User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday February 9, 2009 - 15:57:32 GMT
FX Solutions - www.fxsol.com

Share This Story:
| | Email

Take My Credit Card, Please

Market Directions   February 09, 2008


In the past year leverage has been one of the most overused terms in explaining the causes and ramifications of the economic crisis. It has been applied specially to the gearing of investment banks and hedge funds, now supposedly cured of their addiction to leverage.  Excessive leverage has also been blamed for the inhibition of commercial     bank lending by the billions of dollars of devalued asset-backed securities on their balance sheets.   Less attention has been paid to the equally important consumer side of the leverage leger.

It has been a general presumption that the blame and the cure for restricted lending lies with the banks. Once the impaired securities are removed from their books banks will be able to resume their normal business role, lending to consumers and businesses, creating money through their loans and letting the populace regain its debt fueled purchasing habits. 

Purged of bad assets banks could again extend credit to businesses and consumers who would invest and spend and return the economy to robust growth.  The essential credit function of banks is unchanged though perhaps subject to stricter standards than in the bubble years.  The real question is not whether the banks will lend when their books are clear, they will, but will Americans borrow?  Are the consumers’ free spending ways just waiting for the resumption of credit?

Has the economic crisis wrought a permanent change in consumer attitudes?  Will the old consumer complacency towards consumption and debt resume when the Federal stimulus check start arriving or job creation begins again? Or has this crisis changed the US economy by changing the outlook of the US consumer?

Long term changes to consumer attitudes are difficult to track but there is some indication in retail sales and in consumer credit that this crisis has had an earlier and deeper effect on spending and consumer outlook than usually realized.

Consumer credit has been contracting since mid last year.  Consumers have been deleveraging, paying down credit lines instead of spending.  In December consumer credit fell $6.6 billion.  The majority of that reduction, $6.3 billon, was to revolving credit, essentially credit cards and lines of credit that can be utilized at the discretion of the borrower or consumer. 

Nominal retail sales have been negative only since July last year, except for February they were positive in the first half of 2008. It seemed that consumers had continued to spend freely despite the long running housing crisis and the steep fall in job creation almost until the banking crisis struck in September and October. Such apparent resilience in the face of an economy that had worsened steadily throughout the year might bode well for a return to normal spending once the extraordinary restraints of the credit crisis are removed.

However if one examines real retail sales, corrected for the effect of rising and falling prices they tell a much less optimistic story.  Real sales were static in the first half of 2008; the three monthly rises of 0.2% in March, April and May were negated by contractions of 0.5% in February and 0.8% in June when the current string of negative months began.  In fact the negative monthly numbers are unbroken from August 2007 with the three exceptions above and a flat January 2008.  This is a much more cautious consumer than generally depicted. Bank credit has not been restricted since the late summer of 2007, that crunch started in earnest last fall, but the fall in real retail sales began a year earlier.

If and when bank lending is no longer contained by balance sheet problems and credit begins to flow again, then those people who can afford new cars and homes but have been unable to find credit will purchase.  These borrowers will have to meet the new stricter standards that banks have instituted.  These standards must necessarily reduce the number of eligible borrowers for all types of credit.

The lax mortgage standards of the housing boom contributed much to the housing bubble by granting mortgage credit to folks who had little or no real chance of honoring the terms of the contract. That group of purchasers is now shut out of the market.   The pool of potential home buyers, to take just one market, has been substantially reduced.  What percentage this group was of the total pool of potential home buyers is difficult to tell.  But what is certain is that all types of consumer credit now have much stricter standards.  Consumer credit cannot return to pre-crash levels because the pool of eligible borrowers is now smaller.  If consumer credit is now permanently tighter, consumer spending will be lower for the foreseeable future. 

But the reduction in eligible borrowers is not the main factor depressing consumer spending. 

Fear of unemployment is a much heavier burden for consumers. But even the stunning job losses in the fourth quarter are not the whole story for consumer planning. The unusual and desperate circumstances of the credit freeze last fall, the failure of Lehman and disappearance of every major US investment bank, the national election, the gargantuan fiscal stimulus and President Obama’s apocalyptic rhetoric make for an uneasy future even for the most determined optimists.

The recovery scenario for the US economy has consumer spending in its primary and profligate place. That reliably cheerful consumer is likely to have disappeared in the financial crisis as surely as Lehman Brothers and Bear Stearns.



Joseph Trevisani
FX Solutions, LLC
Chief Market Analyst

Joe@fxsol.com

2008 - FX Solutions, LLC

Privacy Policy | Regulation | Contact Us | Site Map

 

IMPORTANT NOTICE: These comments are for information purposes only. Past results are not necessarily indicative of future results. FX Solutions, LLC believes that customers should be aware of the risks associated with over-the-counter, spot Forex. Forex trading is highly speculative in nature which can mean currency prices may become extremely volatile. Forex trading is highly leveraged, since low margin deposits normally are required, an extremely high degree of leverage is obtainable in foreign exchange trading. A relatively small market movement will have a proportionately larger impact on the funds you have deposited. You may sustain a total loss of your funds. Since the possibility of losing your entire cash balance does exist, speculation in the Forex market should only be conducted with risk capital you can afford to lose which will not dramatically impact your lifestyle.

To the best of our ability, FX Solutions believes the information contained herein is accurate and true. We reserve the right to make corrections and/or update the material when deemed necessary. Therefore, FX Solutions assumes no responsibility for errors, inaccuracies or omissions in these materials.

Distributed by: FX Solutions, LLC., Saddle River Executive Centre, One Route 17 South, Suite 260, Saddle River, NJ 07458

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 18 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Wed 18 Oct
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales

Forex Trading Outlook


Trading Opportunities


  • POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.

  • POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.



  • POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.

  • POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.



  • POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.


  • POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.



John M. Bland, MBA
co-founding Partner, Global-View.com

EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105