It’s Time To Start Selling Money Market Funds

The Federal Reserve Bank of Boston revealed this week that between 2007 and 2011 at least 21 out of 341 money market funds reviewed would have “broken the buck” without support from their sponsor firms. As interest rates have fallen to levels that don’t even cover a money market fund’s operating costs, fund sponsors have subsidized their money market funds just enough to prevent them from breaking the buck, and no more. This is why so many money market funds have paid no interest since the beginning of the year, and one of two reasons its time to start selling money market funds.

At some point, it won’t make sense for fund sponsors to keep subsidizing these funds. When the Fed speaks of keeping rates low through 2014, they are telling money market fund sponsors that they will have to continue to subsidize their funds for at least 2 more years. And, when the Fed talks of further monetary stimulus, they are telling fund sponsors that the subsidies may have to be bigger. When fund sponsors have had enough, you’ll see money market funds closing down entirely. Both JP Morgan (JPM) and Goldman Sachs (GS) have already taken a first step to limit their subsidies by closing their European money market funds to new investors.

The second reason it’s time to start selling money market funds is that investors who are ahead of the curve are already finding better places to put their cash. This is why total assets in money market funds have shrunk to $2.5 trillion from $3.6 trillion 3 years ago. Investors who wait until the bitter end will find themselves competing for decent high income investments at the same time investors with $2.5 trillion will be looking for exactly the same thing.

Don’t wait until a fund closure forces you to take action.

If you have taken money out of the market and have it parked in a money market fund, think about putting a portion of your money market fund holdings into stocks like American Capital Agency Corp. (AGNC) to improve your yield.

AGNC invests in residential mortgage pass-through securities and collateralized mortgage obligations, for which the principal and interest payments are guaranteed by a U.S. Government agency or U.S. Government-sponsored entity. Its current yield is 14.3% or $5/share, but its risk (as measured by beta) when compared to the S&P 500 is .23. What that means is that AGNC’s volatility is about 77% less than the S&P. This means that if over the next year the S&P falls by 20%, AGNC would be expected to fall only by about 4%. However, after including the dividend yield of 14%, the investor will be ahead of the market by 10% and way ahead of a money market fund. Of course it would be even better to buy a portfolio of stocks like AGNC to get a little diversification. Click here for more information about such a portfolio.

If the primary reason you are in a money market fund is because you want income with little risk. Then by incorporating an 80/20 mix of money market funds and a portfolio of similar investments will increase your yield, while taking on only a marginal amount of market exposure. Putting 20% of your money market holdings in such a portfolio would increase your market exposure by 4.6% and increase your yield from .01% to 2.87% giving you a fighting chance to at least keep up with inflation.

If you are using a money market fund to park funds while you wait for the market to improve then putting 50-60% of the funds into a portfolio made up of similar investments as AGNC would; one, decrease your overall market risk, while at the same time give you a portfolio with a double-digit yield, so even if the market stays relatively flat, you would still have a decent return on your investments that compares well with the long-run return on the S&P 500.

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Will Bitcoin Survive This Test?

Since its inception, Bitcoin has survived several tests.

In the beginning, came the user test. The digital currency passed it, as many companies and organizations began to accept Bitcoins as a medium of exchange. According to Bitpay.com 12,000 businesses and charities accept Bitcoin, including the University of Nicosia (Unic), the largest private university in Cyprus, as discussed in a previous piece.

Politicians and investment bankers took notice. Former U.S. congressman Ron Paul said it could be an alternative to the US dollar; and Bank of America BAC +1.5% set a price target on the virtual currency.

Bitcoin survived and thrived. But then came the test of central bankers– and Bitcoin failed it. Last December, Bank of France gave a strong warning concerning the risks of the virtual currency. The People’s Bank made an even stronger case against the virtual currency, in three ways. First, by banning financial institutions from conducting business in Bitcoins. Second, by requiring that Internet sites register Bitcoin transactions with appropriate government agencies. And finally by educating the public of the risks of investing in Bitcoin.

Soon after, China’s Internet leader Baidu announced that it would suspend the use of Bitcoin on its site, causing a sharp correction in the price of the virtual currency.

