republican Mitt Romney, has made reducing the U.S. debt load, which has escalated during Obama’s tenure, one of his key campaign messages.

“A balanced approach that includes not just austerity but growth and job creation is the right approach,” White House spokesman Jay Carney said on Thursday, explaining Obama’s message to the G8.

Bruce Jones of the Brookings Institution said because Obama’s re-election prospects hinge so directly on the health of the American economy, he has a huge interest in getting Europe on a healthy growth track. “Even if he wasn’t in an election season, any president of the United States has a lot riding on the Europeans getting this right,” he said.

Cameron, worried about the impact of the euro zone crisis on a weak British economy, will call for a “strong and united commitment to securing the economic recovery and to support job creation,” his aide said.

Also on the summit agenda will be the price of oil and policy options to address it, although Brent crude hit a 2012 low on Friday.

“I’m sure that the leaders will discuss the range of options that they might have before them,” Donilon said.

Economic policy outcomes are not expected from the closed-door talks at Camp David, a rustic presidential escape about two hours from Washington that Obama has visited far less frequently than his predecessor George W. Bush.

The White House moved the summit to the Maryland retreat from Chicago in part to give the meeting a more informal flavor, as well as to escape the possibility of protests when Russian President Vladimir Putin was slated to attend.

His prime minister, Dmitri Medvedev, will be there instead, along with G8 first-timers Hollande and Yoshihiko Noda of Japan. Monti, Cameron, Harper, Merkel and Obama complete the line-up of leaders and European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy will also attend.

Van Rompuy held a conference call with the European attendees on Thursday to “coordinate positions”.

The White House said each leader would get their own cabin, albeit of different sizes. It will be the largest international summit ever held at Camp David, which was built in the 1930s and is best known as the site of past Middle East peace talks.

Conley of CSIS acknowledged Obama’s power to exert influence over Europe over weekend was “somewhat limited”.

“Nevertheless, I think the president can play a role of listening, helping leaders find common ground,” she said. “We are going to have to watch how this plays out with the frustration in recognizing that it will have a profound impact for the global economy and for the U.S. economy.”

Source

‘Groundhog Day’ was a brilliant movie from the early 1990s starring Bill Murray as a sardonic, jaded and self-loathing journalist who goes to a town in the Midwestern United States for what is supposed to be a short trip. The protagonist ends up in a bizarre time-space warp where the same day happens over and over again, and in Hollywood tradition, hilarity and self-discovery ensues.

Investors and traders are going through their own sort of Groundhog Day, except unlike Bill Murray’s character, their jaded resignation is punctuated by panicked episodes of frantic activity. The same problems have been persisting for three years now and specifically, this summer looks like it may be a repeat of events from Summer 2011.

Several Republican representatives in the United States Congress appear to be reneging on the debt ceiling deal that was cobbled together last year, and may pose problems for President Obama as the inevitability of another increase in the debt ceiling appears on the horizon. The Republicans have shown a willingness to cut their nose to spite their face, and with Obama’s campaign gaining momentum, they will be desperate to find ways to hurt the President going into what is already shaping up to be a very contentious election.

After several months of positive economic data, there have been several misses and disappointments, particularly where employment is concerned. Additionally, high gasoline prices have dampened consumer demand and disposable income, while also increasing operating costs for businesses large and small in the United States. This has led to several companies decreasing their guidance, or missing their earnings targets.

Both of these factors—the potential for another debt ceiling storm and lower earnings for major corporations—could increase volatility and choppiness this summer in U.S. equity markets, with repercussions for commodities and bond markets as well.

Greece is still very much in the news, and if the now-quaint social unrest of Summer and Fall 2011 roiled the markets, the potentially explosive outcomes tied to the current political impasse—not to mention a Greek exit from the Eurozone, could very well take volatility to levels above what we saw last year.

While Greece is a relatively minor player in the Eurozone, the real risk is from contagion due to revaluation of debt and bonds held by European banks in the ‘core’ countries such as Germany and France, which in turn may lead to a fresh round of bailouts. Additional contagion risk could hit bonds for Portugal, Ireland, Italy and Spain—with Spain already making scary new headlines recently due to what appears to be an imminent banking sector collapse and bailout for the sovereign and the banks.

