debt - Blog - Global Risk Community2024-03-29T05:44:42Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/debtMoney & Mental Health - Practical Financial Skills to Manage Moneyhttps://globalriskcommunity.com/profiles/blogs/money-amp-mental-health-practical-financial-skills-to-manage2020-07-11T06:33:24.000Z2020-07-11T06:33:24.000ZJohanne Harrishttps://globalriskcommunity.com/members/JohanneHarris<div><h2><strong>An introduction to money management</strong></h2><p>Everyone wants to make their money go further. Setting up a budget, staying on top of your bills and living within your means – it can all pay off. It’s a good feeling being in control of your finances. And managing money is a skill we should all have – but it’s often something we’re not taught at school. For most of us, we learn as we go, and this could involve a few costly mistakes.</p><p>Financial pressures can affect all of us. We’ve all reached the end of the month struggling to make ends meet. But without action, it’s easy for bad habits to form and problems to snowball. The link between money and mental health or wellbeing is a complex one.</p><p>Worrying about money can make our mental health worse, but poor mental wellbeing can also make it harder to manage finances. It can affect people in different ways, but starting to understand your behaviour can help you make responsible choices.</p><p></p><h3><strong>Key money worries</strong></h3><p></p><p>Recent research found that seven million Australians can’t sleep at night because of financial concerns. Around 40% of those asked were struggling to sleep soundly because of money worries, and more than 60% admitted to regularly feeling ‘hot’ and ‘stressed’ about their bank accounts.</p><p>It’s likely certain worries are shared by most people – for example, more than half were most concerned about household bills and funding day-to-day living. Other concerns seemed to depend on the age of those asked. The research found the most stressed group of Australians were aged between 35 and 54, something which they put down to the group being more likely to face peak mortgage debt, potentially due to upsizing to accommodate a growing family, and juggling careers and raising families.</p><p>Similar results have been found around the world.<span> </span><a href="https://www.yourmoney.com/household-bills/9-5-million-brits-have-mental-health-issues-due-to-money-worries/" target="_blank" class="external-link">UK research</a>, released to coincide with World Mental Health Day 2019, said many of the people who worry about money struggle to sleep soundly at night (32%). It found that 9.5 million UK adults have suffered from mental health issues as a result of financial anxiety.</p><p class="mb-0">For the younger generations (aged 18 to 24), worries were largely focused on the following:</p><div class="row align-items-center justify-content-center"><div class="col-12 col-desk-6"><div class="row my-3 my-desk-4"><div class="col-12 col-tab-6 d-flex justify-content-desk-between mb-3 mb-desk-0"><div class="number mb-0 mr-2 mt-2 mt-desk-1">33% <strong>Paying off student debts</strong></div></div><div class="col-12 col-tab-6 d-flex justify-content-desk-between"><div class="number mb-0 mr-2 mt-desk-1">48% <strong>Paying for a house</strong></div><div class="number mb-0 mr-2 mt-desk-1"></div></div></div></div><div class="col-12 col-tab-11 col-desk-4 offset-tab-1 offset-desk-2"><div class="card card-primary intro-card-1"><h4><strong>9.5 million UK adults have suffered from mental health issues as a result of financial anxiety.</strong></h4></div><div class="card card-primary intro-card-1"></div></div></div><div class="row"><div class="col-12 col-desk-6" style="text-align:left;"><p>How younger people behave as a result of these worries varies. 11% are so preoccupied with their finances that they check their balance several times a day. Others (18%) only check their account every few weeks – perhaps out of fear. The Aussie research, from online financial services company Spaceship, actually gaive this a name. “We call it FOFO, or Fear of Finding Out your bank balance.”</p><p>Whatever stage of life you’re at, money worries can affect you.</p><p></p><h3><strong>Talking about money and mental wellbeings.</strong></h3><p></p><p>For many people, talking about money is difficult. It’s a bit of a taboo subject. Almost a third of Australians never talk about money – with anyone.<span> </span><a href="https://www.news.com.au/finance/money/why-we-need-to-talk-more-about-our-money/news-story/21282d7bd7bbc44f3c5651b0bde9c245" target="_blank" class="external-link">The research analysed</a><span> </span>almost 3,300 adults and found that embarrassment or the fear of being judged is a major reason why people keep quiet.</p><p>Baby Boomers are the generation least likely to engage in money talk, with younger generations being slightly more comfortable talking about the topic. The study developer, Patrycja Slawuta, explained that “money is more than just a number for most people. Our relationship with money is emotional, complex and personal and is influenced by many things.”</p><p>While society has made some great breakthroughs in discussing topics like mental health more openly, it seems there’s still some way to go with other issues.</p><p>If you avoid speaking about your finances, it can have a detrimental effect on your mental health. We’ve already discussed how many people struggle with sleeping. But it can also make life tricky for those around you – for example, if you have joint accounts or both you and your partner’s name are on the bills. Making mistakes could impact their credit rating.</p><p>But talking about it could make a difference. If you’re serious about a secure financial future, it’s important to open up the conversation. Many people have similar worries about money, so no-one is alone.</p><p>Talking about it can help everyone involved by breaking down the taboos, aiding understanding and even helping to find solutions to common problems. As Slawuta says:</p><blockquote class="quote"><span class="quote-text">The more people talk about money, the more motivated they are to learn about money and their financial behaviour to improve their situation and gain confidence.</span></blockquote><blockquote class="quote"></blockquote></div></div><div class="row"><div class="col-12 col-desk-6"><h3><strong>Tips for having difficult conversations about money</strong></h3><p></p></div></div><div class="row justify-content-center mb-4"><div class="col-12 col-desk-4"><div class="text-cont"><h5><strong>Be wary of the emotions involved</strong></h5><p>It’s easy to get emotional when talking about things you find stressful. But some emotions might get in the way of making progress with the conversation. Make sure you give yourself time to address your feelings and have the conversation at the right time.</p></div></div><div class="col-12 col-desk-4"><div class="text-cont"><h5><strong>Appreciate that conversations are two-way</strong></h5><p>Once you’re ready, you might have a lot to get off your chest. But it’s important both people have time to speak uninterrupted. It might seem a little unconventional for a conversation with someone you speak to so often, but you could set some guidelines at the start. It’ll make sure everyone gets to speak. Just remember to stick to the topic.</p></div></div><div class="col-12 col-desk-4"><div class="text-cont"><h5><strong>Avoid judgements</strong></h5><p class="mb-0">Think before you speak or react (facial expressions can be judgmental too). Make sure you don’t make accusations, but instead focus on what you think and feel.</p></div></div></div><div class="row"><div class="col-12 col-desk-6"><p>For most people, these conversations will happen with friends and family. If you can’t talk, or don’t feel comfortable talking to your family or a friend, consider talking to the following people:</p><ul class="list list-green"><li>A health professional</li><li>Mental health charities</li><li>Student services if you’re in education</li><li>Peer support (groups of people using their own experiences to help each other e.g. support groups or online communities)</li></ul><p></p><div class="row align-items-center"><div class="col-12 col-desk-6"><h3><strong>Why you need to manage your money</strong></h3><p></p></div></div><div class="row align-items-center justify-content-center"><div class="col-12 col-desk-6"><p>Recognising when you or someone else needs support isn’t easy. But<span> </span><a href="https://www.moneyadviceservice.org.uk/blog/blank-for-mental-health-article" target="_blank" class="external-link">Money Advice Service</a><span> </span>suggest there are things people do which suggest there could be a problem.</p><p>If you’re worrying about whether your financial decisions may be linked to how you’re feeling, ask yourself:</p><ul class="list list-margin list-green"><li>To make yourself feel better, do you spend large amounts of money on things you don’t really need?</li><li>Do you have gaps in time where you can’t earn because you must take time off work, or can’t work due to poor mental health or wellbeing?</li><li>Do you avoid opening post that contains bills or bank statements, or avoid checking them online?</li><li>Do you avoid face-to-face or phone conversations about money?</li><li>Do you worry about making day-to-day financial decisions?</li><li>Do you still worry about spending and debt, even if you’ve got enough money?</li><li>Do you struggle with concentrating when faced with money matters, or find it difficult to take in all the information you need to make financial decisions?</li></ul><p>You can also use these questions to spot signs that someone else’s financial decisions may be linked to mental health or wellbeing.</p><p></p><p>These behaviours don’t necessarily mean someone has a financial problem. But over time, they could lead you to lose control of your money. Working on the relationship between financial choices and wellbeing can prevent that.