SavvySugar

Fed Chairman Hopes Recession Will End This Year

LibertySugar — Tue, 24 Feb 2009 11:00:12 -0800

The Chairman of the Federal Reserve Ben Bernanke hopes that the current recession, already into its second year, will end in 2009. Bernanke shared the welcomed news with Congress today.

Before you let out a sigh of relief know that there is still reason to be anxious. Bernanke's rosy prediction that 2010 could be a year of recovery hinges on the success of the government's plan to stabilize the financial markets. So far just the announcement of housing and bank rescue plans have done little to soothe them. Let's hope actual implementation does more.

Risks that could bring the doom and gloom into the next decade include: financial troubles overseas that could hurt US exports and increased unemployment if the government can't bring up consumer spending by stopping current job loss, tanking homes values, and shrinking nest eggs.

Do you have faith that next New Year's Eve, you'll be ringing in the end of the recession?

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The End of Wall Street as We Knew It

SavvySugar — Mon, 22 Sep 2008 15:30:54 -0700

While most of us were logging in couch time and watching the Emmys on Sunday night, the Federal Reserve was hard at work creating a new measure that converted investment banks Morgan Stanley and Goldman Sachs into traditional bank holding companies. The two firms were the last standing independent investment banks on Wall Street, and the conversion to bank holding companies truly marks the end of an era.

As bank holding companies, the two companies will be regulated by the Fed and held to much stricter capital requirements than in their previous independent lives. In order to preserve and increase liquidity, the banks will now rely on deposits for capital instead of short-term funding, and the reclassification will allow the banks to build up banking activities on top of the existing investment focus.

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Do You Read Credit Card Disclosure Forms?

SavvySugar — Mon, 05 May 2008 15:26:29 -0700

Aside from spending its time making important decisions about our economy, the Federal Reserve stood up to credit card companies on Friday by proposing a set of rules that would be helpful to credit card-using consumers. If approved, the new rules would affect the following changes.

Specify when card issuers can increase interest rates on existing balances.
Ban finance charges on balances that have been repaid.
Prohibit late fees on customers who were not given a reasonable amount of time to pay.
Companies wouldn't be allowed to direct payments to pay down the portion of the bill that had lower interest charges.
Give consumers the right to opt out of overdraft protection on their deposit accounts.

Ben Bernanke, the Federal Reserve's Chairman, said their previous efforts to require companies to improve their disclosure forms wasn't enough. He explained, "Based on our review of consumers' response to the Board's recent regulatory initiative, it seems clear that improved disclosures alone cannot solve all of the problems consumers face in trying to manage their credit card accounts."

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Interest Rate Cut Not the Best News For Your Savings Account

SavvySugar — Thu, 01 May 2008 04:27:04 -0700

Yesterday the Federal Reserve announced its seventh interest rate cut since September, lowering the federal funds rate by a quarter-point to 2 percent. Interest rates are now at their lowest since 2004 and reflect the Fed's ongoing concern about a weakening economy. The prime lending rate that affects consumers and businesses dropped correspondingly, which could have a positive effect on some credit cards and loans. Also, homeowners with adjustable-rate mortgages should have benefited from the seven rate cuts as rates would have been reduced as the Fed has made their moves.

The rate reductions are bad news for savers, because the interest rates available on savings accounts are lower than they used to be. The average rates barely keep up with the country's 4 percent inflation, which essentially means you're losing money by saving. But don't take that too literally and abandon your savings efforts - shop around for the best interest rates, and keep in mind that earning any interest is better than earning no interest.

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News Flash: Fed Cuts Interest Rate Again

SavvySugar — Tue, 18 Mar 2008 12:35:37 -0700

The Federal Reserve cut its federal funds rate this afternoon to 2.25 percent, making its sixth cut in the last six months. A weakening labor market, slowdown in consumer spending, a loss of confidence and crisis in financial markets, and a tight credit market were reasons the Fed used to support this most recent cut. Acknowledging the issues of inflationary pressures alongside a slowing economy, they stated "Uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.”

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Money, Money, Money! Economy Eeks and Laughs.

CitizenSugar — Tue, 18 Mar 2008 12:00:34 -0700

It's official. The "R" word has been unsheathed. This morning US Treasury Secretary Henry Paulson described the economy as being in "sharp decline." The mention is the closest he has come yet to conceding an election-year recession has set in.

Adding to this grim admission is the just announced Fed rate cut. The Federal Reserve slashed a key interest rate by three-quarters of a percentage point moments ago. The big question is, will it be effective? Rates have already been cut 2.25 percent since September.

Talking about money is just one of those things that's uncomfortable to do in polite society - some might even argue it's downright vulgar. But with the economic news tumbling out of Washington today, you'll just have to excuse our rudeness. The Daily Show however doesn't have any compuction skewering the national pocketbook. For a desperately need money-related chuckle, read more.

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News Flash: Fed Makes Emergency Interest Rate Cut

SavvySugar — Mon, 17 Mar 2008 13:03:40 -0700

In an attempt to avoid a financial market meltdown in the US, the Federal Reserve made an emergency rate cut on Sunday. The quarter percentage point cut applies to the discount lending rate to financial institutions, bringing the short-term lending rate from 3.5 percent to 3.25 percent. This cut only covers short-term loans that banks receive from the Federal Reserve and doesn't include loans to individual borrowers. This move called upon a Depression-era clause in the Federal Reserve Act that waives the ban on the Fed extending loans to nonbanks, as the rate cuts are extended to securities dealers, too. Federal Reserve Chairman Ben Bernanke said, "These steps will provide financial institutions with greater assurance of access to funds."

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Bush on Economy: Tough Times, No Recession

LibertySugar — Fri, 14 Mar 2008 15:00:55 -0700

President Bush spoke to the Economic Club of New York, during what he called an "interesting moment." Today the stock market has been extra volatile on news that the Federal Reserve Bank and JP Morgan bailed out investment bank Bear Stearns with emergency cash. . . . How interesting.

While somber and serious, George told the group that he is an "optimistic fella" and pronounced his faith in America's "resilient economy." Bush recounted recent woes, including low growth, lost jobs, rising prices, and the housing crisis, but said that the problems had been recognized early. He congratulated congressional Democrats for working with him to pass a stimulus package, and said he believes the US economy will come out of the tough times "better and stronger than ever."

Speaking of tough times, the dollar has now dropped below the Swiss Franc for the first time ever. Gold hit a historic peak above $1,000. Gas prices also reached another all-time high today. Do you feel as optimistic as our presidential fella?

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News Flash: On a Euro High

SavvySugar — Thu, 28 Feb 2008 06:11:21 -0800

Yesterday, the euro's value hit its highest point against the dollar since it was introduced in 1999. The currency is valued at $1.5057 and analysts say it could move even higher than its current record. The euro's escalation is attributed to negative economic reports from the U.S. including the lowest consumer confidence levels since 2003 and higher wholesale inflation. There's speculation that the Fed may cut interest rates lower even after its big cuts in January - the cuts are intended to fuel the economy but could also have the unwanted effect of pushing the dollar's value lower.

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News Flash: Fed Cuts Interest Rate Again

SavvySugar — Wed, 30 Jan 2008 12:35:27 -0800

We knew there was a possibility the Fed would decide to cut rates during its two-day meeting, and this afternoon it announced a one-half percentage point rate cut. That brings short-term rates down to three percent, insinuating that right now the Fed is more worried about an economic slowdown than rising inflation. The WSJ added that the action is "capping an unprecedented eight-day period in which officials slashed rates massively to ward off recession risks."

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