Dramatic Rate Cuts to Come to an End

Tuesday, January 13, 2009

The Reserve Bank of Australia has been extremely aggressive in 2008, cutting 300bp in just 4 months. The last rate cut they made was in December when they slashed interest rates by a full percent. According to the RBA, monetary policy is now “expansionary” which suggests that they are almost done with cutting interest rates. The central bank has been extremely proactive and their efforts will be vital in helping to restore the Australian economy.

Like many of their international counterparts, Australia has combined monetary with fiscal stimulus. At most, we expect another 100bp of easing from the RBA next year. This will probably be in the first half of the year, which is when the economy could fall into recession. After that, watch out for a quick recovery for Australia in the second half of the year.

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Lloyds accesses European Central Bank Funding

Thursday, January 1, 2009

Investment banks are secretly profiting from emergency European Central Bank funding by acting as brokers to funnel billions of euros of much needed liquidity to Britain's banks and building societies. Bankers said that UK lenders were having to access the ECB through the back door UK lenders with no operations in Europe are particularly at risk of funding problems because they have been struggling to access central bank money.

While the ECB has pumped more than $500bn (£254bn) into the wholesale funding markets, dropped its penal rate and widened the collateral it accepts as security, the Bank of England has injected just £20bn. In what one executive said was a way of "levelling the playing field" for those without access to eurozone funding, investment banks are acting as go-betweens to provide smaller UK lenders with ECB access.

Lloyds TSB chief executive Eric Daniels last week confirmed the bank, which has a European presence, had used the ECB to "fund at the best rate we can". Other UK banks such as Barclays, Royal Bank of Scotland and HBOS are thought to have made similar moves.

For those without a European presence, the funding works in two stages. First, the UK domestic lender parcels up assets and pledges them to investment banks in return for liquidity. Those investment banks can then pledge the assets on to the ECB, which becomes the ultimate funding source.

The investment banks make their money by charging a higher rate of interest than the ECB.
Alliance & Leicester demonstrated the scale of the opportunity last week, revealing it paid £150m to secure funding through to 2009 in what finance director Chris Rhodes labelled "the cost of the credit crunch". A&L has securitised £17bn of its mortgage assets in two vehicles, pledging "a material proportion" as collateral against new facilities. It is not clear if the investment banks have exchanged the pledges for funds at the ECB but it is understood that A&L's collateral would be acceptable once restructured.

Building societies are also likely to be using the facility. One banker said: "If you were a UK lender and you had assets against which you could draw down funds, why wouldn't you do it?"
Bankers said the fact that UK lenders were having to access the ECB through the back door exposed failures at the Bank of England.

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4 Tips For Choosing a Reputable Forex Broker

Tuesday, December 30, 2008

can attest to the specific broker's qualifications and success history. Put yourself in that position, would you testify to someone's strengths if they did a poor job for you? Client history testimony should be present in any prospective Forex broker and plentiful to indicate a solid background with trading. You can tentatively assess a lot from a Forex broker with a list of clients that will speak up for the brokerage firm or individual broker. It should be noted that all word of mouth testimony should be taken with a grain of salt and dissected to collect the pertinent information. Testimony should be used in your research to find a Forex broker but should not be the deciding factor.

Another good morsel to test the reliability of any potential Forex broker is the amount of information, literature and lessons that they are willing to give to you. Most Forex brokers are of a high reputation and a solid background however, there are many out there that don't have a good history or no history and it is wise to steer clear of these brokers. You are trying to find a trusted financial advisor and settling for second best, just won't do. The more a potential Forex broker is willing to do for you in the area of helping you understand the Forex trading system, the better quality trader they will be for you.

A good avenue to travel down when seeking a good Forex broker is to ask your acquaintances about Forex brokers and how they met. This can not only give you prospective referrals to great Forex brokers but will also equip you with ideas and resources that you may not have located. If you get a referral from friends, be sure to still research that specific broker and his qualifications before committing to any formal agreement.

The other factor in finding a good Forex broker is the margin of return that is offered. A Forex trading margin used to influence your money and many Forex brokers offer different margins. Finding a Forex broker, who gives a margin of ten to one isn't a very good find so it's worth the time to reinvest in research. Remember that this industry is all about customer service and catering to the clients so if your prospective Forex broker doesn't return your calls within a reasonable time frame it would be advisable to keep searching.

