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Everywhere I turn, I see, read and hear how capitalism has destroyed the American economy. The political Left blames capitalism outright, while the political Right claims capitalism is the American ideal. The elitists in banking, government, academia and the media give lip-service to the idea of a free market, when they, in fact, have no use for it. The real purpose of claiming that free markets are the American ideal is to give the collectivist a scapegoat to blame for all their nefarious wealth redistribution programs. Too many of today’s activists have fallen for this intentional misdirection.

Blaming free market capitalism for our economic problems is accusing a ghost. It has been dead for a long time. It was first stabbed in the back in 1913 when the U.S. Congress passed the Federal Reserve Act and the United States Revenue Act (creating the IRS).

The Federal Reserve Act gave a private cartel of international bankers control over the very essence of a free market; our medium of exchange, our money. This put the free market into a death spiral. Now factor in the Legal Tender Act which prohibits any form of lawful money except the Federal Reserve Note. It is this Legal Tender Law that gives the Federal Reserve bankers their money monopoly. Without this law, individual enterprise could offer alternative commodity-backed money and compete with the FRB head to head. But honest competition is not what the elitist central planners want. Well, at least our new federal money still had some value. It was backed by gold, but not for long.

The Federal Reserve can control interest rates by expanding or contracting the quantity of money. It can control the financial markets with its “Open Market Operations.” It can create new money to increase its member’s bank reserves at any time. It can negotiate with foreign banks on monetary policies without congressional approval or knowledge. And it can do all of this with virtually no oversight by any elected representative of the people. Even the Government Accounting Office responsible for auditing all government agencies, has no auditing authority over the Federal Reserve, a private corporation not a government agency.

Without the ability to judge the cost of capital by the true market value of interest rates, determined by the availability of savings for investing and future consumption, no free market can correctly judge its financial health. These false signals along with government regulations are what create booms and busts in our economy, not free market actions. The Federal Reserve and the government manipulate the appearance of economic prosperity for personal and political gain and then blame free market capitalism when the inevitable adjustments occur (busts).

By creating the Internal Revenue Service (collection arm of the Federal Reserve), government makes the claim that our individual production, property and privacy no longer, in any real sense, belongs to us. Congress can change the tax rates and rules at any time, favoring some at the expense of others, and is about to do so again. This privilege of the central planners has driven many a productive individual to send their manufacturing and creative endeavors elsewhere. This put American free market capitalism on life support, still breathing, but barely.

In 1933, by Executive Order of the President (FDR), all Americans were required to surrender their gold to the government. This took away our right to trade in the most respected of all possible commodities used to secure value in our economic exchanges. Not only did government confiscate our gold, they also prohibited redemption of U.S. Dollars for gold by any American. Of course, the international bankers were still allowed to exchange dollars for gold. Now you know where our gold went. FDR pulled the plug on value-backed money for American enterprise, dooming free market capitalism to a slow and painful death.

In 1971, President Nixon reneged on the “Bretton Woods Accord” removing the international gold redemption for the U.S. dollar. Unfortunately, it was too late. It is probable that the international bankers already own most of what was our country’s gold. No longer would our dollars be backed by anything other than our central banker’s and government’s “Good Faith.” No free market can exist without the right to exchange productive value for productive value. In the years that followed, no longer constrained by a gold-backed dollar, big government warfare/welfare spending exploded.

What we have today is not free market capitalism, it is corporatism. Corporatism is a form of fascism, where big business and government work as partners at the expense of the productive class. We have the military/pharmaceutical/energy/media/industrial complex and the elitist central planners of big government ruling our country. We see a revolving door of big business CEO’s and bankers taking key government positions of power. They then move back into their private positions after accomplishing their goals of amassing great wealth for their friends and themselves. This is the outward signs of corporatism for everyone to see. But few are aware or care!

The change we were promised, if we would just vote for anyone except a Republican, is only a change in the national figurehead. Only in such an environment of big government and corporatism is greed truly rampant. Free market capitalism and the Rule of Law can not exist in the same society with either.

We who believe in free markets under the rule of law can not argue against a lie unless we expose it for the lie it is. The free market died when our money became nothing more than the confiscation of our production. Tell America to stop dragging around the corpse of free market capitalism as its whipping boy. We should all have the decency to give the dead some respect for what might have been.

Rest In Peace, Free Market Capitalism!

growing economic region in the world – Southeast Asia. Recent studies, however, are projecting that the region’s growth will soon dwarf its previous (already exemplary) pace, and rise to a staggering 15% growth for the year of 2010. As economic recovery spreads throughout the region, Singapore is uniquely positioned to provide decades of growth in a number of central industries from manufacturing to pharmaceuticals.

While it’s easy to exaggerate when it comes to the financial action going on in places like Singapore, this particular statistic is reliable as it comes directly from the Ministry of Trade and Industry, a group charged with regulating and monitoring economic growth and development throughout the country. When asked about what factors seemed at the core of Singapore’s growth, much of the credit was given to the fact that the Pacific Asia region as a whole has demonstrated a high rate of “bounceback” after recent recessions have plagued much of the Western world.

