Financial Communique » investing

Germany was complicit in irrational credit practices of Greece

Viliyana Filipova — Sun, 05 Feb 2012 16:19:41 +0000

A little more than a week the German government proposed “Budget Commissioner” of the euro area to exercise direct control over the budget of Greece. With this proposal, Berlin, Athens asked to give up its sovereignty in the name of financial assistance, to prevent the bankruptcy of our southern neighbor. Although the European Commission (EC) rejected the proposal, it is not sunk into oblivion. Greece can not settle with its creditors, which leads to two outcomes for the country: either declare bankruptcy or to continue negotiations with the private sector, the European Union (EU) and International Monetary Fund (IMF), says the CEO of American company Stratfor Strategic Analysis and reputed political scientist George Friedman. In his agreement with its creditors Greece will consist of three parts: the forgiveness of the debt, additional financial assistance from the EU and IMF agreement to limit government spending and raise taxes so as to avoid future sovereign crises or at least to be paid to the Greek debt. The Germans certainly do not believe the Greeks, as the latter have not met already made commitments to creditors. That lack of confidence led to the proposal for budget control, but it would be okay, if it is a corporation or a private person, says Friedman. Such a request from a nation state, however, is unacceptable according to the analyst. State is based on two premises. The first is that the nation state is unique legitimate community whose members share a common range of values and interests. The second condition is related to the occurrence of the state. Friedman points out that this happens in people’s will and only has the right to determine state action.
“There is no doubt that Greece is a nation and the government in Athens in accordance with the principles of the state is responsible to the Greek people,” wrote Friedman in his analysis. Germany claims that Greece has failed as a country, for which creditors have a moral right and power to suspend the principle of national self-determination. This is a very radical concept and it is important to understand how it came to her, wrote in the analysis of the expert. The reasons he says are two. First Greek democracy, and many other democracies, requires the state to the benefit of people. Politicians in Greece who want to be selected to provide guarantees for those benefits. Hence the pressure for excessive costs. The second reason, according to George Friedman is associated with the status of Germany as the second largest exporter in the world. About 40% of German gross domestic product (GDP) is formed by exports of the country, most of it is for the EU. Therefore Berlin’s interest to increase demand and consumption, otherwise the country would be depressed.

Pepsi will invest 2,5 billion USD in China

Viliyana Filipova — Sat, 22 May 2010 07:57:59 +0000

The soft drinks manufacturer PepsiCo plans to invest 2.5 billion dollars in China over the next three years. The money will be invested in new factories in the country in research and promotional campaigns, reported AFP. These funds are added to the already announced $ 1 billion investment company, which announced in 2008 and are planned to be invested by the end of this year. Speaking of the leadership of the group shows that Pepsi’s investment program reflects confidence in this important, growing market. Manufacturer’s plans include the construction of between 10 and 12 new plants in China, which currently has 27 factories of Pepsi. There are plans to expand the portfolio of products tailored for the local market. Last year the competitive Coca-Cola also announced big plans in China, the company plans to invest $ 2 billion there for three years. The investment is quite big for the company, which recovered from hard drop in sales for the months of financial crisis. This investment should recover the placement in the largest country of the world and is basically required by the high consumption of the soft drinks in Asia.
The financing of the investment will be done by savings of the company management and fixed rate mortgage.

Lack of cash in US funds may brake the future growth

Viliyana Filipova — Wed, 10 Mar 2010 04:44:33 +0000

U.S. mutual funds investing in equities, with the lowest percentage of its assets in cash from 2007 onwards. In January, the share of the cache has fallen to 3.6 percent from 5.7 percent a year earlier, according to the Investment Company Institute. This is the biggest drop of the indicator in the past 18 years. Currently, managers have available funds in the amount of 172 billion dollars. The last time the managers behaved as a small percentage of cash was in September 2007, a month before the broader index S & P 500 to start 57% decline. The index has lost an average of 16% over the last three times, in which managers are beginning to increase their reserves of cash. The reason for this is that the cache is often due to increased sales. In this situation, when reserves have reached the opposite pole, it is assumed that the growth potential has been exhausted. According to the investment company Parnassus Investments growth stock will fall after last year S & P 500 rose by 23%. For the past 12 months did it rose by 67 percent in a remarkable year for U.S. exchanges. “This is not a red semaphore, but it is flashing yellow, which warns that the strongest part of the recovery of the market probably is over,” said Jerome Dodson, managing 3.6 billion dollars for Parnassus Investments. According to him this year S & P 500 will rise by between 6% and 9%. “There is only so much buying power of the market,” he said.
On the other hand, the shares may receive support from money market investors. It currently invested 3.2 billion dollars, part of which can be redirected to the stock market to increase confidence in the economy.