Iroabuchi Onwuka
We begin the accessment on the man in office, but it is a little too late in the day to place such heavy emphasis on Professor Soludo, the current Central bank of Nigeria Chairman facing re -election. He eliminated uncertainty from Nigerian economy by cutting down the number Banks, a play that was so timely that it simulated a response from China. The Chinese were beginning to complain about the many banks in thier country and about the idea of too many currency floating around Shanghai when by some misguide, Soludo ventured in June 2007 to take an active stand on the idea of currency redomination.
The implied vector of such exericise is balancing act on 'supply' auction, a way of improving liquidity operation without collapsing the value of Equity price. It was a way of fully advertising the country to foreign countries seeking a long term expansion in Nigeria, who were seriously complacent about the country given the global weight of the unit of exchange. The target was for small businesses, all for administrative firms both local and foreign, who were expected to improve their employment numbers and increase pay for fixed income earners.
The kind of attarck Soludo got from News makers like the Nigerian Guardian and Business day, invoked tensions of antebellum with the world fully observed to the fact that tension is still high in the country and was perhaps challenged to look elsewhere. Above all, within the country there was lax security, especially in the Riverine. Riverine daggers on foreign workers were still sharp. Then came the killer punch from New President Yar'uwa suggesting openly that Soludo's plan was unenforceable. It is low point in Nigeria as a financially viable entity. Little did Nigerians know that the man Soludo and the President Yar'uwa successfully blocked a transfer of 2 Billion for a no bid oil pipe line contract, linking River State to Abeokuta.
That was stepping on the wrong toes, the very one of which is Obasanjo's. It is not possible to doubt that Soludo was not forgotten or forgiven, as such his implaccable enemies roved around for the opportunity to act out thier frustrations. That opportunity came with the redomination of the Niara. What amounted to the sum of all foreign fears about Africa became real in Nigeria, that in spite of the effort of the Central bank of Nigeria to live up to expection, the office was still too lenient to Nigerian Governement. It was not the edifice that mark its own meaning, it is not independent of the presidency.
Yet the clamour against Soludo may have been right, that Nigerian Niara need no further emendation of its unit proper. What was the Nigerian Government expected to do, when a new CBN man in office has demonstrated the readiness of the Nigerians to lead the continent once more, against the multitude of past failures now showed lapses in his judgement.
If this episode is considered the lowest point in Soludo stint as Chairman, it will be wise to measure him entirely by how he kept his head above the parapet. He insisted of a new line
of currency notes, got the nod of the Government and did exactly that, he went the distance of announcing his meetings, to re-arm the Diet of his surf in the interest rate. In essence, he made his position useful towards enabling Bankers and other financial institution adjust to matters arising from the market. But from a professional standpoint, this was actually where he failed.
If he wanted to execute the wish of the Banks, it would have been served with annual adjustment in market.
The robust power of the CBN was not checkered, the Banking institution got stronger and stronger, threatning to overpower other avenues of wealth. There was no 'gauge' to enable his judgement concerning investing with interest rate cycle and as such he torched off the job of the Fed Chairman when he cited in 2008 of a propensity towards inflation. PPI, CPI, and what the Americans call 'personal consumption expenditure deflator' (PCE) are used for studying inflation rate, but since these sensitive barometers are not available in Nigeria, it is entirely accurate to say that the power of the Banks may have aggrevated the problem of inflation.
For all important economic dictates, the idea of copuling Naira to Crude oil is weak from the beginning. Not that the idea is uninspiring but given the weak nature of the world total finances market, the Dollars was under pressure since the Euro incentive. Euro was created to elevate the Dollars through competition, but it was doing the opposite. Yet the currency carried on suggesting that these White people can play themselves sometimes. I mean they can really play dummy fool, should I say blockheads given the opportunity Euro was making for Dollars. The Euro should have been done away a long time ago.
Indeed, the US Dollars felt the challenge of its existence in strong hands of Euro, a currency that has levelled out the value of everything, the currency called Dollars was just been exported to dog off the inflation within the US. It was meant to be cheap at that export and CBN and Fed chairmen around the world were to react. The Nigerian Banking system didn't react. The Niara was left forlougnly, and with the tight power of the Banks, the country was set for inflation.
If Crude oil, Nigerian chief export will rise, then Naira was expected to rise with it, and under the common fact that country needed no outstanding debt to divide its Crude oil profit, the only way forward was Foreign reserve. This was no immaculate conception since Foreign reseves have in the time past played an anchor for local currencies. Merit should be given Soludo for insisting on foreign reserve since before we had none, his trainng also proved useful since Iraqi war provided the chief excuse for Dollar depreciation and Crude oil rise.
Soludo also broke his own glass by failing to jettison the Dollars when it cheap, perhaps due to matters arising from 'bureau of exchange' and parallel 'Dutch auction' market. The copulation of Dollars to Niara and the capitulation of Dollars in Nigeria was a major statistical error which reversed the Niara gains to the Dollars, even before it began to climb.