</p><p></p></div></div></div></div><p>To learn more about the article, please check out the link here: <a href="https://finty.com/resources/managing-money-pressures/"><strong>https://finty.com/resources/managing-money-pressures/</strong></a></p></div>The Most Common Ways to Cover Debts in 2019https://globalriskcommunity.com/profiles/blogs/the-most-common-ways-to-cover-debts-in-20192019-09-30T11:01:54.000Z2019-09-30T11:01:54.000ZJill Robinsonhttps://globalriskcommunity.com/members/JillRobinson367<div><p><span style="font-size:10pt;"><a href="https://cdn.pixabay.com/photo/2016/10/12/09/03/woman-1733891_960_720.jpg" target="_blank"><img src="https://cdn.pixabay.com/photo/2016/10/12/09/03/woman-1733891_960_720.jpg?profile=RESIZE_710x" width="640" class="align-center" alt="woman-1733891_960_720.jpg?profile=RESIZE_710x" /></a></span></p><p><span style="font-size:10pt;">The moment you decide to pay your debts permanently, you seek to bring peace, stability, and confidence into your life. However, it's generally known you should stay away from strategies that make you end up with unpayable interests. Balance your debts with a loan? It may not be the best option because you can't borrow more. Neither is stop paying or fleeing the country.</span></p><p><span style="font-size:10pt;">So what are the best strategies to pay off your debts effectively and without panicking?</span></p><p><span style="font-size:10pt;">We understand that not all debts are solved in the same way like in <span><a href="https://samedayfin.com/" target="_blank">Same Day Fin</a></span>. In fact, we know it so well that we have simple ways to get out of your economic problem and in the right way, depending on the situation you are in.</span></p><p><span style="font-size:10pt;">Let's start ...</span></p><p><br /> <span style="font-size:12pt;"><strong>Understand Your Financial Context and Educate Yourself Financially</strong></span></p><p><span style="font-size:10pt;">The first thing you should do is analyze your financial situation - how much do you really owe? Is that a lot? 5 thousand dollars or 10 thousand dollars? These types of numbers can still be manageable if we apply good strategies on our financials. However, debts above 35K or those that exceed 100 thousand are more complicated because interest accrues at such a speed that it multiplies the original figure.</span></p><p><br /> <span style="font-size:12pt;"><strong>How to Pay Small Debts?</strong></span></p><p><span style="font-size:10pt;"><a href="https://cdn.pixabay.com/photo/2014/11/08/19/50/purse-522622_960_720.jpg?profile=RESIZE_710x" target="_blank"><img src="https://cdn.pixabay.com/photo/2014/11/08/19/50/purse-522622_960_720.jpg?profile=RESIZE_710x" width="320" class="align-right" alt="purse-522622_960_720.jpg?profile=RESIZE_710x" /></a>If your debt is not that big and still controllable, then you probably just need to improve your financial education to better manage your money. Therefore, I recommend you visit Same Day Fin company, where you will find recommendations, analysis, and guides that will help you better understand the world of finance. You can apply these tips in your daily life and see how soon your debts will disappear.</span></p><p><span style="font-size:10pt;">Do not think that the subject of money is something reserved for a particular category of people (the rich or the well-connected). We always seek to communicate in a clear and accessible way. For example, if you are looking for how to pay off your debts in 6 steps or how to generate extra money, you will surely find useful and applicable information to your situation.</span></p><p><br /> <span style="font-size:12pt;"><strong>Tips and Advice to Cover Loans</strong></span></p><p><span style="font-size:10pt;">The best practice is to consider a plan that allows you to get rid of debts and, more importantly, keep you away from them. For that, we list four tips that will help you get out of debt in 2019.</span></p><ul><li><span style="font-size:10pt;"><em>Make an annual budget</em>.</span></li><li><span style="font-size:10pt;"><em>Make a list of all the safe income</em> you will have during the year. Salaries, maintenance, government aid, etc.</span></li><li><span style="font-size:10pt;"><em>List all the expenses you have per month</em>. You should aim from the biggest ones like the mortgage or the rent of your home to the smallest ones like the subscription to your gym or your streaming service. Don't forget about the special expenses for the summer holiday season, back to school or winter vacations. This way you will know how much time you have to reserve extra money for these dates.</span></li><li><span style="font-size:10pt;"><em>Start a savings fund</em>. This savings fund must be included in your annual budget. Take a percentage of your income (experts advise 20%) and set it aside from the rest of the money. A savings account in your bank may be an option.</span></li></ul><p><br /> <span style="font-size:12pt;"><strong>Is It Possible to Pay Your Debts with Another Loan?</strong></span></p><p><span style="font-size:10pt;">I understand that this idea may sound risky, but here we mean finding better payment terms so you can cover the debts you already have. Imagine that you keep up with your accounts but the interests are very high, wouldn't it be great to reward your good behavior? If you find yourself in this situation, a <a href="https://www.investopedia.com/articles/investing/092315/7-best-peertopeer-lending-websites.asp" target="_blank">private lending platform</a> would be the best solution.</span></p><p><br /> <span style="font-size:12pt;"><strong>How Does This Service Work?</strong></span></p><p><span style="font-size:10pt;"><a href="https://cdn.pixabay.com/photo/2017/06/08/12/32/wallet-2383496_960_720.jpg" target="_blank"><img src="https://cdn.pixabay.com/photo/2017/06/08/12/32/wallet-2383496_960_720.jpg?profile=RESIZE_710x" width="320" class="align-right" alt="wallet-2383496_960_720.jpg?profile=RESIZE_710x" /></a>You apply for a loan to pay off your debts, which is known as consolidation. But, if you want to apply, you need to meet some requirements that will be evaluated to corroborate that you have the possibility to pay back what was lent (for example, you have a fixed income). The advantage of this process is that the interest rate is personalized and does not exceed 29%.</span></p><p><br /> <span style="font-size:12pt;"><strong>And, If the Debts Are Already Late?</strong></span></p><p><span style="font-size:10pt;">At Same Day Fin, we've already seen how small debts can be met (and even those that are larger but still under our control). However, what happens to those we have stopped paying? Is there a solution to those accounts that are in default? If you find yourself in this situation, do not despair put your trust in us to manage and settle the case.</span></p><p></p><p><span style="font-size:10pt;">A diagnosis will establish your financial capacity and generate a savings plan tailored to your needs. This money will be accumulated in an account in your name, while we are in charge of negotiating with your creditors to get discounts of up to 70%. Once the best deal is achieved, you will take care of what you have saved to settle and go! No more debts.</span></p></div>Crucial Facts to Prove It’s Important to Pay Off Debtshttps://globalriskcommunity.com/profiles/blogs/crucial-facts-to-prove-it-s-important-to-pay-off-debts2019-08-20T06:53:41.000Z2019-08-20T06:53:41.000ZAlicia Sandershttps://globalriskcommunity.com/members/AliciaSanders<div><div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="hardreadability"><a href="https://cdn.pixabay.com/photo/2017/02/16/02/31/no-money-2070384_960_720.jpg" target="_blank"><img src="https://cdn.pixabay.com/photo/2017/02/16/02/31/no-money-2070384_960_720.jpg?profile=RESIZE_710x" width="320" class="align-left" alt="no-money-2070384_960_720.jpg?profile=RESIZE_710x" /></a></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="hardreadability">In fact, after the latest rate has ascended in Canada, it’s essential now to pay down your debts with the cost of borrowing</span>. This statement from the Bank of Canada must make Canadian people concerned.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="hardreadability">Needless to say, a lot of credit cards have such high-interest rates that they lead to the scariest debt in the whole world</span>. <span class="veryhardreadability"><em>Scott Hannah</em>, the president of Credit Counselling Society, recommends paying off your debts on the credit card as soon as possible despite the fact that <em>prime rates don’t influence the credit ones</em></span>. In his opinion, this is a huge problem when people tend to have a balance on their credit cards.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="hardreadability">The statistics from the MNP proves that 44% of Canadians are close to financial problems and instability</span>.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="veryhardreadability">It</span> <span class="passivevoice">is highlighted by</span> <span class="veryhardreadability">the credit company TransUnion that average debt is approximately $30,000 per person with an ordinary credit card budget of $5,000</span>. <span class="hardreadability">Also, as a matter of fact, 50% of Canadians try to pay off their debt every month and it’s much harder for those who don’t have an opportunity</span>.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="complexword">In addition</span><span class="hardreadability">, sociologists from Vancouver have conducted a survey about how people in Canada pay down their debts</span>. The results stated that 11% of Canadians use <a href="https://northnloans.ca/">payday loans Canada</a>, 18% of the population can’t pay off their debt in time. <span class="hardreadability">24% of people don’t have an opportunity to pay their utility account and 25% must borrow money to buy essential things, such as food</span>.