Are Self-Driving Cars a Risk? By Jason Galanis

By Jason Galanis

Self-driving cars are now a reality and I, Jason Galanis, wonder what a colossal impact the may have on our lives here very shortly.

In a future where cars drive us, individuals read daily papers again and ladies in red lipstick drive colossal SUVs, what will spare us from ourselves? Are self driving cars a risk or are they something that can actually help us through what we need them to do, or are we going to be better off if we can drive the cars on our own? What will the insurance for these look like, and will you need special coverage in order to get what you need in order to stay safe in a self-driving vehicle?

Jason Galanis

Jason Galanis: “How much impact will self-driving cars have on our daily lives in the next 2 years?”

There are, of course, a number of companies that are out there that are starting to ask these questions as well. One of the most amusing things that has come out of this is a commercial from a Dutch insurance company, where they ask “what will save us from ourselves?” once the self driving car becomes the standard instead of an oddity. You’ll have to check out the commercial to see exactly how witty they were with the whole thing, but it’s something that we all need to think about when it comes to this whole movement in technology.

It does raise the inquiry of how human drivers will respond to these cars. If they have been designed to drive safely, can humans interfere with that at all or are you stuck at the mercy of the self driving vehicle while you are in it? All the more essentially, by what means will they affect protection claims and premiums? If, for some reason, you ended up in an accident with another vehicle while in the self-driving vehicle, would the maker have the capacity to influence information against you in court, faulting everything for human error instead of the way that the car was made? All of these things are important to think about.

WTO’s Only Success in Twenty Years… Fails by Jason Galanis

By Jason Galanis

The World Trade Organization may have failed for the last time. I, Jason Galanis, believe that major political powers will not continue to deal with this level of failure.

Founded in 1995 with the goal of liberalizing world trade, the 160-member organization has become a vipers’ nest of divergent interests and thinly-veiled protectionism. The Trade Facilitation Agreement would have been the WTO’s first comprehensive initiative after twenty years of high-minded talk, now it is little more than paper following an Indian veto over concessions on farm subsidies and food stockpiles. The trade regulatory body is without purpose or power, and the United States, at least, is preparing to do business in a post-WTO world.

Jason Galanis

Jason Galanis: “How many more WTO failures will the international community put up with?”

American and European negotiators met in Brussels early this year to set the groundwork for the Trans-Atlantic Trade and Investment Partnership (TTIP), a comprehensive free-trade deal that would create common standards for everything from cars to kitchen tiles between the US and EU. Washington is also negotiating a Trans-Pacific Partnership (TTP) with a dozen countries along the Pacific Rim—just not China, which remains America’s largest trading partner. The US and China have been engaged in tit-for-tat exchange of tariffs and appeals to the WTO “courts” for the last three years, with no result except damaged relations.

Now, in the aftermath of the failed WTO agreement, the US is looking to cut its own trade deal with India on terms favorable to both. The American private sector is loathe to jump into the Indian market largely because of its culture of copyright infringement and lack of respect for intellectual property. By some estimates over 60% of the software running on Indian computers is pirated, and most of that was developed in the US. India, for its part, wants to protect its farmers and keep food prices low with subsidies and stockpiles which the WTO says are illegal under its rules. The make-believe of “global free trade” is over, and the world’s major economies are returning to one-on-one trade agreements that adequately reflect their interests.

Argentina Defaults ahead of a Global Credit Crunch by Jason Galanis

By Jason Galanis

The old adage says that the only sure thing in life is death and taxes. Well, I, Jason Galanis, believe you can also add Argentine defaulting on its debt obligation to that saying. History definitely has a way of repeating itself.

Argentina has failed to pay the interest on over $500 million of bonds, thanks to a US court ruling that the Latin American country must first pay off debt owed to US hedge funds which Argentina defaulted on back in 2001. Argentina has essentially defaulted, becoming the first nation to do so since Greece defaulted in 2012, triggering the Eurozone debt crisis. Standard & Poor’s and Moody’s gave Argentina’s bonds a negative rating on the news, raising the spectre of a run of claims by Argentina’s other creditors eager to get out while they still can.

Jason Galanis

Jason Galanis: “History definitely has a way of repeating itself, especially when it comes to Argentina’s debt woes.”

Now Argentina’s nearly half a billion dollars worth of bonds will be sold at auction, and trigger over a billion dollars worth of credit-default swaps, financial instruments meant to indemnify creditors in the event of a default. The value of the swaps exceeds the value of the debt itself, and Argentina’s finance minister is calling foul on “vicious speculators” seeking to make a profit by destroying Argentina’s credit standing. Argentina’s default could trigger additional claims by other bondholders and wreck its economy.

