PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

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Austrian economist Hayek was one of Ronald Reagan’s favorite thinkers. And Reagan, by Hayek’s definition, was an intellectual. Reagan the intellectual? The book Reagan, In His Own Hand (2001) answers that question. This volume, with an illuminating pref­ace by George Shultz, contains 259 essays Reagan wrote in his own hand, mainly scripts for his five-minute, five-day-a-week syndicated radio broad­casts in the late 1970s. They are awe-inspiring in their breadth of subject matter. And they laid out the philosophical framework for his presidency.

It is worth mentioning that The Reagan Dia­ries (2007) have just been published. With the ex­ception of the time Reagan was hospitalized after a failed assassination attempt, he produced a diary entry each day. These were roughly a page in length and written clearly in Reagan’s own hand. Like Reagan, In His Own Hand, The Reagan Dia­ries are Reagan’s own handy work, not material written by his staff.

No wonder Reagan always appeared to be relaxed and in control. He had thought things through. As someone who was a senior economist on the President’s Council of Economic Advisors during 1981-1982, I saw his intellectual acumen firsthand.

One of my early assignments was to analyze the federal government’s landholdings and make recommendations about what to do with them. This was a big job. These lands are vast, covering an area six times that of France.

These so-called public lands represent a huge socialist anomaly in America’s capitalist system. As is the case with all socialist enterprises, they are mismanaged by politicians and bureaucrats dancing to the tunes of narrow interest groups. Indeed, the US nationalized lands represent assets that are worth trillions of dollars, yet they generate negative net cash flows for the government. I presented my recommendations to the annual Public Lands Council meeting in Reno, Nevada in September 1981. The title of my speech: “Privatize Those Lands”

My Reno speech caused a stir. James Watt, the Secretary of Interior, was furious because he wanted to hand over the lands to the state gov­ernments – exchanging one form of socialism for another. Needless to say, I thought I was in deep trouble. Hoping to avoid political immola­tion, I rapidly sent my analysis to the President.

Much to my surprise, Reagan instantly responded, taking my side. Better, he swiftly made my proposals the Administration’s policy.

He went public in his budget message for fiscal year 1983 when he endorsed privatizing public lands: “Some of this property is not _in use and would be of greater value to society if transferred to the private sector. In the next three years we would save $9 billion by shed­ding these unnecessary properties while fully pro­tecting and preserving our national parks, forests, wilderness and scenic areas”

It turned out that Reagan had already thought about this issue. Reagan, In His Own Hand con­tains several essays on the subject that clearly fore­shadowed his policy statement. His 1970s musings on public lands echo the writings of another fine thinker, Adam Smith. While Reagan never cited Smith, their reasoning was similar.

Smith concluded in The Wealth of Nations (1776) that “no two char­acters seem more inconsistent than those of the trader and the sover­eign,” since people are more prodigal with the wealth of others than with their own. In that vein, he estimated that lands owned by the state were only about 25% as productive as comparable private holdings. Smith be­lieved Europe’s great tracts of crown lands to be “a mere waste and loss of country in respect both of produce and population.”

Political opposition stopped Reagan from privatizing. Consequently, US nationalized lands remain ill-used. But Reagan the intellectual had it right long ago.

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MY MONTHLY TRIPS ACROSS THE ROAD OFTEN serve as an opportunity to catch up on the neighborhood gossip. So it was a pleasure to find just leaving the chair the local motorcycle repair shop operator.

After the initial greetings were exchanged, I reverted to my usual form of delving the opinion of the grassroots.

“Who are you going to vote for as governor?” I queried.

“Vote for anyone, it’s always the same, nothing ever changes,” came the depressed response.

“How’s xxx going?” Same response: “What’s the difference, it’s always the same. You can’t hope for much from politicians.”

Bear in mind that this is a man who lives quite comfortably on a thriving business ⁱⁿ which his workshop never seems to be empty.

