Financial Market Potential 2012-2013

Indonesia stock info - Financial Market Potential 2012-2013 ; While we agree with Mr. Ben Bernanke and his colleagues that quantitative easing (QE) should repair this shrinkage of money, how much to inject and ensuring it goes into the right holes is beyond the capabilities of central banks. They need the full cooperation of the banking system to ensure that new money flows down to the right places to consumer and small businesses and the housing market. This has not happened—somewhat defeating the theory of QE. With the shrinkage hitting all but the emerging world, the exercise has to involve all the developed world’s banks doing the same. Instead, they’re contributing to the problem.

The result is seen with a glance across most world markets. We see a potential for volatility that we've never seen before. From 1945 until 2010, the U.S., Britain and the rest of the developed world were the masters of markets, giving them a level of global financial control that defied basic common sense. It's the loss of control of the entire financial world that will create volatility and uncertainty in most markets going forward. The conflicting aims of the developed versus developing world are creating divisions that we cannot see being repaired in the future. There's now a battle between West and East unfolding for control of the world's wealth. It looks like the East will eventually win.

The health of national economies will again dictate the value of its currencies. In the days of yesteryear, a country's "balance of payments" was the dictator of its currency's exchange rate. This changed when the U.S. linked the oil price to the dollar and issued its currency worldwide—all in the face of persistent trade deficits. With pressure to reinvest in the world's largest and most liquid markets, the states balanced the balance of payments of the U.S, which allowed the number of dollars to grow to the point where it stood as the only completely liquid and sole reserve currency (despite its issue being bloated well beyond the needs of the U.S. financial system).

Today we're at a point where such over-issuance has led to debt levels that are completely excessive throughout the developed world. The shrinkage of asset values has not only hurt values, but it has also hurt confidence and trust. If there were to be an increase of interest rates in the developed world as a result of this loss of trust and confidence, not only banks but governments would see confidence in their currencies and creditworthiness collapse. More QE—whether it is through the back door in dollar/euro swaps or QE3—makes little difference except to postpone the fateful day.

With interest rates close to zero, we should be seeing financial markets in the developed world roaring ahead. Instead they’re marking time and have done for the last two years. The potential for equity bull markets is there, but few believe in it. The focus is now on staving off more deflation and hoping the banking system holds together. The Fed has reassured markets that there'll be no interest rate hikes until 2013, at the earliest. Many feel that markets will be safe until then, but then what? The feeling is not one of future growth, or even hope, but can we survive without a major bank/government crisis? For instance, it's more and more likely that Greece will leave the Eurozone in 2012/2013 because it will remain a deadweight in the Eurozone for the foreseeable future.

Related Post:

Financial markets

• forex trading asian session oct 24 2012
• Financial Services Firms In UK To Cut Jobs, Invest Less In 2012
• guardian prediction media business and advertising 2012
• Shanghai financial markets transaction volume forecast 2015
• infects US debt crisis on Financial markets in Europe and North America
• Yen and Swiss franc slide on U.S. debt deal August 1, 2011
• US stock futures and dollar rise on debt deal august 1 2011
• 30,000 jobs are expected to be axed at HSBC over three years
• UK banks face further profit downgrades