Before the 1992 Presidential campaign began President George H.W. Bush was considered almost unbeatable. Successful foreign policy developments such as the end of the Cold War and the Persian Gulf War had given him an approval rating of almost 80%. Then James Carville, Clinton's campaign manager, in a moment of inspiration came up with the slogan,'The economy, stupid.' Within a short span of time the attention of the voters was successfully turned towards the economic recession gripping the US at that time, and Bush lost the election.
This time round the outgoing President, the son of George H.W. Bush faces an uphill task to put another Republican in the White House when he leaves.Unfortunately for him the US seems to be stuck in two wars, in Afghanistan and in Iraq, which it is nowhere near winning, although things seem to be improving.Added to this he has an approval rating of 32%.The attention of the American people is once again focussed on one major headline grabbing issue, that is the sub prime crisis and its likely impact on the economy.The government has belatedly woken up to the hard realization that it has allowed matters to drift for too long and that the crisis is going to cast its shadow on the coming elections.
Lawmakers have been facing political pressure to take action.But in September this year the Fed Chairman Ben Bernanke and the Treasury secretary Henry Paulson warned that some solutions could end up perpetuating unhealthy lending practices that created the whole mess in the first place.However some initiatives were taken, such as making more money available in the system to ease the credit crunch,giving borrowers greater protection against predatory lenders and encouraging homeowners to call their banks in order to discuss their problems and find a solution so that they could retain their homes.It was also announced that while the government will try to ensure that people got to keep their homes it would do nothing to bail out speculators or those who were plain greedy.This stand of the government was probably prompted by the assumption that the crisis was nearing an end.But things have simply got worse and there is no immediate end to the crisis in sight. It is now expected that the meltdown will continue well into next year at the very least.
The government had also assumed that the crisis will remain remain confined to the housing sector which accounts for just 5% of GDP and any slowdown there would by itself not affect the economy as a whole.But economics has never been an exact science, although it is good at offering explanations in hindsight. Declining home values seems to be having a wealth effect and Americans seem to be cutting other expenses in order to both make up their losses and also in order to be able to make higher mortgage payments. This is reflected in declining auto sales and even in manufacturing. Consumer expenditure accounts for 72% of US GDP and a slowdown here could tip the economy into a recession.
The Bush administration and the mortgage industry are finally hammering out a proposal to temporarily freeze interest rates on certain stressed sub prime mortgages. If it goes through it will be the biggest action to handle the worsening crisis. The proposals could be in place as early as next week. Talks have involved all the federal banking regulators and major players in the mortgage industry such as Citigroup, Wells Fargo and others. The attempt is to extend for several years the introductory 'teaser' rates that were offered on sub prime mortgages. Such a scheme would however mean losses for investors who have purchased mortgage backed securities as it would reduce the rate of return on their investments. Companies apprehend shareholder lawsuits if they permit modifications in original agreements which are not in the best interest of the shareholders.
Government intervention in times of crisis is not new.People would do well to remember that in 1998, in the aftermath of the Asian flu, when Long Term Capital Management was in danger of going under, it was Alan Greenspan who organized a bail out for it.The economy has grown at a surprisingly strong 3.9% in the 3rd quarter although it is expected to slow in future. Food and fuel prices are at record highs and inflationary pressures are clearly visible.Although interest rate cuts are probably round the corner there are clearly limits to how low Bernanke can go without raising inflation to unacceptably high levels.Moreover he cannot allow the dollar to fall much further else foreign investors may start bailing out of US stocks and treasuries, triggering off a deflationary spiral in the economy.A widespread collapse in asset prices would have a disastrous impact on the economy.These considerations will have to be borne in mind by the mortgage companies and their shareholders alike while considering the proposals put forward by the government.
What Is Forcing Citigroup To Cut Jobs?
CNBC reports that massive layoffs are being planned by Citigroup Inc., America's largest bank. Faced with huge fourth quarter losses the bank is under pressure to cut costs and another round of job cuts may be the only way out(Citi has already cut jobs once earlier this year).
What really ails Citi? Citi has been growing a bit too fast for some time now.It has been picking up foreign banks and brokerage firms wherever it can, without giving too much thought to managing what it already has. The Nikko Cordial bid, picking up a stake in a brokerage firm in India, the Grupo Financiero buyout in Central America and continuous investments in China reinforce the image of a company that is growing by acquisitions rather than focusing on organic growth.The global sphere of its operations ( it is present in over 100 countries) has naturally led to a huge increase in expenses.In fact this increase had become significant enough for Prince Alwaleed bin Talal to remark to the effect that 'draconian measures need to be taken to curb expenses.' Incidentally the Prince is perhaps the largest single shareholder in the bank.
The tipping point has been the sub prime crisis.Citi has unveiled losses of $6.8 billion for the third quarter and it may lose a further $8 to $11 billion loss in the fourth quarter.Analysts expect the pain to continue into 2008 with expected losses of $4 billion.Citi has a direct sub prime exposure of $55 billion of which $43 billion is in CDO's. It has $135 billion in 'level three' assets.These include those assets which are not heavily traded, such as mortgage backed securities which are difficult to value, more so after the sub prime shakeout. According to Goldman Sachs Citi would need to write off $8 to$11 billion this quarter on account of sub prime losses and have placed it on' America's Sell List.'
Prince Talal acted swiftly and Charles Prince put in his papers Nov. 4th after an emergency board meting.But to say that Prince lost his job solely because of the sub prime investments would not be entirely correct.It had been rumored for several months that Prince's job was on the line unless he could show either impressive revenue growth or noticeable operating improvement. Shareholders were getting restless as the company's stock had not been going anywhere for several years. The only saving grace being the dividend of over 4%. The economy was clearly not in a position to allow the first option, so it had to be the second. After the sub prime loses came in it was unlikely that he could have continued.
It has been suggested that given its large workforce of almost 300,000 Citi can cut its workforce simply by reducing hiring and letting attrition do the work for them.But this strategy has the drawback that it affects all divisions uniformly and takes a bit too long to work out. The company needs to show decisive action and that it means business before the stock market will take notice and reward the decision taken. It is not too difficult for financial firms to find surplus workforce which can be laid off. There are always back offices and IT activities that can be hived off or outsourced. Fortunately for Citi, given its brand name it will be easy for it to find buyers for any such division if it ever decides to do so.The costs of cutting the workforce would be substantial, but small change for a company like Citi. But Citi has to ensure that its actions do not appear to be an act of desperation. Too large a cut and it may scare away potential investors in the short term due to the uncertainties surrounding the impact of such an action on its operations.
Meanwhile Citigroup shares were quoted at $30.47 in early morning trade Tuesday after the Abu Dhabi Investment Authority said it will invest $7.5 billion in Citigroup Inc. Sheikh Ahmed Bin Zayed Al Nahyan called Citi 'a premier brand and with tremendous opportunities for growth.' After this investment is converted into equity shares it will outrank the holding of Prince Alwaleed bin Talal. This investment is significant and it is likely to signal that the free fall in US financial stocks is coming to an end.
What really ails Citi? Citi has been growing a bit too fast for some time now.It has been picking up foreign banks and brokerage firms wherever it can, without giving too much thought to managing what it already has. The Nikko Cordial bid, picking up a stake in a brokerage firm in India, the Grupo Financiero buyout in Central America and continuous investments in China reinforce the image of a company that is growing by acquisitions rather than focusing on organic growth.The global sphere of its operations ( it is present in over 100 countries) has naturally led to a huge increase in expenses.In fact this increase had become significant enough for Prince Alwaleed bin Talal to remark to the effect that 'draconian measures need to be taken to curb expenses.' Incidentally the Prince is perhaps the largest single shareholder in the bank.
The tipping point has been the sub prime crisis.Citi has unveiled losses of $6.8 billion for the third quarter and it may lose a further $8 to $11 billion loss in the fourth quarter.Analysts expect the pain to continue into 2008 with expected losses of $4 billion.Citi has a direct sub prime exposure of $55 billion of which $43 billion is in CDO's. It has $135 billion in 'level three' assets.These include those assets which are not heavily traded, such as mortgage backed securities which are difficult to value, more so after the sub prime shakeout. According to Goldman Sachs Citi would need to write off $8 to$11 billion this quarter on account of sub prime losses and have placed it on' America's Sell List.'
Prince Talal acted swiftly and Charles Prince put in his papers Nov. 4th after an emergency board meting.But to say that Prince lost his job solely because of the sub prime investments would not be entirely correct.It had been rumored for several months that Prince's job was on the line unless he could show either impressive revenue growth or noticeable operating improvement. Shareholders were getting restless as the company's stock had not been going anywhere for several years. The only saving grace being the dividend of over 4%. The economy was clearly not in a position to allow the first option, so it had to be the second. After the sub prime loses came in it was unlikely that he could have continued.
It has been suggested that given its large workforce of almost 300,000 Citi can cut its workforce simply by reducing hiring and letting attrition do the work for them.But this strategy has the drawback that it affects all divisions uniformly and takes a bit too long to work out. The company needs to show decisive action and that it means business before the stock market will take notice and reward the decision taken. It is not too difficult for financial firms to find surplus workforce which can be laid off. There are always back offices and IT activities that can be hived off or outsourced. Fortunately for Citi, given its brand name it will be easy for it to find buyers for any such division if it ever decides to do so.The costs of cutting the workforce would be substantial, but small change for a company like Citi. But Citi has to ensure that its actions do not appear to be an act of desperation. Too large a cut and it may scare away potential investors in the short term due to the uncertainties surrounding the impact of such an action on its operations.
Meanwhile Citigroup shares were quoted at $30.47 in early morning trade Tuesday after the Abu Dhabi Investment Authority said it will invest $7.5 billion in Citigroup Inc. Sheikh Ahmed Bin Zayed Al Nahyan called Citi 'a premier brand and with tremendous opportunities for growth.' After this investment is converted into equity shares it will outrank the holding of Prince Alwaleed bin Talal. This investment is significant and it is likely to signal that the free fall in US financial stocks is coming to an end.
The Falling U.S. Dollar And The Sub Prime Crisis
The year 2007 will be remembered for a long time as the year in which the US dollar fell sharply in value and the US economy faced a crash in the housing sector.The dollar hit a new low of 1.4966 to the euro Friday and everybody is asking how much further it will fall and what is the Fed going to do about it. The worst affected by the fall are China, Saudi Arabia and Japan as these countries have the largest dollar holdings.The value of their huge dollar denominated assets has already shrunk dramatically this year.China and Japan are export driven economies and the falling dollar is hurting exports. Talking of exports even the EU nations are affected by a weak dollar.The US on its part seems to be content to let the dollar decline in value as long as the fall is orderly.In fact its exports have benefited immensely from the dollar weakness, rising 15% in the last 12 months, while prices of imports,except oil, have not risen in proportion as the exporting nations have been reluctant to increase prices in order to protect market share.The only section of the population to have been adversely affected are those traveling abroad for whom a decline in the value of the dollar translates into a decline in purchasing power.
At the recent OPEC summit in Riyadh, Iran And Venezuela called the dollar a worthless currency and floated the idea of an alternative currency.Although their remarks were certainly to spite the US, other nations like China,Japan and those in the Middle East seem to be quietly diversifying their holdings, although there is no large scale sell off of dollar denominated assets as yet.
Bob Shiller in his book 'Irrational Exuberance' (2nd edition) has analyzed home prices in the US for the last 120 years. For 100 years they were almost flat with spikes of 10 to 20% on either side. Then starting in 1997 home prices shot up by 93% in real terms.Part of the rise can be explained by demography, rising incomes and low real interest rates.. But they basically went up because loose credit and easy money created a bubble.The problem with bubbles is that you don't realize you are in one till it bursts.Suddenly prices started falling last summer and the trend is getting worse by the day.Although the supply of new houses has fallen the demand has fallen even more creating excess supply. Add to it about 2.2 million homes the banks will be saddled with due to foreclosures and there will be further downward pressure on prices.Slowing credit to the sub prime sector contributes to further slackening of demand and fall in prices. About $ 1 trillion in ARM's is expected to reset next year. Many people will not be able to afford the higher interest rates and will be forced to sell at depressed rates. It has to be remembered that a large part of the demand was driven by the 'condo flippers,' that is people who were simply buying houses with the intention of selling them later at a profit. Now these people are stampeding to get out to save as much of their down payment as they can.
Goldman Sachs estimates home prices will fall by a further 15%. Shiller thinks it could be as high as 50%.This decline will have a wealth effect and people will reduce spending on other goods.Signs are visible in the fall in auto sales and even in manufacturing.This is worrisome because private consumption accounts for 72% of US GDP. The housing sector is only 5% of GDP and a slowdown there is not enough to trigger a recession but a slow down in consumer spending is dangerous.So to prevent a spillover of the housing crisis to the other sectors of the economy, which may cause the US economy to go into recession, the Fed will have to cut interest rates even at the cost of higher inflation. It is this certainty of a cut in interest rates which is behind the slump in the dollar.
The Fed also has to cut interest rates in order to protect the financial system. We neither know the exact extent of the losses on account of this sub prime mess nor who has lost money. Banks and other financial institutions have admitted significant losses but it is feared that they will report further losses in future. Other losers are the investors in the CDO's and other similar instruments.It is speculated that China and other West Asian nations flush with petro dollars had made large investments in such instruments. For an orderly winding down of these investments cuts in interest rates may be the only way out.
