Saturday, May 29, 2010

Why You Need to Avoid Finance Planners on the Internet

The majority of us are quite eager to maintain a strict level of control over our personal finances, however not all of us are able to achieve this lofty aspiration and sadly many of us will simply fall at the first hurdle. However, this does not mean to say that you are perpetually doomed to failure: rather, you just need a little help to get you there.
The internet is full of articles, support communities and tutorials all of which are designed to help assist you with any financial issues that may arise. However, it is crucial that you take these with a grain of salt and be wary about relying too heavily on any person who professes to be some sort of financial advisory genius or expert. You have means of verifying such bold claims and if you are foolish enough to accept this without question, you leave yourself dangerously exposed.
One of the major problems with these experts on the internet is that they typically churn out a standard template answer which is then applied to everyone, irrespective of the nature of their debt, or the reasons as to why they are in debt. This means that people run the risk of relying on erroneous information, which will not and cannot help them. Ideally, you should be drafting a financial plan by yourself, for yourself. Only you will be truly aware of what your current financial situation is like, and only you can truly know the current bills you owe.
Don't be foolish when it comes to dealing with debt. Make sure you follow your head whenever you are in doubt. Remember, common sense really is the best answer.
Maintaining your personal finance can be one of the toughest tasks that you will have to face in life. Make use of the personal finance tools to manage your personal finance effectively.

How a Chapter 7 Bankruptcy Attorney Can Help You

Filing for bankruptcy can have a bittersweet appeal. It is a final solution to your financial problems, but it can also be a nerve wracking decision because of its finality. Because of the ambiguity of this immense process, a Chapter 7 bankruptcy attorney can prove to a be a helpful addition to your proactive stance against personal debt. The lawyer can even save your home from a foreclosure.
The assistance offered by many legal services can help provide tremendous relief at the very onset of this process. This can include immediate debt relieve and collection intervention, free information on debt consolidation as well as the implementation of a solid plan for credit restoration. They can also provide advice in getting wage garnishment stopped and eliminating embarrassing credit collection calls at your place of business.
This can make the process seem less overwhelming. What can make it a positive process however is the implementation of financial training that will help you avoid having a recurrent financial mess on your hands. A good bankruptcy lawyer typically belongs to a legal team that expresses concern for the future of your finances and in various ways works to ensure that you will get on and stay on the road to financial health.
You want to make certain to choose a seasoned bankruptcy attorney that is familiar to many aspects of bankruptcy laws. This insures you greater protection for the assets that you have. The advice that you get at this stage in the game is crucial and should assure your future security.
Many legal teams offer pro bono or free informational services. This can be online or physical access to numerous documents and programs that assist in credit correction. Your bankruptcy will help you get a handle on the present mess, while the useful educational services of your bankruptcy legal team will assist you in making better future financial decision.
Your consumer debt should not require you to suffer a lifetime of embarrassment and stress. In fact, this can only further enhance the proclivity to make bad financial decisions. Filing for bankruptcy is not necessarily the end of the road; rather it is the beginning of a new financial frame of mind.
Having a Chapter 7 bankruptcy attorney on your team ensures that you will get expert legal advice and instruction. This means that the best plans and methods for dealing with your present circumstances will be used. It also means that you will get the relief of trained caring assistance that can help alleviate the stress of collections and wage garnishments.

Monday, May 24, 2010

Papandreou asks for rescue plan to be activated

Greece requests aid

The Greek debt crisis and fears of increasing sovereign debt problems in other eurozone countries weighed on the euro again this week. EURUSD in particular slipped temporarily to 1.32, the lower end of the trading range of the last two and a half months. At the end of the week, however, after surprisingly upbeat economic data, and the announcement that the Greek government had officially requested aid, EUR-USD is around 1.33 again, still about 1.7% below last week’s level.

