The Web Tycoon’s blog

Between 2004 and 2006, when the real state bubble was in his maximum, complex mortgages in Japanese Yens were a tendency to buy houses at a low cost price. Four years lather, in the middle of a huge worldwide crisis, the followers of this tendency in mortgages are paying it expensive

The magic formula allowed borrowers to reduce interest rates of their mortgages but now with a each time more expensive Japanese Yen, these mortgages are getting though to pay.

During the last days, the Japanese Yen reached a level where one Euro costs just 109,5 Japanese Yens, a maximum unseen for more than 10 years. Since 2008 the Japanese Yen has been increased by more than 50% in value, increasing by this percentage the monthly payments of these Mortgages in Japanese Yens.

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The European Central Bank (ECB) will keep interest rates steady at 1% and stated that will lend all the liquidity banks need at three months. At the same time, the European Central Bank increased his economic growth and inflation forecasts in the Eurozone when detecting a better behavior than the expected.

The good behavior of the economy in the Eurozone lead the European Central Bank to improve its forecasts for this year and the next. Their new forecasts on economic growth go through a growth between the 1.4% and the 1.8% this year,a very more optimistic lecture than the previous 0,7 and 1.3% forecasted in June.

Jean Claude Trichet, pointed that this rise in forecasts responds to a better economic growth in the Eurozone during the second quarter and the months of summer, better than the expected in a beginning.

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Ben Bernanke, has planned this month the actions of the Federal reserve for if the economy of the United States brakes his recovery.

Ben Bernanke announced his next steps during the central banks governors meeting,hold in Jackson Hole (Wisconsin),just the day when the United States revised the GDP growth during the second quarter, than has been lower than the expected.

The GDP of the United States grew now by 1,6%, in front of the 2,4% considered in a beginning. However,the reduction was lower than the expected by analysts, that foreasted a GDP growth by 1,4% .

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The International monetary fund (IFM) demanded transparency to the solvency tests will be published tomorrow (friday 23th) to be more transparent. Furthermore, the International Monetary Fund reported “weaknesses” in the banking system in the Eurozone, and pointed that “too many” financial entities depend in “excess” of the “liquidity and other types of governmental aid” .

The International monetary fund is worried about the recovery in Europe

The International Monetary Fund also warned that growth is too weak to afford problems of debt, deficit and unemployment and advised structural reformations, fiscal consolidation and measures to strengthen the banking system.

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Earning money too easily has its own risks. First fed the real-state bubble, now, despite what we could think, could be cheapening the economic recovery.

When reducing the interest rates to almost 0, the Federal Reserve helped to prevent an economic collapse. However, in front of a weak recovery, many thing than the Federal Reserve is creating deflation.

The question of the million is why banks aren’t spreading credit, specially to small companies who are the motors of economy. One of the answers is that there isn’t demand of credit, but the lack of supply has his role too.

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The deception generated by the private sector employment report of June put Wall Street under pressure. Figures move between red and green after the heavy loses from Wednesday, with the Dow Jones far of the 10000 points.

The Industrial Dow Jones began Wednesday moving to 9867 points, the S&P500 rose by 0.212% to 1043 points. However the technological Nasdaq, has better perspectives and advanced by o.45% to the 2146 points.

Doubts do not leave Wall Street. Other bad macroeconomic figure has showed the weakness of the economic recovery, and the doubts on a possible meltdown are flying around.

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George Osborne, British ministry of Economy, has just announced in the British parliament a deal that the United Kingdom, Germany, and France will establish from January of 2011 a tax tat will penalize banks operating in these three European countries.

With this measure, the British government hopes to obtain 2000 millions of pounds from the entities placed in the United Kingdom and local branches from stranger groups that operate in the country. France and Germany will confirm early if they take a similar measure, according Osborne.

This tax will be similar as the one that the government of Barack Obama announced the past year.

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China announced this week that will adopt a more flexible policy about the exchange rate of the yuan, and will allow a moderate revaluation against the dollar.

The decision announced by surprise also shows that the appreciation allowed by Beijing will be gradual.

“Given the recent economic situation of national and international markets, the Popular Bank of China decided to advance the reform on exchange rates of the renmimbi and increase the flexivility of exchange rates”. Said the central bank in a communicate.

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Although record Warnings and the minimums in stock markets, the analysts from Goldman Sachs are optimistic, and think that reaching 1.250-1300 points in the S&P 500 (an increase by 20%) is a reachable objective in the mid-run. About the Euro, the analysts from Goldman Sachs think that is “where it should be”.

Last turbulences kept the S&P 500 near to lose the level of 1000 points. Just after the aperture was trying to reach the 1060 points, still very far from the forecasts of Goldman Sachs.

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Standard & Poor’s isn’t the only big agency in retrieved the maximum credit rate to Spain. Fitch also reduced the credit rating by a step, to AA+, with a ’steady’ perspective, so isn’t thinking in reduce it again in the future.

This decision was featured one hour after the closing of European markets, but affected Wall Street an the Euro as well. The risk factor in Spain continued to grow and reached 160 basic points. The treasure of Spain highlighted that this rating is still being high.

Fitch returned to trouble Spanish market, specially when looking to the beginning of the next week.

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