Sampson I. Onwuka
Three sins committed by the FEDS or may now be said to sins against October, one, that Funds rates should decline at the same time as Interest rate, and that the Federal Reserve and other Central Banks should not distribute their income through buying or retract their distribution through tapering off. The end result is indecision in the market and there are no degrees of estimable panic. Fund Rate equals fluctuation in Crude oil prices, low interest rate spike prices on the housing market, and interest rate appreciation with a tapering-off in 2015 may have been augmented equities and was designed to help condition the market and inflation with positive outlook on Asset prices. But it is all variable looking at the consideration that a higher funds rate will promote the housing market, particularly and not necessarily equities. Shifting to contraction may also be placing a cap to the bottom of the buying tag and from these normative applications of process, we seem increasingly reliant on positive results especially at the advent of Ebola virus which has robbed these Africans some economic shine, augmented by Goldman Sachs analyst as part of ‘systemic’ economic dysfunction of theory no less significant in the Americans as the struggles against ISIL in oil rich Syria and Iraq. Looking at October from the window of information based decision function, it is usually a period of great expectation among the interest groups of main and stock market traders.
Against the panic in early October, it may be argued that Ebola is what we need as a welcome excuse of why there was so much panic in the market in October, but such excusable property is temporary reminds us of Leibniz advising Prussia to expel the Turks as excuse for poor economic low-down. In so far as the US market is concerned, the question is no longer if and whether a stock market crash is eminent, it is perhaps not eminently as we fear, perhaps the markets was only baying for additional data and results to decide its outcomes, most perhaps, we are over-sight on other ingredient in the October event with comparable emphasis on which of the rates; Interest Rates circulating with temperance with Banks and rate of money or Fund’s rate by the Feds. We completely discourage any sharp moves in October by Fund’s rate with near to regular sight on appreciation. Whereas the Reserve can exercise patience over the maturation of money, extensive circulation of currency can create new conditions for inflation. The five factors for determining the persuasive left and right actions of the Feds are mirrored in the speech of Boston Federal Reserve Governor, Rosenberg, that the information to force the hands of the Reserve as far too slim and the faith in interest rate and fund rate could be suggested as misplaced until additional studies and informational data is vested with new meaning meeting for the sudden and deciding events from Mid-September.
Historically, this period of the year is known for its conditions presaging major corrections in the market, for if we look at the events from 2008, 2004, and the recessions in 1990’s, or deciding economic blow-back from say Japan in 1987 and in Russia 1998, these blow-backs seemed to have always an Mid-September-October led economic corrections. This is not far from what is currently obtainable today, not that events from markets results posit new meaning and requirement in the stock-market every year, but we are within some meaning in holding our press on how the actions of the policy makers and managers at the highest level could pose some problems with the US market or Global economy leading to 2015. It can be argued that this periodic recycle of informed positions of companies and large cartels often means that the poison of a new actions dependent on these results may trigger some health problems of confidence. In common realities, all shedding of the Stock market should revert to underlying factor, some of which are buried in the course of daily business that they no longer matter saving for fundamental threshold like in October of most years.
October by its very present symptoms is not exactly unusual saving for some obvious signs of eminent changes and loss of momentum. Whereas some Octobers are usually corner stone for correction stepping in from the lowest performing month of Sept., we wonder at probability that this year concern may not be telling us too much. One such telling signs may be that we are witnessing a syndrome of middle to late Bernanke as Chairman who was left no choice but to bury as many small banks and institutions that faltered. There are no new leads for the markets does not mean the year will end of low note. The markets will recover as long the numbers do not utterly disappoint or impressions from practiced eyes on the market does not see enough red to spoke a panic. Panics happen all the time, but the concern has always been on the source of the panic leading to melt-downs in the markets.
Perhaps Bernanke need be placed the cold blanket of less checkered Big Bank operation despite the reforms initiated by Obama, it is the shift from Glass-Seagull Act on 1935 which separated Investment Banks from Commercial Banks to Gramm-Leach of 1999 pursuant to a tenable repel of the 1935 ruling that created the niche for Banks to emerge as a better than average players in US economy. The 1935 separation of Commercial Banks from Investment Banks had reasons which are now expired or which are no longer at ease with the Global market. The 1935 creation Gramm-Leach laws was created along other Securities and Social Security laws in the United States. By the age of Credit card created it was no longer enforceable. It was not always the case, in fact US prides as an economic institutions that is open to foreign as well local alternative investment, free from in all classes of respect - meaning that Big Corporations and Banks may work hand in globe in creating rules and regulations sufficient mainly to justify their returns however injurious to the Country – this is not far from operational dynamics of most nations. But to the extent that Small Banks and Investment Banks whose importance are literally overstated in recent times can be forced to succumb to hostile pressures from Commercial as well Investment Banks shroud the umbrella of American Banks especially under Bernanke.
The market seem to have reached a peak and may be sending signals of the deeper problems with the overall economy, may be showing some predilection towards sousing the old injuries from 2008 financial collapse, may be a breather from a very good run, may be adjusting to the new index introduction by the FEDs which emphasizes labor and employment, two of which has short-term application, but going by the departures of heavy dependent on Bank Stocks, it is an item of the future. In some measure, it may be argued that Obama stepping it up with crude-oil reactionary predicative measures – which may or may not be responsible for the low dive of Crude Oil prices, may have taken restrictive actions to welter-down the fast and furious crude oil prices that is pegged to EU and its correlation bias with inception of US dollars. The correlation between OPEC oil producing economies to other realities of economic center of gravity reverting to inflation and low ball with debt returns from fixed income earners in US. Low ball movement and debt recovery is a panic button, not for the general public and advertised interest, but clearly, the measured pace (Greenspan) or rate of information flow attributed to Arrow-Debreu ‘contingent claims’ (whereas rate of information as a normative for price fluctuation is a Mises school, defined by Hawerk of an entirely different school, championed by Hayek) may be considered appropriate to bust the momentum from August heading September. But the down-wards spiral in September received new fever from the future intent by the FEDs to taper-off their buying of Government Bonds, was exposed to additional pressures from safe oil, betting, and banking from the 2008 problems enduring 2014, and from all available information, it may be said that the market seemed to have spooked the instinct of the major and star players in key market areas, that there is an end to the long run beginning with a propensity towards higher home prices. Although the fees at all categories is still 0.5 it may easily mean that there is equilibrium from last year.
Periodically, the results before the end of year is well known and for that no mean surprises for a gain of 16% profit for Halliburton to towing a company’s bottom line implies Poisson for the end of year. The stated and eagerly awaited Halliburton results released some stranger. It is not in the interest of any November man (End of Year Crude Oil LOG) to petition for new bloods in the Industry, for so much can be done in months ahead, but on a long rack, it is Government policies that provision for staying power in these industries, a case that is hard to comprehend given the lobbyist group in Washington some with well rooted sponsorship from bigger and better American Corporations.
Plainly argued, it is natural for markets to breathe easy at this time, it is expected that momentum of trade to ease off a little bit and when this is the situation, there is always the atmosphere of what the companies are saying, more like the final results in major end of year companies such as Crude oil and the entirely Dow Jones International. For the required meaning of what lives us breathing with the International markets, the heavy impact of Crude oil on say for history on Russia in 1998, leads to many conclusions that in so far as efficient market systems are concerned, they are within the wherewithal of the International markets, no that they consume alpha-betas of would be time and date of exposed crude oil logging, but there is a correlation that it not easy to digest in context of a 10 pages, yet the correlations may yet differ and fulfill other purpose - for if it were always that market symptoms are usually a reason for other emergent properties in the market – some of the new reverses can be neglected.
