The Federal Reserve erstwhile Chairman, Alan Greenspan has come in for a lot of criticism concerning the recent recession. Critics have spoken against the Fed’s policy of keeping interest rates at all time low for an extended period. They believe that this led to over zealous borrowings, which was completely unsustainable. Borrowers soon began to default on repayments, more and more homes began to come in for foreclosure and the housing markets crashed. [Read more…]
Economy Grows by 3.2% and on the way to Slow and Steady Recovery
The US GDP has posted a 3.2% growth in the first quarter of the year, fuelled by increased consumer spending and business investments. Statistics also show that home purchases went up by 3.6% in the first three months of 2010. [Read more…]
Economy Looking Up Employment Scenario to Improve & Inflation to Fall
There is reason to cheer -reports indicate that many large companies are planning to hire, an indicator that recession is firmly behind us and the economy continues to move in a positive direction. [Read more…]
Housing Begins Its Comeback March Data Shows Improvement
The housing market is finally showing signs of a turn around after a long period of recession. Although other segments of the economy have been steadily improving for a while now, the lack of any significant improvement in housing statistics was rather disconcerting. [Read more…]
Bad Economy Equals Layoff’s So Be Prepared
Companies had to cut down on their staff strength during the economic recession, because of which many Americans faced layoff during this period. The recession is now over and the employment market is picking up. But it is still advisable that you keep yourself prepared for the possibility of a layoff if your company is not doing too well. You do not want to be caught off guard if you are suddenly fired from your job. [Read more…]
Government’s Next Step to Pull U.S Out of the Recession
When Lehman Brothers announced bankruptcy and the economy went into a recession, the Fed did its best to avoid a 1930s like scenario. It pumped a lot of money into the economy to maintain liquidity and help businesses survive.
Now that the economy is recovering, the Fed will have to act in the opposite direction in order to control the surplus money in the system or we’ll have to face a period of high inflation. Several economists have emphasized the need for the Fed to act before it is too late. [Read more…]
Making Up for Loss Income Due to the Economy
Hard times have hit upon everyone since the financial crisis. If you have suffered the severe setback of losing a steady income, you need to take stock of your financial position and look for ways to get out of your problems.
You are probably wondering how you are going to meet your credit card and mortgage payments till you find a new job or another source of income. You may have savings but they will only suffice for a year at the most. The cost of living remains more or less the same and the prices of many products have even risen. You need a plan to manage your money and safely get past these expenses. [Read more…]
Mortgage Debt Payments Fail to Pick Up Despite Economic Recovery
Statistics show that most consumers are choosing to make their credit card payments over their mortgage payments. Even after the recession is well and truly over, this trend has not changed, which could be a worrying sign for the housing market. [Read more…]
Treasury Secretary Speaks on Urgent Financial Matters
Treasury Secretary Timothy F. Geithner recently spoke about some important financial issues on NBC’s Meet the Press. Here are his views on two issues that are likely to be in the news for the next few days.
Financial System Overhaul
Geithner reiterated that America needs some serious financial changes. The Democrats have introduced the financial reform bill, which is likely to ensure that there is a system for preventing future bailouts of financial firms if their failure will hurt the economy. [Read more…]
New Law Changes Flexible Spending Plan
The new healthcare law has brought about some important changes in the flexible spending program. These changes could have a significant impact on your finances.
Flexible spending accounts can be used to keep pre-tax money for certain health care costs. You assess your health care needs and keep some money for the expenses. You can save about one-fifth of the costs in this way by using your pre-tax money. A flexible spending plan allows you to cover a number of health-related costs like over the counter medicines, sunscreens, eyeglasses, dental costs and so on. [Read more…]
Fixed Income Investment Options for Post Retirement Life
Retirement funds and bank accounts, with their falling returns, can no longer guarantee a secure life after retirement. People have become wary of relying on traditional investment options for supporting themselves after what transpired during the financial crisis. An alternative is fixed income investments, which allow you to strike a good balance between risk and return. [Read more…]
Upcoming Bubbles in the Economy
The real estate bubble left a mark on all sectors of the economy when it burst. If economists are to be believed, we are again seeing the formation of some serious market bubbles. Here are some economic bubbles, which I believe could burst in the near future. [Read more…]
Future Bailouts Ruled Out by Senate
The Republicans and the Democrats are at loggerheads over various aspects of the new finance bill. But there is at least one thing that both wings have reached an agreement on. It has been agreed that there should not be any more bailouts of major financial institutions using the taxpayers’ money. [Read more…]
How Rising Interest Rates Will Impact You
The US economy has recovered from the economic recession, but with all the money that has been pumped in by the government, it is now facing the problem of inflation. The Federal Reserve is taking several steps to deal with inflation without touching benchmark interest rates. For example, it has stopped purchasing mortgage-backed securities, which will reduce the rate at which money is entering the economy. [Read more…]
IMF Considers Levy on Banks Based on their Risk to Global Economy
The International Monetary Fund (IMF) has been considering various plans for encouraging a common global response towards economic crises. One of the proposals it is considering is a levy on banks depending on their impact on the global economy. [Read more…]
Strike a Balance between Spending and Saving
There are three kinds of people in this world: excessive spenders, misers, and people who know how to balance their spending. And you don’t want to fall in the first two categories.
An excessive spender is a person who makes extravagant expenses, such as luxury watches, expensive dinners or entertainment expenses, even if he is not rich enough to afford all these. He spends money as soon as he has saved up enough for his next purchase. [Read more…]
How Rising Interest Rates Can Impact You
Interest rates have slowly started picking up and this will have a huge impact on your personal finances. It will increase the costs of your debt while giving you better returns on your savings.
During the economic recession, the Fed pumped in money into the economy. It kept the banks that were struggling because of high risk mortgage loans afloat by giving huge loans. It also made purchases of mortgage backed securities and kept the money supply in the economy at a high level. The economy seems to be on the road towards recovery and most of the banks were saved. [Read more…]
Consumer Spending is Rising Big Increase in Luxury Spending
Most Americans consumers had cut down on spending during recession, but there are clear signs that people are coming out of their shell now and are willing to spend more.
There are many signs of economic recovery as the job market is picking up, industrial output is increasing and retail sales are going up. And the icing on the cake is that consumers are no longer restricting their spending to necessities like food and medical expenses. They are spending on clothes, jewelry, holidays and cars. [Read more…]
Banks Caught Hiding Their Debt Levels from Investors and You
The Wall Street Journal has reported that several large banks hid their risk levels for the last five quarters, according to the statistics from the Federal Reserve Bank of New York.
About 20 banks, including J.P. Morgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc, Citigroup Inc. and Bank of America Corp. hid the actual debt that they had taken for funding trading in securities. They used to temporarily lower their debts at the end of each quarter when banks have to publicly disclose their debt data and then they increased their debt levels again in the next quarter. [Read more…]
Proposal to Make Loan Backed Bonds Transparent and Safer
During the 2008 market crash, a number of investors who had significant sums parked in consumer loan backed bonds found their investments turning bad. Soaring default rates meant that many such bonds failed to generate the returns that the issuers had ‘guaranteed’. The Securities and Exchange Commission has now proposed some new rules, which are aimed at addressing these risks and making such bonds attractive investment instruments once again. [Read more…]
How to Create a Budget for Effective Cost Cutting
If you have dreams of saving enough money to take a world tour or enjoy the perfect, anxiety free retirement, it is essential to have a well thought out budget in place right now.
A budget can help you regulate the amount of money you spend and what you spend it on. Many people find it difficult to stick to a budget because they do not have a clear goal. If you don’t know what you are saving for, there is a good chance that you’ll end up being undisciplined with your money. On the other hand, sometimes the budget can be too austere and you might find it too hard to stick to it. [Read more…]
Get Organized Do Away with the Clutter of Unnecessary Documents
It is for a fact that you are unlikely to need a lot of financial documents that you store dating all the way, since you started managing your own finances. They simply create more clutter in physical and mental space than have any real value or use. [Read more…]
William Dudley Offers Advice on Combating Asset Bubbles
William C. Dudley, President of the Federal Reserve Bank of New York, recently offered some advice on the subject of formation of asset bubbles in the economy and what central banks can do to deal with it. The recent financial crisis highlighted how poor regulation made the financial system vulnerable and led to bubble formation. [Read more…]
Fed Still Cautious About Recovery Predictions
The Federal Reserve is keeping its optimism regarding the future of the American economy under a tight rein for now. At a meeting earlier in the week, debate appears to have taken place on what the Fed policy should be in the near future to improve the current pace of growth, without upsetting the delicate balance which many sectors of the economy have just managed to achieve. [Read more…]
Planning for Changes in Healthcare Laws
The healthcare scenario is going to change significantly because of the reform bill passed by the Obama administration. Health insurance will become compulsory for the majority of the population and failure to get it could lead to a penalty. Though many of the changes are still far away, you should start thinking about how you will adjust to the new system. [Read more…]
How to Get Back on Your Feet After the Recession
The economy has recovered from the recession and is again growing at a good rate. The value of stocks has started rising again and investor interest in stock market is slowly picking up. The government is also retracting some of its liberal policies that were introduced to deal with the recession and the inter-bank lending rate could soon be increased by the Fed. [Read more…]
Obama Administration Optimistic About Economic Recovery
According to statements from President Obama’s team of economic advisors, the American economy is recovering slowly but steadily. Last month recorded a moderate rise in employment, and senior advisers to the President said that real progress was being made for bringing down the current unemployment rate, which stands at 9.7 percent. Around 162,000 new jobs were created in the month of March. [Read more…]
Citigroup on Their Way to Recovery
Even as the Obama government initiates plans to stop hand holding Citigroup and move out of their bail out program for the banking giant, the company is taking its first steps forwards after a particularly bad phase which threatened its survival. The man being hailed as the one who achieved the near impossible and turned around the group is the Citigroup chief executive Vikram S. Pandit. [Read more…]
FCIC Commission Not Meeting Expectations
The Financial Crisis Inquiry Commission or FCIC, the ten member panel that has been given the task of identifying the main factors which caused the recent economic crisis is not likely to meet expectations. Panel members are believed to be struggling with several differences, leading to stagnation in the investigation process. [Read more…]
Consumer Confidence Index Effect on the Economic Activity
The markets react instantly to variations in the Consumer Confidence Index (CCI) that is used for measuring the level of consumer confidence in the economy. The index takes into account the consumer expenditure and savings. It is an important economic indicator as it depends on activities that account for more than two-thirds of the total economic activity. [Read more…]
Greenspan Acknowledges Beginning of Turnaround
As everyone cheers the news of the biggest jobs creation in three years, former Chairman of the Federal Reserve has acknowledged and acceded that the economy is indeed on the mend, as indicated by these improvements. The 9.7% unemployment rate has been the cause of concern in the recent months even as the activity in most sectors showed signs of revival. [Read more…]
Geithner Optimistic About Chinese Currency Policy Shift
Following heated debates about China’s suppressed currency value, the US government seems to have arrived at some sort of truce with the trading partner for now.
Treasury Secretary Geithner recently made an announcement placing China’s currency policy in a favorable light. The announcement comes after President Barack Obama’s meeting with the Chinese President Hu Jintao, leading to the impression that the outcome of the meeting may be positive to some extent. [Read more…]
Americans Spending More as Optimism and Economy Improves
The unemployment problem plaguing the US may be affecting full recovery of the economy, but consumers are definitely more optimistic now as seen by the increased levels of spending in recent times. February’s statistics show that consumer spending steadily increased for the fifth month in a row, which is good news for policy makers, businesses, and the general public. [Read more…]
