There is little doubt as to the importance of finding a company for auto insurance. Rating is going to play a very important part of how much you pay for your monthly insurance premium. You have to find a variety of insurance companies in order for you to rate the service they provide. However, the insurance companies also have to rate you. To be more accurate, the insurance companies have to rate your specific situation. The reason they do this is to determine whether you are a risk or not. It is important for you to remember the less risk you present to the insurance companies the more chance you have of getting the best deal.
There are a number of factors that insurance companies take into account in order to determine where you fit in on the rating scale. Auto insurance rating can either land you with a low or a high monthly premium. It may come as a surprise to know your credit rating will be considered. This is a recent addition to the rating scale. It is believed that a person who has a bad credit rating is more susceptible to filing a fraudulent claim. In the end, it is all clients who will have to cover the costs of such claims. An insurance company would rather give a higher premium to persons with bad credit in order to protect the premiums of honest clients.
Another very important consideration will be where you live. The insurance company will take note of the level of crime in your area. They will also want to know where you will store your auto overnight. Obviously, the more secure your storage facility the better. Your location will also indicate whether or not the climate is severe enough to inflict damage on your auto. Living in a rural area with a mild climate is going to be rated as less risky than an urban area where weather conditions are extreme. Online quotes list the most appropriate companies.
Publicada por FS em 08:00 0 comentários
Etiquetas: auto insurance online
domingo, 11 de Abril de 2010
Receiving an Affordable Auto Insurance Quote
As the current recession we are experiencing continues, people continue to find ways to cut down on their cost of living expenses. This, of course, includes the cost of insuring our vehicles. The good news is, as drivers become more and more aware of the rates they are paying for coverage, the insurance companies are becoming more and more aware that they need to stay competitive. This is actually helping to lower rates. Getting an affordable auto insurance quote is a lot easier today than it was just a few years ago. In order to get the lowest auto quote possible, follow these steps.
1) Shop online. The greatest discounts are offered online. Not only is it extremely efficient to get auto insurance quotes from many different companies and compare them, most of these companies actually offer their lowest rates to those who shop online. Find a good insurance directory that will enable you to compare rates of many different companies, all in one shot.
2) Show yourself in a positive light. If you are considered to be a safe driver by the insurance company, you will be offered the lowest quotes. Take some driving courses, keep a clean driving record, and don't make insurance claims for minor things.
3) Keep your car protected at all times. Spend some time and money installing anti theft products on your car to keep it safe from burglary. Also, make sure to keep your car in a safe location whenever you are not driving it. Many insurance companies now want to know where it is that you will be storing your car. Find someplace safe, lit and enclosed to get the lowest quotes.
Publicada por FS em 02:09 0 comentários
Etiquetas: auto insurance online
sábado, 10 de Abril de 2010
How to Find the Best Short Auto Insurance Online
Short auto insurance is the insurance of the automobile for the short period or temporary period. It is very important to get your vehicle insured be it anything a scooter, a motorcycle, a car or whatever vehicle you have. Short term auto insurance insured your vehicle for a shorter period and gives risk cover to your automobile. Now the question comes that how to have the best auto insurance over the net. To get the answer of this question, one has to take some pains and one has to do some effort so as to find the right insurer who actually helps them in solving the problem rather than making it more confusion and coming up with hidden rules or thing at the time of action.
When one encounters an accident, he is so disturbed by the accident that he doesn't have any power left to argue over things. It is a time when one needs support and help and this is what they expect from the insurance companies. So, in order to get the best insurance company online so as to have the best insurance deal one needs to search for the right company. One needs to see on the insurance blogs where one can find the feedback given by people on various companies, which actually helps people to know the true picture of all the insurance companies available. This question can again come that positive feedbacks are purchased by money. To this, the answer would be that how much a company can spend for positive feedbacks. See the companies having maximum feedbacks, because a company cannot invest too much on that. See the feedbacks in thousands and then go for a company.
Choose 2-3 companies from the long list of insurance companies so as to apply for a short auto insurance. Look for the various plans available and rest for each and every information the insurance companies gives to you. Know the prices at which they are offering insurance and other related things. Probe them as much as you can, try to get all the information that you need from these selected companies. Only go for a company which satisfies you after answering to your all the question and other queries. Choose and company and sign the insurance deal with them. You need to work a bit on the companies so as to find the actual helper among so many insurance players available.
Jumat, 16 April 2010
Jumat, 14 November 2008
Wall Street ends turbulent week sharply lower
Stocks tumbles in volatile trade as investors cash in from big rally, refocus on economy
* Joe Bel Bruno and Sara Lepro, AP Business Writer
* Friday November 14, 2008, 6:19 pm EST
NEW YORK (AP) -- Wall Street ended a turbulent week with another astonishing show of volatility Friday, with stocks plunging, recovering and then plunging again as investors absorbed another wave of downbeat economic news. The Dow Jones industrials fell almost 340 points and the major indexes all fell sharply for the second straight week.
Hedge fund selling in advance of a Saturday deadline contributed to the market's gyrations, and some retrenchment was to be expected following a big rally Thursday, when the Dow rallied more than 550 points after falling near its lows for the year. But there was plenty of discouraging news for investors to focus on, including comments from Federal Reserve Chairman Ben Bernanke that the markets remain under "severe strain" and a sobering report on October retail sales.
Analysts believe the market is still searching for a bottom after last month's huge losses, and that the pattern of volatility will continue for some time -- selling, even on technical reasons like looming deadlines for cashing out hedge fund holdings, is still coming against a backdrop of an extremely weak economy.
"Clearly, the trading crowd like hedge funds can take this market in any direction they want to. Anybody looking to build a position is just not confident," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
The session saw another stream of bad news. Bernanke said during a speech in Frankfurt, Germany, that he would work closely with other central banks to try to alleviate the global financial crisis and left open the door to a fresh interest rate cut. The Fed is scheduled to meet Dec. 16 at its last regularly scheduled meeting this year.
While Wall Street would like to see another rate cut, many investors aren't sure, given the litany of bad economic and corporate news, of how effective a rate reduction would be in the near term. Many investors are still trying to assimilate the idea that the economy's downturn will be protracted, lasting well into next year and perhaps longer.
"The economic news continues to be very negative," said Ben Halliburton, chief investment officer of Tradition Capital Management. "The realization that '09 is going to be a very bad year for economic activity is starting to dawn on people and they are starting to digest how bad it's going to be."
The Commerce Department reported that retail sales plunged by the largest amount on record in October as consumers cut back on spending in the wake of the financial crisis. Retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.
