US dollar still rules, but debt level a risk: S & P

The U.S. dollar is still the most important currency in the world, said S & P on Thursday, but added that rising levels of debt and U.S. dependence on foreign investors owning part of a heavy debt, represents a danger to the primacy of the currency.
Without a credible plan to curb the fiscal costs, foreign creditors could reduce the dollar reserves, which could pressure the highest credit rating of the U.S., which supports the cost of borrowing at a low level.
At this time, the rating agencies agree that the U.S. economy - the largest in the world, and the depth of financial markets means continued dominance in global trade and currency transactions.
These benefits have helped the dollar maintain its status, despite the financial crisis of 2008-2009, which began in the United States - the report says S & P.
Also, the agency added that the dollar is an important factor supporting the credit rating of 'AAA' USA, which is currently the highest rating in the world.
The main risk for the dollar's status comes from the growing volume of U.S. public debt, which shares owned by foreign central banks and sovereign funds.
S & P also stated that the expansion of the U.S. budget deficit was the risk, adding: "no medium-term fiscal consolidation plan, which markets deem reliable, foreign creditors could reduce their dollar assets, especially if they come to the conclusion that the members of the eurozone are implementing strong macroeconomic policy.
China owned 23% of the huge debt the U.S. in 2009, Japan possessed 21% - said the agency. In total, 46% of U.S. public debt owned by official and private foreign investors.
This percentage has increased every year since 2001, when foreign investors owned 30% of U.S. debt.
U.S. budget deficits for fiscal 2010 is projected within 11%, while the ratio of total public debt to GDP ratio will reach 82% by 2013, more than twice as much as in 2007, which amounted to 38% - the agency said.
"From our point of view, inflation data, trading volumes, volatility in foreign exchange and the state of the current account, will be critical indicators, if the impact of the dollar will fall," - the report says. "Such a scenario may even put pressure on the 'AAA' credit rating of the U.S..
Some major U.S. lenders, such as China and Russia, were dissatisfied with fiscal and monetary policies of the U.S. over the past year and talked about alternatives to the dollar.
In the meantime, it was not so much signal to ensure that investors and governments abandon the dollar.
S & P notes that the dollar still accounts for about 62% of foreign exchange reserves in central banks, only slightly down from 72% mark in 2001.
"Any decrease in the share of dollar assets is likely to continue to be quiet, gradual and secure for many years", - said the agency.
The dollar is still amounted to 86% in currency exchange operations by the fall of 2009, only slightly down from 90% in 2001.
And while the euro is clearly intruding into international finance, the dollar continues to dominate world trade.
"In each of the countries surveyed the proportion of exports in U.S. dollars exceeds the share of U.S. exports from the country, and often by a large margin" - the report says.

Reuters

Dear Wall Street: we're sorry

We inadvertently gave the financial industry trillions of dollars to support their balance sheets and markets. We did this even though the major banks and brokerage houses simply do not need or do not want this help. Everything was bad in September 2008, but we had to go and stick his nose into the world of high finance.

Now we are doing even worse, trying to tell them how much to pay people what risks they can take themselves and what business kosher. Suddenly, we felt that understands the business of banking is better than the bankers themselves. We know who they should lend. We have a firm idea of what they are doing with our money.

We regret this.

We are sorry that we want to close monitoring of our money supply. We regret that we want to have state protection for our deposits, our current accounts, mortgages and credit cards. Maybe we look like simpletons, but we feel nervous when they lose jobs and are forced to sell our homes at a discount to eat.

It's our fault.

The fact is that Wall Street masterfully handled the bills. And we must recognize that the fee for an overdraft, rising interest rates and the collapse in the mortgage market - it's our fault, not the banks.

Funny, but Blankfeyn Lloyd (Lloyd Blankfein), executive director of Goldman Sachs Group Inc. will be forced to continue to apologize for the success of his company. He said that in view of the retrospective approach, Goldman would have done much differently. Goldman took the wrong position. However, during these comments on January 14, he said of the bets placed by Goldman against toxic mortgage securities, which they sold to customers. In the end, is the work of the lord.

Lloyd Blankfein, Reuters photo

I think I speak for all when I write this: Sorry Lloyd, I do not know how we came to such confusion. I think because they pay you big money ($ 68.5 million in 2007).

But, please understand, we had the best intentions, when we interfere with our "nalogoplatelschikovskoy" help.

When your balance sheets look like, if you have problems, you had been developed and introduced Paulson's plan to $ 700 billion.

