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Thursday, October 9, 2008

IMF sees major global economic downturn

Crisis puts policy makers 'between a rock and a hard place'

The world economy has entered a "major downturn" with significant risks of worsening, the International Monetary Fund said Wednesday in its annual World Economic Outlook.

"After years of strong growth, the world economy is decelerating quickly," the report said. "Global activity is being buffeted by an extraordinary financial shock and by still-high energy and other commodity prices."

The financial shock has put monetary-policy makers "between a rock and a hard place," the IMF said, needing to work on two fronts: stabilizing the financial sector and using monetary and fiscal policies to support growth.

The coordinated rate cuts announced Wednesday by the major central banks, including the Federal Reserve and the European Central Bank, was "clearly a step in the right direction," said Olivier Blanchard, director of research for the IMF.

The IMF report was written in the past few weeks, after the crisis entered a "tumultuous new phase" in September.

The forecast for global economic growth next year has been marked down to 3% in the latest forecast, with "the major advanced economies already in or near a recession," the fund said. "The pickup is likely to be unusually gradual, held back by the continuing financial market deleveraging."

Inflation should recede quickly, the IMF forecasters said, provided crude-oil prices do not revisit this summer's highs.

The forecasters acknowledged "considerable downside risks" to their predictions, pointing to the possibility that financial stress could remain very high and that credit constraints could intensify.
The forecast assumes authorities take decisive and successful action to arrest the decline in financial markets, Blanchard said. Public funds will be needed to support financial stabilization, he said, including help in recapitalizing the banks.

Looking ahead, the fund said the major immediate challenge for policy makers is to "stabilize global financial markets while nursing economies through a global downturn and keeping inflation under control."

In the longer run, financial systems must be rebuilt. Policy makers will also have to reduce "procyclical tendencies" in the global economy and strengthen "supply-demand responses" in commodity markets.

The IMF forecast has been significantly reduced since July's report. Global growth in 2009 is now seen at 3%, rather than 3.9%. The advanced economies are expected to grow 0.5%, rather than 1.4%. The emerging markets are expected to grow 6.1%, rather than 6.7%.
The United States economy is projected to grow 0.1%, rather than the 0.8% projected three months ago. The euro-zone economy is expected to grow 0.2%, rather than 1.2%. Japan is expected to grow 0.5%, not 1.5%.

Emerging economies should fare better. China's growth-rate forecast was marked down to 9.3% from 9.8%, and India's to 6.9% from 8%.

Global trade is expected to slow significantly from 7.2% growth in 2007 to 4.9% in 2008 and 4.1% in 2009.

With commodity prices projected to fall in 2009, inflation should moderate to about 2% in the advanced economies, the IMF said.



Thursday, September 25, 2008

Time will tell as FBI probing bailout firms

Time for FBI investigation on those Banks.

The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG - and their executives - as part of a broad look into possible mortgage fraud, sources with knowledge of the investigation told CNN Tuesday.

The sources would not speak on the record because the investigation is ongoing.
FBI spokesman Special Agent Richard Kolko had no comment on that information, but said 26 firms are currently under investigation as part of the bureau's mortgage fraud inquiry.
Earlier this month, FBI Director Robert Mueller told Congress that 1,400 individual real estate lenders, brokers and appraisers are now under investigation in addition to two dozen corporations.

"The FBI currently has 26 pending corporate fraud investigations involving subprime lenders," Kolko said. "As we have seen, this number can fluctuate over time; however we do not discuss which companies may or may not be the subject of an investigation."

The Crisis: A timeline
Previously, CNN has reported that lender Countrywide and Atlanta-based homebuilder Beazer (BZH) - which dropped out of the mortgage business early this year - are part of the investigation.

The sources said the probes of Fannie (FNM, Fortune 500), Freddie (FRE, Fortune 500), Lehman (LEH, Fortune 500) and AIG (AIG, Fortune 500) are believed to be in the early stages. One source said the government would be "remiss" if it didn't look into what happened at these companies because of the financial problems they are involved in and the actions of individuals running them.

Lehman Brothers and Freddie Mac declined comment on the matter. AIG spokesman Joseph Norton said, "We don't have details about the FBI investigation. Of course, we will cooperate with the FBI."

The United States is in the midst of a spiraling economic crisis fueled largely by the housing market. Earlier this decade, mortgage lenders relaxed restrictions on obtaining mortgages as home prices soared about 85% from 1996 through 2006 in inflation-adjusted dollars, creating a bubble. Then the bubble popped, and lenders - as well as mortgages - took the hit.

Money Crisis: Your questions answered
Last week, mortgage insurer AIG narrowly avoided bankruptcy when the federal government took 80% of its equity in exchange for an $85 billion loan from the Federal Reserve while Lehman filed the largest bankruptcy in American history. Earlier this month, the government took over mortgage giants Fannie and Freddie.

Bank of America (BAC, Fortune 500) bought Countrywide in July. Beazer dropped its mortgage arm early this year after an internal investigation - prompted by a Charlotte Observer investigation - found "evidence that employees violated [federal] regulations ... back to at least 2000." The company said it is cooperating with the federal investigation.

Other bank failures and takeovers have led to the Bush administration's current proposal to spend $700 billion to shore up the financial markets. The proposal is under consideration by Congress, where lawmakers from both sides of the aisle have balked at the proposal's lack of oversight provisions, among other issues.

As the mortgage industry began to unravel, the FBI, with assistance from the IRS, launched a broad investigation into mortgage fraud. In June, its Mortgage Fraud Task Force arrested more than 400 mortgage brokers, lenders, appraisers and other industry insiders who, it said, were responsible for more than $1 billion in losses.

Last month, a Mortgage Asset Research Institute (MARI) study found that the number of fraudulent loans issued during the first three months of 2008 skyrocketed 42% compared with the same period in 2007.

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Things would happen so easily, someone would have to answer for it for jail.

Friday, September 19, 2008

谢国忠:中国道路在于提高经济效率

[金融体系都是依赖于政府的隐性支持来维持运转,这样下去的话,金融体系将面临国有化的危险。所以美国政府最终还是在雷曼兄弟这件事上下了决心,划一条线(分清政府与市场的边界),看市场自己能否消化。]

作者:谢国忠,独立经济学家

“这不代表宏观政策的变动,是为了提振市场的信心。”9月16日,独立经济学家、玫瑰石顾问公司董事谢国忠接受本报专访时如此解读。他是全球最早预言美国次贷危机的爆发及其深广的影响的专家之一。

他依旧对全球经济前景不抱乐观。他给出两个标志:金融机构的不良资产被市场重新定价并再流通——这是金融危机见底;公司能够融资并再投资,需求开始回归——这是实体经济见底。“美国经济见底并恢复估计要四五年。

中国希望靠美国经济复苏把我们拉上来,而必须要另外杀出一条血路来。”他坦言。
“杀出血路”的利器,就是提升中国经济效率,“改革是唯一出路。”而他认为,在财政收支、金融资本政策控制、价格体系政府控制中,存在着相当多低效率的地方。“降低政府在经济中的重要程度,可能解决中国目前面临的经济问题。”他说。

美国政府:恢复金融体系市场机制

《21世纪》:作为美国第四大投资银行,雷曼兄弟公司申请破产保护,有人将其称为“华尔街地震”。这究竟意味着什么?

谢国忠:雷曼兄弟公司破产,意味着将有价值6000亿美元的资产需要平仓,这当然会对市场造成相当大的恐慌。这里面有流动性的问题,也有资产价格重估的问题。

雷曼现在很多资产没怎么流通,价格都是大家猜测、想象的,如果它真的抛出来,资产价格就要重新定位,这会给很多金融机构带来很大的问题。如果用金融价格来衡量这些机构资产的话,那他们可能就资不抵债了。这也是市场目前非常担心AIG (美国国际集团,美国最大保险公司)的原因。

《21世纪》:此前,市场一直寄希望于美国政府像对待贝尔斯登那样,通过财政来支持雷曼,使其免遭破产厄运。但在最后时刻,美国政府没有动用这一招。怎样看美国政府这一次的作为?
谢国忠:这表明,美国政府最终还是想恢复金融体系的市场化机制。

这一年多来,金融体系都是依赖于政府的隐性支持来维持运转,这样下去的话,金融体系将面临国有化的危险。所以美国政府最终还是在雷曼兄弟这件事上下了决心,划一条线(分清政府与市场的边界),看市场自己能否消化。

《21世纪》:美联储9月14日联合全球十大银行成立了首期700亿美元的市场救助基金,欧洲央行、英国央行也纷纷向市场注入流动性。这些举措是否为了救市?能否从根本上解决问题?
谢国忠:这些举措,目的都是为了提供资金保障,支持市场短期流动性。因为短期可能因为恐慌性抛盘、资产非理性下跌带来流动性问题。但这个问题不是很大,是一个技术性问题。
而基本面的问题在于,你这个资产到底值多少钱。如果按照美林之前出售抵押债务债券(Collateralized Debt Obligation,简称CDOs)的价格,一元钱只作价0.22元,如果这是一个真实价格的话,很多金融机构都要破产了。而这些央行的救助方案是不能改变这个基本现实的。

全球央行出手:危机仍未见底

《21世纪》:那么这个危机何时才会见底?见底的标志是什么?