The Nigerian ship needed such an anchor on a global level, an anchor to be set against the ocean of uncertainty. More than anything, it will help hedge against the fierce basin of market drift common in advanced countries of the world and in pari passu, the host country tilt to the stable side.
Soludo's measures were all good except for the Binomial mistake of trying to hard to please a world of market dragons with a 'full of a black cow'. His position that US Dollars can capitulate in Nigeria from US propiece, and that Euro can capitulate in Nigeria from Europe prepiece was a great mistake. This may have served to advocate for foreign investment but it was a bad move that can only be understood as a hole in a pot of Gold. He's is an administration that is working to crack Nigeria into the top 20 currencies of the world but letting such transaction to take place is like shooting himself on the leg.
He also forgot the very role of CBN - modelled after the Bank of England - in stabilizing the Bond market. In terms of the galloping inflation that took place in November 2008, annoucing a few selected Bell Wether with very low yield and earnings margin, would have promoted 'price' restoration in all classes of respect and 'decorum'. Agitating for tax free Municipal Bond in high earn areas like Abuja and Metropolis like Lagos would have discouraged the ruling Banks tendency towards a short term interest rates that exceeds the earnings of working Nigerians on thier long term Business package.
Sanusi, the former Governor shut down the idea of foreign currency capitulation and for once in his stint as Governor Naira showed signs of stability. The idea that Western Union, Traveller Check, Visa, Eastern Union and other commercial papers, could now buy into the Naira would have not been desired, for the deal they want is the one that allows Nigerians send money to Nigeria and capitulate in the currency of thier country. In that way, their exchange statistics will appreciate against the money transfer countries of the world, while the host remain weak.
Such buying into Naira at the about 7 Billion dollars a year, would set Nigeria free from the fear that accompanies a strong American Dollars. This is unlikely to have been desired, for could oil rich Nigeria gain against the Dollars and Euro while the Forex traders faired on average. Sanusi was engineered out of office and in Soludo, a new canopy was erected until he took a stand against many banks, until he took corrective measures to helm our foreign reserves, until he experimented with 'redomonition' of the currency...then a plot to ship him out began.
Had it not been for the sudden down turn in the world, who knows what would have happened to the office. The US Dollars late in 2008 began to show signs of strenght, with Crude oil down to the highest since 2005, then came a free fall of the Naira since it was tied the Dollars. Buying 900 million dollars into the Naira immediately was 'sure Banking' but it was gonna do little to helm the losses. The boss however did the unimaginable, Soludo shut down the Dutch Auction by 2nd week of January, surprised everybody. For once, against a burgeoning Dollars that is so strong that Yen is pretty much squeezed, against a free falling Russian Rubies, the Nigerian Naira held out at 146.
The next page is a tricky chapter, it will tell how much Yar'duwa wants to change things in Nigeria. His face should be discouraged from looking at Suadi Arabia, thier whole family of rich people whose wealth are not taken seriously. The Nigerian president should be looking inwards, unless he is not serious in make changes in Nigeria. He should be conferring views on how a restriction of foreign currency capitulation in Nigeria will help, and what can be the advantage of buying 7 billion dollars into the Forex via money transfer agent Nigeria. Let them send in Dollars, let them send in Euro, let Nigerians and their foreign business partners send from whatever country they wish but let all pick up in Naira. Let the president give Soludo and his compeers a chance to make a case for the Naira. The world still yarn for the leader of the continent. Mr. President, those afraid to torch your Naira have no faith in your country.
Today Dateline NBC organised a documentary on Nigerian 419 were all kinds of inventive against the country, it was such a bad showing that make Nigerians look bad of American Televison, it was Soludo who began to remove financiers with questionable character. This NBC attarck is serious psychological on Nigerians and I hope that Nigerians realise that Ghana is set as a counter weight for Nigeria in West Africa.
The Nigerian local market is completely Zero right now and there is very weak internal dynamics. Soludo will need to play close to the president to reaffirm his confidence in him, for next step will not please anyone. Soludo should send a warning that as the 2009 World Cup closes in, you either trade Naira or go home. I can't wait to see the faces of these laughing comedians when CBN finally decides to shut down foreign currency capitulation in Nigeria. You see, is all about exchange, is all about numbers, is about who is winning on a global stage and who is loosing. If that is maintained for at least a 10 years note, expect a double digit growth in Nigeria with such a time.
Thursday, January 29, 2009
Friday, January 16, 2009
Thursday, January 15, 2009
A review of Benanke's Speech on 1st of December 2008
Chairman of Federal Reserve, Ben Benanke gave a speech in Texas on December 1st, 2008. The speech was an attempt to reharse the problems of the society in the context on Fed policy. It had become officially clear that U.S economy is in recession going by James Pertuba of M.I.T, who on the same date highlighted that the country had been in recession for over a year. If this is the case, there is nothing about this recession spoken by Ben Benanke in this 1st December of 2008 speech in Texas. Benanke spent more time reharsing te policies of the Fed over the years leading to the day in question. Some of his usual nuances about inflation were expected but the motion of buying deliquent credit seem relatively new.
