Archive for category Favourites
Sarkozy Says EU Must Back Greece
Posted by Tetyana Matychak in Favourites, Trading Markets on March 8th, 2010
French President Nicolas Sarkozy said the European Union must support Greece or risk destroying the euro as Prime Minister George Papandreou heads for Paris to lobby support for the debt-laden country.
“If we created the euro, we cannot let a country fall that is in the eurozone,” said Sarkozy, who hosts Papandreou in Paris tomorrow. “Otherwise there was no point in creating the euro. We must support Greece because they are making an effort.”
EU leaders have so far refused to give financial aid to Greece and have ordered the government to cut its budget deficit, the EU’s highest, on its own. While Papandreou says steps taken this past week to slash the shortfall warrant more help from the EU, German Foreign Minister Guido Westerwelle said today that his country is “not going to write a blank check.”
Papandreou is touring Luxembourg, Berlin, Paris and Washington after his government passed a 4.8 billion euro ($6.5 billion) austerity package yesterday. German Chancellor Angela Merkel, who met him yesterday, said the question of a bailout “absolutely doesn’t arise” and the steps taken to cut the deficit make her optimistic that a rescue won’t be needed. Read the rest of this entry »
Credit-Card Fees: the New Traps
Posted by Tetyana Matychak in Budget, Favourites on February 26th, 2010
A new federal credit-card law that takes effect Monday could erase billions of dollars a year in fees and interest charges paid by consumers. But card issuers are already deploying new tactics that could prove costly for even the most cautious cardholder.
The law made some important changes. Card companies must now tell customers how long it would take to pay off the balance if they only make the minimum monthly payment. Customers can only exceed their credit limit if they agree ahead of time to pay a penalty fee. And unless a cardholder misses payments for more than 60 days, interest-rate increases will affect only new purchases, not existing balances.
Banning these and other profitable tactics is expected to cost the card industry at least $12 billion a year in lost revenue, according to law firm Morrison & Foerster. This has sent the industry scrambling to find new sources of revenue. So get ready for higher annual fees, higher balance-transfer charges, and growing charges for overseas transactions.
“There are countless fees that can be introduced and rates can go through the roof,” says Curtis Arnold, founder of U.S. Citizens for Fair Credit Card Terms Inc., a consumer-advocacy group.
Consider the new offer from Citigroup Inc. The bank will give cardholders a credit of 10% on their total interest charge if they pay on time. That sounds enticing, except that if you don’t pay on time, your interest rate is 29%. Read the rest of this entry »
Credit regulations aim to help students
Posted by Tetyana Matychak in Budget, Favourites on February 23rd, 2010
A new credit card legislation that went in effect Monday could help prevent college students from falling prey to credit card companies, but the effects of these laws might not be seen for a while.
Along with the set of benefits for consumers planned in May 2009 came a number of changes credit companies made in order to continue earning profits after restrictions were applied, student legal services attorney John Connor said.
“These credit card companies had nine months to prepare,” he said. “And so that gave them an opportunity to decide where to increase their fees. I’m sure it will take a number of years to determine whether or not, in fact, it had any positive effect.”
Some of the changes in the credit card law are specifically aimed at colleges and students, banning credit companies from offering gifts in exchange for having students sign a contract with them. It also encourages universities to require credit companies to notify them of any location on campus they are marketing credit card plans. Read the rest of this entry »
The worst is yet to come
Posted by Tetyana Matychak in Budget, Favourites on February 17th, 2010
Over the next few years, a wave of commercial real estate loan failures could threaten America’s already-weakened financial system. So warns a new report from the Congressional Oversight Panel as part of its oversight of the Troubled Asset Relief Program, highlighting yet one more hurdle for this country’s fragile economy.
The panel, chaired by Harvard law professor Elizabeth Warren, says it remains “deeply concerned” that commercial loan losses could jeopardize the stability of many banks, particularly the nation’s mid-size and smaller banks. Read the 183-page report for yourself here.
Worries about CRE loans — those loans taken out by developers to purchase and maintain shopping malls, offices, hotels, and apartments — have been simmering for months, as we noted in an October article. See “How Banks Will Fare in a Commercial Real Estate Crash.”
The problems now plaguing commercial real estate have no single cause, and the panel notes that the loans most likely to fail were made at the height of the real estate bubble when commercial real estate values had been driven above sustainable levels and loans.
“[M]any were made carelessly in a rush for profit,” the panel said. Read the rest of this entry »
Stiglitz: Regulate Banks. Now. Everywhere.
Posted by Tetyana Matychak in Banks, Favourites on February 1st, 2010
Officials in Davos should try to reach a global consensus about the need for a new regulatory regime for banks, Nobel Prize laureate Joseph Stiglitz told CNBC Friday.