But in terms like this, we are edge of the possibilities which is usually a period of unknowns and rest of the faults in the markets, what these shortfalls should mean pre-occupy our attention for the next foreseeable period. For instance, an unusual spike of crude oil prices may suggest that many Oil Companies are perhaps looking to meet advertised percentage for stakeholders and usually we notice more than normal kurtosis given year to year cycle. The tendency to hedge against like what we have in recent 2014, proves that the action from Federal Reserve could sponsor a run-off with Crude oil. It is not market theory that spikes in Crude oil prices results in spikes in inflation or fluctuation of the currency, which may or may not affect its future estimate hence a sharp escape to precious metals. It makes the argument that housing market, especially in recent times, could experience unusual departures from crude oil prices. Its outcome could in event affect Insurance Mortgage prices leading to deepening of the housing market crisis assuming they existed and then a bubble. This minimalist co-dependent or integral efficient market scenario suffers in real time, especially in today’s market. It leads to argument that in the past, we have seen housing bubble, may have seen prices rise led by crude oil and bond prices fall from FEDs Fund’s rate. But the rate at which the stock market may tend to burst was never linked to housing until fairly recently.
There are strategically placed reasons why the informed positions of those in the administration of policy and financial minutiae would be concerned with the sudden nose-dive in 2014, for if the concerns of those whose access to the market is taken into accounts here as principal actors of US and global financial, there are justifiable fears of Asset bubbles beginning from late 2013, and any hints of panic even a shift from momentum trading is miscarriage as an endgame or a final signal heralding new grounds. This process is believed to have long and suffered as one of the longest streak in American stock market history. In compiling the challenges posed from 2008, that it began somewhere in 2006, the major concerns where with the housing and the shortfalls in the principle areas for its impetus is the Sub-prime inertia that was not correlated to anything else in the market other than the advance behaviors of EU money functions as pointed by Geithner (one of his goods), which resulted from over-priced energy such as Crude oil and alternative energy. In Obama first years as President we would find the President return to fetch more help for energy from Congress and we would discover that some changes in Health and Insurance industries bestraddle the even match that was completely over-sight in 2005 (Goldman Sachs and after Henry Paulson’s quotes), through 2006 (when further witnessing by the Nouriel Roubini that subprime will burst leading to dangerously effects on the markets – probably did not use market collapse in didactic terms as due accredited to him) through the event horizons of 2008, that emphasis on crude oil price as a similitude on CPI hot numbers, that a pressure to welter down the effects by Fund’s rate and available fund from FEDS, could go the distance of existing some of toxic numbers and index from CPI from proving a frisson for the majority of the overall market.
It is hence an educated guess to promote that the plans have worked, but then, there are items from the 2008 incidents that we should endeavor to look into on no other account saving that of 23% spike in the general CPI index. This spike is so weighted on the market that the short spells from momentum driven trading to any factors within the broader leading indexes, would materialize a fortune of distrust not particularly led by private and small investors but for its sake a sound side-effects of the activities of a major institutional traders. In some reality from these bigger trading conglomerates could do to the markets, it can be approached from behind, and that is the extent to which US markets are been led and copied, sometimes cornered by Big Banks who without their knowing it are increasingly and redoubtably reliant on housing market. Housing market are one of the areas of economic barometers that navigate between Bond market and stock market are easily a victim of some of the more advances devices of the Big markets, how and to what extent the Insurance companies may have their day against their weighted and sometimes over-priced market such as US housing.
Coming from the more advantageous victories of the Obama administration and the people of the United States over deep financial alignment with once created GSE such as Fannie May and Freddie Mac, created to augment supply achieved with a consolidating correlation to demands for houses and Residential Mortgage Based Securities which are issued on the demands of both private and institutional traders, enacted some of the lesser known controversial laws that has almost without the Americans intervening created a vacuum system within US market. In command of the 1968 agreement, some of the so called profits from these GSE are not known to have been turned in to the state matters with some consideration that the sensitive quality of a market controlled by Banks to the arguments that they set as much they actively refrain from either of the markets – Wall street and Main street – arguably places the fire on the FEDs Reserve itself who has to operate with the majority of the index from the five factors but are constrained to only one major index, Bank Stocks, cannot purchase a higher value for the US market and the currency than what is obtainable from these Bank Stocks.
If the dependency ratio of US stock market to the actions of the States is compassed by the rate at which the FEDs operate, there is the intricately omitted force field in the market which both the Government and the Federal Reserve has little power to control. The permutations of the Banks which by historical ‘ascent of money’ remains store house for those who find confidence that their money could be safely returned when they need it, place their varying economic means on these banks. When they swell as they did in Europe in 2000s, the saturation funds at the disposal of a central organizing factor such as Central Bank (Common Wealth based) or in US Federal Reserve (de-facto world bank) as Continental market based Bank leading the Global macro, shores-up its currency by widening the credit or lending tree. These Central Banks are said to be expanding largely out of surplus, a momentum biased to manipulations when there are evidence of low liquidity or insolvency. There are other exercises which includes cutting down the rates at which Banks borrow from a Central or Federal Reserve, which allows more Banks to borrow with in adverted understanding that they in turn should look for small market and subprime markets where which allow the low lending window to expire on the economy and create in the process some wealth, especially for new and leading areas of the economy.
The expansion of the EURO was a defined statistical measure of this practice in reality, but when there are issues of interest rate as determined by the debts to earn ratio of many title holders in banks, banks look at other signs or signals from the Feds, when not available they avail their position by increasing interest rate posting that profit or the availability of resources for the lowest economic bottom lining. For argument regarding the spreads from money market and the problems of toxic assets, many banks have the tried hands in leveraging for the judicial befitting customers, some of whom rent the money to traders who experience bull’s market run as hence return the basket from convex bias or zero convexity of any stock which without history means, any period in any estimable bull market. This could not have been a problem at any time in the history of the world, for the natural weight of relying on these statistical ambiance is that they revert to making profit for money savers or for savings which when rented out become investment. In the past, and still as part of the common practice for local market markets and banks, the large swells of new accounts and CDO of the thinnest numbers and bottom line. Overall bank’s profit is largely argued from how well they encourage new accounts and limits of the application of what they call arbitrage in netting some of the profits from the markets. But this is useful when there are Investment Banks – which may Banks are – and when there are Commercial Banks – which a lot of banks are privy to.
To be clear on the serendipity of the two banking options, we are welcome to rehearse that stock prices are usually antiquated by Bond market price, which they inversely correlate. Promoting a labored point from media houses about the conscriptions on equities is a confidence re-assuring exercise, for as much as all commercial property is tagged with limits of exponential value to a statistical bell weather or to a rate that determines from secondary perspective what happens to the Mortgage rate and are accrued from Main Street. In compromising place is what is happening to the Investment side of Banking, where activities of the Stock market is determinative factor. These factors are monitored for over-speeding by financial institutions and regulators FMOC and FEDs but when the Banks can operate these ends of the markets, they have more than a direct decision function at the rate at which the house rises and falls…especially in US.
But here’s why Basel I for instance proves its meaning in the Stock Market today and why it reverts to Banking as least for a start. Its rules renders the risk from precious metals to be zero, reduced it to activity of the buyer-seller institutional to private trusteeship and urn, for its prices and exclusive interest does not conform with what may be considered common market conditions and therefore is considered a separate risk which the creation of Arbitrage rule or Recourse Rules for fat tailed away and way out there Investment plus risk > exposures. It is convertible on the weight of lefty’s consideration of returns of full capacity investment, that is real estate or construction going by Bureau of Labor Statistic which show signs of funk when the completed houses or complex does not pursue an index of reserved ownership or renting. Of course the problem of Population is taking into account, at least between labor and new jobs to displacement or census population in spite of the illegal cases. It is the general rule that most Banks in US – at least those in Commercial interest seek to place 8 % of every 100 dollars within the Bank’s coffers. But in terms of houses, the lending takes a dive, from 8 dollars keep of every 100 dollars made available to somewhere around the half-life or 50% prospective of every 1 dollar loaned from these banks. By calculations of the current balance retrievable, we look at 100 multiplied 0.8 by half-life (0.5) should literally produce a reasonableness of Taylor 4% as a line or factor of inflation or debt since the money for erecting these houses are usually borrowed. If the rates are maintained, advanced decline lines can be based from other factors from this 4% inflationary gaps, implying that Taylors rule is only functional when there are slight deviations from a given momentum or when there are evidence of a market or economy profiting more than it should, or when it is overheat.