A Spanish bailout and banking sector collapse is the proverbial stuff that could hit the fan and lead to major selloffs across many different asset classes. Investors should be extremely cautious and pay very close attention to the political situations in Europe and the United States as much like in Summer 2011, actions by policymakers will have serious market repercussions.

Do you 1) agree with us, 2) think this is an over-reaction or 3) plan to speak later but you’re busy right now buying cans of corned beef and tuning your transistor radio?

Let us know what your forecast is for the Summer of 2012 in our comments section.

Michael J Cooper
Trading & Investment Strategist
Firstline Securities Limited

A Memorandum of Understanding (MOU) between Petrotrin and Panama-based Melones Oil Terminal Inc (MOTI) now gives the State-owned company an avenue to explore bunkering opportunities in the Panama Canal.

The MOU was signed at the Hilton Trinidad on Monday and coincided with the activities of the 2012 Caribbean Investment Forum (CIF).

Petrrotrin chairman Lindsay Gillette and MOTI director/treasurer, Juan Carlos Heilbron signed on behalf of both companies.

“This arrangement represents a major step for Petrotrin as our presence in the Panama Canal provides us with immense business opportunities and can further boost our efforts to improve our presence in the global energy sector,” said Petrotrin president Khalid Hassanali, who was also present at the signing.

Melones Oil Terminal Inc is a privately-owned organisation with facilities under construction at the Pacific end of the Panama Canal. Earlier this year, the government of Panama finalised a contract with this organisation for the operation and administration of a fuel Free Zone capable of storing two million barrels of oil.

Petrotrin has also held preliminary discussions with two other Panamanian oil storage companies, Petrobunker and Telfers Tank Inc and is expected to also sign MOUs with these two companies to further bunkering arrangements.

The purpose of these MOUs is to facilitate further discussion with these companies in developing the opportunities for Petrotrin to enter the Panamanian fuel bunkering market, a statement said.

This latest initiative by Petrotrin also follows on the heels of Prime Minister Kamla Persad-Bissessar’s visit to Panama in April where she held talks with Panamanian President Ricardo Martinelli.

The talks centred on the potential of exploring and deepening the business arrangements between both countries and to specifically discuss possibilities in bunkering.

Source

U.S. stocks advanced, with the Standard & Poor’s 500 Index rebounding from a three-month low, after reports showed housing starts and industrial production rose more than estimated. European stocks swung between gains and losses, commodities fell and Treasuries retreated.

The S&P 500 added 0.4 percent at 9:31 a.m. in New York while the Stoxx Europe 600 Index (SXXP) slipped less than 0.2 percent. The S&P GSCI gauge of 24 raw materials dropped to the lowest in almost five months as oil lost 1.1 percent to $92.92 a barrel. The yield on the 10-year Treasury note jumped four basis points. The Dollar Index (DXY) erased an earlier advance to trade little changed following a record 12 straight days of gains.

U.S. builders broke ground on more homes than anticipated in April and output at factories, mines and utilities increased 1.1 percent, reports showed. European stocks fell earlier on concern a new election in Greece may threaten spending cuts required to secure 240 billion euros ($306 billion) in bailouts. German Chancellor Angela Merkel and French PresidentFrancois Hollande said they would consider measures to spur Greece’s economy as long as voters committed to austerity.

GE Climbs

The S&P 500 rebounded after closing yesterday at the lowest level since February. JPMorgan Chase & Co. and Bank of America Corp. paced gains in financial companies. General Motors Co. climbed as Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake. General Electric Co. rose after saying its finance unit plans to pay a special dividend of $4.5 billion to the parent company. Target Corp., the second-largest U.S. discount retailer, climbed as profit topped estimates.

J.C. Penney Co. (JCP) plunged after the department-store chain reported a first-quarter loss and sales that fell more than analysts projected.

