Archive for the ‘Economics’ Category

 

The New Possibility Of Economics

Sunday, February 28th, 2010

Unfortunately, business schools imported from the U.S., an idea that had begun to take root in Europe, taking socialism. Professor John Maynard Keynes, British economist and an avowed socialist had created his theory of government intervention in the private sector in all European scientists.

Easy to use, Dr. Keynes believed that the role of governments to manipulate the economy of their countries was to reduce the impact of economic recession. He taught that when times are good economic governance must be a way to bring in the economy and social order in which programs like health care, housing, employment, and on: the promotion of Robin Hood syndrome if desired.

In poorer countries, where the economy is already controlled by the government, this concept has been adopted in full, but the means to give the theory a platform for experimentation. There is a better place to experiment, as in America, where the free market economy, based on the biblical heritage, the strongest economy in the world, built with huge surpluses available for stealing.

Keynesianism swept the world. From this was born the International Monetary Fund and World Bank. In the U.S., arrived at the Federal Reserve, the Work Program of the College Farm Bank, Federal Republic of depositors Insurance Corporation, came and went. The real impetus for the adoption of a Keynesian economy was during the Great Depression of the 1930s. In fact, the great economic crisis of President Hoover was prudent to raise taxes on consumer goods, the government exacerbated the growing demand for food and resources to create short move vision, incredible prices on imports of foreign products, and more movement protectionist in the world is on.

Herbert Hoover was ousted from office and Franklin Roosevelt, with the mission of Keynesianism voted at all levels of government in implementation. Giving impetus to these social changes was the U.S. income World War II, during which time the checks and balances suspended the Constitution in favor of almost dictatorial powers for the president. Escaping from the war to expand the role of central government increased until it touches the lives of nearly all Americans.
What we see and accept as normal these days would cause a revolution in a generation before the century. If the federal system of income tax was first proposed in 1912, was promoted voluntary system, because the fans are afraid that voters would revolt if the government tries to enforce it. When Congress voted to accept the voluntary tax system, it was claimed that up to 1.5 percent of what the federal government could raise taxes should be placed. The resolution was found beaten on the ground that Americans would never allow his government to take large amounts of their salaries. It has been argued that might be tempted, if Congress passes this limit at some point in the future politicians seem outrageous amount.

From these humble beginnings, we have developed in the management of Keynesian economic Full Blown. Nothing happens that is not in any way the federal government in the daily operation. The average American believes that now is the duty of our government to control our economy.

The difficulty with the handling of government in the economy that every action produces a stronger reaction and requires more manipulation. Reducing interest rates and credit of the production from wind in any case, it stimulates the economy. But the laws of supply and demand for party unity, and more people competing for available products, prices rise and we have inflation.

The point I make here is that the economy has a direct impact on investment of all philosophy, like it or not. So a little understanding of economics is necessary to preserve the long term. The shorter the period, the harder it is for an economy in project management. Qualified investors need to do is look at trends. Trends are often developed over the years, and certainly not months, weeks, y.

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Forex Day Trading - Some Basic Info And Tips

Sunday, November 1st, 2009

Oops! It’s not just trading in day means day-trading but it’s more than that. Let’s move ahead to find out the meaning of day trading.

It is a forex trading style or a system used to trade at currency trade market and here the traders starts and finishes all his trades at the same trading day.

The trades are completed as fast as possible as it has restriction to finish it’s deal at the end of the same trading day. One more reason is that traders get returns from the trading deals at the time he made the buy or sells the Forex options.

This is a very quick and big profitable trading style if traded cautiously and correctly. Those traders who are using this day-trading system enjoys quick returns and soothing trading practice as well because they don’t need to hold overnight trading accounts.

The fact is that forex trading market is never closed and is open twenty-four hours from Sunday midday to Friday midday. Thus, the trader only decides the starting and end of the trading day and not the Forex market itself.
Whenever traders trade using day trading system they should keep in mind that faster they make position higher will be the transaction costs of the trades so make sure to select a system that has potential to earn adequate amount of money that can replenish all your transaction costs at once.

A very simple difference between day trader and an investor is the time duration of making buying and selling decisions. However, the main difference lies in the difference of goals and objectives of a particular trader.

As an investor purchase stocks with an intention or belief that the value of stocks will increase with the passage of time and in this expectation he tends to hold the stock for long duration for earning more profits.
Whereas, a day trader trades with an expectation of small or short-term movements in the currency value and that’s why he trades in big lots of around 100,000. The minor changes in the value of currency rate is not significant but is prove to be more profitable when that minor fluctuations get multiplied by a big lot of 100,000.

