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Shaw Capital Management News: 1.2% to 1.6% Growth eyed over Belgian economy in 2012

Written By: scmonlineblog - Oct• 17•11

The Belgian economy is anticipated to grow by 1.6% in 2012, the Federal Planning Bureau (FPB) accounts. But, in line with the most recent data from the four largest banks in Belgium, growth would have been a much simpler 1.2% – based from Shaw Capital Management news online.

In contrast to growth of 2.4% this year, the Belgian economy may decelerate to 1.6% in 2012, claims the federal Planning Bureau in their news release through September. Significantly less constructive results had been provided from the largest banks in Belgium that forecast the Gross domestic product growth rate of 1.2% in 2012.

Based on the most recent data by the Federal Planning Bureau, the Belgian economy will certainly grow at 1.6% in 2012. Comparable outcomes are already shown through the International Monetary Fund, ranking Belgian GDP growth for the approaching year at 1.5%.

Depending on the FPB, the Belgian economy can easily cool within 2012 as a result of less strong overall performance in the 3 major macroeconomic elements – imports, personal consumption and gross investment. What’s a lot more, within 2012, we ought to anticipate that salary indexation is going to exceed inflation that, consequently, may drop to roughly 2%. Through these signifies real wages are hoped for to improve by 1.9% the coming year, compared to 1.2% this year.

Moreover, the Bureau, along with the National Bank and the Central Economic Council, alerts concerning the decreasing competition from the economic climate of Belgium. “Although the wellbeing levels are actually substantial, economic development stays sluggish compared to different nations. A growing number of businesses tend to be shedding their own major placement in relation to efficiency”, claim the 3 establishments within their typical notice unveiled a week ago.

However, concerning the job market, the Bureau stays reasonable. Even though quantity of occupations continues to go up, joblessness is predicted to rise. During 2011 net employment generation may add up to 54,200; in 2012 it’ll fall close to 30,000. Simultaneously, the harmonized Euro stat-based lack of employment rate inside the EU-27 would be to increase by 7.3% in 2011 to 7.4% in 2012. Even so, in contrast to 8.9% in 2010, the unemployment rate is with a stabilizing course.

Nevertheless, varying information about the financial state has been supplied by the 4 largest banks working in Belgium – BNP Paribas Fortis, ING, Dexia and KBC. Statistically shown by all four banks in mid-September, economic growth in 2012 is predicted 1.2%. In this instance, government entities must obtain €800m much more to be able to link the actual deficit gap envisaged within the Planning Bureau’s foresight. However, in line with the banks, Belgium scores far better in relation to GDP-growth, joblessness or even residence debts compared to the majority of the Euro zone nations.

Am Cham Belgium’s Stance

Economic growth and restoration within Belgium continues to be healthier compared to anticipated which provides plan designers using possibilities to put into action structural changes for any versatile and aggressive job market, lasting government expenditures along with a lot more vibrant as well as revolutionary economy. In the 2011 Priorities for that Prosperous Belgium, the Chamber places ahead numerous crucial suggestions about exactly how Belgium may effectively handle structural difficulties concerning its competitiveness, social security system as well as job market.

 

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Shaw Capital Management Online: Japan Shares Drop on Europe Tax Plan; Sony Falls

Written By: scmonlineblog - Oct• 04•11

Japanese shares dropped for the first time in the span of three days while the French and German heads announced they will not increase a budget to help Europe’s debt crisis. Meanwhile, housing starts in US fell, renewing the concern that profits of exporters will be cut back as Shaw Capital management fears.

Sony Corporation, Japan’s largest exporter of consumer electronics, slumped 1.9% following talks in Paris yesterday between German Chancellor Angela Merkel and French President Nicolas Sarkozy. Meanwhile, the world’s biggest carmaker, Toyota Motor Corporation, dropped 1.4%. Japan’s top energy exploration company, Inpex Corporation, fell 2.3% due to reduced crude prices.

In Tokyo, the Nikkei 225 Stock Average dropped 0.8% to 9,039 as of 9:31 am. While the wider Topix index fell 0.5% to 774 with 3 shares losing for every 2 that climbs up.

