I2CREDIT Nº 4
The Federal Reserve acts boldly to ease credit conditions
The Federal Reserve's trillion dollar move to expand money available for lending is a known technique, but the scale is historic.
Por: The Seattle Times | http://seattletimes.nwsource.com
THE Federal Reserve decision to pump another trillion dollars into the economy still has the capacity to raise eyebrows.
In economic circles, the decision by the Federal Open Market Committee stirred less excitement. Indeed, there was talk the move was overdue. Even among Federal Reserve policymakers, the vote to proceed was unanimous.
The Fed said it saw continuing job losses, declining equity and housing wealth and tighter credit conditions.
"In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability," the nation's central bankers declared.
The term of art behind the purchase of vast sums of Treasury bonds and mortgage securities is quantitative easing. Money is pumped into the financial system, but the method is less printing currency than printing checking accounts for banks.
Banks have reserve requirements that define the amount of money they must keep on hand. Excess reserves are available for the business of banks: lending.
New money — out of thin air — eases pressures on the banks, lowers interests rates for interbank transactions, and creates an incentive to loan money.
The Fed is watching its balance sheets as it tries to use the sticks and carrots of a central bank to get lenders to put money into the economy.
For as frightfully big as the numbers appear, this practice does not have to be inflationary, according to economic experts. There is time for the monetary policy to work its magic, and the Fed can reverse its policy in the future. Or so it is hoped, because a move of this scale enters new territory.
The complexity of these decisions makes them more difficult to grasp, and not as much fun as the politics of AIG bonuses and other outrages. This latest Fed move comes in a long line of efforts by Congress and the Bush and Obama administrations to prop up pieces of the economy and stimulate other parts.
For a sobering and unexpected accounting of the expensive efforts to date, check out CNNMoney.com for an excellent report on "America's Money Crisis." A list of bailout elements goes back to December 2007, with an allocated total of $11.6 trillion. Those AIG bonuses represent $165 million.
Ultimas Notas
I2CREDIT Nº 4
Senators Examine Credit Card Rule Changes
Sen. Sheldon Whitehouse, D-RI, during a hearing yesterday to explore whether the bankruptcy code should be changed to give borrowers leverage in negotiations with creditors, said banks are more often mistreating credit cardholders.
Por: www.creditcollectionsworld.com
Banks Intensify Credit Card Debt Collection Efforts
Yes, it's more "good news" for consumers... with the credit crunch in full swing and the U.S. economy teetering madly, the banks are stepping up efforts to collect debt from you! Not that they aren't owed, and I know they are all bleeding profusely over writeoffs concerning all things mortgage lately, but aren't we ALL struggling to make ends meet these days?
Por: www.creditinfocenter.com
Handle with care
China suggests an end to the dollar era
IN FUTURE, changes to the international financial system are likely to be shaped by Beijing as well as Washington. That is the message of an article by Zhou Xiaochuan, the governor of the People’s Bank of China. Mr Zhou calls for a radical reform of the international monetary system in which the dollar would be replaced as the main reserve currency by a global currency. It is a delicate issue, however. When Tim Geithner, America’s treasury secretary, discussed the proposal in New York on March 25th, his remarks sent the dollar tumbling before he made clear that, naturally, he thought the greenback should remain the dominant reserve currency.
Por: The Economist print edition
Why Small Companies Will Win in This Economy
Peter Bregman is CEO of Bregman Partners, Inc., a global leadership development and change management firm.
Por: Washingtonpost | http://voices.washingtonpost.com
The nuts and bolts come apart
The nuts and bolts come apart
As global demand contracts, trade is slumping and protectionism rising
COMPARISONS to the Depression feature in almost every discussion of the global economic crisis. In world trade, such parallels are especially chilling. Trade declined alarmingly in the early 1930s as global demand imploded, prices collapsed and governments embarked on a destructive, protectionist spiral of higher tariffs and retaliation.
Por: The Economist print edition
Sharing the pain
EVEN as America’s politicians harangue the bankers, the bankers are sniping back. On March 13th the chairman of Wells Fargo, America’s fourth-biggest bank, called the Treasury’s ongoing stress test for banks, with its glacial timetable, “asinine”. Amid the ranting, the rot from bad debts is creeping up banks’ capital structures, imperilling any recovery. Initially common shareholders, who bear the “first loss” on assets, were crushed, along with preferred shareholders, who get supposedly safer dividends. Now owners of bank debt, which bears losses once equity is wiped out, live in fear. Junior subordinated debt, which ranks next in the queue, trades at 15-45 cents on the dollar and senior subordinated debt at 65-70 cents. Even senior debt, holders of which rank second only to depositors in America and typically alongside them in Europe, is at 85-90 cents.
Por: The Economist print edition
Notas Destacadas
- 2012
- CREDIT PERFORMANCE Nº 36
- CREDIT PERFORMANCE Nº 35
- CREDIT PERFORMANCE Nº 34
- CREDIT PERFORMANCE Nº 33
- 2011
- CREDIT PERFORMANCE Nº 32
- CREDIT PERFORMANCE Nº 31
- CREDIT PERFORMANCE Nº 30
- CREDIT PERFORMANCE Nº 29
- CREDIT PERFORMANCE Nº 28
- CREDIT PERFORMANCE Nº 27
- CREDIT PERFORMANCE Nº 26
- CREDIT PERFORMANCE Nº 25
- CREDIT PERFORMANCE Nº 24
