Archive for category Favourites
The Future Of Banking
Posted by Tetyana Matychak in Banks, Favourites on September 2nd, 2010
The banking industry is always in a state of transition. Banks are also coming out with new products to attract customers. Over the past 20 years, we have seen direct deposit, online banking, banking applications, and automated tellers. All of these products were designed to save money and make banking easier for customers. So, what are banks working on now to improve operations?
Here are 3 ways that technology will make your banking life easier over the next few years.
1. Fewer Trips To The Bank
Remote-deposit capture is the new big thing in banking. Remote deposit capture allows customers to make a bank deposit without leaving their house. Customers can take a picture of a check at home. The computer receives the image and verifies the amount, check number, account number, and the bank’s routing number. A photo of the back of the check verifies that it’s been signed by the recipient. A clearinghouse then routes the funds from the check writer’s account to that of the recipient. Funds are available for withdrawal without ever setting foot in a bank.
2. Fewer Bank Tellers
Banks will always need tellers to address customers but tellers are being replaced by bank technology. First, there was the invention of Automated Teller Machines (ATM). Now, a few major credit unions are trying branches with very few tellers. The bank lobbies have no physical tellers. The teller transacts all business with the customer via a video camera. The teller can see and hear the customer but the customer never physically sees a bank teller. This cuts down on robberies and reduces the number of tellers needed. Read the rest of this entry »
Consumer Spending in U.S. Rises More Than Forecast
Posted by Tetyana Matychak in Favourites, Trading Markets on August 30th, 2010
Consumer spending in the U.S. rose more than forecast in July, exceeding gains in incomes, a sign the improvement will not last without more jobs.
Purchases rose 0.4 percent, the most since March, after little change the prior month, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent, less than projected, and the savings rate dropped.
Disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation, showing the lack of jobs is hurting Americans’ spending power. Companies from Intel Corp. to J. Crew Group Inc. are cutting forecasts as unemployment and flagging confidence prompt households to scale back.
“This, so far, is allaying near-term double-dip concerns,” said Derek Holt, an economist at Scotia Capital Inc. in Toronto, referring to fears the world’s largest economy will tip back into a recession. “It nonetheless showcases very lackluster growth in the U.S. economy.”
Stock-index futures fell after the report, extending earlier losses, and Treasury securities rose. The contract of the Standard & Poor’s 500 Index was fell 0.3 percent to 1,060.3 at 8:54 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 2.60 percent from 2.65 percent late on Aug. 27. Read the rest of this entry »
Monetary Policy Gets No Respect
Posted by Tetyana Matychak in Budget, Favourites on July 19th, 2010
The cover story in Time’s current issue summarizes what everyone already knows. The economic rebound has lost strength recently. The story goes on to report that the policy responses at this late date aren’t encouraging, largely because political support for more fiscal stimulus is weakening faster than the economy. Strangely, the article makes no reference to the possibilities for additional monetary stimulus. The not-so-subtle suggestion is that if the economy needs additional help, new government spending programs are the only game in town and this door is closing fast because of political considerations.
The chief problem, as the Time article presents it, is one of fading public support for more spending by Washington:
Polls show that voters either don’t understand — or don’t buy — the long-established economic theory of John Maynard Keynes, which calls for more government spending (even if it means running up deficits) to help the economy through hard times. Instead, the public is in the mood to smack big Washington spenders hard this November…A new Time poll reveals just how hard the task is: Two-thirds of respondents say they oppose a second government stimulus package.
But as many economists have been explaining recently, monetary policy options may not be a dead end at this point–despite the fact that nominal interest rates are at or near zero. Yet the so-called zero-bound problem inspires some economic pundits to conclude that fiscal stimulus is all that’s left, or so Time’s cover story this week counsels. But this is shortsighted, according to a number of dismal scientists. What’s more, the possibilities for additional monetary policy at the zero bound have been circulating for quite some time. Read the rest of this entry »
Stocks May Surprise By Year-End
Posted by Tetyana Matychak in Favourites, Fund Markets on July 5th, 2010
Economic news has been weak lately. Financial markets have performed poorly for over two months. Dow Theory “sell signals” have been issued. You may have heard a “death cross” is on the way. It is nearly impossible to find a bull among the growing sloth of bears. We are concerned about both the fundamentals and the technicals. However, in the context of history the current situation is not all that unusual.