What was not clear is that frequent mention of "price stability" "standing institution" "primary dealer" "Federal Reserve credit" "private counter party", which despite the clarity of the terms involved seem a bit foreign to the current argument of inflation and recession. If these newer nuances only means that he is looking at secondary option to reverse the trend and that the Feds were looking at using third party to paddle the issue of credit in the country. This might mean that Banks and Banking section is entirely under review, whether he is suggesting that the problems of the society is credit driven does not mean that credit and credit default can replace the issue of value, which is a market trend.
The price of houses in the US has taken a huge spike since 2000 and the money been paid to Banks could not be maintained by Americans on fixed income. This huge run on prices does not infect the value of real estate everywhere in US, but the forceful trend of high prices led to manipulation of Americans by their Banks and their brokers. Shortfalls in payment was only natural and these banks have so much in their hands in times of Assets. 'Decay' is a big deal in real estate, but it does not apply except in the context of reversals in prices, and how those prices remain profitable when default and deliquencies forces drop down in real estate prices, then stagnation. Banks can also remain hostile to spin of assets, with the Feds and Treasuries breathing down their neck about redemption. Upward trend is a market problem, it is a question of price.
Anyone who has followed Benanke's speeches would not fail to notice three major themes his meetings. These are as follows (1) market prices/convertibility (2) price stability and sustainability of demand (3) inflation accounting as converging negatives. It is clear that Benanke is yours truly Keynesian, not that he believes that sustainig demand is the function of the government propiece, rather price stability can encourage a good degree of market 'demand' precipiece. This naturally encourages manufacture and explains the basis of Benanke' insistence on price stability. Manufacturing is a first rate sharpe of market prices, yet price stability in America is not a function of the credit market.
Benanke mentioned that "global economic growth will level out the commodity price" reffering to the act of allowing emerging nations in the world like China to enter the common market. That Benanke reffered to this particular Fed policy in his speech means that he was educating the crowd on the Hedge against the current economic crisis. It is important to understand what that means in realtime, it simply means America was never expected to support its own market and that commodity had been factored in, hence the inevitability of inflation. The trend was upwards and the general conditions means that inflation will stay the course unless a reversal is effected. From such position, we can see that the Speech was intended as an invitation to the Fed policy of buying bad credit as a form of deflationary tactics. But then the jump to Deflation is a last option for markets that are stretching its limits.
On the same day, James Hamilton was also interviewed by Tom Keane on Bloomberg news, and James Hamilton was giving his review of his book 'Time series analysis' upon which hour he mentioned that in terms of Fed policy and the new issue about deflation, it is possible that the Feds were 'running out of option'. James Hamilton suggested that Benanke was perhaps experimenting with the whole issue of 'deflation' given especially his stated awareness of the problem of global stores houses.
I cannot credit Benanke with the claim that he was aware of the problem of global stores given the current surge of inflation, on the count that Junk bonds were until lately outperforming the US Federal Reserves by 11%. It only means what it chimes, that America investors were primarily involved with investment banking with lending to third party, usually foreign businesses. US funds rate had been for many years at all time low an lower still, at Q3, 07, 90% of US Exchange traded funds were still foreign. We are still aware of Greespan's "irrational exuberance" which fall exactly short on the warning that the current American expansion of its local market cannot be defended by its local markets. The lending practices of the 2000's were cause for concern in America, and the returns were not locally generated. Much of that money were invested elsewhere, e.g China, India, Brazil, Russia, Western Europe and Eastern Europe and other secondary emerging markets in the world.
Given the different international valuations of world market, it is not difficult to understand why these funds trapped oversea cannot be accounted for. The funds are seriously trapped. As such the idea that "global economic growth will level out the commodity prices" is entirely redundant on the platform that 'price stability' is a function of the credit market which America and its lending tree is the very fulcrum. The collapse of value is not American in origin, but the rise of inflation in America is due to excess floation leading to deliquences. Deliquencies from fixed incomes.
This 1st of December speech is therefore a hint that the Feds were retreating to the 'formation of crisis' leading to 2008. That means that American recession is more than 12 months. It is several years old. On the October 7th 2008, the world began to crack on its base and immediate attention and remedy was the 'supply side' economics. Of course there is the drain of funds. Whatever the outcome, the general lack of commitment on the part of American banks is not really the bane of global markets. As such the participation is completely disusue. These terms ''short term rate'' "short term funding" "higher credit rating" or "standing instutition" and third party, the usual highlights of Benanke's speech means a consistent federal government intervention, perhaps at a calculated rate which might also mean extensive monitoring by Feds. Risk and price management which be the current theme, but when you have a loss of liquidity, you are likely to stall the market since there is high volitality. Such third party arbitraguer in all consensus will further dislocate the lending institution and nothing under the current condition will hold their value.
