Sunday, November 4, 2007
MySpace Gets Social With Google
Internet social networking leader MySpace is joining Google Inc.'s platform for sharing applications across the Web - a concept that threatens to undermine the rapid growth of their common rival, Facebook Inc. Google trumpeted the MySpace coup Thursday in a meeting with reporters, two days after revealing its plans to create a distribution network for interactive applications known as "widgets." The programs - created by a hodgepodge of independent software developers and other Web sites - make it easier to share music, pictures, video and other personal interests on social networking sites. MySpace, owned by News Corp ., was conspicuously absent from the initial list of Web sites that agreed to host the widgets from Google's "OpenSocial" platform. That raised questions whether MySpace might try to build its own proprietary platform, much like Facebook has already done. But MySpace and Google executives said they began discussing an open-ended system that culminated in OpenSocial more than a year ago. The formal announcement about the alliance was timed to coincide with a party that Google is throwing for software developers Thursday evening in Mountain View. Google also disclosed for the first time that another popular social networking site, Bebo.com, will host widgets supplied from its platform, which is trying to create a common coding standard for the applications so they work on hundreds of Web sites. Other previously disclosed participants networks include social networks Friendster, hi5, LinkedIn, Ning and the Google-owned Orkut. All told, OpenSocial's potential audience is expected to exceed 200 million people. But OpenSocial was an unimpressive alternative to Facebook's platform until MySpace confirmed its participation, said Gartner analyst Ray Valdes. "This is more likely to get developers' attention," Valdes said Thursday. Although Facebook has been growing faster, MySpace remains the Internet's biggest social network - a hangout where people look for dates, share their passions, make new friends or just connect with familiar faces. In September, MySpace's U.S. audience totaled 68 million compared with 30.6 million for Facebook, according to the latest data from comScore Media Metrix. Google's one-size-fits-all approach contrasts with Palo Alto-based Facebook's, which relies on unique coding that has prevented widgets developed for its sites from working at other places on the Web. Facebook's formula has been highly effective so far, spawning more than 8,000 widgets in the five months since the platform started. Including visitors from outside the United States, Facebook says it now has 50 million members and has doubled in size since May. Facebook's booming membership encouraged Microsoft Corp. to pay $240 million for a 1.6 percent stake in Facebook last week - a deal that valued the 3-year-old startup at $15 billion. Now, it looks like Google and MySpace are forming a tag team to duel Facebook and Microsoft. "This clarifies the battle lines, but it's not just a two-way conflict," Valdes said. That's because other large Web sites like longtime Google rival Yahoo Inc., online auctioneer eBay Inc. and Internet retailer Amazon.com Inc. haven't picked a side yet. It's also possible that those Web sites might introduce competing platforms for social networking widgets. Because social networks are attracting so many users, they are emerging as potentially lucrative advertising channels. Google already has been placing text-based ad links on MySpace, just as Microsoft has been doing at Facebook. The partners share the ad revenue with each other. Social networking widgets are expected to yield a myriad of other moneymaking opportunities, but for now Google has no plans to insert ads in its OpenSocial network. MySpace CEO Chris DeWolfe is confident that OpenSocial will transform his site into a hotbed of communal applications. "OpenSocial will become the de facto standard for developing applications right out of the gate," DeWolfe said. Facebook was invited to join OpenSocial, said Vic Gundotra, a vice president of engineering for Google, and Schmidt said the door remains open. "Everyone is invited to join," Schmidt said. "There has been no effort to discriminate or exclude." Facebook didn't get any notice about OpenSocial, according to company spokeswoman Brandee Barker. "When we have had a chance to understand the technology, Facebook will evaluate participation relative to the benefits to its 50 million users and 100,000 platform developers," she said.
Financial crisis may lead to unexpected changes in the global economy
LONDON- The crisis plaguing the financial market could lead to some unexpected changes in the shape of the global economy, according to Roger Bootle, economic adviser to accountants Deloitte.
The effects of the crisis are likely to be seen in a re-pricing of risk, lower appetite for lending and borrowing, slower economic growth, interest rate cuts and a significant fall in the dollar, he said.
While most of these are already starting to be seen, Bootle predicts even wider implications.
"The end result could be an increase in the political pressure on countries such as China to alter their exchange rate policies. The upshot is that the financial crisis may trigger events that lead to unprecedented changes in the shape and dynamics of the world economy," he said.
The financial crisis was sparked by the fallout in the US sub-prime market, but its origins run deeper. The seeds of the crisis were sown by two developments that occurred years before -- namely the sustained period of ultra-low global interest rates in the early 2000's and an excessive appetite for risk, he added.
As the risk element becomes better balanced, the heady-returns generated by some asset classes in recent years may be a lot harder to find in the years to come, even if the world economy were to remain strong.