Our host, the barber, has a couple of local level clip joints, his wife has a developing business trading vegetables. His pride in life is his painstakingly restored 1973 motorcycle, Which he admits has cost him a total of Rp10 million so far.

Life, then, does not seem so bad ⁱⁿ my little neighborhood. While there is visibly high unemployment, no-one seems to go undernour­ished, the boy across the road has the money to buy heavy metal tapes that he can entertain us all with, and the rich (like me) are making in­creasing inroads into the area.

There is the fellow next to the barber who is virtually catatonic ex­cept when he roams out to his front step for a cigarette, but his wife holds down a job and the kids seem to get on fine.

Like most parts of Jakarta, it’s not paradise, but it is a step ahead of some inner city ghettos Where the drug addicts sit like vultures by the side of trash-strewn roads.

It thus came as some surprise to read in the local press that the Indonesian Doctors Association (IDI) believes that every­one around us is in a state of morbid depression.

The reports quoted IDI chairman Fachmi Idris as stat­ing that a survey had found that 94% of the population was suffering from some form of depression.

Incidentally, another survey found that, in Aceh, some 85% of people in post-conflict zones were prone to fear and deep insecurity. The World Bank-sponsored study said 35% of people inter­viewed appeared to be suffering from depression, 10% had symptoms of post-traumatic stress disorder and 39% showed signs of anxiety.

Almost three-quarters said they had been ex­posed to combat, with 28% reporting they had suffered beatings, while 38% had lost a friend or a relative in the conflict.

This I can understand. Living for decades in fear of your life and having to come to terms with the loss of loved ones on a regular basis is undoubtedly stressful.

But 94% of all Indonesians are depressed? Dissatisfied, yes, but de­pressed? The statistic makes little sense, except to suggest in the most simplistic terms that a lot of people are less than happy with the way their lives are going.

Uncertainty

While the crisis brought immeasurable benefits by prompting gov­ernments and economies to enact far better standards of financial probity, it is also true that it left behind a memory of trauma that is hard to erase.

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There are a lot of analysis related to the collapse of financial markets, ranging from U.S. deficit policy, low interest rate policy in the Greenspan era, the greed of political elites, the speculative activities of the company officials, as does Dick Fuld, CEO Lehman Brothers, the high cost of foreign policy programs, manipulation financial report and others. Almost all of the analysis is not dip to the root of most of the problems, so that any drug and recovery strategy that would not be efficacious. Disease crisis and would continue to recur over and over

Kinds of Financial Crisis

Global Financial Crisis can be distinguished to two kinds of crises, the first crisis in capital markets (capital market) and the two crises in financial markets (money market). Both forms of financial market was opened up opportunities to deal with a high level of speculation. Both use the flower as an instrument. They also separate the monetary sector and real sector as the economic system of capitalism taught.

In the conventional capital market, it is possible occurrence of short selling and margin trading. Business activity is very heavy with speculation motive. While in the money market, there are two big mistakes that resulted in the crisis, first, foreign currency transactions motivated speculation, either spot or not, such as forward, options and swaps transaction. Second that the international financial standards is fiat money.

Manajamen experts worldwide, Peter Drucker, referring to the symptoms of an imbalance between the monetary flow and the flow of goods / services as a decopling, the disjuncture between the widespread phenomenon of the flow of money (monetary) to the flow of goods and services.

Imbalance phenomenon was triggered by rampant speculation on the second business financial markets above, namely in the capital market and foreign exchange markets (money market) so that infected the world economy called bubble economy (bubble economy). Called economic bubble, because it looks great physically, but it does not contain nothing but air. When stabbed, he was empty. So, bublle economy is an economy in which large quantities of monetary calculation, but not balanced by the real sector.

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There are several different markets within the Forex exchange system. First, there is the spot market. The spot market deals with trades that are based on the current values of currencies. One person trades a certain amount of currency with another trader in exchange for an equivalent amount of a different foreign currency. Spot trades take two days for settlement.

