China Now Issues Bonds In Euros

Here is hot news that should displease the United States and more to the Fed (U.S. Federal Reserve) and Janet Yellen, its new boss. The China is now on the market for Euro-denominated bonds. The dollar God has longer to behave them. In late September, the oil giant China National Offshore Oil Corporation (CNOOC) has raised € 500 million within a short span of seven years and closely followed by their competitor Sinopec, with 550 million Euros in the same period.

 Experts believe that it is too early to identify a trend in the bond market; the trend is expected to grow according to them. They expect indeed that, in order to diversify their sources of funding Chinese groups continue to try to issue in Euros, and especially the Chinese domestic market does not seem big enough to meet its needs. Encouraging data, the two programs have met with strong demand; some even consider it quite exceptional.

The issue of Sinopec will thus attract a total of 279 investors demand to € 3.3 billion. Another factor to consider: the U.S. fiscal crisis will have prompted investors to turn to the European markets, while Old Europe can regain its appeal as a safe haven. Since the end of 2010, Chinese companies have flooded the credit markets with a dramatic speed.

In the space of a few years or a few months, China has become the first issuer of bonds in foreign currency, surpassing Korea with an average of $ 25 billion. According to Yves Jacob; in 2010, China raised less than $ 5 billion per year, which is an insignificant amount across international markets. For 2013, expects that will up about $ 100 billion. The current context of liberalization of the Chinese economy to alleviate the exchange control system will also gradually open the door to Chinese companies for a program on international markets while now offering the ability to repatriate funds in China.

 Element which should accelerate the movement signed early October a currency swap agreement between the European Central Bank (ECB) and the People's Bank of China, for a period of three years, including facilitating business transactions. The agreement, called “swap “concern more than 350 billion Yuan, 45 billion Euros. What is the third largest amount behind Hong Kong (400 billion Yuan) and South Korea (360 billion Yuan), largely below the agreement signed by the Bank of England (200 billion Yuan) in Paris. Through this agreement, banks in the Euro zone may obtain Yuan in exchange for Euro, China could in turn receive Euros in exchange for Yuan.

Wall Street and the budget debate!

With perplexity but without panicking, the Wall Street brokers watching the budget negotiations and debt embroiled in Washington and expect an output of impending crisis to be able to look calmly on corporate earnings. Over the past five sessions, the Dow Jones Industrial Average, featured together 30 values NYSE index dropped 1.22% to close at 15,072.58 points. The Nasdaq, dominated by technology, and is slightly advanced 0.69% to 3807.75 point. The week was “surprising “to the New York Stock Exchange, said an Economist.

The indices are mounted on the first day of the budget deadlock, when hundreds of thousands of American officials have been on leave without pay due to lack of agreement on the budget to Congress. They fell Wednesday and Thursday “while walking away the possibility of a resolution close to the crisis," before resuming the force Friday. "Investors do not want to commit, neither too bet down to not miss the relief rally that will surely come when an agreement will be reached , nor of course too early to bet on good news ," he says. "If the situation is the same at the end of next week , then the indices, which have already lost 4% since the highs of mid-September, could lose it again as " the expert predicted . " But if there is a sense that things are moving, we can regain these losses. "

 But beyond the economic impact of the paralysis of government services, investors see approaching at high speed the maturity of the debt ceiling that is after October 17, the U.S. Treasury will not be able to honor its payments. "Until now investors keep their calm, saying that one side will end up making concessions , or that the Treasury still has some cards in reserve to avoid default," says Douglas Porter of BMO Capital Markets . Investors are not rushing to the options market to protect their positions.

 Even if the volatility has increased the portfolio managers did not make sudden changes of direction. Market players leave in a principle that politicians, even the most intransigent, “know they cannot play with the debt ceiling, it's much too dangerous." But, he laments, " you can always have a party completely loses control." Hoping that doomsday scenario does not materialize, investors will begin to look at the quarterly accounts of companies.

 Finally, even if monetary policy has been overshadowed in recent days against uncertainty over the country's budget, brokers pay particular attention to the dissemination Wednesday minutes of the last meeting of the U.S. central bank. The institution was then largely surprised investors by maintaining the status quo on its measures to support the economy.

Exchange Traded Funds may be the next bubble! -1

Exchange Traded Funds currently experiencing rapid development in the United States, where they constitute more than half of the daily trading volume in the equity markets. The expansion of these instruments is less visible for the moment in Europe, because in U.S. where half of the market is held by individual investors where as in Atlantic the investors are mainly institutional investors are present in this class asset. Just may be feared that the development of the ETF market is currently powering the next financial meltdown? Recall that the ETF are the basis of funds, that is to say, collective investment vehicles such as UCITS, whose purpose is to replicate the performance of a market index, upward or downward, and whose shares are traded on the stock exchange just like stocks. They offer investors the opportunity to take a position, with management costs and tax costs reduced on a market index, including inaccessible or illiquid markets such as emerging markets, small caps, etc.

There are ETFs on all sectors of the market, and if a little unlikely sector is not yet covered today and in tomorrow it will emerge as new ETF. This is happening almost daily. We will soon invest in the segment of companies specializing in the balloon or tie pins, or companies based in anywhere. If there is no index representing the performance of the sector concerned, no problem, it creates the index and the ETF in stride. The phenomenon went beyond the stock market and extends to all asset classes, bonds (ETN Exchange Traded Notes), commodities (ETC Exchange Traded Commodities), futures, currencies (ETV Exchange Traded Vehicle) etc. The set is grouped under the term FTE, Exchange Traded Products. In short it is a beautiful alphabet soup simmering and is reminiscent of a previous recipe, the securitization (remember the ABS, MBS, RMBS, CMBS, CDO, etc), which had overflowed with some damage collateral for the past 5 years from now.