Iroabuchi Onwuka
What was not clear is that frequent mention of "price stability" "standing institution" "primary dealer" "Federal Reserve credit" "private counter party", which despite the clarity of the terms involved seem a bit foreign to the current argument of inflation and recession. If these newer nuances only means that he is looking at secondary option to reverse the trend and that the Feds were looking at using third party to paddle the issue of credit in the country. This might mean that Banks and Banking section is entirely under review, whether he is suggesting that the problems of the society is credit driven does not mean that credit and credit default can replace the issue of value, which is a market trend.
The price of houses in the US has taken a huge spike since 2000 and the money been paid to Banks could not be maintained by Americans on fixed income. This huge run on prices does not infect the value of real estate everywhere in US, but the forceful trend of high prices led to manipulation of Americans by their Banks and their brokers. Shortfalls in payment was only natural and these banks have so much in their hands in times of Assets. 'Decay' is a big deal in real estate, but it does not apply except in the context of reversals in prices, and how those prices remain profitable when default and deliquencies forces drop down in real estate prices, then stagnation. Banks can also remain hostile to spin of assets, with the Feds and Treasuries breathing down their neck about redemption. Upward trend is a market problem, it is a question of price.
Anyone who has followed Benanke's speeches would not fail to notice three major themes his meetings. These are as follows (1) market prices/convertibility (2) price stability and sustainability of demand (3) inflation accounting as converging negatives. It is clear that Benanke is yours truly Keynesian, not that he believes that sustainig demand is the function of the government propiece, rather price stability can encourage a good degree of market 'demand' precipiece. This naturally encourages manufacture and explains the basis of Benanke' insistence on price stability. Manufacturing is a first rate sharpe of market prices, yet price stability in America is not a function of the credit market.
Benanke mentioned that "global economic growth will level out the commodity price" reffering to the act of allowing emerging nations in the world like China to enter the common market. That Benanke reffered to this particular Fed policy in his speech means that he was educating the crowd on the Hedge against the current economic crisis. It is important to understand what that means in realtime, it simply means America was never expected to support its own market and that commodity had been factored in, hence the inevitability of inflation. The trend was upwards and the general conditions means that inflation will stay the course unless a reversal is effected. From such position, we can see that the Speech was intended as an invitation to the Fed policy of buying bad credit as a form of deflationary tactics. But then the jump to Deflation is a last option for markets that are stretching its limits.
On the same day, James Hamilton was also interviewed by Tom Keane on Bloomberg news, and James Hamilton was giving his review of his book 'Time series analysis' upon which hour he mentioned that in terms of Fed policy and the new issue about deflation, it is possible that the Feds were 'running out of option'. James Hamilton suggested that Benanke was perhaps experimenting with the whole issue of 'deflation' given especially his stated awareness of the problem of global stores houses.
I cannot credit Benanke with the claim that he was aware of the problem of global stores given the current surge of inflation, on the count that Junk bonds were until lately outperforming the US Federal Reserves by 11%. It only means what it chimes, that America investors were primarily involved with investment banking with lending to third party, usually foreign businesses. US funds rate had been for many years at all time low an lower still, at Q3, 07, 90% of US Exchange traded funds were still foreign. We are still aware of Greespan's "irrational exuberance" which fall exactly short on the warning that the current American expansion of its local market cannot be defended by its local markets. The lending practices of the 2000's were cause for concern in America, and the returns were not locally generated. Much of that money were invested elsewhere, e.g China, India, Brazil, Russia, Western Europe and Eastern Europe and other secondary emerging markets in the world.
Given the different international valuations of world market, it is not difficult to understand why these funds trapped oversea cannot be accounted for. The funds are seriously trapped. As such the idea that "global economic growth will level out the commodity prices" is entirely redundant on the platform that 'price stability' is a function of the credit market which America and its lending tree is the very fulcrum. The collapse of value is not American in origin, but the rise of inflation in America is due to excess floation leading to deliquences. Deliquencies from fixed incomes.
This 1st of December speech is therefore a hint that the Feds were retreating to the 'formation of crisis' leading to 2008. That means that American recession is more than 12 months. It is several years old. On the October 7th 2008, the world began to crack on its base and immediate attention and remedy was the 'supply side' economics. Of course there is the drain of funds. Whatever the outcome, the general lack of commitment on the part of American banks is not really the bane of global markets. As such the participation is completely disusue. These terms ''short term rate'' "short term funding" "higher credit rating" or "standing instutition" and third party, the usual highlights of Benanke's speech means a consistent federal government intervention, perhaps at a calculated rate which might also mean extensive monitoring by Feds. Risk and price management which be the current theme, but when you have a loss of liquidity, you are likely to stall the market since there is high volitality. Such third party arbitraguer in all consensus will further dislocate the lending institution and nothing under the current condition will hold their value.
Iroabuchi Onwuka
Wednesday, January 14, 2009
The Euro will Go Down.
