Welcome! Please Sign In or Register

Miscellaneous Finance & Investing

Add to RateItAll's piggybank of miscellaneous finance and investing reviews!

Browse


Top Members Lists


Top tags

Recent Happenings

70 days ago

Review Icon RadarBonding reviewed Bail Bonding in Rader Bonding:
their team of bail bond agents is ready to help with all your questions and concerns, like “What does it mean to post bond? How are bond amounts set? How much do I need to pay to bail out a friend or loved one?” They listen attentively; they respond ethically and lead with conviction. Selecting a bail agent (bail bondsman) is a very important decision and Rader Bail Bonds is right one for you.

Add your Vote:

Votes on this review: 0 Helpful / 0 Funny / 0 Agree / 0 Disagree

176 days ago

Review Icon abichara reviewed Globalization in Causes and Impacts of the Global Financial Crisis:
Globalization is a very broad, encompassing term, sometimes driven by historical and technological factors. For all intents and purposes, I'll be focusing on the neo-liberal version espoused by many Western governments, which has been a primary precipitant in the ongoing financial breakdown crisis.

Effectively, this form of globalization is just another variant of plunder, pillage and mass impoverishment, with the projection of military power being the means that it is carried out, and large scale capital accumulation by a small oligarchy being the primary outcome. They use political destabilization, separatist movements (divide and conquer), and economic coercion to force their interests on other nations in the "periphery". To them, periods of civil unrest is when the greatest profits can be made, as those are the points when assets can be effectively stolen from nations.

Our foreign policy is defined by the need to secure markets and raw materials at a steep discount. The "War on Terror", which our leaders claim will last for another 50 years, is nothing but a glorified resource war targeting a wide swath of Africa, Asia and the Middle East. But today, the mechanisms by which global profits are enhanced have gone far beyond the exploitation of markets, resources and labor; they embrace entire nations, peoples and the public treasuries, not only of regions of Africa, Asia and Latin America, as it usually has, but include the so-called "debtor countries of Europe", Ireland, Greece, Spain, Portugal and Italy, among others. Speculative capital has no nationality, it attacks areas that are weakest. It's basically a legalized form of piracy.

The World Bank, the IMF and other agencies closely connected with the large money center banks in New York and London facilitate the process. Typically, the process starts with hot speculative capital flows entering a nation that has just deregulated their financial markets and pumping up their asset values. Once these markets reach a certain price point, capital pulls out and causes these economies to crater, leaving in its wake huge amounts of debt that are nearly impossible to pay off and a good deal of political instability.

What happens next is that a begging foreign minister goes to the IMF or even the large banks, asking to restructure their debt. Every time, they are forced into accepting structural adjustment, which is nothing but the effective asset-stripping of entire nations. The first step in that process is the privatization of state controlled assets. Rather than object to the sell-offs of state industries, many of the local politicians happily flog their electricity and water companies to international conglomerates, expecting to shave off millions of dollars in the final terms of the deal.

After privatization, the second step is additional capital market liberalization, in addition to similar measures that were implemented earlier. In theory this allows investment capital to flow in and out. Unfortunately, as happened over the past several years in places like Indonesia, Mexico, Argentina, and most recently Southern Europe, Northern Africa and the Middle East, the money often simply flows out. This is known as the "hot money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and even up to 80% in more extreme cases. The result is predicable: higher interest rates demolish property values, destroys industrial production and drain national treasuries.

At that point, the IMF and the international banking authorities go on to the third step, which involves "market-based pricing", which is basically a euphemism for raising prices on food, water and cooking gas. The result is always the same: food riots always ensue. That is what is currently happening in Egypt as we speak, as the Muslim Brotherhood backed government there has embraced IMF conditionality. What happens is that when a nation is down and out for the count, the banks squeeze the last drop of blood out of them. They turn up the heat until, finally, the whole cauldron blows up. The result is fire sale prices for all kinds of assets, from mineral concessions, to industrial plants and production.

This is what many, including last year's GOP presidential nominee, Mitt Romney, refers to as "creative destruction." But it's nothing but thievery and an attack on sovereign nations. Nations that are not compliant in these objectives typically faces political and economic sanctions, and in more extreme cases, US/NATO military intervention is possible, under some sort of secondary pretext oftentimes.

