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The US Dollar And Exporters Anger

The US Dollar And Exporters Anger The reason for the anger to the declaration of a permanent committee in the Bank of America for a decision to be taken, starting from 03/11/2010, to pump $ 600 billion, to increase the growth rate of the US economy.

US Dollar
US Dollar

Prior to interpret how is this pumping, or how the extra dollars issuing process, improved to note that the dollar is not just a national currency is limited to the impact of their value within the American ocean, but a major reserve currency (ie issued many countries its currency in accordance with the rates varying, which is owned by the central banks of dollars US), as well as the most important currency in international trade transactions, and therefore of interest to the dollar value of each Phoenix Trading Software source, whether raw material such as oil, timber, copper, or manufactured materials as tools and mechanisms, as concern, of course, also of import from countries other than the United States and other countries associated with the national currency to the US dollar .

It is pumped dollars, or raise the level of liquidity in the US economy, through the purchase of instruments, or US Treasury bonds. A trade leaves contain the amounts of money under the US Treasury undertakes to pay what is written on the board of amounts, just like any other bonds and other debts vows source to pay what they promise and record on the board of Phoenix Trading Program amounts while expires according to what is written on the board in order to – or history.

However, the difference between bonds issued by private, and bonds issued by the US Treasury, which views that, the central bank is the one who buys these bonds or instruments, namely that the US central bank, which gives loans is the US federal government.

And what does the central securities purchased either directly from the US Treasury, or from other countries they have already purchased and need to amounts or value?

Everything you do it literally «printed» or issue new dollars paid in exchange for buying bonds and then bought from reserves, including bonds that the need to reduce the level of liquidity comes a time. And which retains the largest proportion of US Treasury Phoenix Trading Software bonds or instruments of indebtedness is a major commercial banks. When the central buys these bonds from commercial banks offset dollars, and brings the level of cash in circulation.

What angers many of the exporters and importers?

Which angers them to increase the amount of dollars in circulation lead to lower borrowing costs, it also leads to lower what you pay banking facilities of the owners in exchange for dollar deposits. How?

A certain level of generalization, can be seen that a currency (in this case the dollar) commodity displays of dispense used temporarily to borrowers or deposited in banks. But it will not have the liquidity to lend other free of charge, even if he found a specific number of good people who lend modest amounts of charge. And when it increases the amount of liquidity, it increases the amount that can be borrowed proportion of them. And even increase the supply of loans, required constant survival and lead to a decline in the level of return, which must be paid for loans or to win more deposits for the banking facilities. This in turn Phoenix Trading Program leads to reluctance of depositors from the dollar, and replace it with other currencies such as the euro and the yen, and other, that any pumping more dollars leads, eventually, to the depreciation of the dollar relative to other currencies.

It increases the value of their currencies declining the amount of their exports, while at the same time increase the amount of their imports. The rise in the value of the currency of the exporting country means increasing the prices of their exports, and lower prices for all imports.

If, The cause of the wrath of China, Germany, Brazil and other countries that affect the value of exports in the lives of its citizens to a large extent, from the high volumes traded dollars, is because of her knowledge that it will lead sooner or later to import more than they were imported before, at the same time issued less than they were issued before, balance of payments.

What about the oil-exporting countries?

Indisputable that the devaluation of the dollar leads to higher imports from countries which increased the value of their currencies. As for the proceeds of the Petroleum Exporting Countries, it will not be significantly affected because the depreciation of the dollar even after a while lead to higher oil prices, or at least prevent the decline.

Illinois still bills to pay billions in private schools and social service providers last year, while Arizona State stopped last year to pay the cost of some organ transplants for some people in the medical care program operations. Some states and deliberately to the early release of some prisoners to cut costs rather than as a reward for good behavior. In Newark the state has laid off 13 per cent of police officers last week.
And despite the fact that next year may be even worse, there is a greater longer-term financial risks, according to the views of financial analysts. May be the secret behind this concern is that even in a time when the economy is recovering, budget deficits will not disappear, because many state and local governments burdened with a lot of debt – estimated at several trillions of dollars – much of it is written in the records and restricted significantly for the eyes – that can be sunk in the next few years.

