Posts Tagged money
Why The Stimulus May Not Have Stimulated
Posted by Oksana Grebenjuk in Trading Markets on Ноябрь 5th, 2010
Arnold Kling points to an interesting study by economists John Taylor and John Cogan. It’s an analysis of the effect of the stimulus from a different and intriguing perspective. They write:
Because the ARRA grants to state and local government are fungible and not synchronized with purchases, determining the effect of ARRA on state and local government purchases is more difficult and uncertain than determining the effect on federal government purchases. We therefore analyze the state and local purchases data in detail.
We also consider counterfactuals, trace where the money went, and estimate time-series regressions of the relationship between ARRA grants and state and local government purchases. Our main finding is that the increase in government purchases due to the ARRA has been remarkably small, especially when compared to the large size of the overall ARRA package. In fact, the effect of ARRA on purchases appears to be so small that the size of the government purchases multiplier does not matter much compared to many other factors affecting the growth of GDP.
Taylor and Cogan contend that state and local governments simply substituted federal money for money they would have appropriated via cash flow or borrowing. Effectively, they conclude that little new money actually found its way to the economy.
Kling offers three views of their hypothesis: Read the rest of this entry »
Currency War: “The Worst of Wars”
Posted by Oksana Grebenjuk in Budget on Ноябрь 1st, 2010
The United States is the lead negotiator in trying to convince China to revalue its undervalued yuan. But U.S. officials are simultaneously operating under the growing perception that it may be seeking a weaker currency of its own — by planning for another round of quantitative easing — thereby threatening its credibility.
That’s why U.S. Treasury Secretary Tim Geithner made a strategic move to influence the G-20 agenda. He preceded the formal meetings last weekend with a letter to his G-20 counterparts, recommending a unified position and the language for G-20 opposition to the growing currency tensions in the world.
And for the most part, it worked.
Here’s the key take-away from the final G-20 communiqué and what it could mean for the direction of markets …
First, the communiqué said that they «met with a sense of urgency.» In fact, an ECB policymaker later called the dangerous currency wars «the worst of wars, because at the end there is no winner.»
This is significant …
The last time they made such a statement of urgency was when the euro was on the edge of a cliff. It coincidently bottomed the first trading day after meetings concluded. Read the rest of this entry »
The Secret To Saving Money
Posted by Oksana Grebenjuk in Budget on Октябрь 22nd, 2010
Saving money is a basic concept of personal financial planning, and key to financial success. Yet many of us don’t have a formal savings plan. Without such a plan, the chances of ever saving enough money to meet long-term financial goals or achieve financial security are very slim.
It seems simple. In order to save money, you need to have «extra» cash, right? This is a common misconception. Having a spending plan (aka «budget»), will help you create money for savings. Most of us, by setting spending goals, can manage to save regularly, so if you’re tempted to hit your back button because you simply don’t have enough money to have a formal savings plan, STOP! This article will tell you the «secrets» to savings.
First, set a few short-term and long-term financial goals to work towards, like a down payment on a car or home. Include the dollar amount and a time frame for achieving the goal. It’s much more motivating to save when you know what you’re saving for. And remember, a goal that isn’t written down is only a dream.
Set up a separate savings account. If you mingle your savings with your regular checking account, you’ll almost certainly dip into your savings and may never pay them back. Having your savings in a separate account is a constant reminder that these funds are earmarked for your future, and watching the balance grow is not only rewarding and motivating — it’s downright exciting!
If you don’t already have a written budget that includes tracking your expenditures each month, begin one now. Whether you make thousands of dollars or hundreds of thousands of dollars a year, you need a budget. Budgeting can be relatively simple and entirely guilt-free. See Budgeting 101 for simple, easy budgeting. Read the rest of this entry »
Brazil’s finance minister warns of international ‘currency war’
Posted by Oksana Grebenjuk in Currency on Октябрь 1st, 2010
Brazil’s finance minister Guido Mantega has warned that an «international currency war» is currently being waged.These mutual moves at competitive devaluation, Mantega said in a speech in Sao Paulo, were tantamount to a new trade war.