On the road there is nothing simpler than ETF investor buys an index, and as follows, upward or downward, the performance of the index being tracked. But precisely how this replication is obtained? There are two main methods: physical replication and synthetic replication. With physical replication, the issuer of the ETF actually holds the portfolio securities of the index being tracked. It calculates and communicates information two times: first, the net asset value equal to the valuation at market prices of assets held , divided by the number of shares issued and secondly the market price of the share , which comes from the comparison of buying and selling interests in exchange just like a stock. Both figures; net asset value and share price must be the same to a small margin near.

What will happen in case of divergence? These are specialized intermediaries (“authorized participants "), mandated by the fund issuer, which come into action. If the market value of the share exceeds the net asset value then the ETF is moving faster than the rise in the index, they will buy a basket of stocks in the index. This then delivers their new units; they can sell on the market, realizing a capital gain. Conversely, if the market price is below the net asset value of the fund, they will buy ETFs on the market and present it to again, which reimburses them by delivering the underlying assets. They can then sell these securities on the market and making a profit. These so-called arbitrage transactions are fully automated and have the effect of “realign " asset prices that were uncorrelated. It is the development of algorithmic trading has led to the development of ETFs.

 In case of synthetic replication, the issuer does not directly hold securities of the index, but other assets. It will then go to a specialized intermediary , typically a bank, to negotiate with him a "total return swap " the bank pays the issuer of the ETF 's performance index, while it reverse the performance of assets held in the portfolio. Physical replication is mainly practiced in the United States, where regulation severely limits the use of derivatives by collective investment funds. In Europe, ETFs are equally divided between the two modes of replication. We are mainly interested here in the physical replication, in which today we have a little more perspective. All this cooking takes place behind the scenes between specialized players (asset managers, hedge funds, brokers and banks financing and investment), thus preserving the image of simplicity and transparency between the final investor.

This should not, however, be fooled: many intermediaries are involved in constantly, and we must be aware that they do not by pure philanthropy, but because they have an interest. There was a second there the resemblance securitization market: the first beneficiaries of financial innovation are not the ultimate investors, but those who create and distribute these innovative instruments. That said, proponents point out that these ETF products are primarily funds, and so most of them are within the regulatory framework for the funds. These regulations, both in Europe in the United States, are very demanding especially in terms of transparency to investors . It is up to them to read the prospectus in which he will find, in principle, all the necessary information.

The Euro strengthened against the Dollar !

The Euro strengthened against the dollar late Friday trading in New York , in a fearful market increasingly a budget impasse in the United States and attentive to the speech of several officials of the U.S. central bank. The euro bought 1.3519 dollars against 1.3485 dollars on Thursday at the same time. The European single currency fell against the Japanese currency to 132.88 yen against 133.51 yen yesterday. The dollar also fell against the Japanese currency to 98.24 yen against 99.00 yen on Thursday. Before a crucial deadline in the United States to reach an agreement on the budget of the country, “the clock is ticking and investors get nervous," commented an Economist. " They accelerate their sales dollars , fearing more a closure ( non-essential ) government affects the quality of U.S. assets and hinders growth," the expert added , citing expectations that a partial closure utilities for two weeks would reduce economic growth " 0.3 to 0.5% ." Elected officials must agree to the Congress to ensure continuity of government services on 1 October. A text passed in the Senate Friday is still pressed by the House of Representatives before returning to the Senate for a final vote. You always hope that a last-minute agreement is possible, but this prospect darkens every moment while Congress keeps the dollar and the economy in hostage.

In addition, the market is still uncertain as to when that will choose the Fed to begin to slow its purchases of assets ($ 85 billion per month). It will be based largely on the level of unemployment to make such a decision, which could happen in October or December. Investors therefore waiting for the next monthly report on employment and unemployment situation in the United States, a major indicator to gauge the strength of the recovery in the world's largest economy which is scheduled for publication on October 4. Uncertainties on Friday were reinforced by new interventions leaders and voting members of the Fed, which accentuated the pressure on the dollar. Faced with such remarks, bond rates declined significantly during the session and bringing with them the greenback.

The current Fed policy has the effect of keeping rates low and dilutes the value of the dollar. Traders also scrutinized Italy where resurfaced fears of a new political crisis and trying to take face saving measures. Around 2100 GMT, the British pound rose against the euro at 83.76 pence per euro and climbed against the dollar at 1.6137 dollar per pound. The Swiss franc rose against the euro at 1.2244 Swiss francs to the euro and against the dollar to 0.9052 Swiss francs to the dollar. The ounce of gold finished at $ 1,321.50 at auction Thursday night against 1333 dollars. The Chinese currency finished at 6.1186 Yuan against one dollar for 6.1206 Yuan yesterday.

Crowdfunding a best alternative to Banks?

The crowd funding begins to touch the world of Start -Up, as an alternative to banks and business funders. Crowd funding is in between barter and solidarity loan capitalism of yesteryear, crowd funding often have much fun and attractions but it is sometimes risky. Many projects that have or will emerge in part through crowd funding (literally financing by the crowd), also called crowd funding. The phenomenon is not new: In 1958, John Cassavetes was able to finance his first film “Shadows “with a call for funds to public through radio. This phenomenon is becoming increasingly important. And now there are more than thirty sites are assisting general public as the crowd funding investors. Few of them are Ulule , MyMajorCompany , Sandawe , KissKissBankBank , Loan Union HelloMerci , Babyloan SmartAngels , Wiseed , Anaxago etc.