The answer is yes and no. Yes, because the fall was quite sudden and took away some expectations from Crude Oil appreciation. No, the market at this point is experiencing problems of new leads. New leads are usually an exit strategy for stock market experiencing a Plateau. Lack of leads is usually a cornerstone or foot-mart for economic plateau or peak, for instance the boom days leading to the end of the line for the US Stock market in the 20’s, where the numbers did not reflect any new surprises, Irving Fisher responded that the US markets have gone as far as it could, that it has reached a permanent plateau. What he did not mention then as well now is that the only forward for the markets was essentially downwards. The effects were naturally unprecedented and we become after many decades students of the era where structural decay and oligarchy of many rich few created signs of market adjustment that was first and fore-mostly cornered by the crème of Investment. The language of investment and commercial lending couldn’t have caused the ripple effects in the 20’s, let alone the compulsory end of Benjamin Strong Fed’s buying or tapering off which netted a spike in Insurance and precious metals, all allowed the porosity of internal markets to reach the US, for if Interest rate which was at all-time low and what was the Fund’s rate as well. The challenge was how to simultaneously withdraw from buying, raise interest to redistribute the cash-call, increase the Securities available without effectively creating the problems of Inflation. All of that was to be accomplished without creating panic. Unlike the years after the Brentwood and in this America, since 1971, the lack of scalable interest rate in the 20’s, the absence of international market to peg the dollars made it impossible for the right course of procedure under these circumstances of low interest rate, low Fund’s rate, FED’s tapering and the Interbank lending, to take without bursting the momentum already built in the market.
The attempt at emphasizing interest rate was perhaps the right course of action by the (1929) FEDs, for we can now suggest that based on the scale back of this current Federal Reserve (2014) or contractions to aide a dollar’s stability and health, emphasis was placed on the rate with the most reasonable estimate and measured pace with crude oil rate as correlating. The shocks from suppressed International market (20 countries and mostly Third World), and Third world markets most about 30 countries including some of the International, hints on the rapid rate of dollar appreciation which took the States by surprise and hence a reaction. But here, the problems of the 2000’s which allowed Euro to swamp the US was through Arab dollars from crude oil, where some of the Banks were nearing capacity permitted by practice which means that after a threshold is reached, they can off-load through lending and mainly in unsecured business environment, which spooks commodity give CPI Index as we discover, given also the transfer of actions from momentum based trading to more fundamentals trading without creating the artificial panic that lead others to further misdiagnose the market.
A permanent economic plateau can be reached in the context of two major stimuli, when there is lack of (1) International Scalable alternative with respect to other countries of the same common market category such as US trade partners of Europe following the First World War. This economic litmus has one major characteristics – it is characterized by lack of market placement of Government Bonds and Obligation reading from the apparent leaning off of the FEDs consumptive ‘Godzilla’ behavior for instance buying up every available securities from the treasuries, which stimulate prices (short term prices) given the slow and financial sure go between Banks and Banks Stock and financial Cartels such as a Federal Reserve or Central Bank and their 13/14; 2 pyramid ratio, which places the bonds in the money at least Inflation adjusted/Inflation protected Bonds. This means that market alternative item (for instance Atl-A which in short and tedious refers to a number more than 660 FICO associated with scalable unsecured…or material agents of bifurcation or correlation; Crude oil, precious metals, etc, or similar alternative commodity markets urns which may have expanded to reasonable bullish or nearly bear market like the GOMEX in receding two years or more, may functionally lean towards International markets with enough funk on its tail on a local currency where these precious metal earns the stripes of being the alternative to poor returns of Debt or loss of confidence on say the dollars – which are sometimes arbitrarily based on dollars or local currency appreciation – forcing Americans to remove their stake in Stock Market or from Banks savings to precious metals until the weather tames.
(2) The second litmus test of the problems of Plateau in any economy is the evidence of stagflation as opposed to deflation. We at a point where the Stagflation is not a current discourse, but there are concerns from over-sea market which should exorcise the stagflation in US given the export of Inflation to other parts of the Global Macro. There is steady returns of perishable products, but if all of us easily agree that this is the case, then there is no point for Economic Study and market forecast despite the numbers. The question that should not be asked is if we have reached Stagflation under the current market conditions? Given that Stagflation generates low aggregate demands and hence losses stemming from decline in prices for instance in Dallas Rail Road Station, is it possible to demarcate between a long and suffering stagflation or the next reality of weak economic measures presaging the loss of faith and an end of year stagflation? Or is it a question of irrationality stemming from clever wait and see strategy which may or may not reflect fears in the market, which only if not solely based on best positions leading to the new 2015 financial.
It looks like 2015 is a year of new realities, but these are general new realities and therefore offers little surprises or set-backs. For if and when we arrange all properties responsible for stagflation in any market in context of descending order and by history, there is the evidence that all symptoms tend to collapse or converge into one thesis; that of leads. Disabuse your minds about the collapse of the Sub-prime market, about the spreads of money-market going at the rate of Crude Oil spreads, for sure Sub-prime over 600 FICO in recent measure do not warrant over-sight, does not mean they are negligible and it can’t argued that anything below 660 FICO scores which Bank of America used to select who they are working it, or that Nouriel Roubini’s interpolation with collapse of Sub-prime as capacitance for Stock market burst means that this is constant item in boom and burst. He may or may not have hastened the deepening of Sub-prime in 2008, for almost at the same time that his concerns were made public, Markit ABX even from a year earlier in 2005, were reporting low numbers in Sub-prime market.
Rehearsed from the length of debt returns, to the point of healthy Labor numbers even in 2008, there is a problem we became part of, and that problem was really from the Banking Sector. It never should matter that the role of Government in the market especially in GSE was a controlling factor, the GSE has not been fully accounted for as an instrument in any full and marginal theory of the market crashes, that been said, we have had major recessions from the last great depression until now, some of it requires action as subtle as those the FEDs provisions for, but there are serious ingredients of Government sponsored programs whose relevance are no longer at ease, whose presence still determines the operational dynamics of major players in US markets. GSE since its inception in 1968 have helped many Americans out of poverty, its rate of control expanded, to the largest possible extent that from a Credit Union based property assessment and real estate acquisition show a beta differential of 5 bases point.
It took from here a two year or 18 month plotting of the events of 2008, that as expected from the large reserves of the profits from this year and last, there is additional faith in the business in the world of Bank and bank operation.
This is not a measure volume that is abnormally….This Literally, GSE were not abnormally wide with their activity since 80’s, but the trend from all perception enlarged so much from the 1991 almost simultaneously with changes that were taking place in US, but took a very fatal spike from 1999 when the Gramm-Leach-Bliley repealing of 1935 Glass-Steagall was fully effective. Had It leads that Roubini’s concerns were not unfounded, but it looks that the charts that were available to the public were charts created the…..had the public seem the GSE charts from 1999, it could have done something to force banks from taking too much actions out of the general Americans, the emphasis or the difference we understand from the default rate of US Credit Union and associated unions, point that these engines directly concerned with labor, employment, fixed income, and with Bureau of Labor Statistics were more directly relevant to US market and its economy because of the fundamental nature of their lending. It does not mean that the general buying public engaging in more than one real estate or in its commercial entity, cannot take umbrage under the Credit Union – they could going at a rate of job placement and if they could, they are not barred from more than one building or subjected to only one real estate property.