We just want to support you temporary credit facilities secured by a pledge, a program designed to give the industry $ 200 billion in loans for "top-rated" credit cards, small business, student and auto loans.

$ 30 billion of public-private investment programs were intended only to ease the burden of bad assets on your balance sheet. When this program is no longer look so promising, we just tried to let you get rid of it, changing the accounting rules, which allow you to self assess the value of the junk.

When you are not able to issue debt, we told the federal deposit insurance corporation, the organization responsible for niche stores, take in ensuring your bonds. You took this without much enthusiasm. 84 bond issue to $ 309 billion have been implemented in the program. Citigroup Inc. issued, $ 64 billion. Goldman issued a $ 21 billion. Bank of America Corp. issued $ 44 billion.

We know that you have done this only to make us feel better.

And when it does not work, we simply told the Fed to buy an unlimited number of mortgage loans and pass one of your partners, American International Group Inc. $ 182 billion as the credit line.

How such actions could be construed as support for banks, despite the fact that they continued to bet on their own money on their own trading platforms, hedge funds and private equity funds - remains a mystery.


Bonuses for the hack
In comparison with the pressure on your bonus, all the above - just child's play. In Goldman average bonus per employee is $ 460,000, only slightly more than 9 times higher than the average income in the United States. Sorry, but not everyone is able to buy Bugatti Veyron, even used, for their pennies. It's so much to promote the automobile industry.

In retrospect, all that money to save, were probably intended for the payment of bonuses on Wall Street. Without such a serious cash, your bankers, probably would prefer to switch to more lucrative jobs elsewhere, for example, in baseball big leagues, or would play the lottery. They would not be aimed at stabilizing the financial system, and subsequent problems - it's our fault for having confidence in you. I understand, we do not pay big money for inference.

No, just cut our retirement accounts «401K», our individual retirement savings and, perhaps, if lucky, our homes. We are too dense to see how the bullet and blast our financial system, and taxpayers can never repay you for what we have experienced over the past two years.

So, Wall Street, excuse us for molestation. Forgive us, and Paul Volcker, a desire to return to boring old banking system. Forgive the sarcasm. And above all, forgive us for our gullibility.

MarketWatch
January 26

The collapse on Wall Street. 1929

The statement that the U.S. economy is overheating, scares many investors. And perhaps the lessons of the collapse of the grand market of securities, which occurred just over 70 years ago in the United States can be very useful today.

Family Moses and Walter Annenbergov is one of the most successful combination of "father-son" who has ever met in American business. But good luck good luck, and the consequences of the collapse of 1929, they were directly opposite. His father, who correctly assessed the state of the market, sold all its shares in four working days before the defeat. Son purchased shares until the very last minute and was ransacked.


Seventy years ago, in October 1929, failed the New York Stock Exchange. This event was caused by a combination of different circumstances. We will start from the beginning and try to gradually get to the bottom.

Stock market boom fueled first sales of shares of automobile companies, and companies involved in electricity, but after the first flight was carried out across the Atlantic, stocks have become popular airlines. We can confidently state that the twenties in America were born a decade the automotive industry. And if in 1920 the number of cars produced in the United States was little more than 8 million, by the end of 1929 this figure had exceeded 23 million. In 1929 the automotive industry has become very important in the United States, creating 4 million jobs.

Experienced a boom and electricity. If in 1914, supplies electricity to only 30 percent of American businesses by the end of 1929, this figure rose to 70 percent. Mass production of vacuum cleaners, elektroplit, refrigerators and myriad other household appliances giant steps type your speed.

Each product requires a buyer. And to support economic growth, there is a need in the advertising industry persuades people to buy. Lack of cash was more than covered by the credit boom, which began with the purchase in installments. Most Americans, it was just convenient to believe their president. The motto of the decade have become the ultimate promise of victory over poverty, Republican Herbert Hoover, who had gained a brilliant victory in the presidential election of 1928.

But in the end twenties do not have anything good. Particularly difficult in the beginning had to farmers. The drop in prices of grains does not allow them to cover payments on loans taken from banks against collateral of their own land. In turn, in a difficult situation were the banks, which mainly served agriculture and could not now expect to return their money. The lack of strict regulation of the banking system of the Federal Reserve has resulted in numerous bankruptcy. Subsided went textiles.