Add your Vote:

Votes on this review: 2 Helpful / 0 Funny / 0 Agree / 0 Disagree

193 days ago

Review Icon numbah16tdhaha reviewed Multinational Corporations in Causes and Impacts of the Global Financial Crisis:
What Abi said... yeah, I don't really think I can add anything to the mix after what he just wrote. These corporate fucks are a huge problem.

Add your Vote:

Votes on this review: 3 Helpful / 0 Funny / 3 Agree / 1 Disagree

193 days ago

Review Icon abichara reviewed Multinational Corporations in Causes and Impacts of the Global Financial Crisis:
In many respects, they are at the nexus of the global financial system. Their growth began in earnest back in the 1970's, when these companies realized that through their internal transfer pricing and accounting tricks, they could work around centuries old laws that controlled and prevented speculators from shifting capital across borders.

Once these capital controls were removed in the late 1970's, a feeding frenzy of hot capital flows from New York and London commenced that has not really abated. Since then, financial crises in South America, Mexico, Southeast Asia, and most recently Southern Europe have led directly back to excess speculation and market rigging by these actors, who in many instances have become more powerful than nations themselves, as borders become erased, and as they act above any sovereign law. Subsequent to this, trade barriers were eliminated, allowing finance capital to race from continent to continent without restriction.

Add your Vote:

Votes on this review: 3 Helpful / 0 Funny / 2 Agree / 0 Disagree

231 days ago

Review Icon abichara reviewed Platinum coin proposal in Causes and Impacts of the Global Financial Crisis:
Many, including high profile economists like Paul Krugman, are suggesting that the Treasury can issue a trillion dollar platinum coin and deposit it with the Fed, and then use the credit to pay the country's debts. Congress would then have to try to remove Treasury Department's constitutional right to issue coinage, which would likely require an amendment. Pretty amusing, actually. Technically, it can be done, but I see it more as a gimmick than anything else.

A better path is to follow the rule of law as articulated in the 14th Amendment regarding the payment of debts. Of course, reactionary political allies of the banking powers have already begun agitating to roll back the post-Civil War era amendment, in anticipation of this point. Nevertheless, it should be a very interesting fight with significant repercussions.

Add your Vote:

Votes on this review: 3 Helpful / 0 Funny / 0 Agree / 0 Disagree

233 days ago

Review Icon abichara reviewed Rise of China in Causes and Impacts of the Global Financial Crisis:
Our relationship with China is indeed very significant. Chinese imports are found on nearly every shelf of every store in the US.

As you can imagine, the availability of these inexpensive imported goods from China feeds the insatiable appetite of our consumers. Accordingly, because consumer spending is responsible for about two-thirds of our economy, many tend to believe that this trade relationship is a one-way street with China as the victor. However, China remains much more dependent on the United States than many realize. Ever since entering the World Trade Organization in 2001, China has risen to become the global leader in export trade. But its economic dominance has not been the result of special skills held by Chinese laborers.

The basic history is that trade liberalization and other economic changes initiated during the 1980's enabled China to organize and leverage its labor force. By the 1990's, radical shifts in global trade policy would soon embolden China as a vital member of the global economy. They've risen to power because of numerous government subsidies which have provided domestic firms with significant advantages over their foreign rivals. As well, China has permitted slave labor conditions which have further exploited differences in trade policy with its trading partners.

Our consumerism has fueled the demand required to keep much of the Chinese export engine running. This latter dynamic has also contributed to the loss of millions of American jobs. They call this dynamic "creative destruction" in order to mask its malignant effects on our economy. Irrespective of the collateral damage done to the US economy, the US-China trade relationship has enabled China to amass an enormous current account surplus due to its increasingly large trade surplus. This has generated a large pool of cash, which they use for its sovereign wealth fund that goes towards buying assets and natural resources in other countries. The majority of this surplus however has been put into US Treasury Securities. This financial/geopolitical strategy has several advantages. For instance, since China's trade surplus with the US is already in dollars, by investing in US Treasury securities, China can receive interest payments compliments of Uncle Sam. In this manner, China can avoid the various risks associated with foreign currency transactions.

