The Web Tycoon’s blog

The federal reserve closed 2009 with record profits, $46100 million, that the central bank will refund to the treasure.

According the Washington Post , this is the highest profit obtained by the federal reserve in their 96 years of history. The entity presided by Ben Bernanke, surpassed the analyst’s forecasts from the Bank of America, Goldman Sachs and JP Morgan, and has made it thanks to the aggressive bond purchases last year. His previous record was of $34.600 million in 2007.

At the end of 2009, the Federal Reserve was controlling $1800 billion in debt from the US Government. This figure surpasses widely the $497000 million of 2008.

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A team of specialists from the International Monetary Fund will asses the Greek government to find ways to reduce its high level of National Debt and solve this complicated economic situation.

The members From the International Monetary Fund will remain in Athens around a week since tomorrow, when they are scheduled to arrive. However, the organization presided by Dominique Strauss-Kahn didn’t speak about a possible financial aid to Greece.

This team will analyze “possibilities for the International Monetary fund to dispatch technical assistance, about the pension reformation, tributary policy and administration, and budget administration” according the spokesman of the International Monetary Fund informed.

The Economic plans of Greece are being questioned and the government of the country wants to convince the European Investors and the Stranger Investors that they are able to reduce deficit and national debt. Nowadays, Greek public accounts are the worst in all the European Union and the fear of a worse crisis is increasing.

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The German Finance minister, Wolfgang Schäuble, is studying the possibility of postpone to 2011 the fiscal reform accorded by the government, that regards a reduction of taxes by value of €24000 million yearly.

According the newspaper ‘Der Spiegel’, the department estimates that, given the level of German National Debt, the beginning of tax reductions should be postponed by a year or two.

In his coalition agreement, christian-democraths (CDU), liberals)FDP) and bavarian socialchristians (CSU) accorded in October a wide fiscal reformation aimed to reduce the tax charge by €24000 million yearly, beginning from 2011. Those plans have been considered impossible because of several economic reasons.

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The Federel reserve is still very worried about the evolvement of labor market and and the risks on a still weak economy of the emergency package withdrawal. Furthermore inside the Federal reserve of Ben Bernanke there is divergence of opinions about how will the pressure affect the inflation rate next months.

This way, the Federal reserve showed that although the last report this November, is worried about the unemployment rate. However the bankers of the Federal Reserve state that they will need more than a good report to confirm the evidence that the labor market is recovering.

The hottest discussion between the officers of the Federal Reserve was about the forecast on inflation rate. So, some members of Federal Reserve’s open committee see low risk on the increase of prices due to the low interest rate, although they recognize that it’s important ”to stay alert” in front of possible risks.

On the other side, some members of the Federal Reserve believe that the increase on prices experimented by some raw materials could boost the inflation, a situation that could lead to higher interest rates although further improvements on the labor market.

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The bounce experimented that year by the markets, hasn’t been able to prevent Wall Street to close this year its worst decade in 200 years of history.

Since the end of 1999, Wall Street has lost an average of 0,5% of his value per year. During all this time, markets have received a lesson to the Americans who invested in Wall Street to save money for their retirement.

Many investors in Wall Street won a lot of money because of the market bounce begun in the beginning of the 80’s that lasted until the end of the 90’s. In this period, Wall Street had it’s best behavior in the history, with earnings by an average of 17′6% yearly, that increased share prices in Wall Street.

All this was followed by a trim of dividends by the big companies that braked the profits in Wall Street. But was in 2008 when the ”absolute fear” gave the worst behavior in the history of this market.

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Ben Bernanke, president of the Federal reserve, that received this week the price of best person of the year from the magazine time, and is facing his reelection in the senate, is keeping his monetary policy steady.

The FED left yesterday the intervals of the interest rate low, between 0% and 0.25%, this level has been remaining the same this last year. Furthermore, stated that will leave interest rates exceptionally low during a low period of time.

Ben Bernanke is showing more optimism about the economic situation, mainly about the labor market. The information received from the Federal Open Market committee (FOMC) since the meeting in November suggest that the economic activity is improving and the destruction in the labor market has ended, the unemployment rate surprisingly decreased in November from 10.2% to 10%.

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The data from the big European Banks showed that the worst of the financial crisis is over. The third quarter profits from main entities( excepting the British ones, that do not have Quarter results) has been higher than €9600 million this year, this supposes an increase by 73% from the same period in 2008.

From the Big European banks, only the Swiss UBS is continuing with red figures, with 374 millions in loses, while Credit Suisse and ING are having profits again. Santander with €2,221 in profits this quarter, is the first of the ranking, followed by Credit Suisse, BBVA, and Deutsche Bank.

The recovery seems weaker if we take data relative to the whole year, when the 11 examined European banks won €24,770 million, a 17,6% more. Looking at the accumulated, ING hasn’t still left loses, and UBS is losing still more money, up to €2,600 million.

Santander is keeping the leadership in profits in this temporary landscape, While the French BNP Paribas is the second, just before BBVA.

European banks are doing just the opposite than Goldman

Most entities, after being affected by the financial crisis, have centered efforts to increase income from retail banking, reducing exposure to investment banking. Solvency is another key point for the big European banks as large part of them (except Santander and BBVA) needed public help to survive the financial crisis.

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The president Barack Obama, will try to struggle with unemployment (that is at 10% in USA), with the unused tarp funds.

In a speech hold on the Brookings institution, Barack Obama said that wants to ”boost the job generation” with part of the unused $200bn that will be saved from the financial rescue.

”The aid to the banks, was forecast to cost billions of dollars, but not it is in the way to generate billions of dollars in profits to the public treasure”, said Barack Obama.

The program was launched by the administration of his ancestor, George W.Bush, to prevent the the financial system to collapse after the bankruptcy of the investment bank Lehman Brothers. However, Many Banks returned the funds with interests as market stabilized during the last months, and the cost of the program has been reduced.

”This will give us the opportunity to reduce deficit faster than what we expected before, and use funds that would have gone to help the banks of Wall Street, to contribute in job generation”, said Barack Obama.

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Greece will have serious problems with his national debt because its credit ratings have been downgraded to the lowest level in the eurozone on Tuesday, as its deteriorated finances began to spread fear all over the world.

The incoming national debt disaster caused heavy selling of Greek Stocks and bonds and the shares on the Athens stock exchange fell more than 6 per cent.

For first time in 10 years, a leading rating agency, Fitch, has given to Greece the BBB plus grade with negative Outlook, that is lower than A.

Maybe this building will be for sale to pay Greek national debt.

The Greek Finance Minister,George Papaconstantinou, said that the downgrade reflected Greece’s “mounting credibility gap in recent years and an exceptionally difficult fiscal situation” faced by the new Socialist government, which took over in October.

the other main ratings agencies,Moody’s and Standard & Poor’s, have also warned Greece that they can also downgrade ratings on Greek national debt, that is forecast to rise to 125 per cent of gross domestic product next year.

Concern focuses on whether Greece will be able to contain its national debt by implementing a new revenue-raising measures swiftly enough to cut the deficit from 12.7 per cent to 9.1 per cent of GDP next year in line with budget projections.

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The president Barack obama, partially admitted that the continuous unemployment carnage in the United States seems to have arrived to an end. During the month of November, the job destruction wasn’t higher than 11000, very lower than the expected 130000 and the best record from December 2007, two years ago.

This has been excellent data because the November unemployment in the US not only prevented the record of the last 26 years from being higher than the 10,2 of October, but also reduced it to 10%. The president Barack Obama highlighted that the data is positive but we have still a long way to obtain a prolongated improvement in the job market.

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