The third and perhaps most important test comes today: Mt. Gox, the most important institution in the history of Bitcoin, has vanished. This leaves Bitcoin participants without an exchange mechanism to set Bitcoin prices, providing liquidity at the same time.

While it is still too early to determine what went wrong with Mt. Gox, and whether it will be up and running soon, we nonetheless believe that the digital currency will survive this test, too. For a simple reason: Bitcoin is an innovative currency; and innovators usually find the means to overcome the impediments that get in the way.

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A Possible Reform of the EU Has Risks for Bulgaria

In the EU’s older part, one of the main points on the public agenda is the future of the Union. Where to from now on? With whom? How? Treaty changes are being discussed and even leaving the Union. However, this is not a leading topic in the Community’s newest part, as in some countries it is not even being discussed at all. Bulgaria, for instance, is entirely consumed by its still unsevered connection with the past and the only topic related to the EU is the level of absorption of EU funds the European taxpayer pays to help the economic catch-up of the new member states. Bulgaria is suffering of a mini Ukrainian syndrome of division of the population of pro-European and pro-Russian, in spite of the fact that the country has been a member of the European Union for 7 years now. Eurozone membership or even in Schengen is completely frozen for an unknown period of time and for reasons that have nothing to do with the public opinion.

And although Bulgaria allegedly had national consensus a decade ago that the right path is that toward European integration, the question today about the country’s future has never been more open. The country, where more than half a year anti-government protests have been taken place, although significantly weakened, more and more speed are gaining anti-EU political formations and speech. That speech is being silently passed by by the rulers who, in words, confirm Bulgaria’s European membership, but their actions show an alienation from the European system of values. The country is practically suffering from complete apathy about what is going on in the Union of which it is an equal part. This apathy was especially vivid in euinside’s unsuccessful attempts to get the opinion of representatives of the government about the currently discussed Treaty changes. The working schedule of the chairwoman of the European affairs committee in Bulgaria’s parliament, Ms Denitsa Karadzhova, did not allow such a conversation even on the phone, while Kristian Vigenin, the minister of foreign and EU affairs, did not respond to the invitation at all.

With pleasure and a lot of sadness responded to the invitation Ms Meglena Kuneva, Bulgaria’s first EU commissioner. The person who took part in the Convent on the European constitution. In her capacity as a minister of European affairs in Sergey Stanishev’s government (2005-2009), she closed the country’s accession negotiations. Currently, she is a leader of one of the newest political parties in the country – Bulgaria of the Citizens – which is part of the Reformist Block – a coalition of centre-right parties whose main goal is Bulgaria’s European future and implementation of the reforms that have been promised for decades, but never actually done. euinside also talked on the issue with Ivailo Kalfin, a member of the European Parliament, who was a deputy prime minister and minister of foreign affairs when Bulgaria joined the EU. He is one of the few Bulgarian politicians who are very active on EU stage. Domestically, he recently split from the ruling Coalition for Bulgaria of PES leader Sergey Stanishev to join the movement of former President Georgi Parvanov. Always willing to discuss European issues is also Dimitar Bechev, chief of the Sofia office of the European Council on Foreign Relations (ECFR).

Bulgaria behaves as a country that is still in an accession regime

All three interlocutors of euinside were unanimous that a possible opening of the EU treaty for changes hides significant risks for Bulgaria. According to Ms Kuneva, who, indeed, spoke with much passion on the issue and was obvious she misses her time in Brussels, in Bulgaria Europe’s future is not discussed at all. “And the other big issue, if we keep that direction of the thought – a federal Europe or with element of federatively or rather a common market? What do we need? What did we discuss in Bulgaria? We rely entirely on what we will be told from the outside”. One of the things that strike her the most is that no analyses are made in Bulgaria and the country needs a national analysis on should we go for more integration, which means also setting a deadline for eurozone accession.

Meglena Kuneva is not afraid of the opening of the treaties itself because she is convinced that the Lisbon treaty is a compromise. Currently, the bigger part of the member states share a common currency, practically there is a common market, there is an economic and monetary union, the banking union is also under construction, which means that all the elements for single functioning are available that are typical for the national or federal states. What is not there, though, is adequate governance. “And here somewhere is hidden the challenge that the current treaties cannot respond to”, Meglena Kuneva believes. That is why, she is convinced that the initially developed European constitution, rejected at referenda in France and The Netherlands, was the right solution. The rejected draft provided a much more comprehensive response to the current issues. The biggest of which, she says, is that at the moment there is no “strong and fascinating vision about the way forward for Europe”.