Housing starts rose 2.6 percent to a 717,000 annual rate from March’s revised 699,000 pace that was stronger than previously reported, Commerce Department figures showed. The median estimate of 80 economists surveyed by Bloomberg News called for a rise to 685,000. The Federal Reserve’s report on industrial production showed that gains in auto manufacturing and utility use propelled growth.

The Stoxx 600 has retreated 9.8 percent from this year’s high on March 16. A.P. Moeller-Maersk A/S tumbled 5.7 percent after saying its container line will at best break even this year, falling short of analyst estimates for a profit. Banco Espirito Santo SA,Portugal’s biggest publicly traded lender by market value, sank 6.9 percent as first-quarter profit dropped 84 percent.

The GSCI gauge of commodities dropped 0.5 percent, bringing this year’s decline to almost 2 percent. Gold declined 0.3 percent to $1,539.95 an ounce. Copper slipped 1.1 percent. Palladium dropped as much as 2.3 percent to the lowest since November

The MSCI Emerging Markets Index fell 1.9 percent. The Hang Seng China Enterprises Index of mainland stocks sank 3.4 percent and South Korea’s Kospi index slipped 3.1 percent. The Shanghai Composite Index fell 1.2 percent, and benchmark gauges in India and Hungary lost at least 1.8 percent.

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Greeks are voting with their wallets and pulling euros out of the banks in fear that their country may leave the European single currency despite the declared determination of EU powers Germany andFrance to keep Athens in the monetary union.

As financial markets shuddered over the deepening turmoil in Athens on Wednesday, a chorus of skeptical politicians and central bankers from London to Ottawa predicted the euro zone could fall apart soon unless European governments act more decisively to save the currency.

“It either has to make up or it is looking at a potential break-up,” British Prime Minister David Cameron told parliament in London. “That is the choice they have to make, and it is a choice they cannot long put off.

Greek President Karolos Papoulias warned political leaders that citizens were withdrawing their money due to “great fear that could develop into panic” at the risk of a debt default and exit from the euro area, according to minutes of their meetings posted on the presidency’s website.

The president, who tried in vain to broker a national unity government, appointed a senior judge, Panagiotis Pikrammenos, as caretaker prime minister on Wednesday until a second general election in just over a month is held on June 17.

The failure of Papoulias’ talks to avert a repeat election sent judders around financial markets, hitting global share prices and other riskier assets.

Investors fled to the U.S. dollar and safe-haven German bonds while the euro lost almost a cent to fall to a four-month low below $1.27. Spanish and Italian bond yields spiked while a key index of European shares fell to its lowest level this year.

German Chancellor Angela Merkel and new French President Francois Hollande sought to quell talk of a possible Greek departure from the euro zone after their first meeting on Tuesday evening, which focused on ways out of the 17-nation currency area’s debt crisis.

“We agreed that we want Greece to stay in the euro,” Merkel told a joint news conference in Berlin, adding that Athens must respect the conditions set in a second international bailout agreement signed in March.

CONSEQUENCES

Nearly two thirds of Greeks voted on May 6 for parties of the radical left and far right which oppose the terms of the EU/IMF assistance program, which has imposed steep wage and pension cuts, deepening a four-year recession.

Policymakers from European Union states and the European Central Bank have warned they would stop sending Athens the cash it needs to stay afloat if a new government tears up the plan.

European Commission chief Jose Manuel Barroso said the Greek people must now make a fully informed decision understanding the consequences for their country’s future.

“The ultimate resolve to stay in the euro area must come from Greece itself,” Barroso told a news conference.

But many Greek voters believe they can stay in the euro without abiding by the conditions imposed to obtain the bailouts, as promised by Alexis Tsipras, the charismatic 37-year-old leader of the surging leftist SYRIZA party.

A second opinion poll showed that SYRIZA, which opposes the austerity conditions attached to the assistance program, is consolidating gains and is on track to become the biggest group in parliament in a re-run vote, pulling ahead of mainstream pro-bailout centre-left and centre-right parties.

The determination to keep Greece in the euro spelled out by Merkel and Hollande may be undermined by sniping from several EU finance ministers, including Germany’s own Wolfgang Schaeuble, who have publicly envisaged a possible Greek exit.