The other two types of foreign exchange markets are the forward and futures markets. In the forward market, the buyer and seller agree on an exchange rate and a transaction date is set for a specific time in the future, at which point the trade is executed regardless of what the rates are at that time. On the futures market, futures contracts are bought and sold based upon a standard contract size and maturity date. Futures trades take place on public commodities markets.

A currency quote is listed differently from a stock quote. Stocks are quoted in terms of price per share. Currency exchange prices are listed as either a direct quote or an indirect quote. A direct quote uses the domestic currency as the base and the foreign currency as the quote. An indirect quote works the exact opposite way.

So, if you were to view a quote in an American newspaper that said USD/JPY = 75, that would be a direct quote and would mean that $1 of U.S. currency is equal to 75 Japanese yen. If that same quote appeared in that same American newspaper and was listed as JPY/USD = 0.013, that would be an example of an indirect quote.

As with stock prices, currency exchange prices have a bid and ask spread. The current bid is the amount of foreign currency that someone is willing to spend in order to buy $1 U.S. base currency. The ask is the amount of foreign currency that someone is demanding in order to be willing to sell $1 U.S. base currency.

The Forex markets are generally considered to be less volatile than then stock market because within the course of a trading day, it is highly unlikely for the value of a single currency to move all that much. With equities, it is not uncommon for a trader to buy astock, and then a negative press release causes the stock to lose considerable value within a day or even a couple of hours. Sometimes, however, the Forex can be volatile. If there is a significant economic or political development with a certain country, the currency of that country can lose value quickly.

There is a higher degree of liquidity on the currency exchange then there is on the stock exchange because the currency exchange is open 24 hours per day and because the very nature of currency exchange is to bet on when certain currencies will go up or down; so, it is easy to sell your position in a certain currency even when the value of that money is going down. A plummetingstock is more difficult to unload, but not impossible.

If you want to begin currency tranding, try to set aside some money and open an account with an online broker. Start slowly, then as you get the hang of it, work your way up to larger trades and higher volume. However, do not gamble your nest egg oncurrency trading because inexperienced traders can lose everything they have rather quickly in spite of the relative safety of the Forex market.

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Theory #1 – Balance of Payments
There are two segments involved with a country’s balance of payments (BOP), which is a listing of all transactions between one country and others during a particular period of time. When you are discussing BOP it is normally discussed from either a standpoint of capital accounts or current accounts. This is a measure of influx and outgo of a nation’s capital and goods.

Normally, the BOP Theory looks at a country’s current accounts rather than the capital ones. This is used to determine the direction that a currency is heading in based on the trading of tangible goods. When a country runs a large current account with either deficits or surpluses, its monetary exchange rates are said to be out of equilibrium or are unbalanced. Adjustments to the currency rates will need to be made. When a country’s imports outweigh their exports, this is considered a deficit and it normally devalues the currency. Conversely, when exports exceed imports, a surplus exists and the currency will normally ascend in value.

Theory #2 – Interest Rate Parity
This exists when the difference between two country’s interest rates are equal to the difference between forward exchange value versus the spot exchange value. Due to the connection between interest rates and the two aforementioned values, interest rate parity plays an extremely significant role in theForex market.

The mindset is that if there is no difference in the rates of interest between to comparative countries, then there most likely won’t be any opportunities for financial gain. This is due to the fact that risk ceases to exist, therefore thwarting much hope for any monetary gain via investing.

Theory #3 – International Fisher Effect (IFE)
This theory basically states that any expected changes in currency rates between two countries is roughly equal to the differential of nominal interest rates between the two subject countries. The theory suggests thatexchange rates between two nations should fluctuate based on amounts that are most like these nominal interest rates. If the rate is lower in one of the countries compared to the other, than its exchange rate should appreciate against the higher exchange rate — or so the theory would predict.