Dimitar Bechev, from the ECFR, is of the opinion that if it comes to opening of the EU treaty for a reform, that will be for only cosmetic changes because experience shows that a treaty revision takes at least a decade and there are many points where it can be blocked. If something were to be achieved, that would be a “visual retreat to the benefit of extremist parties and the political attitudes in society”, he said and added that the Bulgarians will be harmed, but not by limitation of rights, but by fuelling an isolationist atmosphere or, to put it differently, by reaffirming the second class of European membership. The biggest risk for Mr Bechev, however, is the institutionalising of the system of many circles in the EU. If the euro area were to separate as a compact European core, it will have a budget of its own, which will raise the issue of a parliamentary body to adopt it and monitor its implementation. This means that a genuine union will be established within the EU and all the others will be second class members, the analyst explained. He recommended Bulgaria to do its utmost to avoid such an option. “Of course, let integration deepen, but this should happen at a level of 28, not at the level of 18″.

Ivailo Kalfin, MEP from the group of Socialists and Democrats, shares the opinion that treaty change means a long and complicated procedure with unexpected end. “I believe that all wishes to open the treaties, mainly related to the institutional recovery of the euro area and its institutions, hides a really big risk, including for the British pretences and other pretences as well, which means that such an opening of the treaties will be very risky”. Among the risks the MEP outlined are reducing the effect of some parts of the European legislation related to the protection of external borders, migration policy and social rights. The biggest risk is the reform to end with a loose EU. In any case, though, if it comes to a reform, it should be done via a convent so that all interested parties can take part. Mr Kalfin is convinced that treaty change is not necessary because the current legislation allows for strengthening of the institutions, including in the euro area.

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Top tips for starting your own business – Part Two

LESSON 3: YOU ALREADY HAVE THE TOOLS YOU NEED

Most homes and schools are already equipped with a lot of the tools a business needs to reach a worldwide audience.

Computers are so cheap that many schools and universities have their own, and with processing power that was unimaginable only a few years ago.

Laptops can let you edit movies, design software, and keep track of all the details of a start-up at minimal cost.

Internet connectivity allows a start-up entrepreneur to collaborate via video conferencing at almost no cost, an extraordinary breakthrough.

The internet also enables a new business to reach a specific worldwide market with a minimal outlay.

Clever viral marketing can pull in curious customers seduced by ingenuity alone.

And very young people are often instinctively able to use the new technology that makes all this happen.

They already know things that large companies have to pay specialists huge sums to get done.

LESSON 4: CASH IS KING

Now, what about funding?

Starting any kind of business requires money: from savings, relatives, angel investors, and bank loans. Obviously the latter is very difficult to get these days. However, a lot of private organizations–often referred to as asset based lenders–have begun offering small businesses loans that are secured against their assets, assets ranging from inventory to invoices. Because these loans are secured, these private lending institutions have less risk than an ordinary bank when giving them out.

Luckily, for several reasons, including the technology mentioned above, not having tons of cash is much less of a problem than it used to be.

Several of the start-up entrepreneurs I have met needed only credit-card loans to get their businesses up and running – a potentially costly and risky route, mind you.

For example, Warren Bennett, 30, is co-founder of the bespoke tailoring service A Suit That Fits – now 6 years old, the company sells around 15,000 suits a year. Warren had the idea while volunteering as a teacher in Nepal, where he had stumbled on a good local tailoring business. Back home in the UK, Warren and a friend started what he says was the world’s first online bespoke suit-making business. The company now has studios across the UK for people to drop in to have measurements taken for a suit that is made thousands of miles away in Nepal. A Suit That Fits was funded solely through credit cards and by asking customers to pay in advance. It is a business that lives off cash-flow, not bank loans. Not having to depend on outside investors also means the founders get to keep a full stake in the business they founded.

And there are many businesses devised around generating cash flow that finances the rest of the company’s operations – asking for up-front money from customers that can be used to pay suppliers and manufacturers later on.