Merkel’s office complained to Austria after Finance Minister Maria Fekter suggested this week that Greece could be thrown out of the EU as a result of its economic crisis, the newspaper Oesterreich reported.

ALARM

International Monetary Fund chief Christine Lagarde said on Tuesday that Greece would either have to be given more time and money to meet its debt reduction targets or else euro zone countries would have to begin planning for its exit.

Spanish Prime Minister Mariano Rajoy voiced the alarm of a country that could be next in the firing line if Greece left.

“I don’t want Greece to exit the euro,” he told parliament in Madrid, as Spain’s risk premium over benchmark German 10-year bonds rose to more than 5 percentage points, a euro era high.

“I believe it would be a major error, it would be bad news and I believe we have to guarantee the sustainability of public debt and then all of us comply with our commitments, which is what we are doing in Spain, what Italy is trying to do and what all the other countries are also trying to do.”

In a blow to Rajoy’s efforts to clean up Spain’s debt-laden financial sector, shares in recently nationalized lender Bankia tumbled 10 percent on Wednesday after it delayed first quarter results, raising fears that the government will have to inject more cash.

Bankia lies at the core of concerns about Spanish banks’ problems after a 2008 property crash. Many analysts believe Madrid or the EU will have to inject funds to avert a collapse of the financial system, worsening the euro zone debt crisis.

Italian Prime Minister Mario Monti, whose heavily indebted country is also in markets’ sights despite economic reforms praised by the IMF, said that U.S. President Barack Obama was seriously concerned about the euro zone situation, which will be on the agenda of a G8 summit in Camp David at the weekend.

Obama spoke to Monti on Tuesday and the White House said they agreed on the need to intensify efforts to revive economic growth and job creation in Europe, apparently siding with Hollande in his drive to temper German-led austerity policies.

Among the skeptical chorus, Canadian Finance Minister Jim Flaherty, a frequent scourge of the euro zone, said this week that Europeans should abandon the single currency if they were not willing to do more to assist member states in trouble.

“They have to do the right thing, use some of their taxpayers’ money to bail out some of the weaker members of the euro zone – or start moving away from the euro zone and just say this was an experiment that has not worked,” he told CTV television.

Bank of England governor Mervyn King told a news conference in London that the euro zone, which Britain refused to join, was “tearing itself apart without any obvious solution”.

“Whatever happens, there are major problems ahead, there are credit losses to be realized and however they choose a solution here, it is going to be a very difficult path to go through because countries like Germany and the Netherlands have yet to face up to their rebalancing,” King said.

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Hectic week ahead, as focus turns to “market access and investment financing”…not to mention the networking opportunities!

Panamanian President Ricardo Martinelli tops the bill of a stellar list of invited speakers who are due to address the two-day Caribbean Investment Forum (CIF), which opens today at the Hilton. President Martinelle is due to join Prime Minister Kamla Persad-Bissessar in the morning session in a discussion on the bilateral relationship between T&T and Panama.

Up to Thursday, over 500 people had registered to attend the CIF, said Trade and Industry Minister Stephen Cadiz. The forum is expected to attract about from the English, French and Spanish-speaking Caribbean as well as from the Netherlands, Brazil and India and Canada.

Speaking last week about the CIF, Cadiz said: “There will be business people from these countries coming to T&T looking for business opportunities. We have over 40 speakers, out of which 30 are international, so this adds a very large international flavour to the event. It gets people into T&T to understand what is happening in the rest of the world, and allow these presenters to view T&T in a different way.

Plenary sessions of the CIF will focus on critical issues such as market access and investment financing, while parallel sessions will focus on key investment industries in the Caribbean, including: maritime, agribusiness, creative industries, clean technology, and ICT.

CIF 2012 is presented by invesTT, Trinidad and Tobago’s investment promotion agency (www.investt.co.tt). invesTT’s mission is to grow T&T’s non oil and gas sectors significantly and sustainably. The CIF, which is reported to be an idea of Prime Minister Persad-Bissessar, will be followed immediately by the Trade and Investment Convention (TIC), which begins on Wednesday and ends on Friday at the Hyatt Regency Hotel.

