Daily Digest 2/3 - Analyst Warns of 2015 Bank Crisis, Beware Pyramid Schemes, World Food Prices at Record High
- Iceland Shows Ireland Did ‘Wrong Things’ Saving Banks
- Analyst Warns of 2015 Bank Crisis Amid ‘Upbeat’ Davos
- Investor Beware - Pyramid Schemes
- Real Estate Down
- Interest On National Debt: 'Skyrocketing' Costs Ahead
- A Thriving Stock Market (Video)
- World Food Prices Hit Record High
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Iceland did the right thing by making sure its payment systems continued to function while creditors, not the taxpayers, shouldered the losses of banks,” says Nobel laureate Joseph Stiglitz, an economics professor at Columbia University in New York. “Ireland’s done all the wrong things, on the other hand. That’s probably the worst model.
When bankers weren’t trying to win business, they were worrying about governments’ fiscal policy in the U.S. and Western Europe or reiterating the role that finance plays in economic growth. And they echoed one element of Wilkinson’s report -- the part that said a focus on bank rules could push risk-taking into hedge funds or other types of financial companies that don’t fall under the regulations. While German Chancellor Angela Merkel said on Jan. 28 that too little had been done to prevent another financial crisis, politicians focused mostly on defending their efforts to restore growth, curb inflation and deal with the debts of European countries such as Greece and Ireland. As French Finance Minister Christine Lagarde told a panel on Jan. 29, “the euro zone has turned the corner” and “we learned from our mistakes and we learned from the crisis.”
The basic premise is this, Mike explains: the new investor comes in on the bottom of the pyramid, agreeing to purchase one or two or 10 coins each month at a certain price, which is considerably higher than retail price of the bullion or the collectable premium of the coin. The new investor also brings in two new buyers to join the club. When the two new buyers purchase their coins at the same ridiculously high price, the original investor who recruited them receives a small cut of the profit, and the bulk of the profit gets passed up the line to the top of the pyramid. The idea is that as the investor works his way up the pyramid, his take grows larger and larger, eventually covering the cost of his own monthly coin purchase.
Real Estate Down (james)
Housing prices are going to continue to drop and it is for the simple reason of supply and demand. People were infatuated with constructing new houses for profit when there was already a steady supply in the market. With the economy as lousy as it is, its no wonder housing supplies well exceed demand and that we currently have a surplus of housing!
Here's what it means if interest costs range between $5.5 trillion and $7.5 trillion: Between 14 cents and 19 cents of every federal tax dollar collected over the next decade would be eaten up by interest. That's 14 cents to 19 cents of every tax dollar that will not be available to pay for government services and programs, or to aid Americans and states in the event of an economic downturn or natural disaster.
A Thriving Stock Market (Video) (presentmoment)
Economist Nouriel Roubini discusses the market's rebound. He points out that massive monetary stimulus of $1.8 trillion for QE I and $600 billion for QE II and a tax cut for top income earners of $900 billion paid by deficit gave us a barely 3% of GDP growth. A set of policies he would like to see are a short-term stimulus, spending cuts, entitlement reform and raising taxes. He says there is no free lunch and the rising debts and deficit is a risk to the economy.
Rising commodities costs are one of the major factors behind a growing wave of civil unrest across the Middle East and North Africa. "High food prices are of major concern especially for low-income food deficit countries that may face problems financing food imports, and for poor households which spend a large share of their income on food," said Abbassian.
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