谢国忠:金融机构的不良资产抛出后,让市场定价,然后这些资产可以重新有流通,这是金融危机见底的一个最重要的象征,而不能说像现在,不良资产还放在自己的账上,自己可以伪装一个价格。

《21世纪》:那全球实体经济的见底恢复会要多久?
谢国忠:金融危机的见底应该早于实体经济。实体经济见底恢复的标志是公司能够融资并再投资,需求开始回归。美国经济见底并恢复还要很久,估计要四五年。

《21世纪》:你对此这么悲观?
谢国忠:原来,美国经济的增长都是靠消费者借钱消费支撑的,这次金融危机也是因此导致的。下一轮经济增长靠什么?不能再回到老路吧?

这次,美国要韬光养晦很久了,不能再虚胖,而要瘦身,再长肌肉,需要的时间会很长。所以,我的观点是,中国不要再等待,希望靠美国经济复苏把我们拉上来,而必须要另外杀出一条血路来。

中国对策:财政“托一把”经济

《21世纪》:在全球经济动荡、面临衰退风险的时候,中国怎样才能“另外杀出一条血路来”呢?

谢国忠:核心问题是,经济的发展不能靠股市、楼市来支撑,中国接下来的路一定是要提高经济效率,改革是唯一出路。

中国经济里面低效率的地方太多了,提高效率,中国经济就可以上一个新台阶。别老说自己的经济增长那么快,你的基础还是很低的。

《21世纪》:你的意思是还是要坚持市场化的制度变革。但短期内政策应如何调整以应对全球经济风险呢?下调人民币贷款基准利率和部分存款类金融机构人民币存款准备金率,是中国政府宏观政策变动的一个信号么?接下来是否会进入降息周期?

谢国忠:这不是宏观政策的变动,是为了提振市场的信心。
准备金率下调是应该的,是为了保持银行体系流动性的正常水平。因为原来是热钱大量流入,现在是热钱向外流,但是要根据外汇储备的升降速度做适度调整。利率大幅下降目前还不可能,通胀过几个月就会消失的想法并不现实。

《21世纪》:下一步的关键在哪里?

谢国忠:从短期来看,两方面的政策很重要。
从稳定需求来看,财政政策对经济应该“托一把”。考虑到出口企业和地产开发商的资产流动性问题,中国经济增速放缓越来越明显。一些财政刺激措施可以做“软着陆”的保障,例如加快城市基础设施建设、铁路网修建等,来缓冲下行风险,对经济长期发展也有好处。
同时,要增加地方政府的财政收入,解决他们的偿债能力问题。
中国企业存在偿还债务问题。“三角债”特别是以应收账款形式存在的债务在不断堆积,问题的源头可能是地方政府缺少资金。

《21世纪》:中长期来看呢?

谢国忠:接下来就应该找到经济低效率的地方并加以改变。在财政收支、金融资本政策控制、价格体系政府控制中存在着相当多低效率的地方。
多年来,中国消费率持续走低,刺激消费政策一直难以真正奏效,很重要的一个原因就是政府占有的收入比重过高。

中国的税收已经达到历史最高水平。今年预算收入可能达到6万亿人民币,占GDP21%,是20世纪90年代最低水平的两倍。国有企业利润也可能达到GDP的6%。还有大量预算外收入。
总体而言,政府收藏了GDP三分之一的财富,或者是国民生产净值(GDP减去资本贬值)的40%。在过去十年,中国经济明显地转向政府这边。降低政府在经济中的重要程度,可能解决中国目前面临的经济问题。

中国可能有潜能在一个良好的投资回报率在未来一年。美国有问题经济,中国的经济可能以更快的速度超过美国。

Andy xie:- bury the Greenspan put and let people get what they deserve.

The global credit bubble is bursting and there are many out there who “deserve what is coming to them,” writes Andy Xie, now an independent economist in Shanghai, in Tuesday’s FT.

In full finger-pointing stride, Xie, who resigned last year as Morgan Stanley’s chief Asia economist after some people took exception to his dim view of Singapore, says “this bubble is primarily leverage financing for owning risky assets”.

”The people who were responsible for what happened played with other people’s money, marketed arcane financial products with false promises of fat profits, but stuffed their own pockets with big bonuses. Neither these masters of the universe nor their greedy but naïve investors deserve to be bailed out”, he says.

The central banks bear equal responsibility in the current debacle, says Xie. After the 9/11 terrorist attacks on America, they slashed interest rates and “provided the cheap money for this leverage bubble”.

“They must not flood the world with liquidity again to sustain this bubble or create another,” warns Xie. Rather, they should focus on “price stability, not financial market stability, and should provide liquidity only to contain the multiplier effect of the bubble bursting on the economy”.
Nor should central banks stimulate to “avoid recession at any cost”, as that would only worsen the “excesses” in the global economy and make the inevitable correction more painful, he says. “Business cycles are not bad. Excesses must be followed with cleansing.”

Wall Street also comes in for its share of vitriole. In the past five years, says Xie, the collapsing agency business has pushed banks into betting their own money for profit and selling “high margin” structured products to their clients: “Their eagerness for selling new and poorly understood products, such as sub-prime mortgage derivatives, is a major factor in the current bubble”; and, like after the junk bond bubble of the 1980s, “lawsuits may hit Wall Street for years to come”.

Rating agencies, of course, “should share the guilt”, says Xie. “They give high ratings to sub-prime derivatives with high seniority in payment. Unfortunately, the repayment behaviour of the sub-prime borrowers depends on macro conditions… Like in the previous debt bubbles, rating agencies behave like momentum traders. The ratings are supposed to give guidance to investment risk during bad times, not to be downgraded when the situation turns sour.”

And let’s not forget the “ballooning” hedge fund industry. “As their funds have become big, they have focused on their 2 per cent management fees rather than the share in investment profit,” says Xie. “So they have focused on gathering assets by over-promising.” Some funds specialise in illiquid assets such as derivative products of sub-prime mortgages and can “report whatever pefromance they want” as long as they do not face redemption, he says. “As soon as redemptions happen, they cannot even sell their stuff and have to refuse withdrawals.”

If central banks try to bail out Wall Street, it would lead to high inflation for years, he warns. The inflationary effect of loose monetary policy of the past was offset by the deflationary effect of globalisation, he adds. “Now China and other developing countries are experiencing high and rising inflation. Loose money will go straight into inflation. The vicious cycle of the wage-price spiral of the 1970s has not occurred as both labour and capital still believe in the inflation-fighting credibility of the central banks. If they loosen up again to bail out Wall Street, this credibility may be squandered. The ensuing wage-price spiral could ruin the global economy for years to come.”

Xie’s conclusion is that central banks should now grab the opportunity to restore their credibility: “Markets have been taking more risk than they should because they believe that central banks will come to their aid during times of crisis, like now. The penchant of Alan Greenspan, former Fed chairman, to flood the market with liquidity during financial instability is the genesis of this ‘central bank put’. As long as this expectation remains, financial bubbles will occur again and again. Now is the time to act. Let the crooks go bankrupt. Central banks should bury the Greenspan ‘put’ for good.”

Andy Xie also goes on to distribute blame:-
“In the past five years, Wall Street has changed dramatically and that may not be for the better. The collapsing agency business has pushed banks into betting their own money for profit and selling “high margin” structured products to their clients. Their eagerness for selling new and poorly understood products, such as sub-prime mortgage derivatives, is a major factor in the current bubble. Like after the junk bond bubble of the 1980s, lawsuits may hit Wall Street for years to come.

Rating agencies should share the guilt. They give high ratings to sub-prime derivatives with high seniority in payment. Unfortunately, the repayment behaviour of the sub-prime borrowers depends on macro conditions. As soon as property prices drop significantly, they tend to default at the same time and the seniority in repayment is not worth much. Like in the previous debt bubbles, rating agencies behave like momentum traders. The ratings are supposed to give guidance to investment risk during bad times, not to be downgraded when the situation turns sour.

The ballooning hedge fund industry is also culpable. As their funds have become big, they have focused on their 2 per cent management fees rather than the share in investment profit. So they have focused on gathering assets by over-promising. Some funds specialise in illiquid assets such as derivative products of sub-prime mortgages. As long as they do not face redemption, they can report whatever performance they want. As soon as redemptions happen, they cannot even sell their stuff and have to refuse withdrawals.”

Andy Xie finishes:-
“If central banks try to bail out Wall Street, it would lead to high inflation for years. The inflationary effect of loose monetary policy of the past was offset by the deflationary effect of globalisation. Now China and other developing countries are experiencing high and rising inflation. Loose money will go straight into inflation. The vicious cycle of the wage-price spiral of the 1970s has not occurred as both labour and capital still believe in the inflation-fighting credibility of the central banks. If they loosen up again to bail out Wall Street, this credibility may be squandered. The ensuing wage-price spiral could ruin the global economy for years to come.

What is occurring is an opportunity for central banks to restore their credibility. Markets have been taking more risk than they should because they believe that central banks will come to their aid during times of crisis, like now. The penchant of Alan Greenspan, former US Federal Reserve chairman, to flood the market with liquidity during financial instability is the genesis of this “central bank put”. As long as this expectation remains, financial bubbles will occur again and again. Now is the time to act. Let the crooks go bankrupt. Central banks should bury the Greenspan “put” for good.”