An equities manager at SMBC Nikko Securities, Inc, Hiroichi Nishi, said that the meeting in Paris proved debt matters can’t be resolved in such a short time.

Futures on the Standard & Poor’s 500 Index fell 0.4% today. Yesterday, as the French and German leaders did not approved of selling euro bonds and increasing the 440-billion euro ($633 billion) rescue fund, the New York index dropped 1% to 1,1,92. Both leaders also proposed submitting another financial-transaction tax that was previously rejected in 2010.

European Union’s statistics office announced yesterday in Luxembourg that the 17-nation Euro area, Gross Domestic Product grew 0.2% in the second quarter compared to previous months when the economy increased 0.8%. In a Bloomberg News Survey, this has been the weakest expansion since the euro zone emerged from a downturn in late 2009 and was less than the 0.3% average estimate of 34 economists.

The Commerce Department detailed that housing starts in the US dropped 1.5% in July from June, and the alternative for future construction also suffered a setback, Shaw Capital management observed.

Nishi added, “The housing numbers of US were not really strong, which triggers a persistent delay in their economy.”

Exporters decreased following reports of economic development in Europe and the opposite happening in the US, which hurt the position for earnings abroad. Sony dropped 1.9% to 1,668 yen, Toyota fell 1.4% to 2,860 yen and Japan’s third biggest carmaker, Honda, lost 2.3% to 2,556 yen.

On the other hand, mining companies reduced prices of oil products. Inpex lost 2.3% to 514,000 yen. The second biggest oil driller, Japan Petroleum Exploration Company, fell 0.8% to 3,330 yen.

Yesterday, crude oil for September delivery decreased 1.4% to stay at 86.65 dollars per barrel in New York. Prices of 6 industrial metals, including aluminum and copper, fell 0.5% in the London Metal Exchange Index.

 

Posted in Financial , , , , | 3 Comments »

Shaw Capital Management Online: Cut Back-to-School Expenses

Written By: scmonlineblog - Oct• 04•11

Another school year is about to start. While teachers are busy preparing their lesson plans, kids are pretty much occupied wondering what new stuff they can show their classmates. Meanwhile, parents too, are very much engaged in budgeting for another year of school expenses.

 

Parents are predicted to spend an average amount of $600 this year according to the National Retail Federation (NRF). Analysts from NRF believe that spending among families can be described as a move “practice restraint.”  Yet, such expenditure is at par with the highest spending percentage since 2003.

 

Well, Shaw capital management is sure of one thing, prices of commodities increased over the past few years and you cannot expect parents and children not wanting to disburse even the little money they have for new school stuff.  Here are some helpful tips for both parents and children to cut the cost of their school expenses:

 

·                     Do an inventory. Make a list of what you already have. Check your drawers, closets, and bookshelves for school materials that are still usable. You surely do not want to spend on pencils and crayons if you already have them. Better survey the materials that you really need to buy or regret on spending too much on surplus materials you have at home.

 

 

·                     Ask for the list. Most schools post their list of required supplies with extra note on what they already provide. Never forget to browse on these lists so you know the materials that are “necessary” for you to purchase. This way you can also avoid duplication of materials bought. Look for other notes such as “recommended” items. Such items are specific to a few classes your kid is not enrolled in.

 

 

·                     Check advertisements. Always be on the lookout for sales, discounts and deals. Shaw capital management recommends checking such advertisements on newspapers or online. Also try to compare prices of items online to see which store is best to visit. This strategy saves you time and gas , and most of the time, window shopping only gets you to spend before your scheduled shopping. Tax and holiday sales are also good.

 

 

·                     Opt for combo deals and bundles. During shopping season, stores try to make valuable combos of stuff for consumers. Buying in larger packages often save you a lot of money and sometimes, stores give special discounts if materials are bought in bulk. Go ahead and calculate for unit prices to make sure you do make a saving. Teach your kids how to compare prices of deals available on stores if you go shopping with them and let them decide on what is reasonable but not expensive.

