The Original Conference

In 1944 in the sleepy New Hampshire town of Bretton Woods 730 delegates from allied nations met to discuss and set world monetary policy. Previous to the meeting economic policies were determined by a myriad of individual, and often conflicting, treaties and trade agreements and progress was often hampered by tradition. During the great depression inflation made the currencies of many countries worthless which only exacerbated the effects of the global depression. The intent of the conference was to rebuild the world monetary system with some semblance of predictability and security.

IMF Established

The conference was the beginning of the International Monetary Fund which was to set monetary policy for decades to come. The nations involved agreed to allow free markets to work with minimal government intervention, limit trade barriers, and accept the intervention of the IMF to regulate the finances of member nations. Many nations involved would have preferred more regulation of markets and state intervention in their respective economies but the devastation of the war prompted the signing of the Bretton Woods agreement. The US demanded, and got, a leadership role in the IMF.

Read the full story

Investor Confidence Returning

On Tuesday the Euro rose sharply against the Japanese Yen signaling investor confidence that the coordinated European bailout plan will revive floundering banking systems. The gain followed announcements by Britain, Germany and France to recapitalize their banking systems taking the apprehension out of extreme risk aversion and hastening the selling of the Japanese Yen. The US dollar remained strong against most major currencies providing investors with plenty of Forex opportunity.

Yen Gains Amid Recession Fears

Last week the Japanese Yen saw stunning gains as investor uncertainty over how much deeper the global financial crisis was going to get prompting many investors to unload risky carry trade positions as global share prices fell sharply. The US also announced plans to recapitalize banks. Insiders familiar with the US plan said that about half of the proposed $250 billion would go to the nation’s largest banks. Japan’s Finance Ministry announced plans on Tuesday to stabilize financial markets, including the passage of a law enabling public fund injections into regional banks.

Read the full story

UK Bailout

On Wednesday Britain announced a 1.23 trillion dollar rescue package that included part nationalization of eight of Britain’s largest banks. Immediately after the UK bailout was announced the Bank of England announced an interest rate cot of 0.5%. The US Federal Reserve bank also announced rate cuts reducing its rates from 2% to 1.5%. As part of the $1.23 trillion rescue package, the British Government said it would invest pound stg. 150 billion ($364.3 billion) directly into banks, establish a pound stg. 200billion special liquidity fund and guarantee pound stg. 250 billion of bank-to-bank loans. During the global financial crisis many investors are seeking the safe haven of the dollar which remains strong and continues to offer Forex opportunity on global currency markets.

The IMF Weighs In

The move was designed to prevent the banking and credit crisis from reaching the real economy. The move did not prevent a decline on the London exchange which fell 6.5% but recovered by the end of the day posting a decline of only 2%. On Wall Street the Dow opened down 2.08%. The International Monetary Fund cut its world growth projections to 3% and predicted growth of industrialized countries to near zero warning that it could fall even further. Developing countries are expected to maintain ‘reasonable’ growth levels. The IMF still believes the world will avoid a recession but warned of increasing risks.

Read the full story

Bailout Passes House

Friday the US House of Representatives passed the bailout bill by a vote of 263 to 171. The bill was immediately signed by President Bush. In a Rose Garden appearance at the White House Bush stated, “By coming together on this legislation, we have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country.” The bailout bill remains unpopular with US taxpayers and the revised version of the bill contains many earmarks unrelated to the bill’s original intent.

Bush Administration Lobbies House

The House vote followed intense lobbying by the Bush administration and supporters of the bill. The law essentially allows the US government to purchase toxic assets from troubled banks and financial institutions. The bill is designed to inject massive amounts of money to loosen all but frozen credit markets. Recent market events such as the record fall of the Dow Jones Industrial Average earlier in the week and a worse-than-expected monthly jobs number with 159,000 jobs lost in September. How all this will affect world currency markets is uncertain at this time but many investors are flocking to the dollar seeking the safety and Forex opportunity the dollar provides in times of crisis.

Read the full story

Earmarks Defined

Wednesday evening, October 1^st, the US Senate passed the revised bailout bill. The bill had many earmarks added to it. For those not familiar with the term earmarks-an earmark is a totally unrelated amendment added to a bill usually added surreptitiously. Despite opposition by the public, earmarks are a long standing tradition in the US House and Senate. An earmark enables a legislator to insert a piece of legislation that that could never stand scrutiny in a public debate.

Earmark Examples

The new bailout bill is 451 pages long and contains many earmarks ranging from the amusing to the utterly ridiculous. Here are some of the more egregious earmarks;

Film and Television Productions (Sec. 502)

Wooden Arrows designed for use by children (Sec. 503)

6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)

Virgin Island and Puerto Rican Rum (Section 308)

American Samoa (Sec. 309)

Mine Rescue Teams (Sec. 310)

Domestic Production Activities in Puerto Rico (Sec. 312)

Indian Tribes (Sec. 314, 315)

Auto Racing Tracks (317)

Wool Research (Sec. 325)

Read the full story

Forex Opportinity For Small Investors

Many small investors in both Europe and the US are interested in Forex trading but have little or no understanding of how Forex markets work and how to invest. Before trading Forex, or any other markets for that matter, a thorough education is paramount. Forex education and training are necessities for those potential investors who wish to participate and take advantage of Forex opportunities.

Researching Forex Opportunities

There are several ways that investors can educate themselves about Forex markets and opportunities. The internet is the logical place to start and just typing the word ‘Forex’ in a Google search will garner millions of results. Beware of sites that make outlandish claims and offer no useful information. Many Forex sites are blatant advertising sites that offer no real information and should be avoided. There are many legitimate websites that offer thorough Forex training and many of these sites offer demo accounts where potential Forex traders may trade imaginary currencies in real time. These demo accounts allow potential Forex traders to get a feel for the market ,how it works ,and to learn how to take advantage of Forex opportunities

Read the full story