Theory #4 – Purchasing Power Parity (PPP)
Estimating the amount of adjustments needed between two country’s exchange rates so that these rates equal the purchasing power of the countries is how PPP functions. The theory mandates that the price levels of the two countries in question should be equal once the adjustments to theexchange rates are completed. The theory also is also suggestive of the “law of one price” wherein the pricing of identical goods be the same on a global basis.

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The failure may occur for several reasons, for example, sub-cap, no trading strategy and money management and lack of discipline. The following tips are based on the fact that most people deal with foreign exchange trading.

Basic Knowledge to be a successful Forex Trader

1. Stay out of the market for major news announcements. Currencies are representations of the strength of the economies. Fundamental news, whether economic or unsettling global events will have an affect on currency pairs. It is common for a major news announcement to drive the currency 200 pips. If it is the wrong direction, you can lose all yourmoney depending on your margin leverage.

2. New traders should only trade pairs with smaller spreads, about 4 pips like EUR/USD. Some pairs can be greater than 10 pips. This means that the pair has to move in your favor by 10 pips to become even.

3. Use a practice account to get used to placing orders and for longer term trading practice, not for short term trading. Short term trading will not be the same as live trading because of the difference with fill prices. The actual entry price on live accounts will not be as good as the practice platforms in most cases. Some platforms are worse than others. Market makers have more of an affect on this than ECN brokers.

It is better to do live trading with a mini contract. It is real trading but with a small risk. Each pip move is only worth one dollar.

4. Look seriously into using algorithmic trading, also known as robot-trading, algo, black-box or automated trading. Today over 20% of all forex trading is being done by algorithmic trading. It is estimated that by 2010 the US and EU stocks markets will be trading 50% ofautomated trading.

Hedge funds, pension funds, and other large institutional traders use automated trading. For the small investor, there are some legitimate companies that offer a version of automated trading mostly known as robot trading.

5. This tip is important for traders using a smaller amount of capital. Make sure that your broker has the option to get you out of a trade if your capital funds get wiped out. If not, place your own stop loss where your capital reaches zero. Always keep a stop loss order slightly above that amount to get you out with a safety margin. It is good to place this stop with a little more room in case there is news that making the price volatile.

6. Forex trading is highly leveraged, since low margin deposits normally are required, an extremely high degree of leverage is obtainable in foreign exchange trading. You can get over 200:1 margin leverage but do not go over 100:1 margin. The higher margin will tempt you to enter larger trades and will ultimately use most of your margin on a trade. Once your capital goes down to zero, you are out of the trade with no moremoney left.

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British Prime Minister Gordon Brown has stated that the average household in the UK is wasting around 8 pound sterling per week on unnecessary food bills. Brown’s suggestion that the British public should think more carefully about their food shopping in an attempt to reduce the horrifying effect of the credit crunch seems laughable. With the cost of oil soaring and the cost of living up by a reported 9.5 per cent, it seems like a drop in the ocean to have two sausages for dinner instead of three

The key issues that are increasing the risk of a global recession have been the agricultural price rises of 40 per cent as well as the oil prices doubling to almost 150 dollars a barrel. As the world struggles to come to terms with economic uncertainty, it becomes clearer that even with the new supplies of oil reported in Iraq we must continue to search for and develop alternative fuels.

U.S. energy secretary, Samuel Bodman, stated the country’s intention when he admitted that industrialised nations will have to aggressively promote ‘investment in renewable energy and other alternative energies technologies.’ The nations that are represented at the G8 – USA, Russia, UK, Japan, Italy, France, Germany and Canada are responsible for more than half of the world’s energy consumption.

So the world will look on as the ‘Big 8? meet at the Hokkaido Toyako Summit to discuss global issues including environment and climate change, African development and peacebuilding. With so many major problems to tackle and overcome, it makes it even more difficult to listen toGordon Brown and count out your chicken nuggets when you’re preparing your dinner.