It leads to the very limits of the measure that both sides of the market cannot be handed over to the bank. That the creation of the two handed ‘Godzilla’ Banks was either to put an end to the Federal Reserve System which is pronuclear in its activity and in interpreting US markets from Indexes and the from the Seasons and cycles, or that the Big Banks as they become are to blocked from
Are there new leads in the day to day transactions and are the experts expecting a Cartel of the munificence such as Federal Reserve or premier Government Agencies including Courts to assume a position with some original matters directly affected to the markets. From the bigger pictures of the roles of International Markets and the Governing dynamics of an economic sun (US) and its major satellites (China, India, Canada, to extent Mexico), the precious metals of world markets and the attempts are ‘taming the inflation’ through the dollars, we wonder if the Conditions in this October qualifies for anything more than a cycle? Here it we might appropriate to suggest that lack of momentum does not mean a market appreciation has come to an end, does not transfer to the possibility that a crash its eminent, for all we know, the problem of stock market as a litmus for the broader economic vintage, warrant discourses on what the economy is essentially saying.
Compassing John Taylor’s factor 4 is really the reaction that can be expected from a cutting of FEDs funds rate, which reverts to persuasion to a priced crude oil or increase in the total price for done oil and usually covering a 3 months period with price persuasion fluctuating the 2 week buy in. This particular case usually happens when there are specific or estimated Federal Reserve contraction, or in the circumstance in a year such as 2014, where the Funds rate beginning sometime in August is reduced to accommodate a momentum from Crude oil with positive propensity towards a year end, forces a fluctuation till sometime in Mid-September, then the market normalizes or forces a correction in October. Natural by the end of August, Crude Oil market is over so also Forex, we look at the conditions of a glut system when we have excess capacity maintained from savings in general investment categories in many areas of world market, or its lack thereof in US, when like we experience in 2014, that there is no real answer to material shift of emphasis on dollars placement and Investment in the United States.
The case seem to jive well with the Chinese Yuan appreciating to 5 Reminbi (RBM) to I dollar. It has moved from 13 yuan to 7 yuan to dollars and following a decade of expansion it attempted to moderation at 6 RMB to a dollar dependent (serious dependent) on Banks operating out from Hong Kong, who’s proof compels a 5 yuan to 1 dollar for this principle year exposing China steep in contraction on one hand and expansion of its biggest banks. This shift natural gives weight of American Super economy scenario, inculcating that the production frontiers of China has more car-pooling than US even at 5 yuan for a dollar, with the width of the global market expanding from the Middle – production – there is a tendency towards profitable Chinese and Asia outlook. The total recall on the dollars towards year end, particularly when recurrent expenditure from similar time setting as from last year, would have seen us buy low on Asia and buy low on Asia, then revert to US as we proceed. But unlike previous years, the money can face a possibility of being trapped oversea on a premise of a cellular and uncertain money functions of say a Chinese yuan to Dollars leading to next year.
As at September 2014 the minds of many people is that the market is superficially gentrified for hedge hunting experts, there is inadequate bottom-line or cases of thin savings from local CDOs, there is a matter of TAF or Term Auction facility which magnifies the new financial assumptions by GSE, and it created fears that they did not bury it going at the rate well known from Greenspan and Bernanke era, instituted in 1968 which literally gave some freehand to MBS not covered or salvaged by the late passé’ on interest rate reductions, to remain outside the auction and acquisition territorial of super shadow and private banking, which was argued () to have given new and inflexible impetus to house pricing, pricing to the degree that a correlation between crude oil prices, shadow banking and house prices – discounting VAR – could not reflect the actual condition of US market in spite of a late academic reversal to Fabricant, Easterlie, and perhaps Kuznet, who emphasized employment and labor with due respect to population census to manufacturing although in Kuznet there is an encompassing of Turner’s ‘end of frontiers’ – hence to Production - a similar argument based on the shift in system dynamics as attributed to Schumpeter but largely stating that shifts from say ‘iron and steel’ to steel industries is equally a BLS Inventory as output – after Kuznet, gives us frame of the structural weight of the economy.
In the case of logs and crude oil, the relative response of slow money from private investors whose rate of debt return as described by Taylor is comparable to the margins of expectation, LIBOR 3-months – OIS 3 months, given a reasonableness of expectations or health of debt or returns of investment and in Commercial terms, a frame of the reasonableness of funding from Well-Funded Banking Institution with 2 percent (Commercial) risk over-head to High-Funded Banks (Investment) with 1.8 slush, with spare capacity of Overnight lending from Federal Reserve with estimable or digital (term) ‘collateral’ on the 3-month window, or as determined by Banks adequacy of funds – at least within a 3-months window – in order to absorb shocks from any hints of possible Fed’s action or what can classified as TAF in real time borrowing of money we don’t already have. So keeping interest rate low has been argued as useful for expanding the spending option of the buying citizen (aggregate demand), but in late transition from low factor of interest rate in its spiking on house prices to a reasonableness of Fed Funds shedding or appreciating, there are hints of heavy lifting from bigger banks since actions by the Government could have especially impact on Crude oil with propensity to appreciate, could roil savings given the built-in bias for price and market function or simply inflation, hence a dash to safe haven such as precious stones even when the fears of dollar fluctuation is not confirmed and necessary, or to other facilities away from Banking and mutual funds within the probability of Government’s action or in this case, the Obama administration, to take actions that mitigates on inflation (deflating the Inflationary pressure; deflation) by not creating money through M2 but borrowing through debt line.
Taylor factor from negative balance sheet is not very effective, may have limited application and has no real or direct causality for current shocks and near panic from lack of leads or glut or exhaustion in a long bullish market 2014, but it’s a natural factor when we look at the diminishing power of cutting fund’s rate as exercised on Thursday, by the classic addition of financial incentive to Banks on Thursday, by Central Bank of England willing to acquire more securities and government bonds from Monday, a saturation that leaves no excuses as to devises implied here, that the advanced psychology of money factors in the reactionary tendencies of the general securities club which for the Americans and their invested compeers remained outside the perimeters of the general public. By the consequent day and Friday, all respectful money houses in the world readjusted to the reliquary of a Friday’s sharp returns to gain.
Even at a rate showing returns slightly away from estimates and seasonal cycle, there is usually an buying actions which may be called money creation as in M2 cases, but official and unofficial buying if not necessarily holding could temporarily moderate any signs of (0.5 beta) estimates away from original and expected daily shifts in crude oil markets for October, granting some concerns that instability in the Middle East is as enduring the tinkering of Crude oil. Excess capacity and boast of no consequence, the root carnal seem to travel along the imperious actions of the Federal Reserve who cannot be blamed for
But the VAR is easily discounted given Real Housing similar cushion as Precious metals, but the differences especially for VAR misaligned categories of convertible arbitrage, you may need the GSE; Fannie Mae, Sallie, and MBS to show relative proof that the banks renting under their vises are fully operational to the management degree that a recall of exposure could be generated through a TARF basic coverage, at least from the point of concession of foreign dominator to US Banks and/or ETF basics to US investment from both private and institutional money houses heading elsewhere (Third Tier markets in International or Third World economies, or government covered external Bonds whose major returns are through the exchange prairie and the guarantee of currency depression in spite of the in-money cover) or returning from foreign lateral (currency rotation), makes it impossible to discriminate between the operational lending of Investment side of the Banks and the Commercial side of the same Banks which some believe guarantees some levels of profit delivered through the composite available to deep resources of the Banks and index which transits to gains and further estimate of debt to earn and hence a bottom-line, either through the arbitrage or through existing or pre-existing banks stocks, whereas debt recovery becomes a restive case for Federal Cartels like the Reserve to force an adjustment to stability through M1 and M2, particular M2 liquid stated money injections.