In the end, one thing to quote is that high profitable potentials brings with it higher risks also so always make buying and selling position with brain because every Forex trading style can be traded using your intelligence and the point you loose your active concentration the moment you loose your profits.
Forex Triangle Chart Patterns - As we, all know the trend lines form the chart patterns and trend lines are set by connecting the highest points or the lowermost points of the Forex trade.

Thus, the converging trend lines indicate the triangle chart patterns that forms a triangular patterns. They are easy to mark and interpret results easily.
The triangle chart patterns of Forex trends are set as a unique group of patterns that are different from other chart patterns that are used to explain various conditions of the Forex trading market.

This pattern is set when the lines from higher price value and the lines of lower price value combined to form a triangle chart pattern.

The types of triangle chart patterns are symmetrical, descending and ascending triangle chart patterns.
The symmetrical triangle chart is formed when none of the buyers or sellers handles to trade at the price movement.

The lines of the triangle are closing the gaps between the two price ranges where a Forex trader anticipate for the breakout.

At some point where the competition stops and one out of the buyer or sellers finally give up. When the hurdle formed by these triangles is broken down then a distinct price action follows the movement further.
Ascending Triangle Pattern:

This trend generally moves upward and indicates about the upward moving trend of the price action.It is essentially an upturned descending triangle and as it is a triangle it hypotenuse that used to moves upward with each fraction of time.

After this upward moving trend, there comes a straight moving trend line and traders are watching attentively this trend for the important resistance point for further trading. As this is the right time to make buying decisions at the Forex trading market.

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Glimmer Of Hope In Economy

Tuesday, October 13th, 2009

For every piece of data that comes out offering a glimmer of hope for the expansion, such as the recent ISM non-manufacturing index, investors are being bombarded with a slew of data of late that points to the recovery being quite weak. The latest piece to fit this bill was the employment report out last week, which not only was worse than expected, the numbers were worse than the previous month’s figures. While unemployment is often viewed as a lagging indicator (which is perhaps why the stock market shrugged off the latest reading), in the case of credit driven contractions such as we’ve experienced) it’s much more of a leading indicator. And the numbers behind the headline 9.8 percent jobless rate suggest we’re in for more pain in the months ahead.

As of last count, 5.4 million people have officially been out of work for more than half a year now. I say officially because if you include those who have simply given up looking for work, the unemployment rate would stand at 10.3 percent. The official rate is also skewed by the Bureau of Labor Statistics birth/death adjustment, which is essentially just a wild guess (not actual survey data) of the number of people who have joined newly formed businesses. Excluding this guess the unemployment rate jumps to 10.5 percent. And the numbers would be worse if many people hadn’t just given up and stopped looking for work. Those people who are still employed are working fewer hours. The average number of hours worked has fallen to just 33, the lowest reading in the 45 years this statistic has been tracked. Had hours worked remained constant throughout the recession, millions more jobs would have been lost. It follows then that companies are going to be slow to add new hires going forward as they will simply be able to use their existing staff more.

Perhaps the best measure of the employment situation is the measure which, in addition to the total unemployed, adds in marginally attached workers working part-time because they can’t get full-time work. This figure reached 17 percent last month. And if you factor in the other adjustments mention above this metric would top 20 percent. The labor market hasn’t been this weak since the Great Depression, and everything points to it only getting worse in the coming months. With millions laid off and millions more concerned they’ll either lose their job or see their pay cut in the next 12 months, it’s hard to envision a meaningful pick up in consumer spending this coming holiday season.

Corporations seem no more likely to ride to the economy’s rescue, judging by surveys of corporate spending plans and the trend in bank lending, which has contracted at an alarming rate in recent months. We should get a better feel on this score in the coming weeks: The third-quarter earnings season kicks off this week. Expectations are for another quarter of losses, but the consensus sees a resumption of growth in the fourth quarter, thanks in large part to soft year-over-year comparisons.

Forward guidance may set the tone for the stock market in the next several weeks every bit as much as actual results. More important than fundamentals, however, are the technicals, which have driven this rally from day one. After reaching a recovery high around 1080 on the S&P 500, stocks pulled back in the last two weeks only to bounce off of their 50-day moving average. I won’t rule out this kind of action continuing for a while longer, with stocks climbing even higher without a meaningful correction, but I can’t help but conclude that at some point market fundamentals will re-exert themselves. When they do, stocks will contract in a hurry.

Gold, meanwhile, just keeps looking better and better. Past rallies above $1,000 an ounce were promptly followed by sharp reversals. This time around we had only a very modest pullback before buyers came back into the market. And while a correction could still occur, the metal has moved to a record high, opening the way for much greater gains in the coming months.