By
Sampson Iroabuchi Onwuka
The creation of the currency called Euro has offered nothing but bad news to the world. It was designed as a bait against the US dollars. There was the guarantee of credit from within members and there was the matter of stabiliy pact, which is not only a credit matter but a question of protection, from both foreign and regional conflict. For all intended purposes the formation of currency has yielded more trouble than good. As we speak, all member states are expecting 1.9 % dip in thier economy. Kudos has been given to the AAA French stock, but it is far from certain that their triple A will remain stable. the French in themselves ran out of option a lot time ago. Then there is Germany, once the third largest economy of the world are now fourth by market estimate, replaced by China a week ago. Italy and Croatia, the geographical neighbours are more than likely to fracture from Euro given thier balance sheet problem. Since the advent of Euro, job creation in 5 million Croatia have not taken the required form. David Rosenberg of Bloomberg News, once despaired over the Euro, citing the "centralisation of currency and discentralisation of policy" and in his view it is difficult for anyone to trully describe the movement of European economy.
In 1999, when the Euro currency began to circulate, it raised a lot of tension regarding its use. By 2000 when it eventually dawned in US market, we began to notice some problem of mergers and acquisition. Big guns bullied small ones in Europe and when they did, Europe felt that in the long run they will all benefit. Yes, there is benefit when there is no market competition and when significant versions of the industries are in few hands. The benefits are follows, natural monopoly which creats inflation, uncontested cost of items within an industry, uncontested worker's wages and treatment, and a big drum of depression. Is like Europe forgot to study the conditions for depression in the US in the late 20's. By eliminating value, It will appear that the Euro succeded in whacking the US stock market in 2000, this thereforced investors to look elsewhere for profit since then. This was actually possible, by way of Unified currency leveling out value. In essence, market value was dysfunctional since European countries relatively bound to the America by capital wealth and culture, now excision from that Global economic equation.
The Real estate was the only industry that provided real time dividend and as such provided high leverages for private business owners looking to stay afloat, it equally made room for investors looking to recover those old days of boom. Bond and Hegde fund managers were not left out, they were ready to display thier own goods, in US to begin with, and then the wider world if necessary. The opening of US market to China, India and Russia sponsored the false faith in commodities, that all these hopes atgged to US economy were indeed possible. In keeping to the nature of markets, commodities all the more impressed a certain kind of confidence with these emerging markets penetrating the US. The price of that confidence was thier investment in non perishable goods, most importantly Equity.
That confidence began to falter when the promise of profit through 'commodity did not level out'. In the place of goods to keep fixed income earners in demand, goods flooded the market, to the degree that American goods began to diminish in supply. Job elimination due to outsourcing killed the idea of open boarder trade and revealed in the long distance the grand possibility that Europe and European currency may not have a great idea. Yet Americans were as creative as they come, and they soon demonstrated through their Media, that Europeans can use the converted power of thier currency to buy into the USA market. Tourist flowed from all over Europe into Newyork and the US, so came also thier investment. Once more, no one could remember that when a particular market is necessarily based on performance from outside, the inside suffers. That generating money in American cities like Newyork from visitors was like repeating Amsterdam in 1600. The eventual fall of Amsterdam stockmarket was due to much money pouring from visitors, not from fellow indigen, which ended up in real estate and Tourist attraction at the expense of stability of Amsterdam economy.
Europe was meant to solve here the problem with house rent, in fact the rent was set in such a way as to conincide with the Euro. It was designed with Euro in mind. Asia and emerging markets were meant to the case down inflation. This was not the case since Europe could not accurately measure thier own value stemming from saturation of banks. As such the profit Banks sought to generate through money function was stalled because of poor attractio of money from US into Europe. This forced a reversal of course and retained a worm of high leverages. Then a credit crunch since many were not paying up in Newyork and in US.
What were they expected to do, since thier hope of generating cash for the banks and for thier private committee of friends were faithfully ended. The nature of the credit crunch and the high derivative that is partner with it, adding the struggling nature of Job and income, which became increasingly burdensome with net profit paraire. Of course, a price of building in Newyork area went from 350 thousand to 550 thousand and on to 600 thousand and within a matter of years 800 thousand. Banks and thier agents were throwing money away, in hope that when buildings are mounted, Europeans with thier Euro will buy them all. All these where happening at the same time employment numbers were down and unemployment numbers were up. Mayor Bloomberg of New York even declared at somepoint that the 'Euro Genius' was a survival of fittest. African Americans who were unjustly forced out of thier homes, received zero attention from the Mayor making it very possible to justify thier eviction.