Singapore in particular has boomed because of its open economy, experts say. The region is notoriously friendly to entrepreneurs looking to migrate businesses or establish new ones. Low taxes, streamlined business processes, and a generally thriving corporate environment make for a solid foundation in which any industry might grow, and adventurous investors are taking note. In particular, pharmaceuticals and electronics have dominated in recent years, adding to the country’s already prolific manufacturing sector (bolstered by a well-supported export economy that has held on and done well even in times of slow growth).

On the subject of manufacturing, the numbers here also reflect the fact that Singapore’s economic growth is outpacing even the most optimistic projections. Recent reports, again from the Ministry of Trade and Industry, show that businesses specializing in manufacturing have expanded an impressive 46% over just the last year. This seems to be a case where the growth of the economy as a whole has helped to boost business in particular sectors in unforeseen ways. To put it a bit more plainly, while Southeast Asia, Singapore included, has always been a major exported of mobile computing and wireless technology, they are now also one of the world’s biggest consumers of such commodities.

As the standard of living in the country grows, exciting opportunities also begin to blossom for passionate entrepreneurs looking for an opportunity to grow. Imagine the growth and profits enjoyed by manufacturing companies in a country with consistently high export and domestic sales. Pharmaceuticals too are now being prescribed and distributed more within the Singapore region, making this yet another big contributor to the growth figures that have analyst stunned.

Whatever the reasons for the 15% jump, however, the bottom line remains clear: Southeast Asia, and Singapore in particular, is one of the most fertile grounds in which to grow a business in recent memory, and represents an unbeatable opportunity for the motivated entrepreneur.

It is very important for the youth just not to be acquainted with the economy and business happenings in India but also be updated with the current affairs regarding the same. It gives a glimpse of the economic stand of India in comparison to the world. One can also take economy quizzes to test their limit of knowledge in this field.

•Main news in business is that the finance Department of Haryana has notified that the sale of securities of 10 years tenure for an aggregate amount of 650 crores. This money would be utilized to finance capital expenditure in connection with development programmes of state government. 10 per cent of the notified amount of sale will be given to eligible individuals and institutions to maximum limit of one percent of notified amount.
•Mil prices have risen up to 27 percent in the national capital in the last two years due to increase in cost production. This has been the current affair in the economic world.
•As the government is still tackling the anger of the public due to inflation rates in many products, it has decided not to increase the diesel rates as of now. Petrol prices has haven risen up recently but increasing the diesel prices can be a serious problem as farmers and manufacturers pass their higher cost to the consumers.
•New eco friendly cells would be introduced by the battery manufacturer, firefly energy India. The new eco friendly batteries will replace the conventional lead acid units and can be vehicles, generators and high end applications.
•Having completed investigation into special audit of five leading operators, including RCom, Bharti and Idea, the Telecom Ministry is likely to raise demand of over Rs 1,100 crores from them for under reporting revenues.
•Due to decline in vegetable prices, the annual flood inflation slipped to single digit.
•The Rakesh Mohan Committee on Infrastructure has listed electricity, railways, ports, electricity supply, water supply, telecom, roads, airports, urban infrastructure and storage as infrastructure sectors.
•The Ruchi group of industries that is based in Madhya Pradesh has plans to invest around USD 150 million dollars over the next few years to expand itself in the oil palm business in India and overseas.

When one is aware one has the power to change. There are many economy quizzes that help individuals to test their knowledge about the economy and business current affairs in India. These serve as preparation material or many exams.

New York is the heart of USA and also known for various trends. A lot of economy of USA is based on this state. It is the biggest state of USA too. New York’s gross state product in 2007 was $1.1 trillion, ranking third in size behind the larger states of California and Texas the other two states of USA. If New York were an independent nation it would rank as the 16th largest economy in the world. Its 2007 per capita personal income was $46,364, placing it sixth in the nation behind Maryland and eighth in the world behind Ireland.

New York’s agricultural outputs are dairy products, cattle, other livestock, vegetables, nursery stock, and apples. Its industrial outputs are printing and publishing, scientific instruments, electric equipment, machinery, chemical products, and tourism. A recent review by the Center on Budget and Policy Priorities found 13 states, including several of the nation’s largest, face budget shortfalls for Financial Year 2009. New York faces a deficit that could be as large as $4.3 billion. New York exports a wide variety of goods such as foodstuffs, commodities, minerals, computers and electronics, cut diamonds, and automobile parts. In 2007, the state exported a total of $71.1 billion worth of goods, with the five largest foreign export markets being Canada ($15 billion), United Kingdom ($6 billion), Switzerland ($5.9 billion), Israel ($4.9 billion), and Hong Kong ($3.4 billion). New York’s largest imports are oil, gold, aluminum, natural gas, electricity, rough diamonds, and lumber. Canada is a very important economic partner for the state. 21% of the state’s total worldwide exports went to Canada in 2007. Tourism from the north is also a large part of the economy. Canadians spent US$487 million in 2004 while visiting the state.

New York City is the center of banking, finance and communication in the United States and is the location of the New York Stock Exchange, the largest stock exchange in the world by dollar volume. Many of the world’s largest corporations are based in the city. The state also has a large manufacturing sector that includes printing and the production of garments, furs, railroad equipment and bus line vehicles. Many of these industries are concentrated in upstate regions. Albany and the Hudson Valley are major centers of nanotechnology and microchip manufacturing, while the Rochester area is important in photographic equipment and imaging.
New York is a major agricultural producer, ranking among the top five states for agricultural products such as dairy, apples, cherries, cabbage, potatoes, onions, maple syrup and many others. The state is the largest producer of cabbage in the U.S. The state has about a quarter of its land in farms and produced US$3.4 billion in agricultural products in 2001. The south shore of Lake Ontario provides the right mix of soils and microclimate for many apple, cherry, plum, pear and peach orchards. Apples are also grown in the Hudson Valley and near Lake Champlain. New York is the nation’s third-largest grape-producing state, behind California and second-largest wine producer by volume.