The market got more disappointing consumer news from retailers Abercrombie & Fitch Co. and JCPenney Co. Both warned that profits will come in below Wall Street's already lowered projections as retailers head into a holiday shopping season that could be among the slowest on record.
The great fear on the Street is that Americans' reluctance to spend will extend what is already a serious economic downturn. A barrage of negative consumer news sent stocks tumbling earlier in the week.
The market drew some brief comfort in the afternoon from comments from Treasury Secretary Henry Paulson, who told CNBC that capital injections in the banking sector will help stimulate lending. He also defended the decision to not buy toxic assets from banks, saying that it would not work as quickly; the move helped send stocks falling earlier this week.
There was disquieting news from the tech sector that weighed on the Nasdaq composite index. Sun Microsystems Inc. said it will cut up to 6,000 workers, or about 18 percent of global staff, as part of a massive restructuring plan. And handset maker Nokia Corp. warned the global economic slowdown will weigh on sales next year.
The Dow fell 337.93, or 3.82 percent, to 8,497.31, at its lows of the day. The Dow fell more than 300 in early trading, recovered to a slim advance and then turned sharply lower at the end of the day as hedge funds cashed out. Fund investors had a Nov. 15 deadline for withdrawing their money, which forced the funds in turn to sell stocks.
The Standard & Poor's 500 index fell 38.00, or 4.17 percent, to 873.29, and the Nasdaq stumbled 79.85, or 5.00 percent, to 1,516.85.
The Russell 2000 index of smaller companies fell 34.71, or 7.07 percent, to 456.52.
Declining issues outpaced advancers by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 5.73 billion shares, compared with 7.67 billion on Thursday.
For the week, the Dow lost 4.99 percent, the S&P fell 6.20 percent and the Nasdaq tumbled 7.92 percent.
The major indexes have fallen dramatically since their highs of October 2007 as the housing and credit crises have taken their toll on the economy. The Dow is down 40 percent from its closing record of 14,164.53, while the S&P 500 is off 44.2 percent from its record close of 1,565.15. The Nasdaq is off 46.9 percent from its then 7 1/12-year high of 2,859.12.
The Dow's surge Thursday was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13. The rally came after three days of selling that wiped out about $1 trillion in shareholder value.
Wall Street's violent swings in recent weeks are part of the market's ongoing "bottoming" process, analysts say, in which the market retests the lows hit last month. The market is expected to remain volatile, as evidenced by past recoveries from a bear market.
Randy Frederick, director of trading and derivatives at Charles Schwab & Co., said the sell-off could be attributed in part to investors not wanting to hold on to stocks going in to the weekend, particularly ahead of a meeting of Group of 20 international leaders in Washington. The meeting could bring decisions on how to help the troubled global financial system.
"Certainly in this market we've had a lot of late Friday sell-offs," he said. "The government has been very insistent on making major announcements on Sunday nights."
Bernie McGinn, chief executive of McGinn Investment Management, said the market needs to have a sustained rally for a couple of days to lure buyers back into the market. For the moment, he believes the market will continue to fluctuate based on events like earnings or government reports.
"We're in the middle of chaos," he said. "That's what it is, pure and simple."
The volatility helped send government bond prices higher as investors looked for safety. The three-month Treasury bill's yield fell to 0.14 percent from 0.20 percent late Thursday, and the yield on the benchmark 10-year Treasury note fell to 3.72 percent from 3.85 percent late Thursday. Lower yields indicate higher demand.
Meanwhile, the price of a barrel of light, sweet crude fell $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange. Oil has been falling for the same reason as stocks -- the fear of a deep global recession.
Shares of major retailers fell as the string of disappointing earnings and outlooks continued. JCPenney lost $2.01, or 10.4 percent, to $17.27. Abercrombie & Fitch tumbled $4.65, or 20.7 percent, to a 52-week low of $17.79.
The dollar rose against other major currencies. Gold prices also rose.
Overseas, Japan's Nikkei closed up 2.72 percent and Hong Kong Hang Seng rose 2.43 percent. In European trading, London's FTSE 100 was up 1.53 percent, Germany's DAX rose 1.31 percent, and France's CAC-40 added 0.98 percent.
The Dow Jones industrial average ended the week down down 446.50, or 4.99 percent, at 8,497.31. The Standard & Poor's 500 index finished down 57.70, or 6.20 percent, at 873.29. The Nasdaq composite index ended the week down 130.55, or 7.92 percent, at 1,516.85.
The Russell 2000 index finished the week down 31.73, or 5.90 percent, at 505.79.
The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended at 8,721.88, down 636.42 points, or 6.80 percent, for the week. A year ago, the index was at 14,727.28.
* Joe Bel Bruno and Sara Lepro, AP Business Writer
* Friday November 14, 2008, 6:19 pm EST
NEW YORK (AP) -- Wall Street ended a turbulent week with another astonishing show of volatility Friday, with stocks plunging, recovering and then plunging again as investors absorbed another wave of downbeat economic news. The Dow Jones industrials fell almost 340 points and the major indexes all fell sharply for the second straight week.
Hedge fund selling in advance of a Saturday deadline contributed to the market's gyrations, and some retrenchment was to be expected following a big rally Thursday, when the Dow rallied more than 550 points after falling near its lows for the year. But there was plenty of discouraging news for investors to focus on, including comments from Federal Reserve Chairman Ben Bernanke that the markets remain under "severe strain" and a sobering report on October retail sales.
Analysts believe the market is still searching for a bottom after last month's huge losses, and that the pattern of volatility will continue for some time -- selling, even on technical reasons like looming deadlines for cashing out hedge fund holdings, is still coming against a backdrop of an extremely weak economy.
"Clearly, the trading crowd like hedge funds can take this market in any direction they want to. Anybody looking to build a position is just not confident," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
The session saw another stream of bad news. Bernanke said during a speech in Frankfurt, Germany, that he would work closely with other central banks to try to alleviate the global financial crisis and left open the door to a fresh interest rate cut. The Fed is scheduled to meet Dec. 16 at its last regularly scheduled meeting this year.
While Wall Street would like to see another rate cut, many investors aren't sure, given the litany of bad economic and corporate news, of how effective a rate reduction would be in the near term. Many investors are still trying to assimilate the idea that the economy's downturn will be protracted, lasting well into next year and perhaps longer.
"The economic news continues to be very negative," said Ben Halliburton, chief investment officer of Tradition Capital Management. "The realization that '09 is going to be a very bad year for economic activity is starting to dawn on people and they are starting to digest how bad it's going to be."