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NOTE: Andy Xie’s article is the most over-the-top article on the FT , this will help you see the whole picture in term your investment.

We shall see US govt. jail Wall street greed one by one in the coming future as after the bubble have gonna.

"The greed of Wall street"

Monday, September 15, 2008

There is news on Lehman Files For Bankruptcy, BofA To Buy Merrill

News from CNN, Date: 15th Sept. 2008

THE EVENTS: Two of Wall Streets' venerable investment giants have been brought to their knees - and an insurance powerhouse hangs by its fingertips. Lehman Brothers Holdings Inc. (LEH) filed for bankruptcy protection, while Merrill Lynch (MER) agreed to be acquired by Bank of America Corp. (BAC) for $50 billion.

Meanwhile, another victim of the ongoing credit and housing crunch, insurance giant American International Group Inc. (AIG), is desperately trying to raise capital.

MARKET REACTION:
Merrill shares gained 26% to $21.59 as investors expressed relief, but Bank of America fell 14% to $28.88. Lehman stock fell 95% to 19 cents a share and AIG dropped 47% to $6.34.
In the broader market, the Dow Jones Industrial Average was down 223 points at 11198, Nasdaq was off 26 at 2234 and the S&P 500 down 21 at 1230.
Treasurys soared as investors scrambled for safety.

The U.S. dollar was off its overnight lows after initial risk aversion moves.
Oil futures slid to a seven-month low as speculators fled for perceived safe havens amid turmoil on Wall Street.

Gold prices jumped nearly 3%.
European stock indexes were down 4% to 5%.
Equity indexes in Asia were off about 4% with the bourses in Japan, China and Hong Kong closed for holidays.

LEHMAN BROTHERS SEEKS PROTECTION: Wracked by massive real-estate-related losses, Lehman Brothers Monday filed for Chapter 11 protection after a feverish weekend of negotiations to attract a potential buyer. But the two most likely suitors, BofA and Barclays PLC (BCS), walked away after the U.S. government said it would not backstop Lehman's troubled assets to facilitate a sale.

Federal regulators assured Lehman brokerage customers that their accounts will be protected and transferred to other brokerage firms. Meanwhile, Lehman employees received few answers Monday about the status of their jobs. Thousands are expected to be laid off.

MERRILL ABSORBED AMID CRISIS: Merrill, in a rushed bid to ride out the storm sweeping Wall Street, agreed to be taken over by BofA in a $50 billion all-stock transaction. Through the weekend, federal officials strongly encouraged the deal, fearing Merrill would be the next financial house to approach the brink after Lehman.

AIG SEEKS CAPITAL: AIG - hobbled by credit default swap investments that have gone sour - spent the weekend trying to raise $40 billion to avoid a credit downgrade which would let counterparties pull their capital from deals with the firm. AIG Chief Executive Robert Willumstad made an extraordinary appeal to the Fed for temporary funding to tide it through the crisis.

WALL STREET CIRCLES THE WAGONS: Ten major commercial and investment banks announced Sunday they would pool $70 billion of their own money to create a borrowing facility that they could tap into to help them ride out the crisis.

U.S. TAKES STEPS TO SUPPORT FINANCIAL MARKETS: U.S. regulators Sunday announced a series of steps - including an expansion of the Federal Reserve's credit facilities - in hopes of stabilizing financial markets after a tumultuous weekend. The moves are designed to make it easier for banks to gain access to emergency credit.

WHAT THEY SAID:
Bank of America Chief Executive Ken Lewis said he felt "no pressure" from federal government regulators to acquire Merrill.

"Today we are looking forward. This weekend's discussions made clear that both market participants and regulators in this country and abroad recognize the need to support market stability and remove uncertainty as they address current challenges," Treasury Secretary Henry Paulson said.

"Monday will be a day of reckoning for the financial markets," said Carlos Mendez, senior managing director of ICP Capital.

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Where in earth having so much money or Huge Capital for those failure banks to refinance their debts? can't US govt. help those banks or protect those banks?

I think to get out of this crisis must able to rise even more fund than those debts adding together that will over come the crisis. The Crisis is meet where the money is short of cash to run the businesses.

America has been number one for more than a centry. The number one are in their economy. are China able to over take it fast enough? are China meet with those standard that America alway meet.

Is there a greed and fear factor in the crisis?

Treasurys jump that cause Wall Street crisis escalates.

Has US crisis over?.....

U.S. debt had gains most since September 2001...

Treasurys jumped Monday, pushing yields down by the most since September 2001, as investors clamored for the safety of government debt in the wake of Lehman's bankruptcy, Merrill Lynch's demise and AIG's need for cash.

Two-year note yields dropped 37 basis points, or 0.37%, to 1.86%, the biggest decline since Sept. 17, the first day bonds traded after the terrorist attacks. The yield is the lowest since April.

"It's definitely an extraordinary set of circumstances and I don't know if it's a culmination," said Jason Brady, who helps oversee about $6 billion in fixed-income assets at Thornburg Investment Management. "There isn't a lot of hope that this is going to turn around anytime soon. People would rather own things they don't have to think about so are buying Treasurys."

Bank of America, which absorbed failing mortgage lender Countrywide earlier this year, agreed to buy Merrill Lynch in the hopes of preventing the demise of yet another Wall Street giant.

Lehman filed for Chapter 11 bankruptcy, ending the 158-year-old Wall Street firm's run and rattling the foundation of the global financial system.

"For markets, the question is whether the liquidation of Lehman's illiquid assets will force other dealers to mark down the value of their holdings, resulting in another wave of write-downs and fire-sales that could destabilize markets," said BMO Capital Markets analysts.

Analysts also note the economic ramifications of potentially thousands of layoffs from all four firms because of overlapping positions or attempts to streamline the business. And as financial firms tighten their belts, it will also likely mean less lending to individuals and businesses, slowing down economic activity even more.

Ten-year note yields, which move inversely to prices, dropped 19 basis points to 3.54%.

Interest-rate futures have jumped as traders almost fully expect the Federal Reserve to reduce its benchmark rate at its meeting tomorrow to 1.75% from 2% to make borrowing and lending more feasible for a battered financial system.

"We believe that the gravity of the situation requires a Fed ease of 50 basis points and a removal of the current 25 basis point premium of the discount rate" at which banks can borrow from the Fed directly, said T.J. Marta, income strategist at RBC Capital Markets. "Such a move would put the Fed 'ahead' of the market."

Futures also show an 80% chance of another quarter percentage point cut at the central bank's meeting on Oct. 31.

The Fed also expanded its loan programs for banks and other financial institutions "to mitigate the potential risks and disruptions to markets," Chairman Ben S. Bernanke said in a statement.

The news are from MarketWatch Date: 15th Sept. 2008

----------------------------------

Is US Dollar flooding the whole world? Since near to all most everything are rate in USD......
I guess US should be able to deal with the crisis it just because there isn't any other country that bigger than US economy...in other word if they can't no single one are able bail them out fast.

This will have to take a long time than expected with the many country finance strength.....

Friday, August 22, 2008

Oil Jump More Than $6 on US's NYMEX.

Are the world getting themselve ready for high oil price with the oil peak period? (The long ever Oil crisis). This is not everyone like to see it happen but it really happen.

The news is retrieve from Bloomberg on Aug. 21:--
-------------------------------------------------------

Crude oil rose more than $6 after the signing yesterday of a missile-shield agreement between the U.S. and Poland bolstered concern that Russia may disrupt the flow of oil, and as a weaker dollar increased the appeal of commodities.

The U.S. missile shield in Europe, which has ``a real anti- Russian potential, won't increase the continent's security,'' Russia's Foreign Ministry said. Russia is the world's second- biggest oil producer. Energy and metals futures also climbed as the dollar fell to the lowest against the euro in a week.

``The tensions between Russia and the West were supposed to be simmering down but they are now ratcheting up because of Poland's agreement with the U.S.,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``The fall of the dollar is sending a huge investor flow into commodities.''

Crude oil for October delivery rose $5.72, or 5 percent, to $121.28 a barrel at 12:01 p.m. on the New York Mercantile Exchange, the biggest increase since June 6. Oil rose as much as $6.48 to $122.04 a barrel, the highest since Aug. 4. Futures are down 17 percent from a record $147.27 reached on July 11. Prices are up 75 percent from a year ago.

Brent crude oil for October settlement rose $6.02, or 5.3 percent, to $120.38 a barrel on London's ICE Futures Europe exchange.

``The dollar has been the big driver of both the rally and the pullback,'' said Kevin Kerr, president of Kerr Trading International in Wilton, Connecticut.

The dollar fell to $1.4875 per euro, from $1.4747, and touched $1.4891, the weakest since Aug. 14. The U.S. currency has climbed versus the euro since touching an all-time low of $1.6038 on July 15.

Hard Assets ``The dollar's rise was too swift to have faith in,'' said John Kilduff, senior vice president of risk management at MF Global Inc. in New York. ``The resumption of the currency's fall has increased the appeal of hard assets.''

The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 3.6 percent to 1503.858 today, the highest since Aug. 1.

Russia has defied calls by U.S. President George W. Bush and other Western leaders for an immediate withdrawal from Georgia since a cease-fire agreement last week ended five days of fighting.