Bootle sees the US economy taking a hit, with GDP growth likely to slow to just 1.7 pct next year and US interest rates falling to 4.25 pct. The euro-zone and the UK are not expected to escape unscathed. Economic growth in the euro-zone is set to slow from 2.7 pct this year to about 2.2 pct next year. Meanwhile, the UK is seen experiencing a slowdown in growth from 3 pct to about 2 pct, prompting interest rates to fall to 5 pct by the end of next year, said Bootle.
"This combination of events is likely to result in a significant fall in the dollar. This will increase the political pressure on the super-saving nations, such as China, to alter their exchange rate policies and to boost domestic spending," he added.
The effects of the crisis are likely to be seen in a re-pricing of risk, lower appetite for lending and borrowing, slower economic growth, interest rate cuts and a significant fall in the dollar, he said.
While most of these are already starting to be seen, Bootle predicts even wider implications.
"The end result could be an increase in the political pressure on countries such as China to alter their exchange rate policies. The upshot is that the financial crisis may trigger events that lead to unprecedented changes in the shape and dynamics of the world economy," he said.
The financial crisis was sparked by the fallout in the US sub-prime market, but its origins run deeper. The seeds of the crisis were sown by two developments that occurred years before -- namely the sustained period of ultra-low global interest rates in the early 2000's and an excessive appetite for risk, he added.
As the risk element becomes better balanced, the heady-returns generated by some asset classes in recent years may be a lot harder to find in the years to come, even if the world economy were to remain strong.
Bootle sees the US economy taking a hit, with GDP growth likely to slow to just 1.7 pct next year and US interest rates falling to 4.25 pct. The euro-zone and the UK are not expected to escape unscathed. Economic growth in the euro-zone is set to slow from 2.7 pct this year to about 2.2 pct next year. Meanwhile, the UK is seen experiencing a slowdown in growth from 3 pct to about 2 pct, prompting interest rates to fall to 5 pct by the end of next year, said Bootle.
"This combination of events is likely to result in a significant fall in the dollar. This will increase the political pressure on the super-saving nations, such as China, to alter their exchange rate policies and to boost domestic spending," he added.
Saturday, November 3, 2007
THE STEEP APPROACH TO GARBADALE
Banking is all about trust. We trust that the bank will have our money for us when we go to get it. We trust that it will honor the checks we write to pay our bills. The thing that's hard to grasp is the fact that while people are putting money into the bank every day, the bank is lending that same money and more to other people every day. Banks consistently extend more credit than they have cash. That's a little scary; but if you go to the bank and demand your money, you'll get it. However, if everyone goes to the bank at the same time and demands their money (a run on the bank), there might be problem.
Even though the Federal Reserve Act requires that banks keep a certain percentage of their money in reserve, if everyone came to withdraw their money at the same time, there wouldn't be enough. In the event of a bank failure, your money is protected as long as the bank is insured by the Federal Deposit Insurance Corporation (FDIC). The key to the success of banking, however, still lies in the confidence that consumers have in the bank's ability to grow and protect their money. Because banks rely so heavily on consumer trust, and trust depends on the perception of integrity, the banking industry is highly regulated by the government.
Even though the Federal Reserve Act requires that banks keep a certain percentage of their money in reserve, if everyone came to withdraw their money at the same time, there wouldn't be enough. In the event of a bank failure, your money is protected as long as the bank is insured by the Federal Deposit Insurance Corporation (FDIC). The key to the success of banking, however, still lies in the confidence that consumers have in the bank's ability to grow and protect their money. Because banks rely so heavily on consumer trust, and trust depends on the perception of integrity, the banking industry is highly regulated by the government.
Use Credit Card Travel Rewards This Holiday Season
For most of us, the holidays mean travel. Don’t be a grumbling grinch about it. Use your credit card travel rewards to make the most out of that 300-mile trip to see Great-Aunt Bertha. Jason Giacchino has several tips on how to spend wisely during the holidays, one of which is to “develop a buying strategy.”
It’s a great idea. Gas purchases and hotel stays can rack up rewards to help you enjoy a little post-holiday stress release. Check out Mr. Credit Card’s post on Kiplinger’s recommended list of credit cards for various categories.
The Capital One Platinum Plus MasterCard came out on top in the travel card category, according to Kiplinger’s. Mr. Credit Card agreed with this choice, as well as the magazine’s choice on best gas card, the BP Rewards Visa. That card offers 5% rebates on BP purchases and 2% on other travel and dining expenses. But Mr. Credit Card makes a good point - not everyone uses BP to fill up. I certainly don’t; I think their gas tends to cost more than competitors.
