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Posts Tagged ‘Finance’

‘Big lender’ China urges US to avoid bankruptcy

Posted by Ram Kumar Shrestha on October 8, 2013

China's Vice Finance Minister Zhu Guangyao (Reuters)

China, the US government’s largest foreign creditor, is “naturally concerned about developments in the US fiscal cliff”, as Reuters quoted Vice Finance Minister Zhu Guangyao giving the Chinese government’s first public response to the Oct 17 US deadline for raising the debt ceiling.

China currently holds 22.85 percent of the US $16.7trln debt, which makes it the biggest US creditor.

Treasury Secretary Jacob Lew calculated the US would run out of money by October 17 and have less than $30 billion cash in hand if Congress fails to agree on its spending plans. Read the rest of this entry »

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Americans impoverished back to 1992

Posted by Ram Kumar Shrestha on June 12, 2012

Families wait in line to receive aid from Feed The Children in Hoffman Estates, Illinois (Scott Olson/Getty Images/AFP)

Families wait in line to receive aid from Feed The Children in Hoffman Estates, Illinois (Scott Olson/Getty Images/AFP)

An average American family’s income has fallen to the level of Bush Sr. presidency, the Survey of Consumer Finances published on Monday. America’s middle class has been affected the most, losing 12.1 per cent of income in just three years.

The Fed reports that if in 2007 the wealth of American middle class family exceeded $126,000, but by 2010 the figure had dropped to $77,300, the minimum index since 1992. The survey notes that the wealth of the poorest families has fallen by 7.7 per cent, whereas the wealth of the richest has dropped only 1.4 per cent.

One of the reasons the wealth has dropped so significantly is that the median housing prices dropped to $75,000 in 2010 from $110,000 in 2007. And this is no secret that home equity has scarcely recovered since then.

The richest 10 per cent of American households in 2010 still earned an average of $349,000 a year. These families still had an average net worth of $2.9 million in 2010. Read the rest of this entry »

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China’s Antiquated Financial System: The Creaking Grows Louder

Posted by Ram Kumar Shrestha on June 6, 2012

Nelson Ching / Bloomberg via Getty Images

Pedestrians walk past the People’s Bank of China in Beijing, China, Dec. 23, 2011.

In April, Chinese Premier Wen Jiabao took aim at China’s powerful state-owned banks. According to Reuters, he said at a discussion with local businesses: “Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital. That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

Wen’s attack on China’s big banks, followed two weeks later by the Chinese central bank’s move to widen the renminbi-to-dollar trading range from 0.5% to 1%, raises the question of whether China is about to accelerate bank and financial system reforms. Against the backdrop of the spectacular fall of Chongqing Communist Party boss Bo Xilai, who upheld the heavy hand of the state-owned enterprises in the economy, and the dramatic escape of political prisoner Chen Guangcheng, are liberal reformers now gaining momentum as China undergoes its next leadership transition this fall?

Experts say further financial liberalization is in the cards, as both domestic and external pressures mount. “The fall of Bo Xilai pushes up reform forces in the Chinese party, government and society, and that’s a good sign,” says Hoest Loechel, professor at Frankfurt School of Finance and Management in Germany and a visiting professor at the China Europe International Business School (CEIBS) in Shanghai. Pieter Bottelier, senior adjunct professor at the Johns Hopkins University School of Advanced International Studies (SAIS) and former World Bank chief of resident mission in Beijing, predicts: “Liberalization of bank interest rates could come very soon, by the end of the year, linked to further internationalization of the renminbi (RMB).” He notes that the People’s Bank of China (PBOC) says the time is right for China to open its capital account in phases, starting over the next three years, transitioning to full financial liberalization in five to 10 years.

(MORE: China’s Yesterday’s News. Who are the Next High-growth Superstars?) Read the rest of this entry »

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Global Financial Collapse: What makes it tick?

Posted by Ram Kumar Shrestha on December 6, 2011

A trader works in front of a board displaying the chart of German share index DAX at the stock exchange in Frankfurt/M., western Germany, on November 2, 2011 (AFP Photo / Daniel Roland)

The mind becomes confused and dismayed when confronted with chaotic situations it can hardly figure out – situations such as today’s Global Financial Woes. Maybe we’re looking too close-up. Let’s take a step back and look again…

Complexity is often engineered into what are basically simple problems by people who benefit from manufactured complications and have the power to control them. When money is involved, the powerful people who benefit from ripping off untold millions of hard workers make sure that their “money machine” will just keep steaming ahead. Take the ongoing Global Financial Crisis.

Firstly, it is not a “crisis” at all: what the world is confronted with today is a full-fledged, irreversible and unsustainable Global Financial Collapse that, if not properly addressed, may bring down the whole global economy with it.

Secondly, this has pushed the Real Economy into a “crisis” from which, if proper measures are taken, it can – and must! – be saved.Because all national economies are basically intact (although many have been badly clobbered!) they can be brought back to health.

Thirdly, the real core of today’s problem is that Finance – that virtual world of banking, fractional lending, usury compound interest, fraudulent derivatives, casino-like speculative “investments” and other parasitic and anti-social activities – has illegitimately risen above the Real Economy which is the world of work, production, manufacturing, effort, toil, sweat and creativity.

