Americans Wise-up on Credit Card Use

by Greg Lipinski

I find myself to be a very lucky person; my parents have taught me the basics of credit cards, building credit, and how I should use a card at a young age. I’ve only been using credit cards for the last four years, in an attempt to build my credit score. My rule: purchase items that can be paid off in a maximum of four months. I’m relieved to have been taught to be frugal in the use of credit cards, and it seems as though the whole nation is adopting a similar approach.

I’m not making the assumption that everyone is looking to completely pay off balances within four months; however, many people are being much stricter with their credit spending and the plans that they create to pay off their balances. It couldn’t have come at a better time.

The recession has caused many card companies to cut credit limits without warning, posing a serious threat to your credit score. Holding a large balance only makes the threat graver. However, despite the average credit balance rising, the percentage of consumers falling behind on payments is much less. This is a result of stricter budgeting, and actually sticking to that budget.

That’s the best method of using credit in this market: create a plan and stick to it.

Luckily for everyone, the burden of credit will be alleviated…at least a bit. Washington is moving headstrong on passing reforms that would restrict fees and charges, increase disclosure, and protect younger consumers.

In the end, however, you have to monitor yourself. Only He-Man has the power to storm Castle Grayskull, but you, like Prince Adam, have the power to control your credit.

Sources:
http://wbztv.com/business/credit.card.debt.2.954722.html

http://www.foxbusiness.com/story/markets/industries/retail/strict-credit-card-rules-forward-washington/

http://www.newsadvance.com/lna/business/local/article/some_card_companies_cutting_credit_limits/8287

Rise and Fall of Consumer Finance

Copied by: Ryan Dennin
written by: Jamie Kitman

Maybe Adolf Hitler got it right. I don't mean the part about world domination, the master race, or all the illing and killing for which he's so justifiably reviled. I'm talking about consumer credit and the way the Third Reich got hard-working citizens to divert a little bit from their pay packet each week to purchase their very own Volkswagen. Theirs to use and enjoy, once they'd finished paying for it. In advance.

The practice seems exactly backward in a world where the idea is to sell as many cars as possible. Compare our U.S. system, pioneered by John Jakob Raskob for GM in the 1920s, wherein John Q. Public gets the car first and finishes paying later, in monthly installments. Hopefully before the car falls apart.

Aggressive consumer financing -not some fascist savings account but real, easy, right-here-now credit-became the great engine of American economic prosperity during the twentieth century. It has sold a lot of cars, agreeable finance being the mother's milk of car selling, in which immediate gratification is the whole point. The only things meant to concern us about the future are our ability to make payments and our next new car. This has been the American way longer than any of us have been alive.

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Evolution of Consumer Finance

By: Ryan Dennin

Consumer finance has become a a topic you hear about almost everyday lately due to the result of our current economic recession. It is important to understand that consumer finance, a term that simply means lending money to consumers is something that has not always been as popular as it is today. Consumer finance really took off in the mid 1900's. Banks began to be less willing to lend to people with poor credit and the consumer finance industry began to be built. Many people chose consumer finance companies as opposed to banks as some people didn't want to deal with the pressures of dealing with a bank. The industry really took off in the later 20th century as sub-prime lending became popular. Sub-prime lending, a current event hot topic, is loans to people with less stellar financial credit and really expensive rates. Americans are "consumpion" happy and love to buy vs. save, an some sub-prime lending for things such as automobiles, and homes has really taken off the last decade. Though this is certainly a part of the reason for the current world recession, it is not the only reason. Consumer finance isn't all about home loans either. They also partner with furniture stores, electronic stores, or any retail outlet where consumers could use extra credit to make purchases. These loans typically attract customers with a NO INTEREST promotion, but usually come with very high interest rates. Consumer finance has become a very important and essential sector in the American economy, and one that US consumers are certain to continue to utilize for some time to come.

Sources:
http://en.wikipedia.org/wiki/Consumer_finance
http://www.nytimes.com/2008/02/12/business/12credit.html
http://www.newsweek.com/id/121512

How does Consumer Finance Loans Affect Your Credit Score

Posted by Brian Redhead

Many Smaller Cities Dodge Crunch in Consumer Lending

by Dan Fitzpatrick
posted by Greg Lipinski

Consumer-lending activity has increased in numerous midsize cities in the U.S., a sign they are riding out the recession better than big cities and rural towns, an analysis of credit data shows.

As banks pull back on risk taking across the nation, consumer-loan balances in places like Huntsville, Ala., are rising. In Huntsville, a metropolitan area of 376,000 that is home to many government contractors, borrowing increased 13.2% per household in last year's fourth quarter, compared with the year-earlier period, according to data provided to The Wall Street Journal by Moody's Economy.com and Equifax Inc.

Huntsville's increase was the largest among 207 U.S. metropolitan areas tracked by the two data-gathering firms. Similar-size cities such as McAllen and Brownsville, Texas; Yakima, Wash; Provo, Utah, and Lafayette, La., also saw consumer-loan balances rise by more than 8% year-over-year.

During the economic crisis, the banking industry has been criticized for not lending enough, contributing to the slowdown in economic activity. The data show that in some places, banks feel comfortable enough about local economies to lend more to consumers. Across parts of California, Florida and Michigan, on the other hand, consumer-credit balances have been falling, the data indicate.

To read on, click here.

Finally some good news

By Michael Boshnack

There are many indicators that economists use to determine the strength of our economy, for the first time in as long as I can remember there have been some positive changes and as a result the stock market has risen almost 1,000 points in the two weeks. One indication of the improvement in our economy is that consumer prices rose for the second time in the last year. This helped offset the big fear deflation, which occurs as a result of a troubled economy. The labor department indicated that consumer prices rose .3 percent in January and a staggering .4 percent in February.

Although housing sales and prices are still down, they at least had a month where we can report there was not a negative decline on both parts. The commerce department indicated that new home sales rose 4.7% last month, hopefully this is a good sign and not just saying that there are even more foreclosures that people are scooping up. I am just glad there was something positive to write about for once, this was the first time in a while I remember blogging about something positive.

To read more click on these links
Economy shows positive sign but it may not last

Rise in consumer prices eases deflation fear

February New Home Sales Rise Unexpectedly

Housing prices increase, and..?

By Sidney Perez


Thanks to the plan initiated by Geithner ( Treasury secretary), prices of houses increased a little bit these last days.
Does that mean that it will keep increasing again?
Is it time to invest again in housing to make huge profits?
Is the government paying premium by buying these toxic assets?
All are crucial questions for the consumer who wants to invest now in housing.