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David Olson, a former head of credit trading in JPMorgan Chase & Co. (JPM)’s chief investment office, learned about risk as a U.S. Navy nuclear submarine pilot.

When he joined the bank in 2006, his new commander, Chief Executive Officer Jamie Dimon, was transforming the once- conservative unit from a risk manager to a profit center.

“We want to ramp up the ability to generate profit for the firm,” Olson, 43, recalled being told by two executives. “This is Jamie’s new vision for the company.”

That drive has now shattered JPMorgan’s cultivated reputation for policing risk and undermined Dimon’s authority as a critic of regulatory efforts to curb speculation by too-big- to-fail banks. It also may cost Chief Investment Officer Ina R. Drew, one of the most powerful women on Wall Street, her job. As U.S. and U.K. investigators descend on the firm following Dimon’s announcement last week of a $2 billion trading loss, lawmakers are pointing to the breakdown at the largest U.S. bank as evidence that tougher rules are needed.

Dimon pushed Drew’s unit, which invests deposits the bank hasn’t loaned, to seek profit by speculating on higher-yielding assets such as credit derivatives, according to five former executives. The CEO suggested positions, a current executive said. Profits surged over the next five years as assets quadrupled to $356 billion and employees were given proprietary- trading accounts, current and former executives said.

‘Wall Street Hubris’

Dimon said on May 10 that the unit made “egregious mistakes” by taking flawed positions on synthetic credit securities and that New York-based JPMorgan could lose an additional $1 billion or more as it winds down the position. The U.S. Securities and Exchange Commission, the Federal Reserve and the Commodity Futures Trading Commission are investigating, according to people familiar with the probes.

The loss was particularly surprising for JPMorgan, the bank whose $2.32 trillion balance sheet makes it the largest in the U.S. and whose traders were the first in the mid-1990s to create credit derivatives, which let firms and investors insure themselves against losses on debt. It was also a blow to Dimon, 56, who has been the most outspoken critic of the Volcker rule, meant to restrict banks from betting their own money.

“It’s classic Wall Street hubris, which we’ve seen so many times before,” said Simon Johnson, a former chief economist at the International Monetary Fund who teaches at theMassachusetts Institute of Technology. “What’s particularly ironic here is that Jamie presents himself, and is believed by others to be, the king of risk management.”

Fannie Mae Loss

It wasn’t the first 10-digit hit for JPMorgan’s chief investment office. In 2008, it lost $1 billion on Fannie Mae and Freddie Mac preferred securities when the government-backed mortgage agencies were put into conservatorship. Olson, who ran the unit’s U.S. credit trading until December, said the only reason he wasn’t fired at the time was because Dimon had been “intimately familiar with those positions.”

Drew, 55, earned about $1.2 million a month over the past two years. She spent three decades at the firm and its predecessors, surviving mergers and changes at the top. She played a critical role steering the company through rocky markets, such as the Russian debt crisis and the collapse of hedge fund Long Term Capital Management in 1998, disruptions from the World Trade Center attacks and the more recent financial crisis, said Lesley Daniels Webster, JPMorgan’s head of market risk. She worked with Drew for more than a decade.

Drew’s Ascension

In 2005, the year Dimon became CEO, Drew was named the bank’s chief investment officer, reporting directly to him. He gave her traders the green light to make investments in riskier products, including asset-backed securities, credit derivatives, sovereign debt and equities — securities Drew and her staff had less experience with, according to a former senior executive who asked not to be identified because he wasn’t authorized to discuss the matter.

“Her position over the years has always been around hedging, but hedging for profit as opposed to hedging just to counter losses,” said Dina Dublon, a former JPMorgan chief financial officer who worked with Drew for 22 years before leaving in 2004 and now teaches at Harvard Business School. “She’s always been in a for-profit operation, even when she was managing a smaller domain.”

Until recently, Drew did well with her investments, with the corporate division under which she reports earning a peak of $3.7 billion in 2009, up from $1.5 billion a year earlier. The bank doesn’t break out results for the chief investment office.

‘High Performer’

“She did an excellent job and was considered a very high performer in the bank,” said Don Layton, incoming CEO of Freddie Mac and Drew’s boss from 1992 until 2002.