Eurostat has revised Greece’s budget deficit for 2009 from 12.7% to at least 13.6% of GDP.
Moreover, Moody’s has downgraded Greece’s rating from A2 to A3. The even greater budget gap makes Greece’s stability programme, which is aiming to cut the deficit to 8.5% this year, appear even more ambitious. Implementing additional austerity measures would probably prove difficult: the measures unveiled so far have already prompted strike action. Furthermore, an even tighter fiscal policy could exacerbate the recession, which would not help to cut the deficit.

Greece’s dilemma has been deepening because of the surge in interest rates. Prices of bonds with shorter maturities plummeted dramatically this week. This reflects investors’ fears of an impending default or debt restructuring, even though the Greek finance minister George Papaconstantinou has shrugged off this possibility as being absurd.
On Thursday, yields on 2-year bonds were over 10%, compared with 6.75% at the end of last week. 10-year yields jumped to 8.8% at times; thus spreads between 10-year Greek bonds and the equivalent German Bunds hit a new record of over 560 basis points. There is growing concern about contagion from Greece spreading to other eurozone countries: yield spreads between 10- year German and Portuguese government bonds, for example, climbed to a 13-month high.

Due to the sharp increase in the cost of financing on financial markets, the Greek prime minister George Papandreou officially requested aid from European governments and the International Monetary Fund (IMF) at midday on Friday.
There is no time to be lost: Greece must find €11bn for maturing bonds by the middle of May.

The fact that Greece is now asking for the rescue plan to be activated is allaying fears of the debt crisis spreading to other eurozone countries and the monetary union breaking up, and is thus easing pressure on the euro. Before the rescue plan takes effect, however, governments of the member states must decide on bilateral loans. The French government has already drawn up a draft bill and earmarked €3.9bn, over 60% of France’s maximum contribution. If all member states provided about 60% of their respective maximum contributions, the total for the whole of the eurozone would be about €18.5bn. Together with the IMF loan, which the German minister of economics Rainer Brüderle estimates at €12bn, this would more or less cover the amount needed by Greece for 2010. However, it is still unclear whether this will in fact suffice. The rescue plan agreed at the end of March envisages bilateral loans of up to €30bn for this year and additional IMF loans of €15bn. The extent of potential financial aid necessary in the following years is not yet known.

In Germany, the legal procedure for bilateral loans has not yet been agreed. But the government will now hardly be able to postpone voting on the unpopular aid until after the election in the state of North Rhine Westphalia on 9 May. According to finance minister Wolfgang Schäuble, voluntary aid would conform with the Constitution, as the no-bailout clause in the Lisbon Treaty only prohibits member states from being liable for the commitment of other states. He said it was in Germany’s interests to stop the Greek debt crisis from escalating.

If loans, on which interest rates of about 5% would be charged, were not granted, Greece would probably become insolvent. This is not an option: if its debts were restructured, German credit institutions, which hold Greek government bonds to the tune of around €40bn in their portfolios, would have to take massive write-downs.
This would cause capital base constraints, which would tighten lending further, and the banking crisis could flare up again.

This would jeopardize the German recovery, which just seems to be gathering pace in the second quarter. This week, for instance, the ZEW expectations rose by 8.5 points, and are now almost twice as high as their historical average.

The Ifo business climate leapt from 98.2 to 101.6, mainly because current assessment had risen sharply. Expectations continued to improve too and are nearing their all-time high. Other climate indicators in the euro area were also quite upbeat. Nevertheless, according to the latest IMF World Economic Outlook, disparity between the US and the eurozone is widening: for the eurozone, the IMF is still predicting growth of 1% in 2010, and it has reduced its forecast for 2011 marginally to 1.5%. However, the US forecast for 2010 has been lifted by 0.4 points to 3.1% and for 2011 by 0.2 points to 2.6%.

Despite the brighter US economic outlook, the FOMC is not likely to signal that it will abandon its zero interest rate policy in the foreseeable future. In the minutes of the last meeting, some committee members had already warned against raising interest rates prematurely, particularly because of the risk that core inflation could drop more sharply than was desired. Therefore, the phrase “extraordinarily low rates for an extended period” is likely to be maintained.