The Baku-Supsa pipeline, which pumps more than 100,000 barrels of oil a day from Azerbaijan to the Georgian port of Supsa on the Black Sea coast, is still shut on security concerns following fighting between Georgian and Russian troops, Toby Odone, a London-based spokesman for BP, said today by telephone. Railway transportation to Georgia's Black Sea ports has also been suspended because of a damaged bridge.

The Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, will be fully operational this week and tanker loading will resume next week, officials said. The pipeline has a capacity of 1 million barrels a day.
`Geopolitical Worries'

``I've been waiting for the gathering geopolitical worries to pump up the security premium,'' Kilduff said. ``The increase in tension with Russia will probably spell the end of cooperation on the Iran nuclear front.''

The U.S. and its European allies are trying to persuade Iran to halt its uranium enrichment program, saying it's a cover for developing nuclear weapons. Iran is the world's fourth-biggest oil producer.

``The hope was that Russia's fields would be developed and the barrels made available,'' Kerr said. ``If you are a multinational, you are already afraid of nationalization of your assets. Now, with the recent problems between Russia and its neighbors, nobody is going to invest there.''
TNK-BP, a 50-50 venture between BP Plc and a group of billionaires known collectively as AAR, is embroiled in a dispute over strategy and management. BP, which relies on the company for almost a quarter of its output, is struggling to maintain control amid pressure on foreign employees.

Gasoline Supplies U.S. gasoline supplies fell 6.2 million barrels last week, the U.S. Energy Department said in a report yesterday, more than double analysts' predictions. Crude-oil stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain since March 2001, the report showed. Stockpiles fell the previous week when Tropical Storm Edouard hit Texas.
Refineries operated at 85.7 percent of capacity in the week ended Aug. 15, down 0.2 percentage point from the week before and the lowest since the week ended May 2, the report showed.
``The market shrugged off the big crude build because they attributed it to delayed imports that couldn't arrive during the week of Edouard,'' McGillian said. ``More attention was paid to the drop in gasoline stocks and refinery runs. If refiners continue to operate at this level we won't be able to build product inventories.''

Gasoline for September delivery rose 13.69 cents, or 4.7 percent, to $3.0472 a gallon in New York.

Pump prices haven't increased since July 19, according to the AAA, the nation's largest motorist organization. Regular gasoline, averaged nationwide, fell 1.5 cents to $3.702 a gallon, the AAA said today on its Web site. Prices reached a record $4.114 a gallon on July 17.

---------------------------------------------------------------------------------

Is the coming future oil supply depend on Russia? If let's say Saudi lost the world oil producer title with the weak oil proved reserves figure that put up by them.

Russia maybe the potential country that able to replace Saudi's world Top oil producer position.
Most scientist may will said, "the Russia is the world largest land in this earth got the most potential in conventional oil recovery."

Will Russia use Oil as a weapon in the future? If that really happen the world will have to suffer the ever crisis that never seen before. no one know what Russia thinking now and also the future.

How much you know about Russia Govt. and the country?

NOTE: The above facts are come without any proof to proof them but the facts can be found from it's fundamental figure that are come from the internet. I will try my best to find the fundamental figure and some facts to support for this article that I posted.

http://en.wikipedia.org/wiki/Russia

https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html

Who is Boris Berezovsky?
http://en.wikipedia.org/wiki/Boris_Berezovsky

The show for Boris Berezovsky in "The Russian Godfathers (BBC) Ep 1" - The Fugitive.
There six parts of them, will take sometime for watching them, please enjoy watching.

http://www.youtube.com/watch?v=thy3C_rlUGc

http://www.youtube.com/watch?v=-_KB6mOCrSE

http://www.youtube.com/watch?v=cwPXpr1rr8Y

http://www.youtube.com/watch?v=sgftWsKABlc

http://www.youtube.com/watch?v=2e8irtXUkBs

http://www.youtube.com/watch?v=mPeMuBcG4ok

Please enjoy watching those videos they are filmed by BBC with the real facts story.

Saturday, August 9, 2008

Hot money come to China in march 2008.

What is Hot money in economy term?

In the economics, hot money refers to funds which flow into a country to take advantage of a favourable interest rate, and therefore obtain higher returns. They influence the balance of payments and strengthen the exchange rate of the recipient country while weakening the currency of the country losing the money. These funds are held in currency markets by speculators as opposed to national banks or domestic investors. As such, they are highly volatile and will be shifted to another foreign exchange market when relative interest rates make this more profitable.

This kind of hot money fund can be may come from various way, it can be borrowing of huge fund from bank while the interest is very low for an example 0.5% prime lending rate.

Hot money is a major factor in capital flight and the ability of developing nations to finance their debt. As large sums of money can move very quickly to take advantage of small fluctuations in interest rates and currency values, countries which have difficulty raising money through the sale of long-term bonds are particularly susceptible to short-term interest rate pressure, particularly during periods of rapid inflation. These types of transactions were largely responsible for the currency crises in Mexico and Asia during the 1990s. See 1994 economic crisis in Mexico and East Asian financial crisis.

In part to reduce the influence of hot money on a nation’s economy, a few nations have minimum time requirements for investment. For example, Chile requires all foreign investments to be put in a one-year-locked account. Although this sort of control reduces investment in a country, it also makes its economy less susceptible to currency flight.

Hot Money is a form of fund that come in vey sudden with huge amount and is undetectable by government or market, it also goes very sudden and quickly.

alright below is the news that I retrieve from Chinadaily dot com.

-----------------------------------------

Foreign investments and international hedge funds, some of which are speculative hot money, are now elbowing into the China market. They're lured by the Chinese people's emerging consumption power, and expectations of the Chinese yuan appreciating higher.

The Ministry of Commerce said on Wednesday that China drew $18.13 billion in overseas investments in January and February, shooting 75.2 percent year-on-year.

Chinese Commerce Minister Chen Deming, who was promoted to the post late last year, said at a news conference in Beijing that the reason for the big increase of overseas capital in the first two months was due to the big increase in large-scale investing projects and a stronger yuan.

Chen's ministry, which oversees foreign trade and domestic consumption, said that during the first two months, investments from the European Union countries rose a whopping 109 percent, while investments from the United States increased 44 percent.

Wild expectations abroad that the yuan will continue to rise in value against major world currencies has led to money coming to China.

"When you bring US dollars to invest in China, you need to change it into the yuan. Naturally you would like your funds to enter China at an earlier date. Because, if you are late, the same amount of dollars will turn out to be less yuan bills," Chen told reporters.

China's foreign exchange administration, under the auspices of the People's Bank of China, the central bank, said in its latest report that the country's total foreign exchange reserve has reached nearly $1.59 trillion by the end of January, the world's largest.

China's currency, also called the renminbi, has been constantly rising in value. The People's Bank of China, set the medium parity trading price at 7.0970 against one US dollar on Thursday, a new record high. The yuan has gained 3 percent against the dollar in value since the beginning of 2008.

The sharp increase in the stock of hard currencies has triggered another round of concern on speculative hot money flowing into China, posing potential risks to China's financial system stability.

Wu Xiaoling, deputy head of the National People's Congress's Finance Committee, who was a former central banker, said that the American subprime crisis and the rising trend of the yuan's value will make world speculative funds come to the China market to seek profits.

When asked by reporters whether the hot money has arrived in the name of foreign direct investments, Minister Chen Deming said: "I can hardly tell their entering channels, and their volume. It belongs to the management of the foreign exchange administration."

Economist Suggests Quick Appreciation.

Liang Hong, economist at the Goldman Sachs, argued in a written article published by a major Chinese financial newspaper on Thursday that Chinese monetary authorities should consider quickening the appreciation pace of the yuan, to fight domestic inflation, which approached to 8.7 percent in February.

Others have suggested another "one-off" big rise of the value of the yuan, possibly 5 percent against the greenback by the central bank, to block more hot money from flooding in.

Liang said in her article that "allowing a marked rise in the yuan value is the most opportune policy instrument to curb inflation, as well as rectify the foreign trade imbalance".

She also argued for immediate interest rate hikes to thwart inflation, otherwise the Chinese economy faces an increasing risk of a hard-landing.

Singapore cuts growth forecast to 4%~5% for the 2008 GDP!

Singapore Prime Minister Lee said in his National Day message, that he has cut the 2008 GDP growth forecast to between 4 per cent and 5 per cent from an earlier estimate of between 4 per cent and 6 per cent.

Prime Minister Lee said the country faces a tough time in the year as it is beginning to feel the impact that affect by the US economy slowdown.

"For the whole year, Prime Minister Lee expect growth to be between 4 and 5 per cent," Prime Minister Lee said in his annual message, which was televised on the eve of Singapore’s 43rd birthday.

Prime Minister Lee said the Singapore economy had expanded by 4.5 per cent in the first six months of 2008.

"Singapore’s economy has so far been partly buffered, because singapore economy have been carried along by the vibrancy of the Asian region. But Asian economies are starting to feel the impact of America’s problems, and so are Singapore. Singapore must therefore prepare themselves for a bumpy year ahead," as Prime Minister Lee said.

Prime Minister Lee also acknowledged the problems Singaporeans are facing are due to global inflation. And while the government cannot prevent prices from going up as they are worldwide, it is trying to lighten the burden on Singaporeans through schemes like Workfare and ComCare.
"The government are doing the next best thing: to put in place effective relief measures, and provide the poor and the needy with the help they need. Singapore government must look beyond immediate problems like the cost of living, to understand what is happening in the world around us, discover new opportunities and tackle Singapore's longer term challenges," he said.
The annual message is seen as a prelude to the National Day Rally, where the Prime Minister goes into further detail on the long term challenges facing the country.