The bank rewarded her with a $15 million pay package for 2010 and $14 million for her performance last year, according to regulatory filings. Drew may resign as soon as this week, said a person familiar with the situation. JPMorgan, like other banks, has adopted so-called clawback provisions for top executives, including Drew, to retrieve bonus pay for poor performance or “conduct that causes material financial or reputational harm,” according to its most recent proxy statement.

“Ina was one of the first senior executives at JPMorgan who quickly earned Jamie’s respect and ear,” said Austin Adams, a former chief information officer who sat on the bank’s 14- member operating committee with the two. “I found her to be very straightforward, someone I could trust. She didn’t suffer fools lightly.”

Shifting Role

Dimon nurtured the office’s shift from its role mitigating lending risks, such as interest-rate and currency movements, to becoming a profit center, former executives said. Drew, who declined to be interviewed, hired Achilles Macris, 50, in 2006 to oversee trading in London. Macris, with Dimon and Drew’s blessings, led an expansion into corporate and mortgage-debt investments with a mandate to generate profits, three former employees said.

When the 2008 financial crisis highlighted the bank’s need to hedge its exposure to corporate loans and bonds it held on its books, Drew’s office expanded into credit derivatives and other risky instruments, according to a former senior officer. Those trades were tightly controlled and monitored at first, the former executive said.

Macris’s mandate drove the bank into riskier products and a less disciplined approach to investing, according to two former CIO executives. The shift provoked an exodus in 2008 of traders who specialized in more-liquid markets where risk was easier to measure, such as interest-rate products and foreign exchange, these people said. Macris didn’t respond to an e-mail or a call.

London Whale

While Drew liked generating profit, she did so in a controlled way, placing strict limits on how much an investment could lose or gain, former colleagues and employees said. Traders were required to exit positions if losses exceeded $20 million, according to one former CIO manager in London. Those limits were scrapped under Macris.

The London team amassed a portfolio of as much as $200 billion, booking a profit of $5 billion in 2010 alone — more than a quarter of JPMorgan’s net income that year, one senior executive said.

The CIO’s increased size and market power have made it an important customer to Wall Street’s trading desks and a market influence watched by hedge funds and other investors, the former employees said. Bloomberg News was the first to report, on April 5, that Bruno Iksil, a trader in the CIO’s London office, had amassed positions in securities linked to the financial health of corporations that were so large he was driving price moves in the $10 trillion market. Some market participants dubbed him the “London whale.” Others referred to him as “Voldemort,” after the villain of the Harry Potter series who’s so powerful he can’t be called by name.

Hard to Unwind

A Bloomberg News story on April 13 reported that Dimon was responsible for transforming the CIO and increasing the size of its speculative bets. Some in London were so big they probably couldn’t be unwound without causing losses, the article cited former executives as saying. That day, on a conference call to announce quarterly reports, Dimon called news about the London trades a “complete tempest in a teapot.”

Dimon said when he announced the losses last week that he didn’t know how bad things were until after the company reported its first-quarter earnings on April 13. Dimon reviews the profit-and-loss reports every day on large positions in the CIO, according to a senior JPMorgan executive. Before the quarter ended, he and Drew were both led to believe that the losses were erratic, and the reports showed that the position swung daily between losses and gains, the executive said.

Mounting Losses

Less than a week after earnings were released, the losses in the daily reports started piling up more frequently and in larger sums — $80 million, $100 million, $120 million — this person said. Even Drew was caught unaware, he said.

JPMorgan is now investigating whether the London office intentionally hid the magnitude of its errors, the executive said. While there isn’t evidence that’s the case, the office doesn’t appear to have fully understood the trade itself, this person said. Every time New York executives asked the London team questions, it responded with more questions, infuriating Dimon, the person said.

Drew offered to resign several times last week, and her entire team in London is at risk of dismissal, according to the person. Macris is among executives who may leave this week, the Wall Street Journal reported, citing unidentified people.