The present state of economy is not as strong as it used to be before recession struck the market. After studying the prevailing conditions of the market, AJ Discala observed that the economy is, still struggling against the illiquidity hangover due to the huge amount of money that went missing from the financial structure after the recession. For this reason, the efforts and services of Broadsmoore are directed towards developing fresh and innovative strategies to survive and flourish. Mr. Discala believes that the shaken confidence of investors due to the recession and corrupted circumstances of the financial environment cannot be reinstated in a single go. The process is a long one and has to involve a continuous series of changes and improvement.

The main reason behind the failures of many strategies during recession was due to fraud riddled companies. The strategy of loan modification also failed because the modifications were for political show and did not reduce the borrowers payments enough to fix the problem. This situation only put immense pressure on the people it was supposed to help- worsening their condition instead of providing any lasting benefits. AJ Discala understood the condition and knew that banks can gain back their earlier positions either through debt recovery or through provision of large amount of capital. The capital restructuring services of Broadsmoore are lending a strong hand to the process by providing various banks, money managers, and insurance companies with the required capital. This capital restructuring is based on the tools of risk management and intelligence that brings security and surety to the financial market.

To strengthen the efforts of Broadsmoore group, AJ Discala collaborated with portfolio companies including Regenicin, Intellivise, EmployUS, XO Armor, Atlas Federal, and Home Accents Alliance. These companies are dedicated to working towards various strategies of Broadsmoore that include risk intelligence, counter party verification, job creation/job salvation, regenerative medicine, housing, transparency in investment procedure, and security. All these strategies ensure the right returns on investment for customers along with fraud detection and clarity in investment documents. These strategies are targeted towards reinstating the investor’s confidence in the market along with benefitting the general economy.

THE SAN DIEGO COUNTY HOUSING MARKET AND ECONOMY: AHEAD OF THE PACK

San Diego, CA- The United States has witnessed sporadic and ambivalent messages regarding our definitive position along the path to the much anticipated economic stabilization and recovery process. As the federal government rushes to provide financial aid to struggling homeowners and financial institutions in efforts to stabilize the largest recession in recent history, many still remain uncertain of what lies ahead for the San Diego County housing market and economy.

The San Diego County housing market has erupted from its dormancy as newly released MDA DataQuick market research indicated a 15.8 percent year-over-year increase in median home prices from March 2009- 2010, the largest year-over-year increase in home valuations in five years.  Furthermore, of the six counties that comprise Southern California, home sales were up 33 percent in March over February, and were up five percent over 2009 levels, according to MDA DataQuick.   Analysts have attributed many factors for this sudden rise in home valuations, and many remain skeptical of the sustainability of this type of growth.

An analyst for DataQuick, Andrew LePage attributes the large spike in home prices to the increase in sales in the upper-tier real estate market. LePage states, “It’s price softness in the high-end that is driving sales and bringing up the high-end total contribution to countywide sales.”

The first quarter of 2010 also saw fewer lending institutions initiate the formal foreclosure process on distressed homeowners. According to MDA DataQuick, San Diego ‘s notices of default, the first step in the foreclosure process, plummeted 39 percent compared to the first quarter of 2009.  San Diego real estate economist and financial advisor, Rich Toscano states, “Much of the government intervention in the housing market, notably low-down payment FHA loans, government guaranteed conforming loans, and the first-time buyer tax credit, has had an inordinate impact on entry-level homes. The price tier that contains these homes is going gangbuster as a result. Meanwhile, the upper-tier, which doesn’t benefit from the stimulus as much as the low tier, stagnates.” Toscano believes this divergence illustrates how the “housing rebound” is mostly being driven by government stimulus and intervention rather than economic fundamentals. But wasn’t that the purpose of the government stimulus to begin with? The stimulus was purposefully instituted to stabilize declining home prices and provide aid to homeowners in distress, all of which has seemed to be realized from the latest statistical data. Buyers are taking advantage of the incentives to purchase within the hardest hit housing sector, the low-tier.

Unemployment and job creation, both hot topics amongst political adversaries, have also shown incremental gains in the first quarter of 2010 within San Diego County. According to the California Employment Development Department’s latest estimates, San Diego not only added jobs in March, but the year-over-year rate of employment decline also fell to its slowest pace since December 2008. The skeptical Rich Toscano, states on his blog, Piggington’s Econo-Almanac, “Employment has been increasing for two months, while at this time last year it was dropping in spite of a tendency towards seasonal strength. There may be fewer people actually employed than last year, but that number is now growing instead of shrinking.” He adds, “It’s too early to tell whether a more enduring employment recovery is underway, but for the first time in a while, the data suggests that it’s at least a possibility.” Lawrence Yun, Chief Economist for the National Association of Realtors, has similar concerns. In his latest commentary, Yun states, “Steadily rising employment will be essential to keeping housing positive once the credits disappear.” While the national unemployment rate remains high and many believe unlikely to improve much in the near future, economists like Mark Zandi of Moody’s Economy.com, expects the unemployment rate to be 10.2 percent at year’s end, up from 9.7 percent in March. At the end of 2011, he predicts a still hefty 8.6 percent jobless rate.