The Commerce Department reported that retail sales plunged by the largest amount on record in October as consumers cut back on spending in the wake of the financial crisis. Retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.
The market got more disappointing consumer news from retailers Abercrombie & Fitch Co. and JCPenney Co. Both warned that profits will come in below Wall Street's already lowered projections as retailers head into a holiday shopping season that could be among the slowest on record.
The great fear on the Street is that Americans' reluctance to spend will extend what is already a serious economic downturn. A barrage of negative consumer news sent stocks tumbling earlier in the week.
The market drew some brief comfort in the afternoon from comments from Treasury Secretary Henry Paulson, who told CNBC that capital injections in the banking sector will help stimulate lending. He also defended the decision to not buy toxic assets from banks, saying that it would not work as quickly; the move helped send stocks falling earlier this week.
There was disquieting news from the tech sector that weighed on the Nasdaq composite index. Sun Microsystems Inc. said it will cut up to 6,000 workers, or about 18 percent of global staff, as part of a massive restructuring plan. And handset maker Nokia Corp. warned the global economic slowdown will weigh on sales next year.
The Dow fell 337.93, or 3.82 percent, to 8,497.31, at its lows of the day. The Dow fell more than 300 in early trading, recovered to a slim advance and then turned sharply lower at the end of the day as hedge funds cashed out. Fund investors had a Nov. 15 deadline for withdrawing their money, which forced the funds in turn to sell stocks.
The Standard & Poor's 500 index fell 38.00, or 4.17 percent, to 873.29, and the Nasdaq stumbled 79.85, or 5.00 percent, to 1,516.85.
The Russell 2000 index of smaller companies fell 34.71, or 7.07 percent, to 456.52.
Declining issues outpaced advancers by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 5.73 billion shares, compared with 7.67 billion on Thursday.
For the week, the Dow lost 4.99 percent, the S&P fell 6.20 percent and the Nasdaq tumbled 7.92 percent.
The major indexes have fallen dramatically since their highs of October 2007 as the housing and credit crises have taken their toll on the economy. The Dow is down 40 percent from its closing record of 14,164.53, while the S&P 500 is off 44.2 percent from its record close of 1,565.15. The Nasdaq is off 46.9 percent from its then 7 1/12-year high of 2,859.12.
The Dow's surge Thursday was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13. The rally came after three days of selling that wiped out about $1 trillion in shareholder value.
Wall Street's violent swings in recent weeks are part of the market's ongoing "bottoming" process, analysts say, in which the market retests the lows hit last month. The market is expected to remain volatile, as evidenced by past recoveries from a bear market.
Randy Frederick, director of trading and derivatives at Charles Schwab & Co., said the sell-off could be attributed in part to investors not wanting to hold on to stocks going in to the weekend, particularly ahead of a meeting of Group of 20 international leaders in Washington. The meeting could bring decisions on how to help the troubled global financial system.
"Certainly in this market we've had a lot of late Friday sell-offs," he said. "The government has been very insistent on making major announcements on Sunday nights."
Bernie McGinn, chief executive of McGinn Investment Management, said the market needs to have a sustained rally for a couple of days to lure buyers back into the market. For the moment, he believes the market will continue to fluctuate based on events like earnings or government reports.
"We're in the middle of chaos," he said. "That's what it is, pure and simple."
The volatility helped send government bond prices higher as investors looked for safety. The three-month Treasury bill's yield fell to 0.14 percent from 0.20 percent late Thursday, and the yield on the benchmark 10-year Treasury note fell to 3.72 percent from 3.85 percent late Thursday. Lower yields indicate higher demand.
Meanwhile, the price of a barrel of light, sweet crude fell $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange. Oil has been falling for the same reason as stocks -- the fear of a deep global recession.
Shares of major retailers fell as the string of disappointing earnings and outlooks continued. JCPenney lost $2.01, or 10.4 percent, to $17.27. Abercrombie & Fitch tumbled $4.65, or 20.7 percent, to a 52-week low of $17.79.
The dollar rose against other major currencies. Gold prices also rose.
Overseas, Japan's Nikkei closed up 2.72 percent and Hong Kong Hang Seng rose 2.43 percent. In European trading, London's FTSE 100 was up 1.53 percent, Germany's DAX rose 1.31 percent, and France's CAC-40 added 0.98 percent.
The Dow Jones industrial average ended the week down down 446.50, or 4.99 percent, at 8,497.31. The Standard & Poor's 500 index finished down 57.70, or 6.20 percent, at 873.29. The Nasdaq composite index ended the week down 130.55, or 7.92 percent, at 1,516.85.
The Russell 2000 index finished the week down 31.73, or 5.90 percent, at 505.79.
The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended at 8,721.88, down 636.42 points, or 6.80 percent, for the week. A year ago, the index was at 14,727.28.
Kamis, 13 November 2008
Stocks stage huge rebound
Wall Street rebounds from selloff, sending major indexes up over 6 pct ahead of G-20 meeting
NEW YORK (AP) -- Investors did an abrupt turnaround on Wall Street Thursday, muscling the Dow Jones industrial average up more than 550 points after driving it down near its lows for the year on a stream of negative economic and corporate news.
After three days of selling that wiped out about $1 trillion in shareholder value, many investors, though nervous about a prolonged economic downturn, appeared convinced the market had priced in enough bad news. So when the Standard & Poor's 500 index -- the indicator most watched by traders -- managed to recover from multiyear trading lows, buyers swarmed back in.
It's "a herd mentality," said Ryan Larson, senior equity trader at Voyageur Asset Management. "We started going higher -- and you don't want to be the last one on the boat."
The market was following in dramatic fashion its pattern of huge price reversals, one that was set early in the now 15-month-old credit crisis and that has become almost the norm on Wall Street.
Some analysts said investors were positioning themselves ahead of a meeting of Group of 20 leaders in Washington. The meeting could bring decisions on mending the troubled global financial system. The G-20 includes the U.S., Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.
There was "some anticipation that we'll hear some good news from that meeting," said Jack A. Ablin, chief investment officer at Harris Private Bank. Thursday's rally was "part hopeful, part technical. But certainly welcome."
As stocks rallied, so did oil prices, sending shares of energy companies higher. The biggest gainer among the 30 Dow companies was Chevron Corp., which rose $8.43, or 12.5 percent, to $75.71. Another big gainer was Exxon Mobil Corp., which climbed $6.48, or 9.4 percent, to $75.41; these two energy stocks represented one-fifth of the Dow's point gain Thursday.