While JPMorgan has refused to describe the trades by Iksil and the London-based CIO team, market participants from hedge- fund managers to credit brokers have tried to piece together the bets from market movements and volumes. The traders say Iksil started amassing positions last year in an older, less active version of a credit-default-swaps benchmark known as the Markit CDX North America Investment Grade Index, which investors use to speculate on the creditworthiness of companies from retailer Wal-Mart Stores Inc. to aluminum producer Alcoa Inc.

Series 9

As European leaders struggled earlier this year to navigate the region’s sovereign-debt crisis and mounting concerns that Spain may be too big to save, market participants focused on the burgeoning impact of Iksil’s trading. Some calculated that he may have built a position totaling as much as $100 billion in contracts in one index. By the bank’s own math, the positions amounted to tens of billions of dollars, a person familiar with its view said early last month.

JPMorgan sold protection on Series 9 of the index in the form of credit-default swaps and through more leveraged wagers using contracts called tranches, the traders said. The firm collected premiums, and in exchange promised to cover losses if companies in the index defaulted. Market participants surmise that Iksil’s trades weren’t one-way bets.

Offsetting Risk

He may have offset the risk of index contracts expiring in December 2017 by buying similar protection using contracts that mature this December, traders said. In such a strategy, the firm effectively would be paid the difference between those two trades, an amount that for the full index was about $41,000 for every $10 million of protection at the end of March, according to prices from data provider CMA. As the gap narrows, the market value of the trade gains. As it widens, the value declines.

The gap on the full index widened to $51,800 per $10 million on May 10 and jumped even more to $65,800 the day after JPMorgan’s disclosure, prices from CMA show. Iksil didn’t respond to an e-mail seeking comment.

The losses have mounted since they were revealed last week, according to one person with knowledge of the bank’s internal deliberations. The firm’s investment bank is now managing the money-losing trades to minimize risk, and the leadership is still confident the maximum downside is about $1 billion more than the $2 billion loss disclosed last week, this person said, speaking on the condition of anonymity because he wasn’t authorized to speak for the company.

Stunned Leadership

Inside JPMorgan, leadership is stunned by the situation, according to two senior executives. The firm’s top managers are less concerned about the financial impact of the trades, because the bank has surplus capital, than they are about the damage the losses inflict on the bank’s reputation, the executives said.

While the firm has layers of safeguards in place in its investment bank to protect against concentrated trading errors, Drew’s chief investment office wasn’t constrained by such controls, according to current and former executives.

JPMorgan can stick with the positions that produced the losses if it needs to and isn’t compelled to sell, insiders said. The bank may have to book more mark-to-market losses as prices move against it, in part because JPMorgan’s predicament is now publicly known and traders at hedge funds and others firms are seeking to exploit that by betting against the bank’s positions, one of these people said.

Bacon, America

Weeks before the announcement, the bank asked Daniel Pinto, co-head of fixed-income trading based in London, to manage Iksil’s positions in an effort to minimize losses, according to a former member of JPMorgan’s executive and operating committees who was briefed on the developments. Guy America, a Dutchman based in London who is head of European credit trading, and Ashley Bacon, a senior executive in market risk, are also helping to sort through the trade.

Dimon has led the banking industry in pushing back against measures in the Dodd-Frank Act that would restrict proprietary trading by institutions that take depositors’ money. On Feb. 2, Drew and five JPMorgan colleagues met with Federal Reserve staff to discuss the rule, a copy of the central bank’s meeting summary shows. The JPMorgan bankers recommended that the final rule be modified so that the chief investment office’s positions “not be included as prohibited proprietary trading,” according to the summary.

‘Little Halo’

The bank’s loss will make it harder for Dimon to maintain that role said Paul Miller, an analyst with FBR Capital Markets in Arlington, Virginia, and a former examiner with the Federal Reserve Bank of Philadelphia.

“JPMorgan had a little halo around them, and that thing just got knocked off,” Miller said.

In an interview two days before the disclosure of the loss, Olson, the former head of U.S. credit trading, said the failure of Fannie Mae and Freddie Mac taught him a lesson.

“That’s a perfect demonstration there’s always risk out there that you just can’t control,” he said. “And you just can’t see coming.”

