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February 26th, 2010 ccblogger
The number of American citizens that are projected to go on vacation this year is dramatically lower than it has been for the past several years. More and more Americans are concerned with putting food on the table, instead of going on vacation. As the economy continues to spiral downward, airlines are desperately trying to keep their businesses up and going.
Many different airline and airfare booking agencies have had to drastically lower the price of airplane tickets. This is a completely different strategy than they had to employ only a few years ago. When the price of oil got to be over $140 per barrel, airlines took advantage of the surge and began charging high airfares. However, the tide has turned in a major way.
In order for many of these airlines to stay in business, they are having to cut the price of a seat. In order to fill seats, the price of an airplane ticket has dropped over 40% in the past year. Similarly, the price of an airplane ticket has recently reached a two-year low.
It has been quite some time since airlines have had to deal with this drastic of decrease in ticket sales. After September 11, 2001, many airlines faced bankruptcy simply because consumers were afraid to fly due to the ever-increasing threat of terrorist attacks. Now nine years later, consumers may think twice about flying. Not necessarily because of terrorism, but because of their pocketbooks. If someone spends, say $500, on airline tickets, there is no telling when that $500 will be desperately needed.
However, you can capitalize on discount airplane tickets by using your cash back credit card. Not only will you be able to fly for a discounted rate, but you will be earning points with your cash back credit card program. Combining these two great “offers” is the way to go. Earn points while you fly and fly for almost free.
Posted in Cash Back Credit Card, Economy | No Comments »
March 12th, 2009 Admin
Have You Considered Swapping Your Home?
More and more people have been affected by the current housing crisis. Millions of homeowners are unable to sell their home for as much as they owe on it. Millions more simply can’t make their mortgage payments. However, a new real estate trend is sweeping the nation and this one has real estate agents stumped.
The trend is home swapping. You read that right. Home swapping. Here’s how it works: One potential home buyer wants a bigger house. One potential home seller wants a smaller house. The buyer can’t get necessary funding without selling their primary residence first. So, the buyer and seller simply “sell” their houses to each other. Each of the closings would have to happen almost simultaneously in order to avoid any sort of financing hang-ups.
Believe it or not, this trend is sweeping the nation. Of course, both the buyer and seller have to agree to the terms of the swap. Similarly, both the buyer and seller end up being both a buyer and seller of one another’s home.
There isn’t really a way to track how large of a trend this is becoming because the National Association of Realtors does not keep track of home swaps in its annual averages. Stephanie Singer, of the National Association of Realtors, said, “We haven’t seen this happen on a very big scale. It can be a very complex transaction, especially if you’re crossing state lines.” However, no one can be certain how often this is happening.
There have been home-swapping websites created to facilitate such transactions. MK HomeSwap, GoSwap.org, Domuswap.com and OnlineHouseTrading.com are some of the most popular home swapping websites out there.
Areas that have been hit the hardest by the housing collapse are also the areas that are seeing the most swapping. Southern California, Arizona, Nevada and Florida are home to many home swaps per year. This is proof that homeowners are getting creative, especially when they have been hit hard by the housing market.
If you have been experiencing problems with your current mortgage or have had a hard time selling your home, you might want to consider listing your home on a home swap website. It may be your only opportunity to get out of your current mortgage without losing money on the transaction.
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March 10th, 2009 Admin
We, as a country, have already watched several big-name retailers go out of business. Mervyns, especially, comes to mind. Mervyns was a department store that sold products for low prices. Where are they no? Non-existent.
The retail industry is probably the most vulnerable right now. Customer analytics shows consumers are spending less and less of their valuable income on non-necessity items. Retailers spend over 10 years in an atmosphere that encouraged consumers to get into debt.
Now, consumers can’t get the same financing they could a few years ago. American families have had to cut back in every aspect of their lives, including unnecessary spending.