Credit conditions remain tight and are expected to get tighter. Around a third of home sales in recent months have been financed by loans by the Federal Housing Administration, which allows down payments as low as 3.5 percent, however, the FHA is tightening its terms somewhat.  James Hagerty of the Wall Street Journal states, “By early summer, the FHA plans to reduce the maximum amount a seller can contribute to the buyer’s costs—such as loan origination, legal appraisal fees—to 3 percent of the home price from 6 percent. That means buyers will have to save more to meet their closing costs. John Burns, a real estate consultant in Irvine, California adds, “A survey of builders by his firm found that they expected the FHA changes to eliminate as many as 15 percent of potential buyers.”

Despite skeptical rhetoric surrounding the local San Diego County housing market and economy, Coastal San Diego luxury real estate specialists Kip Boatcher and Eileen Anderson of Anderson+Boatcher, a strategic partnership under Willis Allen state, “The recent activity in the upper-tier luxury real estate market is unprecedented.”  Since the beginning of 2010 Anderson+Boatcher has approximately placed over 25 million dollars of residential real estate in escrow, and has already closed escrow on approximately 10 million dollars worth of inventory. They have experienced a slew of high net worth clients purchase homes with all cash offers. Kip Boatcher adds, “These buyers were simply not there a year ago.  They have been waiting for signs of stabilization and recovery for a few years now. Both, real estate buyers and sellers in San Diego have noticed the trend toward stabilization and have now begun the process of actively pursuing their goals of buying and selling.”

Eileen Anderson attributes recovering consumer confidence as a leading factor for the rapid influx of market activity. “Our listing portfolio has nearly doubled this year alone. Sellers are practicing their own due diligence, they are searching for the best luxury real estate marketers with the most advanced network of high net worth real estate investors and asset managers. We are selling homes before we can even place a for sale sign on the property,” says Eileen Anderson.

Surprisingly, custom homesites have also been a hot ticket item for Anderson+Boatcher, citing the diminished building costs to construct a custom estate as a leading factor for their high demand.  ”In many instances, today’s market has made it possible to build a custom home in an established coastal community for significantly less than the cost of purchasing an existing home with comparable views and location”, proclaims Kip Boatcher. He adds, “Luxury homebuyers know what they want, how they want it, and they are willing to wait for the perfect opportunity, like we are seeing today.”

P.J. Roustan, the Director of Marketing and Communications for Anderson+Boatcher, attributes their success to a focused and targeted approach to real estate marketing. Roustan states, “We directly market our services and listings to the most appropriate target audiences. Our strategic integrated marketing communications approach highlighted by the advanced use of media technology, a highly stylized user-friendly website, Architecture Digest quality photography, and a team of industry leading market analysts have made Anderson+Boatcher a force poised to dominate the Coastal San Diego luxury real estate market.” P.J. Roustan adds, ” Luxury real estate buyers are there, they never left. They have been simply waiting out the storm, regrouping, and gathering information to make sound decisions for this next real estate cycle.”

Despite growing concerns surrounding the sustainability of a full economic recovery in the near future, San Diego County has remained a bright spot and glimmer of hope for those searching for answers and signs of any substantive economic progress. San Diego can be viewed as a microcosm for the greater US or a sample market, as we begin to see empirical evidence and data supporting signs of incremental progress.

Is the glass half full? The Federal Reserve has committed to buying 0 billion worth of Treasury bonds between now and June, and it wants to purchase up to 0 billion in debt by the end of September 2011.1 This second round of quantitative easing has been dubbed QE2. Basically, this effort would pump cash into the banking system to promote lending and some inflation, and it has the potential to help stocks, the housing market, consumer spending and employment. Let us all be reminded that the basic premise of the Fed lowering interest rates or in this case QE2 is that lower rates of interest leading to increased money supply in the economy will spur investors to invest, banks to loan, and businesses to hire workers and invest in their businesses, which presto creates positive economic activity.

Or is it half empty? Various economists, financial analysts, and business leaders are extremely worried about the impact of this tactic. They fear it may create another stock market bubble like the dot com bubble via an inflated equities market motivated by speculation and low interest rates instead of real earnings by growing businesses. Likewise, others see a commodities bubble that could burst dramatically in the years ahead much like the current housing market.

QE2 has already earned some prominent detractors. Bond market guru Bill Gross of PIMCO just called it “a Ponzi scheme” that will end the 30-year bull market in bonds (an event he has actually forecast for some time). Jim Rogers, the Quantum Fund co-founder who astutely called the worldwide bull market in commodities in 1999, recently labeled QE2 “petrol on the fire” of the commodities market and told an Oxford University audience that Fed chair Ben Bernanke “does not understand economics … all he understands is printing money.”2, 3

Will this help stocks & housing? The Fed’s bond-buying program implies lower long-term interest rates, lower bond yields and a weaker dollar. In an environment with lower bond yields and paltry savings rates, investors are predisposed to enter asset classes such as real estate, stocks, commodities, venture capital or other equity type investments that offer higher returns then bonds (of course the risks are also higher too). If the stock and housing markets improve, that will certainly aid consumer confidence which, in turn, should aid consumer spending and thus uplift the economy.