 

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Shaw Capital Management Reports: Apple’s New Chief Facing Greater Expectations

Written By: scmonlineblog - Sep• 07•11

Steven P. Jobs, Apple’s chief executive officer, has stepped down saying that he can no longer run the company effectively. Timothy D. Cook, the company’s former chief operations officer, succeeds this position. The transition has never been easy as even Silicon Valley is accustomed to seeing prominent figures run a company one instance and gone the next.

 

Cook, now the new chief executive, has sent messages to his employees that nothing will change. Apple continues to set-up computers, tablets, and phones that can come faster, thinner and lighter than previous products released. Shaw Capital Management Financial News is confident that he has vast experience to obtain necessary parts making it possible.

 

Apple needs to retain or extend a $350 billion stock market valuation. However, this can only be done through channeling with Jobs to innovate new products to make business grow. Silicon Valley started out with few kids building few technologies, which turned out to be Apple these days. But today, there is more risk involved as it is running around 50,000 employees.

 

The challenge of taking these risks is in Cook’s hands; but he says this is a stepping stone towards success. While Jobs made the company really big; the new chief executive is believed to do similar job as well. Apple is noted for its platform, technology, patents, and processes, which has built different stores to reach multitude of customers.

 

Many dislike Jobs leaving the company, but it is believed that in 3-5 years time, a great visionary will arise. Stocks slid after hours of trading on Wednesday after the news was first released. It fell modestly on Thursday when the overall stock market stumbled. They felt comfortable as they believed Jobs was still chairman.

 

Cook differs in personality with Jobs. Jeffrey Pfeffer, a professor of organizational behavior at Stanford, relays that the previous chief may had a colorful administration, but the new executive can even excel more.

 

Cook got no interview when he landed the job. His qualifications show that he graduated from Auburn University and decided to join Apple in 1998. Apple was in a precarious state back then, which made people think it was on the brink to bankruptcy.

 

Cook, who was vice president of corporate materials for Compaq back then, was discouraged from joining Apple. He pursued his interest though, and years later, Compaq was acquired by Hewlett-Packard, which is now a troubled company.

 

Jonathan Ive, Apple’s senior vice president for design, is the man responsible for perfecting the appearance and quality of Apple products. He led the team that designed iMac, iPad and iPhone.

 

Philip W. Schiller, senior vice president for marketing, has initiated improvements on the company’s image and sales.

 

Ron Johnson, who takes charge of Apple’s retail stores is said to leave on June to be J.C. Penney’s chief executive.

 

Apple’s greatest products are iPad and iPhone. People are hoping for more new products. Now with the Cook around, a great new challenge lies in his hands.

 

Posted in Technology , | 6 Comments »

HBO features Real-life Superheroes

Written By: scmonlineblog - Aug• 26•11

Here come the real-life superheroes, ready to save the world! Only that adopting a secret lifestyle makes it hard for their services to be required.

As what we learned in Michael Barnett’s gripping yet conflicting documentary in HBO entitled “Superheroes”, modern day supermen/wonder woman can end up handing out tissues to the homeless.

‘Superheroes’, has Barnett traveling the country to profile several of the 300 self-anointed characters who are trying to live a comic-book ideal. They are a far-cry from the ones you will see at Comic Con gatherings who just dress up for the part. These people have seen something in the comics lore that has touched them on a personal level and decided that our society is definitely troubled (and law enforcement is not all the reliable).

Lucid, a superhero in Brooklyn said, “The government and the NYPD are totally undependable.”

A frustrated jujitsu student in San Diego, Mr. Extreme, works by day as a security guard and use his evenings to prowl the streets donning padded yellow-and-green insignia (complete with a bug-eyed helmet and cape) in search for a sexual offender in the news dubbed as ‘The Chula Vista Groper’.

In the meantime, the weird Master Legend drives around in Orlando using a battered van and offers his services to the oppressed, stopping often to treat himself to a can or two of booze from his ice chest tucked in the compartment.

