Sunday, November 21, 2010

Is FED gone nuts?

The global hysteria arising out of the Federal Reserve System (Fed) decision to execute the second phase of the country's economic life, netyla.

It will be recalled that on November 3 on the day the Fed announced additional plans to "infuse $ 600 billion in 2011 to the first half-year end, long-term government bonds were acquired. Speaking today, the Central Banking Conference in Frankfurt, Fed Head Ben Bernanke once again explained that the measures taken to end the American economic life, including the reduction of unemployment. He also noted that, despite the protests of emerging markets (Brazil, South Korea, China, etc..) Final result of the faster it will affect the global economic recovery after the crisis. In this regard, as written in the information-analytical agency Bloomberg, Bernanke indirect form of a never condemned China's efforts to weaken the national currency.

By Bernanke, the Fed decided not only to strengthen the dollar, but also stimulates the regeneration of the world economy "policy, renewing a healthy economic growth with price stability in the context of the United States." Parties to artificially weaken its currency, the Americans gave the Central Bank's head may eventually block the global economic growth and to provoke their own internal economies of financial instability.

It should be added that the Fed decision is criticized not only outside the U.S., but also within the country, including Republican members of the National Congress. They worry that Fed policy will provoke a "soap bubble" growth of securities markets and trigger a strong rise in inflation.

At this time, Bernanke noted in his report, both global economic growth and global trade imbalances are the major differences in the various countries growth performance. Since a significant expansion in emerging markets more directly dependent on the recovery of developed economies, the growth of the mutual model can solve the problem of slow growth at the expense of market participants, where the recovery of developed markets will be successful.

As pointed out by Howard's Friend, one of the best forex brokers Migbank chief market economist at the Chinese Central Bank announced that starting November 29 will raise the reserve rate for national banks by 50 basis points. November 19 at the Frankfurt stock exchange recorded a fall in the dollar against the euro from $ 1.3634 yesterday and $ 1.3721.
In spite of the fact that his speech was limited to only a hint of Bernanke, China directly, the country's recent policies are constantly criticized. A week ago at the G-20 samita Seoul, the U.S. president Barack Obama has also condemned China's actions are aimed at the systematic weakening the yuan, and the country's reluctance to pay attention to the strengths of other countries in the world call it restrained export growth. Asian giant is a global leadership: the enhanced export of the country's GDP surpassed Japan's gross domestic product, taking the second place in this respect in the world this year in the second half. Annual growth rates, record in September for three months is 9.6%, China is also subject to most of the world's foreign exchange reserves, representing about $ 2.6 trillion.

Bernanke statement by Chinese officials to post comments.

Travel to Frankfurt is the first B. Bernanke tour, met after the Fed decision on the new infusion of funds into the economy of this publication. Some American experts estimate the U.S. central bank's decision as "a justifiable risk to print some more money to stimulate the economy, inflation neiššaukiant," writes Bloomberg, former Fed economist on David Cohen, currently commanding Action Economics LLC, a marked drop in Asia.

At the same time, the main banker Henrique Meirelles Brazilian still October, the U.S. currency regulation policy as "arresting and distort" the growth of developing economies. But German Finance Minister Wolfgang Schaeuble, the Fed declared that the decision, saying that the American central bank instead to stimulate economic growth, "stops down" the national currency, which will trigger even greater instability.

Meeting in Frankfurt during the Bernanke noted that inflation in America since December 2007 has declined significantly and continued deflation could freeze the economy. Worrying and still high unemployment rate (9.6%). Bernanke argues that the federal government does not rule out that in the coming months, unemployment may even increase, and it will be an additional obstacle to the recovery of economic growth.

Government securities, the acquisition will be "strictly respecting the economic conditions," Bernanke stressed. Fed executives' strong interest in price stability "and is determined to keep inflation" is not greater than 2% or even less. "

In its report, Bernanke brought parallel with the Great Depression period, arguing that the examples given shows a similar trend, but not the identity of the current situation. During year 1930, in his words, the U.S. and France had forced currency devaluation policies, and what caused the severe deflationary imbalance in other countries and has become a cause of economic depression.

Analogy works, head of the Fed's view, now in China, Taiwan and South Korea (which yesterday announced the introduction of the tax to foreign investors, the acquisition of government bonds), strongly preventing or suspending their appreciation. At the same time, Bernanke pointed out, stopping the artificial weakening of the national currencies of the world economic system quickly regains balance and the global economic recovery after the credit crisis rate of acceleration.

The dollar index forex market is corrected in respect of a minimum six months. Masterforex-V trading system review of the Academy faculty and experts believe that the MF slope W2 level Channel puncture showed the level of the correction begins. At least during the formation of D1-level bull wave, which may be the first wave of the average period of revolution of the model. Where it is necessary for their own "moment of truth, MF," which will determine the further fate of the dollar index.

Where euro zone is going to?

Rising euro exchange rate against the U.S. dollar and the victorious countries, many policy statements on the crisis overcome, in the background there is a logical question is whether the euro against the dollar growth rate is based on "basic data? Will overcome the crisis in Europe and whether the EU has come out of this crisis?

The crisis is continuing its march across Europe. A solution to the situation in politicians still can not find. In their view, it is necessary to reduce the budget deficit, but also all the debt burden to make a whole. Experts say that without these steps to get out of the crisis will not be possible. However, the reduction of the deficit will be at the expense of social spending, which until the crisis was relatively high in many EU countries. Greece and Italy, where the siesta during the working day is the norm, has developed an unusually high debt burden. Employees still disagrees with the terms of the amendment, and the government's reluctance to take risks on the eve of the election. The last EURO central bank decision to bill out billions of dollars as loan for Ireland, just prove that euro zone is not going to give up easy. Analysts believe that cutting government spending in particular is currently unavailable. Such measures can reduce the citizens' ability to pay, thereby reducing the tax base. This situation has become a European Union member states the reasons for disagreement. Large unions and responsible participants in the immediate punishment of all borrowers. For example, Germany, already in the year 2012, all required to achieve the deficit reduction to 3%.