Here’s the trick and why there was much problems in 2008 stemming chiefly from Investment Banks and why there is need to understand the curious response of some major money houses in the world given the newer concerns for this October. In 2008, as the case will show, many of the estates and loans made through Commercial lenders were said by Jeffrey Friedman to have met the Recourse Rules given equitable Aaa to AAA rating, meaning that the market conditions was essentially healthy. But these Commercial groups and Arbitrage rules were not saved from the problems of Investment Banks, for sure, several banks in US where considered too big to fail under the GSE 1968 provisions of the Government, cornered by the Feds and its Big Banks, commends itself to the point of being able to welter between Federal Reserves and GSE, between AIG and the MBS, with sparing from FDIC, compromised the length and breadth of the Big Banks, to the point that if we argue from Credit stand back, that stand-alone/unsecured loans farmed out to Small businesses by these Banks were not the root carnal of the crash in 2008, that it was the failure of the Banking Committee and Federal Reserve who were starved of actions from Investment Banks that over-expanded in 2000’s housing booms beginning corrigenda from 1999 Gram-Leach-B probationary repealing of Glass-Steagall 1935, that created the spiral from leverages in 2008.
Define Subprime, what a beggar is believed to already have as basis of probably embarkation of loan, or at least, what the borrower has on top of the money not already earned. It could follow that subprime loans are by its pyramid ridden to many aspects of lending and credit certiorari, surmising that one functional credit facility for any authored loan is equal to another. In English languages it is called ‘origination of the loans’ based in part on estimable prime-proof collateral for instance Credit based on past record as controlling influence on the limits of expectations in money markets. Large spreads of money-markets has a potentiality of widening the problems of debt given the inflation that it creates, and as far the pressures are concerned, they serve several purposes, one is the irrational reaction of the investment crowd leading to further deepen the problems, the other is something like it, it depresses Asset Value or create the conditions for Asset value depression which reverts to high insurance coverages also delivered by Goldman Sachs. In common and real time market conditions for gauging the relationship between prices and coupons as delivered from Interbank lending for instance (LIBOR or unsecured; that is loans based not so much of collaterals but on Securities and direct ratio of total bank worth and levels of exposure or returns or individual worth to their houses) which is agreed in real time to be placed sometime between the 240 basis point drop on an Asset based loans.
For Coupons or primitive IOU based in part on ABS (Asset Based Securities), you are likely to consider the effects of the conditions between an index drop in housing price or stock market value of Asset based Securities (housing burst) and the rise in Insurance coverage for these houses which Banks also provisions for. In formal account, the Investment Banks can indulge either side of the market, can artificially create a misalignment of well-placed market coupons with the 200 index mark as bantam or bait for…, but by shifting the institutional resources at their disposal from sub-prime and unsecured loans market to Insurance, they force the housing market to take very quick and deliberate nose-dive, to the point that gaps for Coupons becomes a wager that house prices would fall or that the market would crash given the momentum it took from the Sub-prime. It is said that the collapse of the 2008 financial was due to problems of sub-prime loans, that the sub-prime was directly responsible for the poor performance of some of the banks, who began in more casual formats to freeze asset and hold their lending to other Banks in an Interbank lending act, further widening the gaps for futures returns or estimates in less three weeks in August and September of 2008.
Lehman Brothers who were one of the Sub-prime lenders was simply refused lending by other Banks and by the Feds, and like Bear Stearns, these two parties were at each other neck including Goldman Sachs, and each in their own devices were financing a market they were hoping will crash, as such when there is a received dividend for arranging loans that they were not looking to account, going at the instance that the US Bank Act eroded the depositors restrain on the Banks’ sale of Stocks and Banks Shares and the Securities Act released the share-holder’s restrain of securities execution by the CEO of top bosses. Compared from either side of the coin, it the 2008 was not an accident, it was a deliberate calculation which began with a few forces at the top pushing the limits of Stock market activity, till they are forced into some kind of defense which they also created. This was perhaps where Obama and his company was in 2008 through 2010, whereas in previous eras when such a thing occurred there is always the redemption from the Federal Reserve but with competition at the local and small levels and the competition from Shadow Banking and from Europe, adding the similar challenges faced by Americans in the early 80’s with Japan but now with China and other BRIC nations, there is local attention towards high priced building and in this case, Houses that normally sold for $200 thousand could be financed at $500 thousand and it came down easier to acquisition of houses through flipping, creating a credit spiral that could not withstand any shift in Crude oil with Fed Rate at its lowest and almost negative, and under Bernanke, the interest rate took its leftist to the land of Zero or from administrative cost, negative of Interest rate as well.
This was operating from negative balance sheet, would not have mattered saving that the sub-prime markets were already showing signs of cracking, largely for the fact that there was uneven distribution of investment or distribution of wealth resources by those who earned the highest. All the focus was on the bipolar (bifurcation) between crude oil and houses, which were funded by large banks with cartels of industries directly responsive to the general public. The republican arguments has been made on the power of large conglomerate in creating jobs, the Democrats made similar argument using the Government and Taxes as better engine for momentum. Either side may have only won the attention of the public, for as much as know, those who ended using these money loaned out for general good as bog corporations, including the Pharma and health care and all the long tail (self-payee with time not unlike treasury equal duration of one’s life or just duration, secured) as opposed fat tails of health insurance torpedo the private but still cartel level insurance companies (institutional based or adjusted, not unlike the investment banks equal the duration of the quoted term, whereas the companies can pick and choose who they wanted to help, it was the secured insurance that might have garnered the wherewithal to make unsecured term auction without market level – mark-to-market papers or equities depending on the either side of the eventual write-down, or unadjusted spike in prices - dependent on the Reserves and essentially Republican) but all counting on the collapse of the material industry or levels of exigencies in individual or private industries that might create additional price brackets for instance short falls in equity house prices may lead to other demands of Insurance trances or debt.
Looking at the case by case analysis on the debt secured from subprime and why the problems of Investment Banks seem to take adequate roots in Commercial Banking littered with indirect analysis between the actions of the State and original definitions of Act of God (nature’s puerile justifying spending by Insurance companies) on in cases of crowd-funding with individual payee to meet higher requirement. We are entitled to compare the practice and circumstances perpetrated by these Insurance Banks in betting against the Subprime hence Asset Bubbles, that it takes center stage from the aspect of Insurance Companies whose existence with or without Sub-prime banking essentially wrecked Commercial banks in USA. There is a diminishment of the compliment reliability of Commercial Banks practice and ability of the stocks and debt to perform along the lines of Insurance companies whose profit in comparable to long term bonds of the Government or essentially long term, earn all the war in Short terms with high activity to earning’s ratio, thereby shifting does to Commercial Banks. That as much the problems of the 2008 was essentially Investment Bank related, it was through these private bets taken and prepackaged as Insurance financial products and coupons by Investment Banks on Commercial Banks securities - which rely on sub-prime or create Triple A credit through that the market - that affect Commercial banks, that what happened in one area of Banking affects the other leading to panic in spite of their success and return rate.
