Fiscal Cliff: The Valley of Debt

November 27th, 2012

One of the key points in the recently concluded election was about how the “would be president” then would tackle the ominous fiscal cliff. But many, especially non Americans, are still unfamiliar with the term.

The term “Fiscal cliff” was an expression that was used throughout the history especially on budget talks. According to research, the earliest reference to the term was traced back in 1957, when it was used in a New York Times article about home ownership.

At present, the term denotes the effect of a number of laws in the United States which may lead to spending cuts and tax increases. The whooping $7 trillion in spending cuts and tax increases was scheduled to take place at the beginning of this incoming year, 2013, which is approximately 35 days from now. The buzz word first entered the scene during a speech by Federal Reserve Chairman Ben Bernanke to the House committee on Financial Services last February 29,2012.

Under current law, on January 1st, 2013, there is going to be a massive fiscal cliff of large spending cuts and tax increases. I hope that Congress will look at that and figure out ways to achieve the same long run fiscal improvement without having it all happen at – at one date.

The laws involved are the Bush tax cuts and the Budget Control Act of 2011. The Bush tax cuts or Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 is an act centered on the two-year extension of the Economic Growth and Tax Relief Reconciliation Act of 2011 provisions which was intended to delay the return of tax rates similar to the Clinton administration. It was passed by the United States Congress back in December 16,2010 and was signed as law by President Barack Obama a day after. It is scheduled to expire at the start of 2013 which would result to tax increases.

Meanwhile, the Budget Control Act of 2011 is a federal statute and was signed as a law by President Barack Obama on August 2,2011 which mainly focuses on debt ceiling and deficit reduction. It is also scheduled to expire almost the same time as the Bush tax cuts and would result to spending cuts.

The two effects would lead to a reduction in the budget deficit in 2013. The abrupt deficit would then lead then to an increased recession on the same year which would greatly damage its present economic recovery.

Stephen Stevenson

A History of the Brittle Cease Fire for Israel – Hamas War

November 22nd, 2012

After eight days of unrest, both Israel and the Palestinian group Hamas had finally agreed to call upon a cease-fire. The move was initiated by the Egypt’s new Islamist government and supported by the United States.

The conflict which had just been recently reignited by Israel’s “Operation Pillar of Defense,” resulting to numerous civilians casualties for both sides. Four years after the Gaza War back in the winter of 2008-2009. The ideal – rooted conflict can be traced way back in 1988 when the founding charter of Hamas declared for a Jihad – Holy War.

Hamas

Is an acronym for Harakat al-Muqawamah al- ‘Islamiyyah which can be literally translated as “Islamic Resistance Movement.” It is a militant fundamentalist Islamic organization who currently occupies the West Bank and Gaza. Originally, it is an alternative group of Palestinian Liberation Organization (PLO) which is founded by Sheikh Ahmed Yassin aimed in establishing a network of charities, schools and clinics in the region. But certain ideologies and circumstances had urged it to engage into several bloody conflicts with Israel.

A year after the declaration of Jihad, its founder was convicted by an Israel court for giving orders to its members to kidnap and kill two Israeli soldiers which gained him a 9 year sentence in jail. He died 7 years later from an airstrike by Israel. According to reports, the group has been targeting Israelis with suicide bombing which now tolled to 500 individuals since 1993.

The group is viewed differently depending on the audience. Israel, United States, UK, and other western countries treats it as a terrorist group. Meanwhile, Arab and Muslim nations has a different perspective regarding them. They considers them as a victim of Israeli aggression.

Israel

a formidable ally of the United States in the middle east, Israel had age-long conflicts with its neighbors. Many Muslim countries and groups had outrageously deny its existence and called for its destruction. Hamas is one of them. The military power of Israel proved to be more capable than their foes which gained them territories in the Six-Day War.

Over time, some had yielded their advocate but conflicts still ravages on. Gaza War is one of those. It is a result of an offensive measure of Israel against Hamas over the disputed Gaza Strip, a strip of coastal land on the Mediterranean sea. It resulted to more than a thousand Palestinian and 13 Israeli soldiers dead.

Present Conflict

The present conflict was temporarily halted after a truce between the two sides has been agreed upon which took effect 14:00 EDT on Tuesday. According to reports, It stopped a supposedly Israeli ground

invasion which may lead to further casualties aside from 162 Gazans and 5 Israelis dead from bombing and rocket fires. Unfortunately 37 of the present casualties are children.

