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Moneylife Digital Team 07 October 2013
How does Raghuram Rajan, the governor of the RBI, view the experiment of fiscal stimulus that the US Federal Reserve, under Ben Bernanke, has been pursuing? Remember, Rajan had correctly warned in 2005 that a combination of low interest rates, financial innovation, rising asset prices, and...

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The US government has shut down 17 times before. The worst was in 1995 and the market only dropped 3%. So, a government shutdown is not seen as a market moving event. Failure to raise the debt ceiling, which allows the government to keep borrowing and potentially avoid default, is another...

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Although the most corrupt and biggest offenders are Chinese companies, it is unlikely domestic pharmaceutical and food manufacturing firms will face the kind of regulatory challenges imposed on their foreign competitors any time soon The Chinese leadership wants to rebalance and reform...

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Do not expect policymakers, including US Fed and Chinese leadership, to admit that they followed a policy of too much stimulus similar to the one that caused the 2008 crash. For them it is simply easier to ignore the risks and keep the money flowing This week despite the endless fanfare...

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Moneylife Digital Team 19 September 2013
Asian equities, currencies and bonds have taken a beating over the last few months after the U.S. Federal Reserve hinted it would halt its nearly five-year policy of flooding markets with cheap cash, points out Reuters in its release on its Asia Business Sentiment survey Business...

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Moneylife Digital Team 19 September 2013
Tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labour market, the US Fed said The US Federal Reserve has left its $85 billion per month stimulus programme in place, against broad expectations that it would...

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Moneylife Digital Team 31 July 2013
According to Credit Suisse, after months of worry about fragile developed world economies, China has become the main drag on activity important for demand Global growth remains weak in aggregate but it is becoming clear that the latest 'slowdown scare' has come to an end and global...

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Moneylife Digital Team 23 May 2013
Quantitative easing is a powerful monetary policy tool to revive markets and the economy. However, recent analysis has shown that there is no difference on how it affects economy. If at all, central banks’ policies has made markets more volatile than before with Warren Buffet stating that if...

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Bubbles happen all the time in frontier markets. The index in Ghana is up 50% in four months. Assuming you wanted to take the risk, what are the safest investment vehicles and do their returns really represent the mouth-watering  headline numbers? While I was waiting for my interview on...

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As China slows, the loan defaults will increase as will unhappy customers. In an era of social media, it will be more difficult for the government to prevent people from removing their money from the system Zhang Ke, the vice-chairman of China’s accounting association, is worried. He and...

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Moneylife Digital Team 25 April 2013
Nomura felt the risks in China were sufficiently non-trivial to assign a one-in-three likelihood of a “hard landing” commencing before the end of 2014 Almost 18 months ago, global brokerage firm Nomura in its China Risks report provided six reasons why it thought the risk of a hard...

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While much of the recent economic gains have been attributed to the actions of the Federal Reserve, the Fed could be harming as much as it is helping. The question will be what happens when the free money disappears? At that time we will finally know the true state of the US economy and it is...

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Governments are happy to shift bad debts onto taxpayers, or even better to some other country’s taxpayers. Investors have felt safe that there is no down side, no risk. But two insolvencies in recent weeks may change these expectations and changed expectations are contagious Since the...

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Moneylife Digital Team 29 March 2013
As per World Steel Dynamics, inventory restocking should continue in China on a broader level as 2012 saw a large destocking of inventory which is still getting replenished The Chinese crude steel production momentum remains strong since October 2012 and has grown in double digits for...

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In the first part of this two-part article we discussed overheating in credit markets. We now take a look at were the problems exist. Like the Junk Bond ETFs the duration mismatch is not an issue. But if investors began to question the safety of WMPs and stopped buying them, then the whole...

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Governor Stein pointed out that a lengthy period of low interest rates confirms an assumption of little risk. This encourages agents to increase financial leverage beyond what might be considered normal or even sane. Borrowers must work within the income budget and not borrow simply because...

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Although the government’s efforts have not been rewarded with either inflation or a healthy economy, it has resulted in the highest sovereign debt in the world at a whopping 200% of GDP. The only reason why Japan is immune from bond vigilantes is because most of the debt is held by locals at...

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The real problem with the sequestration for both politicians and investors is that the cuts will be phased in over time without an immediate impact. No one is really sure what its effect will be. It is doubtful that either party will feel the need to compromise until there is a consequence...

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China has a powerful elite class, which like the financiers, are a law unto themselves. For the privileged it can mean vast fortunes. It is one of the few places that can give Wall Street some lessons on greed The US stock market is nearing its all-time high. This appears to be very good...

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A poor system of taxation denies the citizens the services they have a right to expect from their government. But the crisis, both past and potential, have illustrated that the failure to collect taxes can have much broader effects on markets far from home The origins of a sovereign debt...

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