What I think is that prices of houses will not reach the price they used to have before the crisis because now banks are aware of the risks of such a speculation. And not only the banks are aware but also the federal government is going to supervise the actions of the Banks to ensure that such a speculative crisis does not happen anymore.
Thus, maybe if you want to buy a house now it can be a good time, especially if you have cash because prices are so low now that they should raise a little bit or be stable at least.
But if you do not have cash, will the banks lend you money in this hard economic context (still)?
Banks, even if the government buy their toxic assets, are going to be very careful and then it should be harder and longer to get a loan, so try to save money right now if you want to buy a house in order to give a guarantee to the bank that you will pay them back.

Finally, we are all paying for these toxic assets as taxpayers. But are we paying a premimum for them..
That is a good question which I do not know the answer, but if yes it is just a scandal...


Sources :
1)http://www.texasgulfcoastonline.com/News/tabid/86/ctl/ArticleView/mid/466/articleId/126/Default.aspx

2)http://www.ofheo.gov/

3)http://www.ofheo.gov/newsroom.aspx?ID=500&q1=1&q2=None

A Plan Obama can Bank on

Copy and posted by: Lisa Crowley

The entire economic crisis is connected to the woes of the banking industry. We loathe these institutions for good reason. But the brutal truth is that we need 'em. If we don't figure out how to get the hundreds of billions of dollars in toxic assets off the balance sheets of the megabanks, then credit will remain frozen and it's only a matter of time before we're all eating cat food.

There are basically four options to address the banking crisis, two of which are nonstarters. The first is to celebrate the recent uptick in banks' stocks (Citigroup's share price now exceeds its ATM fee!) and do nothing—let the market exercise its healing powers. We tried that once before, under Herbert Hoover. Not smart.

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'I Had the Money. So Why Not?'

Posted by Yen Ho
Written by Paul Schwartzman

Alexa Choi did something recently that most Americans are avoiding. She spent money. Lots of it.

On Christmas Eve, Choi went to a BMW dealer in Fairfax County and bought a black 2009 sedan. Her mother's objections did not deter her. Nor did the fact that the value of her investments had shrunk by 40 percent. And that $48,000 price tag? No sweat.

"At the end of the day, I knew exactly what I wanted," said Choi, 31, manager of an Arlington County-based technology company. "I needed the car, I had the money. So why not?"

Link

The Market sees an Increase

Posted by: Lisa Crowley



The Dow Jones shot up to its fifth record high 500 points after the news released from the government for buying back the toxic assets. The government plans to partner with private sectors and investors to finance the bad debt with US $1 trillion dollar.

This is much wanted and needed news for investors and Wall Street because it tackles the two most important issues facing currently the economy, housing and banking.

But who is going to buy trash for cash? The government is giving huge incentives for the investors to buy the mortgage-back securities and other hard to sell assets. It some cases they even provide up to 90% of the finances to buy the assets and this is a concern to many. This subsidy plan is made so rich that it comes at the expense of the taxpayer, so in these times I am not sure how that will work out.

One of the major problems is when the banks are going to sell the toxic asset. They may want to wait it out longer to get a better deal when the economy recovers or sell now it for cheaper. Geithner said investors will set the price for toxic assets through the degree of interest they show in buying them, sparing the government from having to make that decision.

As of right now the government has once again stepped in and pumped money into the economy; however, this time has a more optimistic viewpoint since it is attacking the two critical issues that caused the economy to spiral down. “The great risk that we face now is that after a long period of irresponsibility and excessive risk-taking, that the system will not take enough risk now,'' he said.

It is a matter of waiting to see if the consumer can regain confidence in the banking sector and then if Wall Street follows in an upward direction also reflecting the increase of housing prices or if something else happens.

http://blogs.wsj.com/economics/2009/03/16/outsized-finance-sector-meant-outsized-consumer-spending/
http://www.businessday.com.au/business/world-business/us-woos-investors-to-buy-toxic-assets-20090324-97qm.html?page=-1
http://online.wsj.com/article/SB123747972153985751.html

10 things you didn't know about the IRS

By Sarah Horner

March 25, 2009

This article from Yahoo Finance outlines ten things you probably didn't know about the IRS. Below is a clip from the article or click here to read the entire thing. 

"5. "Just because we billed you doesn't mean you owe us money."

Receiving a CP2000, also known as a correspondence audit, sure sounds scary, but in most cases, you don't actually owe any more money. Not that the IRS will make that clear -- it's likely billing you because of a discrepancy on a certain deduction or reported income; then it's up to you to prove otherwise. But as the number of these audits have risen, up 176 percent since 2000, the chance for error goes up as well. The IRS says 98 percent of the audits it sends out require clarification, not payment, but Charlotte Ogorek, an Illinois-based enrolled agent, thinks it's more like 85 percent.

Even if the charge is unfounded, to appeal it could cost you anywhere from $500 to $4,000, depending on how long it takes, says Bill Wandel, a licensed taxpayer rep at JK Harris. If you plan to challenge a CP2000, contact your local taxpayer advocate from the IRS (go to www.irs.gov/advocate to find yours), who will provide advice and representation free. If it turns out you need even more expertise, contact a tax lawyer or an enrolled agent (a professional licensed by the IRS to represent taxpayers in front of the IRS). Find one at www.naea.org.

6. "If you don't pay, we'll sic a collection agency on you."

If you thought dealing with the IRS was bad, wait till you're past due on a payment and get turned over to one of the two private collection agencies the IRS taps to help collect its money. Since 2005, the IRS has been assigning delinquent taxpayer accounts to either Pioneer Credit Recovery or the CBE group of Iowa -- much like any other business or lender. "These are federal taxes," says Olson, the National Taxpayer Advocate. "The IRS should be collecting them." The retention of these private agencies costs $7.65 million annually, yet when the IRS works these cases instead, "it's three times more productive," Olson says. (A spokesperson for Pioneer Credit Recovery and CBE says the issue isn't who can do the work more efficiently; it's whether these taxes would be collected at all without the private collection agencies.)

If the IRS puts a private collection agency on your case, Olson says the first thing to do is to request that your case be turned back over to the IRS. The reason: IRS collectors have the authority to offer you a compromise settlement, something the private agencies aren't authorized to do."

Saving Money in Times Like These

Posted by Lily Chung

As the financial crisis continues to hit our economy, experts have found many ways that you can save money on a daily bases, some of which you may have never guessed!

- Know when to shop: Shopping late at night proves to be most effective because it is less crowded and shelves are being restocked at this time, so instead of always going for the more expensive brand, there are more options you can choose from with a completely stocked shelf. Also, things that need to be sold by the end of the day are often marked down (especially in grocery stores, where they mark down things like pre-made salads).

- Stockpile and use coupons: When you go grocery shopping, there are always things that are on sale such as soups, pastas, toiletries, etc. So why only buy enough for a week or a month? When you stockpile and use coupons, you can get enough for an entire year!

- Fill your tires: Studies show that driving 12,000 miles annually on underinflated tires wastes up to 50 gallons of gas or $100.

