One difference between Wall Street and Washington

There's less damage to the capitalist system when individuals and companies are held accountable for their mistakes than when politicians decide that every financial "crisis" is an opportunity to shoot the wounded and change the rules.

One difference between Wall Street and Washington is that in the latter no one ever admits a mistake, much less suffers for it.

Or most likely both.

All insurance systems impose limits on consumption, but a government-financed health care would remove any hint of the price mechanism.

That it will either vastly inflate health spending and lead to tax hikes or otherwise lead to government rationing.

Or most likely both.

Riskier people

In the same way that in order to be rich you have to take risk, countries where people don't use to take risk they use to be less wealthy than countries with riskier people.

But in today's winner-take-all economy, rich countries and rich people are especially drawn to bold gambles.

Low level of housing demand over the next several years

The percentage of homes that are owner occupied -- the homeownership rate -- dropped to the lowest point since the second quarter of 2003, according to the Census report.

This year, as many as 900,000 households moved from owning homes to renting them.

It implies a very low level of housing demand over the next several years.

Two virtues

Greed and selfishness are two virtues of the rich societies .

Two different stories.

Google's revenue, excluding commissions paid to marketing partners, totaled $3.01 billion,in the third quarter. It is 23% of partners work, it is up from 21%.in the second quarter.
International operations accounted for 48% of revenue during the third quarter
Google handled 53.6% of U.S. Web-search queries in August, compared with 52.7% in June,
The rate of revenue growth from partner sites(money taken from its partners) that carry advertising brokered by Google picked up during the quarter to 40% from 36% during the second quarter.

The $8.4 billion write down of Merrill Lynch is nearly one fifth of its $42 billion net worth.
Merrill recorded a $2.24 billion loss for the quarter, making it one of the biggest losses in Wall Street history.

One big factor is the shrinking dollar.

A broad group of developing countries face upward pressure on their currencies.

A decade ago some of these countries battled currencies crisis.

One big factor is the shrinking dollar.

The response by central banks to fight inflation has been to buy dollars.

Developing countries are sitting on massive U.S. dollars assets that they may not need.

Why do they do that?. Because they don't have real free markets and don't have modern financial systems.

Downward pressure in already weak markets.

Lenders in softening housing markets states are cutting the amount borrowers can finance and are also taking a tougher look at appraisals.

These tighter standards could add to downward pressure on home values in already weak markets.

To be alive when your time comes to play.

Technology and globalization make a great deal of brick and mortar business to pass away .

The global world demand created space for the few that kept alive and became very profitable business.

Two examples are ocean freighters ans ship builders.

Everything in economics has its cycle . The key of the game is to be alive when your time comes to play.

Logical fear

In the past places like China and Russia, where don't know what freedom is, used to spend their money on guns and butter.

Nowadays they have government controlled investment funds and envision to use these sovereign wealth funds to buy local companies in US and Europe.

They has led to fear in the US and Europe that such funds would be used to take over key domestic industries.

Logical fear.

The floodgates of fear are open

Important banks , Europeans included, and financial firms are expressing more interest than expected in putting billions of dollars , more than 60, toward a big fund to prop up parts of the mortgage security market.

What it seemed as bailout for Citigroup is becoming a necessity for a lot of institution in the financial market.

The floodgates of fear are open.

There is only a way to improve people's live

There is only a way to improve people's live: Taking risk , realizing that it is OK to fail once or twice, wanting to strike out on your own and make something happen.

Because that is very hard to do it is difficult to find those attitudes.

The SIV game is dangerous.

There are perils involved in borrowing money short term and investing it long term, but nobody thought that it could threat the stability of global financial markets.

The biggest bank in the world is the largest player in the SIV market and banks that didn't have exposure to SIVs will involve in the the biggest bail-out of history without forgetting governments.

How much houses prices will fall in the next two years?

How much houses prices will fall in the next two years?

In the same way investors with subprime holdings have difficulty figuring out what the investment worth, to know how much house prices will fall in the next two years is not easy.

It is easy to know that prices will fall because investors know that their subprime holdings are going to be worth less and less.

Are American Banks strong enough?

Tier I ratio reflects how much of a financial cushion a banks has to protect it from unexpected problems.

