The Financial World

FED and the Bank of England denied the news about cooperation

2008-03-23T07:40:00.000-07:00

From the Federal Reserve and the British bank denied the possibility for masked buying of obligations, financed with Amercian mortgages, with purpose to return the confidence to financial sector. In spite of this, the bankers in Great Britain announced that is possible to go to more aggressive purposes for managing with the mortgage crisis and the problems on the financial markets.
From the European Central Bank had refused to comment the case, announced Reuters agency.
The previous week, newspaper Financial Times wrote, that central banks from the two sides of Atlantic Ocean are trying to establish a large operation of buying all depreciated securities, which are in the basic of the financial crisis. This may repair the redit system and will return the confidence in financial system, but the US Dollar will continue to get cheaper.
"The central banks are trying to find the solution of the crisis situation", commented a speaker of the Bank of England. "Our institution will not go in risk situation, which may load up the taxpayers with the problems of trade banks", continued he.
From the federal Reserve answered, that they are not making any negotiations with foreign colleagues for coordinated buying of obligations financed with mortgage debt.

Bear Stearns sold for 240 millions USD

2008-03-17T13:00:00.001-07:00

The American investing bank JPMOrgan Chase agreed to buy Bear Stearns for 240 millions USD, which is nearly 90% form irs price from the previous week. We can remeber, that the investing bank Bear Stearns was hurt a lot from the mortgage crisis in USA and is in front of the bankrupcy. In Friday afternoon, the financial markets broke after the news for bankrupcy of the bank, which cannot pay its engagements.
The shareholders of Bear Stearns will be compensated with shares from JPMorgan, and for every of their share they will get 2$. Just before the Friday news, the shares were at prices of 55-60 USD, and for the previous year the price was over 100 USD. It is expected that Federal Reserve will finance the transaction, and also 30 billions USD for supporting the licvidity of the bank.

Russian Money and Switzerland

2008-03-17T12:45:00.000-07:00

The future change of the authority in the Kremlin in taking the attention of the foreigners, who are making business in Russia, told "Nezavisimaya Gazetta". So, for example the previous Thursday in the Swisss capital Bern, was made a conference in Comitee of collaboration between Russia and Switzerland. The bankers "privately" had discussed the possible schocks in changing the authority from Vladimir Putin to Dmitrii Medvedev and the connected with this perspectives for running of Russian capitals outside of the country, in this count in banks of Switzerland and Lichtenstein.
The organizers of the meeting in bern spent maximum fetch, to keep political propriety. In the conference was discussed the critics to Russia from the Swiss medias, which are a little bit harder sometimes. The accent in the conference had been Constantine Kosachev, the leader of international section of the Government.
Kosachev signed, that Putin is the first after Peter the First, Russian leader, who when leaving the rule was not devoted from anathema.

One of the large bank of WallStreet in front of bankruptcy

2008-03-15T09:11:00.000-07:00

Just 3 days ago the chief of the famoust American bank Bear Stearns, was convincing WallStreet, that the company is in great danger. Now the assurances of Mr. Alan Schvartz turned in apprehensions for bankruptcy, when the client want their money back, which is making the situation for the bank worse.
In Friday JPMorgan Chase and the Federal reserve Bank of New York should give a hand to Bear Stearns, with one financial package, to keep it living, wrote The New York Times. This step was extreme shock for the financial system, made by the credit crisis. The expectings of Wallstreet are that one of the great investors there may fall. The situation may lead to selling of part of Bear Sterns, which loss from invests, connected with mortgages increased. To keep the 85 years'old bank, JPMorgan with a support of FED helped to credit line, which is giving to Bear Stearns. The Bear has 28 to tighten the financial position or more possible after that to search for buyer.

Is the market of luxury goods in crisis too?