Large financial lenders have had to cut back their lending to retailers as well. Wachovia, GE Capital and CIT Group (some of the retail industry’s biggest lenders) have had to tighten their lending terms. Their reasoning is to reduce the exposure to nationwide retailers. These terms have made it much more difficult for retailers to “find capital to reorganize under bankruptcy-court protection.”
So, what does this all mean? There are likely to be a lot more retail liquidations in the coming months.
Circuit City Stores filed Chapter 11 bankruptcy protection in November. On January 9, the electronics superstore said that it faced possible liquidation if an acquisition or cash infusion deal didn’t work out.
Goody’s Family Clothing recently announced that it will be liquidating all of its remaining 287 stores. This announcement came just three months after it “exited” bankruptcy status.
Against All Odds USA, a clothing chain, also announced that it will enter Chapter 11 protection. It will enter this protection in hopes of being sold or being reorganized.
Standard and Poor’s recently reported that nine major U.S. retailers and restaurants face a significant risk of default. Among these are Loehmann’s Holdings, Duane Reade Holdings and Finlay Enterprises. One year ago, S&P had only six companies on its list.
Michael Henkin, managing director and co-head of the restructuring group at Jeffries said, “A lot of retailers survived through the holiday season because they built up their inventories in the summer before anyone, like their vendors, knew it would be this bad. But now you will see a lot of filings.”
Loehmann’s President, Robert Glass, said, “We have sufficient cash to sustain our operations, and pay the interest on (our) notes. Our parent has put money into the business, and has continued to be very, very supportive.”
Many of the retailers that are in grave danger of being liquidated say that they are “comfortable” in their current position. But, the fact of the matter is that many of these companies will be out of business by the end of 2009.
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January 14th, 2009 Admin
Predictions for 2009 Job Losses
How many jobs will be lost in 2009? No one knows for sure. But, there are some pretty scary predictions out there.
An estimated 2 million more jobs could be lost in 2009. 2.6 million jobs were lost in 2008. The Conference Board issued a report that showed exactly where its Employment Trends Index fell to. The index recently fell to 99.6 (down 1.6% from just last month).
Gad Levanon, the Conference Board senior economist said, “The continued deterioration in the Employment Trends Index signals that no turnaround in the labor market is expected in the near future.”
The Employment Trends Index has continued to decline for the past 17 months. It has dropped more than 1.6 percent in the past six months.
Many Americans wish the index would change, but the truth is that it just isn’t getting better. Wachovia’s chief economist John Silvia said, “I know that this is frustrating for a lot of people because they would like to see a change in the trend. But what we’re seeing is the same as before.”
Silvia predicts that the worst is already behind us. He continued, “A lot of companies have already cleared the decks in 2008. Given that we’ve already claimed a loss of 2.6 million jobs, we can probably expect to see another million and a half.”
However, things don’t look so good for those who are out of work. The job market continues to decline as more and more companies resist hiring. In fact, “the jobs hard to get component” of the Employment Trends Index went from 37.1 percent in November to 42 percent in December.
It is getting harder and harder to become employed as millions of Americans look for work. Silvia said, “We can expect to see a further decline in the next six months, but we’ve probably already seen the biggest number we’re going to see.”
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January 13th, 2009 Admin
The Truth About the Bailout
Millions of Americans were against the idea of a ‘bailout plan.’ Millions more were in favor of the plan. Once the bailout plan was passed, it seemed as though Americans counted on this as the way to save the economy.
The bailout plan was passed in a matter of only 10 days. The bailout plan was passed to treat symptoms, not the disease. The bailout plan is merely a way for the government to apply band-aids to a large, open wound.
The government promised that the bailout plan would remove the cancer caused by the failure of Fannie Mae, Freddie Mac and the insurance-giant, AIG. However, all it did was prolong the illness.
Billions of dollars will be spent fixing the balance sheets of banks around the country. However, this does not fix the root of the problem. The root of the problem is that millions of homes around the nation are worth a considerable amount less than the outstanding balance of the homeowner’s mortgage.