But in the end we all have to remember that the dollar can only fall this much and no more.Not only is the US the largest economy in the world , it also has the necessary policies and financial institutions in place which allows both the entry and exit of hundreds of billions of dollars that other nations wish to invest.So once this crisis plays out the and the US economy strengthens again the dollar is expected to regain its position as the most important currency in the world.
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At the recent OPEC summit in Riyadh, Iran And Venezuela called the dollar a worthless currency and floated the idea of an alternative currency.Although their remarks were certainly to spite the US, other nations like China,Japan and those in the Middle East seem to be quietly diversifying their holdings, although there is no large scale sell off of dollar denominated assets as yet.
Bob Shiller in his book 'Irrational Exuberance' (2nd edition) has analyzed home prices in the US for the last 120 years. For 100 years they were almost flat with spikes of 10 to 20% on either side. Then starting in 1997 home prices shot up by 93% in real terms.Part of the rise can be explained by demography, rising incomes and low real interest rates.. But they basically went up because loose credit and easy money created a bubble.The problem with bubbles is that you don't realize you are in one till it bursts.Suddenly prices started falling last summer and the trend is getting worse by the day.Although the supply of new houses has fallen the demand has fallen even more creating excess supply. Add to it about 2.2 million homes the banks will be saddled with due to foreclosures and there will be further downward pressure on prices.Slowing credit to the sub prime sector contributes to further slackening of demand and fall in prices. About $ 1 trillion in ARM's is expected to reset next year. Many people will not be able to afford the higher interest rates and will be forced to sell at depressed rates. It has to be remembered that a large part of the demand was driven by the 'condo flippers,' that is people who were simply buying houses with the intention of selling them later at a profit. Now these people are stampeding to get out to save as much of their down payment as they can.
Goldman Sachs estimates home prices will fall by a further 15%. Shiller thinks it could be as high as 50%.This decline will have a wealth effect and people will reduce spending on other goods.Signs are visible in the fall in auto sales and even in manufacturing.This is worrisome because private consumption accounts for 72% of US GDP. The housing sector is only 5% of GDP and a slowdown there is not enough to trigger a recession but a slow down in consumer spending is dangerous.So to prevent a spillover of the housing crisis to the other sectors of the economy, which may cause the US economy to go into recession, the Fed will have to cut interest rates even at the cost of higher inflation. It is this certainty of a cut in interest rates which is behind the slump in the dollar.
The Fed also has to cut interest rates in order to protect the financial system. We neither know the exact extent of the losses on account of this sub prime mess nor who has lost money. Banks and other financial institutions have admitted significant losses but it is feared that they will report further losses in future. Other losers are the investors in the CDO's and other similar instruments.It is speculated that China and other West Asian nations flush with petro dollars had made large investments in such instruments. For an orderly winding down of these investments cuts in interest rates may be the only way out.
But in the end we all have to remember that the dollar can only fall this much and no more.Not only is the US the largest economy in the world , it also has the necessary policies and financial institutions in place which allows both the entry and exit of hundreds of billions of dollars that other nations wish to invest.So once this crisis plays out the and the US economy strengthens again the dollar is expected to regain its position as the most important currency in the world.
More on Interesting Life
US Exports Hit Record High In August
After months of crises the latest piece of economic news, which is quite encouraging is that the US trade deficit for the month of August has fallen 2.4 percent to $57.6 billion from $59 billion in July.This is the smallest since January according to the Commerce Department.
US exporters benefited from a weak dollar and strong overseas growth to notch up record exports of $138.3 billion.The decline in the deficit would have been larger but for the increase in oil prices.Significantly the deficit with China has dropped 5.3 percent to $22.5 billion.It seems that the efforts of the government in this direction are finally having some effect.This decrease has also been aided by the various recalls of Chinese made goods which affected their demand to some extent.
To appreciate the significance of this development it is necessary to understand why consistently rising deficits threaten to disrupt the US economy.A deficit as everybody knows arises when the value of goods and services exported is less than the value of the goods and services imported.In such a situation foreign countries and corporations are left holding dollars. Increasing deficits year after year imply that the supply of dollars with them also goes on increasing.The fear that is uppermost in everyone's mind is that a point will come when they may decide that it is no longer worthwhile to hold dollars, and they may decide to sell some of those dollars causing it to lose value sharply. This will lead to a spike in the prices of vital imports like oil for instance and place pressure on the US economy.In order to preserve the value of the dollar the US would have to increase interest rates which would affect economic growth, lead to unemployment and the entire vicious cycle would follow.
So far the US has been spared these consequences for some very simple reasons.The US economy was the only one which was large enough to absorb the huge surpluses generated by the oil exporting countries and countries like China and Japan.The US needed these dollars to finance its development needs as in recent times it has become a nation which saves less than it needs.So these trade surpluses have flown back to the US.Finally the US dollar has been a safe haven currency in an age of international turmoil.But now with the growth of the Eurozone economy and the rapid pace of development of the BRIC nations, coupled with a slowing of the US economy there is a real danger of the US dollar falling too far and too fast as people seek to shift to nations offering prospects of higher returns.
It is in this background that the decline in the US trade deficit assumes significance. Further declines coupled with a growing economy will result in a drastic reduction of the trade deficit as a percentage of GDP which will be desirable for the health of both the US as well as the global financial system.
US exporters benefited from a weak dollar and strong overseas growth to notch up record exports of $138.3 billion.The decline in the deficit would have been larger but for the increase in oil prices.Significantly the deficit with China has dropped 5.3 percent to $22.5 billion.It seems that the efforts of the government in this direction are finally having some effect.This decrease has also been aided by the various recalls of Chinese made goods which affected their demand to some extent.
To appreciate the significance of this development it is necessary to understand why consistently rising deficits threaten to disrupt the US economy.A deficit as everybody knows arises when the value of goods and services exported is less than the value of the goods and services imported.In such a situation foreign countries and corporations are left holding dollars. Increasing deficits year after year imply that the supply of dollars with them also goes on increasing.The fear that is uppermost in everyone's mind is that a point will come when they may decide that it is no longer worthwhile to hold dollars, and they may decide to sell some of those dollars causing it to lose value sharply. This will lead to a spike in the prices of vital imports like oil for instance and place pressure on the US economy.In order to preserve the value of the dollar the US would have to increase interest rates which would affect economic growth, lead to unemployment and the entire vicious cycle would follow.
So far the US has been spared these consequences for some very simple reasons.The US economy was the only one which was large enough to absorb the huge surpluses generated by the oil exporting countries and countries like China and Japan.The US needed these dollars to finance its development needs as in recent times it has become a nation which saves less than it needs.So these trade surpluses have flown back to the US.Finally the US dollar has been a safe haven currency in an age of international turmoil.But now with the growth of the Eurozone economy and the rapid pace of development of the BRIC nations, coupled with a slowing of the US economy there is a real danger of the US dollar falling too far and too fast as people seek to shift to nations offering prospects of higher returns.
It is in this background that the decline in the US trade deficit assumes significance. Further declines coupled with a growing economy will result in a drastic reduction of the trade deficit as a percentage of GDP which will be desirable for the health of both the US as well as the global financial system.
Simple Steps To Prevent Foreclosure
The housing boom which lasted till last year saw prices moving up rapidly.As a result home buyers not only had to put in that little bit extra to buy a home, but some also overextended themselves by buying homes they really couldn't afford. In order to buy homes people used innovative and risky schemes of financing such as no down-payment, interest only, negative amortization and piggyback loans which put the borrowers in a precarious position. The most popular was the Adjustable Rate Mortgage or ARM in which the borrower paid very low rates of interest for the first two years and the rates automatically reset thereafter at much higher levels.Such loans usually carry a pre-payment penalty to discourage premature repayment.
Things were OK as long as prices were going up rapidly, often on a monthly basis.People were confident that should the need arise they could sell their house, pay off the loan, and still be left with a profit.But with prices falling the homeowners are staring at losses and high interest borrowings which need to be repaid. Unfortunately the future is also quite bleak. many of the loans that will automatically reset after two years were issued in 2005 and 2006. It is feared another wave of foreclosures will hit the market in late 2007 and early 2008 further depressing property prices. According to Realty Trac Inc. foreclosure filings in August this year were 243,947 a rise of a whopping 115 percent over the same month a year ago. This figure is also up by almost 35 percent over the figure of 179,599 in July this year. Desperate sellers are unable to find buyers, and with realty developers offering steep discounts they find that the value of their houses has fallen further.
But there are some simple things you can do to prevent foreclosure.
The very first thing to do is to call your mortgage lender. Remember they are not in the business to foreclose on property. They will work with you and help you find a way to keep your house.Discuss your problem with them honestly and in detail. They can help you in many ways. Each case is usually considered on an individual basis. The lender usually starts with debt counseling He looks at all your outstanding debts to see if they can be restructured or consolidated. He can then help you prepare a budget to structure a repayment plan. He may also agree to extend the period of your mortgage which will reduce your monthly payment. Overdue payments can be added to the new loans. If you are working with your lender he may grant you extra time to get your problems under control. He may allow you to sell off your home and repay the entire loan. Alternatively you may sign the house over to the lender. This is a kind of voluntary foreclosure but you avoid the public notice of a foreclosure sale.Also if the house sells below the debt amount you may not be liable for the loss.As a last resort you may file for bankruptcy. Although this will severely damage your credit record for seven years, foreclosure proceedings are usually stopped till bankruptcy is resolved.
You can also tighten your belt, go in for strict budgeting and dig into various savings here and there to come up with that bit of extra cash which will see you through this bad patch and let you keep your home.Contact an HUD approved counseling agency only. Beware of scamsters who promise to get foreclosure proceedings stopped if you sign documents appointing them as your agent.You may be signing over the title of your property.
Act promptly and you may continue to enjoy the home you have bought.
Things were OK as long as prices were going up rapidly, often on a monthly basis.People were confident that should the need arise they could sell their house, pay off the loan, and still be left with a profit.But with prices falling the homeowners are staring at losses and high interest borrowings which need to be repaid. Unfortunately the future is also quite bleak. many of the loans that will automatically reset after two years were issued in 2005 and 2006. It is feared another wave of foreclosures will hit the market in late 2007 and early 2008 further depressing property prices. According to Realty Trac Inc. foreclosure filings in August this year were 243,947 a rise of a whopping 115 percent over the same month a year ago. This figure is also up by almost 35 percent over the figure of 179,599 in July this year. Desperate sellers are unable to find buyers, and with realty developers offering steep discounts they find that the value of their houses has fallen further.
But there are some simple things you can do to prevent foreclosure.
The very first thing to do is to call your mortgage lender. Remember they are not in the business to foreclose on property. They will work with you and help you find a way to keep your house.Discuss your problem with them honestly and in detail. They can help you in many ways. Each case is usually considered on an individual basis. The lender usually starts with debt counseling He looks at all your outstanding debts to see if they can be restructured or consolidated. He can then help you prepare a budget to structure a repayment plan. He may also agree to extend the period of your mortgage which will reduce your monthly payment. Overdue payments can be added to the new loans. If you are working with your lender he may grant you extra time to get your problems under control. He may allow you to sell off your home and repay the entire loan. Alternatively you may sign the house over to the lender. This is a kind of voluntary foreclosure but you avoid the public notice of a foreclosure sale.Also if the house sells below the debt amount you may not be liable for the loss.As a last resort you may file for bankruptcy. Although this will severely damage your credit record for seven years, foreclosure proceedings are usually stopped till bankruptcy is resolved.
You can also tighten your belt, go in for strict budgeting and dig into various savings here and there to come up with that bit of extra cash which will see you through this bad patch and let you keep your home.Contact an HUD approved counseling agency only. Beware of scamsters who promise to get foreclosure proceedings stopped if you sign documents appointing them as your agent.You may be signing over the title of your property.
Act promptly and you may continue to enjoy the home you have bought.
Dilemmas Facing Islamic Banking Today
One of the most interesting developments in the field of international finance over the last couple of decades has been the development of Islamic banking.Although this form of banking has been followed for centuries it is only recently that it has caught the attention of the world, when flush with petro -dollars many Islamic countries in the Middle East started to promote Islamic banking in their respective countries.This move was prompted by the desire to run their nations according to the principles of 'Sharia.'
Contrary to popular perception, Islamic banking is not against the idea of a profitable return on an investment. It is just opposed to the idea of interest paid on deposits or any other form of pre- determined return, which is considered to be 'Riba' or usury.Additionally these banks seek to channelize investments into desirable business activities and investments in forbidden businesses such as alcohol, gambling and pork etc. are banned.
Islamic scholars have long accepted the idea of profit sharing for Islamic bank depositors and borrowers as a proper method of compensation.Today Islamic banking is already managing funds in excess of $200 billion and it is growing rapidly.
Amongst the dilemmas that Islamic banks face in an increasingly globalised economy with fewer and fewer controls on cross border foreign exchange movements is that in order to attract depositors they must be able to assure a certain minimum return over a given time period. Too low a rate of interest on long term investments in an inflationary environment may just not be acceptable to most people. More importantly they need to be viewed as independent financial institutions and not as extensions of their respective governments which may require them to finance their welfare programs at the expense of their depositors.
All interest free banks agree on the basic principles but individual banks differ greatly from each other.These differences are due to the differences in the laws of their respective countries, the objectives of the individual banks and also the degree of their interaction with other interest based banks. These factors have inhibited the growth of a truly international bank which is so important these days.These banks also seem to be lagging behind in providing several modern banking and financial products and services which are in demand.
