Mining group Xstrata is to resume dividend payments despite reporting a drop in full-year profits.
The world’s top seven industrialised nations vow to cancel Haiti’s debts in the wake of its devastating earthquake.
95% of traders lose money but the paradox is anyone can make money if they get the right education and mindset and here, we will show you how to avoid the losing majority and get in the elite 5% who make the really big gains. First I want to outline a famous experiment which shows anyone can win and it was conducted by trading legend Richard Dennis.
In December, I posted about Ben Bernanke (Bernanke’s Background and Near-Term US Monetary Policy), specifically about how a basic understanding of Bernanke’s academic background and philosophical approach to monetary policy could be useful for predicting the general direction of interest rates, irrespective of prevailing economic conditions. This post, is somewhere between a follow-up and a step back.
By this, I mean that when I last wrote about Bernanke, it was already a foregone conclusion that Bernanke would be approved for a second term as Chairman of the Fed. While his confirmation is still pretty much a given (despite the requisite speechifying by a small but vocal opposition), the fact that it has been so bumpy has caused all of us talking heads to seek higher ground and look afresh at the situation. My intention here, however, is not to look at other potential candidates for Bernanke’s position, as such would be a complete waste of time at this point. Nor do I want to discuss the implications of Bernanke’s eventual confirmation, as I have already done that. Rather, I want to discuss the implications of the delay/complications in his being approved. You would think that there wouldn’t be enough meat here for a substantive analysis, but you would be wrong.
That the confirmation process has been anything but smooth tells us much about both public attitudes towards Bernanke and about the attitudes towards the Fed. With regard to Bernanke, there is now a strong amount of criticism being leveled against him – for fomenting the housing bubble via low rates, lowering rates too quickly, not injecting enough new money into the financial markets. That such criticism is often contradictory is not important. What is important, is that such criticism is increasingly being taken seriously by Bernanke et al, such that the Fed is gradually losing its position as an independent stabilizing force and is instead becoming a highly politicized organization, that may soon be subject to the same checks and balances as other branches of government.
Of course, many commentators (and not a small number of politicians, as evidenced by the progress of Ron Paul’s ‘Audit the Fed’ bill), couldn’t be happier with this turn of events. They argue that the Fed has too much power, and for too long has been able to successfully operate in a public gray area with the power of a government institution but the freedom of a private one. Bernanke – and supporters of the status quo – argue that the Fed needs to be independent so that it can continue to shape monetary policy in line with certain economic objectives, rather than the whims of political parties and competing ideologies.
Many of you are probably indifferent to this issue. But consider that the outcome of this battle (whether the Fed remains independent, or its decisions will become subject to Congressional scrutiny) – of which Bernanke’s confirmation is part of – carries potentially serious implications for currency markets. It is arguable that the Dollar’s safe haven perception at the onset of the credit crisis stemmed in part from actions that the Fed took to stabilize currency markets, in the form of swap lines and liquidity injections. If such decisions could be vetoed by the government, suffice it to say that investors would begin to question whether the Dollar was really the king of currencies that it purports to see.
On the one hand, accountability in any organization is important. On the other hand, skepticism towards the government is currently near an all-time high, and I would venture to guess that most of you wouldn’t want to see the role of auditor filled by the government. While criticism towards the Fed is justified, turning it into a political institution probably isn’t the solution. Abolishing it all together, on the other hand, well, that’s a different story altogether…
An Australian firm signs a bn deal to supply coal to Chinese power stations from a mine to be built in Queensland.
A trading demo is usually never enough for the forex beginner. At least not until a trader understands what he or she is performing.
Kudos to anyone who correctly identifies that reference. But seriously, in light of the proposed changes in forex regulation that have generated a heated response on this blog and elsewhere, I want to offer some insight into a tangential issue: jurisdiction.
Part of the problem with existing forex regulation is not that it’s insufficiently strict, but rather that it’s essentially optional. That’s because retail forex brokerages do not technically need to be registered in order to operate. Moreover, if they do register, they can choose between several organizations, depending on whose regulations most jive with their business models.
The Commodity Futures Trading Commission (CFTC) is probably the most prominent regulatory organization in retail forex, and of which most retail brokers are registered. [It is also the organization that has proposed the rule changes that everyone in forex is currently talking about]. It was only in 2008 that the CFTC was vested with the power to regulate retail forex, but contrary to popular, only its members (rather than all forex brokers) are subject to the sword of its regulation.
The Financial Industry Regulatory Authority (FINRA), the self-regulatory body for securities brokers,meanwhile, is trying to reach its regulatory powers into the arena of retail forex. In coordination with the SEC, it has proposed enhanced regulation for its own member brokers. Under this proposal, the handful of retail forex brokers that are registered with the SEC would be subject to stricter regulation than their counterparts under the control of the CFTC. Brokers registered only with the CFTC, then, would probably enjoy a competitive advantage (specifically the right to offer 10:1 leverage, instead of 4:1, as proposed by the SEC).
Then, there is the National Futures Association (NFA), which operates in association with the CFTC. Not to mention the exchanges, themselves, which impose their own set of rules on brokers. Make no mistake; all of these organizations are fairly vigilant in pursuing violations and in revoking membership for those brokers that really run afoul. The problem is that such does not nothing to stop a broker from simply registering with another regulatory agency instead, and/or not taking advantage of client apathy/laziness by either not registering at all, or even worse, lying about the registration.
In the end, most forex traders probably don’t care which regulatory organization ultimately wins the turf battle over the right to regulate retail forex. Ideally, though only one such organization would have such power, and all brokers would be subject. Given that this issue isn’t likely to be resolved anytime soon, for now, you would be wise to choose a broker that is registered with the CFTC. You can confirm a broker’s membership here.
British Airways says it made a loss of £50m (m) in the three months to December 2009, which was smaller than expected.
If you want to use the futures trading software successfully, you have to be knowledgeable on futures trading. For instance, you have to know what a futures contract is.