- Wash your own car: I have been doing this since I was in High School, and just thinking about going to a car wash makes me cringe because a little bit of manual labor saves about $208 a year!

- Creative resourcefulness: Instead of buying swiffer dry cloths, you can trade them in for dryer sheets, which have the same static cling, making it useful for dusting.

- Unplug electrical devices: Devices that are still plugged in are still using electricity. Electronics using 100 watts that are still plugged in and turned off for 18 hours a day can cost $131 each year.

- Saving on phone bills: if you have a lot of family and friends outside of the United States, the phone bill with the long distance fees can become pretty high. Instead, look into other options, such as skype.com. Instead of using land lines, you can do long distance calling through the internet. You can get 10,000 minutes for $9.95 a month.

Sources:
Wise buys: Experts share tips for saving on clothes, gadgets and groceries
30 ways to save at the supermarket
How you can save $20,000 in one year

Insurers Ease Stance on Pre-Existing Conditions

Copied and Pasted by Lily Chung

The health insurance industry said Tuesday that it was willing to end the practice of charging higher premiums to sick people if Congress adopted a comprehensive plan that provided coverage to all Americans.

The industry’s flexible position on the issue came as a surprise to lawmakers, and could make it easier to reach an agreement in Congress because it narrows the issues on which insurers are ready to fight the Democrats who control Congress and the White House.

Insurers said they were still staunchly opposed to creation of a new government-run health insurance plan, which, under many Democratic proposals, would compete directly with private insurers.

In effect, insurers said they were willing to discard an element of their longstanding business model, under which insurance policies are priced, in part, on the basis of a person’s medical condition or history.

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Applying For Student Credit Cards

By Mike Hughes

It is advised for college students to apply for a credit card because it can help students to create a credit history, which they will need in the future especially in obtaining loans including car, housing or even cash loans. For students applying for a credit card, make sure to obtain a secured credit card to help build credit. Also, student credit cards are only available for students who have lived in the United States before. Full time students can contact their banks to receive a student credit card and the banks their banks will handle the request. Furthermore if your application for a student credit card is denied, then you will need to find someone with good credit standing to act as your guarantor.

The benefits of student credit cards are to help students learn responsibility in handling money, learn about interest and debt, and the chance to boost their credit scores. The disadvantage is that students must realize that this is “real money” and that the debt must be repaid with interest.

There are six tips for college students applying for their first credit card. First, watch out for on-campus solicitations by credit card issuers offering “free” promotions. Second, if you’re overwhelmed by marketing offers for credit cards, contact the federally mandated credit bureau solicitation “opt-out” list at (888) 5-OPT-OUT. Third, you can lobby your school or student government to stop sharing your personal information with credit card companies. Fourth, make sure to pay your balances in full and on time every month to avoid interest charges and late fees. Fifth, if you can’t pay the full credit balance, then make sure to pay the largest possible payment every month. Finally, watch out for changing due dates as credit card companies will often change the date with little notice.

The top credit cards determined for college students are:
1. Citi mtvU Platinum Visa for College Students
2. Discover Student Card
3. Discover Open Road Card for Students
4. Capital One No Hassle Rewards Card for Students

Sources:
http://ezinearticles.com/?Applying-for-a-Student-Credit-Card&id=235460

http://www.moneybluebook.com/the-best-student-credit-card-rewards-and-offers/

http://www.creditcards.com/credit-card-news/6-tips-for-college-students-considering-credit-cards-1279.php

The Truth About Credit Card Debt

By Liz Pulliam Weston

Posted by Mike Hughes

Youve probably heard that the average American carries more than $8,000 in credit card debt.Its a figure frequently cited by politicians, journalists and pundits as a sure sign of impending economic collapse. They argue that consumers, already struggling under this massive burden of debt, soon will have to stop spending like drunken sailors. The economic recovery, therefore, is doomed! The surprising thing about this statistic isnt that its so widely known. Rather, its that the statistic paints a picture thats just plain wrong.

-In reality, most Americans owe nothing to credit card companies.
-Most households that carry balances owe $2,000 or less.
-Only about 1 in 20 American households owes $8,000 or more on credit cards.

These figures are from the Federal Reserves 2001 Survey of Consumer Finances, one of the most comprehensive assessments of what Americans own and owe.

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Is buying a toxic mortgage for you?

Posted by Yen Ho

The feds are now buying bad mortgage loans owned by banks, planning to split a portion of the costs with private investors. This brings $500 billion in toxic mortgages up for grabs, with investors taking roughly half the profits.

The bottom line question is this: Are these delinquent loans still collectible? Can the buyers get any money back from the consumers that got the loans in the first place, or sell the home for more than the mortgaged amount? This is the only way to profit on this deal, other than selling off the noncollectable loans at a higher price to other investors down the road (an unlikely notion).

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Advice for Young Investors

By Nick Porcell


Two 22-year-olds are just starting their careers and beginning to save and invest. One devotes half his salary to quickly paying off student loans, with the goal of saving money to travel the world. The other dabbles in stocks, while planning to buy a home. Which one is starting out on the right foot? Neither? Both?

Learning to invest is hard enough. Now try doing it during the worst recession in a generation and the biggest financial crisis in a lifetime. If you're a young person with money to invest, however, you can consider yourself lucky. You have income at a time when the jobless rate is rising rapidly. If you're just starting out, you avoided—so far—huge losses of the sort that drastically changed the retirement plans of many baby boomer parents.

But the current environment naturally leaves a beginner confused about how to invest. The tough housing market means real estate looks cheap, but it's also an unreliable investment. After the financial market's problems of the past year, the same can be said for stocks, bonds, and other investments. Are they a bargain or a dangerous trap? At the same time, the financial crisis and widespread layoffs seem to argue for playing it safe. But how much cash can really fit into your piggybank or under your mattress?

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Wall St. Soars on Bank Plan Debut

Written By: Edward Krudy
Submitted By: Joseph Penny

NEW YORK (Reuters) - Stocks surged around 7 percent on Monday after the Obama administration detailed a plan to purge toxic assets from bank balance sheets, fueling optimism about a revival in bank lending and driving double-digit gains in financial shares.

The S&P 500 and the Dow industrials posted their biggest one-day percentage gains since late October after Wall Street finally got what it was asking for: relief for the battered banking sector and more data suggesting the housing market could be on the mend.

The success of Treasury's plan hinges on private investment, so markets were encouraged when several large investors, including Bill Gross of top bond fund Pimco, said they would participate in what has become a key part of the government's efforts to unlock credit markets and revitalize the recession-hit economy.

The KBW Bank index (Philadelphia:^BKX - News) posted its best one-day gain since at least 1993, driven higher by a 26 percent gain in Bank of America Corp (NYSE:BAC - News), a 25 percent advance in JPMorgan Chase & Co (NYSE:JPM - News) and a 20 percent gain in Citigroup Inc (NYSE:C - News).