Consequently, many have likened China's ownership of US Treasuries to America being "owned by China." The argument backing this claim is that because China owns so much US debt, it could dump these Treasury securities at any time, thereby causing interest rates in the US to soar and inflation to skyrocket. In my view, this scenario is unlikely. First, China would have to own a very large percentage of US Treasuries to have that kind of leverage. Next, China would also have to sell these securities over a short time frame, creating an international financial shock that would come back to them. Finally, there would need to be a very low demand for these securities once China dumped them into the bond market. It wouldn't be sensible for them to dump (that is, sell the majority of its position over a short time period) their portion of US Treasury securities.

Plus, they don't own as much US debt as has been let on. Think about it this way: the total outstanding national debt of the US right now stands at about $16.5 trillion. Of this amount, foreign nations own $5.43 trillion, or about one-third of the total. The remaining two-thirds are owned domestically in the form of pension plans, endowments, financial firms, insurance companies and individuals. Out of that $5.43 trillion owned by foreigners, $1.15 trillion or about 20% is held by China. That's certainly a sizable amount of foreign debt. But it only represents about 6% of the total US sovereign debt burden; not exactly a huge amount. In fact, I argue it's not large enough to cause much more than a short-term rise in interest rates if China were to dump its entire holdings. And even if they did, Japan and the UK would likely absorb these securities.

A lot of these ideas about China being the boogieman who holds the cards on the US economy are gross exaggeration. As opposed to selling off their held US debt, they have actually increased their positions by over 60% since the financial crisis of 2008. Why do they hold our Treasuries? Basically it is because China's trade surplus with the US has continued to increase over the past several years. Since the trade surplus is denominated in US dollars, it is much easier for China to keep the funds in dollar-denominated assets rather than to risk losses in the currency exchange market. Furthermore, US Treasury securities remain as the safest investments in the world. So China can easily transform its trade surplus into safe securities that pay interest.

Basically, we have a mutually beneficial relationship with China. By holding and even buying more US Treasuries, China helps keep interest rates low in the US. This in turn keeps the credit flowing to US consumers so they can keep buying Chinese imports. China is also very reliant on Wall Street. Over the past two decades, their fast growth has been fueled by foreign investment, mainly from Wall Street. This relationship was made possible through the gradual privatization of Chinese corporations which began some two decades ago. Privatization of these formerly state-owned firms has enhanced their competitive position around throughout the globe. Once these firms were privatized, they were able to receive foreign investment capital, the majority of which has come from Wall Street in some form or another. Thus, without the continued influx of foreign investment capital, China's economy would come to a halt. In addition, if demand from Chinese imports from the US stopped, China’s economy would crater. From there, Chinese consumers would be required to pick up the slack.

So we do have several advantages over China, but there may come a day when this edge no longer exists. Thus, the US must respond now while it holds a position of dominance.

Add your Vote:

Votes on this review: 5 Helpful / 0 Funny / 1 Agree / 0 Disagree

234 days ago

Review Icon abichara reviewed The Petrodollar Trade in Causes and Impacts of the Global Financial Crisis:
The petrodollar is the core factor motivating our economy. As long as the petrodollar trade remains intact, our economy will remain standing as well. The major nation that guarantees this situation is Saudi Arabia, the primary oil-producing nation in the world. How did they position themselves as they have? First, some history. In 1971, the final phase of the gold standard, and the post-war Bretton Woods system was eliminated after the Nixon Administration refused to honor France's demand for payment in gold in exchange for dollars. Our gold reserves were basically exhausted by the Vietnam War and high domestic spending, creating a monetary crisis in the late 1960's and the early '70's.

So Nixon and Secretary of State Henry Kissinger responded to this major systemic problem by cutting a deal with the Saudi's to settle all crude oil sales with the US dollar. Due to the clout held by the Saudis, the rest of OPEC followed suit. This relationship between the dollar and oil is often referred to as the petrodollar. The petrodollar serves as America's most valuable economic lever. It empowers the US economy literally by means of extortion, because all nations must have dollars in order to buy and sell commodities on the major international exchanges, from oil, gas, gold and steel, to apples, oranges, coffee and cattle. This is the main reason why the US dollar serves as the world’s reserve currency. This trade creates demand for the dollar on the international market, its use prevents its value from collapsing.

Based on its relationship with oil and other commodities, one could argue that the dollar is not exactly a fiat currency since it is backed by the demand for raw materials. Raw materials are in limited quantity in the marketplace. They are also in high demand because they are required for economic growth, they are literally the lifeblood of any nation, required for basic sustenance. The more control a nation has over these resources, the more control it ultimately has over its own destiny. Being a reserve currency also requires having a military power behind it to enforce this monetary order. This is why projecting power is an important part of their strategy.