The price of a barrel of light, sweet crude rose $2.08 to $58.24 on the New York Mercantile Exchange, after falling to the lowest levels since January 2007. Oil has been falling for the same reason as stocks -- the fear of a deep global recession.
Stocks sold off early after the Labor Department said the number of newly laid-off individuals seeking unemployment benefits jumped last week to the highest level since right after the Sept. 11, 2001 terrorist attacks. There was also more evidence of a severe pullback in consumer spending -- a worsening trend that had pummeled stocks earlier in the week. Wal-Mart Stores Inc. trimmed expectations for full-year earnings, and Intel Corp. late Wednesday cut more than $1 billion from its sales forecast.
But then the S&P lifted above its Oct. 10 trading lows, and a Treasury auction of 30-year bonds got lower than average but still decent demand from both domestic and foreign buyers, said Arthur Hogan, chief market analyst at Jefferies & Co. The auction results alleviated some fears about the government having a hard time financing its costly bailout.
Many analysts had predicted the stock market would retest the multiyear lows it reached last month. They also still forecast volatility for some time to come, as Wall Street tries to rebuild from October's devastating losses and gauge the severity of the economy's downturn. During past recoveries from bear markets, a great deal of turbulence in the market became commonplace -- so it's possible that Thursday's gains will get erased if more gloomy reports pour in.
But Hogan called the market's resiliency a "great sign."
The Dow rose 552.59, or 6.67 percent, to 8,835.25, after falling as low as 7,965.42 and rising as high as 8,876.59. That's a trading range of 911 points. The Dow did not sink below its Oct. 10 trading low of 7,882.51.
The Dow's nearly 553-point gain was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13.
The Standard & Poor's 500 index rose 58.99, or 6.92 percent, to 911.29, after dropping to 818.69 -- well below its previous intraday low of 839.80 set Oct. 10.
The Nasdaq composite index rose 97.49, or 6.50 percent, to 1,596.70.
The Russell 2000 index of smaller companies rose 38.43, or 8.5 percent, to 491.23.
The stock market gained back $700 billion Thursday, after losing about $1 trillion during the first three days of the week, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks. At its lowest trading level Thursday, the market value of the Wilshire index fell below $10 trillion for the first time since April 2003.
Advancing issues outpaced decliners by nearly 3 to 1 on the New York Stock Exchange, where consolidated volume came to 7.67 billion shares, up from 5.67 billion shares Wednesday.
Government bond prices fell as investors fled back into stocks. The three-month Treasury bill's yield rose to 0.20 percent from 0.13 percent late Wednesday, and the yield on the benchmark 10-year Treasury note rose to 3.85 percent from 3.67 percent late Wednesday. Higher yields indicate lower demand.
Wal-Mart shares rebounded $2.31, or 4.4 percent, to $54.93. The discount retailer's shares had traded lower in earlier trading after it cut its profit outlook because of the flagging global economy and renewed strength of the dollar. Wal-Mart is the only company among the Dow industrials that is up for the year.
Intel also slashed its outlook, initially driving down shares on concerns that consumers are shying away from big purchases like computers. But its shares recovered to trade up 91 cents, or 6.7 percent, at $14.43.
General Motors shares, however, remained weak as the nation's automakers wait for President-elect Obama to push Congress to approve a bailout of the struggling industry. There are also reports that Obama will move to appoint a czar or board to oversee the companies. GM dropped 13 cents, or 4.2 percent, to $2.95. Ford shares rose 6 cents, or 3.3 percent, to $1.90.
The dollar was mixed against other major currencies. Gold prices rose.
Overseas, Japan's Nikkei closed down 5.25 percent and Hong Kong Hang Seng fell 5.15 percent. In European trading, Britain's FTSE 100 was down 0.31 percent, Germany's DAX rose 0.62 percent, and France's CAC-40 added 1.10 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
NEW YORK (AP) -- Investors did an abrupt turnaround on Wall Street Thursday, muscling the Dow Jones industrial average up more than 550 points after driving it down near its lows for the year on a stream of negative economic and corporate news.
After three days of selling that wiped out about $1 trillion in shareholder value, many investors, though nervous about a prolonged economic downturn, appeared convinced the market had priced in enough bad news. So when the Standard & Poor's 500 index -- the indicator most watched by traders -- managed to recover from multiyear trading lows, buyers swarmed back in.
It's "a herd mentality," said Ryan Larson, senior equity trader at Voyageur Asset Management. "We started going higher -- and you don't want to be the last one on the boat."
The market was following in dramatic fashion its pattern of huge price reversals, one that was set early in the now 15-month-old credit crisis and that has become almost the norm on Wall Street.
Some analysts said investors were positioning themselves ahead of a meeting of Group of 20 leaders in Washington. The meeting could bring decisions on mending the troubled global financial system. The G-20 includes the U.S., Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.
There was "some anticipation that we'll hear some good news from that meeting," said Jack A. Ablin, chief investment officer at Harris Private Bank. Thursday's rally was "part hopeful, part technical. But certainly welcome."
As stocks rallied, so did oil prices, sending shares of energy companies higher. The biggest gainer among the 30 Dow companies was Chevron Corp., which rose $8.43, or 12.5 percent, to $75.71. Another big gainer was Exxon Mobil Corp., which climbed $6.48, or 9.4 percent, to $75.41; these two energy stocks represented one-fifth of the Dow's point gain Thursday.
The price of a barrel of light, sweet crude rose $2.08 to $58.24 on the New York Mercantile Exchange, after falling to the lowest levels since January 2007. Oil has been falling for the same reason as stocks -- the fear of a deep global recession.
Stocks sold off early after the Labor Department said the number of newly laid-off individuals seeking unemployment benefits jumped last week to the highest level since right after the Sept. 11, 2001 terrorist attacks. There was also more evidence of a severe pullback in consumer spending -- a worsening trend that had pummeled stocks earlier in the week. Wal-Mart Stores Inc. trimmed expectations for full-year earnings, and Intel Corp. late Wednesday cut more than $1 billion from its sales forecast.
But then the S&P lifted above its Oct. 10 trading lows, and a Treasury auction of 30-year bonds got lower than average but still decent demand from both domestic and foreign buyers, said Arthur Hogan, chief market analyst at Jefferies & Co. The auction results alleviated some fears about the government having a hard time financing its costly bailout.
Many analysts had predicted the stock market would retest the multiyear lows it reached last month. They also still forecast volatility for some time to come, as Wall Street tries to rebuild from October's devastating losses and gauge the severity of the economy's downturn. During past recoveries from bear markets, a great deal of turbulence in the market became commonplace -- so it's possible that Thursday's gains will get erased if more gloomy reports pour in.
