Monday, September 26, 2011

Financial Crisis and Deregulation

The most recent financial crisis, which was instigated by the housing bubble, was one of the worst economic meltdowns witnessed since the great depression. The ripple effects of this crisis were felt all around the world, causing some countries to be on the verge of economic collapse. Virtually no country was left without having its economic foundation shaken to some extent. Some blame the many companies who went bankrupt or nearly bankrupt of thirsting on greed and not being held accountable for their actions. Yet other people blamed the government and its lack of regulation for being the very inception of the financial crisis.

Sunday, September 25, 2011

Some Thoughts About The Future Of The Dollar

              According to Peterson Institute for International Economics, “The US dollar is not the world’s key currency by policy design, just as English is not the leading global language by policy design. It is the evolutionary outcome of practice and experience. It would take both a major shock to the dollar and a viable alternative to dislodge it from widespread use”. For decades a large number of people as well as nations use the US dollar as an accepted currency for exchange, in fact, “most of the world’s foreign exchange transactions directly involve the US dollar” (PIIE).  What have been witnessed lately after the recent mortgage meltdown in the United States, new emerging markets, the turmoil in the Middle East and the surge in oil prices,  more investors are seeking safe heavens. Usually this would translate to great news to the United States dollar, instead the Swiss Franc and the Yen have been viewed as the new safe heavens for investors (CNBC).

Saturday, September 17, 2011

Half True!

The notion which we are hammered with from every government official, politician, TV Station, and journal is that people don't spend money during tough economic times because "they are worried about uncertainty in the economy." This notion is only half true and laughable. During tough economic times, many people lose their jobs, and therefore, they don't have enough money to pay their bills, much less to spend. After all, more than 70% of the United States GDP comes from consumer spending. As such, I find it funny how even top economists and politicians forget to mention this point. Maybe they don't even know this fact! 

Friday, September 16, 2011

Speculation versus Investment

Surprise! Surprise! The majority of people speculate! Whether in deciding to buy a business, house, piece of land, or shares of a company (stocks), people just dump their money into anything in anticipation of harvesting profits in a short period of time. There is absolutely nothing wrong with having the ambition to make money or increase your lifestyle, but people make the mistake of confusing speculation as investing, in the hopes of achieving stellar financial results. 

Thursday, September 1, 2011

One of my favorite quotes

‎"If interplanetary visitors landed on Earth and examined the workings of our financial markets and the behavior of financial-market participants, they would no doubt question the intelligence of the planet's inhabitants."---Seth Klarman--