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Dollar Lower vs Pound in Late Trading

Tuesday, December 23, 2008


Dollar gives back some gains against the British pound in trading late Tuesday

The dollar fell against the pound in late New York trading Tuesday night. The pound rose to $1.4771 from $1.4735 in late afternoon trading on Tuesday.

On Monday afternoon, the pound was worth $1.4865.

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Obama: Transportation Can Get Economy Moving

Friday, December 12, 2008

Obama sees change in transportation priorities as a vehicle to boost economy, clear air


When President-elect Barack Obama says he wants to get the economy moving again, he means it quite literally.

Transportation will play a central role in Obama's first months in office, not just for policy changes aimed at improving highway, air and rail travel, but as a road toward economic recovery, energy independence and environmental protection.

Solve road congestion, Obama's reasoning goes, and you put people to work.

Use less gasoline and help clean the air.

Build better trains and move goods more efficiently.

Get people out of their cars and reduce greenhouse gas emissions.

"We will create millions of jobs," he said recently, "by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s."

This expansive approach contrasts with the Bush administration's policy that transportation -- like other government functions -- works best when it is in private hands, or at least in a public-private partnership.

Adopting a libertarian, smaller-government-is-better approach to repairing and modernizing the nation's transportation systems, Bush sought to shift more responsibility to state and local governments and encouraged the use of tolls and private enterprise to pay for it.

Obama is not necessarily against such arrangements. He just thinks the national government should play the leading role in a transportation network on which the country and its economy depends.

"Now is the time to invest in our future and strengthen our core infrastructure," Obama said in an October letter to a coalition of groups interested in transportation and environmental issues. "With unemployment rising, these investments are even more important."

Obama takes office as many critical transportation issues are coming to the fore, creating what some experts see as a once-in-a-generation opportunity to remake national policy.

"What's very hopeful about this president, when it comes to infrastructure, is he's prepared to think big," said Janet Kavinoky, chief transportation lobbyist for the U.S. Chamber of Commerce. She said there is broad political support for major changes in transportation policy.

Obama's transition team is working with congressional Democrats on an economic aid bill that could total as much as $500 billion. The hope is to have it ready for the new president to sign when he takes office Jan. 20.

While details have not been finalized, the bill is expected to include tens of billions of dollars for highway, mass transit, airport, and intercity passenger and freight rail improvements.

Bush's transportation philosophy "seemed to be, 'This is what the federal government should be responsible for and nothing else.' And the 'nothing else' category was public transportation," said William Millar, executive director of the American Public Transportation Association, whose members include transit agencies.

Obama, on the other hand, has described himself as a strong advocate of mass transit.

While Bush proposed what some lawmakers described as "starvation budgets" for Amtrak, Obama has pledged support for the passenger rail carrier and for developing a national network of high-speed passenger trains.

The Bush administration has feuded bitterly with air traffic controllers since the Federal Aviation Administration imposed a contract in 2006. Obama has promised to appoint an FAA administrator who will work cooperatively with controllers.

Bush tried to ease cross-border trucking between the U.S. and Mexico, angering domestic truckers who fear the competition and say safety would be compromised. Obama promised the International Brotherhood of Teamsters to aggressively inspect cross-border trucks and buses and enforce safety regulations.

Obama's transportation goals face several potential roadblocks.

The federal program that provides aid to states for highway construction and transit expenses expires on Sept. 30. The current program was funded at $286 billion over five years. Its cost is mainly underwritten by the federal 18.4 cents-per-gallon gas tax, but revenues have failed to keep up with obligations.

Last January, a blue-ribbon transportation commission recommended increasing the gas tax as much as 40 cents a gallon over five years. The additional money would help cover the federal share of an estimated $225 billion the commission says is needed each year to upgrade transportation systems.

Boosting the gas tax carries political risks. The last time it was raised, a backlash against Democrats in the 1994 elections helped Republicans capture control of the House and Senate. Obama has expressed concern about raising taxes in the current economic climate.

Even without an increase, Obama will have to deal with environmentalists who want to undo a bargain struck during the Reagan administration that funnels roughly 80 percent of gas tax revenue to highway projects and 15 percent to transit. They want to redirect money away from highways to alternatives such as transit and intercity passenger trains.

Obama's energy plan calls for saving as much oil as the U.S. currently imports from the Middle East and Venezuela within 10 years, which is about 3.5 million barrels a day.

"That's going to require a pretty robust program to save oil, which means not just better vehicle technology and not just alternative fuels. ... Something will have to be done about transportation policy," said Deron Lovaas of the Natural Resources Defense Council.