Says Einstein Method Software , the financier who helped save New York City from bankruptcy in the seventies: «It seems to me that the request for assistance may be the right way when they reach this».

Some of those who warned of the mortgage crisis two years ago, returned to drive a alarm bells again. Their message was that small towns are not immune, such as the large Illinois and California and the US faced significant risks.

In the past, municipal bankruptcy or inability to repay its debts is rare, there is no mandate of the delayed payment of its debt since the Great Depression, and only a small group of cities or declare bankruptcy resorted to think about doing so.

But funding some state and local governments are very distressed, so that some analysts say it reminds them of the beginnings of a mortgage or a debt crisis that hit some European countries crisis.

Analysts fear that when you reach this stage – no one knows when – investors may be reluctant to lend States weaker, which could lead to a crisis can States the strongest also affect, which will resemble in effect turmoil in Europe and the right of the state after the other.

He warned Einstein Profits Review of that despite the scarcity of the bankruptcy of the localities in the past, it seems possible dramatically, and the lack of balance seemed clear in some areas so that the federal government will have to fall into it in what, although it this may seem unlikely in light of the stage the current political climate.

He added: «I do not like playing the role of the rabbit paranoid, but I do not see when it will be the end of it».

At a time when severe economic recession in the United States, some states hit hard to give up some of the workers resorted which helped her to stand on her feet and filling gaps in the budget every year, but they often come at the expense of future cost.

Some owners of individual retirement accounts, workers may resort to risk the withdrawal of second mortgages to invest in stocks, which is a gamble in which the investment gains would be enough to build a bigger house and repay the loans.

But this is what you do, Illinois, which has failed to provide financial allocations for some pension funds for years; the state has borrowed $ 10 billion in 2003 and used the funds to invest in Mashadtha funds, but the recession has led to a reduction of these funds dividends for the expected profits, and the state reimbursed the value of bonds , along with interest. So what is the solution? Illinois sold bonds worth $ 3.5 billion from pension funds bonds this year, and plans to borrow an additional $ 3.7 billion for pension funds.

These represent the most important long-term problems facing some states such as California, Illinois, New Jersey and New York, which financial analysts show great concern them, for fear that it is a crisis that could affect other states, which increases the cost of borrowing.

But short-term budget, which is facing difficulties in almost all states are what hold all elected officials.

Perhaps Illinois is the only state not be unable to pay their debts, many states such as New York postponed the payment of vendors and local governments pay because they do not have the financial liquidity to ensure that.

The California has paid for the street vendors bonds bills last year, while some other States expressed concern about the flow of liquidity, which has contributed to the postponement of re-payment of taxes recovered last spring.

Now, with the lifting of the economic downturn the demand for state aid, resorting many states to cut aid; the demand for food vouchers markedly increased in the state of Idaho, but troubled budgets have limited mandate to close nearly a third of the field offices of the Department of Health and well-being of the state, who receives such requests. However the tendency of many States to cut aid to cities, some have resorted to cuts that were not on the table in the past, Voqalt police officers and closed extinguishing stations.

These cuts in aid to cities and counties, which are expected to continue, one of the reasons behind the view of some analysts that the cities face significant risk of bankruptcy, or be subject to external supervision.

Is not expected to carry the next year is good news in this regard; States and cities are faced with both a larger fiscal deficit after the recession, according to officials, where emergency funds have been exhausted, easy and procedures.

It is expected that this time does not see a change, it has increased funds stimulus plan, the federal than the Federal share of state budgets to more than a third of just more than a quarter in 2008, according to the report issued by the National Federation of the rulers of States, and the National Union of officials of state budgets.

It is expected that these funds will run out by next summer, at the same time does not expect that the outcome of the tax return to pre-recession levels of another year or two ago, given that the most comprehensive housing market and the economy is still weak, and unemployment remains high.

