Finance / the Economy

• A Look At Oil Rich Venezuela’s Shrinking Economy

  In booming South America, oil-rich Venezuela is the exception: the continent's only shrinking economy in 2010. Officials are rationing hard currency. Government takeovers of private businesses are increasing. One prominent financial analyst recently had just two words of advice for investors here: “Run away.” Many middle-class and wealthy Venezuelans have done exactly that, creating a slow-burning exodus of scientists, doctors, entrepreneurs and engineers. But wander into the bazaar in the shadow of Santa Teresa Basilica in this city’s old center, and the opposite seems to be happening as well. Merchants murmur in Arabic, Urdu and Hindi. Haitians pushing ice cream…

• Egypt’s Problems and Their Affect on the Rest of the World

  We have all been reading about Egypt in the newspapers, and wonder what is behind their problems. Let me offer a few insights. At least part of Egypt’s problem is the fact that in the past the government has threatened to reduce food subsidies. Now it is planning to hold food subsidies level and raise energy subsidies, but it is not clear that the dollar amount of subsidy will be enough. The government is taking steps to make food and energy affordable for most, but there is worry that the steps being taken will not be enough. Egypt’s Declining Financial…

• Modernizing the Russian Economy

  The wildfires and heat wave that ravaged Central Russia last year brought Russia’s super centralized political and fiscal system to the forefront of the country’s domestic agenda. The severe impact of the fires which caused more than fifty deaths and destroyed more than one third of Russia’s wheat crop offers an opportunity for the country’s leaders to rethink its priorities and devote urgent attention to becoming a global leader as Russia modernizes its economy. An anonymous blogger  from the rural Tver region northwest of Moscow has captured the mood of many Russians when stating, “Under the communists….we had three fire…

• A Look at Pakistan’s Deep Economic Weaknesses

  In a recent White House meeting with President Asif Ali Zadari of Pakistan, US President Barack Obama underscored the importance of the US-Pakistani relationship and emphasized continued US support for the country. Unfortunately, the prospects for a payoff to US strategic commitments in Pakistan remain clouded by deep economic weaknesses that have their origins as much in demographics and political factors as in the more widely publicized natural disasters and security issues. Just a few years ago, Pakistan's future looked brighter. Its economy seemed to be taking off after years of stagnation. The World Bank was applauding wide-ranging economic reforms.…

• Is Now a Good Time to Pay Down Your Debts?

  The question of whether a person should pay down debts comes up often, when there are forecasts that suggest unemployment rates and consequently debt defaults will rise dramatically in future years. I know some people say, definitely, “Yes”. I would say, “It depends.” Clearly, at this point, interest rates you can get in a bank are low, and the long term value of most stocks and bonds is very iffy. So from that point of view, if you have assets that aren’t going to earn much in the future, and a smaller amount of debt, you may want to offset…

• The Difficulties of Investing in China

  As China President Hu Jintao visits President Obama and the rest of the US, most of the attention will be focused -- in our view, wrongly -- on the dollar / yuan exchange rate, as well as more important matters like the global availability of high-tech vital rare earth metals, of which China controls more than 95% of the world's export trade - a figure likely to remain more of less constant for the next five to ten years at least. Underlying the currency concern, of course, is the issue of JOBS -- which the US has failed to produce,…

• The Municipal Bond Myth

  Have I seen This movie before? Two years ago, analysts were predicting default rates as high as 17% for Junk bonds in the wake of the financial meltdown, taking yields on individual issues up to 25%. Liquidity in the market vaporized, and huge volumes of unsold paper overhung the market. To me, this was an engraved invitation to come in and buy the junk bond ETF (JNK) at $18. Since then, the despised ETF has risen to $40, and with the hefty interest income, the total return has been over 160%. What was the actually realized default rate? It came…

• The Yuan and The Dollar: Obama and Chinese President to Discuss Currency Concerns

  "More longer-term, China would like to see the renminbi rival the U.S. dollar's status as a global reserve currency. But this is going to take a long time," Leather says. "China's current and capital accounts need to be fully convertible before that can happen. That's no where near the case at the moment, and it's going to be a while before the renminbi even starts to challenge the U.S. dollar for that status." Chinese President Hu Jintao has made it clear during the past week what analysts have suspected for months. Beijing wants the yuan to become a competitor with…

• Economic Predictions for 2011

  Oh boy is 2011 going to be an exciting year! Some things that I think might happen: -Volatility is going up across the board. If you have the stomach for the swings that are coming across all markets there is a ton of money to be made; balls and timing are all that are necessary. The markets will create dozens of opportunities to make and lose. -There will be 50 days with a swing in the S&P greater than 1%. There will be 10 days where gold swings $50. There will be two days with a drop greater than 100…

• Enjoy the Dollar Rally While it Lasts

  Any trader will tell you the trend is your friend, and the overwhelming direction for the US dollar for the last 220 years has been down. Our first Treasury Secretary, Alexander Hamilton, found himself constantly embroiled in sex scandals. Take a ten dollar bill out of your wallet and you’re looking at a world class horndog, a swordsman of the first order. When he wasn’t fighting scandalous accusations in the press and the courts, he spent much of his six years in office orchestrating a rescue of our new currency, the US dollar. Winning the Revolutionary War bankrupted the young…