Finally there is increasing criticism, often in the countries' of their origin itself,that the financial charges they receive from their borrowers is nothing but interest called by a different name.
In spite of these problems the size of this industry, fed with an unending supply of petro-dollars, is simply too large to be ignored.In fact it needs to be studied carefully and suitably strengthened to meet the challenges posed by modern banking methods so that it is able to discharge effectively the role assigned to it.
Contrary to popular perception, Islamic banking is not against the idea of a profitable return on an investment. It is just opposed to the idea of interest paid on deposits or any other form of pre- determined return, which is considered to be 'Riba' or usury.Additionally these banks seek to channelize investments into desirable business activities and investments in forbidden businesses such as alcohol, gambling and pork etc. are banned.
Islamic scholars have long accepted the idea of profit sharing for Islamic bank depositors and borrowers as a proper method of compensation.Today Islamic banking is already managing funds in excess of $200 billion and it is growing rapidly.
Amongst the dilemmas that Islamic banks face in an increasingly globalised economy with fewer and fewer controls on cross border foreign exchange movements is that in order to attract depositors they must be able to assure a certain minimum return over a given time period. Too low a rate of interest on long term investments in an inflationary environment may just not be acceptable to most people. More importantly they need to be viewed as independent financial institutions and not as extensions of their respective governments which may require them to finance their welfare programs at the expense of their depositors.
All interest free banks agree on the basic principles but individual banks differ greatly from each other.These differences are due to the differences in the laws of their respective countries, the objectives of the individual banks and also the degree of their interaction with other interest based banks. These factors have inhibited the growth of a truly international bank which is so important these days.These banks also seem to be lagging behind in providing several modern banking and financial products and services which are in demand.
Finally there is increasing criticism, often in the countries' of their origin itself,that the financial charges they receive from their borrowers is nothing but interest called by a different name.
In spite of these problems the size of this industry, fed with an unending supply of petro-dollars, is simply too large to be ignored.In fact it needs to be studied carefully and suitably strengthened to meet the challenges posed by modern banking methods so that it is able to discharge effectively the role assigned to it.
Understanding Recent Stock Market Moves
The US housing market was a bubble that has well and truly burst.It is estimated that we are heading for 2 million foreclosures this year a figure not heard of since the Great Depression. What's more, the Fed's half point rate cut is not expected to stem the slide.Then there has been the sub-prime crisis.The top financial institutions of the nation have disclosed losses of billions of dollars on loans made to borrowers with poor credit histories. Retail sales are slowing and so is industrial output. To make matters worse energy prices are at record levels.
Yet the stock markets have proved everybody wrong with the Dow rising from about 12800 in mid August to 14066 on Friday, a gain of about 1200 points in a month and a half.
So what is behind this huge rally.Conventional wisdom would have had us believe that the housing crisis was bound to affect the other sectors of the economy causing stock prices to fall. At least that's what always happened in the past. But not this time round. So far the housing market crisis appears to have been contained in as much as it has not noticeably affected other sectors of the economy. The sub-prime crisis at one time threatened to get out of hand. But the Fed's rate cut indicated that it was willing to step in to inject liquidity into the system as and when required.This reassurance seems to have been all that the stock market needed.
The weaker dollar has also helped a lot.While the domestic economy has slowed, world economic growth has remained robust.The weak dollar has enabled top US corporations to increase overseas sales and reap bumper profits.It is these large corporations which have the largest weightage in the stock market indices.Record energy prices have ensured windfall gains for the giant oil companies.These too have a significant weightage in the indices. If these companies do well the stock market will continue to do well.
The disclosure of losses by the financial companies has been seen as a welcome sign of transparency and there is a belief that the worst is over.The latest jobs report shows that more jobs were created in September than expected and the August report was also revised upwards showing a rise instead of a decline.These figures indicate that far from a recession the US economy will continue to grow at a moderate pace.
Experts however warn that we are not out of the woods as yet and that the sub-prime crisis may come back to haunt us later in the year.Also interest rates are not likely to fall much further, meaning that easy availability of cash is a thing of the past.High interest rates also discourage merger and acquisition activity, which reduces premiums which are offered for companies' stocks. With less cash to spare buybacks by companies also get reduced and this depresses share prices.
Experts are clearly divided on where the markets are heading.Morgan Stanley says that its indicators are showing a 'full house' in terms of sell triggers.Many others predict that even if there is no collapse the markets have topped off. Some feel that the markets will be higher in December from where they are today.
Investors would therefore do well to closely watch events unfold over the next few months and take necessary steps to protect their investments rather than have things blow up in their faces.
Yet the stock markets have proved everybody wrong with the Dow rising from about 12800 in mid August to 14066 on Friday, a gain of about 1200 points in a month and a half.
So what is behind this huge rally.Conventional wisdom would have had us believe that the housing crisis was bound to affect the other sectors of the economy causing stock prices to fall. At least that's what always happened in the past. But not this time round. So far the housing market crisis appears to have been contained in as much as it has not noticeably affected other sectors of the economy. The sub-prime crisis at one time threatened to get out of hand. But the Fed's rate cut indicated that it was willing to step in to inject liquidity into the system as and when required.This reassurance seems to have been all that the stock market needed.
The weaker dollar has also helped a lot.While the domestic economy has slowed, world economic growth has remained robust.The weak dollar has enabled top US corporations to increase overseas sales and reap bumper profits.It is these large corporations which have the largest weightage in the stock market indices.Record energy prices have ensured windfall gains for the giant oil companies.These too have a significant weightage in the indices. If these companies do well the stock market will continue to do well.
The disclosure of losses by the financial companies has been seen as a welcome sign of transparency and there is a belief that the worst is over.The latest jobs report shows that more jobs were created in September than expected and the August report was also revised upwards showing a rise instead of a decline.These figures indicate that far from a recession the US economy will continue to grow at a moderate pace.
Experts however warn that we are not out of the woods as yet and that the sub-prime crisis may come back to haunt us later in the year.Also interest rates are not likely to fall much further, meaning that easy availability of cash is a thing of the past.High interest rates also discourage merger and acquisition activity, which reduces premiums which are offered for companies' stocks. With less cash to spare buybacks by companies also get reduced and this depresses share prices.
Experts are clearly divided on where the markets are heading.Morgan Stanley says that its indicators are showing a 'full house' in terms of sell triggers.Many others predict that even if there is no collapse the markets have topped off. Some feel that the markets will be higher in December from where they are today.
Investors would therefore do well to closely watch events unfold over the next few months and take necessary steps to protect their investments rather than have things blow up in their faces.
What College Students Must Know About Credit Cards
Not very long ago credit cards were reserved for those who had a steady source of income.A college student couldn't get one unless a parent co-signed.
Over the last decade things have changed.The usual image of a hard up student has changed into one of a financially independent person, all thanks to the credit card.
But now suddenly questions are being asked as to whether students are graduating with too high a level of debt.
Credit card companies are marketing aggressively to college students.They are offering students, free lunches, T shirts and other gifts if they fill up a credit card application. Unfortunately students pay more attention to the free gifts rather than the terms and conditions of the credit card.
Every year, come fall and the beginning of a new academic year, attention turns to credit card companies and the marketing policies followed by them for students.Several universities have now placed restrictions on the card marketing companies to prevent indiscriminate issue of credit cards to students.But credit card companies are able to get around these restrictions fairly easily.They simply set up shop across the street from the campuses that place restrictions on their activities.
Many card issuers also strike deals with colleges paying them millions of dollars a year in return for exclusive access to their students.This is now turning into an important source of finance for these universities.
The reasons why college students are such a prized catch are not far to seek.They earn more during their lifetime than those who don't go to college and some can also rely on their parents to clear their credit card debts.Added to this is a growing market with several million new potential customers becoming available every year.This is important in an over saturated market with each household having 14 cards on an average.Students also tend to be more loyal and will usually stick to the company that gave them their first card.Once they graduate their financial needs increase immediately.Car loans, mortgages and various other financial requirements need to be met. Existing relationships tend to expand to take care of changing financial needs.
But the flip side is that maybe credit cards are too easily available and it is not unusual for a student these days to get a second one without having made a payment on the first.
The truth is that students pay more to credit card companies by way of late payment fees or by way of fees for exceeding their credit limit than older people.So students are targeted by card companies also because they are a more profitable proposition.
Since credit cards are indispensable there are some things a student can do to stay clear of debt.To start with resist free gifts.Sign up for a credit card only after fully understanding its terms and conditions.Please compare several cards before choosing one.Fees structures and interest rates can vary significantly.A card with your university's logo may not be the best deal.Finally don't buy what you cannot afford.Learn to pay off your balance on time and in full every month.
Avoiding credit card debt will make college a more enjoyable experience.
Over the last decade things have changed.The usual image of a hard up student has changed into one of a financially independent person, all thanks to the credit card.
But now suddenly questions are being asked as to whether students are graduating with too high a level of debt.
Credit card companies are marketing aggressively to college students.They are offering students, free lunches, T shirts and other gifts if they fill up a credit card application. Unfortunately students pay more attention to the free gifts rather than the terms and conditions of the credit card.
Every year, come fall and the beginning of a new academic year, attention turns to credit card companies and the marketing policies followed by them for students.Several universities have now placed restrictions on the card marketing companies to prevent indiscriminate issue of credit cards to students.But credit card companies are able to get around these restrictions fairly easily.They simply set up shop across the street from the campuses that place restrictions on their activities.
Many card issuers also strike deals with colleges paying them millions of dollars a year in return for exclusive access to their students.This is now turning into an important source of finance for these universities.
The reasons why college students are such a prized catch are not far to seek.They earn more during their lifetime than those who don't go to college and some can also rely on their parents to clear their credit card debts.Added to this is a growing market with several million new potential customers becoming available every year.This is important in an over saturated market with each household having 14 cards on an average.Students also tend to be more loyal and will usually stick to the company that gave them their first card.Once they graduate their financial needs increase immediately.Car loans, mortgages and various other financial requirements need to be met. Existing relationships tend to expand to take care of changing financial needs.
But the flip side is that maybe credit cards are too easily available and it is not unusual for a student these days to get a second one without having made a payment on the first.
The truth is that students pay more to credit card companies by way of late payment fees or by way of fees for exceeding their credit limit than older people.So students are targeted by card companies also because they are a more profitable proposition.
Since credit cards are indispensable there are some things a student can do to stay clear of debt.To start with resist free gifts.Sign up for a credit card only after fully understanding its terms and conditions.Please compare several cards before choosing one.Fees structures and interest rates can vary significantly.A card with your university's logo may not be the best deal.Finally don't buy what you cannot afford.Learn to pay off your balance on time and in full every month.
Avoiding credit card debt will make college a more enjoyable experience.
What A Weaker Dollar Means For The US
On Tuesday the Fed Chairman Ben Bernanke ended weeks of speculation when he finally cut interest rates by an unexpectedly bold 50 basis points.The dollar immediately fell against all major currencies.It fell to almost 1.40 against the euro and to just over 114 against the Japanese yen.Experts expect the dollar to continue its slide against major currencies unless various central banks also cut interest rates to maintain the existing parity with US interest rates.
The debate over whether a weak dollar is good or bad for the US is endless.The advantages of a strong dollar are that it makes imports cheaper which in turn keeps inflation in check.US consumers also benefit when they either travel abroad or invest in foreign markets as the dollar simply buys more.The flip side is that US companies have to compete with cheaper imports or foreign goods in overseas markets.Foreign tourists do not find the US to be an attractive destination and foreign investors are reluctant to invest in the US.Exactly the reverse happens when the dollar starts to weaken.Then again it is not necessary that a weak dollar impacts everybody the same way.Some companies which are large exporters stand to gain whereas companies which are large importers stand to lose.Further the dollar may weaken to a larger extent against one currency, say the euro and to a lesser extent another for instance the Chinese yuan.Suffice it to say that foreign exchange movements in modern times are far more complex than at any time in the past and whether a weak currency or a strong currency is good or bad also depends on the view one may take of the matter.
The present cut has been forced upon the Fed by the collapse in the housing market and the sub prime crisis.Experts believe that this was perhaps the only way to avoid a recession.But now there is a growing fear that foreign investors will start avoiding the US bond markets.Data already suggests that in July there have been net sales of US treasuries with sales falling to $19 billion from about $97 billion.As the yield gap between the US and the rest of the world narrows this trend may accelerate leaving the US to find other ways of financing its current account deficit which is expected to rise to $850 billion or 6.5% of GDP this year.Foreigners have funded 25 to 30% of US credit and short term paper markets over the last two years.The sudden fall in the dollar's value may also reverse money flows back into Japan causing further pressure on the dollar.Long term bond yields in the US would rise, "increasing mortgage rates" and aggravate the housing crisis rather than solve it.
As other countries hesitate to cut interest rates in step with the US for fear of kindling inflation it remains to be seen whether the dollar is going to fall dramatically against other major currencies or not.Bernanke may have gambled by cutting aggressively as a rapidly weakening dollar is clearly not in any body's interest.
The debate over whether a weak dollar is good or bad for the US is endless.The advantages of a strong dollar are that it makes imports cheaper which in turn keeps inflation in check.US consumers also benefit when they either travel abroad or invest in foreign markets as the dollar simply buys more.The flip side is that US companies have to compete with cheaper imports or foreign goods in overseas markets.Foreign tourists do not find the US to be an attractive destination and foreign investors are reluctant to invest in the US.Exactly the reverse happens when the dollar starts to weaken.Then again it is not necessary that a weak dollar impacts everybody the same way.Some companies which are large exporters stand to gain whereas companies which are large importers stand to lose.Further the dollar may weaken to a larger extent against one currency, say the euro and to a lesser extent another for instance the Chinese yuan.Suffice it to say that foreign exchange movements in modern times are far more complex than at any time in the past and whether a weak currency or a strong currency is good or bad also depends on the view one may take of the matter.