Of course on Main Street, there are two speed bumps on the way to that rosy domestic destination. A lack of customers and/or demand (especially in the housing market) and unemployment; as those that have been laid-off, are working for less income, or are afraid of being laid-off do not make good consumers. Additionally, even with mortgage rates at all-time lows, loan requirements today are far tougher than in the past 5 years for those that seek to purchase a new or existing home. Thus the Fed’s strategy may have a tough time navigating these economic obstacles.

Why are other nations arguing against it? QE2 could invite a global trade war. A weak greenback means a big advantage for U.S. exports. Our products will be cheaper in other nations thanks to the increase in the money supply holding down the value of the dollar. Correspondingly, imported goods will cost us more and we will buy less of them. That’s terrible news for nations such as Brazil, Canada, China, Germany, Russia, Japan, France, Great Britain and Hong Kong, all of whom are counting on stable currency exchange rates and particularly for exported goods to aid in their economic recoveries.    

“It’s the wrong way to prevent or solve problems by adding more liquidity. Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate.” -Germany’s Economy Minister, Rainer Bruederle.4

If U.S. interest rates are too low for too long, investors may try the emerging markets and/or the commodities markets seeking higher returns. So the commodities markets and the emerging markets could get even hotter as they become flooded with cheaper US dollars looking for higher investment returns.

“I agree that there’s suggestion that aggressive quantitative easing in the United States would create devaluation pressure on the US currency.” – Canada’s Finance Minister, Jim Flaherty.5

If that happens, it would also imply higher prices for oil, crops and raw materials in the United States, which would look like inflation at the grocery store or the gas-pump to Main Street and long-term hamper our economy. Of course, many financial analysts and economists think the commodities markets will keep advancing with or without influences like QE2 because there is simply too much global demand and not enough available supply.

Is this the “Hail Mary” play? I think James Grant of Grant’s Interest Rate Observer, considered one of the most astute and independent thinkers on macroeconomic and monetary analysis, may have best summed up “the risks” the Fed is undertaking by moving forward with QE2.

“The intended consequences of this intervention include lower interest rates, higher stock prices, a perkier Consumer Price Index and more hiring. The unintended consequences remain to be seen. A partial list of unwanted possibilities includes an overvalued stock market (followed by a crash), a collapsing dollar, an unscripted surge in consumer prices (followed by higher interest rates), a populist revolt against zero-percent savings rates and wall-to-wall European tourists on the sidewalks of Manhattan.

As for interest rates, they are already low enough to coax another cycle of imprudent lending and borrowing. It gives one pause that the Fed, with all its massed brain power, failed to anticipate even a little of the troubles of 2007-09″.

With interest rates at nearly 0% and one round of bond-buying already in the history books, the Fed doesn’t have many options left to jump-start the economy. Here’s to its latest move giving the recovery more traction (the proverbial shot in the arm) and not becoming a shot in the foot.

Citations

1 – money.cnn.com/2010/11/03/news/economy/fed_decision/index.htm [11/3/10]

2 – blogs.wsj.com/marketbeat/2010/10/27/pimcos-bill-gross-qe2-is-a-ponzi-scheme/ [10/27/10]

3 – bloomberg.com/news/2010-11-04/bernanke-doesn-t-understand-economics-investor-jim-rogers-tells-oxford.html [11/4/10]

4 – bloomberg.com/news/2010-10-23/germany-says-u-s-federal-reserve-heading-wrong-way-with-monetary-easing.html     [10/23/10]

5 – businessweek.com/news/2010-10-25/g-20-to-avoid-competitive-devaluation-of-currencies.html [10/25/10]

6 – nytimes.com/2010/11/14/opinion/14grant.html?pagewanted=2&_r=2 [11/13/10]

Oh how it all turns around, and how quickly.

World markets have soared overnight; the Australian dollar has surged against the yen and the US dollar and our market is forecast to jump sharply this morning.

The Standard & Poor’s 500 Index jumped 91.56 points, or 10.79%, to 940.48 after sliding to the lowest level since March 2003 yesterday.

The Dow surged 889.35 points, or 10.88%, to 9,065.12 and the Nasdaq finished up 9.53%, or more than 140 points. Hong Kong’s benchmark index added 14%, its best advance in 11 years, while Germany’s climbed 11% and struggling Brazil’s jumped 13%.

London was up less than 2%: the surge in Germany was due to a sharp rise in the shares of Volkswagen as Porsche surprised the market by revealing it had assembled a controlling 7%% by market buying and playing the derivatives markets.

Hedge funds lost heavily as they had been shorting VW shares and got trapped as the value of the shares soared to the point where the car maker was the most highly valued company in the world a

The overnight futures market was signalling a 6% rise in the ASX 200, or more than 240 points..

That was after one of the most explosive last couple of hours trading ever seen on Wall Street. Therre was a gain of 500-600 points in the last hour.

The Dow posted its second-best point gain ever as the cheapest valuations in 23 years lured investors and increased commercial paper sales signaled credit markets are thawing.

In addition, there’s now a belief the Fed will announce a 0.50% rate cut after its current meeting ends tomorrow morning, our time.