 The crowd funding market raised already worth $ 2.5 billion in the United States alone. There are three types of crowd funding. First, there is the gift against gift, nothing but a barter system. Then there is the system of loans or micro-credit. Some are paid, others do not, and that is like solidarity loan. Finally there is the financing of a business project in exchange for shares. The gift system against donation is very common in the world of arts. Projects may be small or substantial. Micro-credit is also very concerned and developed projects in US and abroad, mostly in trade, agriculture etc. According to Ricordeau Vincent, one of the founders of Kiss Kiss BankBank , "the motivation is to give birth to a project without any other return on investment a return emotional . People seek social link, a contact based on sharing, empathy, and trust. It is completely selfless unlike a financial return on investment. "

 For some companies, it is an alternative to banks and business lenders. This is particularly the case of start-ups, with little equity in start-up phase. However, crowd funding sites do not replace the banks. They do not lend money and they do not handle client funds. They are in an intermediate step of advice and not through management. The client chooses his investment and invests himself live in society. The sites just forgive a direct link between investors and entrepreneurs. This is the online community that validates whether the project should be born or not. This is not a window that decides to grant money or not. The risk is real and greater than the stock markets which has the advantage of being more liquid and especially give a real-time indication of the value of its assets.

Capital loss may be total and the second risk is the liquidity, This is an investment you can make for an unlimited period than what you anticipated. So do not invest money that you think you need three to five years. But there is another side: a significant potential gain, as we arrive shortly after the creation of the company. And it's worth it to invest in companies earlier. Here the risk and the reward are fairly standard. Regarding the gift donation against the financial risk is limited because the average financial contribution of users is around 50 Euros. If successful, the trust is garnered monumental. The question of the output is still crucial because all companies are not intended to go on an exchange.

If ramping up its activity, the company may be acquired by a competitor where leaders may choose to redeem the shares of the minority. And the price and the valuation is a matter of negotiation between the parties. Often these issues are anticipated in the shareholders' agreements. Early outputs can also be provided, but the recommended investment period is about 3 to 5 years, to let the company time to create value. In the end, crowd funding today fills a void in the financial needs. It allows artists to project promoters, merchants to support their project to start. Internet also allows them to reach a larger number of donors, lenders or investors, but is by no means a guarantee of success. Crowd funding is still in its early stage. Hence the Crowd funding is a social network linking young companies seeking skills, people willing to integrate a project as a partner or as freelancer and helping each other by joining hands together.

Know more about Crowd funding!

Crowd funding is a technical project finance business start using the internet as a channel of linkage between project managers and those wishing to invest in these projects. Of course it is an ancient practice but currently it is the subject of a wide popularity due to its simplicity of operation and the difficulties faced by some designers to find financing for their small projects.

 How it works?

The investor who wants to invest some money in a good project at one end and the holder of a project who starts business but does not have the funds needed to start his business and does not want to call the bank credit at the other end. The both meet on the Internet via a dedicated platform. The projects are presented by their holders and investors choose to fund one that they like to live up to what they want to invest. The simple operation of this form of financing also has the advantage of transparency for the investor. Both knows what is funds and by which choice and by its values. Crowd funding is associated with all kinds of projects. Generally, cultural, digital projects, social, environmental, innovative are the few worth mention.

 Three types of inputs are available to investors:

The first type of investment is a small gift or donation that is given to the project but the remuneration of the investor has no financial consideration. The second type of investment is a participation in the equity of the company created. The remuneration of the investor is then by dividends or the gain realized on the sale of securities. The third type of a investment is a loan. Pouring loan interest may only be offered by credit institutions authorized by the Banks. Fundraising to make lending is strictly prohibited. Only collecting interest free loans is open to individuals. The money invested can be few dollars to several hundred. Banking and tax regulations is a source of significant stress for structures offering financing platforms that obey different rules : The detailed identification of the investor ( proof of identity and residence) is needed to controls against money laundering , anti- terrorism, etc.

Cont...

Crowdfunding

The crowdfunding is a practice that is becoming increasingly important in all sectors. The "Crowdfunding" means "crowd funding" is to highlight key projects on an online platform and collect donations from users to realize the project. To date, there are several online platforms that do crowdfunding. This device allows individuals to find projects that match their taste, nearby or across the world, in all areas that are, and contribute directly to their construction, thanks to their savings in the form of committed gift, loan, or capital. The problem is that more and more participatory sites come onto the market, and each has a different mode of operation. According to the funding model on which they are based, the consequences for individual investors are not the same.

Mymajorcompany is a crowdfunding online in 2007 platform provides an opportunity for people who want to fund a project to place their gifts on a project of an artistic nature of a fixed term of six months. The project manager makes his case online retailer counterparties repay it intends to users. At the end of the operation, if the project has raised enough money to see the date, individual donors perceive generally a share of profits from the commercialization of the project, "if it generates." This model then gives a close to a "micro business angel" to users who invest in the sustainability of the project status. Other platforms offer gifts to reward individuals who contribute to the financing of projects. If the amount set is reached, the project is funded and users receive a symbolic reward for their participation. The counterparty may be a book autographed a copy of the disc, a card or just a letter / email of thanks. The business model here is closer to the hardcore gift. It keeps the character "philanthropist" to donate to help and not to return on investment. The most popular sites are KissKissBankBank, Babeldoor are the few crowdfunding platforms works by financing through a loan. The user advances some funds to the project of their choice. Once the project is completed, the user is reimbursed up to his contribution. In this area, the most famous platform Babyloan.org lends without interest.