The present cut has been forced upon the Fed by the collapse in the housing market and the sub prime crisis.Experts believe that this was perhaps the only way to avoid a recession.But now there is a growing fear that foreign investors will start avoiding the US bond markets.Data already suggests that in July there have been net sales of US treasuries with sales falling to $19 billion from about $97 billion.As the yield gap between the US and the rest of the world narrows this trend may accelerate leaving the US to find other ways of financing its current account deficit which is expected to rise to $850 billion or 6.5% of GDP this year.Foreigners have funded 25 to 30% of US credit and short term paper markets over the last two years.The sudden fall in the dollar's value may also reverse money flows back into Japan causing further pressure on the dollar.Long term bond yields in the US would rise, "increasing mortgage rates" and aggravate the housing crisis rather than solve it.
As other countries hesitate to cut interest rates in step with the US for fear of kindling inflation it remains to be seen whether the dollar is going to fall dramatically against other major currencies or not.Bernanke may have gambled by cutting aggressively as a rapidly weakening dollar is clearly not in any body's interest.
Why Senior Citizens Are At Risk Of Fraud
There are various investment and other schemes currently available which are targeted exclusively at senior citizens.Now security industry regulators have revealed that many of these schemes are full of incorrect claims and some are complete frauds.
Statistics speak for themselves.People 60 and older make up 15% of the country's population but account for 30% of all fraud victims.When you also consider that three-fourths of the country's consumer financial assets are controlled by people 50 or older, then you get a picture of how much is at stake.The money these people control is about $16 trillion!
The encouraging news is that the government is aware of the problem and is trying to find ways of solving it.The Federal Bureau of Investigation has studied the problem and analyzed the reasons why senior citizens are at greater risk than others.Their findings make interesting reading.
Older citizens are more likely to have a "nest egg", own their own home, have good credit and have some spare cash to invest.
The present generation of senior citizens were raised to be polite and trusting.They find it difficult to be rude or to just hang up the phone on unwanted callers.
Older Americans are less likely to report a fraud because they do not know whom to report it to.Often they are ashamed to admit they have been scammed, or they fear that it may be taken as a sign they are mentally incapacitated and they may be asked to hand over control of their affairs by their own relatives.
When elderly victims do report a crime, they often make poor witnesses.this is because it usually takes weeks for someone to realize that he has been the victim of a financial fraud.Recalling events clearly is often difficult for senior citizens.
the most common frauds being committed these days are by selling 'fake' medical products which promise improved physical health and ability to fight or prevent dangerous diseases such as cancer.
The most common frauds being practiced include Health Insurance Frauds,Counterfeit Prescription Drugs, Funeral and Cemetery Fraud, Fraudulent 'Anti Aging' Products, Telemarketing Frauds, Internet Fraud and Fraudulent Investment Schemes and the list goes on.
But help is at hand.The FBI has a Common Fraud Schemes webpage which provides tips on how to protect yourself and your family from fraud.
The Securities And Exchange Commission is also examining ways to protect Senior Citizens from fraud.Hopefully we will soon have an almost foolproof system in place to provide necessary protection to our senior citizens.
Statistics speak for themselves.People 60 and older make up 15% of the country's population but account for 30% of all fraud victims.When you also consider that three-fourths of the country's consumer financial assets are controlled by people 50 or older, then you get a picture of how much is at stake.The money these people control is about $16 trillion!
The encouraging news is that the government is aware of the problem and is trying to find ways of solving it.The Federal Bureau of Investigation has studied the problem and analyzed the reasons why senior citizens are at greater risk than others.Their findings make interesting reading.
Older citizens are more likely to have a "nest egg", own their own home, have good credit and have some spare cash to invest.
The present generation of senior citizens were raised to be polite and trusting.They find it difficult to be rude or to just hang up the phone on unwanted callers.
Older Americans are less likely to report a fraud because they do not know whom to report it to.Often they are ashamed to admit they have been scammed, or they fear that it may be taken as a sign they are mentally incapacitated and they may be asked to hand over control of their affairs by their own relatives.
When elderly victims do report a crime, they often make poor witnesses.this is because it usually takes weeks for someone to realize that he has been the victim of a financial fraud.Recalling events clearly is often difficult for senior citizens.
the most common frauds being committed these days are by selling 'fake' medical products which promise improved physical health and ability to fight or prevent dangerous diseases such as cancer.
The most common frauds being practiced include Health Insurance Frauds,Counterfeit Prescription Drugs, Funeral and Cemetery Fraud, Fraudulent 'Anti Aging' Products, Telemarketing Frauds, Internet Fraud and Fraudulent Investment Schemes and the list goes on.
But help is at hand.The FBI has a Common Fraud Schemes webpage which provides tips on how to protect yourself and your family from fraud.
The Securities And Exchange Commission is also examining ways to protect Senior Citizens from fraud.Hopefully we will soon have an almost foolproof system in place to provide necessary protection to our senior citizens.
Zune Cellphone To Take On Apple's iPhone
Zune, Microsoft's challenge to Apple's iPod is currently available at more outlets than any other Microsoft product.It is being sold by more than 30,000 US retailers.Zune has some features which the iPod lacks.For instance it allows users to use its wireless features to download and share music files, a feature that the iPod lacks.In an interview Microsoft CEO Steve Ballmer confirmed that video sharing would soon be added to Zune, and that a model incorporating a phone would 'eventually' be available. Ballmer however has not offered any timetable for either feature.The video sharing feature would probably be used to transfer content created by Zune customers.
The Zune phone could be the result of consumers wanting a single portable and convenient device to play music,take pictures and make phone calls.In fact like the Apple iPhone earlier it is quite likely that it will incorporate so many features that it will be called a device which you also use for making phone calls.
So far Microsoft's relationship with the mobile phone business is to provide Windows Mobile software to handset manufacturers.This business is amongst Microsoft's fastest growing businesses and is expected to sell 20 million copies this year.Little wonder then that Microsoft is thinking of entering the cellphone business.If it manages to attract a part of the customers who use the Windows Mobile Software then it may go down as one of Microsoft's brightest business ideas.
So far Microsoft has not offered any details regarding the concept of a Zune mobile phone.It is likely to be based on Microsoft's Windows Mobile Software platform,and it could possibly be a branded version of an existing music enabled smart phone, such as HTC's Amadeus or StrTrk.
In fact most of the popular Windows Mobile smart phones and PDA phones are built by Taiwan's High Tech Computer Corporation(HTC), based on a set of HTC-designed reference platforms. HTC recently acquired the popular Asian phone brand, Dopod.
Dopod International manufactures the 'StrTrk' smart phone which it claims to be the world's slimmest and lightest deluxe clamshell smart phone. For music lovers the StrTrk S-300 has external keys for controlling music playback without opening the phone. It also has a 3D animated interface and a grid arrangement of icons that offers one click access to commonly used functions.
So why are smart phones becoming so popular? Experts say that smart phones will supersede various devices such as music players, games consoles, messaging terminals and digital cameras. All this functionality will be held together and enhanced by the low-cost, high performance core computing intelligence at the heart of a smart phone. This convergence will allow wonderful new products and do away with the overlaps of keeping separate devices.
The battle between the Zune cellphone and the iPhone will be an interesting one and also a win-win situation for the consumer.
The Zune phone could be the result of consumers wanting a single portable and convenient device to play music,take pictures and make phone calls.In fact like the Apple iPhone earlier it is quite likely that it will incorporate so many features that it will be called a device which you also use for making phone calls.
So far Microsoft's relationship with the mobile phone business is to provide Windows Mobile software to handset manufacturers.This business is amongst Microsoft's fastest growing businesses and is expected to sell 20 million copies this year.Little wonder then that Microsoft is thinking of entering the cellphone business.If it manages to attract a part of the customers who use the Windows Mobile Software then it may go down as one of Microsoft's brightest business ideas.
So far Microsoft has not offered any details regarding the concept of a Zune mobile phone.It is likely to be based on Microsoft's Windows Mobile Software platform,and it could possibly be a branded version of an existing music enabled smart phone, such as HTC's Amadeus or StrTrk.
In fact most of the popular Windows Mobile smart phones and PDA phones are built by Taiwan's High Tech Computer Corporation(HTC), based on a set of HTC-designed reference platforms. HTC recently acquired the popular Asian phone brand, Dopod.
Dopod International manufactures the 'StrTrk' smart phone which it claims to be the world's slimmest and lightest deluxe clamshell smart phone. For music lovers the StrTrk S-300 has external keys for controlling music playback without opening the phone. It also has a 3D animated interface and a grid arrangement of icons that offers one click access to commonly used functions.
So why are smart phones becoming so popular? Experts say that smart phones will supersede various devices such as music players, games consoles, messaging terminals and digital cameras. All this functionality will be held together and enhanced by the low-cost, high performance core computing intelligence at the heart of a smart phone. This convergence will allow wonderful new products and do away with the overlaps of keeping separate devices.
The battle between the Zune cellphone and the iPhone will be an interesting one and also a win-win situation for the consumer.
Internet Downloads May Cost More
If you thought that you had signed up for an unlimited internet connection and so you could download all you wanted,you could soon be in for a shock.The US Justice Department has said Internet Service Providers (ISP's) should be allowed to charge for priority traffic, which in effect would allow a two-tier internet system to be put in place.The agency said that it was 'opposed to network neutrality,' the idea that all data on the net is treated equally.The agency submitted its comments to the Federal Communications Commission, which is investigating net access.
Part of the problem can be traced to the rapid growth of online videos,music movies and games.Some people are simply using it too much.These internet hogs download excessively slowing down the internet for other users.
Comcast is the first off the block and it has started suspending services to those who are using too much bandwidth.So if you thought you had unlimited service you have another guess coming.
Cable companies argue that they have spent a huge $90 billion over the last few years to improve their networks.They are simply looking to recover their investments as fast as possible.In spite of the investments made hundreds of subscribers share a single internet connection.One high traffic user can slow down an entire neighborhood. Often unscrupulous neighbors may use up your capacity through unsecured wireless routers.But the biggest culprits are people running small businesses from home. These people usually set up small servers which can slow down everybody who shares that connection.
But Comcast is not willing to disclose how much usage will invite suspension.This is because it fears that all users will adjust their usage just below the maximum limit which will slow down the network further.
It is in this context that the comments of the US Justice Department assume significance.This would allow ISP's to charge for certain content.The idea is opposed by Google and Microsoft who have called for equal access to the net.However companies like AT&T and Verizon seem to favor the idea.
The Justice Department says that imposing net neutrality regulations would hinder development of the internet as ISP's would not upgrade networks, and that the entire burden of costly improvements would be shifted on to the average consumer rather than the person who uses it the most.
But this stance is contrary to most of the internet community who believe that such a two-tier system would allow ISP's to become the gatekeepers to the web's content.It is also feared that institutions such as universities and charities will suffer in such a scenario.
It is not yet a crisis and it is hoped that investments in network capacity, switching over to fiber-optic technology and digital -only programming will ensure that bandwidth is not a problem in the future.
Chopping up the web into two may not be a good idea.
Part of the problem can be traced to the rapid growth of online videos,music movies and games.Some people are simply using it too much.These internet hogs download excessively slowing down the internet for other users.
Comcast is the first off the block and it has started suspending services to those who are using too much bandwidth.So if you thought you had unlimited service you have another guess coming.
Cable companies argue that they have spent a huge $90 billion over the last few years to improve their networks.They are simply looking to recover their investments as fast as possible.In spite of the investments made hundreds of subscribers share a single internet connection.One high traffic user can slow down an entire neighborhood. Often unscrupulous neighbors may use up your capacity through unsecured wireless routers.But the biggest culprits are people running small businesses from home. These people usually set up small servers which can slow down everybody who shares that connection.
But Comcast is not willing to disclose how much usage will invite suspension.This is because it fears that all users will adjust their usage just below the maximum limit which will slow down the network further.
It is in this context that the comments of the US Justice Department assume significance.This would allow ISP's to charge for certain content.The idea is opposed by Google and Microsoft who have called for equal access to the net.However companies like AT&T and Verizon seem to favor the idea.
The Justice Department says that imposing net neutrality regulations would hinder development of the internet as ISP's would not upgrade networks, and that the entire burden of costly improvements would be shifted on to the average consumer rather than the person who uses it the most.
But this stance is contrary to most of the internet community who believe that such a two-tier system would allow ISP's to become the gatekeepers to the web's content.It is also feared that institutions such as universities and charities will suffer in such a scenario.
It is not yet a crisis and it is hoped that investments in network capacity, switching over to fiber-optic technology and digital -only programming will ensure that bandwidth is not a problem in the future.
Chopping up the web into two may not be a good idea.
General Motors Races Ahead Of Rivals In August
General Motors pleasantly surprised industry analysts Tuesday when it reported a 6 percent increase in sales for the month of August 2007 compared with year ago monthly sales for August.GM reported total sales of 385,529 putting it comfortably ahead of nearest rival Toyota(US sales only).GM now commands a market share of 26% in the US in light vehicles.When one considers that this has been achieved bucking the industry trend of weak auto sales in this period GM's achievement appears even more commendable.GM's excellent showing helped domestic brands to recapture a majority of US sales.