In the televised message on Friday, Prime Minister Lee highlighted three other points.
First, the upgrading of Singapore’s economy: to do so, there must be investment in its people. One way is through education. To that end, Singapore is building a fourth university which will take its first batch of students in 2011, well ahead of the original target of 2015. The publicly—funded university will have its campus in Changi.

The second point Prime Minister Lee highlighted was how to encourage Singaporeans to have more children to boost the country’s total fertility rate, which currently stands at only 1.29
Prime Minister Lee said: "The government can create an environment where Singaporeans see them (children) as a natural and important part of life, and where young couples get support in starting families. The government have looked at this comprehensively and will take further steps to address the practical problems which couples face."

Prime Minister Lee also spoke of adapting Singapore to be able to educate and engage what he called "cyber—citizens".

Prime Minister Lee said: "Singapore must adapt themselves to it, and use it to educate and engage their cyber—citizens. The government will evolve their policies and rules, Singapore economy and society, to take full advantage. The government will continue to open up their system progressively."

Prime Minister Lee hinted that the country will continue to open up space for political and societal debate, saying it is the "right way to go". But he also said that as the country continues to open up, its new generation of citizens need to understand that all freedoms come with responsibilities.

------------------------------------------------------

Be prepare for the tough time to come, the impact I believe will last for two to three year down the road. there is an example to see is Japan's property bubble in 90s.

we in the world of globalisation, the impact of US economy slowdown will spread around the world.

Just hope that the credit crunch crisis will over soon and the economy will have a bull run again.

There is news list for reviewing:-

Italy economy contracts, bringing recession close.
http://www.channelnewsasia.com/stories/afp_world_business/view/366035/1/.html

OECD sees growth easing in top economies.
http://www.channelnewsasia.com/stories/afp_world_business/view/365915/1/.html

Japan's longest post-war economic recovery over.
"It is possible that the economy may already be in a recession,"
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/365596/1/.html

Singapore banks sound warning after mixed results.
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/365581/1/.html

Barclays says net profit slides 35% in first half. (Barclays is the 18th largest company in the world according to Forbes.)
http://www.channelnewsasia.com/stories/afp_world_business/view/365498/1/.html

AXA reports 32% profit slump on sub-prime damage. (The 15th largest company in the world by Fortune.)
http://www.channelnewsasia.com/stories/afp_world_business/view/365534/1/.html

Freddie Mac's rising losses bode ill for US housing crisis.
http://www.channelnewsasia.com/stories/afp_world_business/view/365456/1/.html

BNP Paribas second quarter profits down 34%
http://www.channelnewsasia.com/stories/afp_world_business/view/365221/1/.html

Societe Generale reports quarterly profit slump, but shares rally.
http://www.channelnewsasia.com/stories/afp_world_business/view/365008/1/.html

Greenspan warns US governments may have to bail out more banks.
http://www.channelnewsasia.com/stories/afp_world_business/view/364947/1/.html

Analysts say Asian economies yet to feel real impact of US subprime crisis.
http://www.channelnewsasia.com/stories/economicnews/view/364863/1/.html

Sunday, June 8, 2008

POSSIBLE of Global SLOW DOWN in economy.


In the recent higher crude oil price hit at near US$139 per barrel during Friday NYMEX trading , also there is a number of anlaysts put up their target for this year end at US$150 per barrel.

What have done is been done, American President George W. Bush have asked Saudi King to produce more crude Oil output for second time but the King disagree to increase oil output, the reason for his disagree are market having enough oil supply, maybe he are refering the 1971 oil crisis that don't even had any oil supply to oil consumer countries. Some believe Saudi have reach it Oil peak. (What is oil Peak? please check " Hubbert peak theory ")

Some of the country Govt. have subsidize the cost of higher oil price by using govt.'s extra fund that are ended up exhaused their fund that the Govt. forced to remove subsidize so sudden and so large amount that might put the their economy at halt.

All this is cause by lack of putting more interest in alternative Enegry investment and Research in Govt. level in the previous time, why I said it in this way? look country like Brazil is a sucessful country that make full used of sugar cane to convert to Ethanol fuel for so many years. So this is the country that you can put more money in for investing in the coming future. Why Brazil used only sugar cane not other crops to do it? That's is because Sugar cane can have the best yield in getting higher percentage of alcohol that are useable in modern combustion engine that are unlike corn is a lousy crops for yielding Ethanol fuel, that's is why American can't push whole nation wide to use more crops yielded Ethanol fuel, also America is not a suitable place to crops sugar cane that unlike Brazil where the Sunlight, Temperature, water vapour and soil is most suitable for crops sugar cane, beside Brazil there is India the second suitable cropping sugar cane for Ethanol fuel. India might not be a great country to be invest why? because their country do have a bit of price control policy and they used more on crude oil. India Govt. not very good in managing matters, like setting a foreign company in India have to goes thru a number of Govt. sector for an apporval.

With the Global population is increasing there are things needed to be change for economy progress, might be a new economy evolution? example like modify genetic engineering crops... If the change not fast and aggressive would lead to a possible global down in economy, therefore a country wide expansion is not possible. What I really want to tell you is invest in Alternative Enegry is Not Guarantee if you really study in Depth you will food from your Reseach.

NOTE: World population is marching toward 7 billions in 2010. Exiting about 2.4 billions people upgraded to middle class to obtain a modern standard of living. (example China, India, Vietnam and others) What gonna to do with all this? population will drive the demand in everthings as human need to live with a modern standard of living.

Saturday, April 26, 2008

Main side effect of price control.

I just got this news from net. Just read it then you will know what the out ome of the price control in those China big company......

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News: Chinese oil giants to get tax rebate amid price controls

China's two major state oil companies will get a tax rebate on gasoline and diesel imports to help offset losses blamed on price controls, the government said Wednesday.

China National Petroleum Corp. and China Petroleum & Chemical Corp., better known as Sinopec, will receive a refund on a 17 percent value-added tax on imports between April 1 and June 30, the Finance Ministry said on its Web site.

The government ordered the companies in November to step up imports to ease fuel shortages. CNPC and Sinopec blamed the shortages on controls that barred them from passing on record-high crude prices to consumers, leading to losses for their refining units and prompting them to cut back output.

The rebate "is aimed at reducing the refining losses of the oil companies and increasing refined oil products supply in the domestic market to prevent a shortage," the government newspaper China Daily said.

CNPC will receive a rebate on imports of 4.2 million barrels of gasoline and 8.5 million barrels of diesel, while Sinopec gets a rebate on a similar amount of gasoline and 12.7 million barrels of diesel, the Finance Ministry said.

Beijing froze retail gasoline and diesel prices in September as part of efforts to contain rising inflation. It raised prices by about 10 percent in November to curb surging demand but has rejected appeals by the oil companies for more increases.

Analysts had expected the oil companies to get government aid to offset refining losses. They received similar aid at the end of 2006.

Sinopec, Asia's biggest refiner by volume, said this month its refining unit lost 13.7 billion yuan ($2 billion) in the latest quarter due to the price freeze.

Sinopec said it received a 12.3 billion yuan ($1.75 billion) government subsidy to compensate for the losses.

CNPC's publicly traded arm, PetroChina Ltd., said in March that its refining unit lost 20.1 billion yuan ($2.9 billion) in the latest quarter due to the price freeze. The company has not said whether it received a government subsidy.

-----

So far there is only two big oil company that have their taxes offset / Taxes refund. Others China company are able to withstand this type of price freeze by govt.?

This article tells when the China govt. freeze the price of those products that those company produced, it will lead a volume cut back in those company output of products, if things goes bad, the company might may fall into bankrupt and that would be marked The End.





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Monday, March 24, 2008

The Lesson to be learn from Japan.

Lesson to learn from Japan, as Japan want to share it to US, this is the story below:-

The United States should use public funds to shore up its financial system and calm recent market turmoil, Japan's financial services minister said in an interview published Monday. "It is essential (for the US) to understand that given Japan's lesson, public fund injection (into the financial sector) is unavoidable," Yoshimi Watanabe told the Financial Times.

He said Japan was ready to share its experience with the United States at the Group of Seven meetings of finance ministers, who are due to gather in Washington next month. "We are prepared to take coordinated action if necessary," he said. "We must recognise that the current crisis is not as straightforward as past dollar crises." The same newspaper reported over the weekend that US and European central banks were considering buying mortgage-backed securities to resolve the credit crisis triggered by a wave of US home loan defaults.

The problems have pushed the dollar down to a 12-year low against the yen and to the lowest-ever levels against the euro, causing concern in Japan and the eurozone about the impact on exports. Japan suffered a deep and prolonged banking crisis in the 1990s after the country's asset bubble burst, leading to the failure of a number of high-profile financial institutions. The Japanese government injected capital to the banking sector in an effort to shore up markets and struggling financial institutions, some of which were nationalised to prevent their collapse. The problems came amid Japan's "lost decade" of stagnant growth and on-off recession in the 1990s, from which the country is still recovering.