Back in Brooklyn, Lucid, along with his jumpy lot of masked avengers (that go by the names, Zimmer, The Silenced and Forgotten/TSAF, and Z) like to move around the streets on their skateboards in the wee hours, trying to get the attention of muggers.

A certain gay man who opts not to don a mask or even use a hero nickname as it reminds him of hiding in the closet, named Zimmer, glams himself up to lure gay-bashers. Lucid and the others would wait in the shadows, ready to jump in his aid. When that doesn’t do the trick, TSAF (a female, by the way) wears a miniskirt and make up to try her luck at luring rapists.

What these superheroes featured in “Superheroes” seems to deliberately ignore is the notable decrease in the number of violent crimes in the last two decades. Homeland Security era that lights up the night with security cameras of various kinds and deputized every smartphone owner with the capability to upload ongoing crimes to YouTube has helped greatly in catching offenders.

Still, things get darker (and dorkier) on a mishmash scene wherein the so-called superheroes proudly show Barnett the kinds of weapons they have in their spandex ensemble: sharp spikes, knives, maces, Tasers, pepper sprays, lasers and blinding spotlights.

All of them seemed to be dying for some action, which has a way of making them look more trivial, and disillusioned. A police lieutenant in San Diego is concerned that these self-proclaimed vigilantes would hurt themselves (or someone else) while a psychologies speculates on their dependence on alter egos.

 

Posted in Lifestyle , , , , | 8 Comments »

As Fears Continue, Market stays low

Written By: scmonlineblog - Aug• 11•11

International investors bailed from risky resources, making the Australian stock market fall 2.9%, even with a guarantee from G7 nations that financial markets will be stabilized after the historical ratings downgrade of the United States by Standard & Poor’s.

In the journey program, the S&P/ASX 200 list recovered 70 points from the drop in the market opening before vendors arrived later in the day, to leave the index down by 3986.1 points, a new 13-month decrease.

This decline took off $35 billion from the overall market capital of the ASX and prolonged the year’s loss to 16%.

Selling off in Asian markets increased following the move of Chinese central bank to lift its objective range for their currency to a record high opposite the US dollar, causing as 4% decrease in the composite index of Shanghai.

Japan’s Nikkei index suffered 2.2% losses while the Shanghai combined index was off 3.5% at ASX closing.

The hopes for the Australian markets to endure the bad market turnout were lost when the Australian dollar dipped 1.5 cents to 1.03 US dollar and 3 cents to 71.95 euro cents as the currency stood firm opposite the US dollar.

Meanwhile, the Japanese yen and Swiss franc continues to draw safe haven exchange and gold rallied to a record high of 1715.75 US dollar per ounce.

With the iTraxx Australian index of credit default exchanges increasing to 141 points, credit markets in Australia seem to be following the slump in equity markets.

Safe-haven purchasing of the government bonds of Australia slowed down and the 10-year result reversed several of last week’s increase, adding 6.5 points to 4.55% because of foreign selling reports.

John Richards, head of strategy for Royal Bank of Scotland, wrote to a client a memo about equity markets being the ‘key’ to identifying the scope of the US ratings downgrade impact.

Today is the 5th consecutive trading episode wherein the local bourse closed in the red with 87,832 contracts exchanged.

Michael McCarthy, chief market strategist of CMC Markets, stated that the losses were widely based and the materials stocks are among the ones faring worst.

Japan’s Mitsubishi Development and Rio Tinto created a non-binding plan for the stocks in the miner that they do not already have as Coal and Allied’s shares, where both are large stockholders of, spiked high.

McCarthy stated that investor confidence had suffered from an onslaught of negative news although the sell-off has been overdone.

He said, “Investors are changing from crisis motion to the next blow without pausing to catch their breath.”

“Just last week, the market was concerned about the recovery of US economy, which it might stall and bring the world into an even worse recession.

“Come Friday night, we saw employment data (in the US) that openly opposed that concept.

“So generally speaking, the numbers are not signifying another recession to come…and we are seeing company earnings from around the world that are not consistent with the opinion that the market is falling.”

McCarthy added that there’s been a large increase in trading volumes today, more than twice the usual contracts exchanged on the futures where the market turned around wildly.