2008-03-13T14:12:00.000-07:00

To continue the business with luxury goods is necessity most of all, the people to feel good, spending a lot of money. In the time of conferention in Moskow, the director of Louis Vuitton - Bernard Arno went in explanations, to take out the fears of investors connected with negative influence of the credit crisis, the possibility of recession and weak dollar. Against all expectings, Mr. Arno announced, that sellings will jump double in the next 5 years because of the stable searching from the side og growing markets.
After going away of the bad doings in the beginning of the 10-years, connected with terrorist attacks in USA, fears of terrorism and the war of Iraq, which killed the interest of the people in excentric goods, the market in the last 3 years waked up. According to marketing agency Bain, in 2006 sellings had growed with 9% to159 billions USD. The expectings for this year had reached 170 billions USD, which is 2 times more than the incomes realized in 1996.
In spite of the crisis in the US economy, the luxury goods sellings are going in good direction and the prioritets of Americans are really changed and absolutely turned down

About USA Economy

2008-03-13T10:11:00.000-07:00

In 1971, when the USD was weak and was getting cheaper with every day, the financial minister John Connolly paid attention to the whole world with the words “Dollar is our currency and your problem". Thirty years later when the US Dollar was stronger and didn’t stopped to increase, the financial minister Robert Rubin told “Strong Dollar is a good for America”.
Today the US Dollar is again in situation from 1971, and analyzers expected the American positions and economists to pay attention to the words of Connolly, but in spite of that they repeat the phrase of Rubin. The problem is that as much as you claim that you care about American Dollar, when it is decreasing every day, means that you have an interest the situation to be in that way. So the American economists, repeat without words the phrase of Connolly.
The president of European Central Bank, Jean-Claude Trichet, finally began to comment, how dangerous can be the hard and uncontrolled currency movements. The banker is pressed from the production sector in Europe, to make an attempt for stopping of the hard running EUR. For the last month, the Dollar lost nearly 8% toward the EUR, and for the last year, the losing is more than 20%.

USD with top bottom

2008-03-13T10:09:00.000-07:00

The USA currency fell under the psychological value of 100 YEN per USD, which happens for the first time for the last 12 years. This is because of hard apprehensions about going of American economy in recession and the continuous credit crisis.
The currency crashed to a record bottom toward the EUR and CHF, before the important data for American retails and the applications for unemployment later. The Japanese currency raised with 24% toward the USD for a period of 9 months, which will cause a serious problems to the profit of Japanese companies. China often use the YEN as a currency in stead of its, inb international transactions.
”The investors are leaving too quickly their USD positions, which will be a great problem for us”, commented Japanese analyzer in front of Bloomberg. “The American economy, which is the strategy important market, is going in recession”, continued he.
The USD decreased to 99.76 YEN, earlier today, which is the lowest level from 9th November, 1995. In the moment the price is again over 100 JEN, but yesterday the US currency 102 YEN per USD. The USD fell to new top bottom with a fixing of 1.5628 USD per 1 EUR.
Japanese government involved into the currency markets 4 times from 1995 till now, to decrease the price of the YEN and to support the export. The Japanese bank sold 14.8 trillions YEN (146 millions USD) in the first 3 months of 2004, which were after the selling of 20.4 trillions YEN in 2003. All this were done, because the Japanese economy is directed for exports and don’t need expensive currency. With a less expensive currency the Japanese economy will keep the good in concurrent prices. The too cheap US Dollar is making a bad reflection over Japanese export to USA, where are going 25% from all goods made in the Asian country.

Japanese economy with 3.5% increase

2008-03-12T13:38:00.000-07:00

The economy raising of Japan in the last three months of 2007 had been 3.5%, announced today Japanese government ot ministry. That is a little bit lower that the expectings from the government, published a month ago, but second economy in the world had developed much faster, that the experts predcited. After the reporting of the data, the JEN got more expensive, because of the specualtions for decresing of the interest level later this year from the Japanese Central Bank were declined. One of the chiefs of BoJ, announced that it was normally the Central Bank of one country to increase the interest levels in the country, in paralel with increasing of the economy.
In Tokyo immidiately after the publishing of the report, JEB reached 103.01 JEP per USD. The currency specialists think, that JEP may increase its speed and to pass the level of 102.70, because some traders put there automatical orders for buying.
Together with this, the index of Japanese shares Nikkei 225 Stock Average had increased with 1.6% because of the expectings, that the decision of Federal Reserve of USA to invest 200 billions USD in the financial system, will help for export in the largest market of Japanese goods.

Robert Solow about the difference between FED and ECB

2008-03-12T11:59:00.001-07:00

Robert Solow, the Nobel's laureate, explained in interview for Handelsblatt, why the politic of FED is better that those of European Central Bank. The scientist is also talking about the users' confidence of ECB and the decisions of the same institution.
Handelsblatt: Mr. Proffesor, according to the monetary theory of Milton Freedman, the active politics of federal reserve of USA and the pack of economy stimulates of US government are a devil's trap.
Solow; Neo-classic theory and the related over it theory about "real business cycle", which is keeping a serious for the economy movements technology shocks, is comming from unreal premises. In these models is not taking under attention, that there are people with different, competing purposes, consumators, ivestors and workers. That is why, the results and the politic advices, which are comming from neo-classic models and in all the time are claiming for "les fer", and not strong enought.
Handelsblatt: What will happen, if there are more realisitic admissions?
Solow: Then we should calculate with unchanged prices and unchanged working sallaries, with calculating of market force and the restricted time horizons of actors. If this is done, you will see, that the monetary and financial politics are working instruments.

Gazprom with ultimatum from Central Asian countries

2008-03-12T11:29:00.000-07:00

Three of the richest of gas countries in Central Asia, yeasterday made a great change with their relations with Gazprom. The directors of three state companies "Turkmengas", "Uzbekneftgas" and "Kazmunaygas" made a visitation of the chief of Russian comany and told that they will sell the gas to European prices from the next year.
So Moskow, which in international diplomacy, not only once speculated with the threat to create "Gas OPEC", together with other large gas exporters, for the first time met the point of view of the companies.
It looks that the difference had formed because of active diplomacy of American and European governments, which are trying to establish an alternativ of Russia trace for exporting of Middle Asian gas for Europe, claim commenters of "Vremya Novostey".
Paradox according to Russian journalists, that if Gasprom agree with the options of the ultimatum, the Trans-Caspian project, supported from Washington, will be stopped. Together with this the intentions of Russia to realize Caspian gas-main are going stronger, in which the Russians are planning to transportate 10 billions cubic meters Turqmens and the same value Kazachtan's gas.

Jean-Claude Trichet is scared from hard increase of the EUR

2008-03-11T13:34:00.000-07:00

The president of European Central Bank, Jean-Claude Trichet announced earlier today, that he is affraid from the too hard increase of the EUR price toward the USD. In this way, Trichet is making the first try for intervention of currency market, which from some time is hardly destablized.
"We are affraid from too hard movements of the currencies in heavy moment like those today", commented a banker Basel. Trichet told his oppinions for currency market for last in the November, when he told against too unstable currency cources.
Jean-Claude Trichet tried to restrict the growing of the EUR, which got raising of its price with 18% toward the USD in the last year. After going over th psychological
border of 1.50 USD per 1 EUR, the European currency started to restrict the export and production. In the same time inflaion in the Eurozone is with 14 years pick, which made European Central Bank to keep a high level of interest, stimulating more its currency. The expectings for new aggressive increase of the interest of FED, additional will made the situation worse for the European Business and better for the EUR. Trichet is feeling much uncomfortable, because he cannot made a own monetary politic.

The economist from UCLA about American recesion

2008-03-11T12:31:00.000-07:00

American economy will get narrow in the final part of the year, but will not go in recesion, because the crisi in mortgage sector will start to go out in the second part of the year. Finally, the economy of USA will turn back into its normally features and will continue its development, commented the economist from UCLA in Reuters.
"The economy indexes are weak, but still are not allowing us to announce the beginning of the recession", commented they. "Out prediction for running away from the recesion this year are staying in power", continued the economists.
The decrease of working places in the country is normal, if we have in mind tha restricted development of the economy, but this still means, that recesion is fact. The user requesting has a delay with moderately values, again because of the crisis in the mortgage sector and weaker dollar.
Today, the people are just leaving their homes, because the price fell too much and they are not good invest. They stop paying of the mortgage, but keep their work and go ahead. So today, the problems with property sector still are going so easy to the users, as in the past.

Trade loss in USA for January with top levels

2008-03-11T12:08:00.000-07:00

Trade loss of USA in January was record , but even exept of that it was lower than the predictions. This was mostly because the weak dollar had growed itself to top levels. Together with that the income also growed to a top levels, mostly because of the expenssive petrol. In december the deficit in the USA was 57.9 billions USD, and in January it had growed with 0.6% to the value ot 58.2 billions USD, signed from the Trade Ministry.
The decrase of the USD and connected with this selling increases of the foreign markets, including Asia, compensated a little the decrease of the production of American factories, while the loss of worling places is linked also with perspectives for lower users outcomes, wrote Bloomberg.
In the economy of USA, which maybe is already in recesion, the export is staying one of the good moments.

The price of the credit

2008-03-10T10:09:00.000-07:00

We are witness of hard shocks in the world financial markets, which not little watchers are defining like unique. Supported low interest levels from FED and other leding central banks in the world after the terrorist attacks in the Autumn of 2001, as a anti-action of the affraids for global economy damage gave expected results in economy plan, but created the serial financial phenomenon. The investors found a decision of their problems with the profitability with investing in real estates. The population prefered also to invest in real estates, in stead of staying with zero profitability of financial markets with depositing the money into banks. The ballon inflated and with normalizing of the processes broke. When it reached its final point started its turning back. This turning opened other processes and started the fully global restructure
The leading Central Banks in the world activated their work. The medicine is the same - agressive monetary politic, which is act against the possible economy recesion. In 2002-2003 the interests of FED decreased with record low levels, even on some periods less than 1%. From the beginning of 2004 started their low increasing and primary credit rate reached even the top level of 6.25%. The work was broken quickly in the second half of 2007, when for less than a halg year was erased the work of 2 years.

U.S. Treasury increased in Friday

2008-03-09T10:41:00.000-07:00

The prices of American U.S. Treasury increased in Friday (the profitability fell down), after the serial affraids around the credit markets and weak datas for shortened 63 000 working places in USA for February - the largest decrease of employment for five years.
After these bad datas, the profitability of 10 years U.S. Treasuries broke to 3.483%, but after that partially turn back places because of the news for two auctions on value 100 billions USD given of FED in March with purpose to increase the money value. The profitability of 10 years Treasuries closed in Friday with 3.541%, which is still a little bit down from the closing in Thursday.
The profitability of 2 years U.S. Treasuries finished the day with 1.53% after the fell of 1.5% earlier in the day.

The worth of American Properties

2008-03-09T09:18:00.000-07:00

The way in which the Americans are "fastening seatbelts" had changed much more in the last years, which is important index for future assessment of financial markets. In the days in front of breaking of real estate ballon in USA, unsolvent citizens made their best to keep the property over their houses. Of this had no result, they stopped the loan of the car and finally reached the option - mortgage. In todays conditions, the list of priorities turned down, commented Reuters.
Maybe the real estate is not so important for Americans, mostly as its price is falling continuously. We may see soon Americans that first will sell their property, then the can and just finally the LCD TV set. This is the new question "To be or not to be", and even the idea about it is terrible.
In all cases, the credit ballon was created in result of the mortgage crisis in USA, which was followed by negative developing in automobile credits and finally came the problems with credit cards. According to datas of Federal Reserve, the expiring of the debt of credit cards with more than 30 days had grown with 4.55%, which is the highest level from 2003.
As a difference from the last bank crisis from the beginning of 90s, when the credit cards were hit before the mortgages, now the situation turned down. But it is difeerent now. In the last some years, on the first plan in USA came secondary mortgages, which gave possibility of people with bad credit history t get loans for buying of property. Also the first payments got almost to Zero, and the combination from the two gave the possibility of almost every American to be approved for getting a credit. This crashen the financial discipline of the population, for which the property has no worth, and mostly heaviness, which can quickly be thrown, when the price goes down. That is what happened.

