China Blasts U.s. Economic Policy, Expresses Doubt in Financial System
By Jason Simpkins
Associate Editor
Money Morning
China blasted U.S. economic policy yesterday (Thursday) at the Strategic Economic Dialogue, a two-day summit engineered to address long-term issues between the two countries. Chinese authorities have grown more fervent, and more explicit, with their criticism of the U.S. financial system over the past year, evidence of a shift in the balance of power between the nations.
“Over-consumption and a high reliance on credit is the cause of the U.S. financial crisis,” said Zhou Xiaochuan, governor of the Chinese central bank. “As the largest and most important economy in the world, the U.S. should take the initiative to adjust its policies, raise its savings ratio appropriately and reduce its trade and fiscal deficits.”
This kind of lecture was a deviation from past meetings, which were dominated by U.S. calls for China to better manage its fiscal policies. However, the global financial turmoil that has emanated from the collapsing U.S. housing market has left the United States without a pulpit on which to stand.
“One result of the crisis is that the U.S. no longer holds the high ground to lecture China on financial or macroeconomic policies,” Eswar Prasad, a senior fellow at the Brookings Institution, told the Financial Times. “This may actually help turn their relationship into a more equal partnership with less posturing on both sides.”
Indeed, U.S. Treasury Secretary Henry Paulson, who in the past used summits like these to press Beijing to open its financial system and appreciate its currency, was noticeably more humble in representing the United States yesterday.
“International cooperation and coordination have been robust and we appreciate the responsible role China has played in the crisis,” he said.
Meanwhile, Wang Qishan, vice premier and leader of the Chinese delegation called on the United States to “take the necessary measures to stabilize the economy and financial markets as well as guarantee the safety of China’s assets and investments in the U.S.”
Wang’s remarks followed those of Lou Jiwei, chairman of China’s $200 billion sovereign wealth fund, China Investment Corp. (CIC), who said Wednesday that his firm lacks the confidence to invest in the United States, particularly U.S. financial institutions.
“Right now we don’t have the courage to invest in financial institutions because we don’t know what problems we will put ourselves into,” Lou said at a conference in Hong Kong. “My confidence should come from government policies. But if they are changing every week, how can you expect that to make me confident?”
CIC has lost about $6 billion of the $8 billion it invested in Morgan Stanley (MS) and The Blackstone Group LP (BX) last year. More importantly, however, China last month overtook Japan as the largest holder of U.S. government debt. And according to the Financial Times, officials have privately admitted that they are concerned about the value of the holdings.
Concerned with China’s overexposure to the United States, central bank governor Zhou said policymakers should no only address the country’s slowing economy, but “restructure the development model” and prepare “for a worst-case scenario,” the FT reported.
However, Chinese officials also say that any large-scale unwinding of U.S. holdings would be counterproductive, as the value of U.S. bonds and the dollar would subsequently plummet.
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Money Morning
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Define The Stock Market
The Stock Market is a market for the trading of company stocks, and the likes of the same. In Stock Market both of these are securities listed on a stock exchange as well as those that are only traded privately.
Though it may seem common, the term Stock Market is a somewhat abstract concept for the mechanism that enables the trading of company stocks. It is usually also used to describe the totality of all stocks in the market and indeed other securities, with the exception of bonds, commodities, and derivatives.
The term market is used especially to apply within one country as, to put up with within the phrase “the Stock Market was up today”, or within the term ” Stock Market bubble”. Bonds are still traditionally traded in an informal, over-the-counter market known as the bond market.
Commodities are usually traded in commodities markets, and derivatives are traded in a variety of markets but like bonds, mostly ‘over-the-counter’. The size of the worldwide ‘bond market’ is estimated at $45 Trillion and the size of the Stock Market is estimated as about half that.
It must be noted though that the derivatives market, because it is stated in terms of notional outstanding amounts, cannot be directly compared to a stock or fixed income market, which refers to the actual value in a market.
The Stock Market is distinct from a stock exchange, which can be said to be an entity, say a corporation or a mutual organization countenance within the business of bringing people and sellers of stocks and securities together.
Here, the case in point-Stock Market-within the United States includes the trading of all securities listed on the splendid NYSE, the NASDAQ, the Amex, as well as resting on the many regional exchanges, the OTCBB, and Pink Sheets. European examples of stock exchanges include the Paris Bourse (now part of Euro next), the London Stock Exchange and the Deutsche Borse.
Importance Of Market
The importance of Stock Market can be understood when it’s most imperative networks for transport, electricity and telecommunications function properly. Thus, it is essential that, in market payments can be transacted, capital can be saved and channeled to the most profitable investment projects and that both households and firms obtain help in handling financial uncertainty and risk as well as possibilities of spreading consumption over time.
The financial markets constitute an important part of the total infrastructure for every single society that has passed the stage of largely domestic economies.
The Financial System Of The Market Performs Three Main Tasks:
1) It handles transfer of payments in the markets.
2) It channels savings to investments with a good return for future consumption in the Stock Market.
3) It spreads and reduces the economic risks in relation to the players’ targeted returns.
Here also note that systemic risk is not thereby reduced, it merely becomes less concentrated and uneven. Moreover, unforeseen risks, or catastrophic risks are a good example of the complete collapse of the financial system or government institutions in the market, which cannot be capable of being spread, or insured against.
The smooth functioning of all these activities and facilitates in the Stock Market give economic growth and the lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.