Voyager Resources was the most traded stock in terms of Volume following an announcement of a new copper exploration in South Gobi region.

Shaw Capital Management Online was born from a rather unfavorable school project addressing the “How do you make a website user-friendly?” issue. Apparently, we have an uncanny knack in making something unlikable into something, er, more likable. We never really knew it’d be this big, but hey, why not make it official? So we launched SCM Online where we can share, not just the most popular, but the most interesting pieces of news at any given time.

 

 

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Warning: A Review of This Week’s Hot Flicks

Written By: scmonlineblog - Aug• 09•11

Rise of the Planet of the Apes

Teen sci-fi enthusiasts is going to be absolutely hooked with this smart, if not uplifting prequel of the original “Planet of the Apes” in 1968 and all it’sTV, film and video game offshoots.

A note of caution, though with its use of “motion-capture” engineering that allows the actual gorillas and chimps to look as full-blooded as those of the humans in the film – a product of computer effects overlaid upon a human actor. That’s why the physical violence and disorder in this movie could affect to and make it look very real to the minds of young audience.

James Franco plays the protagonist named Will, an excellent scientist who develops a certain anti-Alzheimer’s medication, albeit with a viral part. It is tested on apes and resulted in the animals to to grow rather violent, paving the way for the project to be scrapped. However,  Will still continue to give the particular medication to his father (John Lithgow), who is suffering from Alzheimer’s. Will also takes into his care a baby chimp, Caesar, who was exposed to the drug during their experiments.

When Caesar (Andy Serkis) grew up, he showed signs of superintelligence. But after he acted violently towards someone once, Will is obliged to keep him in a “sanctuary” which ends up to be described as a kind of jail delivering apes for research. Caesar, after having a trainer Tom Felton) frequently maltreat him, instigates the primate uprising against the human race.

The apes encounter law enforcement officials, various weapons, planes and others as they proceed to climb the wires of the Golden Gate Bridge and later dangle through the treetops in Redwood Forest. They plan to rule. That is what you get for screwing up with genetics, cautions this science-fiction film.

There are some scenes in this film that depicts violence between animals and humans that are extreme and may seem too upsetting for some kids, pushing the PG-13 rate to the limit. Early on in the movie, such scenes occur in short sequences but towards the end there is already a prevalent chaos. Although the wounds and the fights are not very visual, there’s certainly death and blood with weapons including iron fence spikes,  electrical prods, guns, tranquilizer darts and others that will not be suitable for the children viewing.

Cowboys & Aliens

Even pre-teens may find this particular PG-13 sci-fi cum Western-themed movie as violent. That’s due to it’s uncomplicated storytelling, though it is actually inspired by a comic novel.

Right away, you’ll realize something’s unusual, when a sturdy man (Daniel Craig) wakes up in the middle of the desert in 1875 and have no idea who he is. What’s more, he’s got a modern-looking metallic bracelet on his arm that he can’t remove.

Later into the film, he eventually learned of his true name, Jake Lonergan,along with the information that he is wanted for murder and theft. Lonergan walks into town met a drunk young person, Percy (Robert Dano) whom he somehow humiliated. As it turns out, Percy’s father is a cattle tycoon, Woodrow Dolarhyde (Harrison Ford), a rogue and grumpy military man.

Just as everyone prepares for a classic Mexican standoff, in came an alien plane, blowing and yanking away various people on wires. This odd threat obliged Lonergan and Dolarhyde, along with the rest of the townsfolk, Indian warriors, robbery gangs and cowpokes to find a common goal.

The said aliens sport the usual features (massive, slimy, reptilian-like creatures) sufficient to freak out some kids below the age of 12. Craig and Ford made nice, rough heroes amidst a superb cast.

The weapon fights and alien episodes using their weird-looking planes may come off as an extreme violent movie. Humans engage in more than one bloody and disturbing battle. The actual climactic struggle feature firearms, explosives and bows-and-arrows. It even involves gutting out of several humans by the supposed aliens and burning of a dead body. The screenplay even has expletives, anti-Indian slurs and a mention of ‘whores’. As expected from a cowboy movie, there’s a lot of alcohol-drinking involved and an indirect nudity.

