2009.10.21 14:58:23

 

Hi community!

I read this paragraph from a pamphlet distributed by the Federal Reserve Bank of Chicago:

"Money is such a routine part of everyday living that its existence and acceptance ordinarily are taken for granted. A user may sense that money must come into being either automatically as a result of economic activity or as an outgrowth of some government operation. But just how this happens all too often remains a mystery." (Modern Money Mechanics, Federal Reserve Bank of Chicago, page 2)

Question 1: How can this be explained to the man on the street? 

Question 2: Are commercial banks loaning out more money than they have in assets (after usually borrowing $ from a central bank) thus not really having any money in the first place, to lend to the public? If Yes, who gives them to right to do so? 

Peace! 

 

money creation | printing money | central bank

2009.06.11 14:47:29

Alpha often refers to the “skill based” returns of a manager. Beta in contrast refers to the market based returns of an asset class.

Investors can use both alpha and beta to judge a manager's performance. If the manager has had a high alpha, but also a high beta, investors might not find that acceptable, because of the chance they might have to withdraw their money when the investment is doing poorly.

Now whose got the Alpha today? Ooo-rahh!!

 

 

alpha | investment return | fund performance

2009.05.18 11:06:42

2009.04.06 12:14:11

The Wall Street Journal disclosed the names of the banks who got some $50 billion of the AIG bailout money. And as some suspected, Goldman Sachs was among the biggest recipients ($6 billion).

This should be a concern because Goldman got that money from *tada!* ex-US Treasury Secretary, Hank Paulson, who is our celebrity 'HedgeFund MONSTER!", who was a former Goldman CEO and held plenty of its stock. Was using bailout money to bail himself out!?

Here are the others (including 10 European banks):

    * Deutsche Bank
    * Merrill Lynch
    * Société Générale
    * Calyon
    * Barclays
    * Rabobank
    * Danske
    * HSBC
    * Royal Bank of Scotland
    * Banco Santander
    * Morgan Stanley (NYSE: MS)
    * Wachovia
    * Bank of America (NYSE: BAC)
    * Lloyds Banking Group

AIG bailout | AIG crash | AIG bankruptcy | Hank Paulson | Goldman Sachs

2009.04.02 14:34:10

video | financial plan | lotto plan | most financial plans

2009.03.24 12:55:52

Could it be that most of us favour being asset rich but cash poor like the simulation below?

Sometimes it takes courage to let go of fixed-assets i.e. your beloved home, in order to avoid being penniless at age 60 as depicted. In fact between the ages 45 to 55, there are some episodes of negative cash values. 

For the Yuppies, would you trade (A)being seen in the newest & spankiest automobile every 5 years with (B)being cash-rich and able to afford many other simple pleasures life has to offer? 

fixed-asset doom | asset rich | cash poor | game over man

2009.03.10 12:00:41

My Middle Class Prison
Friday • March 6, 2009
Tabitha Wang

MY FRIEND from Singapore just emailed me with the dreaded news: She has been retrenched. She could see it coming but even so, it still came as a shock, she said.

Her situation is not so bad, she admitted, with a rich boyfriend and parents to support her. Even so, she said, it felt weird to have no cash in hand. “What I wouldn’t do to be you now,” she continued. “You never had to worry about money.”

How wrong she was. I know poor because I’ve been there. Being poor doesn’t just mean living in a rented one-room flat with barely enough money to buy one meal a day. It can also mean owning a private condo and a car and still not being able to afford a meal a day.

Hong Kong’s Financial Secretary John Tsang recently came under fire from white-collar workers because the government’s latest budget didn’t make many provisions for them. He defended the decision by saying they could just re-mortgage their homes or live on savings. But what he failed to realise was that you can come from the middle class and still be poorer than a blue-collar worker.

Poor is not being able to sell your assets because their values have fallen so much that selling them would mean getting into bigger debt. And you can’t remortgage your home because no bank would give a loan to the jobless. So you end up living in a condo where you can’t afford to pay even the management fee and owning a car you can’t drive because you cannot afford the petrol.

Poor is when every bill strikes you like a body blow and you cross the road to avoid being seen by your usual bubble-tea seller because that $2 can buy you a meal.

I faced poverty during the Sars period, when my husband’s firm went bust and we were left with no savings and debt of over $200,000. Thankfully, I was still working, but my pay was just enough to service the monthly debt repayments.

It was a miserable time. With no jobs to be found, my husband plunged into despair.

No one wanted to rent my studio apartment. I wanted to sell it but the price had plunged so much that I would be owing the bank another $50,000 at least if I had done that. Keeping it and servicing the mortgage was, ironically, the cheaper option. We couldn’t afford to move back to it for a few months because we couldn’t raise enough money to hire a van.

The worst was praying my husband wouldn’t fall ill because we had no medical insurance. We couldn’t fork out the thousands needed to pay for his premiums.