Without good jobs, without jobs simple, Americans whites or blacks or other could not afford
the price of homes. The monthly payment was just too much for anyone, let alone Americans who were fixed income earners. On a brighter day, when the markets were strong, the whole business will be overcome with time. Yet, we could not have imagined that besides America
and Europe, there are no useful economy in the world. When Europe levelled out oppotunity America bore the weight of the world and thier insurance companies span the rest of the world. It was only a matter of time, when that currency will stall and essentially strangulated the world. By that I mean, that the room to speculative finances became a straight line, too linear for market profit, too preditable, too unique given the one man show and less adventuresquely. Other major countries of the world, were busy shoving around thier currency rate.
If 10% of that US market is credit and the default is only 5% of the 10, then there are other forces at work besides the credit problem. What forced Ben Benanke and Hank Paulson to declare the US market problem - ridden is significant inability of the stock market to
meet expectations over a very long period. Europe and her member currency levelled
out opportunity making it impossible for thier holds in US markets to yield fruits. Europe was nolonger competitive, as such volitility followed a straight line like a heart that so pounded that is gradually stopped to beat. Benanke and Paulson's may have over stated the condition, forcing investors to panic with caution on the market's direction appreciably fair but unappreciably misdirected. The Euro sponsored a false sense of hope that the market will take care of itself.
The Bail out, Benanke, and Barak Obama
The initial bail out of $200 billion in 2008 is now trifty sum given the fear that was coming, and more than that it was intended to the stem the tide which did not include Lehman Brothers. The fall of Lehman brothers explained the picture much better to the rest of the world and against the hope of bankers, it widened the gulf of fear and that enlarged the picture with a hurricane
of debt restructure. Placing your head above the market parapet is a difficult matter, and whether moral hazards or not, Banks seeking survival as mate would have to bail, at least pretend they needed money.
But we noticed in October and November last year, can be described as rigged on the count that 700 Billion was asked for and in 7 months, the Dow precipitiously declined. Hundred billion raffle per month is the loss from oil from from June to December 31st, when the Dow finally stabilised. The 700 billion to me was perhaps profit made over the years of conflict in Iraq, which was
now used as debt restructure to the banks affected, banks who perhaps loaned the money to
US government. Injecting this money on a private jetting over a period of 3 years, would unnecessarily inflate the crude oil price. Such practice may or may not have been necessary,
had it not been for the Euro that peculated with the Crude oil price.
If the gloomy picture created by Barak Obama on January 7th 2009 is anything to go by, it can therefore be said the initial $200 billion was a salvafic endeavor and the returning $700 billion asked from congress would been a mere overture. The tussle of conflict had begone to exhibit sign of confusion by January 14th, by Benanke showing that 1.3 trillion is not yet enough, we might begin to argue on the condition, on how big the problem really is? By request and in keeping to tenets of his speech, we fall for the hope that Benanke has seen the light, that he has seen the size of the problem at hand, that it will take much more money to stem the tide. But this position is opposite what we hope to archieve, that spending will not help.
If at all spending will help, we would have soughted out the problems in 2008. If this is the case, it will therefore mean that as much as we shall spend, we might be tempted to at least presume that money is not the problem with world market, that in fact our current market is anti 'depression era' and by this is diagnoses, no amount of money will actually help. It essence, the problem has to come from elsewhere, and in my opinion it has to come from market power; price function and relative Value.
The price of failing is not just Benanke's reputation, it is only greater in the image of the young Barak Obama since history would not treat him fair. History will ugly out his time, as a flip side of popularity's lasting expression, concerning the rise of the most celebrated African American since Martin Luther and the fall. It is not idle conjecture that such hopes have crossed the minds of many people, neither can we hide from such dark embrace that it can be the case. You see in market if not in in life, there is always the second meaning to every tedium. We can however presume that all the pains that he bore leading to the White House were his darker days, whose flip side are brighter days of days to come. For ages that is to come, for all the Americans living and dead, for those whites and blacks that now he represents by accident, for all Americans hoping to live out thier years as the greatest generation, for the very world, this man cannot fail. He must continue to act, to act, and act until we reach a higher ground when our system recovers from its losses. May your stars join to once more see you through.
If the call to action is to be taken literary, it should entail visiting the world before the introduction of Euro. To see the comparative US market behavior from 2000, and ask without sentiments how and why the stock took that sudden dive and why values defy expections. The answer would lead us back to where why I started that the Euro essentially whacked the US stock market, thereby forcing the idea of relative value out of global equation. In essence, Europe represented by thier currency is missing in Global action and the world miss them too.
Mr. Obama who is surprisingly zero on Africa American economist, should look to question the meaning of Euro as a currency. What is the market meaning of a currency that allow member states to have thier own tax system, thier own interest rate and thier own municipal bonds, but unified in currency? How can any one follow such market when ECB pretty much operate in the dark.
