Contextualizing the Risks of Money Markets

Over the years, money market funds have been the safest means of investing some cash for a long term portfolio entry or for those who want a safe place to hold their money. But recent global developments, with the world economy sagging on its knees, experts have started to point out that there are risks in money markets too. This has shed the previous thoughtline that money markets are a risk-free investment avenue. You can no longer hold it for granted that your investment is safe, just because you are in the money markets. In fact, the US Securities and Exchange Commission (SEC) decrees that while investor losses entrusted to money market funds are rare, they are very possible.

However, just as they have become risky to an extent, they have also gained on the rate of interests and profits over the last one decade. Contemporary money markets can triple your initial capital within a few years, and give an impetus to real wealth. Similarly though, just as they are profitable, they can wreck you financially in just a few hours of mishap. It is wise therefore, that before you load your cash into money markets you ensure that you know not only what they are but also how they work. This will facilitate you to know which money market risks to take and which ones are too dear or foolish to take.

Let us begin by understanding what money markets refer to, as a concept. Simply said, money market funds are

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Introduction to The International Monetary Fund

In a way, the IMF has been successful since it was established back in July, 1944. From its genesis, it has consistently worked to foster optimal global monetary cooperation for the general good of member states. The aim has been to secure the financial stability of world nations and facilitate a mutually benefiting international trade among these nations. This in return could boost both poverty reduction measures and promote high employment. With criticism to the institution considered, the International Monetary Fund has helped instigate a sustainable economic growth in most member states, apart from the third world countries which continue to trade in complete dependence of the international market.

The International Monetary Fund (IMF) was a Bretton-Woods brainchild as an international organization that regulated economic policies in member countries that impact on both the exchange rates in the global market and the balance of payments. In playing this role, the International Monetary Fund was charged with the responsibility of stabilizing international exchange rates in a way that could facilitate development in the world economy. Besides that, the IMF became a facility that offered highly leveraged loans to third world countries to aid them in establishing economic independence.

From the original 44 member states, the monetary fund has grown in membership to subscribe 186 nations to date. Kosovo was the last state to gain membership. Most of the nations under the United Nations Charter have

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Short Term and Long Term Comparison of USD / JPY

Long-term trends in the strength of the Japanese yen were witnessed for the longest time in the currency’s history only during the period between 1985 and 1995. The only interruption that occurred was during a stint in 1989. This stability resulted in a very amazing 71% rating of the JPY against the USD

Sometimes though, sudden reversals have to occur which might have rather violent outcomes to investors. These reversals occurred in 1990 and later on in 1998. At the present indications, the USD is heading for an over-bought condition when viewed against the JPY. There is therefore a real danger of a sudden trend reversal. The world ought to be aware of these dangers and should prepare accordingly.

One might say that the further we go in the task of predicting the behavior of the Dollar against the Yen, the closer we get to the point of trend reversal. When the present scenario is closely observed, one can clearly see that things are not as bad as they were in 2002. In 2002, there was a multi-year reversal.

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The EUR / USD Debate in Light of the Current Global Economic Recession

The truth of the matter is that the dollar has become considerably weak in recent times. When the Bush administration plunged the US into war in Iraq, a trade deficit was the most immediate outcome. This weakened the dollar to a large extent. The long-term outcome was that many investors switched from the dollar to the Euro.

Another outcome of a reduced volume of trade in dollars is the increase in the prices of oil. The US economy is reeling from the effects of a biting recession although no negative growth has been reported. This is very true although the first quarter of a negative trend in growth has not yet been witnessed. Technically, there have to be two quarters of negative growth for a recession to be said to exist.

The American mortgage crisis has affected the value of the dollar against the Euro. Many realtors have stopped buying. They are standing by the fence waiting for the next shift in property prices before they can make a purchase. The mortgage in the US has spread its fangs into the UK where several banks have found themselves in liquidity crisis. One of these banks is Northern Bank, a renowned mortgage lender.

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