Positive cash-flow is a business wonder: funding your business expansion out of cash flow is even more wonderful.

But not always.

One Internet start-up founder told me what they say in Silicon Valley, USA: if you are making a profit you are not growing fast enough.

You should be gobbling up investors’ money to fund your hell-for-leather growth.

LESSON 5: TELL YOUR STORY

Whether you are pitching to a potential sponsor, mentor or customer, it helps to tell a good story.

In my experience, young entrepreneurs know how to tell a story, both their own and that of the business they have set up and the needs it is trying to address – plus the adventures they have had on the way.

Arnold Sebutinde, aged 27, from Birmingham runs Spontaneous Portraits. His story, which helped him get funding and a mentor from the Prince’s Trust, is compelling. Arnold got into trouble, and spent two and a half years in prison. While serving his sentence, he made use of his talent for drawing and started to sell portraits of inmates and their visitors, for £2.50 a time. After being released, he continued to build his business, and posted internet videos to highlight his special talent: “I got a commission to draw the England cricket team, and posted a video of me drawing, but I’m drawing with both hands. I did this to get the word out, so people would talk about me as this artist who draws with both hands.”

Story-telling is a vital part of running any kind of business, but it gets neglected as companies get bigger and bigger and more and more arrogant.

Start-ups have great stories to tell.

LESSON 6: DON’T TAKE TOO MUCH NOTICE OF THESE LESSONS

Just get on with it!

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Top tips for starting your own business

With youth unemployment at record highs, one way for young people to get a job is to start their own business.

Instead of waiting for someone else to hire you, why not set up a company and employ yourself?

But how do you launch a business during an economic downturn?

LESSON 1: HARD TIMES ARE GOOD TIMES TO START A BUSINESS

The way the start-up entrepreneurs tell it, it is tricky to start a business at any time – not just during a recession – but their particular business idea is so niche, so focussed, and so special that they shrug off the gloom and just get on with it.

The upside of starting a business during a downturn is that things can only get better as the economic climate improves, and you will have learnt an awful lot in the difficult times that you can use in the easier ones.

Steve Barnes of the start-up internet fast food delivery service Appetise.com says he has only known economic gloom, but that has not stopped him.

“I don’t know what a boom feels like, to be honest. I don’t really know what to expect.

“When you’ve got such a small start-up business I don’t think it is really going to be affected at all. There’s plenty of opportunities in a recession.”

But what should your business actually do?

LESSON 2: FOCUS ON THE IDEAS STARING YOU IN THE FACE

Lots of people go about finding their niche by using business school tools such as market analysis or sector research. Clever, but remote.

Why not start a business based on a need you yourself have, that is not properly addressed by existing suppliers?

You experience the gap in the marketplace, and you fill it: easy-peasy.

University campuses are full of ideas for businesses. For example, David Langer was at Oxford University when he co-founded Group Spaces.

It started as a service for Oxford University clubs, and is designed to make life easy for secretaries and treasurers trying to do admin for clubs, societies, and hobby groups.

Group Spaces now has two million users worldwide, helping club administrators in more than 100 countries.
Continue reading the main story
“Start Quote

It was purely to solve a problem that we had as students”

Steve Barnes Co-founder, Appetise.com

The company employs 10 people, working near East London’s start-up hub Silicon Roundabout and has recently raised £1m ($1.54m) in investment.

The fast-food delivery service Appetise.com was an idea borne by students from Warwick University which has now gone UK-wide.

“It was purely to solve a problem that we had as students,” says co-founder Steve Barnes.

“Trying to order a take-away, we used to order in groups of 10 or 20 people and trying to organise that over the telephone is a bit of a nightmare.

“Whereas now everyone can sit down individually at the computer, place their order and then submit it all in one order and it’s very easy to see an itemised bill to see who owes what.”

Keep it simple, and answer an in-your-face need.

If you have got the need, and the idea, then come the operational problems – but even they are less daunting than they used to be.

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8 simple ways to save money

Sometimes the hardest thing about saving money is just getting started. It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals. The step-by-step guide below can help you develop a realistic savings plan.

1. Record your expenses

The first step in saving money is to know how much you are spending. For one month, keep a record of everything you spend. That means every coffee, every newspaper and every break-time snack you purchase for the entire month. Once you have your data, organize these numbers by category – gas, groceries, mortgage, etc. – and get the total amount for each.