Although car sales for GM continued their earlier decline,they dropped almost 8%,this was offset by a 16.5% jump in light truck models.Industry analysts are impressed because they feel that this was achieved not merely by giving out increased incentives but because some of their vehicles were genuinely successful in the market, the hottest vehicles presently being their crossovers.The quality of GM products is being recognized.A recent study ranked the Buick number one in vehicle dependability (tied with the Toyota Lexus). Another customer service survey ranks GM better than the industry average above Toyota,Ford and Mercedes Benz.
This excellent performance led Mark La Nevre. GM vice president in charge of North America sales,servicing and marketing to remark "The myth of import superiority is being destroyed'.
August also saw Ford sales drop 14% and it was overtaken by Toyota as the no. two US manufacturer of light vehicles(excluding heavy duty trucks).Toyota also posted a surprise 2.8% drop in US sales to 233,471 vehicles.
What is encouraging for GM is that their vehicles are being picked up for better performance and fuel economy.The 5 year/100,000 mile powertrain warranty offered by GM is popular with the customers especially because it includes transferability to new owners and more complete coverage for parts as well.GM also offers better complimentary programs such as courtesy transportation and roadside assistance.
Although it is Nissan which leads the pack with a 6.3% increase in sales in August, its performance comes on a very low base.It had sold 89,848 vehicles in August last year which increased to 95,527 vehicles this year.Its overall numbers are way below those of GM.
The stock market seemed to welcome this news and GM shares rose 3.2% Tuesday.However the automotive forecasting company C.S.M. worldwide has predicted that US sales will total only 16.2 million in 2007 or 350,000 fewer vehicles than last year.That would be the lowest annual sales total since 1998.How the rest of the year turns out for GM remains to be seen.
Although car sales for GM continued their earlier decline,they dropped almost 8%,this was offset by a 16.5% jump in light truck models.Industry analysts are impressed because they feel that this was achieved not merely by giving out increased incentives but because some of their vehicles were genuinely successful in the market, the hottest vehicles presently being their crossovers.The quality of GM products is being recognized.A recent study ranked the Buick number one in vehicle dependability (tied with the Toyota Lexus). Another customer service survey ranks GM better than the industry average above Toyota,Ford and Mercedes Benz.
This excellent performance led Mark La Nevre. GM vice president in charge of North America sales,servicing and marketing to remark "The myth of import superiority is being destroyed'.
August also saw Ford sales drop 14% and it was overtaken by Toyota as the no. two US manufacturer of light vehicles(excluding heavy duty trucks).Toyota also posted a surprise 2.8% drop in US sales to 233,471 vehicles.
What is encouraging for GM is that their vehicles are being picked up for better performance and fuel economy.The 5 year/100,000 mile powertrain warranty offered by GM is popular with the customers especially because it includes transferability to new owners and more complete coverage for parts as well.GM also offers better complimentary programs such as courtesy transportation and roadside assistance.
Although it is Nissan which leads the pack with a 6.3% increase in sales in August, its performance comes on a very low base.It had sold 89,848 vehicles in August last year which increased to 95,527 vehicles this year.Its overall numbers are way below those of GM.
The stock market seemed to welcome this news and GM shares rose 3.2% Tuesday.However the automotive forecasting company C.S.M. worldwide has predicted that US sales will total only 16.2 million in 2007 or 350,000 fewer vehicles than last year.That would be the lowest annual sales total since 1998.How the rest of the year turns out for GM remains to be seen.
Will a Rate Cut Solve The Sub Prime Crisis
It is clear that a rate cut is coming by the 18th of September.President Bush offered Federal help Friday to aid thousands of home mortgage owners at risk of foreclosure.'We will deliver help and hope to American families who need it', he said.
Of late foreclosures have jumped especially for sub prime borrowers with poor credit ratings or low incomes.
The President unveiled several initiatives to help people at risk keep their homes.They include reforms in tax laws to help troubled borrowers refinance their loans.But he hastened to add that it was not the duty of the government to bail out speculators.He cited both 'excesses in the lending industry' and 'optimistic homeowners who took out loans larger than they could afford,' as reasons for the mortgage crisis.
But it is clear that the Fed has realized that swift action needs to be taken.Bernanke spoke about the 'stability of the financial system.' Experts have taken this to indicate that for the first time in a very long time the Fed intends to deal with with financial stability and economic growth as two distinct issues.This would mark a departure from the policies followed by Alan Greenspan who was preoccupied with interest rates and economic growth alone and who many people are convinced is responsible for the build up of the housing bubble and the present crisis.
So what is the extent of the problem?It is much larger than most people admit.Last year there were 1.2 million foreclosures.This year the number is expected to hit two million, or roughly one in 62 US households.Put the two together and you understand what has happened out there in the last two years.
The remarks of the President and the Fed chief have made it clear that a rate cut is coming.But will it help?The Fed rate has gone up from 1% in 2003 to 5.25% last year.The resultant increase in mortgage rates meant that many people were simply unable to repay.The mortgage institutions then took over the property and found that it was worth much less in the market than the loan given against it!Add to it the costs of foreclosure and you get a true picture of the crisis.These companies are thought to have already lost $200 billion in the value of their investments this year alone.This figure is perhaps higher than the combined profits of all the top financial companies put together for the last several years.So is a 25 basis point or a 50 basis point cut in the Fed rate going to solve the problem?It is highly unlikely.It may cheer up the stock market,improve liquidity and temporarily divert attention from the crisis,that is about all.The crisis will go away only once the housing market recovers and property prices start climbing again.This will take some time.Moreover figures published Thursday showed the economy grew 4% in the second quarter.So it would seem that the Fed may not be able to cut rates too far.
So what is the best solution?The government has to ensure that people are able to stay on in the homes they have bought and gradually repay what they borrowed for it.Foreclosures will simply increase the problem.More houses coming on to the market will drive down prices further and cause another downward spiral which now threatens to spread to other parts of the financial system.
Of late foreclosures have jumped especially for sub prime borrowers with poor credit ratings or low incomes.
The President unveiled several initiatives to help people at risk keep their homes.They include reforms in tax laws to help troubled borrowers refinance their loans.But he hastened to add that it was not the duty of the government to bail out speculators.He cited both 'excesses in the lending industry' and 'optimistic homeowners who took out loans larger than they could afford,' as reasons for the mortgage crisis.
But it is clear that the Fed has realized that swift action needs to be taken.Bernanke spoke about the 'stability of the financial system.' Experts have taken this to indicate that for the first time in a very long time the Fed intends to deal with with financial stability and economic growth as two distinct issues.This would mark a departure from the policies followed by Alan Greenspan who was preoccupied with interest rates and economic growth alone and who many people are convinced is responsible for the build up of the housing bubble and the present crisis.
So what is the extent of the problem?It is much larger than most people admit.Last year there were 1.2 million foreclosures.This year the number is expected to hit two million, or roughly one in 62 US households.Put the two together and you understand what has happened out there in the last two years.
The remarks of the President and the Fed chief have made it clear that a rate cut is coming.But will it help?The Fed rate has gone up from 1% in 2003 to 5.25% last year.The resultant increase in mortgage rates meant that many people were simply unable to repay.The mortgage institutions then took over the property and found that it was worth much less in the market than the loan given against it!Add to it the costs of foreclosure and you get a true picture of the crisis.These companies are thought to have already lost $200 billion in the value of their investments this year alone.This figure is perhaps higher than the combined profits of all the top financial companies put together for the last several years.So is a 25 basis point or a 50 basis point cut in the Fed rate going to solve the problem?It is highly unlikely.It may cheer up the stock market,improve liquidity and temporarily divert attention from the crisis,that is about all.The crisis will go away only once the housing market recovers and property prices start climbing again.This will take some time.Moreover figures published Thursday showed the economy grew 4% in the second quarter.So it would seem that the Fed may not be able to cut rates too far.
So what is the best solution?The government has to ensure that people are able to stay on in the homes they have bought and gradually repay what they borrowed for it.Foreclosures will simply increase the problem.More houses coming on to the market will drive down prices further and cause another downward spiral which now threatens to spread to other parts of the financial system.
US Running Out of Options in Trade Relations With China
Since the beginning of this century the US has pushed for a liberalized trading system with progressively fewer and fewer controls.This system works well with democratic nations with free economies.But China is different;it has neither a democratic political system nor a free market economy.The net result is that its trade surplus is rising by the day on the back of a manipulated exchange rate and artificially controlled labor costs.In 2006 it enjoyed a surplus of $230 billion with the US.The surplus this year promises to be even higher.Not only is the trade surplus a problem but the Chinese dumping of goods in the US has led to widespread job losses in this country.
So what can the US do about it?Since US policies have failed to convert China into evenly a remotely democratic society why should it continue with policies that only favor China and a few US corporations.
To start with the US should pressurize China into allowing its currency the yuan to appreciate significantly.The US must understand that the yuan is the most manipulated currency in the world.Simply allowing the dollar to depreciate against every currency in the world is not very sensible and will have serious economic and political consequences elsewhere.A case in point is its likely impact on NAFTA.If the US dollar were to depreciate significantly from present levels then Canadian and Mexican goods would lose their cost advantage in the US.As a result they would be compelled to look for other markets.In the case of Mexico it would lead to a drastic decline in the living standards of its people and the resultant political instability could have far reaching consequences for the US in the long run.
It is clearly time the US made a detailed examination of why the Chinese are able to outsell everybody else.The examination should cover all goods produced in China and if it is found that any of them are being unfairly subsidized the US should not hesitate to slap them with stiff anti-dumping duties.It is difficult to understand why the US is afraid of being called protectionist even in the face of unfair competition.After all the the government has a duty to protect the economic interests of its own citizens.So far the US has mustered the courage of banning the imports of some tainted chopsticks and toothpaste only.Critics of such a course of action suggest that that the trade deficit is due to a lack of savings by the people.This argument is flawed.Trade balances are determined by exchange rates and not by a lack of savings or otherwise.If the exchange rate were proper then people would not find US goods very expensive in comparison.
They would buy sufficient US made goods to prevent a huge trade deficit and more importantly keep US jobs in the US. Temporary jobs here and there which are used to depict a low job rate are no good.What is needed are solid long term jobs in financially strong corporations.The government would do well to accept that the present sub-prime crisis is also a result of this trend,that is fewer and fewer people having solid long term jobs and predictable income streams.The strategy of hiring temps and outsourcing on a large scale makes people more vulnerable to minor shocks such as a slight increase in interest rates.
This is not a call for protectionism but a call for sensible economics which benefits the people at large and not just a few.Its clearly time for the US to act and act fast before most of its financial institutions are permanently weakened.
So what can the US do about it?Since US policies have failed to convert China into evenly a remotely democratic society why should it continue with policies that only favor China and a few US corporations.
To start with the US should pressurize China into allowing its currency the yuan to appreciate significantly.The US must understand that the yuan is the most manipulated currency in the world.Simply allowing the dollar to depreciate against every currency in the world is not very sensible and will have serious economic and political consequences elsewhere.A case in point is its likely impact on NAFTA.If the US dollar were to depreciate significantly from present levels then Canadian and Mexican goods would lose their cost advantage in the US.As a result they would be compelled to look for other markets.In the case of Mexico it would lead to a drastic decline in the living standards of its people and the resultant political instability could have far reaching consequences for the US in the long run.
It is clearly time the US made a detailed examination of why the Chinese are able to outsell everybody else.The examination should cover all goods produced in China and if it is found that any of them are being unfairly subsidized the US should not hesitate to slap them with stiff anti-dumping duties.It is difficult to understand why the US is afraid of being called protectionist even in the face of unfair competition.After all the the government has a duty to protect the economic interests of its own citizens.So far the US has mustered the courage of banning the imports of some tainted chopsticks and toothpaste only.Critics of such a course of action suggest that that the trade deficit is due to a lack of savings by the people.This argument is flawed.Trade balances are determined by exchange rates and not by a lack of savings or otherwise.If the exchange rate were proper then people would not find US goods very expensive in comparison.
They would buy sufficient US made goods to prevent a huge trade deficit and more importantly keep US jobs in the US. Temporary jobs here and there which are used to depict a low job rate are no good.What is needed are solid long term jobs in financially strong corporations.The government would do well to accept that the present sub-prime crisis is also a result of this trend,that is fewer and fewer people having solid long term jobs and predictable income streams.The strategy of hiring temps and outsourcing on a large scale makes people more vulnerable to minor shocks such as a slight increase in interest rates.
This is not a call for protectionism but a call for sensible economics which benefits the people at large and not just a few.Its clearly time for the US to act and act fast before most of its financial institutions are permanently weakened.
Is Innovation Overrated?
Take one of the most visible items of conspicuous consumption, create an even more exclusive, expensive and more importantly “blingy” limited edition of an already “limited or premium” model and in today’s wealth boom you might add $100mn to your top-line just like that. But make sure you skew supplies to the “noveaue rich” economies- the dragon, the elephant, the bear, a certain West African state and the land of Black Gold.
I am not talking of an uber premium hand bang or diamond ring. I am referring to the Sirocco series of the NOKIA’s 8800 model (originally launched in 2004), which was launched in September 2006. Now they have launched an 18k gold plated version retailing at £850( yes, you read it right). There are 2 other versions – black and light, priced at £600. My prediction - 100,000 of these will be snapped up in no time.
