The Coming Storm!

So the world is beginning to think that it is all over and done with, that the financial crisis of 2008/9, which conjured up that of the 1930’s is waning and growth will soon return to the land. And for a while, I was thinking the same thing – and beginning to scare myself into believing what the politicians and biased TV pundits (analysts) have been saying. But not anymore.

Rumor has it that we all should be on the lookout for something that I warned about several months back – and the rumors are coming out of the Federal Reserve in the US and Bank of England as well.

It seems as if much work is being done (behind the scenes so as not to cause an alarm), to stave off a commercial real-estate meltdown, which resulted from the drop in property prices coupled with lack of capital and consumer spending.

Their efforts could quite possibly be thwarted by a large spike in foreclosure rates in the US and England. Many of these properties had mortgages on them that were a part of the Wall Street derivatives market – the same sort of investment tool that many credit with causing this crisis to begin with, but on a much grander scale.

According to the Wall Street Journal, $700 Billion worth of these commercial mortgage backed securities are in serious trouble – and a collapse of them would cost close to five times that number to manage.

The effect that this would have on Forex trading is profound as just as the economy seems to have recovered from the tsunami, the aftershock comes and sets back all that has been done.

The US Dollar and British Pound are very vulnerable, especially since they have spent so much time and effort playing down the amount of damage being done – while all along the crack was actually getting wider and spreading.

Not only could a meltdown in this sector, which is inching closer to reality, harm the economies – it will adversely affect the currencies in the Forex market, as governments spend more money they do not have to fix it.

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Global Recession - Is it really Over?

The Central Bankers of the world met this past weekend in Jackson Hole, Wyoming. Known for hoards of Deer, Elk, hunters and hamburgers, this relatively small frontier town became the center of the financial world for a few days – and will be widely remembered from this day forth as the place in which the global recession was officially declared over.

Just don’t tell those 14% of industrialized workers who are without work, don’t tell those farmers who are selling items at 2/3rds less than what they were last year because of trade restrictions, and don’t tell the Central Bankers themselves, because in the end – the meeting and declaration was more politically motivated than factually motivated.

Jean-Claude Trichet, the EU Central Bank President, gave a speech that can be defined as optimistic, or if you are one of those protagonists, you could have derived a negative message from him.

Ben Bernanke who heads up the US federal reserve was chipper and growth focused in his remarks – notwithstanding the actual numbers, he used words like “I feel” and “in my opinion” to describe the economic recovery – terms usually reserved for politicians and not numbers oriented Central Bankers. Good for him though as President Obama rewarded him with another term as Fed chairman for his efforts.

The Forex marketplace this week has been slow and light, most everyone is off in some vacation spot, perhaps hunting Deer and Elk or eating burgers. Forex traders have not been moving the markets these past few days – and neither has any news for the most part.

The summer is winding down, quarter 4 is around the corner and the world is anxiously awaiting something to happen. In Europe, Germany’s growth and true recession exit is marred by the other EU countries that are still suffering double digit unemployment and negative growth.

In the US everyone, including the politicians and policy makers are on vacation, trying to regroup and figure out how to spend another Trillion Dollars that they don’t have on a healthcare package. And in China, they are selling their Dollars (shhhhhh).

In a world in which the lines between fact and political fiction, it is difficult to pin just where this economy is going. Yes there is some signs that things are getting better, but there also so many signs that there is bad news on the horizon.

In the past 3 months alone, 650 banks have closed in the EU and US – the pains are still there from last year. Unemployment numbers are still rising – and the politicians warn us this is going to happen for a while longer.

But something is happening, we are reaching a critical point in which something will happen. My belief is that it will not be good, but it can turn out to be positive – the haze of summer is upon us and Forex traders and online Forex bloggers like me are looking for a break in the air – a little clarity – and we are not getting it from those who are charged with honesty and truthfulness.

Keep your eyes open – next week will be a good one for numbers. For this week, enjoy the quiet, it is usually like this before the storm.

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