Wednesday, October 3, 2012

Need to Ask Again - Why are interest rates being kept at a low level?


According to the Federal Reserve the interest rates are being kept low for the following reasons: 
        To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens... Low interest rates help households and businesses finance new spending and help support the prices of many other assets, such as stocks and houses. (http://www.federalreserve.gov/faqs/money_12849.htm

I am having difficulty accepting these explanations when reviewing the data that others report:

    1)Business loans under $1 million fell 13 percent between June 2007 and June 2011, and the amount lent has declined 19 percent when measured in inflation-adjusted terms, Federal Deposit Insurance Corporation (FDIC) statistics reveal. (http://www.american.com/archive/2012/may/why-arent-banks-lending-to-small-business-ask-bernanke)
   2)For 2011, the number of reporting institutions of 7,632 fell nearly 4 percent from the number in 2010, continuing a downward trend since 2006... The total number of originated loans of all types and purposes reported fell by about 780,000, or 10 percent, from 2010, in part because of a 13 percent decline in refinancings. Home purchase lending also fell, but by a more modest 5 percent. (http://www.ffiec.gov/press/pr091812.htm)
  3) ...through Q1 2012,  the total household net worth climbed quarter-over-quarter to $62.9 trillion. That's still something of a drop—about 5 percent compared with $66.2 trillion in 2007. (http://www.businessinsider.com/household-net-worth-2012-6) (emphasis added)


The reports of above do not support that lower interest rates helps households and businesses. So I look at the impact on unemployment for a justification - Does a lower interest rate correlate with an increase in employment? Wanting to be fair, I used ten years worth of data from the Bureau of Labor Statistics and the Federal Reserves effective Federal Fund Rate reports to seek a correlation. Below is a chart with these average annual statistics for each - 
Unemployment doesn't appear to decrease with lower FFR
Looking at the chart for years 2005, 2006, and 2007 - it indicates that unemployment was decreased when Fed Fund Rates were rising. In 2008, the Fed Fund Rate lowered and the unemployment rate increased. In the following years (2009-2012) the interest rates have remained the same and the unemployment varied slightly. The ten year overview comparison of annual data does not indicate a correlation between lower Fed Fund Rate and lower unemployment. In fact, one could present an argument that there are indications of the opposite impact when looking at the chart. 

It appears that, there are fewer business and home loans being made, household values fell 5% since 2007, and the unemployment rate correlation is questionable. So, I have to ask again, Why are interests being kept so low?



Wednesday, June 27, 2012

Good Therapy - Not a Good Ask

video
I just created this video using Xtranormal website tools - It just makes me laugh. I have worked in the nonprofit sector for over 30 years - I have helped raise  multimillions of dollars for so many good causes. These last few years, with the economic downturn, I have seen so many, many nonprofits struggle like never before. Then today, as more needs presented themselves, and dollars seem too stretch far enough, making this video, just made me laugh and put it all into perspective. The reality of the nonprofit world is that the nonprofit sector, almost always, really wants to do the best possible  and the donor, almost always, really wishes he/she could do more - we each really do just want to make a good difference and any step forward we make in that direction, is.. a beautiful dance :<)

Monday, April 23, 2012

Hit Pause to Avoid Leading the Bandwagon

I just read on Forbes online (Abram Brown - Mexican Bribery Scandal Could Cost Wal-Mart $4.5 Billion; Shares Down 4%, April 23 ) that the WalMart bribery scandal could cost the mega-store $4.5 billion dollars. My initial reaction was, if bribery was used, 'heads will roll' for anyone who allowed those short-sited decisions! Then, I thought perhaps I need to gather more information: So, to put $4.5 billion into the possible perspective of Walmart, according to walmartstores.com 2011 financial report -
  • Consolidated net sales for the full year were $443.9 billion, an increase of 5.9 percent.
  • Consolidated operating income for the full year was $26.6 billion, up 4.0 percent from last year.
  • Walmart ended the year with free cash flow of $10.7 billion
Looking at Walmart's financial information makes my initial reaction to the potential loss change from "heads will roll' to maybe a "slap on the wrist." My first reaction to the Walmart story is only one example that points to a cultural shift caused by information now being so quickly accessible and feedback possibilities immediate. It has been a long-recognized human behavioral trait, that if a person speaks or writes (even stronger once it is written) a position, they will tend to defend that initial stance even when subsequent facts dispute it. Once a person makes a stand, it is harder for them to move from it.

Social media and online news have created an almost atomic catalyst for community response. This power should give us cause for concern. While information is just a click away, the formation of an appropriate response should require a broader look than the first twitter notice read and a deeper examination then a count of multiple 'shares' from a Facebook post. The newly created desire to be the first-in-the-know (e.g. - the commercial catch phrase "that is so 29 seconds ago") has allowed an opening for us to be manipulated and  has put the term 'bandwagon' into 21st century technology hyper speed.

Any  online call to action that requires act now, think later should probably be held suspect. As our societal culture evolves with high tech mass communication, it may behoove each of us to utilize our internal pause button long enough to do a little research on a subject...particularly during an election season.
  

Thursday, February 9, 2012

The Power of Words

Today is our gift. The challenges may be harder to unwrap, but this moment is our present. This video offers a great reminder - http://www.youtube.com/watch_popup?v=Hzgzim5m7oU&vq=medium

Saturday, January 21, 2012

911 lesson - Never Go through life saying "I should have"

Boatlift, An Untold Tale of 911
This video (click Boatlift) is so moving - With much respect, I offer thanks to the people who answered the call for help. Without question, without hesitation, they came to help each and all - thank you for the heroism and for bringing to light, out of that horrific darkness, the goodness that resides in the hearts of humankind. 

Sunday, January 1, 2012

Reasons to Laugh in 2012

I believe like many, I am ready to close out 2011. I thank the past year for the blessings that were born out of the struggles, but gladly greet in the 'new year.' So to befriend this fledgling relationship with the next 364 tomorrows, I meet it with a promise of appreciation and hope for joy. Looking to solidify my resolution, I found this youtube video and once again am reminded that laughing is just good for our health! (click on the above title to view) Happy 2012 to each and all! May you greet each day with laughter and say goodnight with a good laugh!