Source

Greece’s president met little enthusiasm from political leaders summoned to a final round of talks on Monday to avert a new election, reinforcing fears the country was firmly on the path to bankruptcy and an exit from the euro zone.

European shares slid and Spanish and Italian bond yields rose as the political deadlock threatened to reignite the euro zone debt crisis. Greek banking stocks tumbled 7 percent.

Greece’s political landscape has been in disarray since an inconclusive election on May 6 left parliament divided between supporters and opponents of a 130 billion euro ($168.3 billion) EU/IMF bailout, with neither side able to form a government.

After Sunday’s effort at cajoling party leaders into a coalition proved fruitless, President Karolos Papoulias summoned four party leaders for a fresh round of talks on Monday evening.

But the talks appeared doomed long before they began, as the young leader of the radical leftist SYRIZA party said he would not attend and another leftist leader refused to take part in any coalition unless SYRIZA was on board.

Papoulias must call a new election if he fails to engineer a compromise. Such a poll is expected to be held in mid-June.

With Greece set to run out of money as early as next month and no government in place to negotiate the next aid tranche, investors have begun betting that a long-speculated Greek default and euro exit will happen sooner rather than later.

European paymaster Germany appealed to Greeks to build a viable government, but acknowledged that the country was in a difficult situation.

The prospect of national bankruptcy and a return to the drachma appeared to be slowly sinking in among Greeks, who must now choose between the pain of spending cuts demanded in return for aid and an even more painful existence outside the euro.

“We have to stay in the euro. I’ve lived the poverty of the drachma and don’t want to go back. Never! God help us,” said Maria Kampitsi, 70-year old pensioner, who had to shut down her pharmacy two years ago due to the crisis.

“They must cooperate or we’ll be destroyed, it will be chaos. For once, they must care about us and not their chair.”

“IMPOSSIBLE EQUATION”

Capturing the self-defeating nature of an election that has drawn the country towards bankruptcy, the Ta Nea daily ran a front page picture of a man shooting himself and blood splattered across the backdrop in the shape of Greece.

“SYRIZA has paved the way for new elections. And this time, whether we like or not, they will be more like a referendum. We will have set ourselves the question whether we prefer the euro or the drachma,” centre-left daily Ethnos wrote in an editorial.

SYRIZA, which polls suggest would come first if elections were held again, said on Monday it was willing to take part in one-to-one talks with the president or talks that included all parties except the far-right Golden Dawn party.

But it was unclear what difference that would make and the president’s office said it was not changing its plans for Monday’s meeting.

European leaders have reacted with growing disbelief to the rhetoric from the party’s 37-year-old leader Alexis Tsipras, who has promised Greece can simultaneously renege on the terms of its bailout and stay in the euro zone.

“I think that is an impossible equation and I think in that sense it is an irresponsible statement,” said Finland’s Minister for European Affairs Alexander Stubb.

“We fully realize that the precondition for Greece staying in the eurozone is for it to fulfill the engagements that it has made to the IMF, to the European Central Bank and to the commission.”

In a sign of the shifting European mood on Greece and a growing sense that its exit from the euro is manageable, European officials who once refused to discuss a Greek exit now talk about it openly as a real, if painful, possibility.

But none of this has fazed Tsipras, who has gone from strength to strength on his pro-euro and anti-bailout message to become the unexpected Greek political star of the moment.

The anti-bailout vote that was divided among small parties but has now rallied behind Tsipras, who stands to get a bonus of 50 extra seats in the 300-seat parliament if he wins a repeat election – raising the possibility of an anti-bailout coalition.

Tsipras has consistently refused to join a coalition government with the establishment conservative and socialist parties that ruled Greece for decades, but were punished by voters last week for their role in agreeing the EU rescue, which requires deep cuts in wages and pensions.

That has helped push Greece into its fifth year of recession, which in turn has left one out of five Greeks jobless and ushered in an increasingly volatile social climate.

Three gas canisters exploded at tax office in an Athens suburb early on Monday, causing minor damages, police said.

Any coalition without the conservatives and socialists would have to combine the far-right and far left, which both have ruled out.

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