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><strong>Useful Recommendations</strong></span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="complexword"><span><a href="https://cdn.pixabay.com/photo/2019/08/01/04/32/girl-4376613_960_720.jpg" target="_blank"><img src="https://cdn.pixabay.com/photo/2019/08/01/04/32/girl-4376613_960_720.jpg?profile=RESIZE_710x" width="320" class="align-right" alt="girl-4376613_960_720.jpg?profile=RESIZE_710x" /></a></span>However</span><span class="veryhardreadability">, some people are willing not to mess with debt or get rid of it as soon as possible, so Scott Hannah <em>recommends putting together a budget</em>, which will be great for spending money on needs</span>. Moreover, he thinks that you should <span class="adverb">really</span> keep up with your plan if you want to be free of debt. <span class="hardreadability">For instance, <em>save some money on unexpected situations</em>, such as car repairing, and use savings instead of your credit card</span>. This will help you not to get into this cycle over and over again.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;">Also, Scott Hannah reminds to come up with a <em>working strategy as for paying off debt</em>. Try to get out of small debt first, because you will get motivated to cope with the bigger one if you have.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="veryhardreadability">A lot of people get consolidation loans to pay off another debt they have, but it’s advised to stick with tracking record in priority and then get a consolidation loan</span>. “It will take a while, but it’s definitely worth it, because some emergencies may happen”, says Scott Hannah</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="veryhardreadability">What is more, the <em>payment plan and established budget are useful</em>, in the specialist’s opinion, while <a href="https://www.nerdwallet.com/blog/finance/consolidate-debt/" target="_blank">getting a consolidated loan</a> when you have set the base</span>.</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="complexword">In addition</span><span class="veryhardreadability">, Hannah says: “When you transfer money from one credit card to a low-interest one, it can reduce your payments, but don’t forget that it takes a balance transfer charge</span>. So, it’s better not to do this trick until you deal with debt.”</span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"> </span></div></div><div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr"><span style="font-size:10pt;"><span class="hardreadability">When you stick to a budget, you will see an improvement of your financial state and progress in your life, in general</span>. Everyone has drawbacks in life, but if you control every piece you will manage to overcome them. Be smart, prudent and you will never face debt in your future.</span></div></div></div></div>The Myth that Japan is Broke: The World’s Largest “Debtor” is now the Largest Creditorhttps://globalriskcommunity.com/profiles/blogs/the-myth-that-japan-is-broke-the-world-s-largest-debtor-is-now2015-05-20T19:34:43.000Z2015-05-20T19:34:43.000ZEnrique Raul Suarezhttps://globalriskcommunity.com/members/EnriqueRaulSuarez<div><p><a href="{{#staticFileLink}}8028232685,original{{/staticFileLink}}"><img width="173" height="122" class="align-center" style="width:241px;height:160px;" src="{{#staticFileLink}}8028232685,original{{/staticFileLink}}" alt="8028232685?profile=original" /></a></p><p style="text-align:center;"><span class="font-size-3"><b>Enrique Suarez Presenting:</b></span></p><p style="text-align:center;"></p><p style="text-align:center;"><span class="font-size-3"><b>The Myth that Japan is Broke: The World’s Largest “Debtor” is now the Largest Creditor</b></span></p><p style="text-align:center;"></p><p style="text-align:center;"><span class="font-size-3">Source: Ellen Brown</span></p><p style="text-align:center;"></p><p style="text-align:center;"><span class="font-size-3">Global Research</span></p><p></p><p><i>Japan’s massive government debt conceals massive benefits for the Japanese people, with lessons for the U.S. debt “crisis.”</i></p><p>In an April 2012 article in Forbes titled “If Japan Is Broke, How Is It Bailing Out Europe?”, Eamonn Fingleton pointed out the Japanese government was by far the largest single non-Eurozone contributor to the latest Euro rescue effort. This, he said, is “the same government that has been going round pretending to be bankrupt (or at least offering no serious rebuttal when benighted American and British commentators portray Japanese public finances as a train wreck).” Noting that it was also Japan that rescued the IMF system virtually single-handedly at the height of the global panic in 2009, Fingleton asked:</p><p></p><p>How can a nation whose government is supposedly the most over borrowed in the advanced world afford such generosity? . . .</p><p></p><p>The betting is that Japan’s true public finances are far stronger than the Western press has been led to believe. What is undeniable is that the Japanese Ministry of Finance is one of the most opaque in the world . . . .</p><p></p><p>Fingleton acknowledged that the Japanese government’s liabilities are large, but said we also need to look at the asset side of the balance sheet:</p><p></p><p>[T]he Tokyo Finance Ministry is increasingly borrowing from the Japanese public not to finance out-of-control government spending at home but rather abroad. Besides stepping up to the plate to keep the IMF in business, Tokyo has long been the lender of last resort to both the U.S. and British governments. Meanwhile it borrows 10-year money at an interest rate of just 1.0 percent, the second lowest rate of any borrower in the world after the government of Switzerland.</p><p></p><p>It’s a good deal for the Japanese government: it can borrow 10-year money at 1 percent and lend it to the U.S. at 1.6 percent (the going rate on U.S. 10-year bonds, making a tidy spread.</p><p></p><p>Japan’s debt-to-GDP ratio is nearly 230%, the worst of any major country in the world. Yet Japan remains the world’s largest <i>creditor</i> country, with net foreign assets of $3.19 trillion. In 2010, its GDP per capita was more than that of France, Germany, the U.K. and Italy. And while China’s economy is now larger than Japan’s because of its burgeoning population (1.3 billion versus 128 million), China’s $5,414 GDP per capita is only 12 percent of Japan’s $45,920.</p><p></p><p>How to explain these anomalies? Fully 95 percent of Japan’s national debt is held domestically by the Japanese themselves.</p><p></p><p>Over 20% of the debt is held by Japan Post Bank, the Bank of Japan, and other government entities. Japan Post is the largest holder of domestic savings in the world, and it returns interest to its Japanese customers. Although theoretically privatized in 2007, it has been a political football, and 100% of its stock is still owned by the government. The Bank of Japan is 55% government-owned and 100% government-controlled.</p><p></p><p>Of the remaining debt, over 60% is held by Japanese banks, insurance companies and pension funds. Another chunk is held by individual Japanese savers. Only 5% is held by foreigners, mostly central banks. As noted in a September 2011 article in The New York Times:</p><p></p><p>The Japanese government is in deep debt, but the rest of Japan has ample money to spare.</p><p></p><p>The Japanese government’s debt <i>is</i> the people’s money. They own each other, and they collectively reap the benefits.</p><p align="center"></p><p align="center"><b>Myths of the Japanese Debt-to-GDP Ratio</b></p><p></p><p>Japan’s debt-to-GDP ratio looks bad. But as economist Hazel Henderson notes, this is just a matter of accounting practice—a practice that she and other experts contend is misleading. Japan leads globally in virtually all areas of high-tech manufacturing, including aerospace. The debt on the other side of its balance sheet represents the payoffs from all this productivity to the Japanese people.</p><p></p><p>According to Gary Shilling, writing on <i>Bloomberg</i> in June 2012, more than half of Japanese public spending goes for debt service and</p><p>social security payments. Debt service is paid as interest to Japanese “savers.” Social security and interest on the national debt are not included in GDP, but these are actually the social safety net and public dividends of a highly productive economy. These, more than the military weapons and “financial products” that compose a major portion of U.S. GDP, are the real fruits of a nation’s industry. For Japan, they represent the enjoyment by the people of the enormous output of their high-tech industrial base.</p><p></p><p>Shilling writes:</p><p></p><p>Government deficits are supposed to stimulate the economy, yet the composition of Japanese public spending isn’t particularly helpful. Debt service and social-security payments — generally non-stimulative — are expected to consume 53.5 percent of total outlays for 2012 . . . .</p><p></p><p>So says conventional theory, but social security and interest paid to domestic savers actually do stimulate the economy. They do it by getting money into the pockets of the people, increasing “demand.” Consumers with money to spend then fill the shopping malls, increasing orders for more products, driving up manufacturing and employment.</p><p align="center"></p><p align="center"><b>Myths About Quantitative Easing</b></p><p></p><p>Some of the money for these government expenditures has come directly from “money printing” by the central bank, also known as “quantitative easing.” For over a decade, the Bank of Japan has been engaged in this practice; yet the hyperinflation that deficit hawks said it would trigger has not occurred. To the contrary, as noted by Wolf Richter in a May 9, 2012 article:</p><p></p><p>[T]he Japanese [are] in fact among the few people in the world enjoying actual price stability, with interchanging periods of minor inflation and minor deflation—as opposed to the 27% inflation per decade that the Fed has conjured up and continues to call, moronically, “price stability.”