The Gold model is clearly positioned on bling and exclusive value. It is pitched as an evolution of the impeccable design heritage (of the 8800). The only change (i.e.the evolution) vs. the original 8800 model is the addition of an 18k real gold envelope/coating on the stainless steel body. No technological improvements are mentioned in the print ad vs. the original 8800 model, but a quick look at the Nokia website re-assures that it is functionally quite up to date.
Nokia has done its consumer research well. Not everyone is buying phones for their features – better camera lens, higher storage capacity etc. There are enough rich people who will pay for the show-off and exclusive value of such a mobile phone, if it comes with good core functionality and from a reliable and respected brand. So with no new significant investment in product design (hardware as well as software), Nokia potentially has incremental $100mn in revenues.
If my prediction (of the sales volume) turns out to be true, it will partly prove what I have always believed - “Innovation” is hyped too much and is just another “fad” in a long line of management buzzwords. A whole bunch of things which good companies were already doing in the normal course of driving growth, are now clubbed under the broad umbrella of Innovation.
The Nokia 8800 Sirocco Gold is simple and smart thinking based on good consumer understanding and category insights. This is still the cheapest way to drive growth. You don’t need management tomes on Innovation and a massive re-wiring of your organization to churn out such initiatives.
The Sirocco series has been marketed well in general. There was (apparently) product placement in Casino Royale and there have been charity auctions of celebrity signed limited editions. They also created a special Lamborghini edition. In India, the gold version can only be bought via pre-booking. The only slight niggle I have is on the print campaign. The advertising copy as well as the product shot is average, at best. Copy could have been more evocative and the product shot more alluring (i.e. in the same league as shots of luxury watches, jewelry, and perfumes in the glossy magazines). Media placement also is not stellar. I have noticed the advertisement two times now – once in TIME and the second time in NEWSWEEK. Not sure these are the right publications given the target audience. Also, a dedicated web site would have helped to synergise better with the print campaign. Its a bit deflatory to be directed to the normal Nokia site when you type “Nokia Sirocco” in Google.
Present Market Crisis - Options Before the Fed
The present market crisis has posed the first real test for Mr. Bernanke. The deepening crisis in the housing market is now threatening to spill over to other parts of the economy. The result is that hedge funds are in trouble. As they panic and bail out of risky securities, they are putting pressure on stock prices worldwide. It is now threatening to turn into a downward spiral which, theoretically could push the U.S and the world into economic recession.
The first fallout of the present crisis is that suddenly liquidity has dried up. Hedge funds who typically invest in riskier assets are the first ones to feel the heat. Central Banks, the world over have responded by "injecting" money into the system. How do they do this? They have simply gone out and bought bonds from various banks held by them as reserves. The resultant increase in liquidity, $62 billion on Thursday and Friday in the U.S. alone, has a two fold effect. It prevents a spike in the lending rates and it also reassures people that they need not liquidate their assets in a hurry, thereby minimizing losses.
Admidst this turmoil, calls for cutting the interest rates by the Fed are mounting. Critics are quick to point out that such action would simply postpone the crisis as, theoretically speaking, lower interest rates would revive the housing market and would prompt the risk takers to again start buying risky assets. Then again, should government policy be aimed at helping out billionaire hedge fund managers and their millionaire investors?
The proper course of option presently would be to wait and watch. If the number of people involved is small, the crisis would perhaps blow over, once there is ample liquidity in the system. Otherwise the Fed may be left with no other option but to cut interest rates.
The first fallout of the present crisis is that suddenly liquidity has dried up. Hedge funds who typically invest in riskier assets are the first ones to feel the heat. Central Banks, the world over have responded by "injecting" money into the system. How do they do this? They have simply gone out and bought bonds from various banks held by them as reserves. The resultant increase in liquidity, $62 billion on Thursday and Friday in the U.S. alone, has a two fold effect. It prevents a spike in the lending rates and it also reassures people that they need not liquidate their assets in a hurry, thereby minimizing losses.
Admidst this turmoil, calls for cutting the interest rates by the Fed are mounting. Critics are quick to point out that such action would simply postpone the crisis as, theoretically speaking, lower interest rates would revive the housing market and would prompt the risk takers to again start buying risky assets. Then again, should government policy be aimed at helping out billionaire hedge fund managers and their millionaire investors?
The proper course of option presently would be to wait and watch. If the number of people involved is small, the crisis would perhaps blow over, once there is ample liquidity in the system. Otherwise the Fed may be left with no other option but to cut interest rates.
How to Finance College ?
In about a month's time from now students will be heading to college for the Fall Semester. One thing which will be uppermost in most of their minds is how they are going to pay for college. The vast majority of them will be taking some kind of loan or other. The most important thing is to avoid piling up debt. This can well turn out to be a major burden when you graduate and cause constant stress of falling behind on your payments and building up a bad credit record.
Nowadays student loans are a big and hugely profitable business, what with interest rates climbing all the time. The recent loan scandals have exposed the dirt in the system, that is the advice you get from various counselors may not be the best deal for you. But what is one supposed to do in such a situation.
Experts advise that first of all exhaust your sources of federal funding, whether it be a Perkins, Stafford or a PLUS loan because it caps your interest payments. There are other federal loans as well.
It is possible that this may not take care of your entire needs and you may fall short and may have to find other sources of funding as well. While doing so it pays to have a good hard look at the discounts offered, penalties charged for delayed payments and processing fees charged because in many instances these charges may make a sizable difference to the total cost of the loan including the interest component.
Often students end up taking more than one loan. This can be very burdensome. Consolidating your loan helps not only reduce interest cost but also reduces monthly payments. You also deal with only one lender. At times refinancing your loan may help by increasing the repayment period, but this usually implies a higher rate of interest.
Finally remember to keep your grades up. This improves your chances of scholarship. Also participate in college and community activities. Take advantage of work-study programs. An on-campus job in your field of study is a big bonus.
Have a great time in college!
Nowadays student loans are a big and hugely profitable business, what with interest rates climbing all the time. The recent loan scandals have exposed the dirt in the system, that is the advice you get from various counselors may not be the best deal for you. But what is one supposed to do in such a situation.
Experts advise that first of all exhaust your sources of federal funding, whether it be a Perkins, Stafford or a PLUS loan because it caps your interest payments. There are other federal loans as well.
It is possible that this may not take care of your entire needs and you may fall short and may have to find other sources of funding as well. While doing so it pays to have a good hard look at the discounts offered, penalties charged for delayed payments and processing fees charged because in many instances these charges may make a sizable difference to the total cost of the loan including the interest component.
Often students end up taking more than one loan. This can be very burdensome. Consolidating your loan helps not only reduce interest cost but also reduces monthly payments. You also deal with only one lender. At times refinancing your loan may help by increasing the repayment period, but this usually implies a higher rate of interest.
Finally remember to keep your grades up. This improves your chances of scholarship. Also participate in college and community activities. Take advantage of work-study programs. An on-campus job in your field of study is a big bonus.
Have a great time in college!
China's Economic Threat to the US
China's economic muscle is growing by the day and it is also flexing it. And you won't believe it, it's the US that is being threatened. An article has appeared in a Chinese newspaper in which a Chinese economist has issued a warning that if the US tries to force China into making the yuan rise faster against the US Dollar the Chinese Government might retaliate by liquidating its holdings of US treasuries.
Although it is nowhere like a threat to nuke Washington D.C. the results, some experts say could be as bad for the financial markets. China holds about 1.3 trillion dollars worth of foreign currency reserves and about a third of them are invested in U.S. treasuries, second in size only to Japan. Its trade surplus with the U.S. for the month of July 2007 was about 23 billion dollars. A dumping of U.S. treasuries, some believe would cause a collapse of the U.S. Dollar against the world's major currencies and would push the U.S. economy into recession.
But all economists do not agree with this gloomy scenario. They are quick to point out that China itself has a vested interest in having a stable U.S. dollar because any sharp fall in its value will cause significant losses to the Chinese as well by reducing the value of its holdings. Still others feel that the treasuries market is so huge that such Chinese action would hardly make a difference.
In all probability the Chinese Government is simply outlining it bargaining position. Whatever maybe the final result, it is now absolutely clear that China is in a position to retaliate against the U.S. economically as well.
Although it is nowhere like a threat to nuke Washington D.C. the results, some experts say could be as bad for the financial markets. China holds about 1.3 trillion dollars worth of foreign currency reserves and about a third of them are invested in U.S. treasuries, second in size only to Japan. Its trade surplus with the U.S. for the month of July 2007 was about 23 billion dollars. A dumping of U.S. treasuries, some believe would cause a collapse of the U.S. Dollar against the world's major currencies and would push the U.S. economy into recession.
But all economists do not agree with this gloomy scenario. They are quick to point out that China itself has a vested interest in having a stable U.S. dollar because any sharp fall in its value will cause significant losses to the Chinese as well by reducing the value of its holdings. Still others feel that the treasuries market is so huge that such Chinese action would hardly make a difference.
In all probability the Chinese Government is simply outlining it bargaining position. Whatever maybe the final result, it is now absolutely clear that China is in a position to retaliate against the U.S. economically as well.
The Spreading Fear of Finance
Fear of finance is on the march. Distrust of people with high salaries who work behind computer screens doing something that doesn't look like productive work is everywhere. Paper shufflers are doing better than producers; speculators are doing better than managers; traders are doing better than entrepreneurs; arbitrageurs are doing better than accumulators; the clever are doing better than the solid; and behind all of it, the financial market is more powerful than the state.
Common opinion suggests that this state of affairs is unjust. As US president Franklin D. Roosevelt put it, we must cast down the "money changers" from their "high seats in the temple of our civilization."
We must "restore the ancient truths" that growing, making, managing and inventing things should have higher status, more honor and greater rewards than whatever it is that financiers do.
Of course, there is a lot to fear in modern global finance.
Its scale is staggering. This year alone mergers and acquisitions will amount to $4 trillion, with tradable and -- theoretically -- liquid financial assets perhaps reaching $160 trillion by the end of this year, all in a world where annual global GDP is perhaps $50 trillion.
The McKinsey Global Institute recently estimated that world financial assets today are more than three times world GDP..., up from only two-thirds of world GDP after World War II. ...
But important things are created in our modern global financial system, both positive and negative. Consider the $4 trillion of mergers and acquisitions this year, as companies acquire and spin off branches and divisions in the hope of gaining synergies or market power or better management.
Owners who sell these assets will gain roughly $800 billion relative to the pre-merger value of their assets. The shareholders of the companies that buy will lose roughly $300 billion in market value, as markets interpret the acquisition as a signal that managers are exuberant and uncontrolled empire-builders rather than flinty-eyed trustees maximizing payouts to investors. ...
Where does the net gain of roughly $500 billion in global market value come from? We don't know. Some of it is a destructive transfer from consumers to shareholders as corporations gain more monopoly power, some of it is an improvement in efficiency from better management and more appropriately scaled operations, and some of it is overpayment by those who become irrationally exuberant when companies get their names in the news.
If each of these factors accounts for one-third of the net gain, several conclusions follow. First, once we look outside transfers within the financial sector, the total global effects of this chunk of finance is a gain of perhaps $340 billion in increased real shareholder value from higher expected future profits. A loss of $170 billion can be attributed to future real wages, for households will find themselves paying higher margins to companies with more market power. The net gain is thus $170 billion of added social value this year, which is 0.3 percent of world GDP, equal to the average product of seven million workers.
In one sense, we should be grateful for our hard-working merger and acquisition technicians, well-paid as they are: it is important that businesses with lousy managements or that operate inefficiently be under pressure from those who may do better, and can raise the money to attempt to do so. We cannot rely on shareholder democracy as our only system of corporate control.
The second conclusion is that the gross gains -- fees, trading profits, and capital gains to the winners totaling perhaps $800 billion from this year's mergers and acquisitions -- greatly exceed the perhaps $170 billion in net gains. Governments have a very important educational, admonitory and regulatory role to play: People should know the risks and probabilities, for they may wind up among losers of the other $630 billion. So far there is little sign that they do.
Finally, finance has long had an interest in stable monopolies and oligopolies with high profit margins, while the public has an interest in competitive markets with low margins. The more skeptical you are of the ability of government-run antitrust policy to offset the monopoly power-increasing effects of mergers and acquisitions, the more you should seek other sources of countervailing power -- which means progressive income taxation -- to offset any upward leap in income inequality.
Eighteenth-century physiocrats believed that only the farmer was productive, and that everyone else was somehow cheating the farmers out of their fair share. Twentieth-century Marxists thought the same thing about factory workers.
Both were wrong. Let us regulate our financial markets so that outsiders who invest are not sheared. But let us not make the mistake of fearing finance too much.
Smartest Ways to Finance College.
In about a month's time from now students will be heading to college for the Fall Semester. One thing which will be uppermost in most of their minds is how they are going to pay for college. The vast majority of them will be taking some kind of loan or other. The most important thing is to avoid piling up debt. This can well turn out to be a major burden when you graduate and cause constant stress of falling behind on your payments and building up a bad credit record.
Nowadays student loans are a big and hugely profitable business, what with interest rates climbing all the time. The recent loan scandals have exposed the dirt in the system, that is the advice you get from various counselors may not be the best deal for you. But what is one supposed to do in such a situation.
Experts advise that first of all exhaust your sources of federal funding, whether it be a Perkins, Stafford or a PLUS loan because it caps your interest payments. There are other federal loans as well.
