The U.S. is pushing to reform the international postal treaty that subsidizes Chinese shipping

American e-Commerce Put at a Disadvantage – UPU

American e-commerce business has been put at a disadvantage for subsidizing shippers from developing countries like China, by the Universal Postal Union, a postal treaty where witnesses as well as legislators state, has created a rough playing field for international e-commerce, which is up for renegotiation in 2016.

A hearing was held on June 16th, by the Government Operations subcommittee of the House Oversight Committee that the committee Chairman, Mark Meadows considered as the start of a push for U.S reform strategy. Reported earlier by Fortune, the Universal Postal Union is considered a treaty organization which tends to set international postal standards, comprises of the terminal dues agreements between post-office.

Congressman Meadows, in his opening statements, branded the terminal dues system as `trade distortion’ that had left thousands of the small businesses of Americans at a disadvantage. This was due to the system favouring shippers from countries that included China, which is considered as `developing’ country.Meadows suggested a question for the committee on how the situation could be improved wherein some were offered by the witnesses, which represented the Amazon, FedEx, State Department and USPS.

Negotiating Rights Taken from U.S. Postal Services 

SinceCongress took the negotiating rights away from the U.S. Postal Service and gave the lead to the State Department in 2006, U.S reform efforts have made little progress. Presently the State lead negotiator at the UPU, Robert Faucher, defended the progress that was made while at the same time clarified that the UPU is a very slow moving organization and dependent on an extensive one-country, one-vote Congress, which is held once in every four years.

Head of regulatory affairs for FedEx, Nancy Sparks, claimed that lethargy seems to be the source of the UPU’s deteriorating discrepancies. She stated that the tradition of the UPU is that the haves tend to pay the have-nots and what brings this problem up is that the have-nots suddenly have a lot.

Sparks further pointed that time seems to be short for U.S. game plan ahead of next year’s UPU Congress where the rules could be amended. `September 2016, in UPU time, is a heartbeat away’

Specific Goal – 2016 UPU Congress – Establish UPU Task Force

Faucher refrained from offering a timetable for meaningful terminal dues reform when he was compelledby representative Meadows. He stated that the `State Department’s most specific goal at the 2016 UPU Congress would be to establish a UPU task force to explore fundamental reforms’.

Proposals similar to these had been put forward by the U.S. at earlier congresses though were not successful.Essential approaches were also offered by Paul Misener, Amazon representative who called for the U.S. in making postal rates part of larger diplomatic negotiations with China. He further added that the UPU seems to be an imbalance which makes no sense to Amazon and that they are on the look-out for the whole ecosystem.

Insignificance of the problem could make it difficult to meet that type of political stress and most of the committee members commented that before the hearing they were ignorant of the facts. However, as per Congressman Meadows, this seemed to be just the beginning who commented that this would not be the last hearing, since they were going to look for real results.

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.

Russian Giant invests in Morocco Oil Resources

 

The oil curse is it the fear in Morocco? But we fear the worst in the country so far spared by the Arab revolutions, while already the U.S. oil giant Chevron has signed an agreement with the Moroccan authorities to conduct exploration work on three sites off its coasts. This is enough to create tension between the Kingdom of Morocco, Portugal and Spain, the Moroccan government has recently announced the establishment of a provisional commission for the delimitation of the continental shelf on the Atlantic shore. Now, it is the Russian Abramovich who invests in the kingdom. Thus, the Russian billionaire Roman Abramovich and Circle Oil Plc, Irish Oil Company, just lay the groundwork for an agreement to invest more than $ 20 million for operating a first site in the Basin Gharb.

 Circle Oil says elsewhere on the internet, that the deposit "has been tested with success." Five additional drilling should be carried out by the company, which has two exploration licenses in the area. Recall that Abramovich made his fortune in the oil industry in 2005. He turned back to the oil sector in investing in Latin America and Africa. Since 2011, Morocco has witnessed the signing of new oil contracts for offshore areas like Foum Assaka, Cape Boujdour, Mazagan, Essaouira and Maritime Juby and the onshore area Doukkala. In addition, there are five agreements on recognition of Anzarane offshore areas of Tarhazoute and onshore areas Boudnib and highlands.

The Kingdom of Morocco said today make up the delay through "improved drilling techniques that now allow easier access to deep-water deposits." In order to encourage investors, the Moroccan government has implemented tax measures to encourage exploration while amending the law on hydrocarbons. Thus, the government offers newcomers an exemption from corporate tax for a period of ten consecutive years and rates of royalty on oil and gas not exceeding 10 and 5% respectively.

Dubai Crisis- Is it the end or the tip of the Iceberg?

Dubai Crisis- Is it the end or the tip of the Iceberg



We all know that the financial crisis in Dubai World is due to heavy exposure in Real Estate Investments and the fall of property prices, and a very little demand for the already completed projects.


Money is locked in declining assets. The same scenario was seen in 2008 in US with large Investment Banks collapsing under their weight by holding huge exposure in real estate market. The ripples of that effect was heard in Asian and European Countries also.


But at that time, the asian countries some what remained insulated from that effect. In India also, those effects can be seen by the fall of property prices and lack of demand.