The yen fell the most against the dollar since 1974 and posted its biggest decline versus the euro ever as global stocks rallied and speculation increased that the Bank of Japan will cut interest rates.

There were reports in Tokyo overnight of a plans to cut the key rate 0.25%, which would halve the Bank of Japan’s key rate. The central bank meets Friday in Tokyo.

That saw the yen crash, suffering its biggest loss against the greenback since 1974. It dropped 5% against the US currency in New York. It dropped 11% to 62.70 yen against the Aussie and 10.% to 55.19 against the New Zealand dollar.

The Aussie surged 7% to 64.28 US cents after touching 60.09 cents yesterday, the weakest level since April 2003.

The Reserve Bank of Australia bought dollars for a third day yesterday to stem losses and is now sitting on some nice profits as some of the first day’s intervention Friday night was around 55 Yen..

Sales of longer-term commercial paper soared 10-fold after the fed revealed that two days of backing the slumping US corporate commercial paper market, had revitalised it.

The Fed began buying the corporate paper and on Monday alone the market saw companies yesterday sold 1,511 issues totaling a record $ US67.1 billion of the debt due in more than 80 days.

That compared with a daily average of 340 issues valued at $ US6.7 billion last week. Dealers said the Fed accounted for $ US60 billion of the total.

The Dow’s only larger point gain in a day was on October 13, when the 30-stock gauge jumped 936 points on the government’s plan to buy stakes in banks. We know it plunged several times after that, so this could be a one day wonder.

Now for the Fed’s rate cut, but as that is priced in, will markets fall again?

………….

Business confidence continues to fall, according to the latest survey from the National Australia Bank of monthly business conditions.

While that’s gloomy news, there were a couple of other worrying portents from the NAB survey and from other announcements yesterday.

Residential property prices are looking stretched and the NAB and Merrill Lynch see falls of 5% to 10% coming over the next couple of years, and not much joy after that.

That will be bad news for the likes of Boral, Wattyl, Brickworks, the banks, especially Suncorp and the CBA, and for retailers like Harvey Norman.

Retailing is definitely hurting more than it seems from the outside: even the likes of Billabong, a big name locally and internationally for high margin, very successful sportswear, is seeing fewer items sold, although the slumping Australian dollar is helping offset the slowdown.

Mining companies are reviewing operations because of sliding metal prices, and importers like McPhersons Ltd, are doing the same because of the sliding currency, which bounced around 60 USc after a third successive day of Reserve Bank intervention. (It got up to just under 63 US cents overnight).

Furniture retailer, Nick Scali cut its earnings forecast yesterday because of slumping demand.

According to the NAB, the slump in activity next year will see a surge in unemployment and a blow-out in the federal budget by a massive billion “over the next couple of years”, and force residential house prices to fall by 5% to 10% over the next two years, according to the forecast from the bank, and from analysts at Merrill Lynch (See story below).

And while interest rates will fall further and inflation will follow next year, the slide in house prices will see them stagnating for three to five years: up to 2013 or longer, according to one of those forecasts.
The NAB reckons the Australian economy has slowed to 2001 levels (when we almost tipped into recession after the GST boost and the US slump). It sees the Reserve Bank cutting interest rates to 4.5% next year, but has forecast a billion budget deficit for the 2010 financial year.

“While the Government’s Mid-Year Economic and Financial Outlook is due in a couple of weeks, fiscal expansion together with the negative impacts of slower economic growth may well see the Federal Budget turn to small deficit of say around bn during the next couple of years.”

It was around .7 billion in the year to June 2008, so the turnaround would be of the order of billion.

The NAB also forecast the unemployment rate to rise to 6% during 2009/10) compared with the current rate 4.3%) and “core inflation will return to the RBA’s 2%-3% range’ despite another “near term surprise”, and then fall further in 2010.

The NAB’s forecasts, contained in its latest survey of monthly business conditions, comes as analysts at Merrill Lynch in Sydney have forecast a 10% fall in house prices over the next two years, followed by three to five years of flat or no growth.

The NAB supported the Merrill Lynch contention that residential property prices will fall, but not by quiet as much as 10%.

“Our macro forecasts suggest that as the unemployment rate rises sharply through late 2009, the residential property market may deteriorate further into 2010 – notwithstanding improved affordability associated with significantly lower interest rates. Our forecasts are broadly based on unchanged housing prices in 2009 with a moderate further fall of around 5 per cent into 2010.”

And leading retailer, Harvey Norman, revealed for a third week in a row that it is experiencing ‘negative’ same store sales growth: in the seven days to Sunday October 26, same store sales across Harvey Norman’s Australian stores fell 3.6%, after falls of 5.7% and 4.8% in the preceding three weeks.

Harvey Norman’s experience was supported by an update from a smaller Melbourne-based competitor, Clive Peeters, which told the market last Friday that same store sales were off 10% to 14% in the three months of the September quarter and things are not improving. The company will provide a fuller update at its AGM later in the week.

And Nick Scali’s annual meeting in Sydney heard yesterday that the company first half sales and profit for 2009 will be affected by the slowing economy and weakening Australian dollar.

CEO, Anthony Scali said while there been encouraging signs over the past three months in “sales order intake”, sales for the first half were expected to be about million below the corresponding period last year.