"Even for a bear market rally this is explosive, and frankly it's jaw-dropping. This was a massive move that had three legs," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

Kenny cited three big factors driving the rally: the bank plan, its "benediction" by Pimco's Gross and traders reversing bets that stock prices would fall.

The Dow Jones industrial average (DJI:^DJI - News) jumped 497.48 points, or 6.84 percent, to 7,775.86 and the Standard & Poor's 500 Index (^SPX - News) surged 54.38 points, or 7.08 percent, to 822.92. The Nasdaq Composite Index (Nasdaq:^IXIC - News) spiked 98.50 points, or 6.76 percent, to 1,555.77.

The market capitalization of the Dow rose $167.4 billion, and the index is now up more than 10 percent on the month, nearly erasing a 12 percent fall in February.

While the removal of toxic assets from banks' balance sheets is seen as a crucial step in allowing banks to make new loans, it will also help bank shares, which are still down 30 percent year to date.

An unexpected rise in housing sales, seen as a key factor in spurring an economic recovery, also boosted sentiment. Data showed the pace of sales of existing homes in the United States rose 5.1 percent in February, the biggest increase since July 2003.

The housing data helped the Dow Jones index of home builders (DJI:^DJUSHB - News) rally nearly 15 percent, with shares of Lennar (NYSE:LEN - News) and Ryland Group (NYSE:RYL - News) up 20.4 percent and 17.6 percent respectively.

Even with the run-up, some analysts said the market had been due for a bounce given the damage incurred when stocks slid to 12-year lows earlier this month.

The benchmark S&P 500 index is up more than 20 percent from the bear market closing low set on March 9. The index on Monday closed above 800 for the first time since February 13.

The government's bank plan involves generous government financing to woo big investors to buy up toxic assets.

The Treasury Department will kick off the financing for its Public-Private Investment Program with $75 billion-$100 billion that will come from the $700 billion financial bailout fund approved by Congress last fall.

Oil shares on Monday were buoyed by a large merger deal in the energy sector and rising oil prices. Exxon Mobil (NYSE:XOM - News) jumped 6.7 percent at $70.53 and Chevron (NYSE:CVX - News) gained 6.9 percent to $69.15.

Canada's No. 2 oil company, Suncor Energy (Toronto:SU.TO - News), agreed to buy rival Petro-Canada (Toronto:PCA.TO - News) for about $14.9 billion to create Canada's largest oil company. Meanwhile, U.S. crude futures rose 3.3 percent or $1.73 to $53.80 a barrel.

On the earnings front, upscale jeweler Tiffany & Co (NYSE:TIF - News) jumped about 15.5 percent to $23.37 after reporting quarterly profit that beat expectations.

The S&P Retail index (Chicago Options:^RLX - News) rose nearly 6.42 percent.

And shares of Walgreen Co (NYSE:WAG - News) rose 9.4 percent to $26.58 after the drugstore chain posted better-than-expected profit.

Trading was active on the New York Stock Exchange, with about 1.91 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.24 billion shares traded, below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by 2863 to 259 while advancers beat decliners on the Nasdaq by about 2262 to 429.

For more informantion click here.

Credit assistance on its way

Written By: CNBC.com
Submitted By: Joseph Penny

Treasury Secretary Timothy Geithner told CNBC that the government's highly-anticipated plan to deal with troubled mortgage loans and assets is just the latest effort to stem the financial crisis.

"It's the next step in the series of efforts we're taking to make sure that the banking system is doing what it should do, which is to provide credit for the economy," Geithner said in a taped interview to be aired on CNBC at 2 pm ET.

The plan announced Monday calls for both private and federal funds to purchase toxic assets, using low-cost government financing, government guarantees and government equity as incentives.

Under a typical transaction, for every $100 in soured mortgages being purchased from banks, the private sector would put up $7 and that would be matched by $7 from the government. The remaining $86 would be covered by a government loan provided in many cases by the Federal Deposit Insurance Corp.

"Right now, you have a bunch of loans people made over the last four years before the recession," Geithner said. "They're still sitting on the system, and they're making it harder for people to lend, have confidence. And we're trying to provide a mechanism to help the market take those assets off the balance sheets of banks. That'll free up capacity for lending."

Geithner declined to provide a timetable on how quickly the new program would be up and running.

"We're moving as quickly as we can," he said. "And as soon as we have the terms designed in a way we think it'll work for the taxpayer, and soon as we get the operational infrastructure in place, we're moving."

The Treasury Secretary said the government has already taken several steps to get credit flowing again.

"We've already taken a bunch of actions to help get mortgage interest rates down, to help millions of Americans refinance their homes, to take advantage of lower interest rates," he said. "We launched a very powerful small business lending program, for obvious reasons. Last week we launched this new program to get securities markets going again."

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A plan to help the banks getting rid of ''toxic assets''

By Sidney Perez.


Timothy Geithner announces his plan to clean up the bad assets of the bank.
It will basically consist in buying some bad assets of the banks to drive private investors to do so too.

Indeed, from $75 to $100 billions will be taken from the TARP(Troubled Asset Relief Program) to buy these toxic assets.
This announcement has made the Stock Exchange rise a lot ( the Dow Jones won almost 500 points IE 6.80%). So, will this decision definitely give confidence to the investors, or is it only an illusion?

What I think is it will definitely help the economy to recover a little bit, because these toxic assets really affected the banks for their capacity to give loans.
Indeed, because of the financial crisis, banks really reduced the amount of money they lent and that means that many business could not borrow money to invest or to keep going.
So, if these bad assets become more liquid, banks will be able to give loans again and allow the economy to feel better.

But, will investors really trust these banks ? Will investors accept to buy these assets? Maybe, but the banks also have their word to say and if the federal government estimates their bad assets are worth 60% of their book value, would they accept it?
...
And will the federal government be able to spend once again 1 trillion dollar without seriously compromising its ability to pay the interests of such an ammount of money without taxing more its citizens?

Sources and to read more :

1)http://www.easybourse.com/bourse-actualite/marches/treasury-to-detail-toxic-assets-plan-on-monday-638149

2)http://news.yahoo.com/s/ap/20090322/ap_on_go_pr_wh/bank_rescue

3) http://english.aljazeera.net/news/americas/2009/03/200932219956269611.html

Consumer Scams

By David Norton

It is no secret that we are in the midst of tough economic times. However, some people have founded a business through scams and exploitation of those most vulnerable during a recession. Internet scams of all forms are being widely distributed, primarily through emails. Just in 2007, the Consumer Protection Agency had received 6,000 complaints about different scams that were circulating throughout various the mediaries of the internet. 