On the economic front, the Wall Street Journal helps put recent weak economic numbers in some perspective. Stocks did quite well from late 2002 to late 2007. They also did well from 1992 to 1994.
Pauses aren’t uncommon early in a recovery. After rebounding from recession in late 2001 and early 2002, the economy had a 12-month stretch in which it grew at a paltry 1.5% annual rate, sparking fears of a double-dip recession. In late 1991, growth waned after a recovery had started. In the past 12 months, the economy has gotten off to a faster start than in 2002.
From CNBC: Former Federal Reserve Chairman Alan Greenspan said that the recent stock market decline is “typical” of a recovery, and that international instability has more to do with the recent decline than problems in the United States. “What we’re looking at is an invisible wall, which we’ve run into here. Which, essentially, as far as I can see, is a typical pause that occurs in an economic recovery,” Greenspan said in an interview with CNBC. “Ordinarily we’re saying that the stock market is driven by economic events, I think it’s more in the reverse.” Read the rest of this entry »
Is A Global Reserve Currency A Necessity?
Posted by Tetyana Matychak in Currency, Favourites on June 28th, 2010
Recently Asian Development Bank (ADB) suggested, China’s yuan could rapidly become an internationally used currency and serve as an alternative to the U.S. dollar in central bank reserves. There weren’t many takers for ADB’s suggestion. I beg to differ from ADB’s stance. If China’s yuan becomes a reserve currency then, I ask, is there a guaranty that we won’t see another global financial crisis of the present order? In the wildest of possible pollyannaism, even ADB wouldn’t say that replacement of one reserve currency (US Dollar) with another (China’s yuan) would guarantee us a world free of a future global financial crisis of the present order. At best, I guess, that would be a temporary solution.
I think it is high time we ask the fundamental question – do we need a global reserve currency? Yes of course, there are significant economic incentives in agreeing to have a global reserve currency. But, hasn’t the concept of international reserve currency outlived its usefulness? I, for one, definitely believe so.
A decade ago, in the wake of the Asian financial crisis, Malaysia’s former Prime Minister, Dr Mahathir Mohammed, called on the world to ban currency trading and outlaw hedge funds, which he blamed for spectacular declines in the value of the Malaysian ringgit. His comments focused on the fact that currency trading served no tangible economic purpose and that hedge funds were opaque beasts wielding billions of dollars in vested interests. Though, I don’t agree with his thoughts in toto, I must say his thoughts did inspire me to ask the fundamental question – do we need a global reserve currency? Whatever, one’s answer to the above question may be, there is a broad consensus in the world that the global central banks are risking too much by holding much of their reserves in dollars. The consensus is so strong; there have been a rush of proposals such as – replacing greenback with a new reserve currency system based on the IMF’s special drawing rights; or a more coordinated approach to exchange rate policy involving target zones etc. There are plusses and minuses in all those proposals. But scrapping a global trade based on the concept of international reserve currency seems to be a better idea than all those proposals. Read the rest of this entry »
Deflation Comes To Europe
Posted by Tetyana Matychak in Budget, Favourites on June 11th, 2010
Many economists regard deflation as more dangerous than inflation, as it encourages consumers to delay purchases as they wait for a lower price tomorrow. When consumers put off buying in anticipation of lower prices it creates a downward spiral of lower demand followed by lower production.
Deflation harms debtors as well. Countries like Greece have to pay back the money they borrowed with money that will be more expensive next year. Paying down debt with cheaper money slows economic growth. Japan has struggled with deflation for the last two decades, as growth in Japan faltered.
A sign that deflation is near comes from countries like Ireland and Spain that saw prices fall in May. Inflation was below 1 percent in five other euro zone countries.
There are four causes of deflation:
Decrease in the money supply
Increase in demand for money
Increase in supply of goods
Decrease in demand for goods Read the rest of this entry »
Commodity-Linked Currencies Suffer Huge Losses
Posted by Tetyana Matychak in Currency, Favourites on June 7th, 2010
The weaker-than-expected U.S. employment report helped trigger a flight-to-safety rally in the Dollar while driving investors out of commodity-linked currencies. Aversion to risk weakened U.S. equity and global commodity markets, helping to drive up demand for the lower-yielding Japanese Yen. All three major commodity-linked currencies – Australian Dollar, New Zealand Dollar and Canadian Dollar – suffered huge losses, leading to speculation that this trend is likely to continue next week.