When I tell people my story, they think I am exaggerating the difficulties. “Why didn’t you borrow from your family and friends?” they ask. Well, we would have were it not for pride (having been brought up by our parents never to beg) and the fact that we knew they didn’t have that much to spare anyway.

........ As the middle-income noveau poor, we were in limbo — we earned too much to qualify for any assistance but not enough to pay off our debts. But declaring bankruptcy was not an option, not if my husband wanted to start another business again.

middle class despair | property owners | middle income | market crash | property investment

2009.02.22 23:31:05

I am just a simple man

However, I would expect my Financial Adviser to be an investment analyst, insurance adviser, economist,  loan specialist, estate planner, tax specialist and fully compliant with all the prevailing regulations.

My Financial Adviser would have to be a good listener, in order to be able to analyse and design a strategy
that suits my circumstances with the aim to achieving my financial goals.

My Financial Adviser must be confident when implementing the said strategy by advising and recommending suitable products that are in tandem with my objectives.

I expect the proposed financial plan to be systematically monitored and upon so, to ascertain if any part requires tweaking due to changing life scenarios or economic conditions.

Is it so hard to find such a Financial Adviser?

expect from a financial adviser | financial adviser expectations | what is a financial adviser

2009.02.19 17:59:42

some innocent thoughts come to mind..

First = Banks in trouble beg for money and begin issuing more shares.

Second = Government helps by paying for these shares.

Third = Share values dip even further and consumer confidence hangs even lower.

what's next?

Maybe = Preferred Government acquaintances buy these super discounted shares and suddenly it's a Mega Monopoly!

The WORLD IS A STAGE!

2009.02.10 12:05:34

With 3 American banks failing recently, the US bail-out stimulus is not showing much promise in its effectiveness to curb the crisis.

I will be shedding my USD currency holdings for the time-being.

 What is that currency really worth floating on a bed of extreme debt? Soon time will tell.

2009.02.03 11:20:36

AFP - Tuesday, February 3

Man looks for work in Miami. US President Barack Obama has vowed that Republicans will have a chance to put their imprint on his economic revival package, as he continues to seek bipartisan support in Congress for the bill.

2009.02.02 17:29:21

Obama dude! The American economy was never strong to begin with for the last 30 years. There was too much debt in the system. Some of those responsible have left the country i.e. Haliburton has moved to Dubai. Get them to pay for the USD 800b stimulus!

I fear for the American people who will face these possibilities:
Inflationary depression
Leading to possible hyper-inflation
Leading to hikes in the Price of Food and worst...

Those US dollars more than 30 years ago was backed by Gold. Now with all that debt, they're worth....... you get the picture.

However, it's not going to be doomsday for the rest of the world though. IRAN has a whole lot of oil & gas. China has huge savings. India has massive Gold reserves. Britain has.... Oops, you're in the same muck with Uncle Sam!

Why then:

1970s inflationary spike hit the US. Fed Chief raised interest rates. Good move. Good guy - don't know. Things came to order

Why now:

Recently... Hank Paulson co-opted trillions of tax-payers money.... KA-BOOM!!!!

HEDGE-FUND MONSTER!!

 

We've got a rogue trader in the US treasury secretary office!

The recent government intervention on the financial markets has not done much or any good whatsoever. These are very sad times indeed.

Save yourselves Americanos. Plant a potato garden, dig a reservoir, buy some solar panels, build a magnetic engine and install some wind generators.

2009.01.29 17:29:20

How does one battle inflation with MORE inflation?

WASHINGTON (AFP) - - The divided US House of Representatives on Wednesday approved an 819-billion-dollar stimulus package touted by President Barack Obama as a vital remedy to revive the ailing US economy.....

I just don't get it.

2009.01.23 10:01:11

Rarely does the price of a single commodity hold the attention of the masses like this does but the recent volatile nature of this item has made many of us stand on edge and even declare war on one another because of its resource and debatable future.

Has the bubble truly gone KA-BOOM, considering that it's cliff-drop from nearly USD 150 per drum in mid-2008 to current levels of about USD 36 to USD 39 per drum? Or is it due to a systematic and carefully planned endeavor by those in authority to regulate & control the global population?

That thing is oil. May solar & wind & hydro save us all!

2009.01.22 19:13:22

 - of which S$220 Million is allocated to support Non-profits which number abount 386 whom are registered members of NCSS (National Council of Social Services).

The organization I am supporting currently requires about S$500k a year to operate at its current capacity and we've raised just under S$250k in 2008 and the rest of the expenses was borne by an NCSS grant and some reserves c/f from 2007.

I am really curious about how the allocation is going to be like upon the disbursement of the budget to each and every NPO out there in Singapore.

2009.01.21 16:06:52

Modern society. Faster, more efficient and productive but at what cost to everyone; does the majority stand to really gain any benefits on where we're heading?

Just one question: "Are our leaders really investing in Technology and Trade?" of which in my most humble opinion is the key to a better modern civilization. Tech gives us an edge in our daily activities and lowering the cost of Trade+communications opens up more access to Tech+new ideas for everyone.