</p><p></p><p>He cites as evidence the following graph from the Japanese Ministry of Internal Affairs:</p><p></p><p style="text-align:center;"></p><p style="text-align:center;"><a href="{{#staticFileLink}}8028232487,original{{/staticFileLink}}"><img width="604" class="align-center" src="{{#staticFileLink}}8028232487,original{{/staticFileLink}}" alt="8028232487?profile=original" /></a></p><p>How is that possible? It all depends on where the money generated by quantitative easing ends up. In Japan, the money borrowed by the government has found its way back into the pockets of the Japanese people in the form of social security and interest on their savings. Money in consumer bank accounts stimulates demand, stimulating the production of goods and services, increasing supply; and when supply and demand rise together, prices remain stable.</p><p></p><p align="center"><b>"Myths About the “Lost Decade”</b></p><p align="center"></p><p>Japan’s finances have long been shrouded in secrecy, perhaps because when the country was more open about printing money and using it to support its industries, it got embroiled in World War II. In his 2008 book In the Jaws of the Dragon, Fingleton suggests that Japan feigned insolvency in the “lost decade” of the 1990s to avoid drawing the ire of protectionist Americans for its booming export trade in automobiles and other products. Belying the weak reported statistics, Japanese exports increased by 73% during that decade, foreign assets increased, and electricity use increased by 30%, a tell-tale indicator of a flourishing industrial sector. By 2006, Japan’s exports were three times what they were in 1989.</p><p></p><p>The Japanese government has maintained the façade of complying with international banking regulations by “borrowing” money rather than “printing” it outright. But borrowing money issued by the government’s own central bank is the functional equivalent of the government printing it, particularly when the debt is just carried on the books and never paid back.</p><p align="center"></p><p align="center"><b>Implications for the “Fiscal Cliff”</b></p><p></p><p>All of this has implications for Americans concerned with an out-of-control national debt. Properly managed and directed, it seems, the debt need be nothing to fear. Like Japan, and unlike Greece and other Eurozone countries, the U.S. is the sovereign issuer of its own currency. If it wished, Congress could fund its budget without resorting to foreign creditors or private banks. It could do this either by issuing the money directly or by borrowing from its own central bank, effectively interest-free, since the Fed rebates its profits to the government after deducting its costs.</p><p></p><p>A little quantitative easing can be a good thing, if the money winds up with the government and the people rather than simply in the reserve accounts of banks. The national debt can also be a good thing. As Federal Reserve Board Chairman Marriner Eccles testified in hearings before the House Committee on Banking and Currency in 1941, government credit (or debt) “is what our money system is. If there were no debts in our money system, there wouldn’t be any money.”</p><p></p><p>Properly directed, the national debt becomes the spending money of the people. It stimulates demand, stimulating productivity. To keep the system stable and sustainable, the money just needs to come from the nation’s own government and its own people, and needs to return to the government and people.</p><p></p><p><b><i>Ellen Brown</i></b> <i>is an attorney and president of the Public Banking Institute,</i> <i><a href="http://PublicBankingInstitute.org">http://PublicBankingInstitute.org</a></i><i>. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are</i> <a href="http://r20.rs6.net/tn.jsp?e=001sOSqCKXB8QgwFM-ng2Kg43MDtVTYxy2qQB3fLD8i2nJFYRK3oeUksasXm0XkbQ2TzhnfjeHSeupIWGa7iooogsUQ6jw4cIRE7kUDFmsnmemJGY7NBJ6ZdA==" target="_blank"><i>http://WebofDebt.com</i></a> <i>and</i> <a href="http://r20.rs6.net/tn.jsp?e=001sOSqCKXB8QhpQUhDMJ7I4BfqCc6ISHNrH4VfeXIWfI2qR5AtIcOsQ1SHmxDpM2kH9GEJda8NlhCPMLJPfHR13qZ8JH4i5uYf8K2981MqFxTGdoOKRvU2oQ==" target="_blank"><i>http://EllenBrown.com</i></a></p><p></p><p></p><p></p><p></p></div>It’s the Interest, Stupid! Why Bankers Rule the Worldhttps://globalriskcommunity.com/profiles/blogs/it-s-the-interest-stupid-why-bankers-rule-the-world2015-05-14T19:52:22.000Z2015-05-14T19:52:22.000ZEnrique Raul Suarezhttps://globalriskcommunity.com/members/EnriqueRaulSuarez<div><p style="text-align:center;"><a href="{{#staticFileLink}}8028233088,original{{/staticFileLink}}"><img width="404" class="align-center" src="{{#staticFileLink}}8028233088,original{{/staticFileLink}}" alt="8028233088?profile=original" /></a><span class="font-size-3">Enrique Suarez Presenting:</span></p><p style="text-align:center;"></p><p style="text-align:center;"><b>It’s the Interest, Stupid! Why Bankers Rule the World</b></p><p style="text-align:center;"></p><p style="text-align:center;"><b>Source:</b></p><p style="text-align:center;"><a title="Posts by Ellen Brown" href="http://www.globalresearch.ca/author/ellen-brown">Ellen Brown</a></p><p style="text-align:center;">Global Research, November 08, 2012</p><p style="text-align:center;"><a href="http://webofdebt.wordpress.com/" target="_blank">Web of Debt</a></p><p style="text-align:center;"></p><p>In the 2012 edition of <a href="http://www.amazon.com/Occupy-Money-Creating-Economy-Everybody/dp/0865717311/ref=sr_1_1?s=books&ie=UTF8&qid=1351734217&sr=1-1&keywords=occupy+money">Occupy Money</a> released last week, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system.</p><p></p><p>This hidden tribute to the banks will come as a surprise to most people, who think that if they pay their credit card bills on time and don’t take out loans, they aren’t paying interest. This, says Dr. Kennedy, is not true. Tradesmen, suppliers, wholesalers and retailers all along the chain of production rely on credit to pay their bills. They must pay for labor and materials before they have a product to sell and before the end buyer pays for the product 90 days later. Each supplier in the chain adds interest to its production costs, which are passed on to the ultimate consumer. Dr. Kennedy cites interest charges ranging from 12% for garbage collection, to 38% for drinking water to, 77% for rent in public housing in her native Germany.</p><p></p><p>Her figures are drawn from the research of economist Helmut Creutz, writing in German and interpreting Bundesbank publications. They apply to the expenditures of German households for everyday goods and services in 2006; but similar figures are seen in financial sector profits in the United States, where <a href="http://financemymoney.com/the-5-percent-solution-how-5-percent-of-the-workforce-generated-40-percent-of-u-s-business-profits-and-all-of-it-was-a-ponzi-scheme/http:/financemymoney.com/the-5-percent-solution-how-5-percent-of-the-workforce-generated-40-percent-of-u-s-business-profits-and-all-of-it-was-a-ponzi-scheme/">they composed a whopping 40% of U.S. business profits</a> in 2006. That was five times the 7% made by the banking sector in 1980. Bank assets, financial profits, interest, and debt have all been growing exponentially.</p><p></p><p><a href="http://webofdebt.files.wordpress.com/2012/11/1-power-point-11-12.png"><img width="300" height="219" title="1 power point 11-12+" class="aligncenter size-medium wp-image-4929 align-center" alt="" src="http://webofdebt.files.wordpress.com/2012/11/1-power-point-11-12.png?w=300&h=219" /></a></p><p style="text-align:center;"><a style="text-align:center;" href="http://www.oftwominds.com/blogsept12/cui-bono-Fed9-12.html">http://www.oftwominds.com/blogsept12/cui-bono-Fed9-12.html</a><span style="text-align:center;">.</span></p><p> </p><p>Exponential growth in financial sector profits has occurred at the expense of the non-financial sectors, where incomes have at best grown linearly.</p><p><a href="http://webofdebt.files.wordpress.com/2012/11/income-1.png"><img width="240" height="300" title="income 1%" class="aligncenter size-medium wp-image-4933 align-center" alt="" src="http://webofdebt.files.wordpress.com/2012/11/income-1.png?w=240&h=300" /></a></p><p style="text-align:center;"><a style="text-align:center;" href="http://lanekenworthy.net/2010/07/20/the-best-inequality-graph-updated/">http://lanekenworthy.net/2010/07/20/the-best-inequality-graph-updated/</a></p><p> </p><p>By 2010, <a href="http://www2.ucsc.edu/whorulesamerica/power/wealth.html">1% of the population owned 42% of financial wealth</a>, while 80% of the population owned only 5% percent of financial wealth. Dr. Kennedy observes that the bottom 80% pay the hidden interest charges that the top 10% collect, making interest a strongly regressive tax that the poor pay to the rich.</p><p></p><p>Exponential growth is unsustainable. In nature, sustainable growth progresses in a logarithmic curve that grows increasingly more slowly until it levels off (the red line in the first chart above). Exponential growth does the reverse: it begins slowly and increases over time, until the curve shoots up vertically (the chart below). Exponential growth is seen in parasites, cancers . . . and compound interest. When the parasite runs out of its food source, the growth curve suddenly collapses.</p><p></p><p><a href="http://webofdebt.files.wordpress.com/2012/11/exponential-function.gif"><img width="300" height="290" title="exponential function" class="aligncenter size-medium wp-image-4927 align-center" alt="" src="http://webofdebt.files.wordpress.com/2012/11/exponential-function.gif?w=300&h=290" /></a></p><p>People generally assume that if they pay their bills on time, they aren’t paying compound interest; but again, this isn’t true. Compound interest is <a href="http://www.homeloanlearningcenter.com/mortgagebasics/aboutinterestrates.htm">baked into the formula for most mortgages</a>, which compose 80% of U.S. loans. And if credit cards aren’t paid within the one-month grace period, interest charges are compounded daily.</p><p></p><p>Even if you pay within the grace period, you are paying <a href="http://money.cnn.com/2012/07/17/smallbusiness/visa-mastercard/index.htm">2% to 3% for the use of the card</a>, since merchants pass their merchant fees on to the consumer. Debit cards, which are the equivalent of writing checks, also involve fees. Visa-MasterCard and the banks at both ends of these interchange transactions charge an average fee of <a href="http://meredithadvocacygroup.com/main-street-wins-one-in-congress/">44 cents per transaction</a>—though the cost to them is about four cents.