The U.S. Dollar Index made a new high for the year, boosted by the sharp sell-offs in the Euro, British Pound and the commodity-linked currencies. Gains were limited slightly by the rise in the lower-yielding Japanese Yen.
The initial catalyst behind the U.S. Dollar’s rise on Friday was the news that Hungary is in the midst of a fiscal crisis of its own. This news caught many traders by surprise because most were focused on the upcoming U.S. Jobs Data Report. After the first thrust to the upside, gains were extended when the government reported that the number of jobs created during May fell far below the consensus.
Economist estimates were for an increase of about 513,000 new jobs. The U.S. Labor Department reported an actual increase of 431,000. This news was bearish in itself, but the traders were really surprised when the internals of the report showed that of the 431,000 new positions, 411,000 jobs were created by the U.S. government. This figure was primarily made up of short-term census workers. Read the rest of this entry »
How to Quickly Find Out if Your Identity Is Stolen
Posted by Tetyana Matychak in Banks, Favourites on May 26th, 2010
Here’s a quick and free way to determine whether you’re a victim of identity fraud: check your “My ID score” at www.MyIDScore.com.
Here’s how the year-old tool works. At the site, enter information about yourself including your name, address, date of birth, telephone numbers and, if you choose, your Social Security number. The site then asks you a series of questions to verify who you are and then provides you with a score between 1 and 999 that measures the likelihood that others are misusing your personal information.
The free service is offered by ID Analytics Incorporated and is based on the same technology that the firm has offered companies for nearly a decade. The corporate scoring tool tells companies, from credit card issuers to mortgage lenders, how likely it is that people applying for a card or a loan, among other applications, are who they say they are.
The score is calculated by looking at anomalies in ID Analytic’s database of about 360 billion basic identity elements including names, Social Security numbers, phone numbers, birth dates and addresses, all of which is information from applications and change-of-address forms provided to the database by client companies. Anomalies that may increase an individual’s score would be, for instance, if three people with different names are applying for credit cards using the same Social Security number or from two different addresses on the same day. Read the rest of this entry »
Why it makes sense to fear Greek default
Posted by Tetyana Matychak in Favourites, Trading Markets on May 18th, 2010
Is everybody overstating the consequences of a Greek default and/or devaluation? The Economist points out that Europe has seen quite a few defaults in recent decades (Russia, Poland) and also break-ups of currency unions (Czechoslovakia, Yugoslavia) — and that none of these events caused a lot of lasting damage.
I’m not convinced, if only because the Russia default caused the collapse of LTCM and a serious crisis; if it weren’t for tough arm-twisting by the Fed and billions of private-sector dollars from America’s biggest banks, it could have been much worse. And the end of the koruna and the dinar also meant the end of the Czechoslovakia and Yugoslavia, and the worry is very much that if Greece or anybody else were to exit the euro, then the whole currency union could fall apart, endangering the EU itself.
More generally, financial markets are good at taking the collapse of risky assets in their stride: what they’re bad at is dealing with the collapse of assets they thought were safe. And until very recently, Greek bonds were considered to be an interest-rate play, not a credit play. As a result, the institutions owning them can ill afford to see big losses on them.
The euro was designed to be a super-safe currency; as such, the repercussions of it falling apart would surely be many orders of magnitude greater than anything we saw in the wake of the collapse of the unlamented Yugoslav dinar. Read the rest of this entry »
Mutual Funds: 10 questions to test your IQ
Posted by Tetyana Matychak in Favourites, Fund Markets, Investing on May 14th, 2010
Mutual funds are a cornerstone of retirement planning. Yet they’re widely misunderstood and investing ignorance can really cost you. Do you know the difference between an expense ratio and a turnover ratio? What about an open-end fund versus a closed-end? Try this quiz, and check out the answers at bottom:
1. What percentage of households own mutual funds?
(a) 10 percent; (b) 27 percent; (c) 43 percent
2. When was the key law governing mutual fund operations adopted?
(a) 1929; (b) 1933; (c) 1934; (d) 1940
3. How many mutual funds are there in the U.S.?
(a) Nearly 1,000; (b) Nearly 4,000; (c) Nearly 8,000 Read the rest of this entry »
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Consumer Spending in U.S. Rises More Than Forecast
30 August 2010Monetary Policy Gets No Respect
19 July 2010Stocks May Surprise By Year-End
5 July 2010Is A Global Reserve Currency A Necessity?
28 June 2010
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