These billions of dollars are “destroying Main Street’s balance sheet.” This money is obliterating the value of home-based securities that American Taxpayers are about to start purchasing.
Simply put…the government is trying to fight home foreclosures with an extremely inefficient tool. The tool? Loan modification programs that cover up the problem instead of treating it. As long as the problem is masked instead of fixed, foreclosures will continue to set record numbers.
Todd Harrison of MSN.com wrote, “Defaults become delinquencies, which become foreclosures, which become evictions, which become repossessions, which flood the market, depressing prices as supply outstrips demand.”
It used to be that home prices only went up. Not in this market. Home prices have plummeted and the bailout plan really isn’t doing anything to treat the problem.
Here are a few things for the government to keep in mind…
Teach the American people to simply live within their means. Less is more. Simplistic living could solve this crisis better and faster than the bailout plan ever could. Bigger is not necessarily better.
These principles may be the only way to get America out of the mess it has created…not the bailout plan.
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January 12th, 2009 Admin
Only One Bank?
Doesn’t it seem wrong to you that banks don’t have to track exactly how they used bailout money? The government has handed millions of dollars out to banks around the country with no strings attached. They didn’t say, “Here’s some money to get you back on track, but how you spend it needs to be itemized and recorded.”
No, instead the government passed out this money like candy. There weren’t any rules about how the banks should use the money. And, the banks don’t have to report how they used the money. Doesn’t that seem a little sketchy to you?
The U.S. Treasury has undergone a lot of scrutiny for not making bailout banks account for the money they received. On the flip side, it does learn from its mistakes. 200 or more banks were not required to keep a log of how they used their money. Only 1 was.
Citigroup was given about $20 billion in bailout money. It promised that it would use “its reasonable best efforts to track the money and will send the government quarterly reports.” But, has the U.S. Treasury really learned from its mistake?
Seven other banks were given money the same day Citigroup was. However, these banks were not required to keep a log or track how they spend the bailout money. Why Citigroup? Why is Citigroup the ONLY bank being required to track how its spends government money?
The U.S. Treasury says that it doesn’t want to “impose a burden on institutions it deems healthy.” Surely Citigroup isn’t the only unhealthy bank in the nation. Why are ‘healthy’ institutions getting government money anyways? Why is the U.S. Treasury handing out our taxpayer money and not requesting these banks to track how they spend it?
Neel Kashkari, a Treasury official, gave this shocking defense…”It’s not going to be perfect. And as you know, you put $1 into an institution, it’s impossible to follow where that $1 goes.”
Shocking and ridiculous. What will it take to get government officials to be honest and responsible when it comes to spending our money?
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December 18th, 2008 Admin
Will the Final Rate Cut Matter?
The key interest rate is expected to be lowered to 0.5%. Although nothing has been finalized or announced, the Fed is expected to lower this rate. Will lowering key interest rates really make that much of a difference?
Experts don’t think so. Instead, they think that it will send a signal to the American people. This signal would mean that the central bank would have to take more drastic and creative measures to pull the economy out of its slump.
When the Feds do cut interest rates for the last time, it will mark the 10th interest rate cut for the Feds and Ben Bernanke. The Federal Reserve has been cutting interest rates sine September of 2007. Some experts think that this will be the last cut. They couldn’t possibly go under 0.5%. However, some others think that the Feds will be forced to lower rates to 0.25%.
Why do the Feds cut interest rates anyways? Federal interest rate cuts usually help the economy. When the Fed cuts its interest rate, banks and other financial institutions are forced to cut their prime rate as well. The Federal interest rate has a significant affect on credit card rates, home-equity rates, etc. Yes, when the Feds drop interest rates, it usually helps out the economy as a whole.
There hasn’t been any significant evidence that shows that federal rate cuts have stimulated the economy at all. David Resler, chief economist with Nomura Securities International Inc. said, I think the Fed is going to cut rates and it’s going to be intended as a signal that the Fed will do whatever is necessary to keep the economy from sliding too deeply in this recession.”