But Hogan called the market's resiliency a "great sign."
The Dow rose 552.59, or 6.67 percent, to 8,835.25, after falling as low as 7,965.42 and rising as high as 8,876.59. That's a trading range of 911 points. The Dow did not sink below its Oct. 10 trading low of 7,882.51.
The Dow's nearly 553-point gain was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13.
The Standard & Poor's 500 index rose 58.99, or 6.92 percent, to 911.29, after dropping to 818.69 -- well below its previous intraday low of 839.80 set Oct. 10.
The Nasdaq composite index rose 97.49, or 6.50 percent, to 1,596.70.
The Russell 2000 index of smaller companies rose 38.43, or 8.5 percent, to 491.23.
The stock market gained back $700 billion Thursday, after losing about $1 trillion during the first three days of the week, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks. At its lowest trading level Thursday, the market value of the Wilshire index fell below $10 trillion for the first time since April 2003.
Advancing issues outpaced decliners by nearly 3 to 1 on the New York Stock Exchange, where consolidated volume came to 7.67 billion shares, up from 5.67 billion shares Wednesday.
Government bond prices fell as investors fled back into stocks. The three-month Treasury bill's yield rose to 0.20 percent from 0.13 percent late Wednesday, and the yield on the benchmark 10-year Treasury note rose to 3.85 percent from 3.67 percent late Wednesday. Higher yields indicate lower demand.
Wal-Mart shares rebounded $2.31, or 4.4 percent, to $54.93. The discount retailer's shares had traded lower in earlier trading after it cut its profit outlook because of the flagging global economy and renewed strength of the dollar. Wal-Mart is the only company among the Dow industrials that is up for the year.
Intel also slashed its outlook, initially driving down shares on concerns that consumers are shying away from big purchases like computers. But its shares recovered to trade up 91 cents, or 6.7 percent, at $14.43.
General Motors shares, however, remained weak as the nation's automakers wait for President-elect Obama to push Congress to approve a bailout of the struggling industry. There are also reports that Obama will move to appoint a czar or board to oversee the companies. GM dropped 13 cents, or 4.2 percent, to $2.95. Ford shares rose 6 cents, or 3.3 percent, to $1.90.
The dollar was mixed against other major currencies. Gold prices rose.
Overseas, Japan's Nikkei closed down 5.25 percent and Hong Kong Hang Seng fell 5.15 percent. In European trading, Britain's FTSE 100 was down 0.31 percent, Germany's DAX rose 0.62 percent, and France's CAC-40 added 1.10 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Selasa, 04 November 2008
How The Federal Reserve Battles Recession
Historically, capitalistic societies have gone through boom and bust cycles on a regular basis. The economic good times are enjoyable for everyone involved, but sometimes the exuberance can lead to downturns which are often painful. The Federal Reserve was created to help moderate the effects of an economic contraction and was given some powerful tools to affect the money supply and keep the economy out of recession.
The establishment of a Central Bank went through many convolutions prior to becoming a non partisan guardian of monetary policy. During the American Revolution, the Continental Congress printed the new nation's first paper money, known as "continentals�. Later, at the urging of Treasury Secretary Alexander Hamilton, Congress established the First Bank of the United States, headquartered in Philadelphia, in 1791. By 1811, with a backlash toward the large banking establishment brewing, the bank's 20-year charter expired and Congress refused to renew it by one vote.
By 1816, Congress agreed to charter the Second Bank of the United States, but Andrew Jackson, a central bank foe, was elected president in 1828 and he was successful in allowing the charter to expire. State-chartered banks and unchartered "free banks" took hold and began issuing their own notes, redeemable in gold. The New York Clearinghouse Association was established in 1853 to provide a way for the city's banks to exchange checks and settle accounts.
The establishment of a Central Bank went through many convolutions prior to becoming a non partisan guardian of monetary policy. During the American Revolution, the Continental Congress printed the new nation's first paper money, known as "continentals�. Later, at the urging of Treasury Secretary Alexander Hamilton, Congress established the First Bank of the United States, headquartered in Philadelphia, in 1791. By 1811, with a backlash toward the large banking establishment brewing, the bank's 20-year charter expired and Congress refused to renew it by one vote.
By 1816, Congress agreed to charter the Second Bank of the United States, but Andrew Jackson, a central bank foe, was elected president in 1828 and he was successful in allowing the charter to expire. State-chartered banks and unchartered "free banks" took hold and began issuing their own notes, redeemable in gold. The New York Clearinghouse Association was established in 1853 to provide a way for the city's banks to exchange checks and settle accounts.
Senin, 03 November 2008
Crisis Creates Opening for FDR-Like Economic Overhaul
By Matthew Benjamin and Rich Miller
More Photos/Details
Nov. 3 (Bloomberg) -- Bill Clinton, said his onetime adviser Dick Morris, never got a chance to prove he was a great president because he never faced a big crisis.
No one will be able to say that about Barack Obama or John McCain.
Like Franklin Delano Roosevelt and Ronald Reagan, the new president will get a rare opportunity to leave a sweeping and long-lasting imprint on the U.S. economy. FDR's response to the Great Depression created such enduring institutions as Social Security and federal deposit insurance. Reaganomics, born of the 1981-82 recession, ushered in a quarter-century of lower tax rates and deregulation.
``Great leaders see in a crisis an opportunity, and not just an opportunity to perform crisis management,'' says presidential historian Richard Norton Smith.
There will be no shortage of opportunities in 2009. The U.S. is facing the deepest recession in more than 20 years, the worst financial crisis since World War II and a wave of foreclosures.
No matter who wins the election tomorrow, the new president is likely to create a vastly larger economic role for the government. He'll also permanently alter the relationship between financial markets and Washington, finish the job of reshaping the U.S. banking system begun under Bush, and -- like it or not -- will probably go down in history as the biggest deficit spender ever.
Helping Homeowners
McCain, 72, would spend $300 billion to help homeowners in danger of foreclosure while adding new consumer protections and rules on executive pay. Obama, 47, would have government invest in energy and manufacturing while creating a super-regulator to watch over markets to prevent another catastrophe.
Obama has an average lead of 7 percentage points over McCain in national polls the day before the election, according to Real Clear Politics.
Whichever candidate wins, the first order of business will be to get lending restarted and revive the economy.
Unemployment may rise as high as 8 percent over the next year from September's 6.1 percent, while gross domestic product could contract at an annual rate of as much as 4 percent in the last three months of 2008 and again in the first three months of 2009, says Allen Sinai, chief economist at Decision Economics in New York.