Its about time for the greedy dinosaurs to stop driving around using fossil fuels and go Green-Tech OR else we'd all end up.... yeah, fossilized like a bronto's behind.

 © Image Copyright 2008 All Rights Reserved - Button Up

2009.01.19 15:01:36

Bad News seems to be hitting us again and again and again these days. Steel industry in the US on the brink of collapse. Gas disputes in Europe. Terrorism, terrorism, terrorism!

Am I afraid? No, I'm instead extremely disgusted by the antics deployed here - it's simply Big Boys playing with Big Toys. A big game of Risk is all that it is, involving real countries, economies and people's lives.

In order to successfully promote an agenda, many leaders today instill fear to exert control over our behavior, keep us orderly and docile, and to keep us paying for their 'services'. Most of us who are educated know that Social control is best managed through fear.

There will always be some cause for fear created by those in power to keep us in line. The illiterate of today are not those who can read and write but those who are unable to learn, un-learn and re-learn new things in order to adapt.

Pity to those who are the 'modern illiterate' of today, whom are easily swayed by fear through the news feeds.

2009.01.15 11:06:24

Though rather late but better than never.

All of these corporates remind me of F1 cars. When they touch a wall, everything comes apart like lego!

See Article below:

---

Barclays boss backs banks apology for credit crunch

LONDON (AFP) - - The head of Barclays Bank, which has announced thousands of job cuts in recent days, said Wednesday it was right for banks to apologise for the role they played in causing the credit crunch.

Barclays' group chief executive John Varley said banks must continue to lend in the face of the crisis and also supported greater action by the Bank of England as Britain seemingly moves towards zero interest rates.

Earlier this month, the central bank cut its key lending rate to 1.5 percent, the lowest level in its more than 300-year history.

Barclays has cut more than 4,000 jobs in its retail, commercial and investment businesses in the last two days.

"When I think about the credit crunch that has occurred, there are a number of players in that drama," Varley said in an interview with Channel Four television.

"Is it right for the banks to take their share of the responsibility, is it right for the banks to apologise for... getting some big judgments wrong as we have over the course of the last years, is it right for us to acknowledge that? Absolutely it is."

Varley said it was essential that banks help with reconstruction to ensure that the crisis does not happen again.

"The worst thing that would happen to the world would be the sort of thing that happened in Japan 15 or 16 years ago where the banks were so gun-shy as a result of criticisms... they lost their willingness to lend," he said.

"And you know what happened to the Japanese economy in the following ten years, it shut down."

In the case of zero interest rates, the policy emphasis would shift to money supply and the United States was already moving in that direction, he said.

He added it would be "quite a positive development" if the central bank were to buy assets, gilt and commercial paperwork as British interest rates fall ever lower.

"The world needs stimulus at the moment... and I would be supportive of that," he said, while stressing that central banks have to be careful to avoid inflation.

AFP
AFP - Thursday, January 15

2009.01.14 17:05:58

Today as I was looking over the financial plans for a charitable organization, it occurred to me that every aspect of their core services was optimized to work utilizing the least amount of expenditure to generate the best possible output achievable. Reminds me of how I've been messing around and overclocking my twin SLI ATI Radeons to perform on the edge, squeezing out every itsy-bit of frame-rate without Chernobyl (did I spell it right) occurring in my study room.

Similarities are evident when compared to the for-profit commercial entities. And like an average Joe today, say he decides buys a home but does give himself much buffer for rainy days. The dude allocates just enough to pay for the mortgage, spends as much as possible to max out his standard/quality of living and any crummy balances goes to savings. Sounds just like you reading this? Maybe.

In short, I think almost everything today is optimized to run on the edge!; and who's setting such examples these days? Hello to the banks who have succumbed to the US sub-prime implosion. Great job to the CEOs whom implemented optimization strategies and treating business like high-school/college/whateva science - which is where I think it all went wrong. If business were like science, then why did things unfold the way it did - why did everyone lose their marbles doing 1+1=2?

Business science should have indicators to prevent such bogus things from occurring with these financial institution - then again, it shows how we're all wrong. Hello 1930s full-circle. And we thought our fore-fathers were idiots. With all the fancy formulas and tech available today, we're the bigger idiots.

Past performance does not guarantee future knowledge except in video games.

2009.01.12 13:41:30

I boarded the MRT today and was greeted by a RED BLIP upon swiping my ez-link card at the barriers. I then realized that I had a negative balance. Geez as I thought to myself, "only a week or two ago, I had put in 50 dollars."

A flashback then hit me. It was about our Minister for Transport quipping about that for Public Transport to be free for the masses, the GST had to be increased from 7% to 8.5%. Should we the public have a vote on this then - perhaps next week would be a good time yes?

Anyhow, oil prices have dropped sharply recently and I wonder if the transport companies had actually hedged in advance against the earlier rising prices - if so, should we benefit from a reduction in fares? My question is, "What are transportation fares pegged against here in Singapore?"

Goodbye another 50 dollars.