Pointing at decreased listing volume, slower than expected growth, and issues of currency exchange rates, Kaufman Bros. analysts have downgraded shares of eBay Inc. (EBAY). Kaufman analyst Aaron Kessler indicates that his company remains positive on eBay, even though it has downgraded the stock from buy to hold.

It would seem that the issue of currency exchange might be the greatest concern here, as many of us wait to see how valuation of the yuan shall unfold. If the yuan appreciates significantly, which it probably won't, it could mildly affect eBay's listing mix, but probably not to any noticeable degree.

North Korea's plan to limit wealth through a currency exchange has caused nothing but problems. Early on, it led to riots (and fatalities), and later the government eased the upper limit on wealth that could be held. The situation has become so difficult that the regime has even issued an apology. North Korean premier Kim Jong-il, according to a South Korean activist group, has come out and said the country is sorry.

"During a meeting of senior members of the Pyongyang municipal people's committee a few days ago, Kim Yong-il apologized for confusion and instability in the daily lives of people caused by wrongly fixed prices at state-run shops from the time of the currency reform to early this year," said the Good Friends newsletter.

Even though the regime has loosened some of the restrictions on currency exchange, inflation is still skyrocketing in North Korea. The government recently announced that it was moving to a new currency, and that the swap would involve a limit on how much could be traded. As a result, personal wealth was being consciously constrained, which led to the open questioning of the regime, defiance and rioting in some cases, and even a rare instance of flexibility among Kim Jong Il's subordinate decision makers.

Reports from inside the isolated communist state suggest that food shortages and price inflation have resulted from the new monetary policy, exacerbating a difficult situation with which the country already had to cope.

It took two dead and a few weeks for Kim Jong Il to realize that using a currency exchange to cap wealth was probably a bad idea. Earlier this month, the North Korean leader announced a currency revaluation – without giving any warning. Paired with a currency exchange, citizens of the most isolated country on the planet would not be allowed to swap more than $40 of the old bills for the new. So, even the (relatively) wealthy would be left with $40 and piles of worthless paper.

The response was surprisingly negative. And, the fact that there was a response was surprising. Normally, the regime does a solid job of preventing any significant visible disagreement. This time around, the situation was different. The country, hit hard by famines, power shortages and profoundly depressed morale, voiced its displeasure with the decision. A riot broke out in one city, leaving two killed.

Ben Bernanke and the Federal Reserve have kept interest rates low for some time. Interest rates lie somewhere below a quarter point and a zero, giving people very little reason to save. Why should you save money when inflation could work against you and the money will not grow?

Low interest rates also work to reduce the cost of borrowing. This could help businesses that want to expand, or the federal government that has trillions of dollars of debt that it needs to finance.

The British pound (CME: $BPY) hit $1.60 for the first time in more than half a year this morning, thanks to improved service company sentiment and an increase in mortgage approvals. A rise in consumer confidence in the United States increased risk appetite and lifted the pound, as well.

The news was good enough for a 0.5% gain for the pound against the dollar, a 0.6% increase relative to the euro and 1% against the yen (CME: /JY\M09).

The secondary effects of the subprime fiasco are rippling through the market. High among the losers are those firms living off the carry trade, borrowing currency from countries such as Japan at low interest rates and investing that money at higher interest rates elsewhere.

The foundation for the carry trade is a non-volatile currency market, since a sudden rise in the value of the yen against the dollar, for example, can more than wipe out the profits to be made via the interest rate difference. The recent market, however, has been anything but non-volatile; the dollar has dropped from 124 yen in late June to just 114.398 last Friday.

According to Bloomberg.com, among the big losers in the carry trade is J. W. Henry & Co, whose financial and metals portfolio took a $122 million hit in July. While any losses to the owner of the Boston Red Sox is good news to Indians fans like me, investors with J. W. Henry have seen the assets of the firm shrink by 75% since November. The hedge fund of Campbell & Co. also suffered over a 10% loss in July from its $9 billion portfolio.

A Goldman Sachs index of implied volatility on currency options has risen to 6.03% from a record low in November of 5.54%. With the forecast calling for turbulence in the currency exchange market, the carry trade does not seem like a safe harbor for the risk-adverse to wait out the storm.

A lot has been made about a pizza restaurant accepting the Mexican Peso as legal tender in it's stores. Yesterday Brandon Barker reported: Ay caramba: Pizza chain makes peso policy permanent. Some people feel it is a affront to U.S. sovereignty. Others feel like they are being personally invaded. Still others respond as if the restaurant was committing some sort of crime or letting a thief in through the back door,

This a fantastic opportunity for self reflection, discussion, and maybe education, and growth. My first thoughts on the matter included all of the above and the idea was very unappealing to me, and, I felt, detrimental to the United States. After a few minutes and reading a few comments I changed my mind.

Once upon a time there was a Cracker Jacks commercial that showed a kid at the counter paying for his treat. He could barely see over the counter, very Opey-like, and he only had nine cents for what was a ten-cent acquisition. High finance to a little kid. The fatherly shopkeeper shook his head slowly at the nine cents on the counter and raised his eyebrows, communicating that it was not sufficient. The child, thinking for a moment, reaches deep into his pockets and, with appropriate reservation and in a demure manner, offers up a marble to the shopkeeper --- not sure if this would be acceptable.

The shopkeeper takes the marble, holds it up to the light as if it was a fine jewel, feigning some special value upon it, and wanting to let the boy know that he understood it had significance. He pauses, looks at the boy, nods affirmatively, and the deal is struck. The boy leaves happy, the shopkeeper accepts a marble as barter in partial payment, and not a word was said. We, the audience to this beautiful scene, are left with a warm fuzzy feeling charmed by the kindness and wisdom of the shopkeeper and the pride and joy of the boy. From my perspective this television commercial is one of the finest moments in broadcast media and it is as good as any show ever made.

If the shopkeeper can accept a marble then a store can accept a peso.