Sep 20 2013

Will rising rates cause more banks to lend to US consumers? Depends on where you look.

One item that may push banks into lending more to regular consumers is the rise in rates.  Rates and constricted margins have made it largely unattractive to lend to American consumers.  Many Americans are in the process of slowly deleveraging and with rates at very low levels, margins may not be enticing enough for banks to make the plunge.  That has been one approach as to what is going on with lower rates in the market.  Yet with the Fed hinting at a taper coming online sooner rather than later, the market has been in a seesaw of ups and downs.  Loan growth has been rather slow over the last few years and there has certainly been a peak in what has been loaned out to consumers.  Yet higher rates may shift more demand into lending as rates become more attractive.

loans and leases YoY
Time will only tell but for now, the Fed is still guiding the markets with their policies.

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Aug 15 2013

Cisco and Wal-Mart cutting back as economy slows down

Both Cisco and Wal-Mart are putting on the brakes to the unlimited recovery theme. Cisco is chopping their workforce by 4,000 employees or 5% of their entire crew. They are focusing on increasing the bottom-line which seems to be a them roaming throughout the economy. Corporate profits are up but much of the gains are largely coming from companies trimming down on wages, employees, and other factors that are likely to make a positive impact on most employees. Is this good? Good for who is probably the better question. Executives have become so narrowly focused on ripping to shreds their employees that then wonder why places like Wal-Mart are now issuing sales warnings. This is a big deal. The entire notion that trickle down economics is positive only works if things actually trickle down. There seems to be some problems with this entire theory when the only method of expanding your bottom line is firing workers.

The stock market has been on a tremendous rally largely by this kind of activity but at a certain point you need your consumer base to grow and expand. Cutting down wages doesn’t really seem like the best way to grow the economy and increase income inequality even more so driving us to a new Gilded Age.

Jun 27 2013

Dodging the financial pitfalls as a married couple

Getting married is a joyous time for most married couples, but both parties have to realise that things change with marriage. When you get married you go from being ‘I’ to being ‘we’. Most of the decisions you make and things you do are now done jointly and communicating effectively becomes all the more important. Financial situations can also change and there are a few financial pitfalls that you need to try and avoid as a couple.

Failure to discuss finances

Although it can seem strange when you’ve been used to keeping your finances to yourself, it is important to be open about your financial situations and debts. Many married couples keep areas of their finances secret for whatever reason but this can lead to many problems. You should make sure you are open and honest about all areas of your finances from the very start of your marriage.

Pooling your debts

While many couples open joint accounts and pool their income after getting married, one mistake to avoid is pooling debt. This can turn messy should something go awry in the relationship. By keeping your debts separate – not secret, just separate – there will be clear boundaries about who is responsible for which debts. If one of you has debts that become unmanageable you should seek professional advice from places such as Consolidated Credit.

Failing to budget

As a married couple, it is important to ensure you budget effectively. This means getting your heads together and drawing up a proper budget plan, which details your joint income, outgoings, and other financial commitments. Failing to do this can mean that you run into financial problems more quickly and more easily, which can lead to increased strain on your budget and even your relationship.

Failing to plan for the future

As soon as you get married, you become partly responsible for the financial wellbeing of the other person. Your responsibility grows even more when you start a family. If you don’t plan for the future in terms of finances, you could end up leaving your other half and your kids high and dry. This means planning things such as life insurance, a will, and establishing a savings account for your future or that of your child/children.

Having no financial backup

It is important that you both think about how you would manage in the event of an emergency, and have some financial backup in place with this in mind. Getting some savings together means that if any financial problems arise or one of you loses your job, you have some money to keep you going.

These are all financial pitfalls that you need to avoid when it comes to financial management as a married couple.

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