If Barak Obama can find a way to secretly dismember the currency and not the Union, he would have solved the problem of the decade, if not century and saved the world a bundle. If he cannot tow the line here, he can at least question, the formation of currency in the world. The Euro is the problem of global market yet it took us so long to get to this crisis, which explains the flawed nature of our economic barometers and indicators, and altogether the resistance of the US market. A 'word is enough for the wise'.
by Iroabuchi Onwuka
Sampson Iroabuchi Onwuka
The creation of the currency called Euro has offered nothing but bad news to the world. It was designed as a bait against the US dollars. There was the guarantee of credit from within members and there was the matter of stabiliy pact, which is not only a credit matter but a question of protection, from both foreign and regional conflict. For all intended purposes the formation of currency has yielded more trouble than good. As we speak, all member states are expecting 1.9 % dip in thier economy. Kudos has been given to the AAA French stock, but it is far from certain that their triple A will remain stable. the French in themselves ran out of option a lot time ago. Then there is Germany, once the third largest economy of the world are now fourth by market estimate, replaced by China a week ago. Italy and Croatia, the geographical neighbours are more than likely to fracture from Euro given thier balance sheet problem. Since the advent of Euro, job creation in 5 million Croatia have not taken the required form. David Rosenberg of Bloomberg News, once despaired over the Euro, citing the "centralisation of currency and discentralisation of policy" and in his view it is difficult for anyone to trully describe the movement of European economy.
In 1999, when the Euro currency began to circulate, it raised a lot of tension regarding its use. By 2000 when it eventually dawned in US market, we began to notice some problem of mergers and acquisition. Big guns bullied small ones in Europe and when they did, Europe felt that in the long run they will all benefit. Yes, there is benefit when there is no market competition and when significant versions of the industries are in few hands. The benefits are follows, natural monopoly which creats inflation, uncontested cost of items within an industry, uncontested worker's wages and treatment, and a big drum of depression. Is like Europe forgot to study the conditions for depression in the US in the late 20's. By eliminating value, It will appear that the Euro succeded in whacking the US stock market in 2000, this thereforced investors to look elsewhere for profit since then. This was actually possible, by way of Unified currency leveling out value. In essence, market value was dysfunctional since European countries relatively bound to the America by capital wealth and culture, now excision from that Global economic equation.
The Real estate was the only industry that provided real time dividend and as such provided high leverages for private business owners looking to stay afloat, it equally made room for investors looking to recover those old days of boom. Bond and Hegde fund managers were not left out, they were ready to display thier own goods, in US to begin with, and then the wider world if necessary. The opening of US market to China, India and Russia sponsored the false faith in commodities, that all these hopes atgged to US economy were indeed possible. In keeping to the nature of markets, commodities all the more impressed a certain kind of confidence with these emerging markets penetrating the US. The price of that confidence was thier investment in non perishable goods, most importantly Equity.
That confidence began to falter when the promise of profit through 'commodity did not level out'. In the place of goods to keep fixed income earners in demand, goods flooded the market, to the degree that American goods began to diminish in supply. Job elimination due to outsourcing killed the idea of open boarder trade and revealed in the long distance the grand possibility that Europe and European currency may not have a great idea. Yet Americans were as creative as they come, and they soon demonstrated through their Media, that Europeans can use the converted power of thier currency to buy into the USA market. Tourist flowed from all over Europe into Newyork and the US, so came also thier investment. Once more, no one could remember that when a particular market is necessarily based on performance from outside, the inside suffers. That generating money in American cities like Newyork from visitors was like repeating Amsterdam in 1600. The eventual fall of Amsterdam stockmarket was due to much money pouring from visitors, not from fellow indigen, which ended up in real estate and Tourist attraction at the expense of stability of Amsterdam economy.
Europe was meant to solve here the problem with house rent, in fact the rent was set in such a way as to conincide with the Euro. It was designed with Euro in mind. Asia and emerging markets were meant to the case down inflation. This was not the case since Europe could not accurately measure thier own value stemming from saturation of banks. As such the profit Banks sought to generate through money function was stalled because of poor attractio of money from US into Europe. This forced a reversal of course and retained a worm of high leverages. Then a credit crunch since many were not paying up in Newyork and in US.
What were they expected to do, since thier hope of generating cash for the banks and for thier private committee of friends were faithfully ended. The nature of the credit crunch and the high derivative that is partner with it, adding the struggling nature of Job and income, which became increasingly burdensome with net profit paraire. Of course, a price of building in Newyork area went from 350 thousand to 550 thousand and on to 600 thousand and within a matter of years 800 thousand. Banks and thier agents were throwing money away, in hope that when buildings are mounted, Europeans with thier Euro will buy them all. All these where happening at the same time employment numbers were down and unemployment numbers were up. Mayor Bloomberg of New York even declared at somepoint that the 'Euro Genius' was a survival of fittest. African Americans who were unjustly forced out of thier homes, received zero attention from the Mayor making it very possible to justify thier eviction.
Without good jobs, without jobs simple, Americans whites or blacks or other could not afford
the price of homes. The monthly payment was just too much for anyone, let alone Americans who were fixed income earners. On a brighter day, when the markets were strong, the whole business will be overcome with time. Yet, we could not have imagined that besides America
and Europe, there are no useful economy in the world. When Europe levelled out oppotunity America bore the weight of the world and thier insurance companies span the rest of the world. It was only a matter of time, when that currency will stall and essentially strangulated the world. By that I mean, that the room to speculative finances became a straight line, too linear for market profit, too preditable, too unique given the one man show and less adventuresquely. Other major countries of the world, were busy shoving around thier currency rate.