Nevertheless, the dollar could remain well supported next week, and not just because of the ongoing problems in the eurozone: US GDP data for Q1 will show that this time the main driver of growth in the US was not inventories but private consumption.

Eurozone economic data surprisingly robust, recovery gathering pace

Aid package for Greece eases pressure on euro

EUR-USD plunged to a fresh 1-year low of 1.3114 this week as the debt crisis intensified.
The European single currency could have bottomed out, however. In our view, the euro is unlikely to fall further, for the following reasons:

1. The escalation of the Greek debt crisis after S&P cut Greece’s rating by three notches to BB+ (i.e. junk status) had little impact on the forex market. Although the market for Greek government bonds had virtually collapsed and the panic – additionally fuelled by the downgrading of Portugal and Spain – increasingly spread to the government bonds of other “shaky candidates” in the eurozone, causing risk premiums on their sovereign debt to rocket, the euro fell less than one cent below last Friday’s trough. Apparently, at around 1.31/32, there is substantial demand, from Asian central banks for example, according to rumours.2. All official bodies, which are involved in the negotiations with Greece, have stated quite clearly that a Greek debt restructuring is not an option at the moment. Furthermore, their comments suggest that the financial support from the eurozone and the IMF should cover Greece’s funding requirements for the next three years, reputed to be around €100 to 120bn.

The negotiations with Greece are likely to be concluded this weekend, so markets will then have additional information about the rescue package. The political procedure will take a few days longer, however. The German Bundestag (the lower house) is due to decide early next week, and the Bundesrat (the upper house) next Friday. Apparently, an extraordinary Eurogroup meeting is planned for 10 May, at which member states are to give their final approval to the aid package. At this stage, there could still be the odd uncertainty here and there; in our view, however, policymakers are now well aware that the situation is serious. On the whole, we see a good possibility of things calming down a bit now.

3. In the last few months, economic data in the eurozone have been remarkably robust. Like the Ifo business climate, the European Commission’s survey results are now also indicating that the economic recovery is gathering steam in the second quarter. The comprehensive Economic Sentiment Indicator is now above the long-term average again; Germany’s economy is particularly buoyant, but the recovery is taking hold across the board. We are expecting growth to have been very modest in the first quarter due to the harsh weather, but to make up for this in the second quarter.

The ECB Council is holding its regular monthly meeting next Thursday. Here too, the focus will presumably be on Greece, both at the meeting and at the press conference. But as the eurozone governments are responsible for the aid package, the ECB will probably try to build up confidence. It will be interesting to see whether Jean-Claude Trichet reiterates the ECB’s willingness to implement unconventional measures if necessary to safeguard financial stability in the euro area: as a last resort, the central bank can purchase government bonds, in the same way as it buys, or has bought, covered bonds.

As far as the economic risks are concerned, given the improvement in the economic environment, the assessment could gradually become more positive. A few days ago, Bundesbank president Axel Weber stated that, while the medium-term outlook for inflation is still low, he now sees the upside risks as being somewhat higher than in the last projections in March. That also ties in with the slight increase in money market rates in the euro area. In the last few days, the three-month Euribor has risen by 2 bp to over 0.66. However, in view of the debt crisis, the markets are probably not expecting the ECB to adopt a more restrictive stance for the time being.


Conclusion

Against a backdrop of aid for Greece materialising, the pressure on the euro is likely to ease. The economic environment in the eurozone is becoming remarkably favourable, but because of the debt crisis, the ECB will presumably exercise caution with regard to tightening monetary policy. In the short term, the euro could be somewhat volatile until the Greek rescue package is all cut and dried. Furthermore, apart from today’s GDP figures for Q1, a number of important US data will be released next week. The ISM purchasing managers index and the labour market report next Friday are set to underline the upbeat picture of the US economy, thus limiting the euro’s scope to rise.