The Argentinian debt crisis highlights the fact that emerging markets are deeply in hock to US and European bondholders, and as US interest rates look to rise over the next year, the smart money is getting out of the subprime bond markets while the getting is good. The US Federal Reserve’s low interest rates have made it very easy for emerging markets to get hold of dollar-based credit over the last five years, and Argentina’s default may be a case of chickens coming home to roost. There will be more defaults and more credit-default swaps to come as bondholders seek to avoid getting “locked in” to low-interest rate bonds in an increasing interest-rate world. The end of easy credit is bad enough. Bondholders playing rough in order to collect while they can will make the looming credit crunch even worse for emerging markets.

Walls Start Closing In on US Tech Giants in China by Jason Galanis

By Jason Galanis

There is spy war budding between the US and China that is affecting commerce and threatening China’s place as the “factory of the world.” I, Jason Galanis, believe both sides are becoming more and more aggressive by the minute.

Apple and Microsoft have both felt Beijing’s wrath recently. Government officials raided Microsoft’s offices in China in late July, accusing the Redmond-based tech giant of anti-trust violations. It would be funny that a state-run dictatorship like China is accusing Microsoft of running a monopoly—that is, if the raids weren’t so ominous.

Jason Galanis

Jason Galanis: “The China & US trade war continues to evolve among top tech companies.”

At the root of the issue is China’s concern that technologies designed by US firms are being used by American intelligence agencies as backdoors into China’s network fortress. The “Great Firewall” of China censors internet traffic, muzzling critics of the regime and keeping the prying eyes of foreign spies off of much of what passes through Chinese computer networks. But within those walls are hundreds of millions of devices embedded with software that can easily be compromised by the NSA.

China is fighting back against the threat of US-designed devices. In 2012, the Chinese mobile phone manufacturer ZTE admitted to installing a backdoor on Android-based phones allowing anyone with a hardcoded password to seize control of the device.

The Chinese switch-and-router maker Huawei lost a huge chunk of its US market in 2013, following whispers by the NSA that its products were equipped with special backdoors for China’s security services. In June of this year, eBay and Amazon both simultaneously dropped their inventories of the mysterious Star N9500, a Chinese-made smartphone that sold for half the price of an iPhone, and relayed users’ personal data to servers in China, according to German computer security analysts. Just who manufactured the rooted phone was never discovered, but the Star N9500 was probably the brainchild of China’s infamous Ministry of Public Security.

As the European Union and United States seek to streamline trade and homogenize standards for cars and gadgets, China looks to be drifting away, creating it own private technological domain to match its great private internet. There is already a Chinese internet: why not a Chinese operating system and a Chinese smartphone to complete the set and close the country off from American surveillance for good? These are some the questions PSB officials appear to asking lately.

On the other side of the pond, the question is how far will American companies go to appease Beijing’s narrow political interests. The “Made in China” brand has been severely tarnished recently, and users cannot really trust that their Chinese-made gadgets haven’t been tampered with in some way or another. For the moment, at least, major US technology firms are too enamored with the vast Chinese market to take a stand against Beijing interfering with their products, which in the long run could very well cost them market share back at home.

Investing In Gold (Part 2) by Jason Galanis

By Jason Galanis

In the 1st Part of this investing in gold series, I, Jason Galanis, went into some of the merits of investing in gold. However, there is also a darker side.

A changing market and ‘gold standards’ have evolved the gold market. While it used to be relatively straightforward, it’s now a market subject to rising demand, somewhat rising supply and decreasing prices. As they say, the more something enters the market, the lower its prices get to meet demand.

One of the woes of gold investment is dealing with lower than usual prices. And, it also involves the woes of dealing with higher than usual prices. As you can see, the gold market is always changing to meet the demands of investors and speculators.

Recently, the gold market has changed to meet the demands of investors who want to hedge their funds and investments in light of recent events across Europe and Asia. In that context, gold would protect (hedge) those investments and funds from being affected from market depreciation and depletion in light of those events.

Jason Galanis

Jason Galanis: “Despite its appeal, there are many negative aspects of investing in gold.”

The more those investors traded and bought gold, the higher the price rose. As those investors sought ways to hedge their funds and investments, gold’s price rose to meet that demand. In other words, the value of gold rose to accommodate those market demands.