Federal regulators require a bank to have a Tier I ratio of 4%. A bank with a ratio of 6% or higher is considered to be well capitalized.

As June 30, Bank of America's Tier I ratio was 8.5%, J.P. Morgan was 8.4% and Citigroup fell to 7.4% down from 8.6% .

There is no real money

The riskier investments that the banks made with structured investment vehicles, or SIVs are not in their balance sheet.
It shows how the financial engineering is based on air. There is not real money.

Inequality

Inequality is good for poor people.

Inequality is a Growth-Enhancing Policy.

It is only Growth what gives poor people the opportunity to trade their way out of poverty.

Who will pay?

The big boys (Banks) are discussing a plan to bailout their big mistakes in the mortgages business . The little boy (ordinary people) will pay for the plan with inflation.

What affect the American economy today.

Subprime borrowers are not low-income residents of inner cities.The high-rate lending also rose sharply in middle-class and wealthier communities.

The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.

The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000.

In 2004 there were more than twice as many such Wall Street professionals in the top 0.5% of all earners as there are executives from nonfinancial companies.

Technology and foreign investment are making income inequality worse around the world, the International Monetary Fund said in a new report, handing critics of globalization a powerful argument to use in their political battles.

U.S. strip-mall vacancies hit 7.4% in the third quarter, a 5½-year high.

There is uncertainty in the market, we are in a time of particularly high uncertainty.

What affect the American economy today.

What affect the American economy today.

Wednesday 10, 2007

European finance ministers called on China to untether the yuan to help rebalance global exchange rates.With the euro hovering above $1.41, many in Europe have been calling for strong language, particularly focusing on China's currency.

Some office landlords in Silicon Valley are again accepting stock in still-private start-ups in lieu of rent.PlaySpan Inc., a Web-gaming outfit that raised $6.5 million, boasted on its Web site that it had been founded by a fifth-grader.But some start-ups are trying to tone down the hype.

The majority of business executives in an assortment of non-financial industries suggest that they plan to maintain employment levels or increase them in the next year, with most of the planned increases in export and international-related activities.

The Russell 2000 is up 6.7% year-to-date, while the S&P 500 is ahead by 9.5%. The Dow Jones Industrial Average of 30 megacap stocks is up 12.7. One reason: Large stocks are better positioned to benefit from strong growth overseas and a weak dollar, which makes it cheaper to export.



Tuesday 9, 2007

Japan's foreign reserves rose to a record in September from August, thanks to a stronger euro against the dollar and a rise in short-term U.S. Treasury prices.
value of Japan's euro-denominated bonds increases as the euro climbs against the U.S. dollar, since Japan calculates the value of the reserves in dollars.
Another contributor was a drop in short-term U.S. Treasury yields, which move inversely to prices. Yields on the two-year notes fell to 3.992% in September from 4.14% in August, the official said. Japan parks the bulk of its reserves in U.S. Treasurys.

It is good news whenever a group of American businesses enjoys growth and prosperity. It is far better, however, when this success is earned through market-leading innovation, quality and value -- not through a sinking dollar that happens to make U.S. exports cheap.

Some firms will grow accustomed to their macroeconomic free lunch and be unprepared to compete on the fundamentals should the dollar change direction.

Financial firms are more difficult for investors to accurately value than other businesses, which explains why several large banks saw their stocks jump last week after delivering bad news

Monday 8, 2007

Companies are taking multibillion-dollar write-downs
Credit crunch keeps tied to questionable home mortgages
Oil traders and speculators unload crude inventory. Storage levels have fallen.
The euro's climbing against the U.S. dollar.
Employers added 110,000 jobs in September it is a healthy report for the economy.
Banks in Europe are tightening credit standards.
The dollar is weak and commodity prices in record territory.
The jobless rate keeps stable at 4.7% and increase for real wage after inflation es 2.2% in the last 12 months.
Costs of tackling global warming are going to be high.
Corporate profits are expected to post a third-quarter decline
The stock market is a strong and the world's wealth grew 7.5% in 2006 reaching 97.9 trillion. There are a more than 10 millions of households with 1 million or more in assets and 50% of them are in the USA.