2. Make a budget

Now that you have a good idea of what you spend in a month, you can build a budget to plan your spending, limit over-spending and make sure that you put money away for a rainy day. Remember to include expenses that happen regularly, but not every month, like car maintenance check-ups. Find more information on creating a budget.

3. Plan on saving money

Taking into consideration your monthly expenses and earnings, create a savings category within your budget and try to make it at least 10-15 percent of your net income. If your expenses won’t let you save that much, it might be time to cut back. Look for non-essentials that you can spend less on – entertainment, dining out, etc. – before thinking about saving money on essentials such as your vehicle or home.

4. Set savings goals

Setting savings goals makes it much easier to get started. Begin by deciding how long it will take to reach each goal. Some short-term goals (which can usually take one to three years) include:

  • Starting an emergency fund to cover six months to a year of living expenses (in case of job loss or other emergencies)
  • Saving money for a vacation
  • Saving to buy a new car
  • Saving to pay taxes (if they are not already deducted by your employer)

Long-term savings goals are often several years or even decades away and can include:

  • Saving for retirement
  • Putting money away for your child’s college education
  • Saving for a down payment on a house or to remodel your current home

5. Decide on your priorities

Different people have different priorities when it comes to saving money, so it makes sense to decide which savings goals are most important to you. Part of this process is deciding how long you can wait to save up for a goal and how much you want to put away each month to help you reach it. As you do this for all your goals, order them by priority and set money aside accordingly in your monthly budget. Remember that setting priorities means making choices. If you want to focus on saving for retirement, some other goals might have to take a back seat while you make sure you’re hitting your top targets.

6. Different savings and investment strategies for different goals

If you are saving for short-term goals, consider using these FDIC-insured deposits accounts:

  • A regular savings account, which is easily accessible
  • A high-yield savings account, which often has a higher interest rate than a standard savings account
  • A bank money market savings account, which has a variable interest rate that could increase as your savings grow
  • A CD (certificate of deposit) which locks in your money at a specific interest rate for a specific period of time

For long-term goals consider:

  • FDIC-Insured IRAs, which are built for purposes such as retirement savings
  • Securities, like stocks and mutual funds. These investment products are available through investment accounts with a broker-dealer (e.g. Merrill Edge). Remember that securities, such as stocks and mutual funds, are not insured by the FDIC, are not deposits or other obligations of a bank and are not guaranteed by a bank, and are subject to investment risks including the possible loss of principal invested.

7. Make saving money easier with automatic transfers

Automatic transfers to your savings account can make saving money much easier. By moving money out of your checking account, you’ll be less likely to spend funds that you wanted earmarked for savings. There are many options for setting up transfers. You choose how often you want to transfer money and which accounts you want the money transferred between. You can even split your direct deposit between your checking and savings accounts to contribute to your savings with each pay check. Thinking of saving as a regular expense is a great way to keep on target with your savings goals.
8. Watch your savings grow

Check your progress every month. Not only will this help you stick to your personal savings plan, but it also helps you identify and fix problems quickly. With these simple ways to save money, it may even inspire you to save more and hit your goals faster.

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Top 3 Most Tradable Currencies

Although the foreign exchange market is often billed as a banker’s game, currencies can sometimes be great diversification for a portfolio that might have hit a bit of a rut. It’s a market that can also offer tremendous opportunity when other global forums enter the doldrums. As a result, knowing a little bit about forex, and the fundamentals behind it, can make significant additions to any trader, investor or portfolio manager’s arsenal. Let’s take a look at three currencies every trader or investor should know, along with the central banks of their respective nations.

1. U.S. Dollar (USD)
Central Bank: Federal Reserve (Fed)
Current Interest Rate Information: http://www.federalreserve.gov/releases/h15/data.htm

The Almighty Dollar
Created in 1913 by the Federal Reserve Act, the Federal Reserve System (also called the Fed) is the central banking body of the U.S.. The system is itself headed by a chairman and board of governors, with most of the focus being placed on the branch known as the Federal Open Market Committee (FOMC). The FOMC supervises open market operations as well as monetary policy or interest rates.