``The U.S. is in the middle of a long and deep recession,'' he says.
Fiscal Stimulus
Both candidates are open to another fiscal-stimulus effort, following the $168 billion package President George W. Bush signed earlier this year. Democratic Senator Obama, of Illinois, initially proposed a $50 billion plan with checks for consumers as well as spending on school repairs, roads and bridges, then added aid to states and tax credits for businesses that create new jobs, for a package that would cost $175 billion.
That wouldn't be nearly enough to prevent a deeper decline, says Jan Hatzius, chief U.S. economist at Goldman Sachs. An effective amount would be between $300 billion and $500 billion, reflecting ``the need to offset the sharp drop in spending relative to income by U.S. households and businesses,'' Hatzius wrote in an Oct. 24 note.
The new president may also need more taxpayer money to alleviate the credit crisis than the $700 billion Congress approved Oct. 3 in a plan Treasury Secretary Henry Paulson helped engineer.
Recapitalizing Banks
``We have to recapitalize the banks,'' says Edmund Phelps, winner of the 2006 Nobel Prize for economics and a professor at Columbia University in New York. ``I don't imagine that there's enough money in the first Paulson plan to be able to do all that needs to be done in that direction.''
To deal with rising foreclosures, Republican Senator McCain, of Arizona, would direct the Treasury to purchase endangered mortgages and replace them with government-backed loans.
Obama is also looking at ways to help homeowners renegotiate mortgages. ``He is intensely focused on this, and he has a little task force working on this right now,'' former Treasury secretary and Obama adviser Robert Rubin said on CNN last week.
Already, the costs of rescuing the economy are driving government borrowing to previously unimagined levels.
The government posted a record budget shortfall of $455 billion in 2008, and analysts forecast the gap will balloon to more than $1 trillion in 2009 as expenses mount. Bailouts of mortgage lenders Fannie Mae and Freddie Mac and insurer American International Group Inc. may prove costlier than originally estimated, and Washington faces more demands for help from other insurance companies, state governments and U.S. automakers, including General Motors Corp.
Nothing Positive
``There's nothing happening here that's positive for the budget, nothing,'' says Stan Collender, a former analyst for the House and Senate budget committees and now a managing director at Qorvis Communications in Washington.
Beyond economic triage, the candidates each promise to impose new rules on markets. ``We are going to get a major overhaul of financial regulation no matter who wins,'' says Martin Baily, a scholar at the Brookings Institution in Washington and chairman of the White House Council of Economic Advisers in the Clinton administration.
McCain says he would create a ``safety and soundness'' regulator to watch over financial institutions and halt their operations if they become a threat to the system. He would add consumer protections, especially for home mortgages, and push for new rules on executive compensation and corporate governance.
``He's laid out a comprehensive vision of an America that is very different from the past eight years,'' says Douglas Holtz- Eakin, McCain's top economic adviser.
Streamline and Modernize
Obama wants to streamline and modernize the agencies that oversee the financial industry and give the Federal Reserve unprecedented ability to monitor institutions' books. He would also create a financial-market oversight commission responsible for identifying risks before they get out of control.
``The current crisis requires ambitious economic policies, not just to deal with the financial crisis, but to deal with the underlying root causes of our economic challenges,'' says Jason Furman, the Democratic candidate's top economic aide.
Both candidates also plan a major overhaul of the tax code, made necessary by the 2010 expiration of most tax cuts passed under Bush.
McCain, like Reagan in the 1980s, would permanently reduce the burden for all taxpayers, including the wealthy. His plan would extend the 2001 and 2003 Bush tax cuts, increase deductions for taxpayers with dependents and reduce estate taxes. He also proposes the first major cut in the top corporate tax rate -- to 25 percent from 35 percent -- since 1986.
Tax Cut or Credit
Obama's plan would provide a tax cut or credit for all workers with household incomes below $200,000, while raising taxes on those earning more than $250,000.
Obama would further involve the government in the private sector with investments in manufacturing research and clean- energy projects, which he says could create new industries and additional jobs.
``The next president is going to have to have two financial SWAT teams,'' says Barry Eichengreen, professor of economics and political science at the University of California, Berkeley. ``One to stabilize the crisis and staunch the bleeding, the other to focus on the issue of how to sustain long-run economic growth.'' from http://www.bloomberg.com/
More Photos/Details
Nov. 3 (Bloomberg) -- Bill Clinton, said his onetime adviser Dick Morris, never got a chance to prove he was a great president because he never faced a big crisis.
No one will be able to say that about Barack Obama or John McCain.
Like Franklin Delano Roosevelt and Ronald Reagan, the new president will get a rare opportunity to leave a sweeping and long-lasting imprint on the U.S. economy. FDR's response to the Great Depression created such enduring institutions as Social Security and federal deposit insurance. Reaganomics, born of the 1981-82 recession, ushered in a quarter-century of lower tax rates and deregulation.
``Great leaders see in a crisis an opportunity, and not just an opportunity to perform crisis management,'' says presidential historian Richard Norton Smith.
There will be no shortage of opportunities in 2009. The U.S. is facing the deepest recession in more than 20 years, the worst financial crisis since World War II and a wave of foreclosures.
No matter who wins the election tomorrow, the new president is likely to create a vastly larger economic role for the government. He'll also permanently alter the relationship between financial markets and Washington, finish the job of reshaping the U.S. banking system begun under Bush, and -- like it or not -- will probably go down in history as the biggest deficit spender ever.
Helping Homeowners
McCain, 72, would spend $300 billion to help homeowners in danger of foreclosure while adding new consumer protections and rules on executive pay. Obama, 47, would have government invest in energy and manufacturing while creating a super-regulator to watch over markets to prevent another catastrophe.
Obama has an average lead of 7 percentage points over McCain in national polls the day before the election, according to Real Clear Politics.
Whichever candidate wins, the first order of business will be to get lending restarted and revive the economy.
Unemployment may rise as high as 8 percent over the next year from September's 6.1 percent, while gross domestic product could contract at an annual rate of as much as 4 percent in the last three months of 2008 and again in the first three months of 2009, says Allen Sinai, chief economist at Decision Economics in New York.
``The U.S. is in the middle of a long and deep recession,'' he says.
Fiscal Stimulus
Both candidates are open to another fiscal-stimulus effort, following the $168 billion package President George W. Bush signed earlier this year. Democratic Senator Obama, of Illinois, initially proposed a $50 billion plan with checks for consumers as well as spending on school repairs, roads and bridges, then added aid to states and tax credits for businesses that create new jobs, for a package that would cost $175 billion.