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In Thailand’s property market, results have been conservative but quite optimistic compared to those in neighboring countries. In Bangkok in 2007, growth was subdued, with demand growing only slightly. However, analysts have seen the conservatism in the Thai market as a positive thing, as property valuations become more realistic, and investments become more measured and calculated. The Thai market also has mitigating factors at the moment, including transfer fees and the specific business tax being reduced to nil by the new Thai government, to encourage more spending in the area. Tourism is also a factor in the Thai property market, as the country’s geographical location makes it the perfect place for stopover flights which are available at much cheaper rates than their direct counterparts.

Singapore is another country where results of the global credit crunch on property markets are mixed. The market in general is booming, with a recent survey naming it the best country in Asia for property investment. However, REITs have felt the effects of the credit crunch and many are considering mergers. These specialized property investment companies in Asia are traditionally considered the harbingers of the future, with their downturn signaling a depression of the market generally, and their rise showing that a boom is on the way.

India’s property market is one which is expected to gain significantly, on the back of the credit crunch. The huge rise in demand for housing in the region comes on the back of an exploding population. Investors from abroad, whose home countries see increased cost of borrowing due to the credit crunch, are starting to look towards India forinvestment prospects. Analysts Merrill Lynch predict a 700% increase in the value of the Indian property market, as soon as 2015.

Speculation also remains that the credit crunch might come to an end sooner than it was previously thought. Economies naturally strive for balance, and investors from different areas have picked up the slack in Western property markets in recent months.

Earlier this year, one of the signs that the market may be reversing somewhat came when commercial real estate in a number of Asian markets, which had been heading consistently downwards, showed signs of reversal. This was mirrored in the UK and US markets. Also, in the US, regional banks and smaller lending institutions have started to pick up the slack from the major banks, and are now offering credit to those that have the ability to repay, but are not able to get credit at major institutions.

The global credit crunch has spelled bad news for some, but not all, and it seems that it may finally be starting to correct itself.

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Factor #1 – Economic Growth

Normally, the stronger a country’s economy is, the greater the possibility that its central banks will raise interest rates in order to arrest inflationary growth. The higher those interest rates go, the greater the participation by investors in that country’s financial marketplaces. When you see increasing numbers of investors participating in that particular country’s markets, demands for that currency increases in coincidental fashion. Greater demand equals an increase in the currency’s exchange rate.

Factor #2 – Geo-Politics

Nothing deters a person from looking at the business section in the local tabloids more than boring economic statistics and dull accounting numbers. Well, to offset this disdain, you’ll be happy to know that the currency exchange market is the only one of the global financial markets that can be successfully traded by virtue of political as well as economic news. Remember that currencies are representative of countries rather than companies. Any disturbance to the political landscape will oftentimes affect the direction in which the exchange rate moves.

Factor #3 – Interest Rates

The value of a country’s currency increases coincidentally with a rise in interest rates. The increased value of the currency reflects what is called capital appreciation, and this consequently affords the investor the opportunity to profit. Every currency rate comes packaged with an interest rate attached. Interest income is generated in one of the following two ways:

1. buy currencies from countries with high-interest rates
2. finance these purchases with currency from countries with low-interest rates

Factor #4 – Mergers and Acquisitions

This is considered the least important of the five factors when it comes to predicting the direction that a currency rate will travel in. However, it is oftentimes the most powerful force where near-term currency moves are considered. Mergers and acquisitions occur when a company from one economic region wants to purchase a corporation in another country. The wise investor will keep on top of this sort of activity in that it helps to predict short-term movements in theForex market.

Factor #5 – Trade and Capital Flows

Before ever making a final prediction regarding the movement (or trend) of a particular currency you should determine whether or not the currency is dependent on its country’s capital or trade flow. Capital flow refers to the amount of investment a country receives from international sources. Trade flow is the income resulting from trade. Some countries can be very dependent their capital flow, while other countries are extremely sensitive to trade flows.

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