 There is currently no legislation governing trade and financial flows on crowdfunding platforms. The reason is that the amounts are not large enough to be controlled by law. However, crowdfunding involves several "soft" areas. In the case of a system based on micro-credit model, the platform must have approval by Authority, which is rarely the case. Then, any financial contribution by an individual to a project gives it the status of "associate" because its contribution is legally speaking a capital contribution to the project, which is never the case. Crowdfunding is basically a system that works through donations. The payments are considered donations, must be reported to the tax and to be taxed. The majority of individuals skip this step. If these sites are regularly used to give large sums of money, it is likely that the IRS is involved.

The Circular Economy

The Institute of circular economy was officially launched in Paris on February 6. The main objective of the principle of circular economy is interesting because it is based on the idea that "The waste of one person is another resources of others. This model, which involves a long-term vision, as well as the economy of resource management and environment, seems like a good track to emerge from the economic, social and environmental crisis in which we are stuck now. The Institute of circular economy is an alternative vision of the economy. The Institute is composed of national and local policy-makers, entrepreneurs, academics from different backgrounds and association leaders. The aim of this structure is to promote an alternative vision of the economy. It is chaired by François-Michel Lambert.

He starts from the premise that the linear economic system that is "extract, produce, consume and throw is out of breath. It is now widely recognized that economic model based on a strong dependence on raw materials are becoming scarce and more difficult to extract in one hand, and the development of consumer non-durables - which obsolescence is sometimes planned - on the other hand, impacts our environment in the broadest sense. This model impact the environment and the people who migrate are sometimes under heavy pollution. The circular economy is pragmatic, because the concepts of recycling and regeneration and alter-growth are the foundation of circular economy.

At the ideological level, extensive consumption, reduced product life cycles and the relocation of production are central to the debate. Usage and consumption are also redesigned, including the concept of ownership. The idea is not to share or collectives of the properties but to think in terms of "a well-differentiated uses." Example is taken from the washing machine: the advantage of being owned by such a machine is zero, but its usefulness is high. The circular economy is unifying as it aims to "unite and involve all stakeholders and experts in a collaborative approach by pooling resources to conduct collective thinking."

U.S. monetary policy brings down the Indian rupee?

The Indian currency has again reached a record low on Tuesday. Like other developing countries, it suffers including expectations of investors who expect a shift from the Fed. The Indian giant shuddered. With the collapse of its currency, returns the specter of a crisis it had known early in 1991. Prime Minister Manmohan Singh had himself risen, claiming that this new crisis was not of the same order. Moreover, the crisis of the rupee displays India is experiencing a slowdown - albeit relative - its growth. In this context, the question of advancing the general elections before the month of May 2014 was again discussed among the members of the Indian political class. How to explain this monetary crisis going to translate into political crisis? The Indian currency Monday reached its lowest level. On Tuesday, the dollar traded as against Rs 64.11 earlier in the day. The day before, she had gone through the floor dropping to 63.22 rupees to the dollar. More broadly, in two years, the country's currency has lost more than 40% of its value since July 2013. Main reasons given by most analysts: the fear of expected monetary tightening of U.S.

 The impact of a possible end of the buyback of bonds by the Fed is already being felt in the last two months. Capital hesitates between the United States and emerging countries. When the shift in U.S. monetary policy was announced, the capital flows are rerouted to the dollar. The Indian stock market actually costs, “there is still a month; the SENSEX index exceeded 20,000 points," points out the researcher. He thus lost 7% in three days, falling below 18,000 points before rising slightly at the close on Tuesday. In India the deficit of current account is the source of all problems. The deficit amounted to about 4.5 % of gross domestic product, according to a note from the Bureau of Economic Analysis of BNP Paribas. To this must be added a context of relatively slow growth. For the 2012-2013 year, India's central bank has lowered its growth estimate from 5.8% to 5.5%. Well below the 9 % increase in GDP experienced by the country during the previous years.


 In addition, “even in the field of foreign direct investment, we feel a hesitation. Whenever the election is tight, investors may worry about a shift," says economist Center Future Studies and International Information. Faced with this situation, the Reserve Bank of India (RBI) would have little leeway. This is “very embarrassed because political control of the money supply can have a negative impact on growth and investment. It is therefore obliged to act in short strokes. The RBI has, for example tried to halt the decline of the rupee e.g. preventing imports of gold, limiting to $ 75,000 per year instead of 200,000 the amount that can leave the Indians in the country but also in controlling purchases estates abroad. India is not alone in feeling the effects of investor expectations about the U.S. monetary policy. Other emerging market currencies were also affected, such as the Brazil and Indonesia. Finally, more broadly, the crisis itself could amplify these phenomena. India has no role in driving the region since this has the effect of weakening the economy, there is however a risk of indirect contagion in other emerging countries, especially China.

The European Sovereign Debt Crisis!

The financial crisis of 2007 caused a wide deleveraging among private agents developed and pushed the savings rate to rise, tipping the global economy into recession. Governments and central banks then intervened to prevent the collapse of the banking system and relaxed their cyclical policies to restore aggregate demand. The economic slowdown and the reaction of the public authorities have widened sharply public deficits, even though levels of public debt in the developed countries were already considered excessively high. This further deterioration of public finances has raised serious concerns about the ability of states to maintain their debt on a sustainable path. This is especially the countries of the euro zone that have crystallized concerns. Greece between the budget crisis in autumn 2009, and the sovereign bond yields rise sharply in Spain, Italy and Portugal in late 2010. Thus, interest rates, which had been a convergence in the past ten years with the European integration, begin to diverge, market making clear the distinction between state-member groups: on the one hand, those the "periphery" undergoing unsustainable increase in sovereign risk and on the other, those "core" that benefit from historically low interest rates. Countries experiencing the strongest market turmoil in sovereign debt have increased the fiscal austerity measures to restore confidence and reduce sovereign spreads.