That wouldn't be nearly enough to prevent a deeper decline, says Jan Hatzius, chief U.S. economist at Goldman Sachs. An effective amount would be between $300 billion and $500 billion, reflecting ``the need to offset the sharp drop in spending relative to income by U.S. households and businesses,'' Hatzius wrote in an Oct. 24 note.
The new president may also need more taxpayer money to alleviate the credit crisis than the $700 billion Congress approved Oct. 3 in a plan Treasury Secretary Henry Paulson helped engineer.
Recapitalizing Banks
``We have to recapitalize the banks,'' says Edmund Phelps, winner of the 2006 Nobel Prize for economics and a professor at Columbia University in New York. ``I don't imagine that there's enough money in the first Paulson plan to be able to do all that needs to be done in that direction.''
To deal with rising foreclosures, Republican Senator McCain, of Arizona, would direct the Treasury to purchase endangered mortgages and replace them with government-backed loans.
Obama is also looking at ways to help homeowners renegotiate mortgages. ``He is intensely focused on this, and he has a little task force working on this right now,'' former Treasury secretary and Obama adviser Robert Rubin said on CNN last week.
Already, the costs of rescuing the economy are driving government borrowing to previously unimagined levels.
The government posted a record budget shortfall of $455 billion in 2008, and analysts forecast the gap will balloon to more than $1 trillion in 2009 as expenses mount. Bailouts of mortgage lenders Fannie Mae and Freddie Mac and insurer American International Group Inc. may prove costlier than originally estimated, and Washington faces more demands for help from other insurance companies, state governments and U.S. automakers, including General Motors Corp.
Nothing Positive
``There's nothing happening here that's positive for the budget, nothing,'' says Stan Collender, a former analyst for the House and Senate budget committees and now a managing director at Qorvis Communications in Washington.
Beyond economic triage, the candidates each promise to impose new rules on markets. ``We are going to get a major overhaul of financial regulation no matter who wins,'' says Martin Baily, a scholar at the Brookings Institution in Washington and chairman of the White House Council of Economic Advisers in the Clinton administration.
McCain says he would create a ``safety and soundness'' regulator to watch over financial institutions and halt their operations if they become a threat to the system. He would add consumer protections, especially for home mortgages, and push for new rules on executive compensation and corporate governance.
``He's laid out a comprehensive vision of an America that is very different from the past eight years,'' says Douglas Holtz- Eakin, McCain's top economic adviser.
Streamline and Modernize
Obama wants to streamline and modernize the agencies that oversee the financial industry and give the Federal Reserve unprecedented ability to monitor institutions' books. He would also create a financial-market oversight commission responsible for identifying risks before they get out of control.
``The current crisis requires ambitious economic policies, not just to deal with the financial crisis, but to deal with the underlying root causes of our economic challenges,'' says Jason Furman, the Democratic candidate's top economic aide.
Both candidates also plan a major overhaul of the tax code, made necessary by the 2010 expiration of most tax cuts passed under Bush.
McCain, like Reagan in the 1980s, would permanently reduce the burden for all taxpayers, including the wealthy. His plan would extend the 2001 and 2003 Bush tax cuts, increase deductions for taxpayers with dependents and reduce estate taxes. He also proposes the first major cut in the top corporate tax rate -- to 25 percent from 35 percent -- since 1986.
Tax Cut or Credit
Obama's plan would provide a tax cut or credit for all workers with household incomes below $200,000, while raising taxes on those earning more than $250,000.
Obama would further involve the government in the private sector with investments in manufacturing research and clean- energy projects, which he says could create new industries and additional jobs.
``The next president is going to have to have two financial SWAT teams,'' says Barry Eichengreen, professor of economics and political science at the University of California, Berkeley. ``One to stabilize the crisis and staunch the bleeding, the other to focus on the issue of how to sustain long-run economic growth.'' from http://www.bloomberg.com/
Minggu, 02 November 2008
Financial Literacy & Education
Review of FLN's "So You Want to Become a Trader" Course By Brad Scovey
I enrolled for this course with my girlfriend, not because I wanted to, but because she was interested and thought that I might learn something. To be honest, I day trade already and am starting to make a decent living at it so I didn't really think I needed to waste 2 hours of my life on this. Sometimes you have to make sacrifices, so I did and sat in front of the computer with a beer and an attitude.
The lecture started on time which was good I thought to myself, maybe it will end on time too.
The instructor introduced himself, provided the requisite background information and then told everyone that this was a pilot course—hence the low price of admission. Great! I thought, this guy is testing his shtick on our dime. I flashed an “I’m really interested” smile at my girlfriend and gulped more beer to numb the pain I expected the next two hours would become.
Then Mr. Gandon made an outrageous statement “Most of you should not become traders” he said, “become investors instead”. With this, I became interested. Of course someone immediately asked “Why not?” His answer made me sit up and take notice. “Because most of you will not make it as a trader, most of you will fail at this and lose money.” Most of you won’t get it” he continued, “and those of you who do, won’t follow the rules and will end up broke and disillusioned.” The best choice most of you can make is to view this course as a very inexpensive lesson and put your money to work by investing and not trading.” WOW! THIS GUY IS ACTUALLY TELLING THE TRUTH! I said to my girlfriend.
I enrolled for this course with my girlfriend, not because I wanted to, but because she was interested and thought that I might learn something. To be honest, I day trade already and am starting to make a decent living at it so I didn't really think I needed to waste 2 hours of my life on this. Sometimes you have to make sacrifices, so I did and sat in front of the computer with a beer and an attitude.
The lecture started on time which was good I thought to myself, maybe it will end on time too.
The instructor introduced himself, provided the requisite background information and then told everyone that this was a pilot course—hence the low price of admission. Great! I thought, this guy is testing his shtick on our dime. I flashed an “I’m really interested” smile at my girlfriend and gulped more beer to numb the pain I expected the next two hours would become.
Then Mr. Gandon made an outrageous statement “Most of you should not become traders” he said, “become investors instead”. With this, I became interested. Of course someone immediately asked “Why not?” His answer made me sit up and take notice. “Because most of you will not make it as a trader, most of you will fail at this and lose money.” Most of you won’t get it” he continued, “and those of you who do, won’t follow the rules and will end up broke and disillusioned.” The best choice most of you can make is to view this course as a very inexpensive lesson and put your money to work by investing and not trading.” WOW! THIS GUY IS ACTUALLY TELLING THE TRUTH! I said to my girlfriend.
