Daily Investment Tips

Prof Steve Keen is a reknowned predictor and forecaster of economy. Steve Keen economic predictions and forecast are based on analysis of increases and falls in debt. He believes the up and down in debt is the driver of the economic cycle.

So, pay attention to debt data and you might see where the economy is heading.

Prof Keen argues that the cycle of growing debt always feeds into rising asset prices as the “euphoria economy” takes over. “The final stage is the emergence of “Ponzi financiers” who invest purely on the basis of rising prices.

“They do not have the cash flow to service their debts. When the cycle turns, they are bankrupt at once and are the first to go.”

You can follow his predictions at steve keen blog.

Prof Keen, of the University of Western Sydney, is author of the best-selling book, ‘Debunking Economics’.

written by Constantine Njeru \\ tags: Asset Prices, Best Selling Book, Debt Data, Debts, Economic Cycle, Economic Forecast, Economic Prediction, Economic Predictions, Economics, Economy, Euphoria, Financiers, Forecaster, University Of Western Sydney

I was reading a L.A times article, Russian living in droves. Reason for departure are, low wages and some can’t standing seeing the face of Vladimir Putin (he is returning to Russia President in 2012) on TV for the next 12 years. Such stories are worrying because when a country looses it’s working population the economy will eventually suffer. Even more worrying is the politicians in Russia don’t give a foot: To them the more the educated leave, the more the opposition weakens.

China Vs Russia In the Future

I love web articles but I love reader comments more. A reader left a thought provoking comment on this issue.

Let me get this straight. Russia is the largest country in the world and extends eleven time zones. It has about 140 million people and that population is declining and the Russian economy is flat at best.

Next door China has over one billion people, a growing economy and needs many of the natural resources that Russia has.

Fifty years ago, a situation like that would have brought war.

I’m not predicting war between Russia and China but it is not too far fetched to think that China might some day want to purchase part of Russia. A corrupt and weakened government in Russia just might go for it to fix short-term problems.

written by Constantine Njeru \\ tags: China, Chinese Economy, L A Times, Largest Country In The World, Natural Resources, Population, Russia, Russian Economy, Vladimir Putin, Wages

US News magazine had an article, 10 industries that will hire most in 2011. According to the article, the following industries will hire most as economic growth picks up. The following industries are tipped to benefit most from 2011 economic growth.

The ranking was based on which industries are hiring most in 2011. Which is a good indicator of industries that are growing.

Top Ten Growth Industries / sectors 2011

1. Office staffing.
2. Tourism
3. Education
4. Restaurants
5. Car dealership
6. Doctors
7. Home building
8. Warehouse clubs & supercentres
9. Nursing homes and elderly services
10. Supermarket and grocery stores.

written by Constantine Njeru \\ tags: Amp, Car Dealership, Doctors, Economic Growth, Elderly Services, Grocery Stores, Growth Industries, News Magazine, Nursing Homes, Restaurants, Sectors, Supermarket, Top News, Tourism Education, Warehouse Clubs

In the book Age of Turbulence by Allan Greenspan. The former Fed Chief made some interesting economic predictions of US economy and Chinese economy.

The rise of Chinese wages.

The rural urban migration of Chinese workers from farms into factories, will slow, leading to stronger wage pressures and prices, he says. This is already happening as we have seen Foxconn the largest factory in China increase wages of its factory workers.

American Economy and Inflation

The impact of rise in Chinese wages will impact on the US economy. High prices of Chinese goods coming into the US will cause inflation.

written by Constantine Njeru \\ tags: Allan Greenspan, American Economy, China, Chinese Economy, Chinese Goods, Chinese Workers, Economic Predictions, Factories, Fed Chief, Inflation, Turbulence, Urban Migration, Wage Pressures, Wages

Yahoo finance have an interesting interview with Michael Pento, senior market strategist at Delta Global Advisors. The man has come up with some neat mathematical calculations on why Americas’ debt is a disaster waiting to happen.

I have always thought uncle Sam is too big to fail but after reading Michael Pento interview the US could be another Greece tragedy or may be, another Argentina.

Using Treasury Department’s recent U.S debt estimates that showed total U.S. debt will top $13.6 trillion this year and rise to 102% of GDP by 2015. Moreover, the publicly traded debt (debt excluding intra-governmental obligations) will rise to $14 trillion by 2015, up from “just” $7.5 trillion in 2009.

Mr Pento then calculates, At $14 trillion, the interest payments on the public debt will total about $1 trillion in 2015, he continues; even assuming solid growth and low inflation, that would equal about 30% of total government revenue. “What do you think that does to our bond market?,” Pento wonders. “It leads to a dollar crisis and a bond market crisis. That’s why gold refuses to go down. ”

If Pento is right then expect the yield on US treasuries to rise. Investors in bonds could see the value of the bonds fall.

Read the rest at the Source Yahoo Finance

written by Constantine Njeru \\ tags: Bond Market, Bonds, Debt Crisis, Dollar Crisis, Gdp, Global Advisors, Government Revenue, Governmental Obligations, Inflation, Interest Payments, Market Crisis, Market Strategist, Mathematical Calculations, Michael Pento, Public Debt, Treasuries, Treasury Department, Trillion, Uncle Sam, Yahoo Finance

The price of Gold futures continue to shoot over the roof. One driver of the price is the recent gold purchases by India Central bank from the IMF.

The central bank of India has purchased 200 metric tonns of gold from IMF.

According to this economics time article.

India is spreading its assets which are said to be currently over-weighted with foreign currency, mainly in the form of sovereign US Treasury bonds. In other words, it is a hedge against a falling dollar.

India is the world’s largest private gold consumer, but the government’s holding of gold as an asset is modest. Even so, the latest purchase puts it at Number 10 among the list of top 10 gold-holders in the world.

Of India’s current foreign exchange reserves of nearly $285 billion, foreign currency assets account for more than 90% ($268.3 billion), followed by gold ($10.3 billion), IMF’s Special Drawing Rights ($5.2 billion) and a reserve position in the IMF of $1.59 billion.

While India’s current gold holdings, accounting for just 3.7% of assets, are said to be historically low, buying 200 tons in addition to the 358 tons it already holds is expected to bump up the gold reserves to more than 6%.

As India, China and Brazil buy gold it means more Dollars sales. The dollar may continue sliding downward.

written by Constantine Njeru \\ tags: Bank Of India, Brazil, Buy Gold, Central Bank Of India, Currency Assets, Foreign Currency, Foreign Exchange Reserves, Gold Futures, Gold Holdings, Gold Reserves, Imf, India Central, India China, Private Gold, Reserve Position, Sovereign, Special Drawing Rights, Time Article, Tonns, Us Treasury Bonds

Phil Donahue was interviewing free market economist Milton Friedman and wanted to know if Friedman had ever had a moment of doubt about “capitalism and whether greed’s a good idea to run on?” Friedman was quick in response:

“…is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear: that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”

Donahue then countered saying that capitalism rewards the ability to manipulate the system and not virtue. Friedman was having none of it:

“And what does reward virtue? You think the communist commissar rewards virtue? …Do you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self-interest is nobler somehow than economic self-interest? …Just tell me where in the world you find these angels who are going to organize society for us?”

written by Constantine Njeru \\ tags: American Presidents, Appointees, Automobile Industry, Bureaucrat, Capitalism, Commissar, Economist Milton Friedman, Free Enterprise System, Government Bureaus, Greed, Henry Ford, Market Economist, Michael Friedman, Milton Friedman, Moment Of Doubt, Ordinary People, Phil Donahue, Political Clout, Productive Activities, Self Interest