The hurdles Fed has to overcome!

The persistent weakness of the U.S. economy - where deleveraging public and private sectors continues - has led to a stubbornly high unemployment and a lower than normal growth. The effects of austerity - a sharp increase in taxes and a sharp drop in public spending since the beginning of the year - further undermine economic performance. Indeed, recent data have silenced some officials of the Federal Reserve, who hinted that the Fed could start out the third round of quantitative easing, which is currently underway for a period indefinite. Given the low growth, high unemployment which fell only because discouraged workers are now leaving the workforce and inflation well below the goal of the Fed is not the time to begin to constrain liquidity. The problem is that liquidity injections by the Fed are not generating credit to finance the real economy, but to stimulate borrowing and risk-taking in financial markets. The bond sloppy risky under contractual commitments vague and excessively low interest rates is increasing, the stock market hit new highs, despite the slowdown in growth and the money goes mass to emerging markets high yield. Even the periphery of the Euro area has wall of liquidity triggered by the Fed, the Bank of Japan and other major central banks.

Because interest on state of the United States, Japan, the UK, Germany and Switzerland to absurdly low levels bond yields, investors are in a global search for yield. It is perhaps too early to say that many risky assets have reached bubble levels, and the levels of debt and risk-taking in financial markets have become excessive. However, the reality is that it is likely that credit bubbles and asset / equity form in the next two years, due to the accommodative U.S. monetary policy. The Fed has indicated that QE3 would continue until the labor market has improved enough probably early 2014, providing an interest rate of 0% until unemployment has dropped to less than 6.5%. Even when the Fed will begin to raise interest rates at some point in 2015, it will proceed slowly. In the previous tightening cycle that began in 2004, the Fed needed two years to normalize the policy rate. This time, the unemployment rate and household debt and public are much higher. A rapid normalization - such as realized in the space of a year in 1994 - would cause a crash in asset markets and the risk of a hard landing for the economy. But if financial markets already tend to bubble now, imagine the situation in 2015, when the Fed will begin to tighten its terms, and in 2017 at the earliest, when the Fed has completed the process of tightening. The last time interest rates have summers too low for too long during 2001-2004, and the normalization of rate thereafter was too slow, which had formed a huge credit bubble, housing and stock markets.

 We know the end of this film, and we may be ready to see more. The weakness of the real economy and the labor market, as well as high debt ratios, suggest the need to exit the monetary stimulus slowly. But a slow output may create a bubble of credit and asset as important as the previous one, if not more. The search for stability in the real economy, it seems, could again lead to financial instability. Some at the Fed - as chairman Ben Bernanke and Vice Chairman Janet Yellen - argue that policymakers can pursue two objectives: the Fed will raise interest rates to slow economic stability, while preventing financial instability (bubbles and credit created by the high liquidity assets and low interest rates) through supervision and macro-prudential regulation the financial system. In other words, the Fed will use regulatory instruments to control credit growth, risk taking and debt. But another faction of the Fed - led by Governors Jeremy Stein and Daniel Tarullo - argues that macro-prudential tools have not been tested, and that the debt limit in a part of the financial market only pushes liquidity elsewhere. Indeed, the Fed regulates banks, so that the liquidity and debt migrate to the informal banking system if bank regulation is stricter. As a result, Stein and Tarullo argued that the Fed has only one instrument of interest rates to tackle all the problems of the financial system. But if the Fed has only one effective instrument - interest rates - the two objectives of economic and financial stabilities cannot be pursued simultaneously.

Either the Fed continues the primary purpose of keeping rates low for longer and to standardize very slowly, in which case a huge credit bubble and assets would form in time, either the Fed focuses on the prevention of instability financial and increases interest rates much faster than the low growth and high unemployment have also requested, thus stopping an already sluggish recovery. Exit policies QE and zero interest rates the Fed will be treacherous: a too quick exit would cause a crash in the real economy, while a slow start out by creating a huge bubble and then cause a crash the financial system. If the output can be operated successfully partisan compromise Fed is more likely to create bubbles.

Reason behind Buying Gold!