It is possible that this may not take care of your entire needs and you may fall short and may have to find other sources of funding as well. While doing so it pays to have a good hard look at the discounts offered, penalties charged for delayed payments and processing fees charged because in many instances these charges may make a sizable difference to the total cost of the loan including the interest component.
Often students end up taking more than one loan. This can be very burdensome. Consolidating your loan helps not only reduce interest cost but also reduces monthly payments. You also deal with only one lender. At times refinancing your loan may help by increasing the repayment period, but this usually implies a higher rate of interest.
Finally remember to keep your grades up. This improves your chances of scholarship. Also participate in college and community activities. Take advantage of work-study programs. An on-campus job in your field of study is a big bonus.
Have a great time in college!
Nowadays student loans are a big and hugely profitable business, what with interest rates climbing all the time. The recent loan scandals have exposed the dirt in the system, that is the advice you get from various counselors may not be the best deal for you. But what is one supposed to do in such a situation.
Experts advise that first of all exhaust your sources of federal funding, whether it be a Perkins, Stafford or a PLUS loan because it caps your interest payments. There are other federal loans as well.
It is possible that this may not take care of your entire needs and you may fall short and may have to find other sources of funding as well. While doing so it pays to have a good hard look at the discounts offered, penalties charged for delayed payments and processing fees charged because in many instances these charges may make a sizable difference to the total cost of the loan including the interest component.
Often students end up taking more than one loan. This can be very burdensome. Consolidating your loan helps not only reduce interest cost but also reduces monthly payments. You also deal with only one lender. At times refinancing your loan may help by increasing the repayment period, but this usually implies a higher rate of interest.
Finally remember to keep your grades up. This improves your chances of scholarship. Also participate in college and community activities. Take advantage of work-study programs. An on-campus job in your field of study is a big bonus.
Have a great time in college!
Are Your Assets Really Diversified?
In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect
You've heard the old investment adage, “Don't put all your eggs in one basket.” It's good advice. A diversified portfolio should be at the core of any well-planned investment strategy. While a worthy goal at any age, it's especially desirable as your net worth grows over the years.
The basic purpose of diversification is to reduce your risk of loss. It's primarily a defensive type of investment policy. Depending on your investment goals and tolerance for risk, your strategy may emphasize one type of investment over another. But overall, your plan should be diversified. That's because no single type of investment performs best under all economic conditions. A diversified program is capable of weathering varying economic cycles and improving the trade-off between risk of loss and expected return. Of course, diversification cannot entirely eliminate the risk of investment losses.
Forms of Diversification
An investment portfolio consisting of twenty different construction industry stocks is not diversified. Diversification means dividing your funds among different classes of assets, such as stocks, bonds, real estate, savings accounts and tangible assets. For instance, suppose your portfolio consisted entirely of bonds. Your money would be at significant risk if interest rates rose since bond prices generally fall when rates go up.
It's also important to diversify by owning several stocks in different industries. Suppose you held just 1,000 shares of a major company’s stock from December 31, 1999 through December 30, 2003, and you suffered a loss of $40 per share when the stock fell from 100 to 60. A diversified portfolio consisting of many different stocks in various sectors may have cushioned the blow of the loss. A prudent investor managing his own portfolio might diversify his holdings by selecting some stocks for their rising earnings or accelerating “growth” potential while buying other stocks because they offer “value” by temporarily being out of favor. In addition, an investor may buy individual securities for other reasons, such as income or tax advantages.
An alternative to selecting and managing individual stocks and bonds is to invest in mutual funds. Some mutual funds offer diversification by holding many securities within the portfolio. However, some other funds may not be diversified across industries or asset classes and may focus on a single sector. Mutual funds offer several other features, including:
-Funds have clearly defined objectives and strategies, which are detailed in the fund’s prospectus. A prospectus contains more complete information on the style of investment objectives you should expect in addition to the charges, expenses and risks the fund may incur. Read the prospectus carefully before investing. The investment return and principal value of an investment will fluctuate with changes in market conditions so that an investor’s shares when redeemed may be worth more or less than the original amount invested.
-Shareholders receive periodic reports reviewing the fund’s results and performance.
-Funds are managed by full-time professionals.
-Fund families allow investors to allocate investment dollars among a combination of funds with varying objectives.
Diversification also means not tying up all your funds in long-term investments. You'll need to keep a certain amount easily accessible – that is, in money-market accounts, savings accounts or short-term certificates of deposit (CDs) – for ongoing expenses, emergency needs, and short-term goals such as saving to buy a car or pay taxes. And through dollar-cost averaging, a process of buying stocks and bonds from time to time instead of all at once, you can spread the risk over both good and bad markets. Using this investment method involves continuous investment in securities regardless of fluctuating price levels of securities. Therefore, investors should consider their financial ability to continue purchasing through periods of fluctuating price levels. Dollar-cost averaging does not ensure a profit and does not protect against a loss in declining markets. Diversification is also important because CDs are FDIC-insured and typically offer a fixed rate of return while investments such as stocks and bonds are not FDIC-insured and their value will fluctuate with current market conditions.
Sample Portfolio
Your specific investment decisions will depend on several factors: your age, tax bracket, risk tolerance, liquidity needs, investment time horizon and investment goals. In general, however, a well-diversified portfolio might include:
-Cash Reserves for short-term needs -- checking accounts, money-market accounts, savings accounts and shorter-term CDs.
-Longer-term, taxable investments that are relatively liquid, such as: Stocks -- common or preferred, Bonds -- U.S. Government, corporate, Mutual funds -- bond funds, growth funds, balanced funds, international funds
-Tax-advantaged investments, such as: Annuities -- fixed and variable, Qualified plans -- 401(k), 403(b), IRAs, SEPs, SARSEPs, Municipal bond funds
-Real estate -- commercial, residential
-Tangible asset exposure through mutual funds -- precious metals funds, natural resources funds You may want to consult an advisor regarding designing a portfolio that is right for you and your risk tolerance.
Diversify Beyond Investments
Diversification alone may not be sufficient to protect your investments. By taking a broader view, a financial planning strategy can put safeguards in place to help protect yourself and your family. For instance, purchasing disability income insurance provides protection for your ability to earn a living. Life insurance is another form of protection. It can help preserve your estate assets and reduce the risk that a disaster could wipe out your family's standard of living. Life insurance can also provide the necessary cash for your survivors to pay estate taxes and other expenses, or to carry on a family-owned business.
A properly planned estate can also be a part of your overall strategy. Simply having a will may not be enough. You may need to coordinate your will with trusts for your children, life insurance and tax planning. Estate planning can help preserve and direct the distribution of your assets after your death.
A diversified financial planning strategy will not eliminate risk or guarantee success. But it does offer a sound approach to help protect your assets, reduce risk and potentially grow assets over time. Talk with a qualified professional about how to put an effective financial planning strategy in place.
Rebuilding Credit After bankruptcy
If your past history of credit has been flawed by a bankruptcy, the most important thing for rebuilding credit after a bankruptcy is to add positive information into your credit report. The key to re establishing your long term credit credit is to show creditors that you are now financially responsible after the bankruptcy.
If you have bad credit history because of a bankruptcy there are fast simple ways to rebuild your credit after bankruptcy. One of the easiest ways is to apply for a secured credit card. A secured credit card is backed by money that you deposit into an account. If you fail to make your payments the creditor takes the money out of the account to cover the amount owed. Because of the secured funds these types of cards are very easy to get and almost all of them report to the credit beraus. Normally after 6-12 months of on time payments you may be able to qualify for a unsecured credit card, however credit beraus do not know if a credit card is secured or unsecured so a secured credit card is not a necessity in the first 12 months of credit rebuilding.
Rent to Own centers are another great place to rebuild credit after bankruptcy. Many of these rent to own centers will approve an account for a person with bad credit as long as they have the income to pay the loan back and sufficient on the job time. The drawback to opening one of these accounts is that you will pay a much higher price for an item then if you just went out and bought it. However the overall boost to your credit score and profile more then make up for the extra cost of the item. After 6-12 months of timely payments on your secured credit card and rent to own account you can begin to apply for other credit. However only open 1 new account every 6 months and keep the credit inquiries to a bare minimum. Your end goal is to have 2 open credit cards with credit limits over $2500 and one or two additional accounts such as a gas card or department store card.
In addition to these tips you should also review your credit report and make sure all accounts that were included in the bankruptcy are listed on the credit report as "Included in Bankruptcy". In many cases credit accounts that were involved in the bankruptcy will still report as a delinquent account on a credit report. This will have a negative affect on your credit rebuilding efforts. These accounts can be easily disputed online or through a credit repair company.
Massive US farm bill faces Bush veto, may impact WTO talks
A massive US farm bill packed with consequences for global trade is moving through the Democratic-controlled Congress in the face of a veto threat by President George W. Bush .
The House of Representatives is poised to vote on the multibillion-dollar five-year plan that provides the safety net for farmers and ranchers, governing the amount of subsidies and aid available and a raft of other provisions, such as nutrition and conservation programs.
Bush's Republican administration has been threatening to veto the legislation, partly over what it says are high subsidies, a major stumbling block in the Doha Round of global trade negotiations.
Some observers suggest the threat may be difficult to deliver on, considering the already heated political maneuvering for the 2008 presidential race.
Still, the veto threat was renewed Wednesday after a House panel signaled it wanted to raise taxes on some foreign-owned companies with US subsidiaries in order to partly fund government nutrition programs.
The proposed tax hikes, anathema to Republicans, drew blistering fire.
"I find it unacceptable to raise taxes to pay for a farm bill that contains virtually no reform," Agriculture Secretary Mike Johanns said.
"Myself and the president's entire team of senior advisers will recommend that he veto this bill if it is adopted in its current form. We are unanimous on this point."
The estimated 286-billion-dollar measure was approved last week by the House Agriculture Committee after wrangling to get bipartisan support.
Agriculture Committee chairman Collin Peterson said the bill delivers "significant reform" and strikes "the balance necessary" to ensure that farmers' "safety net is still strong and secure."
The pressure is on to approve the 2007-2012 measure as the current bill expires on September 30, the end of the government's fiscal year.
The bill was taken up by the House late Thursday, but it was not clear when it would come to a vote. Congress adjourns on August 3 for its summer recess and reconvenes in September.
If approved by the House, the legislation must be reconciled with a Senate counterpart before the measure is presented to the president for signing.
Among the most difficult issues to resolve is farm subsidies, which prompted a revolt among 22 developing countries, stalling the Doha Round of World Trade Organization negotiations.
Under the current farm bill, government subsidies are paid to farmers with incomes of up to 2.5 million dollars per year.
The House bill would cut that cap to one million dollars annually and eliminate limits on some loans.
The Bush administration says the subsidy reduction falls far short. It had sought an income cap of 200,000 dollars, averaged over three years. Republicans argue that the House bill would deprive about 7,000 farmers of subsidies, compared with the 38,000 that would be affected by their proposal.
"The House bill actually takes a step backward, creating farm policy that is less responsive to the free market, and it paints an even larger bull's eye on the backs of American farmers when it comes to international trade," said Johanns.
The Bush administration is under fierce pressure to help unblock the WTO Doha Round, launched in the Qatari capital nearly six years ago and aimed at lowering trade barriers and encouraging development.
Developing nation critics of farm subsidies say they allow developed countries to dump excess production on world markets at an unfairly low cost, depriving many developing and poor countries of strengthening their own farm-sector exports.
The United States and the European Union , also known for lavish farm subsidies, have given a lukewarm response to the latest WTO proposals to cut farm subsidies.
"We would underscore that, while we have indicated that we are prepared to offer more on OTDS (Overall Trade Distorting Support), our ability to make further cuts depends upon securing significant real increases in market access," the US ambassador to the WTO, Peter Allgeier, said Thursday.
The House of Representatives is poised to vote on the multibillion-dollar five-year plan that provides the safety net for farmers and ranchers, governing the amount of subsidies and aid available and a raft of other provisions, such as nutrition and conservation programs.
Bush's Republican administration has been threatening to veto the legislation, partly over what it says are high subsidies, a major stumbling block in the Doha Round of global trade negotiations.
Some observers suggest the threat may be difficult to deliver on, considering the already heated political maneuvering for the 2008 presidential race.
Still, the veto threat was renewed Wednesday after a House panel signaled it wanted to raise taxes on some foreign-owned companies with US subsidiaries in order to partly fund government nutrition programs.
The proposed tax hikes, anathema to Republicans, drew blistering fire.
"I find it unacceptable to raise taxes to pay for a farm bill that contains virtually no reform," Agriculture Secretary Mike Johanns said.
"Myself and the president's entire team of senior advisers will recommend that he veto this bill if it is adopted in its current form. We are unanimous on this point."
The estimated 286-billion-dollar measure was approved last week by the House Agriculture Committee after wrangling to get bipartisan support.
Agriculture Committee chairman Collin Peterson said the bill delivers "significant reform" and strikes "the balance necessary" to ensure that farmers' "safety net is still strong and secure."
The pressure is on to approve the 2007-2012 measure as the current bill expires on September 30, the end of the government's fiscal year.
The bill was taken up by the House late Thursday, but it was not clear when it would come to a vote. Congress adjourns on August 3 for its summer recess and reconvenes in September.
If approved by the House, the legislation must be reconciled with a Senate counterpart before the measure is presented to the president for signing.
Among the most difficult issues to resolve is farm subsidies, which prompted a revolt among 22 developing countries, stalling the Doha Round of World Trade Organization negotiations.