The most recent type of scam is not as brazen as the traditional "offshore bank account." Rather today's scam exploits unemployment in a subtle, yet believable fashion. Those who are unemployed have been targeted by scammers with emails saying that they either work for a job placement agency, or they are part of a corporation who wants to hire them. In turn, these scammers usually ask for a monetary deposit which tends to range from a couple hundred, to a few thousand dollars. Though most see this as a scam from the beginning, scammers are obviously profiting from their newest method. 

If you are encountered with a potential scam, the Consumer Protection Agency advises to look for red flags such as asking excessive information that one would normally not ask at an introductory job interview. Also, unless you are explicitly commissioning an agency, it is irrational to be paying for a job interview. So, a mix of common sense and a bit of skepticism is the best way to protect yourself. And the saying goes, if something seems too good to be true, it probably is. 

Sources (Click on Text):

AJC

Consumer Fraudulent Reporting

Consumer Advisory

GE Sells Consumer Branch

By David Norton

TOKYO: General Electric will sell its Japanese consumer finance operation to Shinsei Bank, people with knowledge of the deal said, as the U.S. conglomerate looks to spin off large parts of its portfolio. Shinsei will pay 580 billion yen, or $5.4 billion, for the Japanese arm of GE Consumer Finance, said one of the people, all of whom would speak only on the condition of anonymity because the deal has yet to be announced.

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Times are Changing; Newspapers are Failing

By: Sarah Horner
March 23, 2009

For more than 200 years Americans have had a pretty normal routine, they wake up and read the newspaper with their morning coffee. In ten, maybe five, possibly even 1 year, this routine may be completely extinct. Since January 2008, at least 120 Newspapers throughout the United States have shut down, over 21,000 journalists have lost their jobs and many other newspapers are on the brink of extinction.

Newspapers are not going completely extinct, in many cases, newspapers have moved online. This helps to curb the high costs of printing and can also be more easily reached especially by the younger generation.

This plague on the Newspaper industry is not just a result of the terrible economic recession we are currently facing, but also because of changes in the advertising industry. People have turned to posting classified Advertisements on sites such as Monster.com or craigslist.net instead of in local newspapers. Furthermore, a shocking statistic said that from 2007 to 2008 the industries advertising revenue dropped 23% from $49.5 billion to $38 billion.

A few newspapers that are nearing the brink of extinction include, the Las Angeles Times and the Chicago Tribune, whose parent company is currently facing bankruptcy. Many newspapers are moving online such as the Ann Arbor news. Many other newspapers have announced massive staff cuts, however this will probably only save these newspapers for the short term.

References:

http://www.cnn.com/2009/US/03/19/newspaper.decline.layoff/index.html?iref=hpmostpop

http://www.ireport.com/docs/DOC-231124

Outrage over the AIG bonuses

By Michael Boshnack


We have all heard about the $165 million dollars that AIG paid to its top employees and the American taxpayer outrage that came as a result. Congress has apologized for not making a specification in its deals about the bonuses that could be paid to the firms. I personally do not think that 90% tax on bonuses paid to employees of companies receiving government bail out money will work. It seems unconstitutional and personally undermines the trust in the tax system that I have today. The government messed up plain and simple, they should have set up provisions about the bonuses that could be paid. To me it was not such a hard problem to figure out how much these AIG executives should make. The government owns 80% of the company; pay them 80% at government salary bonuses and the remaining 20% they would make as if AIG were a private company. This way instead of a $1 million dollar bonus, the AIG employee would receive $200,00 from AIG and probably $15,000 like every other government employee. The lesson to be learned from the whole financial mess is the usefulness of foresight and how important risk aversion is to the overall health of our country and economy.

To read more on these topics click on these links below:

Is the AIG tax constitutional

AIG bonus tax may go to far

AIG Bonus tax may be dangerous

Peer to Peer lending

By Michael Boshnack


"Michael DeFabio and his wife, Amy, were waiting for a miracle. The co-owners of the Natural Health Education Center say they were repeatedly refused funding for their holistic health care company. "We didn't have enough collateral," Michael says. "The banks strung us along for three months before turning us down."

After starting the Webster, New York-based company in 2005, DeFabio needed a boost in capital to get his latest product on the market. He took to the internet in hopes of finding a solution. After discovering the concept of social lending--also known as peer-to-peer (P2P) lending or Banking 2.0--DeFabio was drawn to P2P site Lending Club in November 2007. Within a matter of weeks, the 49-year-old naturopath physician fulfilled his loan request of $15,000, and was on his way to producing his B12 lozenge."

To learn more about this topic click here

Expensive gas is back

By Michael Boshnack

"Oil prices topped briefly $54 a barrel Monday, getting a boost from stock investors who seemed hopeful a new plan to resolve America's banking crisis would spur economic growth. Better-than-expected housing news helped too.

Benchmark crude for May delivery rose $1.73 to settle at $53.80 a barrel on the New York Mercantile Exchange, continuing its upward momentum. Prices climbed as high as $54.05."

To read more about the resurgence of gas prices click here

New Car to meet Consumers Price Demands

By: Sarah Horner

March 23, 2009

On April 1, 2009, a new car will hit the markets, it will be released by an Indian car company called Tata Motors. The Tata Nano, is not your everyday car, it will be sold for the low ticket price of $2,000.

An article from the New York Times entitled, Tata Nano; The Worlds Cheapest Car, gives a brief description of the Tata Nano,

"The four-door Nano is a little over 10 feet long and nearly 5 feet wide. It is powered by a 623cc two-cylinder engine at the back of the car. With 33 horsepower, the Nano is capable of 65 miles an hour. Its four small wheels are at the absolute corners of the car to improve handling. There is a small trunk, big enough for a duffel bag."

To learn more about the Tata Nano, Click Here.

Getting the Raise you Deserve

By: Sarah Horner
March 23, 2009



Times are tough and the economy is hurting, many companies are looking for ways to cut costs, which is why unemployment levels are reaching new heights. Many people have lost their jobs or those who are lucky have only experienced a pay freeze or cut as of now.

It may seem farfetched, but even in this terrible economy, it is still possible to get a raise. Gerri Willis, Host of CNN’s open house talks about a number of ways you can get the raise you deserve even in these tough times, in her article entitled, Even now its Possible to get a Raise.

A raise at any time throughout your career is great, although there are many factors you must consider before confronting your boss. First, you must consider the value you add to your company, your worth as an employee depends on your contribution, so if you think you are doing the bare minimum, it is unlikely that your boss will consider you worthy of a raise.

A great way to confront your boss about a possible pay increase is to stress the value you add, not your needs. When you enter a meeting with your boss, be prepared. You should have hard evidence of your contribution to the firm as well as solid reasoning as to why you think you deserve a raise. Also, remember to keep it professional, whining or begging is inappropriate although persistence is sometimes necessary.

If you get the raise, great, however if you don’t, you could perhaps ask for other benefits, maybe you can ask to work from home sometimes or you can ask if your boss will meet with you again in a few months to discuss the possibility of a raise again after he can review your commitment to the job.