 

 

Posted in Lifestyle , , , , | 7 Comments »

Warning: Fear on Wall Street

Written By: scmonlineblog - Aug• 08•11

Stocks posted a shard drop recently, with Dow Jones Industrial Average coming to a 4.3% fall while the Nasdaq also suffered a decrease of 5%.

 

At closing time, there were couple of locations left to be able to conceal. Silver, gold, precious metal,  crude and produces from Treasuries all fell dramatically since traders seemed regarding security and were met by absolutely nothing aside from dropping prices. Over the actual final ten investing nights, stocks and shares lost over 10%, the traditional classification of a market alteration.

 

Today’s selling began inside Europe and also found heavy steam since American traders, already restless within the wake of the financial debt threshold ordeal, all of a sudden favored cash over all other assets. The particular selling started abroad, however we have much more as compared to our own share of issues in the United States also.

 

There is a mounting awareness amongst even the most upbeat traders that the US will be getting into a brand new recession — a feared “double-dip”. Adding to the discomfort will be the sense that the authorities, as well as Federal Reserve tend to be out of each suggestions and methods to be able to stimulate the market. Corporate America is on record amounts money, however it is actually refusing to create new opportunities with so small end demand for its products. Companies and consumers are usually amassing cash, while the economy seems to be requisitioning. The particular debt ceiling discussion was a problem, snuffing virtually any staying self-confidence traders acquired with regard to help from Washington, DC.

 

The end result is investors are believing that we are dealing with the extended and serious economic downturn, and there is absolutely nothing any kind of government on the planet can do to stop it. With that consideration, promoting stocks and shares or “reducing exposure”, as they used to say on Wall Street, makes sense.

 

What exactly must people at home carry out? Steer clear of worry, first of all. The actual swiftness of the modification will be unusual, however a 10% drop isn’t. Last summer, shares dropped 17% on issues not in contrast to those all of us face these days. If you are a trader who can’t sleep this evening, you are probably as well exposed to shares. Sell till you can manage to sleep. No one ever created good financial decisions frightened or, perhaps, exhausted.

 

Today has been the first signal regarding concern in shares observed within a year. To quote Churchill, that might not be the start of the end of the selling, but it is the end of the beginning. It is very unlikely we will notice good financial news anytime soon. The terrible jobs number down the road is now expected and a great one will be regarded as either wrong or even flat-out deceitful.

 

Consider hope for a fast financial recovery out of the particular picture as well and ask yourself this: In the event you woke up tomorrow and shares were set to open with another fall of 1000 points on the Dow Jones, are you going to sell or buy? What ever your own solution will be, you’d be well dished up to think of doing it a little at a time.

 

Attempting to “call the bottom” through heading all inside directly is really a dumb decision. Be patient and calm; steer clear of panic. In such a volatile market, prudence is the most logical strategy there is.

Posted in Financial , , , | 8 Comments »

Shaw Capital Management Online Tech News: Facebook Scam Warnings

Written By: scmonlineblog - Jul• 26•11

While the rest of the world is enamored with the arrival of Google+ and caught up in the churning activity room that is Facebook, we’d like to at least wave a red flag of reality through a weekly scam list we put up.

The week started in a rather gross manner with a scam named “OMG! A Spider under the skin!”. Anyone drunk enough to click on the link after seeing the unintelligible thumbnail accompanying the post is in for something more than a scare. Instead of seeing a more detailed backstory on the claim or some sort of explanation on the photo, the user will be redirected to another page. And guess what, as a sort of test or verification, they require you to fill up a survey form first.

A particularly nasty one is a video of a fan who died at a baseball game. That’s because the story really happened and referring to it in such a manner seems very unethical. It was about a fan who fell to his death trying to catch a baseball in a particular game. Scammers trying to take advantage of such a situation can only be regarded as dangerously single-minded.