The current committee is comprised of five of the 12 current Federal Reserve Bank presidents and seven members of the Federal Reserve Board, with the Federal Reserve Bank of New York always serving on the committee. Even though there are 12 voting members, non-members (including additional Fed Bank presidents) are invited to share their views on the current economic situation when the committee meets every six weeks.

Sometimes referred to as the greenback, the U.S. dollar (USD) is the home denomination of the world’s largest economy, the United States. As with any currency, the dollar is supported by economic fundamentals, including gross domestic product, and manufacturing and employment reports. However, the U.S. dollar is also widely influenced by the central bank and any announcements about interest rate policy. The U.S. dollar is a benchmark that trades against other major currencies, especially the euro, Japanese yen and British pound.

2. European Euro (EUR)
Central Bank: European Central Bank (ECB)
Current Interest Rate: http://www.ecb.int/stats/monetary/rates/html/index.en.html

The Dollar’s Nemesis
Headquartered in Frankfurt, Germany, the European Central Bank is the central bank of the 17 member countries of the eurozone. In similar fashion to the United States’ FOMC, the ECB has a main body responsible for making monetary policy decisions, the Executive Council, which is composed of five members and headed by a president. The remaining policy heads are chosen with consideration that four of the remaining seats are reserved for the four largest economies in the system, which include Germany, France, Italy and Spain. This is to ensure that the largest economies are always represented in the case of a change in administration. The council meets approximately 10 times a year.

In addition to having jurisdiction over monetary policy, the ECB also holds the right to issue banknotes as it sees fit. Similar to the Federal Reserve, policy makers can interject at times of bank or system failures. The ECB differs from the Fed in an important area: instead of maximizing employment and maintaining stability of long-term interest rates, the ECB works towards a prime principle of price stability, with secondary commitments to general economic policies. As a result, policymakers will turn their focus to consumer inflation in making key interest rate decisions.

Although the monetary body is somewhat complex, the currency is not. Against the U.S. dollar, the euro (EUR) tends to be a slower currency compared to its colleagues (i.e., the British pound or Australian dollar). On an average day, the base currency can trade between 30-40 pips, with more volatile swings averaging slightly more, at 60 pips wide per day. Another trading consideration is time. Because the FX market is open 24/7, forex traders must strategically set FX trading schedules. Trading in the euro-based pairs can be seen during the London and U.S. sessions (which occur from 2am through 11am EST).

3. Japanese Yen (JPY)
Central Bank: Bank of Japan (BoJ)
Current Interest Rate: http://www.boj.or.jp/en/index.htm

Technically Complex, Fundamentally Simple
Established as far back as 1882, the Bank of Japan serves as the central bank to the world’s second largest economy. It governs monetary policy as well as currency issuance, money market operations and data/economic analysis. The main Monetary Policy Board tends to work toward economic stability, constantly exchanging views with the reigning administration, while simultaneously working toward its own independence and transparency. Meeting 12-14 times a year, the governor leads a team of nine policy members, including two appointed deputy governors.

The Japanese yen (JPY) tends to trade under the identity of a carry trade component. Offering a low interest rate, the currency is pitted against higher-yielding currencies, especially the New Zealand and Australian dollars and the British pound. As a result, the underlying tends to be very erratic, pushing FX traders to take technical perspectives on a longer-term basis. Average daily ranges are in the region of 30-40 pips, with extremes as high as 150 pips. To trade this currency with a little bit of a bite, focus on the crossover of London and U.S. hours (6am – 11am EST).

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Debt restructuring is inevitable

How can we solve the debt crisis in Europe? An expansion of the bailout passes the true problem and leads us only further towards a transfer union, which would significantly harm, especially Germany. Temporary loans could solve the problems of the European debt states. Nevertheless, it is not so simple.

Because the real problem is that, the debts are so high that they realistically can never be repaid. A debt restructuring is therefore inevitable. The crucial question is numbers the other countries, or private creditors, which participate? The taxpayers in donor countries rightly ask why they should pay for the bill.In a market economy is that investors on the one hand can take profits on their investments, on the other hand they also should bear losses. This suggests also involve private creditors in the costs.

