Asian markets are down today. Hang Seng is down -1,36%. Nikkei -1,95%. KOSPI -0,99%. Shanghai -1,25%. All the European markets are down today. Everyone is red. Markets are falling, and Yen strengthened against the dollar following a bad miss for U.S employment data yesterday. It drops on concerns about central-bank tightening and debt write-offs at banks.
ECB plans to stress test 128 top eurozone banks over the next year and ECB intends to complete the testes by October 2014. ECB plans to stress test 128 top eurozone banks over the next year and ECB intends to complete the testes by October 2014. It aims to build confidence in the financial sector by improving transparency and implementing “corrective action” where needed.
Mr. Alan Greenspan is out with a new book, worries about the U.S economy. In his latest book, “The Map and the Territory,” he is talking about a warning to the FED balance expansion that may unleash inflation. We can see a price acceleration with today`s FED`s balances unchanged, ranging from 3% per unnum to double digits over the next five to six years, he writes.
Nobody have talked about a higher inflation, but instead the inflation has been on a record low level. That`s why Mr. Alan Greenspan is worried. The FED can prevent this threat by selling the bonds, and take the money back and out of the economy.
But; the FED are confident in plan 2: The FED pays interest on the money that the banks hold on deposit, and when the economy is getting better, the FED can increase the interest rate to induce the banks to hold the money on deposit. That can eliminate the inflationary pressure.
If the economy unexpectedly moves to go wild on a high gear, any credit tightening will run into political opposition. We have seen that before. It is also possible that the inflationary pressures won`t build until the economy has gone into a higher gear. It is possible for the FED to stay against inflationary and political pressures at the same time if the FED do their job right. News today: Import Prices at 8:30am, Crude Oil Inventories at 10:30am.
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