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Cash For Clunkers: Who’s The Winner

Friday, August 21st, 2009

The government’s “cash for clunkers” program, which offers credits between $3,500 and $4,500 to those disposing of gas-guzzling vehicles and buying new, more fuel-efficient cars, is bolstering auto sales – and auto makers.

After the initial $1 billion apportioned to the program was rapidly drained, a proposal to top up the funds with an additional $2 billion passed the Senate Thursday by 60 to 37 votes and was signed by President Obama without delay. So far the program (formally the Car Allowance Rebate System, or “CARS”) has led to about 250,000 cars being sold.

As one of the goals of the program was to get more fuel-efficient cars on the road, it should not come as a surprise that some of the best-selling cars are foreign makes. In fact, as of the latest data available, four out of five new cars purchased through the program are manufactured by non-U.S. companies like Toyota and Honda. As the program has won its additional funds, the hard-hit auto industry will likely benefit from incentive-related sales for a little longer, despite some indications of the waning interest. It’s also important to note that in addition to the U.S., other countries such as the United Kingdom, Germany, Japan and China also offer several measures (consumer credits, tax breaks, subsidies) that are boosting the industry. It was reported that Russia is also considering similar measures for domestic cars. It’s very likely that cash-strapped consumers taking advantage of the program, while getting a good deal on a new car, will have less money in their pockets for other discretionary purchases. And if the economy does not improve significantly by the time the additional $2 billion runs out (which is unlikely), “cash for clunkers” will have revved the auto industry’s engine only temporarily. However, this extra boost should prove helpful to the strongest companies in the business who are getting an incremental advantage over competitors.

One such company is Toyota, a leader in fuel-efficient cars. Toyota, which gets more than a fourth of its sales in North America, holds a second place in cars purchased under the program. Recently, it has provided investors with a look into its future as it released operational results for the first quarter of its fiscal 2010. Despite remaining in the red, the company is now more optimistic about the near-future. Toyota now expects higher sales in Japan for the first time in five years as the result of the government-sponsored program for promoting fuel-efficient vehicles. Its earlier forecasts did not include the effects of government incentives at all. Toyota also narrowed its expectations for full-year operating loss to 750 billion yen from 850 billion yen, a significant improvement. Toyota’s balance sheet remains strong and continues to be a significant long-term positive. While purchases prompted by the governments’ incentives do not necessarily reflect sustained demand, the boost they are giving to Toyota is already helping its near-term results. I like the company because of its industry dominance, which is likely to improve as the industry goes through the slowdown. Toyota’s recent guidance may prove conservative as its technological dominance and financial strength will continue helping it to win over competition.

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The Economy Is Not Getting Better

Sunday, August 16th, 2009

You may find it hard to resist going whole-hog into the market these days, especially as we are likely to get a very strong third quarter. By some estimates, growth could be 4%. It could even reach 6%.

However, all the growth we’ll see will be the result of unsustainable factors such as inventory accumulation, car production increases (due to the “cash for clunker” program), etc. With this in mind, you must resist the urge to increase your weighting in stocks.

Long-term, we still face substantial headwinds. But our feeling is, if the market bubble does pop, it will likely be the last pop.

It’s true that irrational markets can rise, and in doing so attract more irrationality. But in the end there will be some event, some realization, that higher earnings (the ultimate motivator of stock prices) will not show up. We’re not smart enough to know exactly when the catalyst for this realization will arise, but we do have a handle on why future earnings will not measure up by the first quarter of 2010, or perhaps as early as the fourth quarter of 2009. We also believe the issues with earnings will be serious enough to derail today’s historically strong market rally.

Looking at stock market commentary, we continue to be amazed that no one mentions commodities. Bloomberg, Barron’s, and other major media invariably deal with commodities and stocks in separate columns and articles. Never do they discuss commodities and stocks together, in the context of their interrelationship. We think this is a serious mistake, for nothing matters more to the outlook for stock prices than commodities these days. And there’s no asset group more important for you to own on a long-term basis than commodity plays.

In addition to commodities, which are used to make things, we also like one in particular, the one that functions as currency, and that’s gold…

Over the past 45 years, there has been an interesting relationship between growth and commodities, in which the average change in commodity prices has roughly equalled the average change in GDP. In the short term, a rising GDP tends to lead to higher commodity prices. In the longer term, when GDP rises sharply, commodity prices tend to stay flat or fall. And when commodity prices rise quickly, GDP tends to struggle.