«We’re in the midst of an international currency war,» he said. «This threatens us because it takes away our competitiveness. The advanced countries are seeking to devalue their currencies.»
Brazil’s own currency, the real, is presently at a 10-month high against the U.S. dollar (having appreciated 40 percent from its lows in early 2009) amidst comments that the real is among the world’s most overvalued currencies. The real is extremely attractive to foreign investors due to Brazil’s high interest rates and torrid pace of economic growth.
The historic $70-billion share offering by Brazil’s state-owned oil company, Petrobras, prompted a further massive inflow of money into the country.
Mantega’s comments come on the heels of moves by various governments around the world — including Japan, South Korea, and Taiwan — that have intervened in order to weaken their currencies and improve exports. Read the rest of this entry »
Consumer Spending in U.S. Rises More Than Forecast
Posted by Oksana Grebenjuk in Favourites, Trading Markets on Август 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 »
Raising Money During The Summer Slowdown
Posted by Oksana Grebenjuk in Investing on Июль 6th, 2010
The streets are empty in NYC this July 4th weekend and it seems like everyone is at the beach. The Gotham Gal and I are getting ready to head to Italy for a week on Sunday night. Summer is here and I can feel the pace of work life and city life slow down.
Many of our companies experience a slow third quarter because people aren’t working at quite the same pace in July and August and it is hard to get it all back in September. And many entrepreneurs and investors I work with assume for the same reasons that the summer months are a bad time to be raising money.
I don’t think the summer months are a bad time to be raising money. It’s a different time to be sure, but not necessarily worse. We see a lot less incoming activity in the summer months so it may be the best time to get a VC’s attention. If everyone else thinks it is a bad time, then the contrarian in me says it is a good time.
I just did a quick query on our portfolio and we made our first investments in eight of our twenty-seven active portfolio companies during the third quarter. Three of our investments were closed in July. Three of our investments were closed in August. And two of our investments were closed in the first couple weeks of September.
Eight out of twenty-seven is thirty percent of our portfolio, and that is north of the twenty-five percent of the year that the summer represents. So our firm has been more active on new investments during the summer than we are on average. Read the rest of this entry »
Nineteen Billion Dollars Is A Big Deal
Posted by Oksana Grebenjuk in Banks on Июль 2nd, 2010
The blogosphere is having conniptions over Scott Brown’s announcement that he won’t vote for final passage of FinReg because of the $19 billion tax on banks that was incorporated at the last minute. The recurring theme is that $19 billion is a small amount of money and that anyway it’s going to be levied on the big banks that have benefited from government efforts to keep the financial system afloat.
Here’s what Ryan Avent has to say:
The fee in question was introduced during the conference session and is designed to cover the cost of the bill, that is, to make sure it’s deficit neutral. It’s a modest amount, and it’s levied on entities that have benefitted significantly from the massive government intervention deployed to keep the financial system afloat during the financial crisis.
And Joe Weisenthal jumps on the subject with this:
This whole thing is a bit silly. $19 billion, levies across the financial system, on various players based on their size is tiny. We repeat: tiny. And beyond that, this isn’t some kind of punitive tax; it’s designed to pay for the enforcement of the bill, which presumably Scott Brown is in favor of, if he likes the rest of the bill. Read the rest of this entry »
Deflation Comes To Europe
Posted by Oksana Grebenjuk in Budget, Favourites on Июнь 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 »
U.S. wants to boost airline passenger bumping fee
Posted by Oksana Grebenjuk in Budget on Июнь 3rd, 2010
Maximum compensation for bumping passengers off oversold flights would rise to $1,300 under a U.S. government proposal released on Wednesday.
The Transportation Department plan would also expand its runway delay program to overseas airlines, making them comply with the same requirements as domestic counterparts for ground delays exceeding three hours.
Current bumping fees range from $400 to $800, depending on whether an alternative flight is available and whether the trip is domestic or international service. U.S. airlines also would have to clarify charges for checking luggage and notify consumers if the fees rise.
The rule builds on steps taken by the Obama administration to bolster consumer protection in the wake of long ground delays and charging for bags as a way to get more money from their customers. Read the rest of this entry »
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