References:

http://money.cnn.com/2009/03/23/pf/saving/raise_willis/index.htm?postversion=2009032310

http://www.careerknowhow.com/advancement/raise.htm

Tighter Consumer Credit Hurts Retailers

By Nick Porcell

YESTERDAY'S [ GENERAL ELECTRIC (ticker: GE) unit] GE Capital analyst meeting had two interesting datapoints that are noteworthy from a retail investor's perspective.

First, the company's discussion of its U.S. Consumer Finance business provided yet another example of the tightening in consumer credit which continues to put pressure on consumer spending and retail sales. In addition, the company inadvertently provided some information that forced Lowe's (LOW) to issue a press release reconfirming its sales and earnings guidance for the quarter.

GE's presentation included a discussion of its private-label credit-card business that manages receivables for Wal-Mart Stores (WMT), J.C. Penney (JCP), Dillard's (DDS), Gap (GPS) and Lowe's. GE's receivables growth from these retailers is declining at a faster rate than the retailer's sales trends as GE has increased FICO [credit standards set by Fair Isaac (FIC)] requirements, decreased credit lines on new and existing accounts, and put in place other restrictions to avoid balance growth.

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Treasury Secretary Looks to Consumers

by David Norton

WASHINGTON- Treasury Secretary Timothy Geithner said the only way to remove troubled assets clogging banks' balance sheets -- which lie at the heart of the financial crisis -- is to work with the private sector, even at a time when Wall Street moneymakers are being vilified by the public and politicians.

In an interview with The Wall Street Journal Sunday, Mr. Geithner said the government cannot fix the financial crisis alone. "Our judgment is that the best way to get through this is if we can work with the markets," he said. "We don't want the government to assume all the risk. We want the private sector to work with us."

Click here to read more of this article

Buy a used car? A new one might cost less!?!

Written By: Associated Press
Copied By: Joseph A. Penny

Demand for used cars is rising, while prices for new cars are declining

DETROIT - For cash-strapped consumers shopping for a car, used would seem like the place to start. Not necessarily. A new one might actually be cheaper.

Consider this: The average cost of a used 2008 Honda Accord EX sedan, certified by the dealership, was $21,544 earlier this month, according to Edmunds.com, a car-buying Web site. A new 2009 model cost $80 less.

It's simple supply and demand. With new car sales at a 27-year low and desperate dealers piling on rebates and incentives, prices are plummeting. At the same time, demand is up for used cars and their values are rising.

"The intuitive logic has been that a used car buy is a better buy," said Edmunds CEO Jeremy Anwyl. "But consumers need to check reality. It's very contradictory."

Used cars still generally cost less than new ones, but a mix of drastic price cuts, rebates and financing incentives is narrowing the gap.

Automakers are subsidizing zero-percent or low-interest loans on new cars, while the average rate on a three-year used car loan is about 7.5 percent, according to Bankrate.com. Factor in the lower cost of financing and the total cost of the new car can be less.

For example, a $30,000 car with an annual percentage rate of 2.9 percent would cost $662.70 a month over four years. By comparison, a used car with an APR of 7 percent would cost $718.38, a total of $2,673 more over the same period.

Automakers like Ford Motor Co. are banking on the phenomenon to drive consumers back to new car showrooms.

"There is an equilibrium level which we believe we are getting back to between the value of used vehicles and the transactional price of new," said Ken Czubay, Ford's sales and marketing vice president, when the company announced its February sales fell 48 percent from a year earlier. "This also portends, we believe, a favorable future for the new business."

Even with the best of terms, however, the monthly payments for a new car are out of some people's reach. That's why leasing became so popular. But many auto finance companies have stopped offering that option because it became unprofitable, and where it is available it may still be out of reach to many consumers.

That's the case with Tom Kostora and his wife, Melanie. They've leased trucks for more than 10 years, but were shopping for a used car this month after turning in their fifth Ford F-150 pickup.

"I want lower payments with my mortgage and tuition for my son's private preschool," the Ford plant worker said while browsing at Law Auto Sales in Wayne, Mich. "My job could be gone."

Zero-percent financing also can be hard to get without excellent credit, and it's unclear whether the Treasury Department's cash infusions to GMAC and Chrysler Financial have loosened lending. So despite great new car deals, consumer might be relegated to buying used.

"Banks may not finance a $30,000 car, but they may finance something less, say a $10,000 to $15,000 vehicle," said Zach Anderson, used car manager at Bob Maxey Ford in Detroit. "People are looking to buy less. They have the fear they won't get financing for a new car if they don't have perfect credit."

The make and model of the car also makes a big difference. Used cars from model lines that don't retain as much of their value — like big SUVs from U.S. brands — may be more appealing to people seeking cheap wheels than value-gripping choices like late-model fuel-sippers from Asian brands.

To view article click here.

FDIC deals with mounting bank failures

By Sidney perez

Seventeen American banks have failed so far this year although, no doubt, that number will have risen by the time you read this. Unfortunately, we'll certainly double, if not triple or quadruple, last year's 25 failures.

On a positive note, in only one instance this year has a failed bank not attracted an institution that wanted to scoop up its deposits, customers and a chunk of its assets. Nevertheless, every failure costs the Deposit Insurance Fund, or DIF, millions of dollars. That's the fund that backs up the Federal Deposit Insurance Corp.'s promise to reimburse customers for every dime of insured deposits when an insured bank fails.

Read more...

9-step Guide to Your Finances

Copied and Pasted by Lily Chung

Here's a money secret that might keep you from driving yourself crazy: You can't do it all.

We're supposed to max out our retirement savings, pile up huge emergency funds, pay off all our debts and buy tons of insurance. Yet we've also got other bills to pay, kids to raise and, yes, fun to have.

Even in good times, many of us can't cover all the bases perfectly. Now that many are facing pay cuts, unemployment or unpaid furloughs, more of us are facing painful trade-offs on less income.

Here's what you need to know now to properly prioritize your spending and manage your money. You may not be able to cover everything right away, but as more money comes in you can work your way down the list and be reasonably sure you're getting the important stuff right.

Click here to read more

Getting an auto loan is just as hard

By Michael Boshnack

We have all heard how difficult it is to secure a home loan given the economic situation that is occurring in our county. Securing a car loan is not any easier. The sub prime borrowers have been completely shut out of the new car buying market. My intuition was that with the massive drop in new car purchases, auto dealers would still be aggressive with their financing to try to increase their car sales, the opposite has been happening. Like the home mortgage market borrowers are being turned away unless they have had perfect credit and a steady income stream currently.

Mike Spector recommends going to the auto companies that are more financially stable right now to secure a loan. This is maximizing ones chance of securing a loan as these companies can be slightly more flexible in the risk of the loans they give out to borrowers. Used car loans seem to be almost as difficult as new car loans, as these institutions rely even more than car dealers that everyone will repay their loans because they deal with less volume.