Banks threaten to move to another location as soon as new taxes or regulation are announced, so the main problems that led to the financial crisis are not addressed, Stiglitz explained.
“If there was a broad consensus… this could stop this race to the bottom which got us into the mess we’re in now,” he said.
Bankers have incentives to take risk and one way to restrain them would be limiting the leverage that banks can have, according to Stiglitz.
“When they win they walk off with the profits, when they lose the taxpayer pays,” he pointed out. “We really need to go more directly at these issues like incentives.” Read the rest of this entry »
China’s boom to end soon
Posted by Tetyana Matychak in Favourites, Trading Markets on January 25th, 2010
After more than a quarter century of rapid growth, China’s factory-to-the-world economy could now be set for a major slowdown, even as it tries to spend its way to strength, according to an expert on the causes of the global financial crisis.
Noted economist and author Richard Duncan said that, faced with sluggish global growth and a tapped out U.S. consumer, there’s little hope that China can keep its factory-geared economy in motion much longer.
“China has followed an export-led growth model for the last 25 years, and it has just hit a brick wall when the U.S. economy went into crisis,” Bangkok-based Duncan said in an interview with MarketWatch.
Duncan is the former London-based head of global investment strategy at ABN Amro. In 2003 he authored “The Dollar Crisis,” which warned that imbalances in global trade would lead to a meltdown of the financial system.
Duncan now believes China is caught in a jam created by excessive credit. Years of easy lending and booming investment inflows have saddled its economy with surplus industrial capacity to the point where China out-produces what it consumes. Read the rest of this entry »
Steps you can take to build credit, get a card
Posted by Tetyana Matychak in Banks, Favourites on January 19th, 2010
Gone are the days when credit card companies barraged you like a lovestruck suitor. Today, bruised by economic losses and consumer defaults, many credit card companies are spurning the customers they once wooed.
And if you’ve got a dinged-up credit score or no credit history, getting a new credit card is next to impossible.
We know one young man – a recent college graduate with a decent-paying job and no major credit dings – who’s been turned down for a credit card repeatedly, even from department stores like Macy’s.
“Credit is still tight, so issuers are not approving as many people with no credit or bad credit as they did 18 months ago when the economy was good,” said Bill Hardekopf, founder of LowCards.com. “It is a very big challenge for them.”
Those with bad credit have long had trouble getting credit cards or finding cards with affordable interest rates. Read the rest of this entry »
Look Who’s Peeking at Your Paycheck
Posted by Tetyana Matychak in Budget, Favourites on January 13th, 2010
You may think your income is private information. But the credit bureaus may have your number.
And starting in February, your income—as estimated by the bureaus—may be used to help determine whether you get a new credit card.
Tuesday, the Federal Reserve issued its final rules related to last year’s Credit Card Act, which, among other things, will require credit-card companies to consider an applicant’s income or assets and current debts before approving credit. To provide flexibility, however, the Fed said that issuers can use “a reasonable estimate” of income or assets based on “statistically sound models.”
In hopes of such a decision, the three big credit bureaus have been updating or rolling out products that seek to estimate consumers’ incomes, based on information in their credit reports, such as the size and age of their mortgages or the size of their credit limits.
The products also are responding to banks’ efforts to tighten credit standards in order to reduce losses and risk. “We look to fill in the blanks where they need the blanks filled in,” says John Cullerton, vice president, product management, for Equifax Inc., an Atlanta-based credit bureau. Read the rest of this entry »
How much you’ll need in retirement
Posted by Tetyana Matychak in Budget, Favourites on January 8th, 2010
Conventional wisdom says you need 80% of your pre-retirement income. But ensuring a comfortable retirement will take more than just a rule of thumb.
Question: I always heard that you will need 80% or so of your working salary to live on in retirement. But is that a percentage of your gross income or your take-home pay? –Mary Taylor, Chalfont, Pennsylvania
Answer: This rule of thumb has long confused many people who are trying to get a handle on their retirement planning. But the question of how much income you’ll need to live comfortably after calling it a career has taken on a special urgency the last year or so as retirement account balances wilted during the market’s meltdown.
After all, if you earn roughly $100,000 a year and take home, say, $80,000 after taxes, the difference between requiring 80% of your gross income ($80,000) and 80% of your net income after taxes ($64,000) is substantial. Unless you’ve got a pretty sizeable nest egg, the difference between coming up with $80,000 a year (plus inflation increases to maintain purchasing power) and $64,000 can have a significant impact on whether your money can support you the rest of your life. Read the rest of this entry »
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You are currently browsing the archives for the Favourites category.
Credit-Card Fees: the New Traps
26 February 2010
Credit regulations aim to help students
23 February 2010
The worst is yet to come
17 February 2010
Afflictions of liberty
8 February 2010
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