Now the million dollar question is whether the worst is over or the worst is yet to come. Normally, when a financial bubble is burst, its effect can be seen for 5 to 10 years. For example, the dot com burst had it effect for another 10 years. The same is going to happen now also.


In India, large number of IPO are coming in Infra, Power and Reality sector. This indicates people are still confident of this sector. It does apply that the worst is yet to come. We are likely to see Dubai Crisis scenario in coming months in some Asian and European Countries.


What I feel is that the Dubai crisis is just a tip of the Iceberg. When the whole Iceberg is known to the world, I don’t know how it is going to affect our career and living.

THE DUBAI CRISIS!!

THE DUBAI CRISIS!!

The announcement of Dubai world seeking a stand still in debt servicing clearly indicates, that the Global financial crisis is not yet over.

 The economy of Dubai had relied on the massive borrowings. It build the economy mostly on trade,reality and tourism. Moreover Dubai invested largely in foreign assets such as Casinos luxury hotels. Ocean liners, properties  etc. Its economy is substantially financed by international borrowing.

In 2007   global financial melt down hit its growth, trade and tourism very hardly, resulting in entire collapse of commercial trade abandoned construction projects,unoccupied  commercial complexes, which lead the property prizes to tumbled down to its bottom.

At this juncture servicing the huge debts raised to create these assets became difficult. The Dubai world one of the government owned company owing nearly $60 billion to international banks asked for a  stand still as regards debt servicing from its borrowers for six months since late November.

Here it is very important to discuss how this same crisis was handled by both US and Dubai. In US the capitalistic country several private banks, including investment banks have been bailed out of with large dose of public or other wise  taxpayers money. But in Dubai the international lenders to the government owned entities have been left alone to handle the massive credit related problems. In Dubai government  entities are substantially in excess of the GDP of the country hence it considered a sovereign risk in the conventional sense of the term.

 The international banks which lend to Dubai world are in no financial position to take even a partial write down on these assets. It is now certain that the process of cleaning up bad debts and recapitalising them.

After the Dubai world travails, the international credit market unlikely to offer government owned corporates without  an explicit sovereign guarantee .

Will be US Dollar replaced by Euro or Chinese currency?

For the past six months Dollar has been depreciating against all major currencies. Against Indian Rupee it depreciated from 52 to 46 Rupees. It depreciated against Euro and it depreciated against Major Asian currencies.

There is already a talk among certain coutries like Russia, China, France and etc, to replace US Dollar as World Reserve Currency. They want to trade oil in some other currencies except USD.

The US Economy is growing at a very slower pace for the past ten years when compared to the other Major developing Countries like China and India. The growth rate is likely to be slow for another 5 years in USA.

Even the once mighty Europeon Countries are no longer growing as Asian Countries. The continueous lesser growth or no growth in US and Europeon Economy would surely put China in the Drivers seat in world affairs and World Economy.

The Chinese growth in the past decade is phenomenal. It is vast a country and it is almost equal to the size of USA. Its population is more than 4 times the population of US and their only disadvantage is English, the language spoken and understood in most part of world. Even in that area, they are improving day by day.

Going by the vast potential of Chinese in Military and Economic Might, Chinese currency may replace US Dollar in another  Five or Ten years in the Future.

Market Cycles

I have observed that any free markets in the world are behaving cyclically. Careful examination of the time period taken by the market in each legs reveal that they are behaving rythematically.



It seems world Equity markets are moving in 33 year cycle. A new bull market is started in Dow Jones Index in 1950 and it continued for 1983 and the current leg is likely to terminate 2016.


Whenever equity markets are in last phase of a cycle, Bullion markets are behaving in opposite direction of the equity Market. So, Equit Markets are in bull phase if Gold Markets are in bear phase and Gold marekts are in bull phase, when Equity Markets are in bear Phase.


The 1970s Bull Market in the International Equity Markets were lead by Japan. The 1980s and 1990s Bull Market in Equity Markets are lead by south East Asian Countries. The 2000s Bull Market is lead by India and China. So the next bull market is likley to be lead by some other new countries.


The smart Investors should always look for the right Market to invest and the right marktet to withdraw their funds. It will not be profitable for anyone to hold on to their same investments in all period.


Market cycles will help you to time the market at appropriate time. So do study the Market cylces and take investment decisions based on the study for profitable Investments.

Is a Bubble building in Gold?

In Financial Markets, herd mentality is in work. Investors always go by the herd.
Last year, they chased real estate and property prices shoot up world over and investors bought properties as though there is no tomorrow.

So, this effectively set up a stage for impending financial Bubble and that happened. Property prices fell all over the world. Many caught in the melee. Banks went bankrupt. Companies went bankrupt. Individual went bankrupt.

But still, herd mentality is in work. Now, the people are chasing Gold assets and it has effectively set the stage for the next financial Bubble, that is ‘Gold Bubble’.


Financial Bubbles are created when all of the investors who are interested in a particular asset want to get hold of it. Once the buying potential recedes, then a huge selling potential is created. Once prices start coming down, panic selling by all the investors push down the prices beyond its intrinsic value. This is how financial bubbles are burst.


The present price rise in gold reminds me of bubble is being built in it. It is likely to burst in another six months. The same story will happen again. Banks will go bankrupt. Companies will go bankrupt. And individuals will go bankrupt.

Let us see, if this happens shortly.