It is possible to put an end to this kinds of arrangement by easing away small banks which were damaged through a largely partisan Insurance companies, some of which claimed to have reach the maximum. The Subprime market has fallen below 453 points which was very extra-ordinary for housing markets creating a very large basket for Insurance companies and Banks that ended up buying other Banks as part of the derivative in risk management, finance, and Banking, had their field day in insurance. This play book was said to have taken away what was left of the Securities secured loans which took an active enhancing from the crude oil spike in the 2000s, whereas we still remember the Federal Reserve made it clear that it was cutting the Funds rate through a measured pace, it still allowed oil prices to percolate leading to money-market spreads over houses which were easily financed or financed with thin collateral outfit until there was appreciation of oil prices. The starve the Banks of excess paper currency littered in many parts of a regional balance sheet, there is an integration of some of the
When we recall from this is the case like we witnessed in 2008 from around 2006 through 2007, Goldman Sachs who are always guilty of the Credit default frauds, essentially baited on the nose dive of the housing market and sub-prime market and in spite of releasing the money to enhance the list of sub-prime lenders, it widened by additional acquisition of the….that kept the national moratorium on Banks at economic arm’s length until fecund by the three months lack of principle debt balance sheet of the….It proved a shock that provided the incubus for emotional kamikaze of 2008. The end would not have mattered for Commercial Banks in spite of healthy barometer for lending, which fostered in the timeliest light of the 2000s died a sudden death on the ‘shroud’ one the banks of two meaning an too powerful. It may be said the reasons for eliminating these Investment Banks resulted from the attempts at reducing the fleecing of Commercial banks and markets, but Fed Reserve has not let the lid off the Securities through buying all bonds necessary. Put differently, there is a long term connection to short term if Assets are taken into context, whereas short-term is a determinant factor for the future, it is inversely correlated. This can prove dangerous if not taken seriously as we discover from 2014, that following a long run, the shift from momentum or day to day trading on daily information to accumulation of information (paper) and trading based on results has gradually and already taken place.
We are no longer at the short-term momentum pre-disposed to financial agility and exit and entrance placement, markets now executed by soft-ware and accompany accompany day-trading or actions from the floor when there are active reasons to continue with the market. As they year ends, we are looking at something more fundamental, its reflects on some of results from major houses, that for instance total savings and balance sheet, to what happens to a stock three months from hereon or preceding, or the shift from the rapid fire investment which are sure and sustained with Global macro however damaging it is to American market and which happens all the time - to fundamental investment based primarily on quotas, on over-head term quotes, on what to Banks and their Subprime and longer than and clearly, they are hints of likely slow-go which presages housing burst and those who prey on it from the same banks or counter-party associated, increases of their the price of the Insurance as obtained through Coupon (mark-to-market) their suspicions of nose-dive further perpetuated by departure in single days or over-three weeks, experience when there are hints of a housing depreciation from previous high prices.
Such that prices for instance, stock prices (short term), are inversely proportional to bond (long term), which is why Insurance Companies (long term) toe the lines of advance decline and derivative index such as ABX, which are set for long term, but in terms of the actions of the Vega and Kurtosis from an overheat market, it breaches a breathing point like we experience in 2014, it forces momentum from the market like we experience in Mid-September of 2008, when for all the efforts put by the larger trading public, Dow Jones Industrial fell by 502 points. This was not the confirmation that traders were looking for but it widened the spread in other money-markets, it was not an isolated or widowed event, rather the end the was evident in US Housing market was gradually realm, it was signal that the inability of the banks to perform without over-pricing real estate, especially from the market that GSE has evident hands on, and since they have the largest hold on American houses followed by similar RMBS, their command of the market is understated. These GSEs borrow from the FEDs through banks and their operational distribution is
The Banks gradually recollect in time for a future and possible burst on Assets which Lawrence Summers hinted on earlier this year. It would have also suggested that he may have been privy to information that Roubini collected a few years ago, as if some needed to be done as Obama did to forestall deepening crisis with one area of US market. Insurance for new mortgages will likely pick up and from derivative stand point, while at the same poaching on each other’s Debt gaps and attempt at freezing from here-on to the next possible months will likely dominate US markets. Dubiously encourages Investment Portfolio Banks such as a Goldman Sachs to place faith in tranches and debts by removing some of their prized paper assets from a sub-prime market, encouraging a further erosion and decline in over-heated housing market. Asset priced erosion of value…
For the apparent lack of new leads and the consequences of buying too long and too large of federal obligations, the litmus to test the effects of a growing Big and Oversized Banks in US economy following the 2008 financial challenges remained a poor stimulus. The Advance decline lines may have being breached in the last 6 years without consequence and without our fore-knowledge, either does it or would have said to have really mattered, yet the test disappeared under the weight of new requirement and was probably buried from lack of early show or what is no show with the disappearing of small banks who for all the shadow banking and thin trading, easily lifts the lid on the problems of debt and securities recoveries couched in the Banking. Lack of separation of Bank activities makes it seem that the role of the Federal Reserve is under scrutiny and requires some knife. We should sacrifice the Federal Reserve completely if the US Banks are to be trusted as they did under Bernanke with both Investment and Commercial Banks. The Federal Reserve will also have no purpose going at the rate of Funds which they manufacture bearing on the reaction from the US Government and the growing power of GSEs. The alternative consideration would be an understanding that no Bank is sufficient enough with its capital to actively conduct Investment Banking on one hand and Commercial banking at the same time, that in a business environment like those of these United States, private ownership of houses and RMBS are large percentage house holders. These effects when spread on case by case and individual to individual bases, manages to spread the risk or reduce the collectively placed on any momentum.
Hopkins (2009) pointed out that “had banks built stronger reserves during the boom years, they would not need to reserve as much now, and they would be in a stronger position to support economic growth.” (C/c Friedman 2011). The argument rendered in Hopkins’ is not sufficient to topple the fact that a growth from a low interest rate only leads from real estate and housing. It is also not sufficient in comparing period of low interest rate to spikes in house prices, although from the response to a certain Frank Raines of the Fannie Mae, there is was large percentage profit and in-bound acquisition of more houses through the low interest rate scheme. It is not sufficient to bury the possibilities that low interest leads to higher CPI fluctuation whose annualized correction is to theme of 25% - 20% on the numbers on the Consumer Price Index. We should neatly escape the clutter in some of the reductionist argument in Friedman that subprime can be said to have given impetus to the down-spiral in 2008, for if that was the case, housing bubbles and short-falls in subprime or low numbers in mortgage funds like what the 2007, where RMBS was over 400 billion in 2007, and later in 2008 has fallen to 11 billion dollars, would always and almost result to collapse of the stock market and a financial meltdown.
But this is not the case, since short-falls in houses or housing recession has taken place several times in US without breaking the back of the market. It is the argument of this author that they seem almost a sensation that markets rise and fall and there are cycles and seasons which it toes, some in years, some in months, some in weeks, but most of the Seasons are year to year among other biases. This author believes that all these economic seasons and cycles are products of a demand and supply that they mainly apply to irrational side of the market. This author believes that the idea of wants and needs reflecting the supply and demand side of the market is probably true and can be manipulated. The argument about the future of the market or positive economics may be complicated with references to price without history that is always approaching from a negative balance sheet as investment compares with debt – depending on investment from savings.
What is lacking is the role that these Banks played since 1999 when they were in all polar positions to persuade both Investment and Commercial Banks to become sensitive to market reactions, that from the example from 1986 when majority of profits the Bank’s profits from houses were limited to 20%, but 1990’s, housing markets was generating 40% of US Bank’s profit, and up to the 2000’s the numbers were brushing 50% and in many cases like the Investment Banks and the shifts of risk obligations through Swaps, it was the only sources of major profit.
From what is available to us in economic indicators, we have to assume incognito that the shift of profit from a broad investment basket including all known and perceived financial ‘frontiers’ and actual sources of income or funding, housing market taking more than its fair share of the general income class of all categories of investment, suggest that the US market was far from equilibrium, that in reality, housing market were entering the avenues of profit expected from other industries, that the economy was either running too quick on one industry or was bending too close to one aspect of the general market. It is called one-crop profit margin, like we may cited elsewhere, there are several differences between a country like Nigeria (International Market under the new title MINT) and World Order such as United States. That these countries may have a volume that may show disparity which the weight of Insurance and market capacity cannot justify, that the currencies rate of these countries may not be the best estimate of the quality to quantity ratio separating real-time market environment, but US is far more stable, far more proficient, and essentially effective with standing history running to a 150 years, that it looks like US on paper is so much better than Nigeria. But this is not really the case. In common sense, the major difference and perhaps the root causality between US or any First world and an International Market and perhaps due for a transition bracket to Second World Mexico, is that International markets such as Nigeria or Turkey rely on a major source of income for Global export market, and the chief source of this income is mainly added some other source of income which are mainly naturally resources.