Euro in free fall


The euro came under heavy pressure this week.
EUR-USD actually fell below 1.26 for a short time, but strengthened again to almost 1.28 at the end of the week. The single currency’s weakness was noticeable against almost all currencies. The chain reaction triggered by the Greek debt crisis spread rapidly this week. Bond and credit spreads of the peripheral countries soared and equity markets posted steep losses across the board. The ECB council meeting disappointed investors who had been hoping that the ECB would ease the pressure by buying debt-stricken countries’ bonds. The ECB dashed these hopes, however: according to Jean-Claude Trichet, the council did not even discuss this option.

With the renewed escalation of the crisis, attempts to calm down worries about the Greek debt crisis have failed once again. Only last weekend, the Greek government had agreed with the IMF, the EU Commission and the ECB on an ambitious multi-year fiscal consolidation package, thus creating the necessary prerequisites for financial aid for three years offered by eurozone member states to be made available. Hopes that the €110 billion bail-out package would suffice to cover Greece’s funding requirements faded all too soon, however. Furthermore, given the vehement protests, markets are still doubtful whether the Greek government will in fact be able to implement the austerity measures.

Thus bond and credit spreads in the debt-stricken countries shot up to new record highs, while investors continued to rush into quality. Yields on 2-year German government bonds are now only around 0.5%; 10-year Bund yields fell to fresh lows too, and US Treasuries were also in demand. The losses in the peripheral countries are putting the European banking system under increasing pressure. Asset swap spreads have widened sharply in the last few days. As banks’ balance sheets contain numerous bonds of debtstricken countries, risks for banks in Europe are estimated to have grown significantly again.

Up to now it is not clear how and whether the chain reaction can be stopped. Risk aversion is heightening every day, which in turn is increasing the risk of further member states losing access to capital markets. Admittedly, Spain successfully launched a 5-year bond yesterday, albeit with much higher interest rates. Ultimately, EU government leaders and the ECB will have to decide how to react if investors were to boycott buying bonds issued by the peripheral nations. In the short term, the ECB would then hardly be able to avoid purchasing government bonds on a larger scale. One permanent solution might be for the eurozone to issue joint bonds, which would prevent speculation against one particular country. However, comments by central bankers and policymakers suggest that they are not yet prepared to take such a step.

Economic development has become almost irrelevant – despite extremely upbeat data again; industrial new orders and production in Germany soared in March, thus confirming the very positive sentiment indicators. Everything is indicating that growth in the eurozone will rebound significantly in the second quarter. It remains to be seen to what extent the debt crisis will dampen the upswing again in the subsequent quarters.

Thursday, May 20, 2010

Forex GBP/USD capped below 1.4400/05 area

Pound's recovery from 144-month low at 1.4235 has been halted at 1.4465 high on Asian session, and the pair dropped to 1.4315 at European opening, to pick up, favoured by improved market sentiment, although Sterling remains capped below 1.4400/05 resistance area.

On the upside, above 1.4400/05, (intra-day resistance), the pair might find resistance at 1.4465 (May 19 high) and 1.4525 (May 18 high). On the downside, support levels lie at 1.4320 (session low), and below here, 1.4275, and then 14-month low 1.4235 (May 19 low).

The pair is going through short-term consolidation, says by Slobodan Drvenica, technical analyst at Windsor Brokers Ltd, who foresees a return to 1.4517/47: "Undergoes short-term consolidation just above 1.4235, yearly low. While 1.4273 holds, return towards 1.4517/47 area is not ruled out, however, medium-term bias remains firmly to the downside following a push through key 1.4475 support on 17 May."

AUD/NZD drops to 6-month low 1.2230

The Aussie has been depreciating across the board, weighed by a mix of risk aversion and concerns about a "hung parliament" in Australia, pushing the AUD/NZD to a fresh 6-month low at 1.2230, before picking up to 1.2300 area at the moment of writing.