As I've pointed out before, American consumers serve as the superficial driving force of our economy. Inherently one might assume that a strong consumer would be the by-product of higher living standards or higher personal incomes. Enigmatically, the powerful consumer demand seen in the United States has not come from a commensurate increase in living standards or personal incomes. On the contrary, as domestic demand has soared over the past three decades, living standards have trended downward. So what has been the source of this demand?

The source of fuel for the American consumer comes from the Federal Reserve Bank in the form of credit. Instead of spending more on consumer items as incomes rise, most citizens use debt in order to improve their living standards. As you can imagine, this is not a sustainable path to prosperity. The majority of the credit created by the Federal Reserve comes by way of fractional reserve lending. Some liken this mechanism to creating money out of thin air, but in truth, this money is backed by the petrodollar trade. That is, the demand for dollars increases every time oil is bought.

Thus, when the Federal Reserve wants to print excessive amounts of dollars, the global demand created for dollars through the purchase of oil and other commodities will diminish the inflationary effect that would have been otherwise created within the United States. In contrast, when other nations use fractional reserve lending, they face the possibility of hyperinflation at some point because their currency is backed by nothing other than the underlying economy and strength of the government. That's what has happened in Zimbabwe, one of the poorest nations in the world that does not have effective control of their resource markets.

The problem is, since the United States has been transformed into a consumption-based economy, it must create asset bubbles during periods of weak domestic demand. The Federal Reserve's ability to create these asset bubbles (whether in high tech companies, housing, etc.) is enhanced by the petrodollar. Thus, the petrodollar enables the Federal Reserve to form asset bubbles, while exporting inflation throughout the globe. The financialization of the economy and the deregulation of the banking sector also plays a role in this dynamic.

Ultimately, petrodollar-based inflation is the manner by which the United States taxes the globe. Without the petrodollar the US economy would face very dire consequences. With it, the US can print its way out of messes and force the rest of the world to subsidize its mistakes and finance its asset bubbles via exporting inflation.

Oil rich nations could care less about keeping rates low in the US because inflation (which increases when rates are low) causes the price of oil to rise. Thus, Middle Eastern nations spend much more of their petrodollar surplus buying up hard assets such as hotels, restaurants, infrastructure like ports and roads, resorts and other businesses as opposed to investing in US Treasury securities, like China does. But of course they do own a decent amount of US Treasuries due to their trade surplus with the United States, and as a symbol of loyalty to the petrodollar arrangement.

The Saudi's benefit a great deal from this "special arrangement" that they have with the US. It ranges from military support to assurances that they could govern their people in any way they chose without the threat of economic sanctions from the United States. This is specifically why Saudi Arabia has not faced sanctions despite its long history of religious and human rights violations and exporting terrorism.

The one flaw in the petrodollar trade is that despite the fact that a good deal of inflation is exported out of the US, eventually some of it will return like a boomerang in a variety of ways. But as far as Washington is concerned, the benefits outweigh the risks because excessive inflation can serve as a means by which to more easily pay off its mounting federal debt stemming from wars, high health care costs, and other types of corporate welfare. In this way, Washington and well connected oligarchs can have their cake and eat it too, because petrodollar economics guarantees that the US will never face very high inflation. The petrodollar always creates a win-win situation for the United States. Meanwhile, other nations, particularly those in the third world with no means to defend themselves, in many instances possessing corrupt elites that have sold out their people, get shafted.

Add your Vote:

Votes on this review: 4 Helpful / 0 Funny / 1 Agree / 0 Disagree

234 days ago

Review Icon numbah16tdhaha reviewed Lack of Sound Banking Practices in Causes and Impacts of the Global Financial Crisis:
...and the gradual legalization of said practices.

Add your Vote:

Votes on this review: 2 Helpful / 0 Funny / 1 Agree / 0 Disagree

234 days ago

Review Icon numbah16tdhaha reviewed Rise of China in Causes and Impacts of the Global Financial Crisis:
At this point I'm under the impression that China has to burn themselves down to burn us down. Anybody think they're interested in that?