Says Scott Pattison, director of the Association of the budget: «Next year will be the worst year during the four or five years, a period of economic downturn».

It is expected limited number of experts that the federal government resorts to offer direct assistance to the states, at least in the near term. And it is opposed to a lot of the Republican majority in the House of Representatives economic stimulus plan, and Washington is considering the recommendations of the debt reduction. And then some states resort to pay operating expenses, adding some of the new debt was not disclosed fully; The state of Arizona, which groans under the weight of the housing bubble ordnance, turned into a real estate deal for aid, reneged mainly to sell a lot of government buildings – including sale the tower, which is located where the governor’s office – in exchange for $ 735 million paid in advance, but the rental buildings over the next 20 years will cost taxpayers an additional $ 400 million in interest.

Many governments are at present to delay the financial allocations to fund her retirement, which will be needed in the end to payment, high interest rate – usually up to 8 per cent – is expected to accrue funds annually.

New York tended to balance its budget this year through the embezzlement of her retirement fund, and New Jersey Governor Chris Christie to pay $ 3.1 billion was owed to the pension funds this year.

Those hidden growing debt that has made a lot of analysts are showing great concern, owns States and localities currently deferred bonds by nearly $ 2.8 billion, but this figure dwarfs the debt deleted across many states of books.

And facing the local pensions and pension state – which is another form of futures religion guaranteed by some States in their constitutions – a deficit hidden in the budget, up to $ 3.5 trillion, according to some accounts, and health benefits promised by the state of large local government retirees, which is moving forward , it could cost the state more than $ 530 billion, according to the Government Accountability Office.

He says Jerome Powell, a visiting professor in partisan politics Center, who worked under the leadership of Secretary of the Treasury during the process of saving the savings and loans in the early nineties: «most of the financial crises come unexpectedly, and in time make you be ready to it. This time it is quite contrary, you expect a crisis, and it would be sin not to do something about it at the time, who still own the opportunity to do so ».

So far, investors accept to buy US bonds eagerly, with full belief that states and cities will be able to repay the debt, but recent weeks have seen declining demand for bond purchases clearly, mutual funds that invest in municipal bonds through the sale process, which is the largest operation sale within one week, more than it has done during the collapse of the financial markets in 2008, and hedge funds currently seeking to find ways to place bets against the debt with the help of some US investment banks.

There are some states, of course, that are not experiencing similar crises to Illinois and California, says credit rating agencies that the risk of default is very low debt. And put cities and states to pay the debt to bondholders as the most important priorities even before pay for necessary services.

The index «Standard & Poor’s» has issued a report saying that the crisis faced by states and localities is related to a greater on the hard decisions, more than expected defaults on debt.

Change in Categories

* Improved insurance ratings for a number of local governments this year, not because of financial finances seen the consolidation, but because the rating agencies changed the way deliberately through which to analyze governments.

New high classifications, which costs less than borrowing emphasizes the fact that the sweeteners deficit was rarer than corporate defaults.

«Moody» Foundation has issued in October (October) last report, I explained it behind classified the fifty States, which stated that in Illinois better credit risk than most non-US companies and financial reasons.

But some analysts fear that this assessment is overly optimistic, pointing out that the rating agencies also ruled out the possibility of a mortgage crisis. In spite of all agreement on the possibility of States unable to pay their debts, they are afraid to pay the suffering of the States of the accumulated debt problems, investors refused to buy the debt of weak states or local governments, which would be would make a crisis, because the US can not work unless you can borrow, and this crisis can be passed on to the proper States, which increases the cost for her. If Europe is the example for it.

And he warned Meredith Whitney, a banking analyst was among the first to warn of the impact of the collapse of the mortgage market will affect the banks, they see similar problems in financing state and local governments.

She said in an interview with Channel «CNBC»: «the position of the state seems like a lot to what it was before the crisis banks»; there is a strange similarity between the real estate debt crisis, looming on the horizon, and the crisis of municipal debt….

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