</p><p></p><p style="text-align:center;"><strong>How to Recapture the Interest: Own the Bank</strong></p><p style="text-align:center;"></p><p>The implications of all this are stunning. If we had a financial system that returned the interest collected from the public directly to the public, 35% could be lopped off the price of everything we buy. That means we could buy three items for the current price of two, and that our paychecks could go 50% farther than they go today.</p><p></p><p>Direct reimbursement to the people is a hard system to work out, but there is a way we could collectively recover the interest paid to banks. We could do it by turning the banks into public utilities and their profits into public assets. Profits would return to the public, either reducing taxes or increasing the availability of public services and infrastructure.</p><p></p><p>By borrowing from their own publicly-owned banks, governments could eliminate their interest burden altogether. This has been demonstrated elsewhere with stellar results, including in <a href="http://www.webofdebt.com/articles/canada.php">Canada</a>, <a href="http://www.webofdebt.com/articles/commonwealth_bank_aus.php">Australia</a>, and <a href="http://www.foreignpolicy.com/articles/2012/07/03/the_shots_heard_round_the_world">Argentina</a> among other countries.</p><p></p><p>In 2011, the U.S. federal government paid $454 billion in interest on the federal debt—nearly one-third the total $1,100 billion paid in personal income taxes that year. If the government had been borrowing directly from the Federal Reserve—which has the power to create credit on its books and now <a href="http://www.nytimes.com/2012/01/11/business/economy/fed-returns-77-billion-in-profits-to-treasury.html">rebates its profits directly to the government</a>—personal income taxes could have been cut by a third.</p><p></p><p>Borrowing from its own central bank interest-free might even allow a government to eliminate its national debt altogether. In <span style="text-decoration:underline;"><a href="http://www.amazon.com/Money-Sustainability-Missing-black-white/dp/1908009772/ref=sr_1_1?s=books&ie=UTF8&qid=1351868182&sr=1-1&keywords=money+and+sustainability+the+missing+link">Money and Sustainability: The Missing Link</a></span> (at page 126), Bernard Lietaer and Christian Asperger, et al., cite the example of France. The Treasury borrowed interest-free from the nationalized Banque de France from 1946 to 1973. The law then changed to forbid this practice, requiring the Treasury to borrow instead from the private sector. The authors include a chart showing what would have happened if the French government had continued to borrow interest-free versus what did happen. Rather than dropping from 21% to 8.6% of GDP, the debt shot up from 21% to 78% of GDP.</p><p></p><p>“No ‘spendthrift government’ can be blamed in this case,” write the authors. “Compound interest explains it all!”</p><p></p><p><a href="http://webofdebt.files.wordpress.com/2012/11/french-debt.png"><img width="300" height="257" title="French debt" class="aligncenter size-medium wp-image-4934 align-center" alt="" src="http://webofdebt.files.wordpress.com/2012/11/french-debt.png?w=300&h=257" /></a></p><p style="text-align:center;"><a href="http://webofdebt.files.wordpress.com/2012/11/graph4.jpg"><br /></a><strong style="text-align:center;">More than Just a Federal Solution</strong></p><p style="text-align:center;"></p><p>It is not just federal governments that could eliminate their interest charges in this way. State and local governments could do it too.</p><p></p><p>Consider California. At the end of 2010, it had <a href="http://www.treasurer.ca.gov/bonds/debt/201011/summary.pdf">general obligation and revenue bond debt of $158 billion</a>. Of this, $70 billion, or 44%, was owed for interest. If the state had incurred that debt to its own bank—which then returned the profits to the state—California could be $70 billion richer today. Instead of slashing services, selling off public assets, and laying off employees, it could be adding services and repairing its decaying infrastructure.</p><p></p><p>The only U.S. state to own its own depository bank today is North Dakota. North Dakota is also <a href="http://www.webofdebt.com/articles/north_dakota.php">the only state to have escaped the 2008 banking crisis</a>, sporting a sizable budget surplus every year since then. It has the lowest unemployment rate in the country, the lowest foreclosure rate, and the lowest default rate on credit card debt.</p><p></p><p>Globally, <a href="http://www.webofdebt.com/articles/brics.php">40% of banks are publicly owned</a>, and they are concentrated in countries that also escaped the 2008 banking crisis. These are the BRIC countries—Brazil, Russia, India, and China—which are home to 40% of the global population. The BRICs grew economically by 92% in the last decade, while Western economies were floundering.</p><p></p><p>Cities and counties could also set up their own banks; but in the U.S., this model has yet to be developed. In North Dakota, meanwhile, the Bank of North Dakota underwrites the bond issues of municipal governments, saving them from the vagaries of the “bond vigilantes” and speculators, as well as from the high fees of Wall Street underwriters and the risk of coming out on the wrong side of interest rate swaps required by the underwriters as “insurance.”</p><p></p><p>One of many cities crushed by this Wall Street “insurance” scheme is Philadelphia, which has lost $500 million on interest swaps alone. (How the swaps work and their link to the LIBOR scandal was explained in an earlier article <a href="http://www.webofdebt.com/articles/liboriceberg.php">here</a>.) Last week, the Philadelphia City Council held hearings on what to do about these lost revenues. In an October 30<sup><font size="2">th</font></sup> article titled “<a href="http://www.shareable.net/blog/can-public-banks-end-wall-street-hegemony">Can Public Banks End Wall Street Hegemony</a>?”, Willie Osterweil discussed a solution presented at the hearings in a fiery <a href="http://abundanthope.net/pages/True_US_History_108/TESTIMONY-OF-THE-PUBLIC-BANKING-INSTITUTE-THE-PENNSYLVANIA-PROJECT-TO-PHILADELPHIA-CITY-COUNCIL-23-OCTOBER-2012_printer.shtml">speech by Mike Krauss</a>, a director of the Public Banking Institute.</p><p></p><p>Krauss’ solution was to do as Iceland did: just walk away. He proposed “a strategic default until the bank negotiates at better terms.” Osterweil called it “radical,” since the city would lose it favorable credit rating and might have trouble borrowing. But Krauss had a solution to that problem: the city could form its own bank and use it to generate credit for the city from public revenues, just as Wall Street banks generate credit from those revenues now.</p><p></p><p style="text-align:center;"><strong>A Radical Solution Whose Time Has Come</strong></p><p style="text-align:center;"></p><p>Public banking may be a radical solution, but it is also an obvious one. This is not rocket science. By developing a public banking system, governments can keep the interest and reinvest it locally. According to Kennedy and Creutz, that means public savings of 35% to 40%. Costs can be reduced across the board; taxes can be cut or services can be increased; and market stability can be created for governments, borrowers and consumers. Banking and credit can become public utilities, feeding the economy rather than feeding off it.</p><p><br /> ___________<br /> Ellen Brown is an attorney and president of the Public Banking Institute. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are <a href="http://webofdebt.com/">http://WebofDebt.com</a>, <a href="http://ellenbrown.com/">http://EllenBrown.com</a>, and <a href="http://publicbankinginstitute.org/">http://PublicBankingInstitute.org</a>.</p><p></p><p></p><p style="text-align:center;"></p></div>Useful Resources for Financial Literacyhttps://globalriskcommunity.com/profiles/blogs/useful-resources-for-financial-literacy2014-06-12T22:19:09.000Z2014-06-12T22:19:09.000ZTal Yampolskyhttps://globalriskcommunity.com/members/TalYampolsky<div><p>The purpose of this blog post is to stress the importance of financial education (literacy) by gathering valuable resources that will help both youth and adults get a better understanding of finance.</p><p></p><p>I chose to write about financial literacy as lack of it represents the basis for most of the legislation and regulation initiatives. With products getting more complex the consumers are more vulnerable to mis-selling. Also, this is no secret consumers may show irresponsibility in their financial decisions.</p><p></p><p>I often tend to compare financial literacy to driving competency. The authorities can enhance the infrastructure, regulate speed and enforce the behaviour on the road, put more signage, strengthen the license eligibility process and expand police presence but it won't necessarily be more effective than the driving education provided by parents, schools, authorities or the media.</p><p></p><p>A <a href="https://www.moneyadviceservice.org.uk/files/habits-set-by-age-seven-pr-220513-final.pdf">study</a> conducted by the <a href="https://www.moneyadviceservice.org.uk/en">Money Advice Service (UK)</a> confirmed that the adult money habits are set by the age of seven years old. The study showed that by the age of seven most children recognize the value of money, understand that money can be exchanged for goods and are capable of complex functions such as planning ahead and comparing between choices. Despite the conclusion above, this study also shows that children under the age of eight haven't developed an understanding of the differences between ‘luxuries’ and ‘necessities’.