Commexfx - www.commexfx.com

May 12, 2015

The Financial Aspect of the War on Terror and the Positive Index

There is a firmament that divides modern history, a firmament after which can be found fear and a general political climate of distrust. This firmament is 9/11, 9/11 meaning the 11th of September 2001, a day on which terrorists attacked the world trade center in New York City.

The political implications of this attack was severe, resulting in the launching of a war on terror which has resulted in millions of deaths in the middle east. There have also been severe economic implications resulting from these terrorist attacks, especially after the war on terror began.

The first major impact was the deepening of the recession the America was already going through. This resulted in a dramatic decline of America’s currency, the dollar. The dollar is a major currency, with a majority of international trading being performed using US dollars as the standard currency due to its perceived solidity and stability. Hence, the sudden decline in value of the US dollar resulted in shockwaves travelling throughout the financial world, with many countries that generally conducted trade using the US dollar suffering losses due to the sudden devaluation of their most liquid asset.

The sudden decline of the US dollar affected many other countries currencies as well. This was due to the fact that many countries in Africa and the Middle East had pegged their currency to the dollar, maintaining a ratio of their currency units to a single dollar unit based on the value of the dollar. When the dollar’s value declined, these countries found the value of their own currency declining as well.

Another major financial repercussion of the war on terror was the immense financial burden it placed upon the countries involved. Wars are expensive, especially a war against an enemy as vague as “terrorism”. The amount America alone has spent on this war on terror is a massive two and a half trillion dollars. One could wonder how America was able to afford such a costly war and simultaneously fulfill the financial requirements of its own people, expenditures that are required to maintain its infrastructure. The answer to this question is simple: it couldn’t.

America simply didn’t have the money to pay for both a war on two fronts (Iraq and Afghanistan) and simultaneously pay for the expenses of maintaining its infrastructure, so it did what anybody would do when they want something they can’t afford: it borrowed. The national debt of America numbers in the tens of trillions, so high that America will likely never be able to fully pay off its debts. The economic implications of this debt is dire; America will eventually have a debt that is so high that it will struggle to pay the minimum required installment. The minimum repayment is in itself a farce as it only ends up increasing the overall debt. Once America’s debt goes past this point of no return, the result will invariably be disastrous.

http://www.commexfx.com/the-financial-aspect-of-the-war-on-terror-and-the-positive-index/

May 15, 2015

Working Long Hours and Harder Than Ever Versus the Decrease of Purchasing Power

There was once a time, long ago, when work was all that a man was supposed to do. Workers went home only to sleep, or if they were lucky and slightly higher class, they were able to have fixed timings. Over time, the average work day has decreased, until working from nine in the morning to five in the evening became the standard work day, particularly for middle class employees. However, the middle class has recently been noted to be shrinking. Upward movement has always been a big part of the American dream, and in today’s financial climate, upward movement means long working hours.

It is no longer enough for the middle class employee to put in his eight hours with a lunch break, punching in and out and expecting to be promoted based on his loyalty to his employer. Nowadays, employees are expected to take their work home with them in order to meet deadlines that would otherwise be impossible to achieve within the official work day.

It is fair to say that the official work day is still the old eight hour work day with a one hour lunch break, but the work load of employees has increased to such a point that they are often reduced to eating a quick lunch whilst continuing their work. The reason for this is that companies, in an effort to reduce costs, have begun downsizing, decreasing their workforce in order to save money.

Conversely, the work load of the average company has increased drastically, and this drastically increased work load is being heaped upon a greatly depleted work force, resulting in employees being forced to stay back and increase their work days in order to meet their deadlines. These extra hours are often not paid for, as it is considered the employees duty to finish this work regardless of how long it is making his work day.

Additionally, the money that the average employee earns is worth less and less each year. Inflation results in a decrease in the value of dollar, making things that were once for twenty five cents fifty years ago now cost upwards of two or three dollars. Hence, the value of money can only be really ascertained by examining its purchasing power. Purchasing power is the value of money after adjusting for influence.

For example, if two dollars today are equivalent to twenty five cents fifty years ago, then it can be said that the purchasing power of the currency has remained stable. However, this is not the case. The purchasing power of the American dollar has decreased over the years, even after adjusting for inflation. Commodities and items these days are more expensive than they used to be when purchasing power is examined.

Hence, it is plain to see the lot of the average employee in middle class America. They work more than ever before, and for less money, a combination that is resulting in the destruction of the middle class.

http://www.commexfx.com/working-long-hours-and-harder-than-ever-versus-the-decrease-of-purchasing-power/

May 19, 2015

Online Trading Platforms versus Stock Exchanges

The stock exchange market is one of the most liquid markets in today’s economic dispensation.Trading in shares on these markets is one of the most important activities in both the national and global economy. This is because it is one of the most effective ways through which companies can raise large amounts of capital with minimum liability. It also gives traders the chance to own a piece of these companies, and hence the possibility of earning profits.