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This is the same kind of matter that happen in Japan's property bubble. If the crisis is very serious it may have a serverity deflation in all asset in US just like Japan that time. Is not hard to find some information that Japan had the property bubble that cause a great deflation.

is there a advantage for currencies to pegged with weak dollar?

This is the news that I get from internet that said:-

Abundant liquidity, triggered by sharply higher oil revenues, and the effect of currencies pegged to a weakening dollar are fuelling inflation in the Gulf region, economists say. And the situation is so serious that Gulf business leaders will meet in Bahrain on Monday to get advice from the International Monetary Fund (IMF) and the European Union on how to tackle the problem. "The growth of money supply in Gulf countries has in some cases exceeded 20 percent," leading Bahraini economist Ahmed al-Yusha told AFP this week. "This reflects in (higher) demand, and consequently affects prices." Gulf Cooperation Council members Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have been enjoying a windfall of oil revenues on the back of record crude prices. But the surge in revenues, which have injected GCC economies with a shot of energy reflected in impressive economic growth, has also left countries awash in cash.

The IMF expects overall GCC inflation to rise to six percent in 2008, with consumer prices in some member states rising at much higher rates. The UAE and Qatar registered 9.3 percent and 11.8 percent, respectively, in 2006. Most final inflation figures for 2007 have not been released, but inflation is estimated to have hit 11 percent in the UAE and 12 percent in Qatar. Saudi Arabia, which traditionally had a fairly low inflation rate, reported a 4.1 percent rise in its consumer price index in 2007. A key element in higher prices is the sharply higher cost of housing. Even though the region is experiencing a frenzy of construction, there is still a bottleneck in supply. The increase in the cost of goods that are imported from non-dollar zones is also blamed. A December study by the Federation of GCC Chambers blamed inflation mainly on the huge money supply and the peg of all GCC currencies - except the Kuwaiti dinar - to the deteriorating dollar. "Available liquidity that is accompanied by a fixed supply of goods and services ... and the drop in the value of local currencies due to the weakening of the dollar" are the two main reasons for inflation, said the Saudi-based federation, which groups the region's chambers of commerce, industry and agriculture. The study pointed out that the weakening greenback contributes to the "increase in the cost of GCC imports from countries whose currencies had appreciated against the dollar, like the EU, Japan and China." "The imports of the GCC jumped from 154.5 billion dollars in 2003 to 376 billion dollars in 2007, a 143 percent increase," the study said. The dollar peg forces GCC central banks to follow the US Federal Reserve in setting interest rates. But while the US central bank continues cutting rates to stimulate a sluggish economy, GCC central banks are faced with expanding economies that were already overheating at the higher rates. On Tuesday, the Federal Reserve slashed key interest rates three-quarters of a point, lowering the federal funds rate to 2.25 percent, and most GCC central banks followed suit with cuts of their own. Dubai-based investment bank EFG-Hermes said on the same day that the need for a "currency reform" in the GCC increases with the aggressive interest cuts in the United States and the sharp dollar weakness.

"We forecast a greater than 60 percent probability of currency reform" in the first half of 2008 by one or more states, the bank said, without elaborating whether reform should mean currency de-pegging or revaluation. It suggested however that the UAE or Qatar might lead the way, while saying it might be done by the GCC as a whole. Meanwhile, Yusha suggested that the link to the dollar should be revisited without necessarily de-pegging the Gulf currencies, saying this could be done through revaluation.

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So do you think is a good ideal to invest in weak dollar? Better think twice first before you put your money in weak dollar. Do more research the fundamental of dollar and you will know why.

As for me what I think Dollar got a hard time to climb back to pre-credit crunch level. This is due to high level of bad debt in US, unless US come out a new standard for their currency policy that are not Dollar policy.

Sunday, March 23, 2008

Does currency hike curb higher oil price?

Oil price for NYMEX is future price that why is at least one month advance contract.
Nov. Oil price is USD$ 90/barrel
Mar. Oil price is USD$105/barrel


Base on the currency Chart for one SG Dollar that exchange in US Dollar.
We get the Oct. exchange rate at 0.68 for buying Nov. Oil contract at NYMEX.
and get Feb. exchange rate at 0.705 for buying Mar. Oil contract at NYMEX.
Working on Nov. Oil :-
Using SG Dollar to buy Nov. Oil, therefore 1/US$0.68 = SG$1.47058

SG$1.47058 X US$90/Barrel = SG$132.35220
Working on Mar. Oil :-
Using SG Dollar to buy Mar. Oil, therefore 1/US$0.705=SG$1.41843

SG$1.41843 X US$105/Barrel = SG$148.93515
The difference is 148.93515 - 132.35220 = 16.58295
that is for 11.1% increase currency hike for SG Dollar to buy the oil at NYMEX.
If let's say SG Currency fixed at Oct. exchange rate to buy Mar. Oil at NYMEX.
(Mean that SG Dollar don't get any hike)
Working:-
SG$1.47058 X US$105/Barrel = SG$154.41090
The difference is 154.41090 - 132.35220 = 22.05870
This is very expensive to fixed the currency for buying the growing high oil price.
This is the Pro for currency hike to curbing higher oil price but is bad for exporting goods to other trading country, because high SG Dollar other country people will have to pay more to buy SG Goods.
I believe that oil price will goes down in the middle term this is due to most country adjust their economy growth to lower and the winter in cold country is goes to ended soon.

Monday, March 17, 2008

New York bridge is falling down! - US Dollar is falling..


By looking at this chart you will know US Dollar is falling and Japanese Yen is raising.
This will making more inflation to the world economy just because of cheap US Dollar in the near future, just don't forget those commodity product are priced in US$ and the buyers are from the country from the whole world because their currency is going up and up..they have a lot of saving to buy those commodity.

It look like Japan may head a recession, maybe to Japanese recession is not a big deal because they have went thru a very long recession since that burst of property bubble (that is 1989 time...) I can't image that one US Dollar can only buy 97 Japanese Yen (Forex Exchange rate on 17/03/2008) that can tell you Japanese goods are expensive. To those who are able to go to Japan for a tour that they are well loaded with cash. most of the people will start to thinking of buying US goods when US Dollar is falling to the lowest like 1.20 or 1.15?...who will know how low the Dollar will goes? can't tell.

There is a lot used of US Dollar in many products, like Oil, Gold, commodity, most of the country in the whole world their saving (reserves) are in US Dollars that is a lot..that are talking about 1/8 trillion or 1/2 trillions..like China is ready having more than a Trillion in their reserves.
NOTE: US Dollar is a "reserves currency" that are commonly used in the world. There is noway for a Top billionair to manipulate US Dollar movement because it too huge for manipulate you are talking about a country level in controling the currecny that needed a few billions..unless a few central banks make-up together for invention the Forex market then the US Dollar will follow as their wish. if not they just don't like US Dollar like what some OPEC countries going to do about the US Dollar in the future (recent news only)...

Following day may will be happening because most of the US Banks, lenders and brokers going to report their earning in this week. so there will be a market meltdown again. This type of market only headed for selling only, good for short seller. I feel that 2nd Quarter of this year maybe is the bottom if US economy can really avoid the recession if not,...all the way down. that tell me something like Japan's property bubble during 1990's. now you can know it about how bad, just to get you the feel. What the US Fed can do is printing more and more US Dollar notes that what American said "Paper Dollar"....print more US Dollar note will cause the falling in currency Value and making other Foreign currency to rising...

American alway said "In God We Trust" let the God make the faith.

Saturday, March 15, 2008

Will Oil price continue to rise?


Future oil price believe to stay at $100 and above but in the mean time there should be a correction in oil price in the short term is because most of the countries are try hard to let their economy to slow down for control the recent high inflation, also the weather in cold country will went into warm weather soon.

If the Oil price still staying high, is would tell they can afford at current price with the amount of oil that they want, then after if they can't afford the Oil price would fall. This would have to wait until most of them exhausted in their fund for purchased Oil.

We can never know when and where in the world oil well is going to run at peak rate that so call peak oil in oil and gas industry.

For your information an average oil well will run completed dry that will be about 45 years for a average size of oil well we are talking about. but not for Saudi's giant Ghawar field, the world's largest oil field, with estimated remaining reserves of 70 billion barrels. That field is the largest and have not yet reach it oil peak production, also that is couldn't know it that is when.

Friday, February 29, 2008

Creative Technology could be bullish in the future.


The stock price have reach high again, it had cut thru 200 day moving average. We can have the time to watch it if the company business is good, the price maybe will break $10 level for a test. buying Creative Technology have the advantage that is they do have good dividend paid out that able to keep some income in your pocket.
Time for buying in 2008 maybe fall within March to April when I guess the bottom will be there as what the stock analysts said this year will be a S shape growth for economy and end of the year maybe had a rally, that should be able to form S shape growth chart.




Saturday, February 9, 2008

US will not fall into recession but will had slow growth.



US Treasury Secretary Henry Paulson said in the recent G7 meeting that US will not fall into Recession but will have a slow growth. The aim for the G7 meeting is to be more open in the sub prime figure bad debt write off and other important information as well. This will help each and other counties in coping with the credit crunch crisis in Finanical Market that may ensure the economy is moving and is not falling into recession. So this meeting is expected to keep the economy on track and crub inflation for this year.
For the coming future the Fed will be easy then before in performing his job as a lot of the thing is fall within his expectation.