In fact, the downturn on Wall Street began in February 1928. Just a strong growth of industry has caused a steady increase in stock prices, which is virtually unchecked over the next 18 months. By the end of 1928 the stock market in the United States was at the level of popularity throughout the country. By playing on the stock exchange podtyanulis millions of ordinary Americans. Many brokers artificially warm speculative boom by offering loans to buyers of shares at preferential terms is absurd. It was a time of low interest rates, it is facilitating a game to market. Ability to purchase the shares at the expense of the money borrowed from brokers, allows people with limited means to make significant market investments.

It is easy to understand prevailing at the time, way of thinking. Stocks appeared to be the only way to quick and easy wealth. Even banks are not able to resist the significant market investments, allowing them to offset the large debts in other areas.

In the early 20's, as the securities market, people invest money in shares, which would ensure they continue to receive good dividends every year. With speculation rising stock prices have been steadily rising, and the conditions on which dividends are paid, are unchanged. Individual shares rose in price by more than 400 per cent, despite the fact that never yielded dividends.

Dow Jones, which includes shares of leading industrial countries, has doubled from May 1928 to September 1929, the average value of shares increased by 40 percent. Sales soared from 3 million shares per day to more than 12 million. Speculative fever has become increasingly fierce. In the state of euphoria before tens of thousands of people.

A typical representative of that time was the youngest, Walter Annenberg, the son of the rich and famous publisher Moses Annenberga. And father and son played on the Stock Exchange. Moses Annenberg was the owner of a brokerage company called "Annenberg, Stein and Company", which allowed his son to hold the stock exchange speculation in the $ 4 million and be a guarantor to obtain the relevant credits. A 21-year-old son and his 53-year-old father had different approaches to investing. Annenberg senior invest in shares of first-class companies, such as "General Electric", "Pullman" and "General Motors". He invested in companies that have good governance. His son followed the same model, but it led to more risky equities, such as "Chrysler" and "RCA". He started to play the market, still studying in school, and over the last year of school earned $ 17,000.


By mid 1929, the portfolio Annenberga, Jr., was worth nearly $ 3 million - about $ 30 million today. Huge money. I think many would have failed the bar and went to rest. But the money was not the money until they varilis in the overall stock pot fever. All this wealth has been achieved solely through the "loan transactions." And many of Walter Annenbergov were absolutely the same. All of America was covered madness of exchange trade in shares. Brokerage offices were opened in the lobbies of hotels, grocery stores, at train stations. Later, Walter Annenberg admitted that he felt invincible when he was a wise father advised him to be careful and warned of possible consequences. Shares of one of the favorite companies Annenberga Jr. - "RCAI" rose from 85 cents in 1928 to $ 5.49 in 1929.

Many did not notice the clouds, gathering on the horizon. Corporation continued to expand its production capacity, the economy was booming. It happened that was to happen. Non recovery led to pereizbytku food production. By mid 1929, some industries have begun to feel the fall in demand. Developing the industry, using less labor intensive technology, have allowed themselves to reduce the number of people employed in manufacturing employment. Unemployment began to rise, and money was not enough.

The second sign of the impending danger of a fall in demand for American goods from the Europeans. The situation of America, playing the role of the leading international trader, shaken. If the twenties exports was one of the main income economy, the end of the decade about him was simply forgotten. The reasons were several. The main can be described as significant progress in its own production that has taken place in Europe after the First World War, and more time to the financial difficulties most European countries do not allow them to import American products.

Some economists warned that the stock market boom not last long, but the Americans refused to listen. Dow Jones, on the basis of ten years increased by 255 per cent and by the summer of 1929 the stock market Gudele of this news.

The market collapsed a few days.

Friday, Oct. 18. Some traders and professional traders fear that prices in the market reached its peak and start to sell shares.

Monday, Oct. 21. The fall in equity prices is becoming concern.

Thursday, 24 October. After a slight revitalization began the collapse, and on Friday, sensible investors withdrew from the game. Among them was Moses Annenberg and sold in one day all of their shares and leave the market. His son would not follow the example of his father, believing that the situation is temporary. He saw in the fall is only the opportunity to buy cheap shares. Who knows, perhaps in the day son bought some shares sold by his father.

The cause of the collapse of the family of Walter and Moses Annenbergov was the October collapse on Wall Street in 1929. Moses Annenberg sold all its shares four days before the collapse. His 21-year-old son Walter had lost $ 3.4 million (now about $ 32 million), as well as continued to buy shares until the end. Most private investors to destroy America, and only those few who understand the time that happens, it was possible to stand up. Car stoivshie $ 1000 per week dropped the price to $ 100.

