As the boom in commodity prices stretches on , expectations are more than bullish than ever. China’s strong economic growth and a hunger for raw materials and commodities such as copper , iron ore and aluminum have produced the foundations for sharp rises in commodity prices over the past five to seven years. Prices have been driven higher by new mines taking longer than expected to develop, because both skilled workers and specialized equipment such as drills has been in particularly short supply. The growth of India will provide further growth in commodity prices and pricing resulting in ever greater amounts of foreign exchange currencies and currency trading. It can be argued that the growth in commodities is a “super cycle”- a long period of higher prices and pricing as was seen in the 1960’s , a time when Japan was industrializing.
The big western mining companies are waking up to the new dynamics in their industries. The landscape and earning of capital and foreign exchange currencies have changed . Firstly this is not a normal cycle - not a “normal cycle”. Secondly there are interlopers and competitors who do not have the same viewpoint or perspective of the financial cycle or cycles. The growing competition between western mining companies and emerging market producers reflect the facts that high quality mining assets are ever increasingly scarce. It all comes down to the income and the growth of the foreign currency and currencies earned in these periods by these producers.
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The Federal Reserve reported recently that consumer credit — basically everything we all owe money on except our houses — rose more than 7 percent last month to $2.5 trillion worth of revolving debt. And the price tag is mounting daily as interest charges accumulate even though most Americans are pulling in their belts and economizing.
For years, banks and the credit card companies that service them have been sending us greater and greater sounding offers. But they’ve been hiding how much interest they’ll be charging and how they calculate the outstanding balance. It’s not unusual for them to suddenly increase annual interest rates, impose high penalty fees, even shorten billing cycles to make it harder to pay on time. Sure, they disclose their right to do all this stuff when you sign up, but it’s in print so small as to give you a headache even if you understand it.
In other words, they’re offering what look like great deals, but the deals are becoming nightmares for millions of Americans. Sound familiar? It’s just like what mortgage lenders were doing before the bust.
But the housing bust has been something of a wakeup call, and now both Congress and the Fed are considering banning these practices. Yet the American Bankers Association is vowing to block these reforms. It argues that stopping credit card companies from bilking their customers who get behind on their payments will increase the costs of credit to those of us who pay on time.
If this sounds familiar, too, that’s because it’s much the same argument mortgage lenders are using for why their abusive lending practices should be allowed to continue.
Make no mistake, the Bankers Association is a powerful lobby, and it’s not just Republicans they control. Only 11 of 36 Democrats on the House Financial Services Committee have backed the bill so far, and the going is likely to be rougher in the Senate — which is why the Fed may be the only hope for protecting Americans while avoiding the kind of meltdown that hit the mortgage market.
It’s another reminder of how our democracy has drifted into the hands of non-democratic agencies like the Fed, because the political branches are answerable to money interests rather than to the public interest.
http://www.gototheboard.com/articles/Why_Credit_Cards_are_Getting_Away_With_It
Sphere: Related ContentTo date, fully 3.25% of Fed cuts have knocked only 1.5% points off 10-year
So while Ben Breanne’s big fix for the housing market has failed to squash longer-term mortgage rates, it’s also failed to reduce interest rates for the government, too. It also represents an ugly return of the Greenspan issue and issues
It can be said that “The broadly unanticipated behavior of world bond markets remains a conundrum”.
At that point for Greenspan and his era the staid bond market then was keeping rates cheap. Indeed, the yield on 10-year and longer-dated US Treasury bonds stayed near their multi-decade lows – first reached when Greenspan slashed the Fed funds rate to just 1% in the summer of 2003 – as he began “normalizing” short-term Fed rates from that record bottom.
Longer-term finance then cost less than shorter-term loans. And with US Treasury debt heading for $11 trillion and more it is no fire sale that any ones wants.
Once again, the Fed can’t move long-dated yields; but now the cost of paying for
is there a tumble in the works - or an adjustment coming forward ? Thirty-year US bonds now yield fully 5% more than short-term Treasuries. Last time this premium for long-term borrowing got so high, the
No one on Capitol Hill complained, therefore. Longer-term finance then cost less than shorter-term loans. And with US Treasury debt heading for $9 trillion and more, what politician didn’t want easier terms from the bond market?
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Remarkably in this environment , core inflation has remained quite muted. Nevertheless the Bank of Canada , resumed its expected tightening moves in the last years. Overnight rates may be hiked more than once in the next coming months.
Labour markets are tight and tight to the point that labor shortages may become evident in many sectors - especially in the booming Alberta and British Columbia economies. Wage inflation may well follow suit with surging energy and petroleum commodity prices and pricing.
Economic data continues to be strong. This is largely reflective of the recent trend and trendlines in energy as well as metal and raw material commodity prices. This has narrowed investment income defecits , which when coupled with continual strong trade surpluses especially in regards to oil - bode for a very strong underpinning of the Canadian dollar currency and currencies. In addition bond yields will continue to be strong despite the continued rise in short term interest rates. Long term interest rates will continue to be quite muted and demand for long term duration fixed income products by pensions and coming pensioners will remain more than strong in the financial and financial markets. Even the mildly inverted yield curve ( tow year bonds yields exceed 10 year bond yields by around 6 basis points) an outlook of solid growth and solid profits , low domestic inflation, rising incomes and strong trade balances appear to be in the offing.