 Other Member States have also adopted fiscal consolidation efforts to contain the contagion and prevent their own solvency are in doubt. In some countries, the change in sovereign risk premiums can however hardly be explained by changes in economic. If the debt and the deficit actually reached unsustainable levels in Greece, the fiscal situation in other countries threatened by the debt crisis was not more disastrous than that of the United States or the United Kingdom. In 2009, Spain respected the main Maastricht criteria for fiscal policy, since its public debt represented less than 60% of GDP. Italy certainly requires a budget adjustment to service its debt, but it should make the effort appeared modest as interest rates remained at a low level. Several authors have developed the idea that the sovereign debt crises, particularly the European countries could result from self-fulfilling expectations. In other words, the sustainability of public debt does not only depend on fundamentals (including the amount of the debt, the primary balance, etc. When investors fear for one reason or another the state has difficulties to cope with the burden of debt, they divest their sovereign bonds. These sales push interest rates higher and then the government could more be able to refinance its debt other than prohibitive rates. The liquidity crisis can then quickly degenerate into a solvency crisis. Indeed, the states will try to consolidate their public finances to restore market confidence. If the economy were initially in recession, austerity measures further depress activity, so they are likely to lead to a further increase in the debt to GDP ratio. With rising interest rates and contraction, states are finally forced to default on their debt. Thus, a State may become insolvent simply because investors fear default. They act indeed in such a way that the probability of default rises, even if their concerns were initially unfounded. If it happens, the default validates initial fears: expectations are proven "self-fulfilling." Ultimately, public debt is sustainable as creditors consider it as such. The economic literature formalizes this idea by emphasizing the existence of multiple equilibrium. These are particularly unstable in the presence of self-fulfilling expectations: a simple reversal of expectations is likely to tip the economy a good balance bad. However, a State may in principle difficult to use the central bank to reduce the risk of a liquidity crisis.

 Therefore, the member countries of the euro area, in essence, a greater chance to experience a crisis of sovereign debt that countries into debt in their own currency, even if they have more degraded public finances. The member states of the monetary union can indeed rely on a central bank to provide liquidity if it is missing. As such, they share the same vulnerability to crises of sovereign debt that developing countries that emit denominated in a foreign currency usually the U.S. dollar debt. When a liquidity crisis occurs in a monetary union, countries that lose market confidence the peripheral euro area countries meet in a bad equilibrium characterized by high interest rates and capital flight, as investors seek safer investments in the world. These countries are then capable of falling into recession as the high interest rates encourage their government to implement austerity plans. Conversely, countries that retain the confidence of the bond the core countries are maintained in a good balance: they receive cash flows from the periphery. These inflows exert a downward pressure on their interest rates and thus stimulate the economy. They find that increases in risk premiums that were observed in 2010 and 2011 occurred independently of changes in the ratio of public debt to GDP. Greece, however, is an exception, since the increase in the spread on its debt actually due to the deterioration of public finances. By cons, countries that do not belong to a currency area and that borrow in their own currency appear immunized against liquidity crises. They have indeed crossed the Great Recession without knowing a significant increase in their spread, even though some of them had ratios of public debt to GDP higher than in the euro area. .

So finally endorsing its role as lender of last resort to the States, the ECB seems to have managed to "break" the expectations and bring savings to a good balance. The announcement also seems to have been credible enough that the central bank did not have far to intervene in bond markets to stabilize interest rates. Since the crisis of sovereign debt in the euro zone is mainly due to the self-fulfilling expectations, the reaction of fiscal authorities appear absurd, dictated only by the emergency. The turmoil in the bond markets led all governments of the euro area to focus on fiscal consolidation at the expense of supporting the activity. While the public sector should continue spending to allow private agents to reduce debt, otherwise he immediately sought to consolidate its own balance sheet, which was subjected to powerful euro zone recessionary pressures.

Countries that have experienced the largest increases in spreads have implemented the most severe austerity measures. They then switched to a vicious spiral where the contraction and deterioration of the fiscal balance are mutually maintained. However, if there is a disconnection between risk premiums and the fundamentals, a policy aimed exclusively at improving fundamentals that is to reduce the burden of public debt may not be sufficient to contain the spread. The intervention of the ECB is against proved crucial in stabilizing the bond markets. Thus, not only the macroeconomic shock therapy that have inflicted the peripheral countries is very vain, but it has mostly contributed to the deterioration in public finances deteriorate the growth potential of their economies. However, economic growth is a key factor in the sustainability of public finances. The ECB intervention has certainly reduced the risk of self-fulfilling expectations, but the fundamentals are perhaps now sufficiently weakened that fears about the solvency of public finances are now justified.