</p><p></p><p>Another <a href="http://regradar.com/talk.php?id=48668&FINRA-Foundation-Study-Finds-Millennials-Struggle-Financially">study</a> conducted by the <a href="http://www.finrafoundation.org/">FINRA Investor Education Foundation (USA)</a> showed that young millennials (ages 18 to 26) display low level of financial literacy, engage in problematic financial behaviours and express concerns about their debt.</p><p></p><p>It hasn't been a surprise that the <a href="http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf">Financial Crisis Inquiry Report</a> concluded a combination of excessive borrowing, risky investments and lack of transparency put the financial system on a collision course with the 2008 crisis. In conjunction with other outcomes, the report concluded that households were left vulnerable to financial distress as their mortgage debt doubled while wages remained the same.</p><p></p><p>The timing of this article is not random as we're approaching the summer break period across the world. Youngsters are going to start their summer vacation and some of them will be starting their summer jobs.</p><p></p><p>The <a href="http://www.consumerfinance.gov/">CFPB (US)</a> addressed this matter in their <a href="http://regradar.com/talk.php?id=152485&Summer-jobs-are-a-perfect-time-to-build-financial-skills-for-young-people">recent publication</a> stating that "For young people, particularly those between the ages of 16-24 who may be entering the workforce for the first time, developing good money management skills is critical. Without the necessary financial knowledge and skills, many will not develop money management habits, trapping them in a future with limited savings, high debt, or compromised credit."</p><p></p><p>I believe with appropriate financial education some people could have avoided financial incapability. Therefore, I decided to gather several resources that can help households (both youngsters and adults) who want to learn and teach finance. This list can be also used by <span>financial institution who want to provide added-value services and organizations that want to offer valuable educational resources.</span></p><p></p><ul><li><a href="http://www.moneysense.gov.sg/">MoneySENSE</a> - A national financial education program</li><li><a href="http://www.consumerfinance.gov/askcfpb/search/?selected_facets=audience_exact%3AParents&selected_facets=tag_exact%3Afinancial+education">ask cfpb</a> - Ideas for how parents can talk to their kids about money</li><li><a href="http://www.finrafoundation.org/">FINRA Foundation</a> - Provides knowledge, skills and tools necessary for financial success</li><li><a href="http://www.consumer.ftc.gov/features/feature-0022-financial-educators">FTC Consumer Information</a> - Articles, videos and blog posts about financial topics</li><li><a href="http://www.fsa.gov.uk/pubs/other/young_adults.pdf">FSA</a> - Case studies of organisations assisting young adults</li><li><a href="http://www.usfinancialcapability.org/quiz.php">FINRA Quiz</a> - Financial Literacy Quiz</li><li><a href="http://www.centralbank.ie/education/Pages/default.aspx">Central Bank of Ireland</a> - Education and resources</li><li><a href="http://moneyasyougrow.org/">Money as You Grow</a> - 20 things kids and young adults need to know</li><li><a href="http://twocents.lifehacker.com/your-guide-to-free-resources-for-improving-your-money-s-1557390942">lifehacker</a> - Improve Your Money Skills with These Free Resources</li><li><a href="http://www.360financialliteracy.org/Life-Stages">360 Financial Literacy</a> - Helping understand personal finance through every stage of life</li><li><a href="http://www.rbi.org.in/financialeducation/home.aspx#sthash.zvwJRiBq.dpuf">Financial Education</a> - Reserve Bank of India's Financial Education Initiative (Contributed by <a href="http://in.linkedin.com/pub/subramanian-sankaranarayanan/14/9a9/140">Subramanian Sankaranarayanan</a>)</li><li><a href="https://www.facebook.com/MarketechInteractive">Financial Literacy for Women</a> - Financial literacy Facebook page resources (Contributed by <a href="www.linkedin.com/in/marketechinteractive1">Gayle Barr</a>)</li></ul><p></p><p>Are you familiar with additional useful resources?</p><p></p><p><span><a href="http://regradar.com" target="_blank">RegRadar.com</a> is an online regulatory hub that collects and analyses regulatory information.</span></p></div>Edward Ingram reveals some ground breaking ideas in Risk Management for Mortgage Financehttps://globalriskcommunity.com/profiles/blogs/edward-ingram-reveals-some-ground-breaking-ideas-in-risk2013-01-12T14:56:38.000Z2013-01-12T14:56:38.000ZEdward C D Ingramhttps://globalriskcommunity.com/members/EdwardCDIngram<div><p><i>A comprehensive round-up of some of Mr Ingram's work </i><b><i><a href="http://macro-economic-design.blogspot.com/p/ingramsure-board.html">(of IngramSure (UK) Ltd)</a> </i></b><i>on investigating the instability and risk that is built into the foundations of the world's economies. Edward thinks that this is where Risk Managers need to assert themselves by getting involved in the design of the products that they are risk managing.</i></p><p><i><br /></i> <b>BORIS - Edward you have been telling me and much of the world on your blogs about your researches.</b></p><p> </p><p><b>It seems that your approach to risk management is somewhat unique. Can you tell us about that?</b></p><p> </p><p>Edward – Yes Boris it is very different because I am not employed to manage risk. I am free to say, “This is not something that we should be managing the risk of<b>.”</b></p><p> </p><p><b>BORIS – Can you give an example of that?</b></p><p> </p><p>Edward – Yes the prime example of something that is not correctly structured is mortgage finance. The way it is repaid is just asking for trouble and the way it decides how much should be lent / is costed is asking for trouble.</p><p> </p><p>The fact is that mortgage finance and property price values and the budgets of borrowers are all at risk.</p><p> </p><p><b>BORIS – Yes you have explained that before and I have to agree that risk managers frequently say that interest rate risk is virtually impossible to manage. You once told me that it has even been said that adding reserves to the lenders’ bank balances will not work “Because the waves are bigger than the ship.”</b></p><p> </p><p><b>But before you go into that, can you name anything else that is creating insuperable problems for risk managers?</b></p><p> </p><p>Edward – Government debt is another one which is important because it is so big. And on the opposite side of that government borrowing are investors who are trying desperately to create a retirement plan which does not put their hard earned investments at risk.</p><p> </p><p><b>BORIS – What you are saying is that there are no investments out there that are AAA rated to protect the investments that people are putting aside for their retirement. Is that right?</b></p><p> </p><p>Edward – That is absolutely right.</p><p> </p><p>It is all sourced basically from the one common thread that we have put close to our hearts and around which we have constructed almost everything financial.</p><p> </p><p>“What is that?” I hear you asking.</p><p> </p><p>Let me put it this way – I think I am right when I say that for most people, interest and capital are two different things - right?</p><p> </p><p>If you take away the interest what you are left with is the capital. This is a commonly accepted theorem or definition of interest and capital.</p><p> </p><p>But then everyone also knows that money is constantly changing its value. Where does that fit in? It is not fully recognised by any of the financial structures that are on offer. And it is that inbuilt kind of structure, that insistence that all of the interest must be paid on a mortgage or a government bond, which makes the whole foundation upon which our economies are built, unsafe and unstable.</p><p> </p><p>So the outcome is that we have nothing that is safe either in terms of its investment value or in terms of a safe budget that repays a safely affordable amount of value so that the borrower is not put at risk of default by the lender.</p><p> </p><p><b>BORIS – What about index-linked investments and mortgages?</b></p><p> </p><p>Edward – In principle this is a much better idea but there are some objections.</p><p> </p><p>HYBRIDS</p><p>One is that the public are not educated into them, so to overcome that one I have created a hybrid mortgage in which it appears to be and starts out as the usual level payments thing, but if the interest rate rises then the borrower has a safety net which in effect turns the mortgage into a rent-to-buy model with the payments rising less quickly than incomes. This ongoing easement in the cost of payments has the effect of preventing what is called Payments Fatigue and it helps to keep all of the borrowers on board because not everyone’s income rises as fast as the average - at least not all the time. Most incomes rise faster at times and slower at other times. It may also be argued that younger people may be on a promotion path, leaving older borrowers income increases lagging behind the average.</p><p> </p><p>So for various reasons the lender has to take care about what index is used for this exercise. Defining the average has its own issues. If in doubt, use the national average index but make sure that the payments fall away fairly fast relative to that index. I think that around 4% p.a. will do the trick. This means that every three years the cost burden in value or average income terms eases by almost 12%. It means that if incomes are standing still payments will be falling every year by 4% p.a. It means that you have to repay more value at first and less later on. I have been asked to illustrate that which I have now done in FIG 0 below.</p><p align="center">-------------------------</p><p><b>FIG 0</b> – 3.55 times income (near mid-range) mortgage repayment table with zero income increases, and falling payments.</p><p>Source: Edward C D Ingram Spreadsheets.</p><p></p><p><a href="{{#staticFileLink}}8028221088,original{{/staticFileLink}}"><img src="{{#staticFileLink}}8028221088,original{{/staticFileLink}}" width="619" class="align-full" alt="8028221088?profile=original" /></a></p><p>NOTES –</p><p>The total amount of income repaid in this table for this 3.55 times income mortgage, if you add up all of the ‘% of income’ data is around 35.2% more than was borrowed at 4.8 years' income, which is about the normal additional cost-to-income based on average rates for the UK 1970 – 2002.