Once the Fed cuts the interest rate this time, there won’t be much room to cut it after that. It isn’t likely that Ben Bernanke will cut interest rates at all after this point.
Kurt Karl, chief U.S. economist with Swiss Re, said, “Once you get rates down to zero, it’s hard to move off of zero. Plus, you’ve made the price of money free and it shouldn’t be. There should be come cost to loans. The Fed may hint that this next rate cut is sufficient. But the other think the Fed will emphasize is that it has more tools, more arrows in the quiver. The Fed’s job is not over just because there may be no more interest rate cuts.”
What else should the Federal Reserve and Ben Bernanke do to stimulate the U.S. economy and bring it out of the depths of this recession?
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December 2nd, 2008 Admin
Investing in the Obama Recovery Plan
The main reason why President-Elect Barack Obama was elected was so that he could fix our crippled economy. When it comes down to it, it is always about the economy. Think back to past-Presidents. What are they remembered for?
FDR is remembered for The New Deal. Ronald Reagan is remembered for his economic reforms. Bill Clinton is remembered for transforming welfare and free-trade. What will Barack Obama be remembered for?
Obama promises to overcome this economic crisis that was “created” by President Bush. Whether you agree with that statement or not, Obama does have a plan for the White House. There are three main things that Obama has promised to investors. Investors and consumers alike will be encouraged to buy:
1. Anything green, especially the U.S. dollar
2. Anything with its “hand out”, especially the government
3. Anything like a cement truck
Obama is going to push alternative energy, municipal bonds and infrastructure. Here are three ways that you can invest in the Obama plan.
1. Go green. Obama is pushing hard for alternative energy. Petroleum is expensive and, for the most part, out of the control of the American people. Wind and solar power are expensive too. The cost curve is going down for alternative energy. Stocks in the alternative energy realm can be volatile. This makes it a prime arena for investors.
2. Buy American. Obama is trying to convince the country to buy more American products. If more people bought American-made goods, we could keep more money within our borders. Buying American products would stimulate the economy and get it breathing again.
3. Buy government bonds. Buying government bonds really hasn’t been all that popular in recent years. Investors can buy these bonds and get 10 percent back when they help out local communities. A Manhattan financial adviser, Lewis J. Altfest, recently asked, “Where does anyone come off giving you triple tax-free for a rate so much above Treasurys? It’s not an overstatement to say it’s unheard of.” This is the way to invest because the government is bound to really pay up to investors.
These are the three ways to invest under Obama’s plan. Obama will hopefully stimulate the economy enough to make these times better ones. Only time will tell if his plan will actually work.
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October 17th, 2008 Admin
The Average American Income
America has always been known as the land of “opportunity.” Citizens have come here from other countries with hopes of creating a better life for themselves and their families. So, how much does the average American make every year? Certainly, our people live in comfortable houses and enjoy many other “luxuries”…for the most part. Did you know that half of the American population makes less than $32,000 per year?
That is an incredible number. I personally was shocked to hear those statistics. These statistics were recently released by the Internal Revenue Service. Americans who made the most last year (the highest earning one percent of all taxpayers) made over 22 percent of all of the income that was reported to the IRS. The lowest earning 50 percent of employees made, collectively, 12.51 percent of the total amount of U.S. income. That means that over 1.4 million taxpayers earn 22 percent of the income. On the other hand, 68 million people share only 12.5 percent.
Those 1.4 million people who make the most of American income pay over 39 percent of all federal income taxes. Only 2.99 percent of federal individual income taxes are paid by the bottom 50 percent of earners. These numbers are from individual income-tax returns from 2006. The IRS recently analyzed these returns and reported its findings.
Income tax is something that nobody wants to pay. Luckily, those people who make less aren’t taxed as heavily as those who do make more annually. $32,000 certainly isn’t a high salary, especially for those people who are trying to raise a family on such a small income. The failing economy certainly isn’t helping anything. Hopefully, the new bailout plan will stimulate the economy enough to generate cash flow into our economy.
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