Buying gold is favored by almost all investors and laymen in the field for three main reasons: In fact, buying gold would be sought from the purchase ornament that the metal is a store of value and a safe haven much more net growth in a context of crisis especially now. Indeed, buying gold is the only safe other than the other monetary valued purchase. It is for these reason even central banks are getting into and carry out purchase of gold. Buying gold is a kind of asset protection for professional investors who believe that buying gold is a good investment for both the long term and short term benefits. This not to mention the attractive European taxation regarding this specific area stipulating a progressive exemption by 10% annually and that from the third year of the tax on the capital gain that would result in a tax exemption on the capital gain after 12 years of holding gold assets.

 Buying gold for the purpose of hoarding seems reasonable for several reasons. Indeed, buying gold is hoarded in order to avoid the trustee payments but also by a fear of an upset or simply to avoid certain estate costs. This leads us to say that to capitalize on gold through buying gold can only lead to benefits. In addition, buying gold is going to be a real guarantee despite it does not generate revenue. Therefore by purchasing gold, it is good before speculating wait for the right moment when gold allow you to generate good profits. As such each would behave selfishly by hoarding their gold and wait for the right moment because gold cannot be a generator of profit.

How to maintain your credit rating!

How to maintain your credit rating? Maintaining your credit rating in the world of personal finance is essential. The credit has an influence on a lot of things we touch. It influences the conditions of bank loans, the discount interest rate and even our financial reputation. Here are some tricks that allow me to maintain a good credit rating. We live in a society where the rule of consumption plays enormously. Therefore, as a consumer, you have one day or the other the desire to own any property. Obviously, things have changed. Before you know reputable seller or practically confirmed your purchase. Now we swear by your reputation and bank credit is the king. Hence it is very important to keep your credit rating in good condition. The first thing you have to do is to build your credit rating is as follows: you must make purchases by funding. Then complete the purchase of thing in cash. Leave your money in the bank. Get now a credit card to prove your spending habits, and most importantly, payment habits. So pay your bills at the end of every month or at least your minimum balance.

Whenever there is a delay in your credit card payments that will be indicated in your credit file. This negative impact will fall on your side. Obviously, the higher your score down, the more you become a consumer uninteresting by banks. Therefore, you will lose promotions, you will have high interest rates and it will be difficult for you to build a good heritage. If you are in the category of least preferred by banks, we need to change that. There are actions to be taken, over time; you can develop yourself to be a customer who is preferred by the most popular banks. Initially, pay your bills that too on time. This is obvious, but how many people do not perfectly? Also, do not change your credit card every year. This will ensure that your credit history will disappear and your credit rating will be less beautiful.

 Avoid more credit applications regularly. Often, it is rather the others who make for us in trying to verify exactly our credit. In this case, ask if it is really necessary. If the answer is positive ask the person rather pick up your credit report of you. A request by you has no impact on your score. It is in my view you should use credit wisely and get a credit card. But settle with just one card. Having many credit cards indicates that you have the opportunity to borrow a lot, thus adversely affecting your score. Thereby maintain only a good credit card only. A good credit score will increase your chances of getting the loan as required for the purchase of your home or your car. You may receive bank discounts and preferential interest rates benefiting you. You could maximize your assets more efficiently.

Dramatic Decline In The Price Of Gold!

In this month, the price of an ounce of gold has decreased by over 12%. This is the largest decline in the price of gold last 33 years history of gold. A decline in the selling price of gold, which affected the activity of buying gold from the counters of the jewelers around the world and it create a new rush in the bullion and gold coins across Asia and America. The ounce of gold traded in London at $ 1,790 October 5, (the highest price in the year 2012-1675), Friday, 12 April it was $1548 and on Monday and fell to $1416 before stabilize in the next few days between 1380 and 1400.

 Many explanations have accompanied the fall of the price of gold, some were optimistic and explained the decline of renewed confidence among investors in the economic and banking system as they no longer fear a collapse of the international banking system and no longer reluctant to put their money in financial products. So it is indeed signal the end of the crisis. Other explanations are much less positive considering that it is the fear of a resumption of the weaker global economy that was expected, resulting in less stress on the commodities market and therefore a lower risk of slippage in prices. Gold, he did not forget, is primarily a protection against inflation.

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: