Hatch Chastises Administration Over Market Comments

The top Republican on the Senate Finance Committee chastised the Obama administration for stoking “greater market uncertainty and volatility” with recent warnings to investors about the threat of a U.S. default.

“Comments such as those recently made by administration officials invite greater market uncertainty and volatility, which threatens the livelihoods and savings of millions of Americans,” Sen. Orrin Hatch (R., Utah) said in a Friday letter to Treasury Secretary Jacob Lew. “This is irresponsible and threatens to create needless panic.”

“As Treasury Secretary, you have been entrusted to be a responsible steward of the public’s finances, and should act in every possible capacity to protect and enhance the depth, liquidity and efficiency of markets for U.S. debt securities,” Mr. Hatch said.

President Barack Obama, Mr. Lew and other top officials in recent days have suggested investors should not be as calm as they have been as the U.S. comes close to exhausting its ability to borrow money. Mr. Lew has said Congress must raise the $16.7 trillion debt ceiling by Oct. 17 or the U.S. may not be able to pay all of its bills.

“I think they should be concerned,” Mr. Obama told CNBC this week, when asked if Wall Street should remain calm over the standoff. “When you have a situation in which a faction is willing potentially to default on U.S. government obligations then we are in trouble. And if they’re willing to do it now, they’ll be willing to do it later.”

Jason Furman, the chairman of the White House’s Council of Economic Advisers, suggested in an interview Thursday markets should not assume the conflict will be resolved at the last minute, as it has been in the past. “It’s not obvious to us that this time is business as usual,” Mr. Furman said. “We think that’s something that people need to understand and appreciate.”

In his letter to Mr. Lew, Mr. Hatch said “it is irresponsible for high-ranking government officials to stoke fear into the marketplace and sentiments of the American people based on personal conjectures, when you know that Republicans are willing to work with you to reach a reasonable resolution.”

Mr. Hatch said “the overwhelming majority of members of Congress on both sides of the aisle are committed to ensuring” that the U.S. does not default.

Read More»

Money Says but They Missed The Target

Hi everybody, here is a video that is really funny and it proves that money can't buy everything.

Have a look.......

Read More»

Number of the Week: Here’s What Jobs Report Would Have Said

156,000 : The number of jobs added in September after a merger of several private sources of laboratory market data.

As the National Zoo Panda Cam , Bureau of Labor Statistics ' job report was a victim of the government - closure .

Missing the BLS report provide other data , mainly from private sources , information about job markets last month . The cumulative result : probably no surprise pop in payrolls or unexpected deterioration in unemployment.

Three sources give estimates on private setting use different ways to achieve their numbers .

Automatic Data Processing reported a gain of 166,000 . Job search engine Bright.com said 164,000 jobs were added . During the Liscio Report has not made any official estimate , equivalent to " the survey a further 150,000 increase in employment in the private sector . "

Trim Tabs Investment Research , said that the entire U.S. economy added 159,000 . Use all four estimates and adjustment for government layoffs , which so far have 5,000 a month on average in 2013 , so total wage and salary , just to have risen 156,000 in September , much less than the 181,000 forecast by economists .

Perception of labor markets , however, offer a positive spin for September, with one big exception .

Consumers clearly perceive career prospects were better beats in September than in August , a trend that has kept the unemployment rate at 7.3% or slightly decreased .

The Conference Board reported that more people thought last month , jobs were " plentiful " and less held jobs " hard to get . " In the latest consumer survey , conducted by the Royal Bank of Canada Stieg employment index to its highest level since October 2007 and the lowest losing the proportion of consumers who fell one point , provide since the start of the survey in 2010.

Company but is more mixed mood .

On the positive side means the decline in unemployment claims, that company will lay off fewer workers . Online help - wanted advertising jumped in September , says the Conference Board . And the Institute for Supply Management's manufacturing index showed an increase in employment in the factory setting.

However, another ISM data point is the demand for labor is one big exception . The job index for non- manufacturers - Mainly service provider but also the construction and public administration Sectors - what weaker than expected in September. This is disturbing because manufacturers do not employ the lion's share of the U.S. workforce.

It is unclear when the September payroll and payroll report is published. And if politicians do not come to a budget agreement soon , the October payrolls survey could be in trouble.

Important to note is the fact -for the whole market hype and attention it- the first print, the payrolls number is not the last word. The BLS data changes back two months. Then it performs annual and benchmark revisions that can completely change what we thought we knew the labor market .

If the BLS initially reported that only 88,000 jobs created in March , triggered , for example, fears of a slump spring. The number is revised twice now added a respectable 142,000 jobs.

Read More»

Secondary Sources: Why No Taper?, U.S. Default, Returning to Egypt

A roundup of economic news from around the Web.

–Why No Taper?: Dave Altig lays out the case against the Fed cutting back bond purchases in September. “So, what do we have, then? Inflation is low relative to the FOMC’s objective—and has not moved in the direction of that objective with any conviction. GDP growth has disappointed, with the anticipated pickup in second-half growth nowhere in sight. “Continuing gains in the labor market” at the pace seen earlier in the year are looking a little shaky. I find it pretty easy to see how this fails to add up to satisfaction of the three-part economic conditionality laid out in June by the Chairman (on behalf of the FOMC).”

–U.S. Default: Donald Marron notes that the U.S. has defaulted. “The United States thus defaulted because Treasury’s back office was on the fritz in the wake of a debt limit showdown. This default was temporary. Treasury did pay these T-bills after a short delay. But it balked at paying additional interest to cover the period of delay. According to Zivney and Marcus, it required both legal arm twisting and new legislation before Treasury made all investors whole for that additional interest. The United States thus did default once. It was small. It was unintentional. But it was indeed a default. And the nation still stands. But that hardly means we should run the experiment again and at larger scale. Zivney and Marcus examined what happened to T-bill interest rates as a result of this small, temporary default. They find a surprisingly large effect. As best they can tell, T-bill interest rates increased about 60 basis points after the first default and remained elevated for at least several months thereafter. A simple way to see that is to look at daily changes in T-bill yields”

–Returning to Egypt: Simone Bertoli and Francesca Marchetta look at the impact of migrants returning to Wgypt. “Return migrants have major social and economic consequences for their countries of origin. This column uses Egyptian household-level data to analyse the effects of migrants returning from neighbouring Arab countries. Start-up firms by returnees are more likely to survive, and returnee families tend to have more children. These results imply that return migration may not be an unmitigated blessing for Egypt.”

Read More»

Fed Survey Finds Fixed-Income Market Conditions Deteriorated May-July

Markets conditions for U.S. Treasurys and other securities worsened earlier this year as investors awaited word on the Federal Reserve‘s bond-buying program, according to a Fed survey out Thursday.

“During the period of heightened market volatility beginning in May and extending into early July, dealers indicated that liquidity and functioning generally deteriorated across a number of fixed-income markets, including those typically perceived to be the most liquid and deep, such as the markets for U.S. Treasury and agency securities,” the Fed’s Senior Credit Officer Opinion Survey said.

The survey doesn’t mention the Fed’s easy money policies, and other factors also were likely at play in markets during the time period.

But in May the central bank signaled it could start to wind down its $85 billion-a-month bond purchase program, creating uncertainty across markets. Fed officials surprised investors last month when they decided to continue the program unchanged while determining the direction of the economy and fallout from rising interest rates.

The quarterly survey queried credit officers in a series of special questions related to Treasurys, Treasury inflation-protected securities, or TIPS, high-grade corporate bonds, high-yield corporate bonds, and agency mortgage-backed securities.

Read More»

White House Economist: Debt-Ceiling Standoff Might Be Bigger Threat to Economy Than Past Showdowns

The partisan standoff over the government shutdown and U.S. debt ceiling may represent a greater threat to the U.S. economy than similar showdowns in the past, a top White House economist said in an interview Thursday.

“There’s a perception right now that Washington always does this type of thing, this is business as usual, and people get their act together at the last moment so there’s no need to pay attention to all the bumps and wiggles along the way,” Jason Furman, chairman of the White House’s Council of Economic Advisers, told Wall Street Journal reporters and editors.

“It’s not obvious to us that this time is business as usual,” Mr. Furman said. “We think that’s something that people need to understand and appreciate.”

The Obama administration has been ramping up warnings to investors about the threat of a U.S. default in coming weeks as lawmakers remain locked in a battle over funding the government. President Barack Obama, Treasury Secretary Jacob Lew and other officials have suggested that markets are brushing off the threat of a government default too easily.

The White House is trying “to inform people about what’s going on in Washington and how that might affect the economy,” Mr. Furman said, and “let the chips fall where they may when people understand that.”

The Obama administration has said the U.S. could fail to pay all of its bills sometime after Oct. 17 unless Congress raises the debt ceiling. Yet the stock market has been hovering around record highs for weeks.

Citing the experience from mid-2011, when Congress pushed the fight over raising the debt limit until the last minute, Mr. Furman said the economy and markets could face damage from the brinkmanship.

“Last time around we actually raised the debt limit, we never defaulted, and that was still bad for the economy just getting up until midnight” before raising the debt ceiling, Mr. Furman said.

The shutdown, which entered its third day Thursday, threatens to hurt an economy that has been otherwise picking up, Mr. Furman said. He credited the U.S. energy boom, rebounding housing and auto sectors and stabilization in the European and Chinese economies for some of the recent gains.

“We have a whole lot of really positive things going on in our economy,” he said. “All of them are a wind at our backs’ being countered by government cutbacks and a potential hit to business and consumer confidence from the latest fight.

Mr. Furman said the White House is open to negotiating over government funding for the coming fiscal year, once Congress passes legislation to end the shutdown and raise the federal borrowing limit.

House lawmakers should take up Senate legislation soon and then move on to a broader budget negotiation. “If you get that bill to the floor and allow members to vote their conscience, that bill will pass,” he said.

Read More»

Personal Finance For Loans: A Lifesaver In Difficult Times

Every now and then, one faces circumstances that necessitate financial resources in order to get through. But not all the time one has sufficient available resources to deal with these situations. In times like these, filing a personal finance loan application can become one’s lifesaver.

There are actually various types of personal financing loans to choose from depending on one’s specific needs and reimbursement ability.A personal loan is a type of financing provided by banks and financial institutions that can be availed for various purposes. Nowadays, institutions that offer personal financing are banks, companies at brick and mortar places or online and credit or lending unions. Personal loans are generally divided into two categories: the secured and the unsecured personal loans.

Secured vs. Unsecured Personal Loans

On one hand, secured personal loans essentially require collateral backings that are owned or managed by the borrower. These items may include one’s real estate properties, a car, boat or other financial assets. In the event that a borrower fails to reimburse the payment imposed by the financial institution the borrower may lose these assets to foreclosure.

On the other hand, unsecured personal loans do not require any form of collateral backing and is principally based on the worthiness of the borrower. But since the risks involved on this kind of loans are high one should expect that the personal finance loan rates for its interest are higher too. In case the borrower fails to reimburse the borrowed money the lender can opt for legal claims.

Popular Types of Personal Loans

Popular personal loans that many people make at some point in their lives include convertible loans, fixed-rate loans, installment loans, payday loans, single-payment loans and variable-rate loans.

Convertible loans are commonly used in business. This loan gives borrowers the option to convert all or portions of the outstanding principal of the loan into a form of an equity position in the company where the borrower is working.

Fixed-rate loans are the most common type of personal loans. The interest rate of this loan remains constant or fixed allowing the borrower to pay the same amount of payment on the agreed time until paid in full. Even though fixed-rate loans’ interest is higher, many people still prefer this type of loan because if offers more security.

Payday loans or sometimes called “cash advance” are considered to be one of the most expensive loans one could make. Interest rates for payday loans are particularly high and include unwarranted fees. Reimbursement for payday loans is usually secured against the borrower’s next paycheck. Since this loan is expensive, this should only be used in times of emergencies only.

Single payment loans are also called “bridge loan” or “interim loan.” This type of loan is generally used for short-term financing and the interest is reimbursed in one lump of payment at the end of the agreed term. A payday loan is actually an example of a single payment loan.

Variable-rate loans are quite risky type of loans for borrowers because interest rates of variable-rate loans voluntarily adjust at different intervals throughout the existence of the loan based on the market. Many people still opt for this type of loans because the initial interest rates are usually lower.

How about personal finance loans for people with bad credit?

Sometimes, people with bad credit or those who have low credit score find it problematic to get financial assistance from banks and financial institutions. However, there are actually many personal finance loans online that are willing to assist people in getting financial assistance. These online lenders can offer bad credit loan to anybody in need in times of crises.

Searching through the web is one of the quickest ways to find a company that is willing to give loan approvals even though the borrower has current unpaid debts and has low consumer score. However, these types of loans call for higher interest rates and fees.

Loans can be a lifesaver in times of financial crises and emergency cases. Accordingly, it is important one should make sure that he or she chooses a financial institution that is trustworthy and have a strong reputation in the industry before deciding to apply for a loan.

Read More»

The Secrets to Booking Low Cost Luxury Holidays

There are few things nicer to look forward to than a luxury holiday in a sun-drenched destination. Unfortunately, luxury holidays usually come with high price tags, especially during the peak holiday seasons. However, there are some methods to use that will significantly reduce the price of a luxury holiday to a more affordable level.

A luxury holiday does mean different things to different people but the general assumption is five-star hotels in beautiful surroundings. The Mediterranean island of Ibiza has long been a desired holiday destination thanks to the beautiful beaches and fabulous nightlife. Cheap holidays to Ibiza are available but if you’re looking for a touch of luxury then the upmarket hotels will be hard to beat. Booking a last minute holiday to Ibiza is always a good way to obtain low-cost luxury accommodation but there are other ways to find luxury bargains.

Many people will only book their holidays through travel agents and this can be a good option if you are prepared to negotiate over prices. Travel operators make commission, which means they will usually negotiate prices if a sale looks likely.

Another option is to book directly through the airlines and hotel websites in order to research your options thoroughly before your book. Online research means you can compare hotels and the amenities they offer before booking. Check out the difference between four and five star rated hotels to see if you are really getting more for the price of that one extra star.

When it comes to booking flights there are a few golden rules to follow in order to find the lowest prices. Midweek prices will always be lower than Friday to Monday prices. Flying early in the morning or late at night will also bring lower priced flights and booking well in advance is the preferable option.

Ibiza is an all year round sunshine destination, which means you are pretty much guaranteed sunshine whenever you arrive. However, the peak holiday season in Ibiza is from June through September due to the higher temperatures and the school holidays. Booking either side of these months will mean significant accommodation discounts. These discounts can be as much as a 70% reduction simply by booking either side of the peak holiday season months.

The trouble with Mediterranean destinations is that many hotels, clubs and restaurants do shut down during the winter months but not all of them. If you fancy some winter sunshine in Ibiza in a luxury hotel then book early using online hotel websites. The temperatures in Ibiza during December will be around 55F and a four star luxury hotel will set you back around $500 per person, per week. That same four star hotel during July will cost $1,830 per person, per week.

Research is the key to finding a luxury holiday at a reduced price. However, choosing the low seasons can mean an extended holiday for a fraction of the cost of a one week holiday during the peak season.

Read More»

How Do You Pay Off High Credit Card Debt Fast? Here Is A Detailed Guide

 

For Americans facing debt problems, advertisements offering to “erase” debt or claiming to be “government credit card relief” programs are tempting in hopes that they will stop the harassing collection calls and help them get a fresh start. Unfortunately, too many of these online advertisements are scams, and some of them can actually make matters worse for consumers. Therefore, it is important to understand exactly what credit card relief programs should include, and be aware of additional programs that may come available in the upcoming year.

Credit Counseling

In many instances, a consumer may not need an extensive debt consolidation or settlement program. Many credit counselors report that consumers often believe the situation is far worse than it actually is, and many of those who feel their debt situation is overwhelming can actually manage their debt simply by restructuring their budget. Credit counselors recommend the following steps to begin working toward a debt free life:

Stop using credit cards. By not increasing debt, it is easier to begin the steps necessary to become debt free. However, experts recommend not cutting up cards or closing accounts unless you feel you cannot control your spending, as credit cards can help build credit for high cost items such as cars and mortgages.Create a detailed budget analysis. Be brutally honest when you create a budget. Use a sheet of paper or a computer spreadsheet, whichever is easier for you, and enter all your income in one column and all your expenses in another. Be sure to include everything, including periodic expenses such as car insurance, clothing and auto repairs. One way to be sure you include all expenses is to review what you have spent of the past year, using bank and credit card statements. Total the annual amount earned and spent and divide by twelve to get a monthly average. Once you have entered everything into your budget, review areas where you can reduce spending or increase income. Consider eliminating features on your cell phone, or dropping channels from your cable bill. Begin using coupons and store rewards cards to save money on groceries. If necessary, eliminate items you can live without until your debt is gone, such as gym memberships or dinners out. Be sure to include an amount for savings, even if it is only a few dollars each month.Determine how much you have left after all expenses are paid each month. This is the amount you have available to pay down your debt.Make another list that shows all credit card balances, minimum payments due and the interest rate you are paying on each. Organize the list with the highest interest card first. Begin paying the extra money you have each month on that card, while continuing to make the minimum monthly payments on the remainder. Once that card is paid in full, begin paying the extra amount, plus the minimum payment from the first card on the card with the second highest interest. Continue that process until all cards are paid in full.If possible, transfer balances on cards with high interest rates to those with lower rates to help you get out of debt even faster.For consumers who are paid bi-weekly, another option is to make payments every two weeks rather than once a month towards debt. When you are paid bi-weekly, twice each year you receive three paychecks in one month. By paying bi-weekly, you actually pay one extra monthly payment each year. Many mortgage companies will allow customers to arrange for bi-weekly payments of mortgage payments, allowing the homeowner to pay their mortgage off faster. Before beginning this payment plan, however, it is best to contact the creditor to be sure their system allows such payment processing.

Some credit card counselors recommend paying the card with the lowest balance first as some consumers are motivated when they see an account paid in full. If this works better for you, it is fine to use that process, but it will cost more in interest over time.

Debt Consolidation Services

For those who create an honest budget and learn that there is no money left over at the end of the month even after trimming expenses as much as possible, debt consolidation services may be the answer. In debt consolidation, a credit counselor works with creditors for a lower interest rate, creating a repayment plan that is more manageable. Debt is consolidated into one monthly payment that is normally lower than the monthly amount the consumer was paying to each individual creditor. Creditors do report to credit reporting agencies that the consumer is working with a credit counseling agency, which can temporarily lower credit ratings, but not as much as defaulting on a credit account will harm scores.

Debt Settlement Services

When a consumer cannot even afford a debt consolidation plan, or whose accounts are already in collection status, another option is debt settlement. In this option, a qualified debt settlement negotiator works with one credit company at a time, negotiating lower interest rates and balances owed. While the counselor negotiates, no payments are made directly to creditors. Instead, the consumer pays one monthly payment into a trust account until the creditor and the debtor agree to a settlement. Once the agreement is approved by both, the creditor is paid from the trust account, and the balance is considered paid. Debt settlement can initially lower a credit score, but has less of an impact on scores than bankruptcy.

After a consumer participates in either debt consolidation or debt settlement, there are programs available to help rebuild credit through most credit counseling companies. Before choosing a credit counseling program, be sure they are in good standing with the Better Business Bureau and have been in business more than a few years.

  Paul Paquin is the President at Golden Financial Services; an A+ rated Debt Relief Company.  Paul participates as an author in the Golden Financial Services debt relief blog, and on other various financial websites, working hard to provide consumers with the most current financial education and resources.

Read More»

Financial Tips before Buying Your Dream Car

AppId is over the quota AppId is over the quota

Posted by admin on Oct 18, 2013

Nowadays, the need of four-wheeled vehicles for family is increasing. However, keep in mind that a car or other vehicle types is in the category of consumer goods, and generally cannot be used as an investment asset. A car is an object having price depreciation from year to year. Therefore, generally, car cannot be used as an investment asset.

Buying a vehicle that functioned for productive activities (business) is different from buying a car for consumptive needs. If for business activities, it would be okay to buy a car with installment scheme. Moreover, if the car is used for your daily consumptive activities, it would be best for you to buy it in cash.

Before buying a car, you have to audit your personal financial or household finances. The goal is to measure your expenses when you have a car. You just calculate your family income per month. After that, count how much you or your family spends per month before buying a car.

After having the amount, now you have to calculate the component costs to be incurred when having a car. If according to your calculations, your family income is inadequate to buy the car you want, do not force yourself to buy, even if it's a used car.

Choosing the type of car

The main thing in buying a car is the engine condition. Remember, engine conditions determine the operating costs (fuel and oil), as well as maintenance costs such as servicing the car, and the purchase of spare parts.

In addition, if you are intending to buy a car, you should choose the type of car having high re-sale price value.

Read More»

House Democrats Try Longshot Maneuver

House Democrats on Friday rolled out a plan to force a vote on reopening the federal government without additional conditions, using a maneuver that would require at least 17 Republicans to override GOP efforts to leverage federal spending to change the health care law.

Flanked by Democratic leaders, House Minority Leader Nancy Pelosi (D., Calif.) outlined plans to try a little-used procedural maneuver known as a discharge petition. House Democrats have tried petitions on other issues four times this Congress, so far with no luck.

“If Speaker Boehner will not allow a vote on a clean senate passed bill to open the government we will force them,” Rep. Nita Lowey (D., N.Y.) said at a press conference.

Rank-and-file lawmakers can override House leaders to bring legislation up for a floor vote as long as they can gather support from a majority of the chamber. Democrats control 200 of the 432 seats that are currently filled in the House, meaning they would need the support of their entire caucus and at least 17 Republicans.

Democrats said such motions are permitted only on the second and fourth Mondays of a month, meaning the earliest a vote could occur is Oct. 14.

Discharge petitions rarely succeed even for the most widely-supported measures because they represent a challenge to House leaders who control what comes up for floor votes, committee assignments and other important activities.

“It’s a question of what legislative options you have; we don’t have many,”  Rep. George Miller (D., Calif.) said.

Some Republicans dismissed the idea.

“People who are talking about a discharge petition — do you know how long that would take?” asked Rep. Michael Grimm (R., N.Y.) “That’s not an option.” 

Two years ago House Appropriations Chairman Hal Rogers (R., Ky.), under pressure from Republican leaders, ended up withdrawing his name from a discharge petition to force a vote on a currency bill that was supported by a majority of the House.

Read More»

How Much Risk of Death Will You Accept to Save Time, Money?

A new paper on tradeoffs between time and money is likely to influence public policy on infrastructure — and spark a new appreciation of a smooth trip to the airport.

Research by Gianmarco León and Edward Miguel on calculating VSLs, or the value of statistical life, began with the “harrowing journey” travelers must make to and from the international airport in Sierra Leone. Compared with that odyssey, the ride to JFK, Dulles and O’Hare looks like a cakewalk.

Messrs. León and Miguel visited Sierra Leone several times in the past decade while collecting data for projects on postwar reconstruction. The two economists experienced the stressful journey first-hand — and saw an opportunity. For years, the often-protracted and risky trek to Sierra Leone’s international airport have fed many a headline and conversation.

The transportation options “are really orders of magnitude riskier” than in the U.S., Mr. Miguel said. “And people are making this trade-off. They’re trading off both the costs of the trip and their time.”

To reach the airport, in the hamlet of Lungi, from the capital, Freetown, travelers have to cross the roughly 10-mile-wide Sierra Leone River. Driving is out of the question: circumnavigating the river would mean a journey of at least six hours on unpaved roads. That leaves four options, none with an impeccable safety record: ferry, water taxi, hovercraft or helicopter. The ferry, at $2, is the cheapest and slowest, taking 70 minutes. In addition, the ferry depot in Lungi is a ways from the airport, and travelers have to take a half-hour bus ride to the terminal. The ferry also has the second-worst safety record, and vessels often are packed with too many passengers.

A safer and more expensive option is a water taxi. Aboard these smaller craft, which carry 12-18 passengers, the trip costs $40 and takes about 45 minutes. A slightly faster option is the hovercraft, which also costs $40, for a journey about 40 minutes long. The fastest and most expensive option, the helicopter, costs $80, takes 10 minutes, and has the worst safety record.

(The strife apparently doesn’t end upon reaching the terminal. Even visitsierraleone.org, a site promoting tourism, warns, “Prepare yourself for chaos when you arrive at the airport.”

On crossing the Sierra Leone River, the site observes, “In recent times, this journey across has been an adventure in itself and on very few occasions, with fatal consequences. It is your decision which mode of transfer you choose but the main things to evaluate are speed, safety and reliability – all of which are available to various degrees.”)

The researchers conducted interviews with more than 550 travelers, both Africans and non-Africans, and found that “while differences between Africans and non-Africans are not statistically significant… African travelers appear somewhat less willing to pay for reduced mortality risk, with an average VSL of $577,000 compared to $924,000 for the non-African travelers.”

The primary reason behind this difference appears to be income. “If you’re a wealthy business person, those extra few hours on the ferry are actually worth a lot of money,” Mr. Miguel said. “That’s a real opportunity cost… If you have a high opportunity cost at the time, you take a higher risk.”

The research’s implications extend far beyond documenting travel headaches. The VSL is a concept “urban planners, transportation and public-health officials are grappling with all the time,” Mr. Miguel said. VSLs are commonplace in many countries—the study cites the $2.7 million VSL that the California Department of Transportation uses in weighing investments in safety. However, VSLs are less seen in the developing world and would be particularly helpful in countries, such as Sierra Leone, that are in the midst of infrastructure booms.

“We’re providing new evidence,” for Sierra Leone, said Mr. Miguel. The research has “a really practically applied dimension.” Authorities in Sierra Leone are debating how to improve the situation, perhaps by building a bridge to Lungi, making the existing modes of transportation safer, or moving the airport to a more accessible location.

Read More»

Is It Still Possible To Get A Mortgage Loan If You Have Bad Credit?

Unfortunately, the last few years have been a real struggle financially for many people around the world. In fact, certain countries experienced a housing crash and severe economic difficulties during 2008, which basically caused a worldwide recession. Unfortunately, ever since 2008 most lenders have become far more strict in their lending policies and will typically not offer most forms of lending to someone with a history of bad credit. With that beings said, it is still possible to obtain a mortgage if you have a bad credit rating, but there are certain factors you should be aware of.

Whenever you apply for a mortgage your lender will typically want to check over certain details about you. This will usually involve checking your credit report, your residential history, your employment history and any other debts you currently have. They will also be particularly interested in what cash you currently have available, in terms of paying a deposit towards your new home and also if you have sufficient funds to pay a mortgage loan for an extended period of time if you no longer had income coming in.

If you are able to provide a larger deposit, typically 25% or more, you will be considered far less of a risk by a lender. Most lenders will appreciate that you are basically “sharing” the burden of the loan and property price with them and will be far more lenient in terms of their lending policy. A lender will also want to see you recent payment history on your other debts. You may have a bad credit rating due to financial difficulties you experienced a number of years ago. However, if a lender can see that your repayment history has been very good over the past year or two, once again they are likely to be a lot more lenient when it comes to lending you money.

 

Firstly, you should be aware that you can’t improve your credit score overnight and this will take a little time. However, if you find that you are currently unable to obtain a mortgage because of your credit rating, this may not be the case a few months down the line. The first thing you should do is to order a copy of your credit report, which can be obtained from a number of providers. You should scan through for any mistakes, as it is estimated that over 80% of all credit reports contain some type of error. In fact, you may find that a certain error is the reason why you have a bad credit rating and therefore you should have this removed as soon as possible. You will also want to make sure that you make your debt repayments on time and in full, as this will be reflected in your credit report for lenders to see.

A subprime lender is simply a lender who works with those who have a poor credit rating. However, it is important that you are a little wary and make sure you are dealing with a legitimate firm. Many subprime lenders are simply out to give hope to potential customers, but will then charge them the most outrageous interest rates which will simply see their credit rating get even worse. With that being said, there are still many subprime lenders who do a great job and can help you obtain a mortgage even with bad credit.

Read More»

5 Things To Think About When Choosing A Health Insurance Plan

Looking for healthcare coverage has never been easy and the new changes made under the Affordable Care Act can make things even more confusing for people without insurance. Now that Americans are required to be covered with health insurance there will be more people searching for the right one to meet their needs. If you currently need to find health insurance coverage and are trying to understand the differences between plans there are a few things to consider during the process.

1. Balance Out of Pocket Costs Versus Monthly Premiums

The first thing to think about when choosing healthcare coverage, is figuring out how to balance the monthly cost and the amount you pay for each visit. Plans that have higher monthly premiums will allow you to pay less money out of pocket and plans with lower premiums will have higher out of pocket costs.

The decision should be based on how often you tend to visit the doctor or if you get regular prescriptions. Someone who visits the doctor infrequently should get lower monthly premiums to avoid spending too much on health coverage.

2. Choose a Plan Based on Flexibility or Affordability

There are generally 3 types of health insurance plans to choose from: HMO (health maintenance organizations), PPO (preferred provider organizations) and POS (point of service plants). A plan that is an HMO will offer less flexibility in terms of using a physician only within a specific network but is more affordable while a PPO offers more flexibility to go out of network but costs more.

A POS allows the option of going out of network but asks that you choose a primary physician within the network.

3. Look for Preventative Health Services

For those who were not enrolled in an existing health insurance plan before the new healthcare reform law passed, they will be able to take advantage of preventative services with a new plan.

These are health services that prevent potentially costly health problems and can include immunizations, blood pressure tests, mammograms, mental health services, smoking cessation programs, depression screening, diet counseling and a number of other options.

4. Find Cheaper Insurance for Good Health Habits

If you practice good health habits you may be able to choose a less expensive plan. That means eating healthy, exercising, drinking moderately and not smoking. Living a healthy life style makes you less of a risk for insurance companies.

Insurance coverage costs more for a smoker than a nonsmoker for example and you will be able to save money on healthcare costs in the long run if you work to fight preventable illnesses.

5. Talk to an Advisor

For those especially concerned about making the right choice for healthcare, an advisor can help answer any questions you have and explain all the details that you do not understand. There is no reason to guess with something as important as a health insurance plan.

Find an insurance expert to help you look for a health plan that suits your budget as well as your personal healthcare needs.

Read More»

Breast Cancer Awareness Month - October

To increase awareness about breast cancer every October is celebrated as Breast Cancer Awareness Month (BCAM). This celebration is also referred to locally as National Breast Cancer Awareness Month (NBCAM).

Though October is recognized as National Breast Cancer Awareness Month, NBCAM is a year-round provider of current breast cancer information and resources for patients, survivors, caregivers, as well as the general public. In 2009, NBCAM celebrated its 25th anniversary. NBCAM has been at the forefront of promoting awareness about breast cancer issues since its inception a quarter century ago.

Major breast cancer charities organize their annual international health campaign in October to raise funds for research and development about the cause, prevention and cure of breast cancer. NBCAM offers information and support to those affected by breast cancer. It is also a great opportunity to remind women to be breast aware for earlier detection and hence higher chances of cure.

The number of companies promoting breast cancer awareness has increased over the years. To celebrate BCAM, several companies arrange the illumination of world-famous landmarks in pink light to draw attention to the importance of mammography screening for early diagnosis of breast cancer.

In 2009, the Georgia Aquarium celebrated NBCAM by lighting up in pink for the entire month of October.

People raise money each October for BCAM, by organizing activities such as a "pink day," when employees wear pink clothing or accessories at work, fund raising walks, marathons and bike rides. Usually, organizers donate the money raised to a breast cancer care or research program of their choice.

Also, there are "pink products" which donate a part of their sales' revenues to support research and care for breast cancer. Some examples of such products are pink prepaid debit cards, credit cards, consumer products pertaining to fashion and beauty, electronics, personal care and jewelery, sports, travel, games, home, gifts, and more. BCRF (Breast Cancer Research Foundation) has created an amazing range of "pink products," programs and events that help raise funds and support for itself.

Among various non-profit organizations that support NBCAM and are working actively to raise awareness about breast cancer, Susan G. Komen for the Cure is a global leader of the breast cancer movement. This organization has invested more than $1 billion since its inception in 1982.

It's noteworthy to mention that they have the world’s largest grassroots network of breast cancer survivors and activists. Susan G. Komen for the Cure is working to save lives, empower people, ensure quality care for all and energize science to find the cures. Events like the Susan G. Komen Race for the Cure®, and generous contributions from partners, sponsors and fellow supporters, have helped this organization to become the largest source of nonprofit funds dedicated to the fight against breast cancer in the world.

Some other sponsors of NBCAM include established and trustworthy names like American Cancer Society (ACS), American College of Obstetricians and Gynecologists (ACOG), American College of Obstetricians and Gynecologists (ACOG), American Society of Clinical Oncology (ASCO), AstraZeneca HealthCare Foundation, Breast Cancer Network of Strength, CancerCare Inc, Centers for Disease Control and Prevention (CDC), Centers for Medicare & Medicaid Services (CMS), Men Against Breast Cancer (MABC), National Cancer Institute (NCI), National Medical Association (NMA), Oncology Nursing Society (ONS), and Prevent Cancer Foundation (PCF).

In this world of duality, NBCAM has also encountered its fair share of criticism. The Cancer Prevention Coalition (CPC) has criticized the basic message of NBCAM as a form of victim blaming because it focuses on "early detection and treatment" while ignoring the cause which might be rooted in environmental and genetic factors as well as hormonal imbalances. Some also criticize drug, chemical and bio tech companies, which usually sponsor NBCAM. The proposition in such cases is that these companies have a vested interest in treating the disease (which boost sale of their products) rather than finding ways to minimize its rate of incidence. Other criticisms focus on marketing of "pink products" and partnerships. Their mainstay is that more money is spent marketing these campaigns than is donated to the cause!

Well, we have tried to present a balanced picture of BCAM or NBCAM as is. There are pros and cons of this event. The goodies lie in the facts that NBCAM has presented a useful resource of information about breast cancer which is definitely of great aid to those who have been diagnosed with this disease. Also, it has done its part well to increase awareness about breast cancer and raise funds for its treatment, cure and research. The critics do have a point about the focus being on detection and care of breast cancer rather than on research and eradication of its cause. We have a feeling that with time, there will be a flow of increased energy and funds towards the critics' cause. This will perhaps restore balance and increase transparency in the treatment, care and prevention of breast cancer.

Read More»

When can we expect the economic data?

The flow of official US economic data, largely by shutting down stopped continue Government should economists and analysts once back to their offices. But many publications to delays and other technical hurdles that mess up data or cause that threaten outright cancellation might be.

September employment, retail sales and inflation reports, including since on ice the closure Oct. 1 start. RAW data for the next round of reports does not collect dark with offices, fill mailboxes and telephones go unanswered.

"The main issue is centered on the employment report long delayed payroll and where [Bureau of Labor Statistics] was, as she stopped data processing household and establishment survey," Mizuho Securities Chief-Economist Steven Mohammed said in a note to clients.

It also logistical questions remain unanswered. The two main agencies that produce and economic reports, work and Commerce departments, release data to the media using shared "lockup" room. They need to coordinate schedules, distance probably the data, once she release is ready.

Ready to go

Some instruments were ready for release, or very close to this point. The August construction spending report, was by the Oct. 1, should immediately after the US Commerce Department will be ready to go and be executed. It would have been finished probably while the Agency on Sept. 30 was financed.

Close but not quite there,

The labor and Commerce Department had collected data for the employment report (expected to Oct. 4), retail (Oct. 11) and the index of consumer prices (Oct. 16).

If Dole Oct. 3 announced that it will release the employment report, not, as planned, offer it not an appointment to terminated. It remains unknown how close analysts in the Bureau of labor statistics were for the completion of the report and how quickly she could restart their work.

It is a guessing game. Mr Ricchiuto estimates two or three days for the employment report. TD Securities analyst Millan Mulraine is more skeptical, and said he expects a turnaround time of seven to ten days after the Government reopened.

Forever damaged?

Also unknown is what will happen in the October employment report planned for publication on November 1.

The U.S. Department of Commerce Census Bureau, which collects information for the household survey's employment report has set the economic data collection.
Normally, it would have contacted households this week questions people after their employment status of the previous week. These responses determine the monthly unemployment rate for other numbers.

The survey much later than mid-October should be carried out, could distort the results, because people can not remember their status.

The other half of the establishment survey employment report should be less problematic. It relies on data from companies, which usually records of hiring and firing. The establishment survey shows how many jobs were added or lost.

October consumer price index, is expected Nov. 15, can also technical difficulties.

In a normal month the Ministry of labour data collections to thousands of retail stores, apartment buildings, doctor's offices and other facilities would send get prices on 80,000 articles.

With only two weeks left in the month would be short and narrow snapshot.

The independent fed

Other reports, such as the Federal Reserve industrial production report are based on numbers of shuttered agencies. The Fed said last week that they this data as planned on Thursday (Oct. 17) to release would not.

The Central Bank, is subject to not the Congress funds process to preserve its independence. It has also other data and important reports including Wednesday "Beige Book" on regional economic activity and minutes of its Federal open market Committee meeting last week to release.

Here is a partial reduction in the official government data for planned was:

Tuesday, Oct. 1

10 AM-construction spending (Commerce Dept.) - postponed

Thursday, Oct. 3

10 AM-factory orders (Commerce) - postponed

Friday, Oct. 4

08:30 AM-employment report (lab) - postponed

Tuesday, Oct. 8

08:30 AM-international trade (trade) - postponed

10 Most job openings and labor turnover (lab) - reset

Wednesday, Oct. 9

10 AM-wholesale (trade) - postponed

Thursday, Oct. 10

08:30 AM-import prices (lab) - postponed

2 Pm-federal budget (Treasury Dept) - postponed

Friday, Oct. 11

08:30 AM retail sales (trade) - postponed

08:30 AM-producer price index (lab) - postponed

Reset 10 AM business inventories (Commerce)

Wednesday, Oct. 16

08:30 AM-consumer price index (lab) - postponed

Thursday, Oct. 17

08:30 AM-housing starts (Commerce) - postponed

09:15 AM industrial production (Federal Reserve) - postponed

Thursday, Oct. 25

10:00 AM-new-home sales (Commerce)

Friday, Oct. 25

08:30 AM-durable were (trade)

Tuesday, Oct. 29

10:00-Vacancies (Commerce) housing

WEDNESDAY. Oct. 30

08:30 AM-gross GDP (3Q) (Commerce)

Thursday, Oct. 31

08:30 AM-personal income (Commerce)

08:30 On the employment cost index (laboratory)

Read More»

Positive Trends Underneath Wider Wage Gap Between Men and Women

A recent dispiriting report on the gender wage gap contains some glimmers of hope.

According to a Census Bureau report, women working full time earned 76.5 cents for every dollar that men did in 2012. That is slightly below 2011’s level of 77 cents, where the ratio has hovered for much of the past decade.

However, a look at slices of the data shows that in the past 20 years, mid-career and older workers have made some progress toward equal pay. Those workers also have the most ground to make up. The wage gap is narrowest for women on the threshold of their careers and widens for older workers.

“Women start out doing well and then don’t climb the ladder as well as men,” said Isabel V. Sawhill, of the Brookings Institution. However, “women have a lot more opportunities now than they did when the older cohort was first entering the labor force.”

In 2012, women 15 to 24 earned 87 cents for every dollar men did, compared with 95 cents in 1993, according to Census. Women ages 25 to 44 earned 80 cents last year, up from 74 cents in 1993. Women ages 45 to 64 earned 73 cents, up from 61 cents in 1993.

Economists cautioned against relying on the numbers for the youngest workers, which don’t reflect individuals still in school and not yet in the work force. The data for individuals ages 15 through 24 also are far more volatile than those for older workers.

The trend is smoother for those age 25 and older, with the most substantial wage gaps narrowing in the past 19 years. The gender pay gap is wider for older workers in part because women tend to take more time off for family reasons than men do, said Francine Blau, an economics professor at Cornell University. But these “career interruptions…have gotten smaller over time and women have become more firmly attached to the labor force,” she said.

The glass ceiling also may be more a factor for older workers than young ones, she said: “There is evidence that suggests that men are more likely to be promoted and move up than women and that would give them higher earnings.”

Getting a handle on the gender wage gap is difficult. The raw numbers encompass all jobs, from artist to surgeon, and don’t tease out potentially significant factors, such as education, occupation and work-schedule flexibility. Harvard professor Claudia Goldin found that white, U.S.-born college graduates aged 25-29 earned about 86 cents for every $1 their male counterparts did in 2012; women in their fifties earned closer to 70 cents.

When one controls for differences and attempts an apples-to-apples comparison, the gender wage gap often narrows, said Natalia Kolesnikova, an assistant professor of economics at the University of Mississippi. The authors of a Labor Department report estimated a wage gap of about 5% in 2007, after controlling for variables such as education and career interruptions.

In a recent interview, Ms. Kolesnikova emphasized that work, and not wages, is the key. “I think making the policy discussion focused on 77 cents to the dollar is misleading,” she said. “It’s not that women are not paid the same for the same job. It’s that they have different jobs” that don’t pay as much. “We need to find a way to make sure girls understand they can be just as good in math and science and go into technological professions, like engineering.”

Ms. Sawhill also cited the importance of encouraging more women into higher-paying occupations. “The big problem is not unequal pay for equal work, the big problem is occupational segregation. … Women in the past have been relegated to relatively poorly paid sectors of the economy and jobs: nurses, teachers, librarians, social workers, secretaries… And men have been engineers.”

Read More»

Health-Insurance Applications Near 700,000

AppId is over the quota
AppId is over the quota

Nearly 700,000 Americans have completed applications for health insurance using federal and state insurance marketplaces, an Obama administration spokeswoman said Thursday, trying to parry characterizations of the health-law rollout as a failure and a disaster.

Thursday was the first of what the administration says will be daily briefings by the Centers for Medicare and Medicaid Services, or CMS, the agency in charge of the problem-plagued HealthCare.gov website.

The site serves people living in 36 states. Fourteen states are fully running their own marketplaces and have generally fared better.

Julie Bataille, director of the CMS office of communications, said the 700,000 figure included the state exchanges, but she didn’t offer a breakdown. A Wall Street Journal tally shows at least 325,000 people in those states have started health-insurance applications, and probably more. At least 264,000 have completed applications to have eligibility for subsidies determined in those 14 states and the District of Columbia. [Note: The 325,000 figure represents the number who have started applications, according to the Journal's tally of state reports. An earlier version of this post incorrectly described it as the number who have completed applications.]

The botched rollout came under harsh criticism at a four-and-a-half-hour hearing Thursday at the House Energy and Commerce Committee. The committee’s chairman, Rep. Fred Upton, said the site was “nothing short of a disaster.”

“We know the experience on HealthCare.gov has been frustrating for many Americans …with error messages and timeouts,” said Ms. Bataille.

Contractors at the House hearing said their individual parts of the system worked during testing leading up to the Oct. 1 launch. CMS was in charge of bolting the parts together, and end-to-end testing didn’t happen until the final weeks, the contractors said.

“Obviously due to a compressed time frame the system wasn’t tested enough,” Ms. Bataille said.

Still, she accentuated the positive, saying 1.8 million people have contacted a call center with questions, suggesting high interest among Americans in getting health coverage.

On Tuesday the Obama administration named Jeffrey Zients–slated to become the next director of the National Economic Council in January–as an adviser to help fix HealthCare.gov. The administration also said it was bringing in other experts but declined to name them.

Read More»

Weak exports show limits of China's growth model

One unexpected decline in exports in September, after a series of monthly bescheidenden, signaled renewed weakness in emerging markets, the major trading partner for China are, and are indicating that the boundaries of the building next to the economy makes export growth.

Statistical trickery can explain part of the drop, but overseas demand is not much for the Chinese economy.

China revealed $185,6 billion value of 0.3% from the same month last year and far short of the forecasts of economists by 5.5% growth were from abroad in September,.

One reason for the September exports look so bad, that a year ago, exporters probably bring their sales as a way to fund that exaggerate were bypass onerous restrictions on foreign exchange.  Shady, have the company pull this trick for years, but it really took from the end of 2012 as a strengthening Chinese economy and expectations that the Yuan would rise, provided a strong incentive to get money in the country.

Only after reporting in the media widely used authorities, to tough rules on invoicing excessively may last year prompted the export figures of the earth return.

It is hard to know, but the official export statistics were probably significantly inflated by September last year, make the current numbers in comparison worse look. Ting Lu, an economist at BofA Merrill Lynch, notes, the exports of integrated circuits a favorite item for overinvoicing - and broadcasts through bonded areas, other red flag, Bank both were much higher in September 2012.

"We expect headline export growth still weak--or even in negative territory - in the next two quarters, unless revised Chinese Government over export data", said Mr LU.

It doesn't help that in September this year was one less working day, thanks to the timing of the mid-autumn holiday, undermined export volumes continue.

But the world's largest exporter, the breakdown of shipments to destination doesn't explain all of the weakness and with China says a lot about the State of the global economy.

Exports in the developed world was relatively good, with shipments in the United States rises 4.2% to the previous year despite the budget mess in Washington. But exports to emerging economies fell as the prospect of a tightening of monetary policy by the Federal Reserve chilled markets from Jakarta to Johannesburg. That could be a problem for China, which sends well less than half of its exports to the United States, EU and Japan.

Exports fell 0.3% to the previous year after Indonesia, for example, in September, while those fell 12.8% to South Africa.

"Also the statistical distortion of the underlying of one of China's external demand still pretty lackluster looks," said economist Wei Yao Société Générale.

China's competitiveness has declined, like a shrinking labor drives wages with private salaries rising 14% in 2012. The effect is by a stronger currency, which strengthened Yuan to 2.9% against the dollar this year.

But even than struggling exporters, China's imports have surprisingly good, stopped cutting the trade surplus to $15.2 billion in September from $28.5 billion in August. This could be at least some pressure on China, its currency continue to revalue to distract.

Raw material imports were particularly strong. Crude oil shipments rose 27.9% for the previous year in September, that China, the world's largest importer of oil. Iron ore imports rose by 14.7% to a record high.

This is good news for commodity giants like Australia, Canada and Brazil. Iron ore shipments are a further infrastructure and building boom in China, feeding, despite increasing concerns, whether the projects are profitable.

"Demand is being driven by the Government", said Fan Zhang, an economist at brokerage UOB KayHian. "It's infrastructure, all these raw materials used to."

Although Beijing has signaled that he wants to keep a tighter rein to local governments has it given their spending plans, green light, kept a stack of new Metro projects and away from the fresh curbs on the real estate market in the last few months.

In the future, China must more and more on this kind of domestic demand to leave. Gone are the days when double-digit export growth to the economy makes it could lean on.

Read More»

Baby Steps Toward Tighter Money in China

China’s central bank has shown signs of inching toward a tighter monetary policy this week, pressed by rising inflation, runaway house prices and renewed capital inflows. That’s on top of the long-term job of getting mounting debt under control before it overwhelms the economy.

Restricting lending fits authorities’ goal to move the economy toward consumption-led growth rather than an investment-driven model. But the People’s Bank of China must walk a tightrope: Moving too aggressively could aggravate strains on the financial sector, already shaken by a severe cash crunch earlier this year.

The PBOC has plenty of reasons to turn more hawkish. Consumer price inflation ticked up to 3.1% in September, still well within the official 3.5% target but the second-highest figure in a year. House prices are on a more alarming trajectory, climbing 8.2% on average in the year to September, and even faster in the largest cities.

The U.S. Federal Reserve’s decision last month to keep its economic stimulus in place for now has prompted a renewed movement of capital into China. The PBOC and other Chinese financial institutions bought a net 126.4 billion yuan ($20.7 billion) of foreign currency last month as money flowed into the country.

The PBOC needs to suck cash out of the system to keep it from feeding inflationary pressures.

At least a reviving economy means China is better placed to withstand tightening than it was earlier in the year: GDP growth bounced back to 7.8% on-year in the third quarter, from 7.5% in the second.

With growth on its side, the central bank drained 58 billion yuan ($9.54 billion) from the interbank market this week. The seven-day reverse repo rate, a benchmark indicator of liquidity conditions, climbed to 4.79% on Friday from 3.49% a week earlier, showing that banks are having to pay more for their funding.

Traders said liquidity began to loosen again Friday afternoon, probably because of central bank intervention. The PBOC is likely wary of overshooting: The last time it withheld liquidity, in June, the fragile interbank market all but froze up.

Some economists detect a bigger agenda, saying the central bank may be moving to stop lending – both within and outside the traditional banking system – from spiraling out of control.

In June, the PBOC made a concerted effort to stop borrowers using the interbank market to fund speculative “shadow banking” activities. With the central bank’s liquidity support withdrawn, interest rates quickly went through the roof.

After stock markets tumbled and panic began to take hold, the central bank turned the taps back on, but the message had been sent.

Since PBOC Gov. Zhou Xiaochuan “started his new term in March he’s been trying to do this,” said Ken Peng, an economist at BNP Paribas. “The looser policy between July and September was a pause in a longer effort to try to rein in growth of the money supply.”

China’s debt has been growing at a stupendous pace. Total social financing, the broadest official measure of credit creation – which includes shadow banking and bond issuance in addition to bank loans – declined to 808.8 billion yuan in July amid the tighter conditions, the first time in more than a year that the monthly figure failed to top one trillion yuan. But it quickly bounced back to 1.57 trillion yuan in August and 1.4 trillion in September.

Outstanding borrowing by businesses and households hit 170% of gross domestic product at the end of 2012, up from 117% in 2008, according to the Bank for International Settlements. It’s the speed of the climb, as much as the total, that worries economists.

With sustained growth and moves toward reform, some have faith that the explosion of debt can be kept under control.

“We know there are leverage issues in the system, but the current pace of credit creation is not as rapid as in the past,” said Li Wei, an economist at Standard Chartered. “The PBOC clearly wants to slow the pace of credit growth, and policies are moving in the right direction.”

But pessimists note that credit growth has run far head of the real economy, which has needed ever bigger hits of funding to get short-lived bursts of growth. That puts regulators in a bind.

“It’s going to be difficult to tighten in an aggressive way because the economy has become so reliant on credit,” said Charlene Chu, an analyst at Fitch who is deeply skeptical about China’s ability to get its debt load under control. “To rein in credit significantly without that itself slowing growth is going to be very difficult.”

The PBOC may want to cut down the dosage, but China won’t be deleveraging cold turkey any time soon.

Read More»

World Officials Give Janet Yellen the Thumbs Up

International finance officials on edge over mounting policy uncertainty in the U.S. expressed widespread relief over President Barack Obama’s nomination of Janet Yellen to be the next Federal Reserve chairman.

“I personally welcome very much” the nomination, said Ewald Nowotny, governor of the Austrian central bank. “She is one of the wisest [central bank] governors that we have seen on the world scene,” Mr. Nowotny said on the sidelines of meetings hosted by the International Monetary Fund and World Bank this week in Washington.

The gathering of economic policymakers from all over the world has been largely dominated by talk about the U.S. budget impasse that threatens the government’s ability to borrow and meet its financial obligations. Also high on the agenda were the global impacts of the Fed’s plans to start reining in its $85 billion-a-month bond buying program.

For many of the officials present, the process would be in a safe pair of hands if Ms. Yellen takes over the Fed when Chairman Ben Bernanke’s term ends in January.

“It has been a pleasure to work with Janet in her role as vice-chair of the Fed, and I greatly look forward to continuing to work together in her new capacity,” Bank of England Gov. Mark Carney said.

Mr. Carney and Ms. Yellen face similar challenges. The Fed and the BOE both cut their policy rates to near-zero and engaged in a massive stimulus effort in a bid to avoid a repeat of the Great Depression of the 1930s. With the U.S. and U.K. economies now recovering, it will likely fall to them to reverse those policies, a task many economists say is fraught with risk.

Some policymakers expressed the hope that Ms. Yellen would be able to improve the central bank’s communications. Colombia Finance Minister Mauricio Cardenas said that uncertainty over when the Fed will start reducing its bond purchases and at what pace has created turmoil in emerging markets. “She’s a person who inspires a lot of confidence,” Mr. Cardenas said. “We firmly believe there has to be a clear, predictable path with good information so that there are no scares in the marketplace, as we have seen this year.”

Yi Gang, deputy governor of the People’s Bank of China didn’t comment on Ms. Yellen’s nomination, but he too said that international markets need an “orderly, well-communicated tapering” of bond purchases by the Fed. China is the largest foreign holder of U.S. treasuries.

Canadian Finance Minister Jim Flaherty, an outspoken critic of the Fed’s bond-buying program, was reserved in his comments on Ms. Yellen. “The choice of the chairman of the reserve bank is the president’s choice. And he made his choice,” he said.

The policies of the U.S. central bank have an outsize impact on the global economy, yet analysts expect Ms. Yellen to focus on shoring up the U.S. economy without too much concern for spillover effects. “Stabilizing nominal [U.S.] growth is of net benefit irrespective of these spillovers,” said Adam Posen, president of the Peterson Institute for International Economics.

Read More»

7 ways to buy GOLD – this Diwali…

Gold has always caught attention as investments. Festivals add to this charm as they form part of rituals to become top of items in the shopping list. In the given scenario people buy and consume gold in different ways. With advent of technology and development in financial markets, gold is no more jeweler dominated market. One can purchase it through various other means with advantages like purity & safety. But still the jewelers are not crying as people still like to buy/invest in gold through them. This article will enumerate the avenues available to invest in gold during this festive time.

Before we move forward, it is worth mentioning that gold is an important part of any investment portfolio. But the quantity as any other asset class depends on your individual requirement, risk appetite and future goals. So we have already answered “How much to buy” in previous articles, this is an attempt to tell “How” to buy gold. Below is the list of various avenues available today to buy gold:

Jewelers: This has been the traditional source of buying gold since ages. The most common form of buying physical gold has been jewelry. The other forms available with the jewelers are gold coins, utensils, statues and bars. Indians are big consumers of gold when it comes to jewelry. Wearing gold is status symbol and many favor jewelry over coins or bar as gold can easily be converted to cash, new jewelry or may be coins. Gold in the form of jewelry should be purchased only for ornamental use and not for the purpose of investment as it loses value while converting to cash/gold in form of making charges. But still people favor it countering that they enjoy wearing it and showcasing status and for this a loss of 15-20 percent is not a deterrent.

Banks: Gold Coins and Gold bars are available now in mostly all the banks (SBI, ICICI, BOB to name a few). Very soon the marketing departments will call you for booking it as they have their own targets and figures have shown that banks have imported handsome quantity to sell to Indian buyers. (not sure about this year)

Now the question arises-whether to purchase physical gold from jewelers or bank?

Below is the comparison of gold purchased from jewelers and gold purchased from banks (with the advantages and disadvantages)

 

2.     Monthly Investment Schemes managed by jewelers

Few jewelers manage monthly contribution schemes. Investor pay for the entire year and some jewelers also contribute 1 or 2 installments. These are of two types. In one variation one accumulates in terms of Rupees contributed and investor redeems as per the rate prevailing. In the second type the investor accumulates in grams. So here he can take advantage of the price fluctuations throughout the year and redeem when the prices are high. The advantage like an SIP it is disciplined way of investment and one can plan in advance. The drawback is that few jewelers compulsorily redeem in jewelry to earn on making charges. Conversion to coins/bars is not allowed. Also instant purchases cannot be done under these schemes.

Before moving to other options available to buy gold, the question arises should gold be bought in physical form or electronic form.The biggest disadvantage of buying jewelry in physical form is the need to keep it in safe custody as it carries high risk of theft. This feature makes electronic gold more attractive. Moreover, in electronic form, a person can purchase as minimum as 1 gram of gold which is not always possible in case of physical gold.

3.     GOLD ETFs

Gold Exchange Traded Funds are very popular these days. These are mutual fund schemes that invest only in gold. Its units are held by the investors in electronic form.  Generally, one unit of Gold ETF is equivalent to approximately one gram of Gold and hence its price is also approximately equal to one gram of gold. (there is some difference noticed in last few months) The minimum unit that can be purchased in Gold FTF is 1.The units of Gold ETF are traded on stock exchange and can be bought and sold like ordinary shares.

The biggest advantage is that one can be free from safety angle. ETFs are like securities which can change hands like other securities. And the disadvantage is the cost as broker charges both ways to buy or sell ETF units. Also if you open a demat account only to buy gold ETFs, the demat maintenance charges will also eat part of your gains. Also you will have no enjoyment of touching or wearing your investment.

Read More»

Politics Counts: Big Wins and Partisan Divides

Dante Chinni writes Politics Counts every week. Mr. Chinni is the director of the American Communities Project at American University, which examines different types of communities across the U.S.

The 113th Congress was never shaping up to especially prolific. Even before this week’s shutdown, a long list of measures, such as the amount of legislation passed, suggested the body was deeply divided.

A look at some numbers behind the U.S. Congress over the last two decades indicates the current crop of Democrats and Republicans isn’t actually all that dissimilar from those of previous years. The difference is in how those numbers are playing out and larger shifts going on behind them – moves in where those safe seats are and the constituents they serve. The country is more geographically segregated politically that it was 20 years ago.

Much has been made of the “safe seat” argument in the current shutdown debate – how congressmen and women increasingly come from districts where the vote is not close meaning they have little reason to come to the middle and compromise. And at first blush that idea seems to carry a lot of weight.

In the 2012 election, 87% of the House Republicans beat their nearest competitor by more than 10 percentage points. For Democrats, the number was roughly the same, 84% But as high as those numbers seem, they are not out of line with the margins in recent elections. The numbers are actually slightly lower than the recent peaks.

Congressmen with Big Wins by Party

Going by the table above, the partisan divide perhaps should have been worse in 2002 or 2004, when House Democrats and Republicans, on average, won by bigger margins than they did 2012. And while those are not thought of as years of immense cooperation in Washington, they didn’t produce a shutdown.

Even after Democrats regained control of the House in 2006, again with a lot of “big wins,” the government kept operating. That makes it hard to point specifically at comfortable wins as the driver of Washington’s current acrimony.

So Politics Counts looked at the votes within the Congress to see if they grown more polarized. To measure that we used ratings from a left-leaning group, Americans for Democratic Action (ADA), and a right-leaning group, the American Conservative Union (ACU). Both groups pick out key pieces of legislation and measure whether members of each party support their position.

The ADA and ACU measures offer a little more evidence of a divide. In 2012, the ACU showed House Democrats at a 20-year low on their index, scoring 8.2 out of possible 100. The ADA, meanwhile, found House Republicans near a 20-year low on theirs, GOP members scored 5.6 out of a 100.

Again, those numbers are not terribly out of line with where they have been. The ACU has had the House Democrats at that low score for three years. And the ADA has had the House Republicans slightly lower in 2010 and 2003. But they are significant, particularly when you compare them to the “big win” numbers.

When you put these numbers together, they suggest there is little penalty for partisanship once members arrive in Congress. In fact, there seems to be no penalty. Polls may show that voters want members in Congress to work together, but voters don’t vote that way.

In other words, it’s not that “safe seats” are a new concept. Even back in 1992, 82% of House Democrats and 79% of House Republicans won their seats by more than 10 percentage points. But these safe seats, and their constituents, are different.

You can see the differences in the geography of the House. Republicans and Democrats used to be spread across the country in different states. But over time both parties have solidified into more regional casts.

As recently as 2001, Connecticut’s congressional delegation was made up of three Democrats and three Republicans, now it is entirely Democratic. Arkansas had three Democrats and one Republican, now it is entirely Republican. Maryland went from being evenly split between four Democrats and four Republicans to being seven Democrats to one Republican.

States and regions are more likely to be represented by one party or another. Moderate Yankee Republicans are extinct and southern Blue Dog Democrats are a small fraction of what they once were. And it’s not just redistricting that has pushed the Democrats out of Arkansas or the Republicans out of Connecticut. There are bigger demographic and cultural changes afoot.

That’s the real issue in Congress now. It’s not just safe seats, but rather where those seats are located and what the constituents they represent actually want. Voters in Connecticut and the northeast in general, don’t want what the GOP has to offer so they elect and reelected Democrats by large margins. Voters in Arkansas and the south and plains don’t want what the Democrats have to offer, so they elected and reelect Republicans by large margins.

Put it all together and you get situations like the 2013 shutdown. And you can see why the shutdown may not be easy to solve.

Read More»

Solid Fundamentals, Strong Central Banking Behind Philippine Upgrade

Not so long ago, Indonesia and India were considered the Asian countries most likely to get investment-grade ratings from all three major ratings firms.

But the Philippines leapfrogged them and scored the trifecta first after Moody’s lifted its Philippine rating Thursday to Baa3, the lowest-rung on the investment-grade rating. Standard & Poor’s and Fitch raised the Philippines to investment grade earlier this year.

The designation could mean a wave of new investment for Manila as markets increasingly differentiate among developing economies.

Moody’s announcement cited robust economic growth, fiscal and debt consolidation, political stability and improved governance. It also noted the archipelago’s “relative lack of vulnerability” to external shocks such as the anticipated scale-back of the U.S. Federal Reserve’s economic stimulus.

That resilience is thanks to the Bangko Sentral ng Pilipinas, which has kept the Philippine banking system strong and funding conditions stable.

The BSP is a tough regulator, very cautious and “not afraid of shutting down banks,” said Christian de Guzman, a Singapore-based analyst at Moody’s.

The central bank has pressed local banks to adopt strict Basel III capital-adequacy standards, and has kept a close watch on banks’ exposure to the real-estate sector.

That has helped create a very strong banking system — the only one in the world, in fact, to enjoy a positive outlook from Moody’s. Even as the rest of emerging Asia reels from concerns about eventual Fed tapering, strong local banks have sheltered the Philippine economy.

Philippine “banks are in such great shape that they don’t pose a risk to the government,” Mr. de Guzman said.

Strong banks mean the government can borrow money locally rather than having to tap international capital markets just as global economic uncertainty is raising borrowing costs.

“Although the Philippine government is the largest sovereign issuer of U.S. dollar-denominated securities in Asia-Pacific based on total debt outstanding, it is now much more reliant on domestic sources of financing,” Moody’s said in its upgrade note Thursday.

On the policy front, the BSP has succeeded in anchoring inflation: Data out Friday showed consumer prices have risen just 2.8% on-year through September, below the central bank’s target for 2013 of 3.0%-5.0%.

In a research note Friday, ANZ Bank said the Philippines “remains in a sweet spot, posting high growth amid a low inflation environment.”