And because these scammers are easy to catch on, with the soft launch of Google+ came the pretentious invites for a privileged access to the popular social networking site. People are practically clamoring for Google+ invites; and upon seeing the profitable market, scammers jumped in the scene. End result: personal information ending in the hands of the wrong guys.

Shaw Capital Management Online is also keen on issuing a scam warning on the very tempting “1000 free Facebook credits” scheme. A message making the rounds in the Facebook-verse (or simply self-propagating virus), entices users by promising a thousand credits. It just calls a URL to be manually pasted on the address bar, which effectively draws you out of the Facebook fence and into the den of the scammers where your details could be compromised.

Most of the scams in Facebook are actually common survey nuisances which the perpetrators propagate in hopes of collecting money or other perks when they hit a certain threshold. One such scam calls attention for the users to click it by putting a “Who had blocked you?” title. For the curious Facebook users, this could potentially spell data compromise as the scammer plays on the curiosity nerve of people.

Seeing it in your friend’s wall doesn’t mean you have to lower your guard. Actually, the reason most of the scams in social networking sites have such a great exposure is that once a user clicked the malicious link, his profile will automatically display a copy of the same scam (which is, in a way, like signalling to his friends it’s legit or something). Living in the Information Age, possessing the right information is something that can save you from dealing with lots of troubles.

Hopefully, we’ve warned and informed you enough to take action and click those Report Page as Scam links in Facebook instead of the interesting links.

 

Posted in Technology , , , | 66 Comments »

Shaw Capital Management Online: US pushing back-up plan amidst fear of default

Written By: scmonlineblog - Jul• 19•11

A back-up plan hatched by the US Senate’s top leaders seems to be the prominent solution that will spare the country a pending default on August 2, Shaw Capital Management Online found out. This contingency measure by Democrat leader Harry Reid and Republican leader Mitch McConnell aims to ease the dilemma in the seemingly endless debate on increasing the country’s debt limit.

 

The US government hit their debt limit of $14.3 trillion in May and currently in danger of defaulting if the limit is not raised by August. This will result to higher interest rates for the public as well as on the borrowed money of the government. But for the new borrowing ceiling to last them until the end of next year, it should be raised by $2.4 trillion.

 

Warnings of possible downgrade have also been issued by various entities, including the Federal Reserve and JPMorgan Chase. Moody’s Investor service is also looking at a possible downgrade of the US bond rating while Standard & Poor’s stated that they will strip the US government of its AAA rating if the deal on raising the debt ceiling is not agreed on.

 

“Further delays in raising the debt ceiling could lead us to conclude that a default is more possible than we previously thought. If so, we could lower the long-term rating on U.S. government this month,” S&P said.

 

Republicans want any increase in the borrowing limit to come with an equal amount of spending reduction. On the other hand, Democrats and President Barrack Obama aims on having tax increases as part of a long-term deficit-cutting plan.

 

“United States is in a different position from other countries. This is not some fiscal reform programme that they have to put in place. This is just political machinations,” said Adrian Foster of Asia Pacific at Rabobank International in Hong Kong.

 

True enough, President Obama has been having problems with both parties; on one side are the Republicans who want to replace him and on the other are the Democrats who wants to re-elect him. Bottomline: both parties seems to be using the issue to further their personal interests which ends up with the debate looking more like performances to impress the public.

 

Another idea that surfaced is that US might not have the problem of being under-taxed, but just spends way too much. And as SCM Online discovered, the Central Bank is not planning on any stimulus measure any time soon.

 

“There’s just too much at stake politically and economically for a deal not to get done,” says John Briggs, Treasury strategist at the Royal Bank of Scotland. “It seems hard to believe that any politician would want their name attached to a default of U.S. debt.”

 

Surprisingly, Wall Street seems to be complacent as the stocks and bonds have been showing only the slightest hint of being concerned.

 

“In financial markets, you’re playing with people’s confidence,” Sam Yake, a stock analyst, says. “If enough people start thinking it’s a catastrophe, it could become so.” The prospect of such terrible consequences may be exactly the reason investors aren’t all that worried.

 

Posted in Financial , , | 8 Comments »
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