Petrol price with new top

2008-03-08T08:46:00.000-08:00

In closing of the market in Friday the prices of petrol slightly decreased, after earlier in the day reached its serial record of over 106 USD per barel. The basic causefor the new top of the prices of 106.34 USD per barel are buyings of speculants, hedging because of the weak dollar and inflation.
On the New York Merchantile Exchange (NYMEX) the price of April futures of American ligh petrol with brand Ligh Sweet Crude Oil decreased with 32 cents to 105.15 USD per barel. London's bret petrol was in prices of 102.38 USD, which is 23 cents less.
An Analyzer of futures options signed, that increasing of the prices in Friday was because of the changes of USD and the expectings, that Federal Reserve may had to decrease the interests much more. A report of American Government is showing second serial month decreasing of working places, This brought to some expectings for new interest decreases from FED and the dollar in the beginning of the day fell more.

Not so dangerous increasing of petrol price

2008-03-07T14:46:00.001-08:00

The price of petrol passed the psychological border of 100 USD per barel, and the European investors are overloaded with problems of capital markets. They still don;t feel more serious pressure from that. Harder searching of goods from developing markets, expenssive EUR and lower meaning of the petrol crude oil from the European countries, is restricting the effect from the record price, commented Reuters.
The petrol reached the top level ever, with the price of 105$ per barel immidiately after the rejection of OPEC to increase the daily productional rates in Wednesday, which is almost 5% more expensive from the beginning of the year. For 2007 the petrol got nearly 57% to its price. The middle price of the petrol this year will be nearly 90$ per barel, while for 2007 it was 72.30$ per barel.
All this should bring to terrible pressure over some industrial groups, from heavy chemistry to producers of building materials. Worst thing will be if the more expenssive petrol may bring to taking away from the users from the market, and we know that the expenses of homes in USA are resposible for more than 70% of growing of gross Domestic Product of USA.

George Bush about USA economy

2008-03-07T14:36:00.000-08:00

The support for the economy of United States of America is a good action and will have a possitive effect in long-tems, commented George Bush in his announcment in Friday. He also added that the economy is slowing and it is not a reson for inconvenience and there is no word for recesion. "I know this is a difficult time for our economy. But we recognized the problem early and we provided the economy with a booster shot.", added the president of USA.
The president explained that the stimulations for the economy, that were made from the Congress and federal Reserve are just started to pick up the financial situation in USA. This will make the workers in America and businessmen richer, which will give them the opportunity to increase the development of the economy and will give a new direction of it.

Sallaries in the Eurozone

2008-03-07T14:20:00.000-08:00

The sallary of the chief of European Central Bank Jean-Clod Trishe was increased with 2% last year. This in fact is not against of its exhortations not to increase the sallaries of the workers in Europe. The increasing of Trishe's sallary is only with 2%, which is lower than the inflation in the Eurozone, wrote Bloomberg.
The sallary of Jean-Clod Trishe reached 345,252 EUR, which is 6,780 EUR more than the one from 2006. This was written in the yearly accounting reports from European central Bank. The reports were published into public for the first time yesterday. Just to compare, the chief of the Federal reserve Ben Bernanke is getting 191,300 USD, and the president of Bank of England - Mervin King is getting 283,564 pounds.
Trishe claims, that the increasing of the sallaries in the Eurozone is some threat to the pricing stability in time, when the inflation had reached 3.2%. The European central Bank is taking for its own general object keeping the inflation in the borders of 2%, but the inflation for the previous years was 2.1% and the increasing of the sallaries of German workers had been 1.4%, and it is the largest increasing for the previous 6 years.

The union of Cyprus will give 1.8 billions EUR to the country

2008-03-07T14:08:00.000-08:00

If we find a decision of the division of Cyprus, this will be not only peace for the country, but also will guarantee an incomes from 1.8 billions EUR every year, due to the chance for the business with Turkey and other possitive incomes. This is the conclusion for the examination, sponsored from the Norwegian International Insitute for studying of the peace. A group of scientists from Greece and Turkey Cyprus had counted, that the union of Cyprus will get on every Cyprus family dividend of 5,500 EUR yearly for the first 7 years.
The union of the island hardly will favour the tourism, building, university education, financial and legal services and trading companies. The trading of goods and services with Turkey will have its pick.
"One fair negotiation means growing security for people in Cyprus, larger stability in the region, increasing of the trade and service, making of conditions for the growing of culture and arts, and Cyprus will show as a model for the peace living of one world, built from divisions", told a special deputy of United Nations' Organization for Cyprus, filling that the new begining was extremely important for future disscusions for the destiny of the island.