</p><p></p><p>This model even works when incomes are falling. As long as interest rates are lower or mortgages are smaller, the payments will fall even faster in that case.</p><p> </p><p>In the same conditions, (3% interest and zero income increases), the Level Payments Model would lend the same amount on an income of 19,143 p.a. compared to this ILS mortgage needing 28,185 p.a. That amounts to lending 5.2 years’ income (inflating property prices because all income groups can borrow more). The traditional model will cost 30% of income p.a. every year for 25 years, if incomes are not rising, a total cost of 7.5 years' income. The IMF July 2012 UK Country Report estimates that UK House Prices are normally 3.5 times income on average, based on past data, and currently they are 4.5 times income on average due to lowered interest rates.</p><p align="center">--------------------------</p><p><b>BORIS – That kind of thinking rather puts use of the prices index outside the realm of mortgage finance.</b></p><p> </p><p>Edward – Yes it does. In fact all of the experiments done by lenders using the prices index have fallen into the dustbin of history. The nearest anyone has got to my mortgage model as far as I know, is in Turkey where they have a model that increases the payments at the same rate as the wages index of Civil Servants. The mortgages are then offered to Civil Servants. I understand it is not popular. I am sure that must be because it creates Payments Fatigue. The advantage, which also applies to my mortgage model by the way, is that more can be lent at high interest and inflation rates.</p><p> </p><p>If you ignore some of the more practical issues that can arise, in theory, my model can lend the same amount in any economy, provided that... quite a long list of things are well managed.</p><p> </p><p><b>BORIS – How does the risk management work? You say it should not only eliminate most of the arrears cases but it also stabilises property values.</b></p><p> </p><p>Edward – I have developed some equations and a chart for risk management which are named after myself – Ingram’s Risk Management Charts. There is the related Safe Entry Cost Equation, which is really just an equation that breaks down the state of any kind of mortgage or other regular payments debt structure into three elements which added together make up the current level of payments. They are the current capital payment element, the current rate of easement of the payments cost relative to income, called the rate of Payments Depreciation, and the current rate at which value is being added to the mortgage. I will come back to this later.</p><p></p><p>I am also preparing a follow-on paper for this discussion which I would like readers to see when it is ready.</p><p></p><p>TRAINING RISK MANAGERS AND PRODUCT DESIGNERS</p><p>In fact much of that has already been done in much greater details in LESSONS 3 to 8 at:</p><p><a href="http://ingram-school.blogspot.com/">http://ingram-school.blogspot.com</a>, but it needs to be done more professionally sometime. I am also creating a new, hopefully better written version of all that to be sold with an interactive spreadsheet so that every kind of test imaginable can be done on the various mortgage models by risk managers and product designers world-wide.</p><p> </p><p>What the equation shows is that if you start with too large a mortgage you then find that you are charging too little in entry cost (the early monthly payments) because <i>the borrowers usually cannot afford to pay more for a larger mortgage</i>. This means that you, the lender, are at huge risk of arrears and default when interest rates rise. Later on, the interest rate and the payments rise because they have to. The mortgage you started with was too big because interest rates were too low to stay low. Interest rates always revert to mean, just like share prices and P/Es tend to do.</p><p> </p><p>STABILISING PROPERTY VALUES AS RISK MANAGERS TAKE OVER</p><p>The outcome if all lenders over-lend in this way, is that property values get pushed sky high and when interest rates revert to mean, the collateral security has gone and the arrears jump through the roof. You don’t need any sub-prime idiocy to make that happen.</p><p></p><p>So the amount that it is safe to lend does not enlarge a lot if interest rates fall, and vice versa, it does not reduce a lot if interest rates rise above the mean value. What counts for affordability is the income multiple originally lent and the longer term averages for interest rates relative to incomes growth rate. This approach to risk management should make property values much more stable and it should preserve the collateral security that is needed.</p><p> </p><p><b>BORIS – You gave an example of what happened in America – the Fed tried to raise what had been 3.5% interest up past the mean to around the 8% mark at which point the inference was that mortgage payments would cost over 50% more.</b></p><p> </p><p>Edward –That is correct, and that is why property prices came tumbling down. It was not just because of forced sales and sub prime.</p><p> </p><p><b>BORIS – On that basis are not property prices still over-valued?</b></p><p> </p><p>Edward – Yes I believe they are. When QE finishes and interest rates have to rise, there will be a repeat of the same dilemma. In fact many people are strongly opposed to QE because it is robbing the elderly of their wealth and it may be robbing lenders of some future lending capacity. Certainly it is distorting the economy, for which there is always a price to pay.</p><p></p><p>THE PROBLEMS FOR ECONOMIC RECOVERY </p><p><b>BORIS – You said that there is a solution to this dilemma - a way to keep property values high even as interest rates return to normal, which means that QE may be not necessary. Please tell us about it.</b></p><p> </p><p>Edward – Basically my risk management chart shows that only if you stick to the middle ground of mortgage sizes and entry costs can you manage the interest rate risk and the payments fatigue.</p><p> </p><p>As I said earlier, the <b>Safe Entry Cost Equation</b> (the one that gives a breakdown into component parts of any current level of payments including the proposed entry cost), says that any regular mortgage / debt repayment level has three basic elements as follows:</p><p> </p><p>- The current Capital Repayment content C% p.a.</p><p>- The current Mortgage Fatigue avoidance element called Payments Depreciation (relative to incomes), D% p.a.</p><p>- The current True Cost element which is the <i>part of the interest rate</i> that makes a borrower have to repay more value than the value that was borrowed, I% p.a.</p><p> </p><p>Just add these together and you get the current level of Payments, P% p.a. of the amount borrowed.</p><p>P% = C% + D% + I% (all p.a.)</p><p>This equation applies to ALL mortgage repayment models. They only differ in how they manage the elements - the Payments Depreciation D% , and the Capital Repayment Content C%. How these components are allowed or forced to behave by the particular mortgage repayments model determines how the total repayments behave at any given time and how safe from arrears they will be.</p><p> </p><p>If you stick close to the middle ground in mortgage sizes (income multiples) you can probably lend around 3.5 years’ income repayable over 25 years in the UK. In the USA they go for 30 years but that is a bit more risky in my opinion, so I stick with 25 years.</p><p> </p><p>The rate of easement – the Payments Depreciation, D% p.a. - can then be around 4% p.a. or a fraction more if the third element in the Safe Entry Cost Equation, I%, is currently low – below what I think is the average, or median, level.</p><p> </p><p>Now in order to support the kind of property values that are around today, many lenders are offering mortgages as much as five times income. QE is being used to keep the interest rate low for this reason – to support the collateral security of lenders and to boost the confidence of borrowers and home owners. It is claimed that this helps with economic recovery, which in the short term is true. But there is no clear plan about what to do when QE ceases and interest rates have to rise.</p><p> </p><p>My equations and spreadsheets shows that this support for property values can be done by lending the same amount, around five times income, even as interest rates are rising towards the median rate of interest of say 7% interest if Payments Depreciation, D% p.a., then falls towards 2% p.a. That is stretching things a bit and is not for the longer term. Some borrowers will get stressed but they will not all crash out at the same time and they may move on before their arrears grow much and their property value may be still safe. And the mortgage money sizes will not actually start rising at these rates. So borrowers may want to opt for this route as interest rates rise.</p><p></p><p>AN INTERVENTION</p><p>But it does mean that if Lenders / Risk Managers are directed to lend this much, then property prices can stay high to protect those assets and balance sheets, whilst incomes do the catching up to reduce that five times income multiple back to the norm of say 3.5 times income, as the economy recovers. This removes one distortion at least - that of low interest rates caused by QE (or any other intervention measures), and both borrowers and bankers will survive the recovery which the current alternative plan using the traditional mortgages, may not do so easily.</p><p> </p><p><b>BORIS – Thank you Edward. I am sure that your full paper on this will be absolutely fascinating. It appears that you have shown that if the risk management is done correctly then property values will stabilise and that going forward to a new era after economic recovery, mortgages will almost always be affordable for almost everyone with an ongoing income.