In order to secure an auto loan during this time consumers must be willing to put down higher down payments to entice the lenders to give them a suitable loan.


To read more on this subject click on the links below


All revved up with no place to borrow

Recession proof cars

Car buying incentives are up 18%, drive away on a dime

Fed to Pump $1.2 Trillion into markets

Posted by Yen Ho
Written by Neil Irwin

The Federal Reserve yesterday escalated its massive campaign to stabilize the economy, saying it would flood the financial system with an additional $1.2 trillion.

The decision by the Fed to buy government bonds and mortgage-related securities is designed to lower borrowing costs for home mortgages and other types of loans, thereby stimulating economic activity. The central bank, effectively, will print more money to pay for the purchases.

Combined with the billions already deployed by the Fed, the new money dwarfs even the biggest government bailouts of financial companies.

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So the Fed is taking action. How will it affect you?

Posted by Yen Ho
Written by Washington Post Staff Writer

The Federal Reserve yesterday renewed its commitment to encouraging consumer lending by announcing steps aimed at helping push down interest rates.

Here are answers to questions about how those steps might affect consumers:

QI'm thinking of refinancing. Will the Fed's announcement drive interest rates lower?

Read more

What is TALF?

by: David Norton

From government proposals, to stimulus packages, to reactions on Wall Street, we are seeing much uncertainty in today’s economy. In the beginning of our most recent recession, the causes were unclear. As time has passed, it has been manifested that the underlying issue is a freeze on credit, which has complicated many of the other issues that impede growth in the United States. It is clear to see that there is a problem in consumer confidence, but what is not clear is an answer.

From government proposals, to stimulus packages, to reactions on Wall Street, we are seeing much uncertainty in today’s economy. In the beginning of our most recent recession, the causes were unclear. As time has passed, it has been manifested that the underlying issue is a freeze on credit, which has complicated many of the other issues that impede growth in the United States. It is clear to see that there is a problem in consumer confidence, but what is not clear is an answer.

TALF stands for Term Asset-Backed Securities Loan Facility. Under this provision, the Federal Reserve will lend up to $200 billion in nonrecourse loans to holders of AAA rated Asset Backed Securities (AAA being only the most favorable or highly rated). The goal of TALF is to free up money so consumers can get loans for school, businesses, credit cards, or any worthy expenditure that requires capital. With this $200 billion dollars, lenders will be more susceptible to issue loans to worthy recipients.

Reviews on Wall Street are mixed. Whether TALF is the answer to our problems or not will remain a mystery for some time. It is not uncertain however that the government will continue to spend and spend until there is a solution.


Sources:
http://www.businessweek.com/investor/content/nov2008/pi20081125_381246.htm?campaign_id=rss_daily
NPR
http://curiouscapitalist.blogs.time.com/2008/11/25/tarp-goes-talf-as-frbny-lends-against-aaa-abs/

Fed Helping Consumer Lending

By Nick Porcell

It is complicated. It is untested. And at $200 billion, the government's latest attempt to shore up the crumbling economy is anything but cheap.

The announcement yesterday that the Federal Reserve would generate up to $1 trillion in consumer loans by creating a $200 billion fund to buy asset-backed securities was met with an increasingly common reaction these days: caution and skepticism.

In theory, the Term Asset-Backed Securities Loan Facility (TALF) would persuade banks and other lenders to give new loans to consumers, businesses, homeowners, commercial real estate investors - you name it.

How? The government would take existing loans off lenders' books by buying them up as packaged securities. Lenders then would feel more comfortable issuing new loans.

And since loans help people buy things, the hope is it would contribute to an economic recovery.

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Good Debt vs. Bad Debt

Copied and Pasted by Lily Chung

It's far too easy to spend more than you can afford, especially when you pay by credit card. The average U.S. household with at least one credit card carries nearly a $10,700 balance, according to CardWeb.com, and personal bankruptcies have hit record highs in recent years.

Of course, avoiding debt at any cost is not smart either if it means depleting your cash reserves for emergencies. The challenge is learning how to judge which debt makes sense and which does not and then wisely managing the money you do borrow.

Click Here for more.

Consumer Prices Rise

Posted by Lily Chung

Even though the recession was supposed to have reduced any chances for inflation for the rest of the year, we are currently seeing a 0.4 percent rise in consumer prices. This was mostly due to the jump in gas prices (again!) as well as an increase in clothing prices. It was a big relief when gas prices lowered a drastic amount towards the end of 2008, but starting in 2009, there has been an increase of 6 percent in January and 8.3 percent in February. Energy costs rose 3.3 percent, cost of clothes rose 1.3 percent, and new car prices increased 0.8 percent. Although we may all love decreasing prices, the slight inflation has given analysts hope that the economy will not spiral into dangerous territories of deflation, which has not been seen since the Great Depression. Deflation has been feared for quite a while with the "deepening recession and prolonged housing slump".

Sources:
US Consumer Prices Rise 0.4% in February
Rise in Consumer Prices Eases Deflation Fears
Consumer Price Index Summary

Student Loans; Decades of Despair

By: Sarah Horner


College students seem to enjoy a relatively stress free lifestyle, however there are some things that continue to haunt students even after their finals are over; they are student loans.

The truth of the matter is, most lenders want and expect students to default on their loans so they end up making more money. On top of extraordinary interest, they can charge usurious penalties and fees when a borrower defaults. Furthermore, the college student is the perfect victim, not only are they borrowing sometimes upwards of $100,000 their ability to repay these loans is extremely risky.

Student loans are a very tricky business, the laws and regulations are very harsh and many students do not understand the repercussions. Some things to know when taking out student loans is that, first, they are the only loans for which bankruptcy protection is prohibited. Furthermore they can only be consolidated once, so basically you are stuck with your original terms.

Many students facing the enormous threat of student loans have gone so far as to flee the country and even suicide to try and escape them. A college education is one of the best investments you can make, however if you graduate without a job and with a pile of debt, it can take you decades to get out from under it.

References:

http://www.boston.com/ae/books/articles/2009/03/12/the_case_against_student_loan_lenders/

College Financing Advice

By Mike Hughes

Earning financial aid to help pay for college begins by learning how to navigate through the college finance system. First, it is important to know what kinds of aid are out there. While it can be difficult to qualify for federal need-based aid; other options include student loans, via government and private channels, merit scholarships, community scholarships, grants, and even sponsorships. Second, it is important to submit one’s FAFSA as soon as possible (even as soon as January 1) in order to receive the best chance of securing financial aid. Third, do not rush through filling out the FAFSA because it is very easy to reduce one’s eligibility simply by filling out the form incorrectly. Fourth, it is necessary to reduce cash balances by paying off debt, which will improve eligibility and reduce one’s cost of living at the same time. Finally, students should keep their options open.