The market is one of the primary most important sources for companies to raise money. Prior experience has shown that the price of shares and other assets is an influential part of the dynamics of economic growth. The continuously rising share prices tend to be associated with increased business investment and vice versa in the Stock Market.
Share prices also affect the wealth of households and their consumption. Thus, central banks tend to keep a bull’s eye on the magnificent control and behavior of the market.
Relation Of The Stock Market To The Modern Financial System
In the market the financial system in most western countries has undergone a remarkable transformation. One main feature of this progress is disinterring mediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via banks’ long-established lending and deposit operations.
The general public’s heightened interest in investing trait within the Stock Market, either directly or through mutual funds, has been an important component of this process.
The statistics related to the market show that in many countries in the recent decades shares have made up an increasingly large proportion of households’ financial assets. A feature in the market within the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 per cent of households’ financial wealth, as against less than 20 per cent within the 2000s.
The major part of this adjustment in financial portfolios has gone directly to shares but a bargain now takes the form of various kinds of institutional investment for groups of people. As examples in the Stock Market the pension funds, mutual funds, hedge funds, insurance investment of premiums, and so on, the list goes on. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds.
Thus, in a Stock Market similar tendencies are to be related in other industrialized countries. In all developed economic systems, like the European Union, the United States, Japan and other first world countries, the trend has been the same-saving has moved away from well established (government insured) bank deposits to more risky securities of one sort or another.
Lastly, any type of a dealing in the Stock Market should be given a serious thought and then only to be proceeded.
William Smith
http://www.articlesbase.com/finance-articles/define-the-stock-market-80990.html
Bad Credit Debt Consolidation: Quick Fix for your Bad Credit and Debt
Bad credit debt consolidation is a privilege in times of financial adversity. Bad credit debt consolidation will help you avail a new affordable loan to replace Vexed by the number of high interest payments you are dealing with every month? Afraid that your bad credit rating will leave you with little or no options? Imagine if you could divest yourself of the debt crisis and look forward to a better credit rating. Sounds good? Reading this article on bad credit debt consolidation would equip you with the information you need. Read on and find out…all your existing high interest borrowing. The rate of interest is generally lower than the rates on your existing loans which reduces your debt burden and helps you pay off your debt soon.
Does Sub Prime Market Help You When Everyone Else Has Refused?
Lenders who offer bad credit debt consolidation loans are not wary of dealing with bad credits. That doesn’t mean that these lenders are not concerned about the safety of their investments. Years of experience in the sub prime market has led them to believe that offering bad credit debt consolidation loans is not such a bad idea. Borrowers troubled by bad credits are not as lax in payments as credit records display. That’s why bad credit debt consolidation loan are offered especially to bad credit people and is easily available so they can deal with their debts before it’s too late.
Does Bad Credit Debt Consolidation Help?
Bad credit debt consolidation loan is the easiest way to organize your bad debts. You can avail a bad credit debt consolidation loan in secured or unsecured options. In case of large debts, secured consolidation loan will be beneficial because it comes with lower interest rates and preferential repayment options as you have placed security with the lender. Security maybe the form of property like home and depending on the strength of the collateral, a larger loan can be borrowed at low interest rates. But there is risk of repossession by the lender if you fail to pay back the loan. However if you are looking for an effective solution to deal with small debts, unsecured bad credit debt consolidation which is offered only on the basis of borrower’s credentials and does not require collateral is the solution. They are a safer bet although they come with higher rates of interest. You don’t waste time on property evaluation and other paperwork which makes it a quick, risk free option to deal with your debts.
Reethi
http://www.articlesbase.com/loans-articles/bad-credit-debt-consolidation-quick-fix-for-your-bad-credit-and-debt-114446.html
Max Keiser on Inside Story – Greek Debt Crisis – (2/2)
http://maxkeiser.com
Max Keiser’s guest appearance on Inside Story, Aljazeera English
Topic: Greek debt crisis
Air date: 24 February 2010
Duration : 0:9:9
Frost over the World – Europe’s financial crisis
The economy is in trouble again. European stock markets are rapidly falling due to concerns about debt repayment in Portugal and Greece. Portugal is facing a political crisis over the country’s economic troubles. Fernando Teixeira Dos Santos, Portugal’s finance minister, joins the show to discuss this. Plus, Alex Brummer, the city editor of the UK’s Daily Mail newspaper, analyses the financial crisis facing Europe and Alex Stubb, Finland’s foreign minister, talks about the relationship between the European Union and the US.
Duration : 0:15:16
Collapse of the Dollar (Pt 7 of 7): Testimony in Support of the Montana Sound Money Bill
Please help us reach a wider audience by donating at http://www.montanasoundmoney.org/parksvideo.html
On March 12, 2009, the Montana House State Administration Committee held a hearing on HB 639, the Sound Money Bill. The purpose of this bill is to begin to reassert Article I Section 10 of the United States Constitution, which states that, “No State shall… coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.
This is the expert testimony of Dr. Lawrence (Larry) Parks at that hearing.
Dr. Parks is the Executive Director of FAME.org (http://www.FAME.org), whose Board of Advisors includes Ron Paul, Lew Rockwell, Edwin Vieira, and other heavy-hitters who advocate sound money.
Visit http://MontanaSoundMoney.org for more information on the Montana Sound Money Bill.
Duration : 0:7:6