USA in recesion according to American analyzer.

2008-03-07T12:55:00.000-08:00

New working places in USA in February are with negative sign for the second serial month, and so they are making harder the speculations of the market, that the economy is in recesion. The working places in USA had decreased with 63 thousand in the previous month, which is the hardest monthly decreasing from March 2003. We will remeber that their number decreased with 22 thousands in January, and the expectings for today were in increasing direction. The news are a little bit possitive for the decreasing with unemployment of 4.9% with 4.8% in February, which is explaining the fact, that many people had refused to seach for a job.
The weaker market of the employment together with the weak presentation of the real estates, the higher price of the petrol and fuel and high interest levels of mortgages will bring to user's quest. The missing of new working places is the basic index, which FED is watching at the moment and decided even to take a new interest decreasing. After today's datas, futures' market in Chicago is rating to 100% the possibility of interest dcreasing with 0.50% on 18th March.
"All indexes had a red light", commented American analyzer in front of Bloomberg. "We are definitely in recesion already. I don't think that there is someone, who is not understanding this", continued he.
Just minutes before the showing of the report, from the Federal Reserve told, that they will increase this month credit auction to 100 billions USD in previously announced 60 billions USD.

Fortis lost 1.5 billion EUR from the mortgage crisis in USA

2008-03-07T12:39:00.000-08:00

Dutch-Belgian financial company Fortis today, announced that its profit in 2007 had decreased with 8.2% when it should lose more than 1.5 billion EUR, because of the crisis in secondary American Mortgages. This result is based on often relations to the investors and hard rating of obligations for owes in the sector of secondary mortgages, told from the company.
In the previous year Fortis had registered 3.9 billions EUR net profit, but 900 millions from this are from the selling of its unit CaiFor to the Spanish Bank Caixa. Without outside incomes , the net profit of the financial company is 3.06 billions EUR, which had a decreasing of 30% in comparison with the result of 2006.
Fortis together with Royal Bank of Scotland and the Spanish Bank Santander soon took the Dutch bank ABN Amro for the recor value of 71 billions EUR. From Fortis announced, that the prices of passage and integration is going with full power.

Warren Buffet in front of Bill Gates according to Forbs Magazine

2008-03-06T09:54:00.000-08:00

The founder of Berkshire Hathaway Inc., Warren Buffet took the place of Bill Gates from the top place of yearly rating for world billionairs of Forbs magazine, where the founder of Microsoft was number 1 for the previous 13 years. The fatal 13 year he lost the place.
Because of realized incomesfrom shares, for nearly one year the money of Buffet had increased wfrom 10 billions USD to 62 billions USD. According to Forbs magazine, the capitals of Bill Gates increased with only 2 billions and reched 58 billions USD. So the computer magnate is on the third place after the mexican Carlos Slim and his 60 billions USD.
The number of world billionairs had increased only due to the growing markets. Nearly 70% from all new billionairs are from Russia, India, China and USA.

Wolfgang Munchau about Great Britain crisis in real estates sector

2008-03-06T04:53:00.000-08:00

Swedish economist Axel Leijonhufvud, working in American univercity UCLA, often loves to tlk about the practise of central banks to keep to the Inflation targeting. "This policy is wirking better on practise, than on theory", told he. The comentor of Financial Times - Wolfgang Munchau would tell them samo for British economy. If we have in mind the low producity of employees in Great Britain, and also the weak engineering achievements, the country should not develope so good in the last 15 years. From economic point of view, the prosperity of the country is looking impossible.
According to Munchau in the next some years, the British economy wonder will be in front of many problems. The balloon in the property sphere will bfrake somewhen and the citizens will be in front of harder crisis the the USA's now. A serious percent of Gross Domestic Product of Great Britain is forming from financial sector.