| Large programs of loan are started by the developed countries. The Ministry of Finance of the USA plans to issue bonds in the sum of $1, 5 billion, the
Ministry of Finance of England plans to issue bonds in the sum of $207 billion, and Europe plans to borrow $880 billion. All received money will take
places in the markets of these countries for the purpose of crisis prevention.
Acknowledgement to it is the declared anti-recessionary program of the USA in the amount of $800 billion The American authorities continue to pour in
enormous means in a national economy to inhale a life in the paralysed credit markets. On Tuesday the USA Federal Reserve System has declared that
starts some programs in the total cost 800 billion.
If to speak a simple language all money will go on the repayment of securities which are provided by a hypothecary pool (on this program it is allocated
the basic part of means) and the consumer credits provided with a pool. The money printing press in the USA is started, and the printed dollars are
provided by gold and exchange currency reserves of developing countries.
Against low rates to the USA, placing of money in the market of such volumes can cause inflation splash. I think, the majority of economists are afraid
of growth of inflation and there is a game under construction around inflation. But let’s not forget about last summit G20 which was similar to exchange
of cards for elimination of the world crisis. So, in the total communique it has been defined, that developing countries will sponsor IMF and the World
Bank. But in exchange they will receive what is necessary for them, namely the high prices for oil, metals and other minerals. It is some kind of a
payment of the developed countries in order to access the money of developing countries.
All the above gives the bases to believe this that the prices for the goods, namely for oil, gas and metals, will be at high levels. The second and most
important factor which speaks well for expensive oil prises, is the saturation of economy by US dollars. Flooding of the economy by dollars will
increase liquidity in these markets so will essentially lower market risks and will raise trust of investors. It will lead only to decrease in the
effective interest rate, i.e. value decrease in real cost of loan. Finally all it will lead to inflation growth. But let’s not forget and that all
inflation, or its part, will be exported simply to emerging markets. To begin with it is necessary to comprehend behaviour of the currency market.
The process of strengthening of the American currency is like a rent that has to be paid back to US for high power resources that other countries
enjoyed. We saw the compelled return of US dollars from other countries, for the purpose of covering their own financial holes. It was the compelled
demand for dollars. Lot of assets have been sold, with the subsequent purchase of US dollars.
Now we have different situation. In the financial market of the USA there is money at the expense of anti-recessionary programs and large programs of
loan. Financial holes will be closed at the expense of similar injections, and the part of means will be redistributed in other countries. The USA will
act as the creditor of the requiring countries, primarily for England and Europe where money is simply necessary. All countries are integrated into the
world economy. In any case it will stop process of the compelled refund of the US dollars back into the economy of the USA. All of the above will lead
to the falling US dollar exchange rate against other currencies. It will be caused by an overflow of money from the USA, where US acts as creditor,
whose rates very low, into other countries. And these countries will create a demand for their own currencies which they will pour back into their own
economies. The rate of falling dollar will be same, as well as its growth, as it will be reverse movement of money (from the USA into other countries)
in the same volume. And it will cause the growth of the the commodity market (in particular the oil market, as antipode to US dollar).
Taking into account two important factors mentioned by me, it is possible to draw a courageous conclusion that oil will cost not less that we already
saw. As rate of falling of dollar will be identical to rate of its growth the price for oil can reach with ease a point of $150 for barrel of oil of
mark Brent. Though it is hard to predict a time frame for the above scenario. In hard economic times like these and a credit crunch you might need cash
advance or so called payday loan. Payday Loans are short term loans that have minimal requirements and a very easy to meet.
Helen is a financial advisor and might help you with your questions about short term credit and Payday Loans. |
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