Of course, the price of gold also drops. It’ll probably drop again later this year, after all. Gold prices typically drop when there’s a surplus of gold around. That gold is usually utilized to meet a demand for gold products, especially in countries where gold products are revered. Though, in a world where gold mining is more or less winding down as a resource, gold prices realistically stabilize and don’t rise as much in value during ‘down’ periods.

The volatility of gold as an investment vehicle might not make the precious metal a sound investment choice. Though, if you do just want to reap short term returns, there’s nothing wrong with trying.



Investing in Gold (Part 1) by Jason Galanis

By Jason Galanis

Recently, the investment trend towards commodity diversification has more and more people thinking about investing in gold. However, I, Jason Galanis, believe gold can be an extremely volatile, yet effective tool in one’s investment portfolio.

Most investors select gold as a way of diversifying their risks, especially if market conditions make it so risks are more common. Gold’s even been used to prevent losses or incur profits in market conditions like the aforementioned.

Though, it doesn’t stop many new investors from choosing gold as an investment vehicle. Most of them, however, should understand one thing about gold investing: there’s always a catch.

According to industry experts, there are reasons behind why gold investment has a catch:

  • Gold prices are more volatile than what most beginners expect.
  • Gold prices are often affected by day trading, as performed by central banks and speculators.

Gold prices may rise, but those particular reasons point to gold being a lot more volatile than most people think.

Let’s look at an example. Gold prices are known to get as high as thousands of dollars. At the same time, gold prices can drop down to just hundreds of dollars in just a few months. If you were an investor who had a lot of stake in gold, losing hundreds at a time isn’t really something you want out of an investment like that.

Jason Galanis

Jason Galanis: “Gold can be a critical part of one’s investment portfolio.”

Gold investments are said to ‘shine’ when used as a hedge against losses for assets like real estate and bonds. That’s something you should think about if you’re planning to invest in gold. Most beginner investors, however, probably want to invest in gold for getting a return on their investment. And, that’s fine, too.

Just don’t forget to talk to a financial adviser for advice on what movement to make.

Russia Looks to Renminbi as Dollar Hedge by Jason Galanis

By Jason Galanis

America’s financial sanctions on Russia are driving the country away from the West and into the waiting arms of China. I, Jason Galanis, believe we are playing a dangerous game of geopolitical tug-of-war.

The sanctions began in response to Russia’s annexation of Crimea in April and its ongoing support for separatist rebels in eastern Ukraine. Although the US sanctions are targeted to a narrow group of companies in the oil and gas sector (the state-owned Rosneft and the independent Novatek) and those linked personally to Vladimir Putin, the ripple effects are now being felt throughout the Russian economy. Russian stocks have tumbled and the ruble is now the worst performer against the dollar of all the major currencies. Russian companies are gearing up to switch their contracts to the renminbi and other Asian currencies to hedge against getting pushed out of the dollar market by US sanctions and a falling exchange rate.

Jason Galanis

Jason Galanis: “The US and Russia are playing a dangerous game of geopolitical tug-of-war.”

Russia is trying to ease Western investors’ fears and looking to the east for growth in foreign investment. Russia’s sovereign wealth fund, the Russian Direct Investment Fund, recently launched a Chinese version of its website, part of an effort to diversify Russia’s sources of foreign direct investment. Russian billionaires and corporate CEOs are looking into Chinese accounts and investments settled in renminbi, according to the head of Deutsche Bank in Russia. Russia is also working on a national payments system to reduce its reliance on American companies like Visa and Mastercard, which Moscow recently threatened with billions in fines if they refused to process payments for US-sanctioned companies and individuals. The tit-for-tat exchange of sanctions and threats between America and Russia has caused some leading Russian politicians to call for a complete “de-dollarization” of the Russian economy, and many Russian companies are re-negotiating their contracts to include provisions allowing payments in China’s renminbi. In the long-term, the fracas will no doubt add fuel to Russian calls for a basket currency—which began at the first BRICS summit in 2009—to replace the dollar as the world’s dominant medium of exchange.

Fed Rate Increase Imminent? By Jason Galanis

The Federal Reserve is signaling a potential rate increase within the next few months with Fed Chairwoman Janet Yellen pulling out all the metrics to convince the markets and the country that it’s getting time to increase the cost of money. I, Jason Galanis, am curious to see what effect this has on the market.

Yellen is pointing to improvement in the jobs market (US unemployment fell 1.4% over the last year, from 7.5 to 6.1%), which came “more quickly than expected,” but is also warning of asset bubbles in biotech and social media stocks. Yellen seems to be suffering from a case of analytic myopia: instead of focusing on stock prices, unemployment and inflation at home, she should be looking at the enormous dollar bubble in emerging markets.