In terms of gaining information about financial aid, there are five financial aid tips: 1. Consult your school’s financial aid office for advice. 2. Look everywhere for advice. 3. Go public before you go private. 4. Apply for scholarships and state assistance. 5. Track your paperwork and details.

Finding trustworthy lenders is another problem students and parents face. One issue is the preferred lender problem. Colleges provide students with a preferred lender list consisting of financial institutions that offer lower rates and revenue-sharing deals to college. Generally this is beneficial to students; however it is important to note that financial aid directors have been accused of receiving questionable consulting fees or paid trips for high placement on the list. Politicians have also been able to offer solutions to this problem by proposing new programs or encouraging schools to do private lending themselves. All in all, the best option is for students and parents to protect themselves through intensive research and an understanding of the types of programs or loans and their alternatives. Additionally, understand the loan agreement to get the best deal possible.

Sources:
http://www.mortgageloan.com/college-financing-2009-tips-for-getting-aid-2913

http://www.mortgageloan.com/five-financial-aid-tips-1484

http://www.mortgageloan.com/student-loans-who-can-you-trust

How to Wow Your Mortgage Lender

By Marcie Geffner

Posted by Mike Hughes

"It's not enough these days to have good credit and a steady job, as lenders are increasingly picky when it comes to loan approvals. Here's how to make the best impression."

Whether you're buying a home or refinancing an existing home loan, you'll soon find out that lenders today are a picky and demanding bunch when it comes to loan approvals. Even well-qualified borrowers are expected to jump through some pretty high hoops to qualify for financing. But fear not: These tips and suggestions can help you make the best possible impression on the lender of your choice. Just as job hunters may wonder what top employers want to see on a resume, prospective borrowers may be curious about what lenders look for on a loan application.

The four C's: The answer may be summed up with a mnemonic called "The four C's," according to Greg Gwizdz, national sales manager for Wells Fargo Home Mortgage in Des Moines, Iowa.

Capacity, which refers to the adequacy of the borrower's income to cover the interest and principal due on the loan, plus property taxes and homeowners insurance.
Character, which refers to the borrower's track record of paying debts, as evidenced by his or her credit history and credit score.
Capital, which refers to the borrower's down payment (or equity) as a percentage of the current value of the home.
Collateral, which refers to the safety and soundness of the home and the value of the home as determined by an appraisal relative to the agreed-upon purchase price.

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Investing in today's economy?

By Sidney Perez


Everybody has heard about Madoff's scandal in which billions of dollar have been lost. Even "clever" people have been "trapped" by Bernard Madoff, just because they trusted him as former chairman of the NASDAQ Stock exchange.


Here are some tips to avoid losing your money on the markets, or in Banks.


Firstly, always check if your investments are FDIC insured.

Furthermore, check your broker's background (you can contact your state regulator's database for example).


Moreover, do ask questions in order to be 100% clear with your strategy and with your investments.


Finally, do not write checks to the adviser. They should be made out to the brokerage firm and be SIPC insured.


As we can imagine, the value of the shares are very low due to the crisis, and then it can be the right time to invest.


However, you have to be careful, because it can become worse anyway.

That is why maybe some "refuge" value like gold, and oil can be good investments.

Indeed, 5 years ago an ounce of gold was worth $400, in September 2008, it was $780, and now it is almost $950!!

Maybe now it is too late to invest because a peak is already reached, but who knows??

In any case, gold will always have value whereas the money you put in a bank has a chance to disappear ( the FDIC only ensures $100,000 per person)...


Sources :


http://abclocal.go.com/


http://en.wikipedia.org/wiki/Bernard_Madoff


http://www.goldprice.org/spot-gold.html

American Express paying people to clost their accounts

By Michael Boshnack

This article explains the new measures credit card companies are taking to reduce risk


"American Express, the “don’t leave home without it” people, are paying customers $300 to pay off their account balances and close their accounts. This comes after the company has spent the better part of a decade trying to grow its customer base. The number of accounts over the last few years have grown from 65 million in 2004 to 92 million last year.
Why would they try to unload fee-paying customers? Analysts say it is a fear of defaults — that is people falling behind on payments and never catching up. Already, those default rates have soared to 8 percent. American Express didn’t return our calls for comment."

To read more click here

What's Washington Doing To Our Money

by David Norton

Your Money: Washington's Solution

The government has produced a massive tax cut and financial sector rescue plan to restore the flow of credit. But some say taxpayer dollars are being wasted.

NEW YORK (CNNMoney.com) -- Borrowing and spending are the lifeblood of the economy, but both have tightened up dramatically in recent months.

As banks and consumers hoard cash, consumer spending, which accounts for 70% of the nation's gross domestic product, sharply declined.

click here to read more

How to control your debt

March 16, 2009

By: Sarah Horner 

This article from CNN.com describes 10 things you need to know in order to control your debt. 

"7. Watch where you borrow.

It may be convenient to borrow against your home or your 401(k) to pay off debt, but it can be dangerous. You could lose your home or fall short of your investing goals at retirement.

8. Expect the unexpected.

Build a cash cushion worth three months to six months of living expenses in case of an emergency. If you don't have an emergency fund, a broken furnace or damaged car can seriously upset your finances"

Click here to read all 10 tips.

Where to stash your cash

By Sidney Perez

NEW YORK (Fortune) -- Now that even the biggest banks are battling for survival, traditionally safe investments suddenly look fallible.
What happens to your money market account if your bank fails? Or even worse, if you buy a CD from someone like Stanford Financial, the bank that lured investors with above-average yields and allegedly funneled their money into a Ponzi scheme?

Click here to read more...

Ten Must-click websites

Posted by Yen Ho

Surfing the web for top-notch research and advice to help your business grow? Save some time with these information-rich websites.

BizStats.comFree statistics and financial ratios for businesses by industry; find out what the average firm in your industry spends and earns.Business.govThe central source for federal, state and local government information for businesses; learn about employment laws, where to apply for government grants and loans, and more.BusinessFinance.comThis lender-matching service offers a range of useful information on various ways to finance a business.Entrepreneurship.orgThe Kauffman Foundation runs this site, which features hundreds of how-to articles for entrepreneurs, and data for policymakers.NielsenSnapshots of consumer trends in different markets, from groceries to movies, by one of the oldest and biggest market-research firmsLadies Who LaunchBlogs, success stories, how-tos and more, all targeting women entrepreneursAccess eCommerce GuideEven internet-illiterate entrepreneurs can learn almost everything they need to start an e-commerce business here.Small Business Advancement National CenterThe nation's entrepreneurship researchers contribute to this trove of scholarly articles on small-business issues.Small Business SchoolView online videos and read transcripts of presentations on financing, hiring, exits and more.Statistical Abstract of the U.S.The U.S. Census Bureau's comprehensive and authoritative rundown of statistics on America's economy and society

Link