“The recent weakening of the Australian dollar in a very short period will cause a substantial one-off decline in our gross profit for the first half of 2008/09 and is expected to reduce earnings by .9 million to .4 million,” Mr Scali told the AGM.

“Our net profit after tax for the first half of the current financial year is now likely to be between .3 million to .8 million, against the .62 million earned in the December half of 2007.”

Harvey Norman has already revealed an 18% drop in earnings for the first two months of this financial year because of a slump in Ireland. But it hasn’t upgraded that forecast because of the slump over the past month to six weeks in Australia.

The NAB said it expects Australian economic growth to slow to 1.25% next year as the ” full effects of falls in share and key commodity prices fall and slow global growth weigh on prospects, notwithstanding expectations of stimulatory policy responses from both Governments and RBA.’

It said its local forecasts remain “unchanged on the bearish side of “consensus” view. Downside risks remain – at home & abroad – with much dependent on success of global financial rescue underway”.

The NAB said it expects the RBA cash rate cut from 6% to 4.5% by mid 2009 as well as aggressive cuts by central banks elsewhere;

It said the “Federal Budget is likely to go from surplus to deficit of around billion”, which would be a billion turnaround!

“Global GDP growth (on a broader definition) forecast lowered to only 2.5% in 2009 – including recessions in US, UK,

The US economy is in far worse shape than many in the US think, and is heading for a hard landing.

American consumers, who account for 70% of demand and consumption in the huge, $ US14.4 trillion economy, are in trouble and cutting back spending, thanks to falling levels of credit.

In fact the credit cuts are now much deeper than anyone thought after the release of up to date figures.

The IMF said overnight that the US appeared to be sinking into a recession, it said.

The Fund said in its latest World Economic Outlook that the US was now poised to expand 1.6% this year and a bare 0.1% in 2009.

That was an increase of 0.3% and a decrease of 0.7%, respectively from the prior forecast just three months ago, in which the IMF had lifted its April WEO forecasts, citing improving economic conditions in the US.

That improvement for this year relates to the 2.8% rise in second quarter economic growth.

The estimates were made before the latest figures though on consumer borrowing which tell a story of US consumers cutting back, or being cut back on credit, the lifeblood of the economy.

Figures for September store sales from some major retailers overnight showed sluggish growth for most, with downturns for those selling more expensive products, such as department stores.

Wall Mart managed a 2.4% rise in same store sales, but that was less than forecast, discount bulk chains lost Costco did OK, but Target reported a 3% drop in comparable store sales.

JC Penny, the big department store chain reported a massive 12.4% drop in same store sales in September, far worse than expected.

But it’s no wonder after the Fed’s earlier report.

Figures Tuesday night from the Federal Reserve on consumer credit show the biggest fall in the history of the recorded figures.

At the same time major industrial, Alcoa, suffered a 52% drop in third quarter earnings and has joined the mighty General Electric in eliminating a share buyback to conserve capital.

The national body for US car dealers warned that 700 would go out of business this year alone, and more would follow in 2009, if the credit freeze was not eased soon. Car sales fell 27% last month and the way the credit freeze is working, that drop will increase in the coming quarter.

And in a dramatic move the Fed extended the boundaries of its ‘Lender of Last Resort’ understanding by supplanting temporarily the frozen $ US1.6 trillion commercial paper market, the day to day lifeblood for American business activity.

At the same time Fed chairman, Ben Bernanke held out hopes for a rate cut, but said the US economy was heading into tougher times.

The Fed said it would set up a new Commercial Paper Funding Facility to buy three-month debt from banks and non-financial companies.

It’s probably one of its most important decisions because if this vital short term debt can’t be rolled over for US companies (end employers) when it falls due; the American economy will be crunched to a halt.

The move was desperately needed with figures showing that 28% of the market would fall due this week and a further 12% next week.

The Fed’s figures last Friday showed that in the week to last Wednesday, the market had already contracted $ US215 billion in the past three weeks and virtually all new lending was being done overnight.

If that 28% to 40% of that huge amount can’t be rolled over, the US economy will be crunched by the end of October at the latest, so the Fed had to act.

Without the Fed’s move to being a sort of bank, the US economy will crunch to a complete halt in a matter of weeks, throwing hundreds of thousands of people out of work and setting off a domino chain of corporate failures across all sectors.

This freeze in the commercial paper market is why the likes of Alcoa and GE have cut their share buybacks and why Bank of America cut its dividend by 50% and is seeking to raise $ US10 billion in new capital.

It has to support the acquisitions of Countrywide Financial Services and Merrill Lynch and the added burdens they will impose on its finances: but it is like all other banks and has cut lending across the board.,

But it’s clear consumers, the engine of the US economy, were being denied credit by banks and other lenders well before the eruption of this latest phase when the credit crunch turned to a freeze.But there’s nothing the Fed can do immediately to ease the squeeze on consumers: each week tens of thousands of them are losing their jobs, their homes, having their pay cut and hours trimmed and are being denied credit at a rate not thought possible until the Fed released the credit figures for August, a month before the crisis worsened with the spate of failures and bailouts in the US starting with Lehman Brothers.

The Fed reported that consumer credit fell by $ US7.9 billion in August, the biggest fall since the statistics began being collected in 1943, to $ US2.58 trillion.

