How has subprime crises in USA erupted a volcano in remaining world?
Basically subprime crises act as a chain reaction resulting in a bigger blast every time its effect is felt on the member of the chain. So as the loans were defaulted in the US by the firms and households, this chain of continuous defaults resulted in increasing number of properties in the hands of banks and as these were handed more and more to these banks the value depreciated in huge values as compared to previously stated values when the private players were banking upon their huge earnings to cash these properties. So continuous withholdings of these assets from households/firms to banks sparked an unwanted downfall in the liquidity in the current state of the market. By liquidity, i mean the cash flows reduced as the mortgaging by the banks increased to innumerable numbers causing a huge fall in the liquid form f money that is cash or bank deposits fell causing a tremendous amount of effect in the current picture of the market situation. Such setbacks acted as a fuel to fire in the whole world economy as major banks set up in USA failed with subprime crises. With many local banks and financial institution banking upon these banks failed and hence resulted in a big phase of recession. This worse phase of recession is felt throughout the whole economy in every single country and the situation can’t be taken under control till the time government interferes with the matter on hand.
Now this government interference can be taken as a phase of development transition of capitalism into socialism phase .Socialism is the ultimate phase of Development .This is mainly because of the fact as world globalises the only force in hand is government interference whenever the world economy suffers from crises . And hence socialism.
So this subprime crisis can mark a possible transition of development phase from Capitalism to Socialism.
Tuesday, September 30, 2008
Monday, September 8, 2008
Commodities Continue Their Late Summer Swoon
Commodities Continue Their Late Summer Swoon
In my last column, I mentioned that most of the commodity sectors have seen selling over the past few weeks, with many falling from multi-year, or all-time highs. And it looks as though that selloff still remains in force for now until something causes it to turn around.
We’ll start with the crude oil first…
Oil Slides Below 200-Day Moving Average… More Downside To Come?
Crude oil futures were trading in the vicinity of $115 a barrel (the October futures contract). Since then, the price has continued to move to the downside and currently sits around $106.50 a barrel. That’s $42 lower than its high, set on July 11. That equates to a dollar value change of $42,000 move on one futures contract.
A few weeks ago, we’d pegged the 200-day moving average area of about $110 a barrel on the daily charts as a level of potential support. But that has now been breached, we could see more downside to come. One thing is sure: You never want to write off this market, as many of the events that had propped it up in the first place are still lurking in the background.
Gas Gets Pounded
The energy sector’s other major player - natural gas - has suffered a relentless downside slump recently. It’s been mashed so much that it’s given up all the gains it made for 2008.
So what next? We may be nearing a final support area, as the charts have become very oversold and the hurricanes rumbling through the Gulf of Mexico are keeping many of the short sellers at bay for now.
The October futures contract has currently lost about 500 points since our last update - with an even lower level seen just a few days before that. That 500-point move equates to a dollar value of $5,000 on one futures contract - and an unbelievable $63,000 move from its high price on July 2.
Whether the hurricanes cause any real damage and disrupt supplies is yet to be seen, but it looks like we could finally be getting to a stable support area for natural gas.
Lastly, let’s take a look at the metals market…
These Metals Have Lost Their Shine
For the most part, silver and gold are still taking their cues from the oil and dollar markets. These physical commodities follow the oil market directionally, but move to the inverse of the dollar.
Right now, silver is by far the weaker of the two metals, as it just can’t seem to muster up a sustained rally for some reason. It continues to trade at the low end of its recent range.
The December futures contract currently trades around $12.10 an ounce, which is well off its last high of $19.70 an ounce on July 15. This equates to a dollar change of $7.60 an ounce, or $38,000 with the silver point multiplier. That’s a big chunk of change in that short period of time.
From a technical perspective, silver is still oversold, but it’s hard to pick a bottom from here. What we can say is that if the dollar starts to sell off and the oil market starts to move back up, we could see a nice rebound for silver.
Gold has also continued to move in a similar pattern to silver: Lower. However, not to the same extent. December gold futures are currently near the $807 an ounce level and holding above its lows of $778 an ounce from a few weeks ago.
Since both metals move in tandem, when one goes down, so does the other. Gold topped out right near $1,000 an ounce back on July 15 and has given up roughly $200 an ounce since then - a $20,000 move in equity.
As with the other commodities, that’s a big swing. And just like silver, gold is oversold and could see just as impressive a bounce if people start to pile in.
Commodities Continue Their Late Summer Swoon
In my last column, I mentioned that most of the commodity sectors have seen selling over the past few weeks, with many falling from multi-year, or all-time highs. And it looks as though that selloff still remains in force for now until something causes it to turn around.
We’ll start with the crude oil first…
Oil Slides Below 200-Day Moving Average… More Downside To Come?
Crude oil futures were trading in the vicinity of $115 a barrel (the October futures contract). Since then, the price has continued to move to the downside and currently sits around $106.50 a barrel. That’s $42 lower than its high, set on July 11. That equates to a dollar value change of $42,000 move on one futures contract.
A few weeks ago, we’d pegged the 200-day moving average area of about $110 a barrel on the daily charts as a level of potential support. But that has now been breached, we could see more downside to come. One thing is sure: You never want to write off this market, as many of the events that had propped it up in the first place are still lurking in the background.
Gas Gets Pounded
The energy sector’s other major player - natural gas - has suffered a relentless downside slump recently. It’s been mashed so much that it’s given up all the gains it made for 2008.
So what next? We may be nearing a final support area, as the charts have become very oversold and the hurricanes rumbling through the Gulf of Mexico are keeping many of the short sellers at bay for now.
The October futures contract has currently lost about 500 points since our last update - with an even lower level seen just a few days before that. That 500-point move equates to a dollar value of $5,000 on one futures contract - and an unbelievable $63,000 move from its high price on July 2.
Whether the hurricanes cause any real damage and disrupt supplies is yet to be seen, but it looks like we could finally be getting to a stable support area for natural gas.
Lastly, let’s take a look at the metals market…
These Metals Have Lost Their Shine
For the most part, silver and gold are still taking their cues from the oil and dollar markets. These physical commodities follow the oil market directionally, but move to the inverse of the dollar.
Right now, silver is by far the weaker of the two metals, as it just can’t seem to muster up a sustained rally for some reason. It continues to trade at the low end of its recent range.
The December futures contract currently trades around $12.10 an ounce, which is well off its last high of $19.70 an ounce on July 15. This equates to a dollar change of $7.60 an ounce, or $38,000 with the silver point multiplier. That’s a big chunk of change in that short period of time.
From a technical perspective, silver is still oversold, but it’s hard to pick a bottom from here. What we can say is that if the dollar starts to sell off and the oil market starts to move back up, we could see a nice rebound for silver.
Gold has also continued to move in a similar pattern to silver: Lower. However, not to the same extent. December gold futures are currently near the $807 an ounce level and holding above its lows of $778 an ounce from a few weeks ago.
Since both metals move in tandem, when one goes down, so does the other. Gold topped out right near $1,000 an ounce back on July 15 and has given up roughly $200 an ounce since then - a $20,000 move in equity.
As with the other commodities, that’s a big swing. And just like silver, gold is oversold and could see just as impressive a bounce if people start to pile in.
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