If 10% of that US market is credit and the default is only 5% of the 10, then there are other forces at work besides the credit problem. What forced Ben Benanke and Hank Paulson to declare the US market problem - ridden is significant inability of the stock market to
meet expectations over a very long period. Europe and her member currency levelled
out opportunity making it impossible for thier holds in US markets to yield fruits. Europe was nolonger competitive, as such volitility followed a straight line like a heart that so pounded that is gradually stopped to beat. Benanke and Paulson's may have over stated the condition, forcing investors to panic with caution on the market's direction appreciably fair but unappreciably misdirected. The Euro sponsored a false sense of hope that the market will take care of itself.
The Bail out, Benanke, and Barak Obama
The initial bail out of $200 billion in 2008 is now trifty sum given the fear that was coming, and more than that it was intended to the stem the tide which did not include Lehman Brothers. The fall of Lehman brothers explained the picture much better to the rest of the world and against the hope of bankers, it widened the gulf of fear and that enlarged the picture with a hurricane
of debt restructure. Placing your head above the market parapet is a difficult matter, and whether moral hazards or not, Banks seeking survival as mate would have to bail, at least pretend they needed money.
But we noticed in October and November last year, can be described as rigged on the count that 700 Billion was asked for and in 7 months, the Dow precipitiously declined. Hundred billion raffle per month is the loss from oil from from June to December 31st, when the Dow finally stabilised. The 700 billion to me was perhaps profit made over the years of conflict in Iraq, which was
now used as debt restructure to the banks affected, banks who perhaps loaned the money to
US government. Injecting this money on a private jetting over a period of 3 years, would unnecessarily inflate the crude oil price. Such practice may or may not have been necessary,
had it not been for the Euro that peculated with the Crude oil price.
If the gloomy picture created by Barak Obama on January 7th 2009 is anything to go by, it can therefore be said the initial $200 billion was a salvafic endeavor and the returning $700 billion asked from congress would been a mere overture. The tussle of conflict had begone to exhibit sign of confusion by January 14th, by Benanke showing that 1.3 trillion is not yet enough, we might begin to argue on the condition, on how big the problem really is? By request and in keeping to tenets of his speech, we fall for the hope that Benanke has seen the light, that he has seen the size of the problem at hand, that it will take much more money to stem the tide. But this position is opposite what we hope to archieve, that spending will not help.
If at all spending will help, we would have soughted out the problems in 2008. If this is the case, it will therefore mean that as much as we shall spend, we might be tempted to at least presume that money is not the problem with world market, that in fact our current market is anti 'depression era' and by this is diagnoses, no amount of money will actually help. It essence, the problem has to come from elsewhere, and in my opinion it has to come from market power; price function and relative Value.
The price of failing is not just Benanke's reputation, it is only greater in the image of the young Barak Obama since history would not treat him fair. History will ugly out his time, as a flip side of popularity's lasting expression, concerning the rise of the most celebrated African American since Martin Luther and the fall. It is not idle conjecture that such hopes have crossed the minds of many people, neither can we hide from such dark embrace that it can be the case. You see in market if not in in life, there is always the second meaning to every tedium. We can however presume that all the pains that he bore leading to the White House were his darker days, whose flip side are brighter days of days to come. For ages that is to come, for all the Americans living and dead, for those whites and blacks that now he represents by accident, for all Americans hoping to live out thier years as the greatest generation, for the very world, this man cannot fail. He must continue to act, to act, and act until we reach a higher ground when our system recovers from its losses. May your stars join to once more see you through.
If the call to action is to be taken literary, it should entail visiting the world before the introduction of Euro. To see the comparative US market behavior from 2000, and ask without sentiments how and why the stock took that sudden dive and why values defy expections. The answer would lead us back to where why I started that the Euro essentially whacked the US stock market, thereby forcing the idea of relative value out of global equation. In essence, Europe represented by thier currency is missing in Global action and the world miss them too.
Mr. Obama who is surprisingly zero on Africa American economist, should look to question the meaning of Euro as a currency. What is the market meaning of a currency that allow member states to have thier own tax system, thier own interest rate and thier own municipal bonds, but unified in currency? How can any one follow such market when ECB pretty much operate in the dark.
If Barak Obama can find a way to secretly dismember the currency and not the Union, he would have solved the problem of the decade, if not century and saved the world a bundle. If he cannot tow the line here, he can at least question, the formation of currency in the world. The Euro is the problem of global market yet it took us so long to get to this crisis, which explains the flawed nature of our economic barometers and indicators, and altogether the resistance of the US market. A 'word is enough for the wise'.
by Iroabuchi Onwuka