Bloomberg said that economists forecast an increase of $ US5 billion in consumer credit during August, so the Fed’s report came as a complete shock to the market.

Total consumer borrowing dropped at a rate of 4.3% in August, the most since January 1998.

Revolving debt such as credit cards decreased by $ US612 million during August and non-revolving debt, including auto loans, dropped by $ US7.3 billion.

That fall was a month before the 27% plunge in US car sales last month, so it’s likely that consumer credit again fell sharply in September.

The news of the Fed’s move and the sharp contraction in consumer credit (one of the Fed’s ‘Key Economic Indicators’) makes it easier to understand the contents of a speech overnight by chairman, Ben Bernanke in which he painted a gloomy picture of the US economy.

He would have known of the move to try and stop the rot in the commercial paper market and the sharp fall in consumer credit, so it was no wonder he was saying:

“Economic activity had shown signs of decelerating even before the recent upsurge in financial-market tensions.

As has been the case for some time, the housing market continues to be a primary source of weakness in the real economy as well as in the financial markets. However, the slowdown in economic activity has spread outside the housing sector.

“Private payrolls have continued to contract, and the declines in employment, together with earlier increases in food and energy prices, have eroded the purchasing power of households. This sluggishness of real incomes, together with tighter credit and declining household wealth, is now showing through more clearly to consumer spending.

“Indeed, since May, real consumer outlays have contracted significantly. Meanwhile, in the business sector, worsening sales prospects and a heightened sense of uncertainty have begun to weigh more heavily on investment spending as well.

“The intensification of financial turmoil and the further impairment of the functioning of credit markets seem likely to increase the restraint on economic activity in the period ahead.”

“All told, economic activity is likely to be subdued during the remainder of this year and into next year. The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth.

“To support growth and reduce the downside risks, continued efforts to stabilize the financial markets are essential. The Federal Reserve will continue to use the tools at its disposal to improve market functioning and liquidity.”

Meanwhile the chairwoman of the National Automobile Dealers Association says the credit crunch and economic problems are likely to cause 700 auto dealers in the US to go under this year.

Speaking to the Automotive Press Association in Detroit, Annette Sykora said quick action will be needed to ease the squeeze and restore consumer confidence and help the industry.

An estimated 94% of American car buyers finance their purchases, Ms Sykora says but even those with good to high scores and solid credit records can’t get financing.

Dealers with good credit also are having trouble getting financing for their inventories.

It’s the same story in home lending and also in credit cards where credit lines and revolving credit arrangements are being terminated or refused.

According to the National Auto Dealers Association, there are around 20,000 auto dealers in the US. About 430 dealerships closed last year and 295 closed in 2006.

The estimate of 700 dealers going out of business does not include new dealers that will enter the market.

According to the Fed’s credit figures, lenders were cutting back on car loans (and other credit in August) and car sales fell 11% in the month. The 27% fall in September reflects the intensification of the credit freeze and helps explain why car sales sank 27% to less than 1 million for the month for the first time since 1993.

Some buyers are not committing because they fear for their jobs or can’t get the right vehicle when they are looking for more fuel-efficient models.

Regardless of the reason, it means consumers are spending less. September’s retail sales figures are out in about 10 days or so and are likely to make miserable reading, along with the consumer spending figures a little later in October.

IMPORTANT: AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general

This summer starts with a wealthy shine. The American Economy started shining from more than a year long “Cold” days. The cold was bitter; it has made many American’s life hard. The slow down, bad debt, credit crunch, down sizing, job loss, bankruptcies hit Americans of every level, major share holders to small level consumer. But now average Joe can get his smile back! It seems, Mr. Obama’s relief measures are paying now. Lets see what Anthony says about this issue.

“Automobile & real estate are the two industrial sectors which will show how the economy is moving. Though people say Wall Street is the economy indicator, these two sectors are the indicators for the Wall Street. This is a simple logic, because these two sectors relates with important industrial sectors like steel, cement, metals, plastics, oil, energy, logistics, infrastructure, InfoTech etc., with finance, banking and insurance in every step and every division. The number of direct and indirect employment these industries generates will be of an incredible size. These people are the real reason for the economy to run. They will be in some part be a contributor who made it happen and at the same time will be consuming its benefit. At times, they may not be aware of this fact even. This is the strength of these two sectors.”

A couple of weeks before, in an interview we discussed about the auto sales rise in the US market. “This is a very good sign for the economy. When the sales of automobile and realty increases it shows that mindset or sentiment of the people changes. This change is good. This is the right time for the lenders, dealers, banks and other financial institution to fuel this mindset and create confidence in people. Auto Relief Group is there for the customers who ever needs financial advise on this issue” says Anthony Tribunella, Director of Operations at Auto Relief Group

Normally when summer is heavy drought occurs, but this summer seems to end the drought suffered by the American for a year.

“This summer will be warm”, Anthony assures with great confidence.

About Auto Relief Group:

Auto Relief Group was founded to help customers deal with their auto loan payments in time of need. Over the years each member of their team has developed a stellar reputation, and industry connections, allowing the company to quickly identify opportunities and act to assist the clients in their efforts to reduce their payment and keep their car, SUV or truck.

For more information on Auto Relief Group and its scope of services,

Visit: http://www.autoreliefgroup.com

Contact:

877.216.7203

877-259-3559

877 842-7667

autoreliefgroup@gmail.com