But as for US, there are several aspects of its economy, several sources of national and local revenue, that it is economic and not necessarily market definition to brag that housing market could have at least brought the Banks and other private Americans any more wealth and profits any more than 10% for commercial and financial entities and perhaps 20-30% for other private scoring agencies and individual Americans. If these American banks whose output or limits within the functions of the market and the decision Chi square is prompted from the aspect of Arrow and Debreu functions of increasingly utility to information, then we might suggest that 80% hugging of US Stock market by Banks and Financial institutions and over 50% resources and sources of revenue to have come from houses, means that 80% weight of the stock market from institutional traders across the board achieved their profit through 50% of the time in housing, through mortgage back acquisition and resale, through buying from Government houses which are acquired for nothing, would 80 over 50 of 100 of every Chi (x) profit from all industries is close to the rate of money made by banks in the overall market in relation to other aspects of US market over the same period of time 1999 – 2008. The US economy was closer to the an International Market, perhaps closer to Mexican economy in quality and in actual outfit, for if there was profit from Crude oil, housing market superseded it….over the same time. The problem of fast and furious housing numbers was the lack of adequate correlation to other industries within the same, and the gap simply reverted to the understanding that low interest rate did not curb inflation, it sifted from other CPI to one major event, which was housing.
US may have seen some new frontier sharing and social technology, such as the Googles, the Facebook, the Yahoo adding other advancement with foreign registered Samsung, etc., it may have gotten a dose of health from consumer markets such as Walmart, Duane Reade, Best Buy, Home Depot, etc., but then it was behaving to some extent like an International Market (better term would be a third world market through its housing numbers which nowhere justified by the markets, which however retained the crown of world markets since the currency remained low and inflation in reasonable areas not over stated) whereas China with general distribution of its sources of income, was in many ways the one example of Super economy which it exactly wasn’t. The major problem with a-one crop economy or progressive economies bound by its third-tier or in the case of an actual third world, bound to its nationally syndicated conglomerate such as an early version of a General Electric or General Motors with the nations being the highest and loudest shareholders, or an economy where only one aspect of its industries is getting all the actions – for instance housing responsible for much of revenue over the same decades by Banks, may suggest that wealth and investment grade resources from Mexico since 1993 and over the same period of time, equally adjusted to high and recurrent prices in the new mortgage license and buildings.
That efforts placed on this one significant area of grow-economy buried others, created the blanket reactions that what happens to the sub-prime – the highest source of financial reconnoiter, would more than necessarily affect the rest of the Global market, indicating that as long revenue is packed though housing, and house prices rising almost exponential in spite of cuvee for 30-year mortgage, there will always be the problems of a bell-weather on one hand, problems of inflation on any other hand, problems of a healthy economy which could effectively show itself in the total resources available and its allocation leading to deficiency in courage, problems of confidence in the overall economy and problems of frontiers and leads. Who said you have to rise very quickly in our markets? Who said we have to be very slow? Some lessons may be said to have been learned for hot and pretzel decade with houses in the 2000s, much of these houses were overpriced, whereas population sensitive areas of US and its rising new cities such as Austin or Phoenix will adjust to high demands for houses, but an equal and concentrated efforts in building houses in a near regional equilibrium could save these cities and the rest of country from risk which here may be associated with over-exposure.
The Chief ingredient of one-crop market is risk and fragility, it could easily crack from any form of shocks to its system especially when private wealth is intricately woven into market sources of revenue (income) such as Housing. Could it said that Greenspan argument concerning the impact of housing bubble on stock market bubble to ‘rather a large sketch’ was ridden to error given the oversight on the impact of low interest rate as we have in 2014, and the inverse CPI indexing leading out through the houses, that these were detrimental to the declining world mortgage securities….
On a general note, Greenspan was probably right about the poor correlation between housing market and the stock market bubbles, but when Janet Yellen – the current Federal Reserve Chairperson – pointed to a bestraddle US economy which was damaged, it may seem that she was not looking at it from the leftist power control of our economic existence through the Banks, she was pointing out that there are cases of equilibrium in US market which has further eroded quality of life. The case is perhaps old and is not justified anywhere else saying when they concern some of the assumptions in the latest economic numbers.
Fannie MAE and Freddie Mac profits multiplied, with Banks controlling what the Government did at one hand and what and who makes investment through over-indulgent IPO standards, they easily cornered the market without our knowing it, a practice that is perhaps front and center on what Bank of England always confer with major banks before setting a rate. It is interesting that China entered world market in 1999 and by 2010, they have already surpassed most countries in Europe, to the point that in 2014, China could comfortable challenge the total productive frontier of Europe. Apparently, these European economies were doing badly, were hanging on the thread of what the banks calling for, and in US, there was dark-phases of the investment that rested on Banks and their chasm for profit through the more persuasive and more available resources in the real estate market.
Take for instance what is happening in the world market today, there is a hint of depression in the markets following a less significant Fed’s Rate shifts in basis, perhaps to recover some of their losses from 2008 and to prepare a landing pad for a possibly tapering-off of Fed’s buying (contraction). Slight appreciation of Fund’s rate usually affect inflection-protected 30-year bell-weather bonds (corresponding to 30-year mortgage rate), which in the last summer a major exiting of very powerful business star trader. House mortgage rates are also expected to shrink, but this shift on emphasis under regular circumstances should not transfer to the sensitive stock market movement.
The total amount of weight placed on ANY Investment away from savings is in the future of the Housing market – the mortgage usually requiring a 30 year maturation – secondary to it is the Savings Theory of Social Securities and Pension or Retirement Funds. Consider that in so far as fixed income earners are concerned, the IRA funds are usually matched out from the State and Government guarantee of purchase with owner’s intent to certified private placement who petitioned for it, or through institutions who work directly with the Government, or through Banks who contracted for such funds. When there is a house appreciation for property already earned, there is profit for the owner mortgage plus appreciation. The new rate for buildings and mortgage sets new standards for fixed income earners who were the primary motivation for creating GSEs in the first place, it creates high levels of price participation that only a depreciation of US currency can account for such adjustment from fixed income earning, or inflation in terms of robust economic values which shrinks value of prices…since this new line of profit is built through savings and investment….
Following after an article by Marcy Gordon, Christopher Rugaber, Josh Boak, for the Associated Press release information, based on the information released by Freddie Mac that the fees for both 30 year mortgages rates and the 15 year refinancing remain steady with 0.5 from last year. That Investors were hoping for preferred increase in housing mortgage with expected rise in Fund’s rate from next near. Although it would amount to short delays in several ways than one, it lends itself to the idea that 2014 was a luck in disguise since it may halted the heating up of housing number which are so far within the 0.5 rates. What these group of experts did not discuss was the role of crude oil prices in guess estimating the price of houses and how his informed designation of the international market cannot be separated from principle dynamic crops such as Crude oil. Apparently, Ebola may have created more concern for economic growth than was surmised in the first place, but this is if we are considering the limits of economic bandwidth of China as being negligible. The longer consideration of this article would point to how the year is more than likely to end, will point to controlling influences for 2015. To this end, the brief annotation of the problems of economic downturn in 2014 should be a concern for the future.