Liquidity Trap

During the Great Recession, many central banks reduced their interest rates to historically low levels. However, the interest rate was good to be its zero point, it remained higher than the natural rate, that is to say, the nominal interest rate which closes the output gap and ensure price stability. However, once the zero lower bound is reached, the central bank may further cut its key interest rate, which exposes the economy to deflationary pressures and an increase in its unemployment rate. In such a situation called liquidity trap, where monetary policy is proving excessively restrictive fiscal authorities must necessarily intervene to counteract deflationary pressures. The finance managers adopt their next steps "unconventional" to make them more effective monetary policy. However, the Great Recession is different from previous episodes of liquidity trap, including the lost decade in Japan, that the phenomenon of liquidity trap this time has a global dimension. The United States, UK and the other Euro countries are the countries most closely linked by trade and financial linkages that have experienced the largest slowdown in crisis, bringing their monetary authorities to fix the interest rate to the nearest zero.
According to famous Economist, the appearance of liquidity traps in a context where markets for goods, services and capital are integrated internationally gives a new dimension to the dilemma highlighted by the literature in finance International (also called "impossible trinity" or "impossible trinity"). The traditional interpretation of this phenomenon, a country cannot simultaneously ensure the opening of capital markets, fixed exchange rates and monetary policy autonomy. If achieved two goals, the third becomes unattainable. However, even if the exchange rate is flexible and fully opens capital markets, monetary policy loses its effectiveness in a liquidity trap. If the domestic economy is a powerful external shock depressing domestic demand, the zero lower bound is likely to constrain its own monetary policy. Financial markets play a key role in the spread of the phenomenon of liquidity trap a country to another.
The economic literature have suggested that the introduction of capital controls to reduce the risk that a country will suffer destabilizing capital inflows: inflows are indeed likely to fuel an unsustainable credit expansion, the formation of bubbles assets and excessive currency appreciation, especially in emerging countries. The introduction of capital controls makes monetary policy more effective in reducing the risk that the economy switches into a liquidity trap.

Aggressive stimulus efforts by Abe given strong boost to Japan

The expected increase of 3.6% after 4.1% annualized GDP and the private consumption expected to have risen 0.5% Reversal expected business investment. The growth of the Japanese economy is expected to reach 3.6% annualized in April-June, a Reuters survey showed a third consecutive quarter of expansion that would reflect the impact of increasing net policies "reflationary" Prime Minister Shinzo Abe. The figure released on Monday morning in Tokyo should also strengthen the government's desire to raise the VAT next year, even if the implementation of this project politically sensitive involves many other factors, economists note. The second quarter should certainly have marked a slight slowdown in growth after the 4.1% annualized from January to March, driven mainly by household consumption, but the April-June statistics should show a recovery in exports and business investment, they add. "The growth is balanced with a strong domestic demand and external demand. This is a sign that the impact of political Abe is becoming wider," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo. Compared to the first quarter, gross domestic product (GDP) is expected to have risen 0.9% in April-June, foreign demand are contributing 0.2 shows the Reuters survey.

Private consumption is expected to grow by 0.5% a quarter to the next, which would mark a slowdown after growth of 0.9% in January-March. But business investment, which fell by 0.3% in the first three months of the year, is expected to rebound by 0.7%. Abe's government plans to raise the VAT rate of 5% to 8% in April and 10% in October 2015, as part of efforts to try to contain the public debt, which exceeds 200% of GDP, the highest ratio of the major industrialized countries. This doubling in a year and a half, which is the most ambitious reform of the Japanese taxation engaged for decades, obviously poses risks to the consumer and more broadly for the recovery, as it may curb spending. Abe said he would adopt in the fall a final decision on the matter, in particular according to the changing conditions. Until then, it will be especially aware of the revised second quarter GDP, which is scheduled for publication on September 9. A Reuters survey shows that most private sector economists are in favor of raising the VAT according to the original schedule, considering that the economy can now absorb the impact.

On Monday, the International Monetary Fund (IMF) has called Tokyo to implement the project, considering it was a "necessary first step" to solve the fiscal problems of Japan. But even if GDP figures are as strong as expected and confirmed next month, Shinzo Abe will take a decision after studying the findings of several studies it has commissioned on the expected impact of the reform explain several sources. Careful, the prime minister also asked his staff to consider alternatives to this reform. "A good GDP figures could reinforce the scenario of a VAT increase in the initial project. But the final decision rests with Abe and he alone, “said Yoshiki Shinke. "It will be more important than past GDP figures is how the economy will react if VAT increases indeed. At this stage, it is very difficult to predict."

The Future Economic Rebalancing Of The World

In 2017, no European country will be included in the top ten contributors to global economic growth. The emerging economies will account for fifty percent of global production of goods and services. According to IMF, in the year 2018 the proportion will increase to 55%. And this is only the continuation of a trend that began there more than thirty years and represents a consolidation in the global economic consequences. As noted by the chief economist of Goldman Sachs who invented the concept and acronym BRIC's in the 1980s when the growth of the Chinese economy was even more important today, a growth rate of China's economy 10% was less important to the world that U.S. growth by 1%. In 2013, the rates of equivalence are 8% and 4%. Today, financial markets are equally concerned of China slowdown as the U.S. recovery. No wonder that, as growth in emerging was much stronger than the rest of the world, and that their standard of living per capita has steadily catching up with the seven most industrialized countries. By the mid-1990s, countries such as Germany and Italy had dropped from the list of top ten countries with the highest growth rates. While in the 1980s, the United States accounted for 30% of global growth and Europe 20%; in 2017 no European country will included in the top ten contributors to global growth. Europe as a whole no longer and will contribute only 6% of it, while India and China will contribute to almost 50%. Even more surprising is the speed at which occurs rebalancing and this because of the masses in. The economic transformation and urbanization of China occur at a scale with the population is one hundred times greater than that of Great Britain at its early industrialization and a speed ten times. Thus the Chinese momentum is 1000 times that of Britain 200 years ago. This rebalancing is a return to the state of the world that existed in the early nineteenth century. But this is only small consolation because it is perceived as a stall and undoubtedly contributes to the gloom in US, as in the rest of Europe.