In numbers, we see that today Finance has grown to be 20, perhaps 30 times larger than the Real Economy. Read the rest of this entry »

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EU debt bomb – coming soon to an economy near you

Posted by Ram Kumar Shrestha on October 17, 2011

In every good movie about bomb detonations there comes a moment when the hero needs choose between cutting the red wire or the black, or connecting wire A to point B to short circuit some device, as a timer runs down, with an alarm starting to whir.

Timer buzzing in the lead roles

This week finds Germany and France filling in the key role in deciding what gets cut and what gets connected.With the Euro, and the Eurozone economy the bomb, and the rest of the world the bystander watching on with mouths agape and knuckles white.

There aren’t that many bomb disposal movies, admittedly, but generally the theme tends to feature a key moment where the heroes can save things, acutely aware of the outcome if they get things wrong.Germany’s Chancellor Merkel and President Sarkozy of France would be feeling something of that same type of pressure this week.

Greece – Who wears the cuts and pays for the bailout? Banks – Who short circuits balance sheets in the banking system?And given there seems to be a lot of unhappy people setting fire to cars in Rome, but generally behaving better whilst still being disgruntled elsewhere, there is a sense of who gets to please these people – presumably by conjuring some sort of stimulus – who gets the chick?

Finger pointing

Merkel and Sarkozy need to come up with something which makes sense to the markets, and keeps enough people of Europe onside to make it worthwhile.They have a week to do it and the rest of the world has their eyes upon them.And that world has fingers already half pointed at the Eurozone when it comes to allocating blame for the recession that much of it is already easing into.Canadian Finance Minister summed things up nicely at the G20 Finance Minister’s meeting. Read the rest of this entry »

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China threatens US with trade war over currency bill

Posted by Ram Kumar Shrestha on October 5, 2011

A woman exchanges money at a currency exchange shop in Hong Kong on September 15, 2011. (AFP Photo / Laurent Fievet)

Anger is erupting out of Beijing this week after lawmakers in Washington are aiming to force Chinese currency to rise to put both nations on level ground with trading.

Politicians on Capitol Hill are hoping that a proposed bill could keep currency in China from getting any lower and thus giving what they say is an unfair advantage to business in the Far East. China, however, has responded that the legislation would just be Washington’s way of putting the rest of the world’s economies at risk.

Before Congress this week, Senate Majority Leader Harry Reid said that China’s “deliberate actions to devalue its current gives its good an unfair competitive advantage in the marketplace.”

Earlier this summer, solar panel manufacturers Solyndra filed for bankruptcy after they revealed that they could no longer generate a profit in an industry in which foreign competition, particular that in China, can create goods at a cheaper cost. The downfall of Solyndra came despite heavy backing by governmental loan guarantees. They were one of several related companies to recently close its doors.

In a response to the proposed legislation, China’s central bank and its ministries of commerce and foreign affairs all said that DC lawmakers are “politicizing” currency issues. Read the rest of this entry »

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‘Modern capitalism has reached the end of its rope’

Posted by Ram Kumar Shrestha on October 5, 2011

There is barely a corner of the globe that has not been touched by the current financial meltdown. But a senior sociology scholar at Yale University thinks the crisis is far wider than the economic crash – it is capitalism itself which is collapsing.

Immanuel Wallerstein explained his theory to RT.

“Modern capitalism has reached the end of its rope. It cannot survive as a system,” Wallerstein said. “And what we are seeing is the structural crisis of the system. The structural crisis goes on for a long time. It really started more or less in the 1970s and will go on for another 20, 30, 40 years. It is not a crisis of a year or of a short moment, it is the major structural unfolding of a system.  And we are in transition to another system and, in fact, the real political struggle that is going on in the world that most people refuse to recognize is not about capitalism – should we have or should we not have it – but about what should replace it.” Read the rest of this entry »

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Americans face new recession

Posted by Ram Kumar Shrestha on September 18, 2011

People look at a list of companies attending the job fair (Joe Raedle / Getty Images / AFP)

Hold onto your money, folks. It’s going to be a bumpy ride. Economists predict that the odds of entering another recession are pretty good — or pretty terrible, depending on how you look at it.

The latest survey from the Wall Street Journal suggests that the odds of entering another economic recession are at one-in-three, the most likely they’ve been since the United States rebounded from the last one and went into recovery.

That recovery, however, has been a staggering one, marred with an unemployment epidemic and a schizophrenic market. Now, says The Journal, odds of going into a double-dip recession are 4 percentage points higher than they were last month,

John Ryding, chief economist at RDQ Economics, tells the Fiscal Times that if the unemployment problem in America continues, another recession seems inevitable. “The trend in jobless claims is an important input into our recession probability model, and if this trend were to continue for a number of weeks it would raise a warning flag on the state of the economy,” Ryding says.

Figures released this week from the Labor Department show that applicants filing for unemployment benefits in America surged last week up to 417,000 claims; earlier predictions on Wall Street had signaled a number substantially less. A total of 7.144 million Americans are currently receiving governmental benefits. Read the rest of this entry »

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Financial ‘Bloodbath’ As £35 Billion Wiped Off Share Index

Posted by Ram Kumar Shrestha on August 4, 2011

Somewhere still booming, but here every week thousands of job cuts.
Read the Article at HuffingtonPost

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“Internet nuclear bomb is waiting to go off”

Posted by Ram Kumar Shrestha on January 10, 2011

Gerald Celente, the founder of the Trends Research Institute, believes that the Internet will empower the youth of the world to unite to start a revolution that will overthrow the existing deadlocked elitist establishment.

Read the rest of this entry »

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