Add your Vote:

Votes on this review: 4 Helpful / 0 Funny / 2 Agree / 0 Disagree

269 days ago

Review Icon abichara reviewed The "Fiscal Cliff" in Causes and Impacts of the Global Financial Crisis:
I consider this Wall Street agitprop, enabled by certain elements of Congress bent on executing cuts to Social Security and Medicare, programs that citizens have paid for with the payroll tax, along with cutting back all aspects of the social safety net, from food stamps to unemployment benefits to Medicaid, to housing subsidies. These programs are not the core problem. Social security is fully funded and is not a direct contributor to the deficit. What's happening is that these political and economic forces are simply trying to create hysteria to force through their agenda. The cliff is indeed real, but it is a result, not a cause.

The genesis of the fiscal cliff goes back to the debt ceiling deal made in 2011 in response to Congressional brinksmanship on a package of spending cuts. The core issue revolves around "sequestration," which calls for three elements: tax increases, spending cuts impacting everything from defense to social policy, and an increase to the payroll tax (FICA). These items were all pushed ahead into the future in exchange for raising the debt ceiling. If Congress doesn't come to a deal before it adjourns later this month, we'll see about $350 billion worth of tax hikes, just over $100 billion in increases to the payroll tax, and about $110 billion in spending cuts. These are significant sums, but it won't be the end of the world. Most of these cuts will be phased in over time. It comes out to about 1/2% of our total yearly GDP.

We have reached this situation due to the inability of the federal government to close the budget deficit. It cannot be closed because unfunded liabilities stemming from eleven years of US-initiated wars against a half dozen Eurasian and Middle Eastern nations--wars that have benefited only the profits of a military/security complex dominated by political insiders. High health costs thanks to price fixing from the health insurance and pharma industries are also contributing to escalating Medicare/Medicaid costs. Also our economic and financial policies that are focused only on saving banks that wrongful financial deregulation allowed to speculate, to merge, and to become too big to fail, thus requiring public subsidies that vastly dwarf the totality of US welfare spending.

Ever since John Maynard Keynes, economists have understood that tax increases and spending cuts suppress, not stimulate, economic activity. This is especially the case in an economy such as the American one, which is driven by consumer spending. When spending declines, so does the economy. When the economy declines, the budget deficit rises. This is especially the case when an economy is weak and already in decline. A declining economy means less sales, less employment, less tax revenues. This works against the effort to close the federal budget deficit with austerity measures. Instead of strengthening the economy, the austerity measures weaken it further. Furthermore, to cut unemployment benefits and food stamps when unemployment is high or rising would be to provoke social and political instability.

At the present moment, incomes are stretched to the limit, as people cannot pay their bills, mortgages and their student loans. People are drowning in debt and there is nothing that they can cut back in order to save money with which to pay higher taxes. The financial system is especially troublesome and the problem stems from deregulation of the big banks and financial houses.

Meanwhile, the Federal Reserve's policy is focused on saving the banks, not on saving the economy. The Federal Reserve is purchasing not only new Treasury bonds issued to finance the more than one trillion dollar annual federal deficit but also the banks’ underwater financial instruments, taking them off the banks’ books and putting them on the Federal Reserve's books. Normally, debt monetization of this nature amount results in rising inflation, but the money that the Federal Reserve is creating in its attempt to manage the public debt and the banks private debt is hung up in the banking system as excess reserves and is not finding its way into the economy. The banks are too busted to lend, and consumers are too indebted to borrow.

Our economy has a serious disease: a parasitical element has taken over the functions of governance across several economic sectors. They insist that they need to continue to receive their loan guarantees, subsidies and favorable regulatory treatment, even at the expense of a sound monetary system, or even their guaranteed Social Security and Medicare benefits paid into by way of payroll taxes. The neo-liberal and neo-conservative political establishment in Washington are prepared to go with this element, and the result will likely be austerity. They would rather deal with the symptom of the problem and not the root disease.

The economy will likely slow down in the next several months, but much of that will have to do with variables like declining corporate profits, and a deepening recession in Europe, and signs of it in India and China. Those factors are weighing more on the equity markets right now than this fiscal cliff stuff.

Add your Vote:

Votes on this review: 3 Helpful / 0 Funny / 0 Agree / 0 Disagree

View Next Subject: Stocks

Top Miscellaneous Finance & Investing Reviewers