The Corporate Bankruptcies and The Crisis

The real crisis, the corporate bankruptcies are the real crisis and it is the creative destruction. Like it or not, the real victims of the crisis in Europe are definitely businesses. The loss of business in the Euro zone increase indeed 21% in 2013, to return to a growth rate moderate 7% in 2014. These bankruptcies are concerned and unfortunately synonymous with soaring unemployment and a real deindustrialization. Since the record figures of 2009, the waves of loss, of the United States to China, passing throughout the Europe, concentrated in areas with erratic tax incentives, such as construction and services. Once the boost is flown, numbers of companies were no longer profitable. Today, the shock wave is more fundamental: the sharp slowdown in consumer spending in Europe, or at half the exports for Asia. In Europe, the areas of distribution, furniture, consumer electronics, and automotive, and are strongly affected. This industrial Darwinism seems to be the swell of the year 2013, still marked by the credit crunch. But the induced effects are numerous: for example in Asia, companies see their market melt like snow in the sun and the overcapacity problem. This economic turbulence with a number of businesses created which also increases in many countries could it is a synonym for renewal? Economic entropy can be conducive to a new beginning, if we are to believe the evolutionary hypothesis of Schumpeter. The undertakings least well adapted and especially the least innovative way to let those who are reinventing themselves and meet new needs. "The perennial gale" Schumpeter, after the storm of 2009 and the economic winter it starts to make a lot. And yet ... The needs are there, in sectors with high added value, intensive skills, human capital and social capital, driven by research and innovation and entrepreneurship. So, of course the news is bad with soaring business failures and accelerated payment risk, while margins are already weakened. But, is it better to jump back? The answer is “Maybe”. It is also necessary that the guidelines are taken on supporting innovation, the business environment, or incentives to take care of seedlings, otherwise incubators will also be decimated.

Europe needs long-term financing!

The urgency for Europe to reconnect with smart, sustainable and inclusive growth, which allows Europe to create jobs and, based on the areas in which it has a competitive advantage, gain market competitiveness world. To achieve this, it must meet investment needs large-scale and long-term. To finance these investments in the long term, governments and businesses, regardless of size, should have access to a long-term, predictable funding. The ability of the economy to make available such long-term funding also depends on the financial sector's ability to effectively provide users and relevant investment, effectively and efficiently, saving governments, businesses and households. This provision may be indirect, such as through banks, insurers and pension funds, either directly, via the capital markets. The long-term funding must be secured in such a way that supports structural reforms and help get the economy back on a path of sustainable growth. The financial crisis has reduced the capacity of the European financial sector to channel savings into investment long-term needs. It is important to ask whether in Europe, traditionally high dependence with regard to banking intermediation to finance long-term investments could be replaced by a more diversified system leaving more room for direct funding by capital markets and the involvement of institutional investors and alternative financial markets.

The task of ensuring the existence of an effective and efficient intermediation for long-term financing is complex and multidimensional. Recently, the Commission adopted a Green Paper on the financing of the European economy that includes public consultation. Its purpose is to launch a wide debate on how to increase the supply of long-term funding and diversify the financial intermediation system for long-term investment in Europe. The answers to the questions will enable the Commission to deepen the analysis of barriers to long-term financing to determine what policy measures could help to overcome them. The whole process could lead to different results and, in some areas it may be necessary to introduce new rules or modify existing ones, while in others, the role of the EU would to foster better coordination and promotion of best practices, or to provide specific measures to certain Member States in the framework of the European community.

The Real Estate Bubble Bursts Netherlands!

The Netherlands saw their housing bubble burst. For years the country's banks have granted mortgages without sufficient guarantees coupled with tax breaks from the government. The German newspaper Der Spiegel highlights the weaknesses of the Dutch economy, rising unemployment, reduced consumption and GDP that was stalled. Der Spiegel believes that these are the consequences of the bursting of the housing bubble in Netherlands. In addition, institutions financed more than 100% of the value of the property and tax breaks could go up to 52% of mortgage interest paid. The chart below are the property price increase:

The Battle for the control of Silver!

Most of the countries more particularly US and China wants to control over the precious metals market. U.S want to keep the price of white metal as low as possible where as China tries to keep it in uptrend. Now days obviously gold is money but silver was the universal monetary standard for more than 7000 years. The countries have stopped minting silver coins in 1960s because of the deficit between the mining and the industrial demand. The deficit on the market has been filled for many years by selling their old reserves held by countries themselves. Those reserves were completely destroyed by the industries even though the mining production in the recent years had increased tremendously and it failed to meet the demands. To control over silver the banking oligarchy launched ETF. Investors wishing to invest in physical silver without having to carry pounds of metal ingots bought shares traded, they could easily sell. These ETFs are a huge success. In theory, the issuing banks hold hundreds of millions of ounces in stock, but only in theory. As for gold, cash investors have been diverted. Instead of buying silver bullion, and thus weigh on the rise in metal prices, banks guardians of these treasures, HSBC and JP Morgan, have manipulated the prices down. They sold the paper money, the silver-virtual, on the Comex and the London market, to lower the price of this rare and precious metal. These banksters sold five years of production in the form of derivatives in a very short term; they are absolutely unable to deliver.

When China began to open up to the outside world after the meeting Mao and Nixon, the bankers of the world have invested in China, creating new ports, equipped with the most modern refineries which enabled China to carve the lion's share in refining. The industrialization of China has enabled him to become the workshop of the world, so much so that the Middle Kingdom is poised to become the first world power. Since 1971, China sold to Westerners finished products against the dollar, the international currency. But since Nixon's visit, the currency has continued to devalue. Expressed in gold, today's dollar is worth 45 times less than that of 1971, the Chinese have been paid in funny money. China still exported 4800 tons of silver in 2006 will become a net importer in the following year to import 3500 tons in 2010.