The pair has accelerated downtrend after breaking below Fib support at 1.2440 area and long-term support at 1.2340, according to the Varengold Bank Research Team: "After breaking the Fibonacci support level of 38.2%, the AUD/NZD crossed the horizontal support line around 1.2340. It reached its lowest level since the end of October 2009. This break might be a signal for further falls towards the Fibonacci support lines below."

Next support levels, according to the Varengold Bank Research Team, lie at 1.2230 and 1.1925. On the downside, support levels lie at 1.2422, 1.2577, 1.2730.

Friday, May 14, 2010

US treasuries gain on euro zone uncertainty

US long-term treasuries are on the rise this morning as investors look to hedge their exposure to equity markets amid ongoing euro zone concerns. The benchmark 10-year note is up 12/32 dropping the yield to 3.493. The 30-year note is up 18/32 reducing the yield to 4.391. Bond prices and yields move in opposite directions.

Investors are flocking to the safety of US treasuries as uncertainty over the long-run impact of the EU/IMF bailout package including grueling austerity plans for periphery economies is once again the focus of the marketplace. Equity markets are substantially lower in the European session as the banking sector suffers from exposure to government debt. Moreover, Portugal recently announced bipartisan agreement on new austerity measures which will use tax hikes and wage cuts to cut the budget deficit to a proposed 4.6% in 2010.

Gold moving towards a new all-time high above $1250

The gold contract for June delivery recently spiked reaching $1247.20, just below the all-time high set in the previous session. Gold is threatening to push above the $1250 level as it continues its bull rally amid concerns over euro zone public debt.

The bullion is once more gaining on safe-haven appeal as investors are still spooked about euro zone sovereign debt and the long-term impact of the EU/IMF bailout package. With new austerity measures already announced in Spain and Portugal this week along with similar measures in the UK on the horizon, investors fear overall growth is in danger of stalling. Moreover as the euro and pound continue to weaken, investors are placing more wealth in the yellow metal sparking the current record demand.

Oil N’ Gold places the next resistance levels just above the current price at $1249.67 and $1255.63. On the downside, support levels are listed at $1239.43 (a previous resistance) and later $1233.47

Thursday, May 6, 2010

Most important events today will be the press conference of the ECB

Today’s Comment

One of the most important events today will be the press conference of the ECB. We do not expect any changes in the interest rate or new signals about coming changes in the interest rate, but the reason why it is nevertheless worth keeping an eye on the press conference is, of course, that in no way has the crisis in Greece and the euro zone become less severe since the ECB’s April meeting. On the contrary, the crisis has escalated, and that has questioned the role of the ECB and its possibilities of taking action to put a damper on the turmoil. One of the options available to the ECB is reintroducing long-term repo auctions at fixed rates in order to ensure sufficient liquidity in the system. This may not, however, suffice really to do away with the uncertainty in the markets. Most likely purchases of government bonds in the market will have a stronger impact. Such a solution may be a bitter pill to swallow for several ECB members, and we do not expect this option to come into play at the ECB meeting today. If the turmoil in the markets escalate further (if, for instance, we see further pressure on Spanish government bonds), it may become the case.

Another event that the market will follow over the coming days is the election in the UK, and it has been a long time since a general election in the UK has been as thrilling as now. We expect initially that pound sterling will weaken for a short term if the election result in a hung parliament. If the government formation turns out to be fairly smooth, and the new parliament quickly begins to deal with the economic challenges, we assess there will be no marked movement. In our view, the most important threat to GBP is a development where the government formation is long in coming or if we have to have a second ballot. We do not think a second ballot is particularly likely but if such a scenario materialises, pound sterling may come under pressure. For the time being, we maintain our 1-month forecast at 87 for EUR/GBP to reflect the risk associated with the election. We still think that in the long term pound sterling offers potential that has not yet benefited from the economic improvement that we have seen after all.

