Fed mulls interest rate cut, maybe to all-time low
Sun Dec 14, 3:38 pm ET
WASHINGTON – With the country spiraling deeper into recession, the Federal Reserve is ready to slash its key interest rate — perhaps to an all-time low_ in hopes of cushioning some of the economic fallout felt by many struggling Americans. To battle the worst financial crisis since the 1930s, Fed Chairman Ben Bernanke and his colleagues already have ratcheted down their main lever for influencing the economy — the federal funds rate — to 1 percent, a level seen only once before in the last half-century. The Fed opens a two-day meeting Monday to assess to economy and decide its next move on rates. Another reduction to the funds rate, the interest banks charge each other on overnight loans, is all but certain to be announced Tuesday. Many economists predict the Fed will cut its rate in half — to just 0.50 percent. A few think the Fed could opt for an even more forceful action — lowering rates by a whopping three-quarters percentage point or more. If that larger cut occurs, it would be the lowest on records that track the monthly average of the targeted funds rate going back to 1954. Even an aggressive rate reduction won't turn the economy around, analysts said. "It is not so much going to give the economy a big push forward. It's more a case of trying to help the economy from being pushed further backward by all these negative events," said Stuart Hoffman, chief economist at PNC Financial Services Group. However deeply the Fed decides to cut rates, the prime rate — now at 4 percent — for many consumer and small-business loans would drop by a corresponding amount. The prime lending rate is used to peg rates on home equity loans, certain credit cards and other consumer loans. Cheaper rates could give pinched borrowers a dose of relief. The goal of lower borrowing costs is to entice people and businesses to spend more, which would revive the flat-lined economy. So far, though, the Fed's aggressive rate reductions have failed to lift the country out of a recession that started last December. Clobbered by the financial crisis, worried banks have hoarded their cash and been extremely reluctant to lend money to customers. Fearful consumers, watching jobs vanish and their investments tank, have sharply cut back their spending, including big-ticket purchases like homes and cars that typically involve financing. The negative forces have fed off each other, creating a vicious cycle that Bernanke and Treasury Secretary Henry Paulson have been desperately trying to break. To unlock lending and get financial markets to operate more normally, the U.S. has resorted to a string of radical actions, including a $700 billion financial bailout where the government is making cash injections in banks in return for partial ownership stakes. In terms of rate cuts, the Fed is getting ever closer to running out of ammunition. It can lower the funds rate only so far — to zero. Even if that were to happen — a point of debate among economists — the prime rate would fall to 3 percent but no lower. Against that backdrop, Bernanke says the central bank is exploring other ways to stimulate the economy. The Fed could buy longer-term Treasury or agency securities on the open market in substantial quantities, Bernanke says. This might lower rates on these securities and help spur buying appetites. Another option the Fed has mulled: issuing its own debt, which would give the central bank cash and more flexibility to battle the financial crisis. To do that, however, the Fed would need new powers from Congress. "The Fed wants to show that it has tools and options and is not out of tricks because interest rates are very low," said Michael Feroli, economist at JPMorgan Economics. "The problems holding back the economy are fairly long lived in nature." To combat the financial crisis, the Fed already has created first-of-its-kind programs, such as getting cash directly to companies by buying up mounds of "commercial paper," the short-term debt firms use to pay everyday expenses such as payroll and supplies. It also recently launched massive programs to boost the availability of consumer credit, including that for cars, student loans, homes and credit cards. The Fed also is making loans to banks, is providing a financial backstop to the mutual fund industry, and has injected billions of dollars in financial markets here and abroad. The Fed could opt to expand programs by enlarging loans it's now making, providing loans to other types of companies, or buying more and different types of debt. The Fed's balance sheet has ballooned to $2.2 trillion, from close to $900 billion in September, reflecting some of those other activities to get credit flowing again. Even with all the bold moves, the economy continues to sink deeper into despair. Skittish employers axed 533,000 jobs in November alone. That drove the unemployment rate up to 6.7 percent, a 15-year high. Since the start of the recession, the economy has shed nearly 2 million jobs. Analysts predict another 3 million more will be lost between now and the spring of 2010. Last week alone, Bank of America Corp., tool maker Stanley Works and Sara Lee Corp., known for food brands such as Jimmy Dean and Hillshire Farm, announced job cuts. General Motors Corp., Chrysler LLC and Ford Motor Co., meanwhile, are fighting for their survival. GM and Chrysler have said they're in danger of running out of money within weeks. The White House is exploring new ways to help Detroit after rescue efforts collapsed in Congress. With the employment market eroding and consumers retrenching, the economy could stagger backward at a shocking 6 percent rate in the current October-December quarter, analysts predict. It shrank at a 0.5 percent pace in the third quarter. President-elect Barack Obama is advocating an economic recovery plan that ...............http://news.yahoo.com/s/ap/20081214/ap_on_bi_ge/fed_interest_rates
Price of crude is low, but oil companies gouging us again
Oil prices per barrel have fluctuated around the $40 since the beginning of 2009; they will rise some days, then drop some. Ever since the end of December 2008, the oil companies have been raising gas prices, whether oil prices drop or goes up. This outright gouging is criminal greed. The oil companies are determined to rake in their obscene profi ts even if oil is cheap. High oil prices helped set the stage for the spiraling down economy — when fuel prices are high, transportation costs go up, thus prices of all products will rise. These oil CEOs and executives do not care in the least — all they can see is themselves getting huge bonuses salaries and golden parachute retirements with no remorse whatsoever. They got away with it when Bush “The Oilman” was president. Now that President Obama is preoccupied with this disastrous economy, they can gouge under the radar, knowing that little attention will be paid to them by the government. It seems abundantly apparent that they sold their souls to the Devil for wealth. The government needs to crack down before fuel costs start to get out of control. If that happens again, this economy will never recover.
