OCT INDEX

The Conference Board announced that the leading index for Mexico
declined 5.7% The leading index declined sharply in October due to very large
drops in oil prices, the real exchange rate, stock prices and the net
insufficient inventories component. As a result, the leading index fell
9.3% during the six-month period ending in October, down significantly from the 3.3% rate of
increase between October 2007 and April 2008. Only one of the six components, the industrial production construction,
that make up the leading index increased in October. The US refiners’
acquisition cost of domestic and imported crude oil, the (inverted) real
exchange rate, stock prices and net insufficient inventories decreased
in October. The (inverted) federal funds rate remained unchanged. As a result of three consecutive declines in the leading index,
its six-month growth rate has turned sharply negative and is now the
largest decline since the 1994-95 downturn. At the same time, the
six-month growth rate of the coincident index has gradually slowed and
has now remained below zero since August 2008. Taken together, the
recent behavior of the composite indexes suggests that economic activity
should be weak going forward and that there are increasing risks of
further economic weakness in the near term. The leading index now stands at 158.1 (1990=100)

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Spamometer Rises with the Sinking Economy

Research commissioned by Ipswitch Messaging indicates a correlation with
the decline of the economy and the increase of cybercrime. With the
recent hit to Wall Street and the collapse of some big names in global
banking, spam attacks also took a strong Q4 dive. Cyber-crooks are now
targeting new sources of income. Instead of targeting the banking
industry, credit cards and passwords, spam campaigns are now
focusing on promoting services that contend to eliminate or leverage
debts, mortgages, and loan obligations. With the USA still leading the
pack in spam production with 53.49%, and
costing millions of dollars to enterprises each year, botnets,
spear-phishing, and insider attacks are just some of the threats on the
horizon for the coming year. The most effective solutions against spam
combine a strong reputation
system with a complete filtering system that includes heuristics,
statistical analysis, signature filters and multi-lingual detection.
Spam is wholly dependent on the level of awareness with respect to the
rising number of threats and on how proactive an organization is with
respect to security issues.

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MINT 2008

Prepaid provider Mint Technology has released results for year ended
August 31, 2008. Mint reported a net loss of
$2,790,745.00, down significantly from a net loss of $5,003,496.00 for the
period of August 31, 2007. The net loss reduction is due to a number of
factors, primarily a reorganization of the business since the new Board of
Directors was appointed in March 2008. Mint has taken a number of steps to
establish new projects while continuing the successful MuchMusic program. Other operational highlights include
a new contract signed with Transguard Group, U.A.E to manage prepaid payroll cards; a new contract
signed with Yep! Mobile, a Montreal based
mobile media company to provide prepaid cards through Facebook Platform applications targeted at the youth phenomenon of “social
gaming”; entered into an agreement with Silverback Media PLC to introduce
mobile technology for financial payments for existing MuchMusic MasterCard holders;
entered into an agreement with IMT Cards LLC for IMT to exclusively
manage Mint’s prepaid debit card programs in the United Kingdom and
UAE. Mint is in advanced stage negotiations for contracts with other
groups in Canada, United Kingdom and the U.A.E to roll out new
prepaid card programs

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Consumers Started Downshifting in Q2/2007

New research reveals that consumer confidence and spending began slowing about eighteen months ago. The analysis, based on data from Experian’s ‘”Simmons” and “Hitwise,” found that from Spring 2007 to Summer 2008, the percentage of U.S. adults who felt they would be financially better off in the next year dropped from 46% to 37%. Not only did the percentage of confident consumers slump, but the number of adults who felt they would be worse off in the coming year grew by 9% to 22%. Other findings: between October 2006 and October 2008, overall visits to retail Web sites declined 4% year-over-year; overall visits to Web sites in the travel category dropped 10%; and online searches for major electronic items saw significant, year-over-year decreases, with “televisions” down 33%, “laptops” down 48% and “computers” down 57%. Experian also found that households earning $250,000 or more were the fastest to abandon the notion they would be somewhat or significantly better off in the coming year, dropping by 40% from Spring 2007 to Summer 2008.

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RETAIL PAYMENTS

The use of cash and checks to pay for goods and services remains the “King” with a combined share of 47%, however both methods continue to decline. Meanwhile, debit and credit cards continue to gain dollar volume share, growing at annual rate of 16% and 3%, respectively. According to an analysis by CardFlash International, the use of customer checks declined more than 13% year-on-year in October slipping to A$97.2 billion. However, direct debit payments rose more than 14% in October to A$48.4 billion, compared to October 2007. For October, the Reserve Bank of Australia reports that debit card dollar volume rose 16.1% to A$10.8 billion and credit card dollar volume increased 3.2% to A$19.4 billion. Debit and credit cards capture about 40% of total retail payments, while “BPAY” and other methods, such as money orders and “Cabcharge” payments, capture 13%. The RBA noted that even though cash remains the most widely used payment method and is in decline, it is particularly important for small transactions, accounting for nearly all payments under $10 and close to 90% of all transactions under $25.

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January – 0% Promo Rates and 6% Go-To APRS

With the prime rate slipping to 3.25% this month, credit card go-to
offered rates will hit record lows in the January billing cycle.
Additionally, 12-month 0% promotional interest rates have returned
in-force as issuers mull a migration back to fixed rates and the
implementation of new floor rates. According to CardWatch all five of
the nation’s top issuers are currently offering 0% promo APRs for about
12-months with Bank of America offering a 15-month zero rate on balance
transfers only. Chase also offers a 15-month zero rate on its 8.99%
fixed rate card offer. Capital One’s zero rate offer runs for 11 billing
cycles. However, most of the issuers now, for the first time, base the
length of the promotional period on credit score. Among the best go-to
rates offered is BofA with a prime +2.99% rate on its “Visa Platinum”
and Citi with a prime +3.49% on its “Perfect MasterCard.” Among other
direct mail offers captured by CardWatch this month is an agent offer
through U.S. Bank offering a 12-month 0% promo rate with a go-to rate of
prime +3.99%.