Some large banks have tried to strengthen public confidence and prevent the inevitable by acquiring shares. Even Rockefeller made his first few years of a public statement, claiming that he believes economic fundamentals strong enough and that he is buying shares. Walter Annenberg bought shares before the very last moment, naively believing in the success of your business.

Tuesday, October 29, the market collapsed. All attempts to keep him have failed. On this day, marked by "Black Tuesday" in the market place is the real mass panic. For sale was billed on 16 million shares, making the index of industrial shares in the companies' New York Times fell 43 points - the largest at that time in the history of a single drop in one day. Dow Jones fell 30.57 points. $ 30 billion ($ 300 billion by today's money) just disappeared from the economy and stock market speculators brokerage accounts. The huge mass of stock value. Many companies were left without a cent and had been forced to undertake a massive lay-off. The decline in the market continued in the coming weeks, bringing only the month of October damages totaling $ 46 billion.

Requirement to deposit money, or call margin, caused the sale of shares of all market participants, thereby further lowering the prices on the market. Started a chain reaction. Walter Annenberg did not differ from the rest. All had to sell his shares to meet its obligations. His portfolio trehmillionny disappeared, instead it has a debt of $ 350000. He went bankrupt, seven months after his twenty-first birthday. Fortunately, his father, with a network of businesses valued at $ 8 million, was able to gain from his troubles. If it were not so lame young Annenberg could well join the stag, which discharges from the windows. So great was the extent of their financial ruin.

Unlike other breakdown of the securities markets, this has had a devastating effect on the instant American industries. Shares staleproizvodyaschih companies and car manufacturers fell to a tenth of its original value, and half of the workforce in both sectors was dismissed. All new office skyscrapers built in expectation of the continuation of the boom, were deserted. Their tenants were left without a cent in his pocket and had to leave the expensive apartments.

This is so simple and dramatic, just a week collapsed economy one of the biggest industrial empires of the world. And despite the occasional signs of recovery, the market remained in a deep stagnation for more than four years and could not finally come to a further ten years.

Vladimir Minaev
Source: EuroBusiness

Interests in time for Wall Street

NEW YORK. Federal investigators arrested a mysterious man with outstanding ability to trade the stock market on charges of using insider information - and, incredibly, he claims that he was a traveler in the days of 2256!

Sources in the Securities and Exchange Commission confirm that 44-year-old Andrew Kalsin offered fanciful explanation of his incredible success in the stock market, after having been removed in handcuffs on January 28, 2003. "We do not believe in the history of this guy - he is either crazy or a pathological liar," said the representative of the commission. "But the fact is that without the initial investment in the $ 800, for two weeks, he made more than $ 350 million. Each of his deal, makes a profit as a result of unexpected economic and business news that can not be pure luck. The only way he could do so, it is the illegal use of confidential information. He would sit in a prison cell at Rikers Island until you agree to open their sources. "

In 2003, the indistinct movement of share prices have left most investors' portfolios is not at its best. Therefore, when Kalsin made a series of 126 high-risk transactions, and each time left with a solid gain, it has forced even the wonder-beaten guard Wall Street.

"If action is something the company increased because of the merger or major technological breakthrough, which, as expected, it was classified, Mr. Kalsin, one way or another, knew about it beforehand," said a source in the Securities Commission closely associated with the ongoing investigation.
When investigators brought Kalsina for questioning, they were more than anticipated - the stunning four-recognition.

Kalsin stated that he had traveled in time for 200 years from the future, where it is generally true that our era experienced one of the worst stock falls in history. And any armed with knowledge about a certain stake, can make well-being.

"It was so tempting, that it was difficult to resist this, confidentially told Kalsin in his filmed on video recognition. "I had planned to do this is to look natural. You know, losing a little here and there, so that it does not look too perfect. But I was carried away and was captured
moment. "

In exchange for the offer of leniency, Kalsin, according to available information, has offered to publish "historical facts", like the whereabouts of Osama bin Laden and a cure for AIDS.

All that he wants - so that he was allowed to return to the future in his "Time Machine". However, he refused to show the location of the mechanism or to discuss how it works, perhaps out of fear that the technology could fall into the "wrong hands". Officers are confident that the statements "travel time" is fiction. Still, a source in the Securities Commission recognizes that no one can find any information on Andrew Kalsina available until December 2002. "

Forex Magazine
based on entertainment.tv.yahoo.com