Make your first million - page 187
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In anticipation of the Greek referendum, this week's thehanalysis could be a letdown. The Euro is likely to move in one direction all week (probably downwards but not for sure) until Greece makes up its mind.
Please don't litter here for fellow "off-topic" comrades.
In anticipation of the Greek referendum, this week's thehanalysis could be a letdown. Most likely the Euro will move in one direction all week (more likely down but not certain) until Greece is decided.
Please do not litter here with "off-topic" comrades.
Looking forward to Greece in the EEU.
After the Russian default. Have you seen the bond yield curve?
After the default of the Russian Federation. Have you seen the bond yield curve?
can you elaborate on Russia's default?
Let's abstract away from the deflationary problems of W7, and compare Russia with a similar country in terms of economic structure.
This is what the yield curve looks like for a well-functioning economy.
Please note both the absolute values of the rates and the structure by year. The rate rises with the entrainment of the circulation period. And in absolute values it says that there is an idea problem in the country (as the rate is negative on short bonds), but overall money is cheap and it makes sense to develop long term projects.
In RF, it is more expensive to borrow money for a month than for a year. This shows a strong lack of trust and a business bias towards a very short production cycle (buy in China, sell houses and that's it. It's scary to build a factory). Absolute value of 12 is extremely high, major competitors - global corporations - are funded much cheaper while they cannot boast of stable margin of 12%.
Given the structure of the debt. It is highly probable that the default would not be on foreign government Eurobonds.
But at the level of local corporations. As an example, a firm has decided to build a shopping mall, signed an agreement with a bank for a credit line, and as the construction progresses, the bank is forced to increase the cost of the loan, while due to the general decline of GDP and real incomes of citizens, the occupancy rate of the already commissioned shopping mall will be lower than planned. As a consequence, the builder goes bankrupt, the bank has bad assets, the Central Bank gives a refu than somehow stimulates a rise in interest rates (inflation) and the exchange rate.
At the grassroots level. According to the Central Bank on 1 May, the total debt of citizens to banks at the current exchange rate is $200bn, which is already comparable to the Central Bank's gold reserve. With real (inflation-adjusted) income falling for the 5th quarter running, the debt burden is getting heavier and heavier, which we are seeing through the growth of bad debts from banks. Again in a spiral, bank losses = ref from the Central Bank = higher inflation and impact on the exchange rate.
However, a particular risk is caused by the fact that many goods have been consumed with credit and it is no longer possible to increase it, on the one hand the income of citizens (the basis for repayment of credit) is falling, on the other hand the problem is growing and free money has to be sent to reserves.
Proceeding from this, a default at a low level (medium and small companies; individuals), will be quite massive. The sooner the central bank cuts the interest rate and floods it with money, the sooner the economy goes into a growth spiral. The downside of this rate hike
As long as they are doing the right thing - lowering. Yes, it is difficult for the average Russian, yes the rate can fall to hell, but apparently there is no other way. I have heard about something else - denomination... What do you think about it?
It takes a long time to think. They should not have raised the interest rate in the winter. If they had kept the economy at 100 for a quarter, they would now have the same 60, but without the risk of another wave of rate hikes.
I have not heard about the denomination, and it does not affect the economy.
Thank you
There are people who write things, not nasty things...