Nevertheless, that is difficult, because then you have to be careful, not again trigger a Lehman scenario. It will probably not be avoided that for a debt restructuring at least in the handling of the banks in the euro zone, the taxpayer will be consulted. The danger, however, is large enough that the policy afraid this step. Ongoing process of increase the debt of Greece and Ireland with the parachute is the worst possible solution.

What is the situation with the middle class?

Middle class is not shrinking. Gloomy scenarios of a decaying middle class is fueling economic woes. With reality, this has little to do but these are the results of a recent study. Of course, these results are not very encouraging. However,exactly what the study shows.

It was recently commissioned by the Roman Herzog Institute. Accordingly, the share of the middle class to the whole society in Germany since 1993 is relatively constant and talk about 60 to 67 percent. In international comparison, this is a remarkable value. At the time of the crisis in 2009, there was even an opposite trend.

This resulted in an increase of the middle class by 0.6 percent. What could be in this case the futures forecast? A future forecast is that the middle class can be slowly eroded.

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The fiscal consolidation

If the leaders of the EU meet in early February for their summit, it will be again to talk about the debt crisis in the euro countries. It is clear that over-indebtedness of states and banks is far from overcome. The markets are unsettled. This situation in turn leads to other consequences and they are quite consequential.

I guess everyone here agree with this statement. When uncertainty prevails, transparency is important. Just this is it, which lacking, especially on the part of the European Central Bank (ECB).The successful placement of bonds of Portugal a week ago in the order of 1.25 billion euros was publicly hailed as a great success.

A day later told the news agency Bloomberg, the ECB had bought the day before bonds in the order of 1 to 1.5 billion euros. What a coincidence! Sure, the ECB has bought no German government bonds, probably not Dutch or Finnish. Perhaps she bought Greek or Irish, but maybe Portuguese papers. The ECB is cloaked in silence and thus contributes to the uncertainty in the markets.One thing is clear. The ECB is moving on very thin ice. You must under Article 123 of the Treaty on the Functioning of the European Union to not be allowed directly buying government securities.

In the same time, in regards to the marketability of Greek and Portuguese bonds can certainly have doubts.A manipulation of the market price is the intervention that now includes nearly 140 billion euros, anyway. Because in addition to the purchases of nearly 80 billion euros in government bonds, the ECB has purchased € 60 billion covered bonds.In this situation, the ECB has taken through the monetization of government debt itself. The ECB has become by their own “unprincipled” blackmail.

Therefore urges the ECB President Trichet leaders to an increase in the “euro rescue fund.”The ECB does not operate in a legal vacuum. After the European treaties, it is not the financing of insolvent states and banks committed, but the “price stability”. That is their job. Whether to accept this statutory mandate, they must demonstrate: “Mr Trichet, tear down this wall!”

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More about the use of natural resources

The economy is with limited natural resources. Perhaps no man who would not agree with such a statement. This fact excite the minds for centuries and it has long been hotly debated. Of course, in this case, relaxation is not required. On the contrary, we are confronted with a global population of seven billion people today and this requires quick decisions.

Rachel Schomaker by the German Research Institute for Public Administration in Speyer sees the decision straight through increased commercialization of the significant potential resource. She thinks for a genuine privatization or at least in public-private partnerships in water supply worldwide, for example. Similar opinion is admirable and you suppose you completely agree with it.

The consultant Rainer Opgen-Rhein talk about a “generational contract, which is provided in the self-interest of equitable use of natural resources in the present and the future“. It is not easy given the great uncertainty about future developments.Coordination problems and most of the contractors (future generations) do not exist. Political actors acting contrary would have only a short time horizon, says Opgen-Rhine.

In order to arrive at an equitable distribution of resources is required some incentive, through bonuses and tax breaks. Economic incentives of this kind are well suited. In this way, will have more than a model of price regulation by the resource owner or manager. So far we have already discussed some opinions on these issues. Personally, I believe that you also have your own vision. For the majority of authors, it is clear that a more efficient use of natural resources is to be expected only if are observed the rules of the game in the political sector to create the necessary incentives.

The policy had to respond as quickly as possible. Action is needed about the processing industry, as and on the cost pressure.In Germany this issue is discussed less. Perhaps it is better to have more discussions and opinions.

However, we should deal with the global availability of industrial minerals and metals and energy commodities and determine resource and mining potential.

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