DECEMBER PROMO & GO-TO APRS
BofA: 0% from Jan 09 to Mar 10; then 6.24%
Chase: 0% from Jan 09 to Dec 09; then 9.24%
Citi: 0% from Jan 09 to Dec 09; then 6.74%
Cap One: 0% from Jan 09 to Nov 09; then 8.15%
AmEx: 0% from Jan 09 to Dec 09; then 10.24%
Source: CardWatch (cardwatch.com)

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MOODY’S V SCORES

Moody’s has released “V Scores and Parameter Sensitivities in the Global
Credit
Card ABS Sector”, applies the measures, which were recently revised, to
typical transactions across all global credit card ABS sectors including:
U.S. credit card, Canadian credit card; U.K. credit card; Japanese
credit card; and Korean credit card. In the report, Moody’s concludes
that it expects V Scores to range from
Low/Medium variability for Canadian and Japanese credit card ABS to
Medium variability for U.S., U.K. and Korean credit card ABS.
V Scores are a relative assessment of the quality of available credit
information and the potential variability around the various inputs in
determining the rating. V Scores are intended to rank transactions by
the potential for significant rating changes owing to uncertainty around
the assumptions. The second supplemental measure being applied by
Moody’s in this sector
are Parameter Sensitivity analyses, which provide a quantitative
calculation of how the initial, model-indicated rating of a structured
finance security may vary if key assumptions are changed. Moody’s
intends to begin reporting transaction-specific V Scores and
Parameter Sensitivities in pre-sale reports, new issue reports and press
releases for all new transactions in the global credit card ABS sectors
beginning January 1, 2009.

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Visa Beefs-Up its U.S. Litigation Reserves

Visa has deposited $1.1 billion to be set aside in the litigation
escrow account. The plan was established at the time of Visa’s initial
public offering to provide coverage and a payment mechanism for
judgments or settlements in specific U.S. legal cases, protecting Visa
and its Class
A and Class C shareholders from any direct losses. Under terms of the
Plan, when Visa funds the litigation escrow its U.S.
financial institutions, the sole holders of Class B shares, bear the
expense via a reduction in their as-converted share count. The deposit
of the funds into the escrow account reduces the conversion
ratio applicable to Visa’s Class B common stock outstanding from 0.7143
per Class A share to 0.6296 per Class A share. On a converted basis, the
245,513,385 Class B shares currently outstanding are equal to154,566,658
Class A shares of common stock.

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OCT INDEX

The Conference Board announced that the leading index declined 2.6% in October.
The leading index fell sharply in October, the largest monthly
decline since January 1987. Three of the seven components in the leading index
increased in October. The positive contributors to the leading index are
new residential construction orders, inventory change series, and
gross enterprises and properties income. Negative contributors are stock prices, new orders in
investment goods industries, consumer confidence and yield spread.
Since April 2008, the leading index has fallen by 6.8%, well below the 3.6%
decline between October 2007 and
April 2008. Additionally, the weaknesses among the leading indicators
have remained more widespread than the strengths in recent months. The leading index has been trending downwards since July 2007,
declining by more than 10 percent during this period. After growing
steadily through 2006 and 2007, the coincident index has been
fluctuating around a slight downward trend in 2008. The accelerating and
widespread decline in the leading index suggests that the economy will
remain weak going into 2009, and that the contraction in economic
activity may deepen in the near term. The leading index now stands
at 89.3 (1990=100).

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ChristmasFuture Offers Charitable Cards

Social media users can purchase giftcards for charitable giving using “ChristmasFuture”.
Giving through ChristmasFuture is fast and simple and doesn’t require
any driving or gift-wrapping. By tweeting unique gift pickup codes directly to people in their
networks, Twitter users have been able to give to their entire networks
in a short period of time and 100% of the online gift cards go to chosen projects.

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AQUA & LLOYD JAMES

Aqua credit has appointed Lloyd James Group as managers of its insert programme.
Lloyd James Group Ltd is a provider of on and
off-line data solutions, offering a comprehensive set of interactive services
that cater for the wide ranging marketing needs
including a full service data bureau, data analysis, list broking and
list & media management. The Aqua customer is predominantly low-income earners, part-time workers and the
self-employed. The card specialises at targeting consumers who feel underserved by ‘Prime’
lenders.

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Shell-Shocked Americans Become Savers

More evidence that Americans are switching from credit/spend mode to
the savings/budget mode as Visa finds that more consumers are saving for
emergencies and major purchases. The U.S. Commerce Department’s Bureau
of Economic Analysis recently reported that the personal saving rate, as
a percentage of disposable personal income, had climbed from 1.0% in
September to 2.4% in October. The Visa poll found that saving for
emergencies and a rainy day (30%) topped the list of what Americans set
aside money for, followed by retirement (20%) and education (10%).
Overall, 66% of Americans surveyed said they set aside some amount every
month for major expenses. Additionally, Visa found that Los Angeles area
respondents set aside the most for emergencies (39%), followed by
Orlando (34%) and San Antonio (33%). New York City, Chicago and the
state of Vermont ranked near the bottom, with each of these areas
reporting only 22% of residents saving for emergencies.

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