"The question is, does it make sense if energy security is an overarching national commitment to stick to ... a 25-year-old deal?" Lovaas said. "I think the answer is, 'No.' That's going to be an enormous fight."

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China Tells US to get Economy in Order

Thursday, December 4, 2008

China appeals to Washington to reform economy, protect Chinese assets at high-level talks

China promised more currency reform to ease trade tensions but told Washington to get its own economy in order as the two sides opened high-level economic talks Thursday amid a global financial crisis.
The unusual Chinese appeal at the Strategic Economic Dialogue highlighted the close links between the world's largest and fourth-largest economies and the global importance of their ability to keep relations smooth.
China's envoy, Vice Premier Wang Qishan, said Beijing was contributing to global stability by keeping its own economy growing strongly.

The chief U.S. envoy, Treasury Secretary Henry Paulson, said engagement between China and the United States has helped in managing the crisis. Officials said both sides stressed the importance of cooperation to combat a potential rise in trade protectionism.
But in unusually pointed language, China's central bank governor, Zhou Xiaochuan, blamed the crisis on U.S. financial excesses and said they should be fixed.
"The important reasons for the U.S. financial crisis include excessive consumption and high leverage," Zhou said in a speech to the meeting, according to Jin Qi, a central bank official who briefed reporters. "The United States should speed up domestic adjustment, raise its savings rate and reduce its trade and fiscal deficits."

The two-day meeting was not expected to produce breakthroughs on trade or other sensitive issues. The two sides signed a pact Thursday to cooperate in financing for projects to improve energy efficiency and were due to work Friday on an investment treaty.
Speaking earlier as Paulson listened, Wang appealed to Washington to "take the necessary measures to stabilize the economy and financial markets, as well as to guarantee the safety of China's assets and investments in the United States."
Wang did not elaborate, but Beijing owns $585 billion in Treasury debt that has helped to finance U.S. budget deficits, and a weak dollar and financial turmoil have fueled Chinese anxiety about such investments.

U.S. officials said the Chinese side promised more currency reforms. Washington and other trading partners say China's yuan is kept undervalued, giving its exporters an unfair price advantage and adding to its trade surplus. Some American lawmakers are calling for punitive action against Beijing.
"The Chinese continued to reinforce to us that they were committed to continued reform, and by that I mean continued appreciation (of the yuan) over time," said an American official who briefed reporters on condition he not be identified further.
The American officials said they did not know details of what Wang meant by protecting Chinese investments. But they said there was extensive discussion of steps the United States was taking to stabilize its economy.

The yuan has risen 20 percent against the dollar since Beijing cut its peg to the dollar in July 2005. But it has fallen this week in government-controlled trading -- including a nearly 1 percent decline Monday, its biggest one-day drop in three years -- in what analysts suggested was a message from Beijing to go easy on the issue.
The yuan's drop Monday also might have been meant as a warning to President-elect Barack Obama, that talks will be more effective than confrontation, said Frank F.X. Gong, chief Asia economist for JP Morgan Securities Ltd.
Obama has yet to say whether he will continue the dialogue. Some analysts have speculated that Obama and the U.S. Congress will take a harder line on China.

China's economic growth is expected to slow this year to about 9 percent, down from last year's 11.9 percent. Communist leaders worry about rising job losses, especially in export industries, and the possibility of unrest.
Beijing is launching a 4 trillion yuan ($586 billion) stimulus package meant to revive slowing growth through heavy spending on construction and other projects.

"We have always believed that if China can manage its own affairs well and maintain relatively stable and fast development of the domestic economy, that is itself the biggest contribution we can make to international economic and financial stability," said Jin, the central bank official.
Paulson is accompanied by U.S. secretaries of agriculture, labor and health, the U.S. trade representative, officials of the Treasury and Commerce departments, and others.


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ForexGen Services

Thursday, September 11, 2008




ForexGen Services that design of the good transparency practices in the Code rests on two principles.


First, Partnerships With Forex Gen monetary and financial policies can be made more effective if the public knows the goals and instruments of policy and if the authorities make a credible commitment to meeting them.


ForexGen Customer Indicators as Second, good governance calls for central banks and financial agencies to be accountable, particularly where the monetary and financial authorities are granted a high degree of autonomy


So that Open Demo Account The Code contains a listing of broad principles related to transparency for monetary and financial policies that central banks and financial agencies should seek to achieve.