EUR/CHF plunges from 1.4320 to 1.4205

The Euro has collapsed more than 100 pips in a matter of minutes, dropping from 1.4320 area to a fresh one-month low at 1.4205, after the SNB abandoned its policy against a strong Swiss Franc, according to market sources.

As usual, the Swiss National bank has not given any details about its activities in currency markets.

Monday, May 3, 2010

The Greek Tragedy: EU/IMF approves €110 billion package

Gathering in an emergency session over the weekend, European finance ministers announced on Sunday an unprecedented, record €110 billion EU/IMF bailout package for Greece - and the Euro actually fell further.

Greece conceded to draconian austerity measures, the Eurozone members to €80 billion of loans (at a mere 5% interest), and the IMF to an additional €30 million (at 3%), all with the assurance that Greece's first €8.5 billion in financing needs for May 19 will be met. The total of €110 billion was in fact almost 4 times the initially imagined €30 billion amount, and EU leaders stressed that the sum is beyond what Greece will likely require. The size of the package was to serve as a silver bullet, a death knell to the calls of country default.

Yet, the announcement instead manifested itself in market consciousness as a series of further questions: Will the EU member states - namely, Germany - now be able to pass this final package through their individual Parliaments? Will Greece be able to keep its austerity promises without flooding its streets further with protesters? Will this whole ordeal repeat when Portugal or Spain's number is up?

Part of market hesitation originates in the stringency of Greece's promised austerity measures - a prerequisite Germany had placed in order for the debt-laden European country to secure a bailout. Greece has promised increases in VAT, raising retirement ages for public sector workers, new levys on businesses, and other steps to secure an additional €30 billion in fiscal savings through 2013. Budget cuts should slash Greece's deficit from 13.6% in 2009 to 8.1% in 2010. Unions have threatened further strikes to oppose the deal. Already, rioters in Athens have been throwing Molotov cocktails at police, protesting the "giant injustice" by the "European junta."

Greece had been forced to scurry for help this past Friday after Standard & Poor's downgraded its credit rating to "junk" status. Moody's also recently slashed its valuation of Greek debt and warned that further hits were on the way if Athens did not take more deficit reduction measures. Standard & Poor's has been on a rampage versus the larger part of the southern periphery of the European Monetary Union. The agency knocked Spain's credit rating down by one notch to AA from AA+ on Wednesday and stated its outlook was negative on the Iberian nation due to concerns over its budget deficit. This hit on Spain came just one day after the S&P slashed Greece's rating by three points as well as cut Portugal's rating by two levels.

Spain is announcing cuts in government administration with the hope of appeasing the markets and the rating agencies, and it seems a day doesn't pass without a Portuguese official publicly highlighting the differences between Greece's precarious situation and its own.

Now the passage of the package - and possibly the viability of the Euro - lies in the hands of the individual country leaders, who must put the bailout measure through their Parliaments. All eyes are on German Chancellor Angela Merkel, who, after everything from a pleading visit to Berlin by European Central Bank President Jean Claude Trichet to a personal phone call from Barak Obama this past Friday, will now need to gather her resolve to push through Germany's lion's share commitment of €22.3 billion of the bailout loans in the face of a crucial regional elections on May 9th.

AUD/USD recovery from 0.9210, capped at 0.9275

Australian Dollar's retreat from Friday0's high at 0.9325 found support at 0.9210 low on early Asian session, and the pair has picked up to halt 0.9275 on European session, and ease towards 0.9250 area at the time of writing.

On a wider perspective, the FastBrokers Research Team observes the pair capped by intra-day resistance s around 0.9300 area: "Aussie faces technical barriers in the form of intraday, 4/30, 4/26, 4/21, 4/15 and 4/12 highs. Additionally, the psychological .93 and .94 levels could continue to serve technical obstacles over the near-term."

On the downside, the FastBrokers Research Team sees the pair supported by uptrend lines: "As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with intraday and 4/28 lows.