Stephen Stevenson

The results of InstaForex First Conference in Moscow 2012

November 21st, 2012

InstaForex Company has summarized the results of the first InstaForex conference for existing and potential customers that took place on November 10, 2012 in Moscow. A registration for this large-scale event ended few weeks before its opening and gathered more than 300 people at Ritz-Carlton Moscow Hotel on Red Square. The event was attended by traders not only from Moscow but also from other cities of the country, which made the meeting one of the brightest Russian Forex events this year.

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During the conference day leading experts in the field of currency trading delivered their reports: Stanislav Zelenskiy, Nadezhda Zhyzhko, Sergei Belyaev, Gleb Kabanovs and Viktor Pershikov. Informative presentations on various aspects of technical analysis were met by the audience with great interest and led to a number of additional questions.

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The presentations were followed by a lively debate over hot topics raised by the speakers and did not stop during the complimentary coffee break organized by InstaForex Company.

Between the presentations the guests of the event took part in prize draws for bonus accounts and other gifts totaling $5000. In addition, the visitors got $50 on their deposit as a present from InstaForex Company.

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InstaForex First Conference in Moscow 2012 brought effective results and made it possible to actively discuss the problems of currency trading in Russia, to strengthen professional relationships and establish new partnerships. The event contributed to the professional development of the participants.
InstaForex Company thanks everyone for their interest and activity during the conference. We look forward to seeing you at the conference next year!

You can find a photo report here.

Eurozone Debt Crisis

November 19th, 2012

Today the Eurozone debt crisis is the subject traders and economists have been discussing most. Month by month, forecasters paint an increasingly dark picture of a situation in the EU with a collapse of the union at worst. Greece, France and Italy with its banking crisis may be the first to leave the EU due to extremely high debt levels on the global loan market.

Spain was offered 100 billion euros as a bailout, which is equivalent to 15% of its GDP. However, despite the amount is impressive, it might be insufficient to solve the troubles of the country, even though the economic recession in Spain is far from its culmination. The situations in Spain and Ireland are identical. It should be said though that the size of Ireland’s economy is eight times as less, but it has asked for 65 billion euros.

Greece has been said to be likely to quit the Eurozone, but most experts are sure it will stay. Otherwise, the crisis will totally devour it as the national government will definitely fail to cope with it alone.

As for Spain, the country needs substantial funds to revive its economy, but Germany seems to be unwilling to give it a helping hand. What Angela Merkel proposes is uniting the banking systems, which in fact means creation of a supra-national supervisor with an aim to establish German order and discipline in the banking sector of the Eurozone.

Even though such a scenario is hardly possible to implement now, it would definitely help out the indebted countries and the Eurozone as a whole.

Up for the Presidency: Xi Jinping

November 15th, 2012

The Chinese Community Party already released the voting result of who will dictate the leadership of China in the next five years. The country’s vice president Xi Jinping was chosen to take the presidency after Hu Jintao steps down from the office this March according to Xinhua.

Aside from being the Vice President, Xi Jinping is also currently the top-ranked member of the Central Secretariat of the Communist Party of China, Vice-Chairman of the Central Military Commission, President of the Central Party School and the 6th ranked member of the CPC Politiburo Standing Committee. He was the son of the communist veteran Xi Zhongxun and had experienced his part of struggle during the cultural revolution. He is a man known to have a tough stance on corruption and a frank openness about political and market reform.

The selection, which takes place every 5 years, was just recently deliberated with a list composing of highly recognized Chinese officials. Also in the same report, the other candidates who belong to the list are North Korean-trained economist Zhan Dejiang, financial guru Wang Qishan, minister of the party’s organization department Li Yuanchao, Tianjin’s party boss Zhang Gaoli, and the conservative Liu Yunshan.

But it seems that only those in the government are celebrating the transition of power. In an another article, the locals, most especially the young and educated, are infuriated because not even a touch of democracy is present in the voting. Only those in power are given the chance to select and appoint the leader, robbing the people of their say to the faith of their government in the next five years.

The recently concluded US election, wherein President Barack Obama was given his second term, also salted the wound of the Chinese. Democracy was proudly displayed on the event, giving a fair ground to the American citizens to choose on who will going steer the wheel for the next couple of years. In the same article, the Chinese people are also weary from shouts of reforms coming from the former upcoming candidates thus deepening the disappointment.

The incoming President Xi Jinping has a lot of tough challenges ahead and his character will be really put to test. The most pressing concern will most probably the real reforms in the system that the Chinese people are deliberately seeking. But achieving it won’t be a walk in the park because unrooting the habits, serving as a blockade for its achievements, is a messy process. Relationship with relatives and friends may be lamented in the process before the problem will be finally rooted out.

Stephen Stevenson