 In March 2009, before the G20 meeting, the governor of China's central bank, the COPD, published an essay on the wishes of China's international monetary system, denouncing the failure of the current system and regretting that the new banking system proposed already by Bretton Woods has not been explored since. This rejection of the U.S. monetary hegemony will quickly turn into currency war between BRIC and Washington. In August 2009, China announced that it authorizes to default on Western derivatives, it is considered fraudulent. The silver is at the heart of the problem. In September 2009, the Chinese governments allowed its citizens to stock precious metals and launched a communication campaign pushing the silver the price is extremely low compared to gold. China then banned the export of silver which will cause a few months later the explosion at the rise in silver, putting JP Morgan in trouble. China, which had announced that it wanted to have a say about the price of raw materials, has achieved one of its objectives.


 For the record, in January 2011, Xia Bin, then a member of the Monetary Committee of the Chinese Central Bank, in an interview quoted by Bloomberg, said: "China should increase its gold and silver reserves." It seems important to reconcile this statement with the wishes of China's monetary system, especially as it was the last power to abandon the standard money in terms of silver. The U.S. policy of Roosevelt on money in 1934 caused a monetary crash in China, leading to a dictatorship then the first communism.

Ecology, carbon Emission and Economy

Sustainable development: Sustainable development takes into account all aspects related to the business (i.e.) raw materials, human and economic system. Sustainable development can produce products and services that meet the desires and human needs while preserving the environment for future generations. We can then say that sustainable development is linked with ethics. The World Commission on Environment and Development United Nations defines sustainable development in 1987 this way: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs." The ecological footprint is a tool to evaluate the quantity of energy used for the production of a product or service. Can then be compared with this tool the difference between what natures provides us and what we consume.

It is used to make predictions but also to measure human actions on the environment. It measures not only for human consumption but also of a country, or even the planet nature necessary for the production of an object. E. Williams REES one of the two creators of the term suggests the following definition: "The ecological footprint is the corresponding area of productive land and aquatic ecosystems required to produce the resources consumed and to assimilate the wastes produced by a defined population at a specified material life. ' The carbon balance: The carbon footprint is a tool to quantify the greenhouse gas effect greenhouse (GHG) emissions of a company or an administration. These emissions can be direct or indirect. Carbon footprint to become much more important than the ecological footprint as international governments based GHG limits on companies that are based on the calculation methods.

 The great strength of the carbon footprint that is compatible with the ISO 14064 and 14065 with the theme here is the official definition proposed by ADEME: "A method of accounting for emissions of greenhouse gases from readily available data to arrive at a proper assessment of direct or indirect emissions from your business or territory." These definitions related to the various international meetings and scientific reports have led to the emergence of these themes in world governments. The Kyoto Protocol in 1997 was the first meeting has taken quantified commitments. It aims to reduce emissions of greenhouse gases (GHGs).

The European debt crisis going to end soon!!!

Europe emerging from a period to improve its financial situation that began in August last year, when the President of the European Central Bank (ECB), Mario Draghi announced that it would needed to support countries that are deficient in the Euro zone. This intention is then translated by a specific program for Italy and Spain, to limit the level of interest rates on their debt.

 However the optimism is reversed because of the accumulation of issues such as political scandal in Spain, financial conditions of Ireland. Hence the international markets react accordingly. Indebtedness of most European countries in relation to Gross Domestic Product is rising despite the efforts of Member States. With an average debt of the Euro zone (8000 billion Euros) over 90%, the smallest increase in interest rates impact the refinancing. The Euro zone should refinance more than 1,000 billion Euros in 2013.

 Reforms of the costs and revenues of government continue to impose. Economic lethargy does not seem to decrease. The European GDP growth is almost nil. Hence it is still in recession phase. Without growth, tax revenues are also lethargic and financial costs of states continue to be excessive. In this context, most European economies saw their unemployment rates are increasing. The question that remains is whether this or will improve? Basically, this is the strength of the U.S. economic recovery we can expect an early growth at the end of 2013. And the creation of 157,000 jobs in January 2013 is really good news. But the weakness of Europe is the situation of its banks. Without going into a pessimism that has no purpose, it should not diminish the vigilance that the Euro zone needs to restructure.

Growth of Asian Market

Since from the middle of 2011, Asia was the front and foremost region in the world that have many number of millionaires (3.37 million millionaires, representing 30.4% of the number of millionaires in the world) with a growth of more than 20% in four or five years. They have a total wealth of 10 700 billion that is 25.5% of the overall wealth of millionaires in the world.

 In a market asset management generally quite gloomy figure of Asia is essential for growth for the major international private banks. In the longer term, the Asian continent is undoubtedly the one that produces the most wealth and hence the most millionaires. According to industry professionals, the rapid growth of wealth is expected to continue at a rate of more than 12 to 15% over the next 5 years. To successfully lead the conquest of this Eldorado gold, banks need to understand the specificity of this market.

 They must also define a profitable business model focused on customer segmentation adapted. Finally, they must analyze their strengths and weaknesses in the region to determine how to implement cost. On the one hand the onshore market, with millionaires Asian (Chinese, Indians) who made their fortune because of the considerable economic development in the region in recent past. This market is doubly exciting because at the growing number of millionaires adds their current low supported by private banks (only 20% of Asian millionaires are entrusted to private banks). To conquer the market is considerable. On the other hand the offshore market, with a clientele composed of customers in Europe, America and the Middle East who wish to outsource all or part of their holdings to access attractive Asian markets or to enjoy banking regulations and tax more conciliatory in this part of the world. For this reason Singapore is poised to dethrone Switzerland in her role as a global financial center offshore.