For non-BP users, Mr. Credit Card recommends the American Express Simply Cash Card. It is a business credit card that pays 5% rebates on gasoline and certain types of business expenses. The site mentions that a person can obtain a business credit card without actually owning a business; they will simply be treated as a sole proprietor. It’s worth a try!
For those who will need to fly instead of drive, Kiplinger’s has a recommendation on that too. Here’s what Mr. Credit Card had to say about the magazine’s choice, the Citi Premierpass Card Elite Level.
While this is a very good card, I think there are just too many types of travel reward cards to simply pick one. What they failed to mention is that this card will only suit those who travel a lot because you can earn points from the dollars you spend and also from the miles you fly. For those of us who are not really frequent flyers, then this card may not be suitable. Plus, Citi’s ThankYou Network airline reward system could get complicated as they have “fixed options” and “flexible options” for redeeming points for airline tickets. Check out our review of Citi’s Rewards for more details.
Something else to keep in mind is that the Platinum Plus MC (best travel card) is for consumers with “excellent credit,” according to MasterCard’s web site. If you can get it, go for it - and happy traveling!
Posted in Capital One credit cards, Citi, Featured, Article, business credit cards, American Express Credit Cards, Credit
It’s a great idea. Gas purchases and hotel stays can rack up rewards to help you enjoy a little post-holiday stress release. Check out Mr. Credit Card’s post on Kiplinger’s recommended list of credit cards for various categories.
The Capital One Platinum Plus MasterCard came out on top in the travel card category, according to Kiplinger’s. Mr. Credit Card agreed with this choice, as well as the magazine’s choice on best gas card, the BP Rewards Visa. That card offers 5% rebates on BP purchases and 2% on other travel and dining expenses. But Mr. Credit Card makes a good point - not everyone uses BP to fill up. I certainly don’t; I think their gas tends to cost more than competitors.
For non-BP users, Mr. Credit Card recommends the American Express Simply Cash Card. It is a business credit card that pays 5% rebates on gasoline and certain types of business expenses. The site mentions that a person can obtain a business credit card without actually owning a business; they will simply be treated as a sole proprietor. It’s worth a try!
For those who will need to fly instead of drive, Kiplinger’s has a recommendation on that too. Here’s what Mr. Credit Card had to say about the magazine’s choice, the Citi Premierpass Card Elite Level.
While this is a very good card, I think there are just too many types of travel reward cards to simply pick one. What they failed to mention is that this card will only suit those who travel a lot because you can earn points from the dollars you spend and also from the miles you fly. For those of us who are not really frequent flyers, then this card may not be suitable. Plus, Citi’s ThankYou Network airline reward system could get complicated as they have “fixed options” and “flexible options” for redeeming points for airline tickets. Check out our review of Citi’s Rewards for more details.
Something else to keep in mind is that the Platinum Plus MC (best travel card) is for consumers with “excellent credit,” according to MasterCard’s web site. If you can get it, go for it - and happy traveling!
Posted in Capital One credit cards, Citi, Featured, Article, business credit cards, American Express Credit Cards, Credit
Money Saving Tips That Aren’t Boring
Sometimes I feel like a broken record with the repetitive nature of posting on debt-reduction tips. After all, how many times do you care to read the same underlying message that cutting back on some of the things you love can put more money in your proverbial pocket? This is why I was particularly amused when I stumbled upon a blog post by Selena Maranjian that began with the following:
Money-saving tips can be boring, especially since we often don’t want to do them.
She had my attention! She goes on to say:
Giving up smoking is a classic one. If you smoke a pack a day and each pack costs you $5, you’re spending nearly $2,000 per year on tobacco. Invest that for 25 years and, if you earn an annual average return of 10%, you’ll end up with nearly $20,000 at retirement — just from that one year’s worth of not smoking. Imagine how much you could accumulate if you gave it up for several years!
Quitting smoking is much easier said than done, though, and that’s where the problems begin.
Consider this …Here are some ideas from advisors Dayana Yochim and Robert Brokamp that aren’t quite so difficult to impliment:
• Give your cash a shot of adrenaline. If your current checking or savings account pays anywhere near the national average APY of 0.34%, stop letting your short-term money languish. On a $5,000 balance, you could easily earn 2.13% to 4.05% (that’s $106.50 to $202.50 over the next year) just settling for the national average rates.” You could do even better than that — some banks are offering more than 5% interest on savings accounts (which could net you $200 more than you’re currently getting). Savings: $200.
• Overlooked deductions, credits, and itemization opportunities [on tax returns] cost the average taxpayer more than $400 a year. Yikes! This can be a biggie. Every situation is different, so some people could end up saving $1,000 or more by being more comprehensive with their tax returns. For example, you may be able to deduct your job-search expenses, charitable contributions, and medical expenses. You may even qualify for $1,000 or more in education-related credits. (Learn much more here: Tax Center.) Savings: $1,000.