The country also is doing well on the fiscal front. Since coming to power in 2010, President Benigno Aquino III has doggedly pursued an anticorruption program that has improved the country’s image with investors, after years when the Philippines was regarded as the “sick man of Asia.” By taking aim at pork-barrel projects, the government has reduced its deficit and freed up spending for desperately needed infrastructure projects.

The economy grew at a blistering 7.5% pace in the second quarter – as fast as China — making the Philippines among the fastest-growing economies in the world.

With former investor darlings India and Indonesia troubled by persistent current-account deficits and lethargy on reform, it’s no surprise that the Philippines has surged ahead in the ratings game.

Read More»

How Bernanke Built a Metal Mountain

Industrial companies irked at Wall Street over the availability of warehoused metal have their eyes on the wrong target. The real culprit is the Federal Reserve and its continued easy-money policy. When that policy ends, metals prices could sink.

Metal is piling up in London Metal Exchange-licensed warehouses as inventory is quick to enter but slow to leave. In some cases, it’s taking more than a year to get aluminum out of storage once you ask for it.

The inventories aren’t swelling because people don’t want the metal. They do — prices are historically elevated, just above $1,800 a metric ton, and some metal users have filed suit against the LME and some Wall Street banks in frustration that they can’t get delivery fast enough.

This has left the market in an unusual situation: high supplies and high prices. The last time prices were around this level (excluding the financial crisis period of 2008-09) was in the first half of 2005, when aluminum inventories averaged fewer than 600,000 tons, about a tenth of the current level.

What happened to the usual inverse relationship of prices to inventories? The Fed’s low interest rates, that’s what. “The major cost in commodity markets is the cost carry,” says Steve Hanke, professor of applied economics at Johns Hopkins University. More simply, the cost of holding inventory is the combined cost of borrowing money to buy the metal and the cost of storage, itself tied closely to the cost of borrowing. That’s true of all metals.

But it’s particularly true with aluminum because of its low density, says Catherine Virga, director of research at New York-based commodities consulting company CPM Group. Financing aluminum is more expensive because the rental costs are higher, she explains.

In other words, a ton of aluminum takes up more space than does a ton of copper. And copper prices are nearly four times higher than aluminum. When interest rates are low, that difference doesn’t matter so much because the cost of storing the metal is lower. That leads traders to take a buy-and-hold strategy.

U.S. benchmark interest rates near 0% also allowed banks and commodity traders to use borrowed money to take advantage of the gap between prices of the metal for immediate delivery and for future delivery. Traders could take a loan, buy metal on the physical market, warehouse it, and sell it at a higher price on the futures market, earning enough to pay back what they borrowed and still profit.

So what? Expect prices to change dramatically when interest rates rise.

“When the price of something goes up, you start rationing it more carefully,” Hanke says. In all likelihood, owners of the current massive inventories on the LME will likely reduce their holdings, he says.

There is another factor at play here. When interest rates rise, the economy tends to slow. That’s why central banks adjust the cost of borrowing—to moderate the economic ups and downs. It’s just a matter of time.

“The real-economy effects of higher rates can take many months to play out,” according to a recent report from Credit Suisse.

That said, any rate hikes by the Fed could be a good way off, and the Fed’s quantitative-easing program isn’t likely to end before 2014 at the earliest.

Read More»

No Way Out of Recession Sparked by Failure to Raise Debt Ceiling

If U.S. lawmakers fail to raise the federal government’s borrowing limit this month they will cause a “very, very severe recession with no obvious way out,” Moody’s Analytics Chief Economist Mark Zandi said Friday.

With the government unable to enact fiscal policies and the interest rates set by the Federal Reserve already near zero, “there would be no policy levers” to use against the resulting recession, Mr. Zandi said in a conference call with clients.

Mr. Zandi’s comment’s echo recent warnings from Wall Street titans like Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein and from the White House.

The U.S. Treasury has said it will run out of room to maneuver to remain below the $16.7 trillion debt limit “no later” than Oct. 17 unless Congress raises it. That deadline is fast approaching, even as the government entered its fourth day of shutdown because of deep-seated disagreements among lawmakers over spending.

If the debt ceiling isn’t raised, Treasury will have to match its ongoing expenditures to its revenue on a day-by-day basis. Since the government spends more than it takes in, the inability to borrow money will take billions of dollars out of the economy that it injects through daily operations and spending. The situation could also eventually lead to a government default if the Treasury is unable to make payments to its creditors.

Even if the U.S. Treasury were to prioritize debt repayment over outlays for Social Security, Medicare and other payments, investors would grow increasingly nervous about their holdings of government debt securities. “The real unknown is how financial markets will react,” Mr. Zandi said.

Against this backdrop, Mr. Zandi expects to investors to start applying increasing pressure on lawmakers in Washington to resolve the twin fiscal crises. He noted the stock market this week has been “softening,” while the cost of insuring U.S. Treasuries against default has been rising. “If this drags into next week the sell-off will start to intensify,” he said.

Read More»

U.S.-Europe Trade Talks Hit by Shutdown

The U.S. has cancelled plans for a second round of negotiations on a major U.S.-European trade pact next week, citing financial and staffing difficulties related to the U.S. government shutdown.

U.S. Trade Representative Michael Froman called European Union Trade Commissioner Karel De Gucht on Friday to tell him that the U.S. could not proceed with the talks, a statement from his office said. The statement said he told Mr. De Gucht that the shutdown made it “impossible” to send a full team of negotiators,” and that U.S. negotiators would work to create a new plan for talks once the U.S. government shutdown ends.

The Transatlantic Trade and Investment Partnership, or TTIP, is the largest bilateral free trade agreement ever negotiated. A first round of talks was held in July in Washington, D.C. Mr. Froman is currently in Bali, Indonesia, negotiating terms for the proposed 12-nation Trans-Pacific Partnership free trade agreement on the sidelines of the Asia-Pacific Economic Cooperation forum.

U.S. President Barack Obama had been scheduled to attend the APEC forum next week, and to visit Malaysia and the Philippines, but cancelled the trip due to the shutdown.

Read More»

Fed’s Kocherlakota: Must Do ‘Whatever It Takes’ to Aid Job Market

Minneapolis Fed leader Narayana Kocherlakota repeated on Friday his call for the central bank to do whatever it can to get the unemployment rate to fall quickly.

The official’s speech largely repeated remarks he made in late September, in the wake of the Federal Reserve‘s shock policy meeting that saw officials press forward with their easy money policy against broad market expectations they’d cut back on the stimulus. Mr. Kocherlakota has been a steadfast support of aggressive action, and he repeated his call for the Fed to do even more than it currently is to bring down the unemployment rate quickly.

“There is considerable monetary policy capacity” still available to the Fed, even with the Fed’s short-term interest rate target pegged at zero percent, and the balance sheet swollen to historic levels, Mr. Kocherlakota said.

He said the Fed must do “whatever it takes in the next few years” to lower an unacceptably high unemployment rate. He noted that even though the jobless rate had fallen since the end of the recession, it remains high, and the amount of progress suggested by the jobless rate drop actually overstates the level of improvement.

Mr. Kocherlakota repeated that the Fed must be “willing to continue to use the unconventional monetary policy tools that it has employed in the past few years.” He added “doing whatever it takes will mean keeping a historically unusual amount of monetary stimulus in place–and possibly providing more stimulus.”

Read More»

Will Shutdown Screw Up Next Month’s Jobs Report Too?

The federal government shutdown already shelved a key piece of economic data: Friday’s jobs report. A prolonged government closure could cause more damage to other data — more than simply delaying reports.

A shutdown lasting several weeks could create headaches in compiling the next jobs report, scheduled for release on November 1, said Keith Hall, a former commissioner of the Bureau of Labor Statistics.

Government analysts are due to start the next survey of households in mid-October, asking people across the U.S. about their employment status during the week of the 12th.

If federal employees are out much past October 15, the survey would be conducted later than normal, said Mr. Hall, a senior research fellow at George Mason University. That could delay the report and skew the data.

“If you’re asking about two or three weeks ago, will people accurately remember which week they applied for a job or had an interview?” he asked. “That answer is really important to determining who is categorized as unemployed.”

The household survey determines the month’s unemployment rate.

Analysts wouldn’t change the week of the month they ask about because doing so would alter seasonal-adjustment factors, Mr. Hall said.

The consumer price index report also could be affected by a lengthy shutdown. That report, due out on October 16, depends on government personnel to check prices at thousands of retail locations.

“You can’t walk into a store and ask, ‘What did this cost a few weeks ago?’” Mr. Hall said.

The CPI report, as a measure of inflation, uses one month’s data to build the next report. If a month’s data is skipped or delayed that could have a ripple effect into subsequent reports, he said.

Even the data that is being published during the shutdown can be tricky to read. The Labor Department’s closely watched initial jobless claims figure doesn’t include furloughed federal workers, who tap a separate pool of funds. The widely reported number only tracks state programs.

Policy makers will have to wait longer to see specifics on federal employees. That data, like figures on veterans and those on special crisis-era programs, is reported with a one-week lag.

Read More»