Jason Galanis

Jason Galanis: “Is a rate hike imminent?”

The Fed is using stock prices to gauge whether to increase rates because traditional inflation indicators are giving nothing but “noise,” i.e., numbers the Fed doesn’t like to think about. The Fed is a business like any other. It’s job is to ensure high levels of employment and stable inflation rates.

When Yellen called the 1.8% CPI increase “noise,” she was doing what any good chairperson would have done: downplay the bad numbers and focus on something else, like favorable price-equity ratios. Indicators the CPI and even Yellen’s personal favorite, the NAIRU (“non-accelerating inflation rate of unemployment,” which strikes a balance between full employment and price stability), are no longer of any real use to determine Fed policy. Even if they weren’t subject to all kinds of fudging, they simply ignore a huge part of the monetary picture.

According to the International Monetary Fund, the Fed’s low rates have enabled about $500 billion in loans to emerging markets, and even a small rate increase could trigger disastrous capital flight from India, Indonesia, South Africa, Brazil and Turkey. Easy money is a potent drug, and over the last five years the Fed has gotten a good part of the developing world thoroughly addicted.



Record Losses for BofA, Share Price Holds Steady by Jason Galanis

Bank of America posted record losses for the second quarter of 2014 amid ongoing legal battles with regulators and falling mortgage revenues. I, Jason Galanis, hope this does not cause the who banking sector to slide.

Profits were down 43% for the iconic institution, America’s second-largest bank by market capitalization. Although its share price took a minor hit in response to the news, investors aren’t dumping the stock, which is hovering right in the middle of its 52-week average.

Jason Galanis

Jason Galanis: “I hope this does not lead to a banking sector selloff.”

Just this April Bank of America agreed to pay over $10 billion to settle accusations that it misled lenders Fannie Mae and Freddie Mac about the quality of the mortgage-based derivatives it sold them during the run-up to the financial crisis in 2008. That’s on top of the nearly $10 billion Bank of America paid directly to Fannie and Freddie last year to buy back its bad mortgages, money which came straight out of the bank’s reserves. Chief financial officer Bruce Thompson decided to look on the bright side of his company’s woes, saying it had done well to “manage expenses.” Fair enough, but lowballing your attorneys isn’t a growth strategy.

Despite the optimism Bank of America remains saddled with billions’ worth of bad mortgages which it is quietly writing off, and new mortgages aren’t coming onto the books fast enough to replace the old rotten stock. New mortgage production in the first quarter of 2014 was less than half compared to the previous year: down from $25 billion to $10.8 billion. In other words, Bank of America pulled in just enough revenue from new mortgages in the first quarter to settle up with the Department of Justice over its predatory lending practices. So the question is: when will Bank of America get its head above the rising tide of legal fees, settlement costs and bad debt?

How to Jumpstart Your Retirement EARLY by Jason Galanis

Much has been written about how to successfully save for retirement. However, I, Jason Galanis, believe the most important piece of advice is to get your financial world in order EARLY!.

Adult children, specifically those in their 20s, need to learn how to be financially responsible now, instead of waiting for the opportunity in the future. Even if it’s too late, there’s still time for adult children to learn how to become more financially responsible in their 30s.

Becoming financially responsible in your 30s

They say around age 30 is when people approach many life milestones, including marriage, purchasing a new home and possibly having children. In fact, many financial experts assume people in their 30s have a more ‘mature’ outlook on finances, since they should have already learned from their past mistakes.

Jason Galanis

Jason Galanis: “The best decision one can make to ensure future financial success in this rapidly developing financial world is to get started EARLY!”

The truth is that young people aren’t prepared for financial responsibility in their 30s. Thankfully, there are things they can do when they reach that age to become financially responsible:

Finance and marriage in your 30s

More millennial couples talk about finances than older couples, according to a recent study. That means many young couples do care about responsibility and civilly managing their finances in a recovering economy. So, younger couples should talk with each other about their finances to remain ‘on the same page.’

Finance and children in your 30s

Child care expenses can get expensive, almost $10,000 a year on average, for the first few years of their lives. That’s why it’s important for young couples to save and manage their money to ensure their children’s financial priorities are cared for alongside their own.

Finance and real estate in your 30s

Buying a home is probably the largest purchase most people make in their lives. That said, many people don’t realize how much they need to save before taking the plunge. It’s recommended to save as much as 20 percent on a home’s purchase price for its down payment, when the time comes. And, if you can’t buy a home for any circumstance, it’s better to rent.