</b></p><p> </p><p>GOVERNMENT BONDS TOO</p><p><b>I understand that you wanted to tell us about a similar and very costly misunderstanding involving government debt. You told me that investors in government debt have been reaping very high returns that have cost tax payers huge amounts in terms of value, and that this is largely due to the wealth risk exposure that the fixed interest rate model imposes. Unfortunately we have run out of time, but maybe another time we can go into that.</b></p><p> </p><p>Edward – Yes Boris it is a great shame because if a value-protecting, index-linked bond structure was used, linking the value of bonds to national average incomes, or to GDP even, then that would revolutionise retirement planning. Then, all kinds of other things that are troubling the governments of the world would come right. From the data I have seen it could also save tax payers a great deal of money. Some of the most costly things that both people and an economy can face is insecure wealth and uncertain costs. I can show that the outcome of these instabilities is enlarged business cycles in place of relatively shallow ones, and lots of personal financial problems at every level. I believe that the instability of government debt value also considerably complicates and worsens austerity measures when they have to be applied.</p><p> </p><p><b>BORIS – I understand that you are preparing another paper to illustrate and explain more of all this. Please let us know when and where we can see that. Thank you for being with us today.</b></p><p><b> </b></p><p>Edward – Yes I will and Thank You, it has been my pleasure.</p></div>Global Finance and Economy: a Hot Summer Indeedhttps://globalriskcommunity.com/profiles/blogs/global-finance-and-economy-a2011-07-02T20:19:39.000Z2011-07-02T20:19:39.000ZKristi Rohtsaluhttps://globalriskcommunity.com/members/KristiRohtsalu<div><div dir="ltr" style="text-align:left;"><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">Are we seeing ghosts everywhere or is something ugly going on indeed? Take a look to some of the current debates, concerns and questions about Greece, US and China, and imagine how it all could play out.</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><b>Greece: Austerity measures and new bailout package</b></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">Last week, Greece’s Prime Minister George Papandreou won approval to his 78 billion-euro package of budget cuts and asset sales, key to receive the fifth instalment of 110 billion-euro bailout in 2010. This despite of the boiling public anger and an <a href="http://www.un.org/apps/news/story.asp?NewsID=38901&Cr=austerity&Cr1">UN expert’s warning</a> that these austerity measures could violate human rights. Yet the country’s overall debt situation is not likely to improve as a result: a second rescue package for Greece of about the similar magnitude as the initial 110 billion euro bailout is already being considered.</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">Several questions and concerns arise, e.g.:</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* How long this game around Greece can continue? When and how will it end?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* Will or should the second bailout be classified as selective default by rating agencies given that private-sector is in fact forced to participate via a “voluntary” rollover of maturing Greece’s debt by banks?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* What risks the banks are taking when rolling over Greece’s debts? Do they have better alternatives? What are the implications to banks’ lending to private sector?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><b>US: Debt ceiling and QE3</b></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">As also pointed out by IMF in its <a href="http://www.imf.org/external/np/ms/2011/062011a.htm">Concluding Statement of the 2011 Article IV Mission to The United States of America</a> (20 June 2011), US public debt is on an unsustainable trajectory. In order to avoid default, the federal debt ceiling has to be raised once again (according to IMF, this has already happened more than 70 times over the past few decades). Meanwhile real economy is picking up very slowly if at all: housing market remains weak, unemployment stays high, credit supply conditions remain tight etc. To somehow (although temporarily) cope with the situation, <a href="http://money.cnn.com/2011/06/28/news/economy/federal_reserve_purchases/">the Fed is set to buy USD 300bn more Treasuries</a>. Some say, QE3 has already started (see e.g. the post in <a href="http://www.zerohedge.com/article/qe3-has-already-started">Zero Hedge</a>, 31 May 2011).</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">In relation to the above, one could (for example) think about the following:</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* The absurdity of the situation where just lifting up the debt ceiling means a top grade credit rating while not doing it would result in default grade</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* QE1 and QE2 ended up everywhere else than helping US real economy to recover. Where will go QE3?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* Are there any real possibilities for avoiding high inflation later on? Of course, Fed has at least some technical means for mopping up excess liquidity but can this be done given the likely consequences of reducing money supply?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><b>China: All at the same time</b></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">When taking a quick look to the latest news about China, it feels that the blow up is just around the corner. Just consider these headlines and excerpts:</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* <i>“The speed at which China's local governments are taking on debt is "terrifying".”</i> (<a href="http://www.businessinsider.com/china-local-government-debt-2011-6">Business Insider</a>, 28 June 2011)</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* <i>“After years of housing prices gone wild, China’s property bubble is starting to deflate.”</i> (<a href="http://online.wsj.com/article/SB10001424052702304906004576367121835831168.html">Wall Street Journal</a>, 9 June 2011)</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* <i>“And legendary short seller, Jim Chanos, says China’s local government debt is worse than America’s subprime problem.”</i> (<a href="http://www.csmonitor.com/Business/The-Daily-Reckoning/2011/0614/Which-is-worse-China-s-debt-problem-or-ours">The Christian Science Monitor</a>, 14 June 2011)</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* <i>“The official public debt of the central government was only 19% of GDP at the end of 2010. Adding the debts of local governments, the non-performing loans of the banks and other liabilities, such as central-bank bills, the public debt amounts to about 80% of GDP according to Andrew Batson and Janet Zhang of GaveKalDragonomics, a consultancy in Beijing.”</i> (The <a href="http://www.economist.com/node/18775343">Economist</a>, 2 June 2011)</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* <i>“China: new lending sharply down”</i> (<a href="http://blogs.ft.com/beyond-brics/2011/06/13/china-loans-money-supply-growth-drop/#axzz1QwUI3KiE">Financial Times</a>, 13 June 2011)</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* <i>“The yield on Chinese bonds are inverting at an accelerating rate. This does not portend well for the Chinese economy, and this may have negative implications globally.”</i> (<a href="http://www.moneynews.com/Elias/barryelias-china-yuan-dollar/2011/06/24/id/401269#ixzz1QwXE7GgJ">Moneynews.com</a>, 24 June 2011)</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">Based on facts or just guesses, these expectations may very easily be self-fulfilling. According to the logic of finance, the real risks are extremely high too.</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">But that’s not all. China’s large forex reserves are not well diversified either. It is estimated that around two-thirds of the total USD 3.04 trillion is invested in US dollar-denominated assets and that US Treasury bills account for half of these assets. In addition, euro-denominated assets accounted for a large share of forex reserves -- up to 25 percent. (Source: <a href="http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20110606000118&cid=1502&MainCatID=15">Want ChinaTimes, 6 June 2011</a>) What if US rating will be downgraded or Greece will default? Note that if “money game” were fair game, both of these events would have happened already.</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">Among others the above urges us to ask:</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* What are the links between the above and the China’s current monetary policy?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* How China is planning to manage all of these risks and uncertainties at the same time? Which risks are actually manageable and which ones are not?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* What is more likely for China: soft landing and hard landing?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* What is China going to do with its foreign reserves?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">* Should we fear a serious conflict between China and US?</span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;"><br /></span></div><div class="MsoNormal" style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><span style="font-size:small;">The above presents only a fraction of all the current global financial and economic challenges – a bare top of an iceberg. Vote into which topic we should bring the clarity first or add your own: <a href="http://blog.logicoffinance.com/p/propose-topic-vote-and-win.html">vote, support and win!</a> I feel that no matter how well educated and capable central bankers and policy makers may be, we cannot rely on them only. Our own ability to interpret the news is at least as important.</span></div></div></div>