In some similar argument, there is not much to believe about houses that is relative to inflation and performance of any currency than what can be traded, minding its flow and stock. That we can build houses in Lagos Nigeria, may give the impression of boom, but adding the fact that more than 30% of Lagos work force is considered either unemployed or under-employed, it buries the issue of houses and number of holders. It is here that we can gradually see why there was problems with Sub-prime, and why there was that necessity in recent economic environment to skillfully burst any hints of diminishment with Inflation which could recall the faith in the houses and seeking to reconsider either a total removal of GSE such as Fannie Mae or Freddie Mac, and placing hold on houses in America population with slightly better 600 FICO score sufficient to slow down the rate of profits which Banks almost without breaks enjoin through these bad arrangement under GSE. Although some argument about money markets may endure, there are no hints,
The contrary theory may be referenced to Greenspan’s defenses that housing bubbles and stock market bubbles are not exactly correctly, or as it appears in Jeffery Friedman’ s ‘What caused the Financial Crisis’ (2011) he quoted Barlett (2009) that it was ‘rather a large sketch’ in commentary on Robert Shiller and Alan Greenspan. Jeffries Friedman and Richard Posner also cited (O’ Harrow and Dennis 2008) whose original statement is that “The Over-the-counter credit-default-swaps markets has drawn the world’s major financial institutions and others into a tangled web of interconnections where the failure of anyone institution might jeopardize the entire financial system.” But these two in their words mentioned that in July 2004, “…an economist at Northern Trust predicted a house-related financial crisis, noting that “60 percent of Bank’s earning assets were mortgage-related – twice as much as the case in 1986.”
There is argument that between Investment and Commercial Banks, there is a similarity that they exist with a certain degree of separation because of the problems of duration or maturity. Many of these mortgages do not mature like US markets without some damages, in Europe mortgages are almost intricately bound to some Government bond and another. Here’s a rewarding scenario, Construction when enhanced by Federal government under any programs or new forms of businesses is an effective job recovery initiative, whereas real estate that is done houses or similar types is a means to ensure the further stability of a currency, it has been said that prosperity is entirely possible without some maturation date. In normal times, these sense of recovery from lack of jobs through erecting adequate structural changes is carried over to a period of economy maturation as in S level. When we arrive from excessive emphasis on real estate or utility complex, we are fretting from the false allusions of progress cheap on the idea of rising house prices as nearly similar to economic progress. When this is the scenario we are at the end this market, and a small shift in Crude-oil for our sake, a small shift in any policies of a major Cartel, affects momentum of trade. Then there is panic from the experience and a throwing distance of financial kamikaze. If equilibrium must be reached in the concept of x, y, z, it must demarcate the rate of development, the rate at which we arrive a plateau in common market, from the long term economic vintage such as savings theory; of pension, of social security, and IRA funding, - the first two equal to re-distribution from a general balance and national purse, all of which are prey and predilection to inflation and what even Greenspan described as destructive depreciation of prices, or what we can regard as price corruption. That is when Savings theory is destroyed by inflation, whipping out a whole generation of inflation.
It could in fact be a logical course of procedure since the primary reasons for the invention of such SIVs was to shorty price escalation and free housing and real estate control of private cartels who control all but what ensues from government is not no longer the case, that these groups of persons easily decide on who they want to rent to, who builds these houses and where, do not really have competition of any sorts so also these GSE. There is more casual reason, that if these big banks could be allowed to operate Investment Banks as well Commercial Banks, the shocks on the housing market will levitate from long term position to short term, and this burst of specific areas of interest such as the sub-prime would easily send all kinds of messages to the rest of the global market. The sensitive clause enjoyed in the previous administrative eras, found new expression in something, but the new experiment from those times until lately were mainly created for short-term reasons or with duration. For instance the lasted influences of the Great Depression created several programs to enable Americans jump the huddle with less than perfect credits.
Only a few percentage of Americans have perfect credit, reduced credit for the lower earn workers is middle ground for the rest of the society, however, the reason why we have not experienced any major recession in housing until recently may be due to the role of GSEs, MBS, and RMBSs, but then these were times when there was no Godzilla control of Main street seeing from Wall Street by the same banking and financial institutions which are we are left to deal with price and bond issue with insurance at the offing all of which easily if not natural assume their post from any hints of meltdown, and then withholding or freezes momentum, gives the head-wind that it was an end. But how long this will continue remain on how well the central offices handle it.
There is a point to be made that in the last 6 years, at least since the 2008 crisis, engineered as has been suspected by Bankers and repos, that the securities exchange is attracting fewer and fewer private investors. Although the 80-20% rule and ratio of Institutional traders to private placement can still be maintained in current recycle, there are fewer Americans with any money to saunter off and make some money for themselves, or through their banks or American agencies, enter the stock market or invest from foundations or pool of finances mutually collected elsewhere. To say the least, more and more Americans are poorer by the years than ever before, and since 2008, there is more poverty in America than before. It seems essentially clear that Americans have less savings than most census depended countries in Europe. Although women are not much richer than men saving for a few CEO operating from private and family foundation, the majority of new balance sheet saving in terms of savings and investment are essentially female. In fact most meaningful savings available through fixed income wealth in many parts of the US is essentially female dominated. The second event horizon which play quite ominously on the isolated and bank dominated securities and exchanges markets, is the presence of investment vehicles created for recycling money and to aid initial and minority business entrepreneur survive the challenges associated with early days are hijacked by Big Banks.
An October recovery should have started with these small banks and financial institutions - no that they necessarily point to the future – but they help in their own ways to almost natural sustain new economy by funding least desirable options – with high risk usually funneled outside the US - or at least save new IPOs from Big Bank poaching usually after 18 months leads as they edge away from poor friction and from vitality of an economic straight line. Since these smaller Banks are lacking for now, Obama and his compeers should look to be comfortable with hints of inflation, either through crude oil or resulting from currencies floating into US as we head December. There are other measures which may not exclude additional Government borrowing, to at least aide the Federal Reserve in its attempt to taper-off the buying (deflate the inflationary pressure).
If inflation is a cause for concern, the Federal Reserve may not be too comfortable with sustained expansion into 2015, may in fact be looking to CURB inflation through their labor function to new employment, but would be better preferred with creating a rotation starting with interest rates adjustment which release the bottom-line on house prices, and can only be achieved with a factor 5 tampering given the measures already initiated by Federal Reserves and their Fund’s rate. One of the clear cut means of achieving low interest rates with or without FICO over 600, with or without the accretion from School loans from banks or federal resources (Gramm-Leach) is through alternatives and perhaps if not most perhaps through a deliberate creation of small banks such as PPP Obama Banks, with emphasis on Development or Agriculture, for instance Development Bank or in the instance Food based distribution Bank, through improving Capital ratio for any title with insurance holders, through new ways of ensuring better protection of personal information and security, through creation of jobs to inject meaning to old economic bottom-line, through a similar GSEs solely away from the carriers of major housing such as Fannie Mae and Freddie Mac, through projects that seem close to the events from and these can come to an end after reverses are achieved. can be achieved through these are through small Banks and new eco It may however sustain the pressure on sub-prime, lead to further demands of additional collateral from Banks to Banks, then a tapering off or neutral position into 2015, followed in the end by FEDs Funds rate. Of course there is no other way, but the standard practice ….of starting with Fund Rate is experimentally obvious to be a wrong course of procedure.
But this is safe betting and logically exit strategy given the new and obvious salvific intents of Madam Chairman in adding labor and employment numbers as preliminary for Federal Reserve interest rate consideration, for if we consider that in the previous last years, that the US market and its securities has been a closed market for a few and institutional experts as we saw in the Great Depression, If the healthy stock numbers are parripassu the Fed’s buying of Government bonds and obligations, they are helping the economy to grow, they are growing their own representative or repo (secured) interest in Banking and finance, and the Government should look seriously to longer and more permanent basis on economic sustenance….Whereas the effects are from all classes of respect, a consequence of too few big Banks that call the shorts both for the Wall Street and the Main Street.