Under the current farm bill, government subsidies are paid to farmers with incomes of up to 2.5 million dollars per year.
The House bill would cut that cap to one million dollars annually and eliminate limits on some loans.
The Bush administration says the subsidy reduction falls far short. It had sought an income cap of 200,000 dollars, averaged over three years. Republicans argue that the House bill would deprive about 7,000 farmers of subsidies, compared with the 38,000 that would be affected by their proposal.
"The House bill actually takes a step backward, creating farm policy that is less responsive to the free market, and it paints an even larger bull's eye on the backs of American farmers when it comes to international trade," said Johanns.
The Bush administration is under fierce pressure to help unblock the WTO Doha Round, launched in the Qatari capital nearly six years ago and aimed at lowering trade barriers and encouraging development.
Developing nation critics of farm subsidies say they allow developed countries to dump excess production on world markets at an unfairly low cost, depriving many developing and poor countries of strengthening their own farm-sector exports.
The United States and the European Union , also known for lavish farm subsidies, have given a lukewarm response to the latest WTO proposals to cut farm subsidies.
"We would underscore that, while we have indicated that we are prepared to offer more on OTDS (Overall Trade Distorting Support), our ability to make further cuts depends upon securing significant real increases in market access," the US ambassador to the WTO, Peter Allgeier, said Thursday.
Job Interviews Made Easy
When you are hiring a new employee you naturally want the best person for the role. In a candidate poor job market you need to realize that while you are interviewing the candidate, they are also interviewing you to see if they really want to work for you. You need to be on your game - to make sure you leave candidates with a great impression of your company.
So, let's start with the basics. Interviews are not an exact science. They are not meant to be. The best you can do is to try and remove as much of the emotion of the process as possible and balance it with logic.
Interviews should be about helping candidates show their best side, it is not about tricking them, putting them under added stress and seeing how they "perform". They are not seals; they are human beings complete with human feelings. Interviews are of themselves inherently stressful - so even in the most relaxed interview you are getting a person operating under stress.
Here are some tips to help you with your job interviews
Before the interview:
1) Make time in your diary for the interview. You need to show candidates the courtesy of being fully "present" at the interview. If you need to, hire additional staff to cover for you or close the shop for an hour.
2) Make sure there will be no interruptions. If you allow yourself to be interrupted during the interview you are giving candidates the message that when they work for you they are unimportant and will always be second best. Is that the message you really want to give?
3) Work out exactly what you are looking for. Of course you have a position description for the role written. If you don't, you need to write one before the interviews so that candidates know exactly what the role will entail. Once you know precisely what they will be doing, work out what skills and experience are essential in order to be able to perform the role.
4) Work out the sort of person you need for your team. Fitting a person into a team is a real jigsaw. If you are a scattered sort of person, perhaps you need to look for someone organized to balance your gaps. It is easy to get carried away with someone who is a nice person, but if they don't have the skills or the right personality for the team then they are the wrong person for this role.
5) Make sure you are not directly or indirectly discriminating. Do you really need a "bloke" for the role if it involves heavy work? Gender is not a good predictor of strength. Some of the weediest people I have met have been blokes and the strongest people who can bench-press better than everyone in the gym are women.
6) Contact the candidates. Let them know who will be interviewing them, how long they can expect the interview to last, where to come and where they can park. By showing them courtesy as if they are your top client, you are sending a very strong message about what it will be like to work with you.
7) Somewhere to wait. Make sure there is somewhere nice to wait before the interview. Some candidates can arrive up to half an hour early, so be prepared.
8) Work out the questions you are going to ask. These questions should be directly linked back to the duties of the position. You need to ask each candidate the same basic set of questions so you can compare answers. Of course you can prompt for more information, but the basic questions should be the same. Also work out the sort of answers you would expect to see from a great candidate.
9) Check your questions actually give you the information you need. If you ask "can you use Microsoft Word" you will get a Yes/No response. If you ask "tell me how you would go about setting up a mail merge letter to my database" and you get a better idea of their skill level.
10) Consider giving candidates the core questions 15 minutes before they come in for interview. Remember you want them to be the best they can be. In most jobs people don't have to answer off the top of their heads all day every day. People have time to think. By allowing people the chance to see and think about the main questions before the interview, you allow introverted people the chance to shine. Interviews traditionally favour extroverted people, which means that you are missing out on at least half of the population.
11) Consider having more than one person in the interview. Different people see different things in candidates. It can help to balance out viewpoints.
During the interview:
1) Introduce yourself and take some time to build rapport before launching into questions.
2) Allow the candidate space to be nervous. Make sure they have a glass of water to drink to steady their nerves.
3) If conducting a phone interview, periodically make some noise when they are talking such as "aha" or "mmnn". Phone interviews can be disconcerting as often all the candidate hears is silence. Consciously fill the background and you will get a better interview.
4) Check the referees are still current (you may want to ask the candidate what they think the referees will say about them - always enlightening).
5) Remember the no interruptions rule. Once you are interviewing allow no phone calls or people barging in. If someone does barge in, apologise first to the person you are interviewing. Tell the person who barged in that you are interviewing at present and will get back to them in half an hour.
6) Ask if they have any questions for you and be prepared for any curly question about you, your company, pay and conditions, development opportunities and promotional possibilities.
After the interview:
1) Check references of all candidates you are seriously considering.
2) Personally ring every candidate you interviewed to tell them they have been successful or unsuccessful. Give some basic feedback on how great they were at interview but the field was very competitive.
3) Follow it up with a short note thanking them for their time and interest in your company and wishing them well for future roles. It costs nothing for courtesy but builds a great image of you and your company.
When all is said and done, you need to balance logic with gut feel about the candidate. If your gut says no but they are a great candidate, check it out further with more questions or reference checks. Your gut usually has picked up something that you need to know more about, so trust its wisdom and dig a bit deeper.
12 Job Interview Tips to Help You Ace Your Next Interview!
So you've written and re-written your resume and cover letter countless times...you've used every trick in the book to make your resume and cover letter stand out. You've finally sent them out to get your dream job and low and behold all that hard work has finally paid off...the phone rings and you get that call you've been waiting for...you have been asked to interview for the job of your dreams.
Congratulations...now don't mess it up!
It's important that all that hard work to get the interview doesn't go waste...the last thing you want to do is blow it on the interview.
Here are 12 job interview tips to help you get that job of your dreams...
1. Never be late for a job interview. Not only will arriving late not go over too well with your interviewer, but you should give yourself time to relax and gather your thoughts before the interview actually starts.
2. Do your research. Before the interview, try to find out as much as you can about the company. How else do you expect to answer the question, "Why do you want to work out [insert company name]?" Or, "Why do think you would be a good fit with [insert company]?" Or, a number of similar questions. If you don't know anything about the company you are not going to get hired.
3. Always carry extra copies of your resume to the interview. You never know if others will be called in to sit on the interview committee. You want to be able to give everyone on the committee his or her own copy of your resume.
4. Interviewers want to know that you are not just looking for "any" job, but that you are looking for the "right" job for you. Therefore, you should be prepared with a handful of questions that you would like ask of them. This will also make the interview seem more like a two-way conversation rather than a one-way interview.
5. Never pretend you know more than what you really do. Lying or misleading the interviewer will come back to haunt you.
6. Always dress properly for an interview. Your first impression could be your last one. When in doubt it is better to over dress than under dress.
7. Research the most common interview questions for the job you are seeking and practice your answers. Always try to be as specific as possible when answering questions. Use examples whenever possible.
8. Body language plays an important role in whether or not you get hired. You should greet your interviewer with a firm handshake and maintain eye contact during the interview. Watch out for any bad speaking habits you might have such too many hand gestures or biting your upper lip.
9. Show your passion for the job. Remember, passion is NOT something that can be taught...you either have it or you don't. Your employer wants to know that you have it.
10. Be attentive while the interview is going on. Listen to the question being asked. You can recollect your thoughts before answering the question and you can always ask for clarification in case you do not understand the question.
11. Answer the questions in a manner that shows that your strengths and experiences match those that are required by the job.
12. End the interview with another firm handshake and ask when you can expect to hear from them about the job.
Job interviews can be extremely stressful...especially when it is a job you really want. However, if you follow the job interview tips above you will enter your next job interview with much more confidence.
Now go out and ace your next job interview!
How To Choose The Right Forex Trading System
Forex Trading System is a complete set of rules that needs to be followed in order to reap the maximum benefits accruing from the Forex market. It helps an individual to make calculations and provide instructions on how to create his personal Forex trading portfolio. Many trading systems are available in this regard but it has been observed that approximately 95 percent of them actually do not live up to the expectations.
However it is a myth that the more complicated the trading system is, the more are the chances of striking success. In fact, it works the other way round, the less complicated the trading system is, the lesser are the chances of failing. Simple systems work better because they have fewer elements to break. These simple systems act more robustly in the brutal and ever-changing environment of real trading. So one should try to keep the system as simple as possible. The one basic thing to be kept in mind is that only those systems actually work that have been created while keeping in mind the personality of an individual. A trading strategy may work for someone but it is not necessary that it would also work for another person.
The basic education in Forex trading help one to understand how and why one's trading system works. If one is not aware of this thing then it is quite difficult for him to follow the system, and unless one effectively follows it, it is quite difficult for him to achieve trading success. The only person who can make money for an individual is he himself. One should always find out the compatibility of the system with his personality.
While looking for a Forex trading system, one should be careful about choosing one that can provide a real-time record. This shows the success rate of their system. One should talk to the vendor beforehand and give him/her time to answer his queries. Then a check needs to be made on the support and guarantee provided by the vendor. One should also take the advantage of money-back guarantee (some of the vendors do provide that, in case the trader tries it for a short-term and does not find it useful). The best way to opt for a good system is to first survey the market. Doing this can help one to find various systems at variable prices.
Forex trading system is one that has no rules and no orders. One thing that is beneficial for an individual at a given time may not be so at another point of time. Another thing that plays a vital role is that a system might have the best possible characteristic traits and the best indicators but that may prove to be of no use unless the trader applies it consistently with proper discipline and application of his specialized knowledge and expertise. So to gain profit from a Forex Trading System one needs to find a good system first and then follow it stringently for deriving optimal results.
Open the Door to Brand New Opportunities
We have all experienced the long toil to find employment. Searching endless hours through newspapers, job advertisements, job centers and writing to companies asking to keep our cv on file. We ask ourselves whether there is an easier way to find the position we are looking for, for many it can be a demoralising experience going to many interviews and experiencing many knock backs. Most of us spend our time trawling instead of finding recruitment agencies which potentially could open doors for you. I am not saying that if you sign up with a recruitment agency you are guaranteed instant success but it could possibly be a supply of new vacancies which you never knew existed. This is how it works.
Recruitment agencies are not only there for candidates (jobseekers) searching for employment they are also there to help companies and businesses find staff or advertise vacancies within there employment. These vacancies can be in any job industry, of which there are many to choose from.
Industry sectors for example may include, commercial, industrial, accounting, technical or hospitality and leisure. These industry sectors will each require several different skills, abilities and competences, therefore catering for a wide and very diverse range of people from apprentices with none or little work experience to full time positions for managerial positions with experience being essential, temporary opportunities arise to cover sick leave or extended holidays, and there are vacancies for skilled and semi-skilled tradesmen.
Enrolling with a recruitment agency can take some of the hard work out of a job searching; an initial interview with the recruitment agency in many cases will take place to further investigate the kind of work you are looking for. This not only helps you but makes it clear to the recruitment consultancy which jobs would be suitable for you and which would certainly not, for example if you are looking for a job as a cashier you are not going to find the right job in a warehouse who are requiring for forklift truck drivers. It just defines which areas are suitable and which clearly are not. Note: You may still need to provide the a current CV (Curriculum Vitae) and references from previous employers
In additional your primary interview will provide you with the opportunity to seek advice about the interview technique, simple suggestions such as arriving is vital, so if you are not sure of the location, travel arrangements and time it will take to get to the interview, it would be prudent to make a trial journey just to make sure you know where you are going and how long it will take, dress smartly for your interview, presentation and first appearances go a long way! although interview nerves may get in the way try to be confident. Keep eye contact and try to avoid nervous fidgeting, try to give constructive answers to questions asked instead of saying the first thing that comes into your head or just yes and no. Sit with a good posture and try not to slouch; all of these are just little tips which could create the right personal impression.
As I mentioned earlier many companies also use the services of recruitment consultancies to advertise positions. Many companies build a rapport with recruitment agencies knowing that they will receive the right kind of candidate because of the background work already done. Once a rapport has been established many companies will use the same agency again and again which in turn means that with more clients on a recruitment agency database the more jobs there are likely to be on offer.
Another reason to join an experienced recruitment agency is that they might make you realise new potential in other areas, perhaps you are a chef looking for a catering job, you have tried to find work in hotel kitchens and public houses but have drawn a blank, but have you tried places such as golf clubs and spas? Golf clubs usually have a club house which offers their members a top quality service, part of playing golf is enjoying the social aspect, after a round of golf there is nothing better than relaxing and discussing the day over a hearty meal and social drink. Therefore the golf course will require catering staff, its just one area which can be overlooked. The golf industry actually offers such a diverse range of opportunities such as reception, managerial, housekeeping, food and beverage opportunities right through to greenkeeping!
So whatever position, vacancy, job opportunity you are searching for, a visit to a reputable recruitment service might just open doors for you helping your realise your potential whilst broadening the opportunities on offer.
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