For traders, they can decide to use one or both of the available channels to trade in stocks. These are online trading platforms and stock exchanges. In the following paragraphs, the similarities and differences between the two have been expounded in order to arm traders with relevant information on which method to choose.

Charging of Commissions

On this front, the two methods are inherently quite similar. This is because in the traditional stock exchange, the stock brokers will always charge a commission on each and every stock that is traded through them.

The same is true for online trading platforms as well. This is because the online brokers will also charge a commission on the traded stocks. Sometimes this is hidden in the costs. Despite what is usually said, they do not necessarily charge a lower rate than the stock exchanges. These rates vary from one online broker to another and sometimes may be higher than those in traditional stock exchanges.

Capital Gains Tax

Governments usually levy a stamp duty in form of a capital gains tax on any stock that is traded on the stock market.

This means that regardless of the platform, be it stock exchanges or online platforms, the trading of shares will attract this tax.

Level of Competence Required of Traders

Although there is no minimum requirement in terms of trading experience that is needed for traders to participate in any of these markets, it should be a guiding factor in choosing which platform to use.

For greenhorn investors, stock exchanges would be a good idea to start with since the advice of stock brokers as well as their experience will make them more adept at judging markets, and hence enable the investors make the best move.

For more experienced traders, getting into online platforms in addition to the stock exchange would be a good way of diversifying the places they invest their cash or sell their shares.

Availability and Accessibility

The online trading platforms are easily accessible to traders as all they require is a computer and an internet connection. It is also possible to move from one platform to another by just opening a new tab.

On the other hand, one would need to physically move to the stock exchanges, thus costing more in terms of time, energy and money.

Volumes of shares being traded

The two platforms trade relatively the same number of shares in the same region. However, online platforms may offer the traders more variety since there are several of them, each of which offer a wide variety and volume of shares.

http://www.commexfx.com/online-trading-platforms-versus-stock-exchanges/

May 20, 2015

The Forex Industry and the Financial Rating Agencies

The forex industry is one of the largest sectors of global economy with large amounts of money being traded. It also involves a large number of players across many countries. It is therefore important to have independent financial/ credit rating agencies so as to analyze the credit worthiness of the players that are involved in the forex industry.

If you have been seeking information regarding these agencies as well as their role in the global forex industry, then you will find this piece extremely useful as it delves into explaining all the details about them in a very well detailed, concise, and in a way that is easily understandable. Move on to the next paragraphs to learn all these and much more.

The Roles of Financial Rating Agencies

Financial agencies are an integral part of the forex industry. This is because they play a very central role in the market. These agencies perform the following functions:

Credit, Debt and Bond ratings

As their names suggest, this is the main role of the financial rating agencies. They do so by evaluating the debtor’s ability to repay the debt that is lent to them and hence the likelihood of default.

For national governments, the agencies issue a sovereign credit rating. The rating evaluates the creditworthiness of the country by taking into account the current economic conditions as well as the political stability of the given country.

Armed with these ratings, institutional investors are able to qualify as well as quantify the ease of doing business and the investment atmosphere of the country in question.

The agencies also issue the same ratings for individual companies as well as to certain kinds of securities, including preferred stock and corporate bonds. All these ratings can be offered for short term or long term obligations.

Financial Advice

Occasionally, the rating agencies may be called upon by financial institutions and even sometimes non-financial ones such as law firms, to help in the analysis of their metrics. In this scenario, they usually play an advisory role.

Major Financial Rating Agencies

There are several rating agencies in the world, but for a long time now, there have been 3 major financial rating in the world which controls about 95% of the global market share. This section is dedicated to providing an overview of these ‘Big Three’, as they are known.

Standard and Poor’s

This is the oldest, having been established by Henry Varnum Poor in the 1860s in the USA before merging with Standard Statistics (established in 1906) in the early 1940s. It today controls an estimated 40% of the market share.

Moody’s Investors Service

The company as it is known today was established in 1914, even though the founder, John Moody and his associates had been publishing financial statistical reports since the turn of the century. By the 1970s it had cemented its position and today also controls approximately 40% of the market share.

Fitch Ratings

It is dually headquartered in New York and London, having been founded in 1913. It holds a market share of 15% and is credited with formulating the D through AAA system of rating that has become the standard in the industry.

http://www.commexfx.com/the-forex-industry-and-the-financial-rating-agencies/