The 1970s were a notable time when we had soaring commodity prices which short-circuited GDP gains. We had a massive recession between 1973 and 1975 on the heels of OPEC’s engineering a massive hike in oil prices.

Commodity prices then moderated, but began rising again in the late 1970s. It took a stalwart Fed Chairman, Paul Volker, to finally halt commodity prices by raising interest rates dramatically, which reduced GDP and allowed more commodity supplies to come on stream. He set the stage for low to negative commodity price growth and a very strong market throughout the 1980s and 1990s.

The 2000s, however, have told a different story. Stocks have dramatically underperformed their long-term average. In fact, the years from 1997 to 2007 may have been the worst ever in real terms. During that period, commodities soared. GDP growth, which until recently looked to be on a strong trajectory, faltered. The last time we saw both the 6-year growth in GDP and the 3-quarter growth in GDP above their averages at the same time was back in 2000. In other words, it’s almost been a decade since we’ve seen above average GDP growth, both short and long-term, simultaneously. (In fact, it’s been four years since we’ve had even short-term GDP growth above average.)

During this long period of slow GDP growth, commodity prices have surged. By the 2nd quarter of 2008, they had risen nearly 185% over a 6-year period. That’s a bigger gain then we saw in 1973-4.

Bear in mind that this past decade has not been marked by commodity shortfalls due to political events, as we had in the 1970s. Commodity prices have risen purely as a result of growth – but not growth within the U.S.

As for the most recent 3-quarter period, even assuming growth of 6% during the 3rd quarter of this year (admittedly a reach), the 3-quarter growth rate will still be negative. Yet commodity prices for the same period will have risen 16%. It’s unheard of for commodity price growth to be a standard deviation above the mean in the context of negative economic growth! Plus, 6-year commodity price growth is close to 75%, which is off the charts and almost unbelievable given the weakness of the U.S. economy and that of the entire developed world!

My point is that the U.S. has become a non-player in the commodity dynamic. The real players are the emerging markets, which continue to grow like crazy. Indonesia, for instance, will likely grow at an annual rate of 5-6% for the next 6 quarters. China and India will grow even faster. The emerging nations have become more important factors than the developed nations. Nearly 100% of world growth over the next 6-8 quarters will likely come from the emerging markets. And as the emerging markets become bigger and bigger players, their need for commodities will become even greater.

This is bad news for the U.S.

High commodity prices caused growth in the U.S. to be subdued during the 2000s. Now, with the emerging markets growing larger and driving commodity prices higher, U.S. growth will be even more restrained.

Also holding down U.S. growth for some time will be the very tired U.S. consumer, who accounted for over 100% of U.S. growth during the 2000s.

It’s not a pretty picture. Nonetheless, it is clear that, for the next 10 years or more, money will be made by those who invest in the hard stuff – commodities – and the emerging markets.

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Importance and Differences in foreign currency exchange rates?

Tuesday, January 6th, 2009
the one 1 asked:


I am trying to understand the importance of foreign currency exchange rates. Why would economists care that today the dollar converts to x amount of Chinese currency for example? Also why would economist care that today the dollar is stronger or weaker in the same day in different countries such as China, Japan or others?

I am just using those countries as examples, nothing special. I really would like to know.

Thanks in advance

ROBERTO

 

currency exchange?

Wednesday, October 1st, 2008
kelbel asked:


I am confused with the rates of exchange. I received a 10 yuan from someone and checked on line to see the exchange rate. I continued to see different exchange rates between different countries and the USD. Anyway my question is, if you can get per say 500 of a certain currency for one usd, does that usually mean that you can buy a lot more there for “less” if we were to be talking about its cost in USD?

JIM

 

How does currency exchange based upon?

Sunday, April 20th, 2008
Bob asked:


How does currency exchange work?

I am comparing a possible benefit compared to using Forex Foreign Exchange software that trade currency.

Is it anything different or is it better to show up at the NYSE or Dow Jone Merchentile trading?

AMANDA

 

Why do tourists from third world countries have to suffer when it comes to currency exchange?

Wednesday, October 17th, 2007
simplyred asked:


Ifyou are from a third world country and u get to travel to a first world country such as the usa or uk, you will have to scrape your wallet and live a mieger life than the life you led in your home country.This is due to currency exchange. You have to pay ten times the amount to buy a loaf of bread in your visiting country than the amount you paid back back home for the same product.

JILL

 

What is the currency exchange rate EU verses the US dollar?

Wednesday, August 29th, 2007
singingsiva84 asked:


like what is the currency exchange rate the US dollar or the EU euro

BOBBY