The IRS is gathering data on U.S. merchants who may be diverting online credit card sales revenue to offshore accounts.

A federal judge has granted permission for the IRS to force big credit card processor First Data to provide details on any U.S. merchants who have arranged since 2002 to have payments from credit and debit cards deposited in offshore accounts with the assistance of First Atlantic Commerce, an obscure company headquartered in Bermuda.  

Credit card companies now.  Can questionable Forex operators be too far behind?  More at Forbes...

Jim Rogers is an expatriate American investor and financial commentator based in Singapore. He is co-founder, along with George Soros, of the Quantum Fund, and continues to write, lecture and provide commentary on global economic issues.  He is also the creator of the Rogers International Commodities Index (RICI).  In this interview, Rogers expresses his view that Asia is now the center of global economic strength and that the United States (the largest debtor nation in history) and United Kingdom are in decline.



A lot of folks have been upset by this interview, so watch and listen carefully. I'd be interested in hearing your feedback.

If you've been following my blog posts the last couple of weeks, you know that I've been spending some time looking at what brokers have been doing about the new Compliance Rule 2-43(b) which requires an FDM to offset positions in a customer account on a first-in, first-out basis, resulting in the prohibition of the trading practice known as "hedging."

Since CFTC imposed the new regulation, we have witnessed brokers and traders alike express their dissatisfaction with it. Next week I am going to spend some time talking about some of the misconceptions retail traders have about NFA and CFTC and how the roles of those organizations really impact their trading.

Here is what happened this week:

Friday, 22nd
Interbank FX joins other brokers with hedging alternatives for their customers.

Thursday, 21st
Are China, Russia, and Brazil getting ready to dump the dollar?
Tradeview Forex reveals its unique solution for their hedging clients.

Tuesday, 19th
CitiFX announced its mobile trading platform for iPod and Blackberry.

Monday, 18th
Currensee: A new way to learn and trade Forex.

Tuesday morning the Financial Times reported that China and Brazil are planning to use their own currencies to trade rather than using the dollar.  This means that China would pay for products like Brazilian oil and beef using the Brazilian Real and not the U.S. dollar.  Brazil would, in turn, accept the Renminbi from the Chinese.  Although, this prospective trade agreement wouldn't break the U.S., it could be a first leak in the dike.  The Chinese have already expressed their support for Russia's initiative to develop a new global reserve currency as an alternative to the U.S. dollar, but the $2 trillion the Chinese have in foreign exchange reserves have kept them from being more aggressive. An agreement with Brazil would allow them to reduce their dollar reserves slightly, since they wouldn't need the dollar to trade with Brazil.
 
Why do you care? If another currency or basket of currencies eventually replaced the dollar as the reserve currency, the U.S. would face higher interest rates to attract capital, reducing economic growth for the long-term. Consider an article published in "The Economist" on May 14th which said, "Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign creditors. Given the political implications of such austerity, the temptation will be to default by stealth, by letting their currencies depreciate. Investors are increasingly alive to this danger..."

According to the Federal Reserve, there is $829 billion dollars of U.S. currency currently in circulation; the majority being held outside the United States. As of May 7, 2009, the total U.S. federal debt was $11,256,266,640,050.20, ranked 12th in the world. This debt is about 80 percent of GDP. Its no wonder the Chinese are concerned.

Didn't Confucius say, "A journey of a thousand miles begins with a single step."

I was talking to my father last night about the economy and the prospect that some companies may not make it through the crisis. Pop was born in 1923 and he started reeling off the names of companies that were around when he was a child that he thought were rock-solid but no longer exist. He knew all their stories -- who the players were; why they failed; how much money he or one of his friends lost when another one went belly-up or got swallowed up by a bigger fish.

» Arthur Andersen - Founded 1913. Dissolved 2008.
» Dean Witter Reynolds - Founded 1924. Merged with Morgan Stanley 1997.
» Drexel Burnham Lambert - Founded 1935. Died a slow death 1990-1992.
» E.F. Hutton & Co. - Founded 1904. E.F. Hutton merged with Shearson to become Shearson Lehman Hutton, Inc. and then acquired by Primerica which was swallowed up by Smith Barneywhich was acquired by Citigroup.
» First Boston - Founded 1932. Retired by Credit Suisse 2006.
» H. F. Ahmanson & Co. - Founded 1927.  Acquired by Washington Mutual 1988.
» Kidder, Peabody & Co. - Founded 1865. Sold to Paine Webber 1995.
» Paine Webber - Founded in 1880. Acquired by Swiss bank UBS AG in 2000.
» Mutual Benefit Life Insurance Company - Founded 1845. Liquidated in 2001.
» Salomon Brothers - Founded 1910.  Now part of CitiGroup.

I know the list is longer, but all of the companies on Pop's list were companies he had personal experience with and were household names at one time or another.  It shows you how things can change and that nothing is permanent. 

My grandfather was a 33rd Degree Freemason who built a construction company in New Jersey. He was a hard-working, self-taught businessman who made the Wall Street Journal daily required reading for my father. By the time Pop was 12 years old, he had a paper route and a grocery delivery business manned by three 12-year old kids he hired from the neighborhood. Pop is 86 years old now and he's seen it all -- the good times and the bad.  The only piece of advice he gave me, before he hung up the phone, as he reflected on the financial turmoil we're experiencing now was, "Son, what goes up must come down.  But eventually, it will go up again."