That would be our fancy schmancy car companies fault for being sticks in the mud.......Mr.Ford and the rest of the car croonies(good back in the day but without any kind of forsight) chose gas/oil and are linked at the hip like siamese twins......their belt being the unions......so who's pants are down now????????
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
The Obama administration is rapidly setting into place policies that will fi nancially hurt the middle class, poor and retired. Who would have thought that the federal government would force car manufactures to make more costly, small vehicles that the average consumer does not want? The argument that small, high-mileage vehicles will reduce foreign oil imports is disingenuous and simply wrong. Let us assume that super-small vehicles will increase fleet gas mileage to 35.5 mpg, as the administration has proposed. The “change you can believe in” administration says “look at the money you will be saving on gasoline while we are saving the planet.” That sales pitch assumes that the price of gasoline will remain what it is today, approximately $2.50 per gallon. Probably the price of gasoline will not remain the same because without additional development, which this administration opposes, domestic oil production will continue to decline. The result will be the need to increase oil imports, now running near 75 percent of national needs. If gasoline consumption does decline by forcing the public to buy super-small vehicles, the tax revenues to both the state and federal governments would also decline — creating additional stress on government revenues. What is the logical next step? Radically raising gasoline taxes to make up for the loss of tax revenue. The Obama administration is driving national policy into the European model, where gasoline is so highly taxed that it costs $6 to $10 a gallon. What will that do to the middle class, poor and retired? The answer is that their standard of living and quality of life will be reduced — perhaps substantially.
CAPITOL State adopting new way to bill users for energy delivery BY MICHAEL HILL The Associated Press
New York is phasing in a new billing system for electric and gas delivery that guarantees utilities steady revenues even when sales fluctuate and that exposes customers to small surcharges or rebates in their monthly bills. It’s called revenue decoupling, and it replaces the traditional way of charging for energy delivery in which the more customers consume, the more revenue utilities collect. Regulators in New York and other states with decoupling say the traditional system is outdated in light of the national push to conserve energy. They maintain that utilities had scant incentive to promote energy-efficient appliances and other conservation measures because that would reduce revenues for the companies. “If your business is selling cars and suddenly you’re being asked to sell fewer cars, unless you get compensated differently, that isn’t going to work and you’re not going to be in business for long,” said National Grid vice president for regulatory affairs Janet Gail Besser. Under decoupling, the state Public Service Commission sets the amount of revenue a utility can collect for delivering gas or electricity over a period of time based on predicted sales. Revenue forecasts are checked against actual sales, usually every six months. If sales are higher than expected over the period — meaning customers are paying more for delivery than expected — customers get a rebate after the end of the period as part of a “true up.” If sales lag, they get a surcharge. Decoupling in New York only affects delivery charges — the money customers pay to utilities to deliver energy through pipes and wires — not the actual commodity charges for electricity and gas. .......................>>>>............................>>>>..........................http://www.dailygazette.net/De.....r00901&AppName=1
Don't look for a change any too soon. National Grid is possibly looking at 2011 or 2012. MAYBE!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
New York is phasing in a new billing system for electric and gas delivery that guarantees utilities steady revenues even when sales fluctuate and that exposes customers to small surcharges or rebates in their monthly bills.
Because WHY?????? THE WORLD WIDE WEB AND INFO.......we know how you function....we know about your guaranteed contracts(dorks) and we know we are getting ripped off.....I cant afford you and you cant afford me......
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(12-02) 07:36 PST -- In a bid to appease publishers, Google has updated its search programs, allowing publishers who charge for their content to limit users to only five free page views per day.
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-------------------------------------------------------------------------------- More Technology GPS makers looking for new way 12.06.09 Less to fear in online banking than you think 12.06.09 New game for PlayStation 3: Crunching numbers 12.05.09 Skiff to have wireless service for publications 12.05.09 . -------------------------------------------------------------------------------- Many publishers impose this type of limits on free page views for Web surfers who visit their sites directly. If you browse the WSJ site directly, for example, you could browse a certain number of articles for free, but once you reach the set limit, you would be prompted to register or subscribe to the site.
But, in the past, Google refused to implement these limits on its search results and articles in its Google News service. If you only clicked through WSJ articles using Google News, for example, your entries weren't counted toward the site's limit.
Because of this stance, Google has drawn the ire of some news publishers. Media tycoon Rupert Murdoch has called Google many names and has threatened to remove its news assets (like Fox News and the Wall Street Journal) from Google search. There were even discussions of Murdoch partnering with Microsoft, which would pay to exclusively index the content.
Google has stood firm and refused to pay news publishers for indexing their content. But the search giant now seems to have acknowledged the turmoil the newspaper industry is going through and is now making changes to accommodate the much disputed pay walls on certain Web sites.
The changes to Google's First Click Free program let publishers prevent unrestricted access to subscription Web sites. So if one user clicks on more than five articles in a day, he/she will be automatically routed to subscription purchase pages. Google's John Mueller explains in a blog post that the company hopes "this encourages even more publishers to open up more content to users around the world!"
On Tuesday, the same day that Google announced the changes, Rupert Murdoch spoke at a Federal Trade Commission workshop on the future of journalism in the Internet age. Murdoch explained that good journalism is an expensive commodity and criticised sites that profit from reusing news articles by others without paying. He did not mention name of sites, but this has been seen as a direct attack at Google and its News service.
Arianna Huffington of the Huffington Post also spoke at the workshop on Tuesday, and accused Murdoch of confusing aggregation of news with misappropriation. Huffington said she strongly believes in aggregation next to original content, noting that some of Murdoch's own sites aggregate eternal content as well.
Rupert Murdoch is expected to erect more pay walls for it news properties in the coming months.
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