OPEC will may ditch US Dollar.


As you can read from the TELETEXT the future of the US Dollar is going to be a bearish trend. I don't have any figure on how much US printed the Dollar notes in this world, but there is economist that ever mention US itself only hold 20% and the rest of the countries holding 80% of the US Dollars if they are all added together it will be roughly around a Tens of Trillions of US Dollars, I just guess only... (There is no document can proof how much they have printed.)
Will there a trend of untie the Dollar with their products? Just like what the OPEC is going to do.
This is a unstoppable trend for those people to do as what OPEC does, because they also don't want their value to get weaker. So if this trend get stronger, people might avoid Dollar more often and the Dollar will be getting even weaker.
Most of the Market tie with Dollar, example Oil (US$/barrel), gold (US$/Kg), metals and other more commodities. Why US want to do in this way, this is because the more consumer want the commodity they have to sell their currency to buy Dollar for the commodity that they wanted to buy. This will be talk in Foreign Exchange (Forex), example 1 US Dollar buy 120 Japanese Yen that is last time rate, now the rate is 1 US Dollar buy 107 Japanese Yen, this mean the US Dollar is getting weaker and the Japanese Yen is getting stronger.
Weaker currency will have their advantage and disadvantage. The Advantage is the exporting trade will get strong as the goods for US is getting cheaper so consumer from other countries buy more. For the Disadvantage is weaker dollar cannot curb the high inflation. This all will be talk in economic study in degree course.
If US Dollar want to be strong again, US Govt. will have to put more productivity in their high end / high value export, cut down the most of their Govt. spending, regain the strong Dollar diplomat by asking other countries currency to tie with Dollar for not to sell Dollar (also by Exchange other things). once US govt. have the more money they will have to buy back their debts fast to keep their Dollar strong.
This Year US GDP is expected below 2%, many of the economist is expected to see this to be happen even the US economy will no fall into recession as what the US President and Fed expected for the 2008 US economy.
All this will depend on the new US Govt. to defence for their Strong Dollar policy. Question now is Who will be the next US Govt....?
Reference:-
United States public debt
U.S. NATIONAL DEBT CLOCK -News (you can keep track on this link for the news.)
http://www.brillig.com/debt_clock/
NOTE: This Article is just for a prediction only, the trend of the currency itself will be change by time to time when the Central Bank intervation the Markets, Monetary Policy and others more.

Sunday, January 20, 2008

Bush's $145 billion stimulus package is for short term relief.

The $145 billion stimulus package cannot help US to pull out of subprime mortgage financial crisis, this stimulus help US and other countries to escape from recession risk but slow growth is unavoidable in the coming future. it will take a long time for a fully recovery stage as right now US Govt. are in huge debts and they just can't simply offer to print more US Dollar notes. (9 trillions plus of bad debts) Why US able to build up so huge debt? They know the way to refinancial by using their huge debts that cause so huge. (They know how to borrow but they don't know how to pay back that huge debts, on one able to settle this problem either their govt. and their Fed too - This will build up a more huge risk in the coming future US if the huge debts is not going to reduce.)

From 16th Jan 2008 and 17th Jan 2008 market movement that tell me most of the countries are depend on US for their major trade partner in that mean once US is falling the whole trade partner to US is falling too.

Anyway Bush take this action that show that he are a responsibility US president even his term is going to be ended soon and recession may avoided in short term (one year?). Compare EU (European Union) and US their action taken in their package is difference, in last year's August, September and Octcber EU have injected more than 250 billions of money into their banking system for the relief. I guess in the coming future's economic superpower maybe not going to be US again that holding more than one century title (next is who? China?).

China maybe want to slow down their overheat economy in the coming future but for 5 year down the road China is still good to be invested in, as the recent UK is looking for China to increase the trade. India is a good choice to be invested in as EU is increasing their investment recently. To have a good investment choice read more newspaper and internet news to know more future market movement.

Referance:-
-Rank Order of countries Debt
-Rank Order of countries Public debt
-Rank Order of countries GDP (purchasing power parity)
-US Debt news

Wednesday, January 16, 2008

STI drop near to 3000 level.


Now is only begining of the year 2008 and is only the first month of the year 2008. We can see this bad market sell down at this time, this maybe mean we can see even bad than this in the coming future. as What I know those banks bad loan write off will last until mid of 2008 or Q308 the later, after that may will have a turning point in the market.
Now we have to watch Fed Chairman or US president are they able to resolve?
US is a country that alway printing Dollar notes this is one of the way to resolve or US govt. selling their asset to rich nation, selling Military Arm to some money to kill this problem that is second way of doing in US, this is what I know how they rise their money and there is a few method more...
Singapore analysts target STI will go 4000 level at this year end 2008 and 3000 is the expected low for 2008 but right now we already see STI at near 3000 today. no sure how low STI will go? We shall watch.

Monday, January 14, 2008

Another place to put your money at this time.

The US sub prime causing a credit crunch that force the Banks to sell their stock in the market, this may last for 6 month to 1 year time and is depend on the US govt. to take a very effective action to make their economic to go for a growth instead of recession.
I saw this DBS Enhanced income is growing day by day, is a good place to your money in for 6 month to 1 year time. Why 6 month to 1 year time? those bank's write off may will last until 6 month to 1 year time, as the write off is reduce or gone the market may start to have a turning point by that time the market may have a bull rally. This is depend on many other facts that add in to have a bull rally.
This is another place to think of. The DBS Enhanced Income.

Friday, January 11, 2008

Streettracks Gold is on the rise.

The price for 10 Jan. 2008 is at the all time high, it break the 52 weeks high, this maybe tell you that major market cashflow is going to Gold. Gold is a safer place for the cash to place and future Gold price may expected more even higher than present price.
Market now is mostly seller more then buyer and world market are lack of cashflow as this is the effect of credit crunch that causes. Major bank like citibank, Goldman and others will keep selling their share for keeping the cash for running their core business.
On the other side if the Bank stock price keep on down, may can watchout for their bottom and grab it if you can, anyway bank is one to more the country economy by offer loan to those businesses.
Most of the market analysts expected to see Gold price at US$1000, I just keep to see the price to hit this price US$1000 level.
Next we have to watch what can US Govt. do to help their economy in the year of 2008, as Bush expected 2008 will have a growth rather than slow down.
Will US fall into deflation like Japan's 1990 bubble? I shall watch it...

Reccession Odds- Greenspan 50%, Merrill 100%



In an interview this morning with NPR, former Fed Chairman Alan Greenspan said that the odds of a recession are "clearly rising" and are now about 50%.
click for NPR radio broadcastEarlier on Thursday, CNBC reported that Greenspan raised his view of chances of a U.S. recession to 50%, from 30%:





"Greenspan said it's too soon to say whether a recession is coming, "but the odds are clearly rising."
"We're getting close to stall speed" in economic growth, he said. "And we are far more vulnerable at levels where growth is so slow than we would be otherwise. Indeed ... somebody who has an immune system which is not working very well is subject to all sorts of diseases, and the economy at this level of growth is subject to all sorts of potential shocks."
~~~
The former Fed chair is downright chipper compared with some of the data crunchers over at Merrill Lynch: They look at the simple formula involving the Yield Curve and Corporate Spreads. This correctly forecast the 2001 and 1990-91 recessions.
Based on Merrill's read of these two elements -- and I don't know precisely what they do to generate this chart based on those factors -- they have a much more distraught view of the economy than the Maestro:>100% Chance of Showers


Chart courtesy of Merrill Lynch, Gartman Letter
>
If any one can tell me how this chart gets assembled and massaged, it would be greatly appreciated . . .
>
Sources:Greenspan: Recession Odds 'Clearly Rising'NPR, Morning Edition, December 14, 2007http://www.npr.org/templates/story/story.php?storyId=17210282
Merrill Lynch Global Research
Greenspan Says Recession Odds Are `Clearly Rising' Vivien Lou ChenBloomberg, Dec. 14 2007http://www.bloomberg.com/apps/news?pid=20601087&sid=aGyhKOCi4xdU&






Economists say 2008 may will be a year to forget.

Analysts at American Economic Association now see recession as a given

NEW ORLEANS -- Gathered in this city struggling to regain its footing after Hurricane Katrina, a group of leading economists said the U.S. is getting hit by another damaging storm: the global credit crunch.

Many analysts gathered at the American Economic Association's two-day annual meeting spoke of a recession as almost a given but differed over how severe it will be.
"The recession is likely to be a serious one," said Dean Baker, co-director of the Center for Economic and Policy Research.

He estimated losses in prime mortgages will be two to three times the $160-$200 billion hit seen in the subprime sector. This, he said, will lead to large losses at banks and difficulty for Fannie Mae and Freddie Mac.

University of Chicago professor of finance and former chief economist at the International Monetary Fund, Raghuram Rajan, said questions in the media over whether the U.S. economy will fall into recession are really only about semantics.

"We are going to have very low growth in the first two quarters of the year. Whether it is negative or zero, it is going to feel like the same thing," Rajan said.
But he added that it remains an "open question" whether an even more serious slowdown develops in the second half of the year.

"One of the big issues is the extent to which the credit crunch initiated by the subprime crisis starts spreading and how much does it affect smaller corporations and poorly rated corporations," he said. "Do we have a bank credit crunch which starts impacting on retail credit for small and medium enterprises? There is some uncertainty."

Alistair Milne, a professor at the City University of London's Cass Business School, told MarketWatch he's expecting "a really weak year," but added that "it is too early to say how deep the crisis is going to get."

"There has been a substantial credit expansion in many areas -- not just subprime -- over the past five to 10 years," he said. But now, with credit now under pressure, he sees the risk of a vicious cycle developing where the decline in bank lending pushes down growth, which further reduces bank lending.

"If there is a severe enough downturn, it will make all the credit problems worse," he said, adding that the crisis would also hit credit card debt and leverages buyout loans.
But Milne also pointed to a bright spot, namely sovereign wealth funds pouring money into troubled banks, which shores up capital and could help prevent an extreme economic downturn.
He also said that the Federal Reserve is moving in the right direction and that the European Central Bank is likely to follow with rate cuts within six months, adding that a negative economic shock will take the pressure off inflation eventually.

Still, he said, the economy won't likely get back on track until 2010 and will require more capital from overseas.

Can the government help?

Several economists at the conference said attention needs to turn to a possible government stimulus package to take the punch out of the downturn.

The likely magnitude of coming economic difficulties makes it important for Congress to take action on the fiscal side, complimenting easing by the Federal Reserve, they said.

President Bush has also indicated support for crafting a stimulus package to help the economy.
But many analysts argued that the government may be powerless to prevent a downturn.
"My sense is that even though the government wants to be seen as reactive, there is not that much they can do at this point," Rajan said. "Monetary policy has lags of a year. It can't revive lending that isn't taking place because banks have capital constraints."

Baker said he supports the idea of a stimulus package but added that it has to be big -- over $100 billion -- and it has to be fast.

Princeton economist and New York Times columnist Paul Krugman was skeptical that Congress would put aside partisan politics over tax policy in order to pass such measures.
"One side will not accept tax cuts for rich people, and the other side won't take fiscal action without tax cuts for the rich," he said.

The news are from MarketWatch.

There maybe stand a chance for recession...

This is cause by US economy slow down that may hurt other country like Japan. there is news on Goldman Sach that comment Japan economy will stand a 50% chance of recession. Here is the news:-

Date: 10 Jan. 2008.
Goldman Sachs Group cut its economic growth estimate for Japan and said there's a 50 percent chance of a recession in the world's second-largest economy. ``The probability of a recession in Japan has risen to the danger level,'' Tetsufumi Yamakawa, chief Japan economist at Goldman,
said in a report to clients today. ``We project weaker- thanexpected growth in Japan.'' The nation's economy will continue to slow ``for the time being,'' Bank of Japan Deputy Governor Toshiro Muto said today. The housing slump in the U.S., which Goldman yesterday said may
already be in recession, could prompt overseas investors to sell real estate holdings in Japan, Credit Suisse Group said today.

Yamakawa cut his 2008 growth estimate to 1 percent from 1.2 percent, citing slower demand from emerging markets. Stocks including Mitsubishi Estate Co. declined today after the Credit Suisse report. Japan's leading index, a gauge of growth in the next three to six months, stalled in November, a report today showed.
``Goldman's report highlighting the increasing chances of a recession, as well as the leading index's poor showing, indicates the outlook for external and internal demand is nonexistent,'' said Hiroaki Osakabe, who helps oversee $365 million at Chiba-Gin Asset Management Co. in Tokyo.

Sluggish spending by consumers has left Japan more dependant on overseas markets, just as cooling U.S. demand threatens to spread to Asia, where Japan sells half its exports.

Slashing Interest Rates.
Goldman yesterday said slower growth in the world's largest- economy may force the U.S. Federal Reserve to slash interest rates. It predicts the Fed to cut its benchmark rate to 2.5 percent by the third quarter, after saying in November it would reduce the key rate, currently at 4.25 percent, to 3 percent by the middle of 2008.

Earnings gains among Standard & Poor's 500 Index members may have averaged 8.1 percent from a year earlier, the slowest growth in six years, according to data compiled by Bloomberg.
The Bank of Japan probably won't be able to raise its key interest rate, the lowest among industrialized nations, this year because of the recession risk, Yamakawa said. The cycle of rising corporate profits feeding into wages and consumer spending is losing momentum and the bank will conduct policy ``with discretion,'' Muto said in a speech in Sapporo, northern Japan.

`Increasingly Cautious'
``Muto is signaling the Bank of Japan is becoming increasingly cautious about the downside risks for the economy,'' said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. ``The central bank is already veering from its path of raising rates.''

And there is news that comment on Alan Greenspan:-

Date: 10 Jan. 2008.
The next bubble to deflate may be Alan Greenspan's reputation. Hailed as perhaps the greatest central banker who ever lived when he left the Federal Reserve in 2006, Greenspan is under
attack from critics ranging from the New York Times to economists at the American Enterprise Institute for his handling of the 2000-2005 housing boom. The former Fed chairman has taken to the media to defend himself, writing in the Wall Street Journal and appearing on network television.

``He's had a bubble reputation that derived from the growth of U.S. household wealth,'' said Edward Chancellor, author of ``Devil Take the Hindmost: A History of Financial Speculation.'' ``As that goes down, his standing as a superstar will suffer.''
At stake is not only Greenspan's legacy but also the future of policies he espoused during 18-1/2 years atop the central bank. Critics blame his aversion to regulation and reluctance to use interest rates to puncture asset bubbles for the boom in house prices and mortgage lending that has since gone bust, threatening to throw the economy into recession.

In an interview, Greenspan said such criticism ignores limits on what regulation and monetary policy can achieve.


Fed Chairman Ben S. Bernanke has already moved away from the laissez-faire approach of his
predecessor by proposing new restrictions on subprime mortgages.

High Marks
Academics, including Princeton University professor and former Fed Vice Chairman Alan Blinder, Fed historian and Carnegie Mellon University economist Allan Meltzer and Stephen Cecchetti, a former Fed official now at Brandeis University, generally give Greenspan high marks for his performance as chairman. During his tenure, the economy weathered two recessions, each lasting less than a year, and enjoyed its longest expansion ever.

Some of the earlier enthusiasm for Greenspan's tenure has been tempered by the performance of the economy, particularly the housing market, since he left. Blinder, who wrote in a 2005 paper that Greenspan might be the greatest central banker, now hedges on whether that assessment still stands.

Greenspan still merits a ``summa cum laude'' for his conduct of monetary policy, he said. The 81-year old former Fed chief falls short of that lofty grade, though, for his oversight of the banking industry, Blinder said.

`Slow on the Draw'
``The Fed and the other regulatory agencies were slow on the draw,'' Blinder said. ``They could have made this debacle substantially smaller, not by better monetary policy, but by better regulatory and supervisory policy.''

Desmond Lachman, a former International Monetary Fund official now at the American Enterprise Institute in Washington, blames Greenspan's libertarian bent for his failure to curb lending abuses:

``That philosophy got us into a lot of trouble.''
Greenspan said in the interview that, while the Fed's bank examiners were hard at work during the mortgage-lending boom, ``we have to be realistic about what regulators can and cannot do.''
``It is extremely rare to uncover fraud other than through whistle-blowers,'' he said. ``You don't get at it through internal audits, you don't get it through outside audits and you certainly don't get it through bank examinations.''


Rates Too Low
Some economists, including Blinder, also fault Greenspan for fostering the housing bubble by keeping interest rates too low for too long. The Fed cut its benchmark rate to a 45-year low of 1 percent in June 2003, held it there for a year, then raised it only gradually, in quarter-percentage-point increments.

``For that episode of monetary policy, I would probably give him a B, where my overall grade is A or Aplus,'' Blinder said.

A simulation by Stanford University professor John Taylor suggested that much of the housing boom could have been avoided if the Fed hadn't cut rates so deeply and had raised them back up more quickly.

Meltzer said that while Greenspan was a ``great Fed chairman,'' he erred in ignoring warnings about the risks of keeping rates low.

``I think he lets himself off much too easy,'' Meltzer said, adding that he told Greenspan at the time that he was exaggerating the danger of deflation and thus making a mistake in cutting interest rates to 1 percent.

Rethinking Approach

Allen Sinai, chief economist at Decision Economics Inc. in New York, said the Fed's experience is leading other central banks to rethink their approach to asset bubbles.

``There is a growing body of thinking in central banking that one should not let these bubbles run and allow them to burst,'' he said. ``They should lean against them.''
Greenspan disagrees with such a strategy. ``There is no evidence that it works other than in computer models,'' the former Fed chief said. He noted that the stock market merely leveled off when the Fed doubled interest rates to 6 percent in 1994-95, then resumed its climb.
Greenspan maintained that the housing bubble was inflated not by the Fed's monetary policy but by a global savings glut that held down long-term interest rates worldwide.
As evidence, he pointed out that the U.S. wasn't alone in experiencing a housing boom in the early 2000s. The IMF said in its World Economic Outlook last October that other nations, including Britain, Spain and Australia, experienced bigger house price run-ups than the U.S.
Cecchetti, professor of international economics at Brandeis' International Business School, said it's natural that Greenspan's legacy is being reassessed.

``With distance, you get perspective,'' he said. ``We'll get a much more balanced view of the
Greenspan legacy as the years go by.''

The above two news are from Bloomberg.

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