Kamis, 30 Oktober 2008
Understanding the Mortgage Meltdown; What happened and Who's to Blame
By�Richard Gandon�| Published �03/25/2008 | Economy |
People are losing their homes and many more will lose their jobs before the mortgage meltdown works its way through the system.
To paraphrase Alan Greenspan's remarks on March 17th, 2008, �The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War. The crisis will leave many casualties.�
How many casualties? Experts are predicting that in the next few years, between 15 and 20 million homeowners could have homes worth less than what they owe. Walking away from a bad situation may actually make sense for people who mortgages that are �upside down� considering the fact that refinancing is out of the question and home equity is nonexistent.
It seems quite easy to point fingers at greedy Wall Street titans for causing the sub-prime mortgage crises. They after all, put together the deals that allowed banks to underwrite mortgages and then offload these liabilities to investors. What many fail to realize is that there is no shortage of blame to go around from homeowners buying more home than they could afford to real estate agents looking for more Commission dollars. Mortgage brokers and bankers, the banks themselves, ratings agencies such as Moody's and Standard & Poor's, Wall Street, the Fed and last but certainly not least, the Federal Government.
Let's start with the homeowners--the people who are now in the process or soon to enter the process, of losing their homes. Some of these people had never before owned a home and as such, may not have been prepared for the costs associated with homeownership. Basic financial literacy is sorely lacking in this country despite there being no shortage of budgeting and tracking programs readily available such as Quicken and Microsoft Money. The lack of financial literacy does not absolve these buyers of their responsibility. Every borrower receives a truth in lending disclosure statement. Here is a portion of what the act covers:
The purpose of TILA (Truth In Lending Act) is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.
Much of the subprime mortgage crisis can be traced directly back to variable-rate mortgages. As is clearly stated above, �TILA does not regulate the charge that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumers dwelling.� It also clearly states that TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling. One has to wonder whether or not these homeowners:
1. Bothered to read the truth in lending act disclosure at all.
2. Understood what the truth in lending act disclosure meant.
3. Chose to ignore the information printed clearly the truth in lending act disclosure.
A number of months ago, just as the subprime mortgage crisis was beginning to unfold, The New York Daily News ran an article about a family in New York City, who had bought a home and were now faced with the prospect of foreclosure. The article was sympathetic to this family, highlighting the fact that they're living the American dream and that this dream was about to come to an end. What I found to be distressing was the fact that clearly visible in the photo that accompanied this sympathetic article was a very expensive flat screen television hanging on the wall. Perhaps I'm na�ve, but I can assure you that if I were faced with the prospect of losing my home and having my family put out on the street, there is absolutely no way that I would still have that expensive television hanging on my wall. It would have been one of the first things to be sold and some financial relief would be found by jettisoning what I'm sure was the expensive cable bill.
Clearly the public needs easy access to financial literacy courses. Too bad we don�t see the need to make this a mandatory course of study in our educational system.
Mortgage bankers and brokers have in the last four or five years been raking in cash by the bucket load in the form of commissions paid when mortgages they�ve originated, close. Many of these people have not needed to do much in the way of prospecting. Instead, their phones have run off the hook as people have jumped on the homeownership and refinancing and take out extra cash bandwagon, despite their ability to pay for their home. No-document loans were readily available without the borrower having to produce documentation that backed up their income. Clearly this practice can and indeed has, lead to substandard loan underwriting processes. Were some of these mortgage
People are losing their homes and many more will lose their jobs before the mortgage meltdown works its way through the system.
To paraphrase Alan Greenspan's remarks on March 17th, 2008, �The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War. The crisis will leave many casualties.�
How many casualties? Experts are predicting that in the next few years, between 15 and 20 million homeowners could have homes worth less than what they owe. Walking away from a bad situation may actually make sense for people who mortgages that are �upside down� considering the fact that refinancing is out of the question and home equity is nonexistent.
It seems quite easy to point fingers at greedy Wall Street titans for causing the sub-prime mortgage crises. They after all, put together the deals that allowed banks to underwrite mortgages and then offload these liabilities to investors. What many fail to realize is that there is no shortage of blame to go around from homeowners buying more home than they could afford to real estate agents looking for more Commission dollars. Mortgage brokers and bankers, the banks themselves, ratings agencies such as Moody's and Standard & Poor's, Wall Street, the Fed and last but certainly not least, the Federal Government.
Let's start with the homeowners--the people who are now in the process or soon to enter the process, of losing their homes. Some of these people had never before owned a home and as such, may not have been prepared for the costs associated with homeownership. Basic financial literacy is sorely lacking in this country despite there being no shortage of budgeting and tracking programs readily available such as Quicken and Microsoft Money. The lack of financial literacy does not absolve these buyers of their responsibility. Every borrower receives a truth in lending disclosure statement. Here is a portion of what the act covers:
The purpose of TILA (Truth In Lending Act) is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.
Much of the subprime mortgage crisis can be traced directly back to variable-rate mortgages. As is clearly stated above, �TILA does not regulate the charge that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumers dwelling.� It also clearly states that TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling. One has to wonder whether or not these homeowners:
1. Bothered to read the truth in lending act disclosure at all.
2. Understood what the truth in lending act disclosure meant.
3. Chose to ignore the information printed clearly the truth in lending act disclosure.
A number of months ago, just as the subprime mortgage crisis was beginning to unfold, The New York Daily News ran an article about a family in New York City, who had bought a home and were now faced with the prospect of foreclosure. The article was sympathetic to this family, highlighting the fact that they're living the American dream and that this dream was about to come to an end. What I found to be distressing was the fact that clearly visible in the photo that accompanied this sympathetic article was a very expensive flat screen television hanging on the wall. Perhaps I'm na�ve, but I can assure you that if I were faced with the prospect of losing my home and having my family put out on the street, there is absolutely no way that I would still have that expensive television hanging on my wall. It would have been one of the first things to be sold and some financial relief would be found by jettisoning what I'm sure was the expensive cable bill.
Clearly the public needs easy access to financial literacy courses. Too bad we don�t see the need to make this a mandatory course of study in our educational system.
Mortgage bankers and brokers have in the last four or five years been raking in cash by the bucket load in the form of commissions paid when mortgages they�ve originated, close. Many of these people have not needed to do much in the way of prospecting. Instead, their phones have run off the hook as people have jumped on the homeownership and refinancing and take out extra cash bandwagon, despite their ability to pay for their home. No-document loans were readily available without the borrower having to produce documentation that backed up their income. Clearly this practice can and indeed has, lead to substandard loan underwriting processes. Were some of these mortgage
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