• Slash your car and homeowner’s insurance by as much as two-thirds. Raise your deductible to $1,000 from $250 (15% to 30% savings), purchase auto and homeowner’s insurance from the same company (15%), and keep a claim-free record (5% to 35%) for $245 to $560 in savings on a $700-a-year policy.” Wow — got that? These savings (which could amount to $1,000 or more for someone like me with a policy that costs more than $1,000 a year) are there for the taking and will only cost you a few phone calls. No long-term suffering, no subsisting on salads made of lawn clippings. Understand that a higher deductible will cost you more out-of-pocket during the years when you have a claim, but most of the time, you’ll end up ahead of the game. Savings: $750.
• Save on airfare with Farecast.com, a free service that predicts the direction of prices for travel from most major airports. Farecast touts an accuracy rate of roughly 75% and, for $9.95, allows you to lock in low fares. If you save just $100 each on four flights this year, that can make a big difference. And this, too, is painless money saving with little inconvenience. Savings: $400.
• Tend to your credit rating. Be diligent about paying your bills on time and using credit responsibly. Check your credit report regularly to make sure that there aren’t any errors (if there are, you can fix them). By having a super-duper credit score, you’ll likely be able to snag the best interest rates available when you borrow money. On a $200,000 mortgage, getting a 6.5% 30-year loan instead of an 8% one can mean you pay $1,264 per month instead of $1,468 — a savings of about $200 per month, or $2,400 per year. That’s a big deal. Savings: $2,400.
• Look for small ways to save, too. For example, I rarely buy sodas when I dine out. If I dine out four times per week and forego four $2 sodas, that’s $8 per week not spent, at little inconvenience to me. For the year, it’s a whopping $400. Savings: $400.
Money-saving tips can be boring, especially since we often don’t want to do them.
She had my attention! She goes on to say:
Giving up smoking is a classic one. If you smoke a pack a day and each pack costs you $5, you’re spending nearly $2,000 per year on tobacco. Invest that for 25 years and, if you earn an annual average return of 10%, you’ll end up with nearly $20,000 at retirement — just from that one year’s worth of not smoking. Imagine how much you could accumulate if you gave it up for several years!
Quitting smoking is much easier said than done, though, and that’s where the problems begin.
Consider this …Here are some ideas from advisors Dayana Yochim and Robert Brokamp that aren’t quite so difficult to impliment:
• Give your cash a shot of adrenaline. If your current checking or savings account pays anywhere near the national average APY of 0.34%, stop letting your short-term money languish. On a $5,000 balance, you could easily earn 2.13% to 4.05% (that’s $106.50 to $202.50 over the next year) just settling for the national average rates.” You could do even better than that — some banks are offering more than 5% interest on savings accounts (which could net you $200 more than you’re currently getting). Savings: $200.
• Overlooked deductions, credits, and itemization opportunities [on tax returns] cost the average taxpayer more than $400 a year. Yikes! This can be a biggie. Every situation is different, so some people could end up saving $1,000 or more by being more comprehensive with their tax returns. For example, you may be able to deduct your job-search expenses, charitable contributions, and medical expenses. You may even qualify for $1,000 or more in education-related credits. (Learn much more here: Tax Center.) Savings: $1,000.
• Slash your car and homeowner’s insurance by as much as two-thirds. Raise your deductible to $1,000 from $250 (15% to 30% savings), purchase auto and homeowner’s insurance from the same company (15%), and keep a claim-free record (5% to 35%) for $245 to $560 in savings on a $700-a-year policy.” Wow — got that? These savings (which could amount to $1,000 or more for someone like me with a policy that costs more than $1,000 a year) are there for the taking and will only cost you a few phone calls. No long-term suffering, no subsisting on salads made of lawn clippings. Understand that a higher deductible will cost you more out-of-pocket during the years when you have a claim, but most of the time, you’ll end up ahead of the game. Savings: $750.
• Save on airfare with Farecast.com, a free service that predicts the direction of prices for travel from most major airports. Farecast touts an accuracy rate of roughly 75% and, for $9.95, allows you to lock in low fares. If you save just $100 each on four flights this year, that can make a big difference. And this, too, is painless money saving with little inconvenience. Savings: $400.
• Tend to your credit rating. Be diligent about paying your bills on time and using credit responsibly. Check your credit report regularly to make sure that there aren’t any errors (if there are, you can fix them). By having a super-duper credit score, you’ll likely be able to snag the best interest rates available when you borrow money. On a $200,000 mortgage, getting a 6.5% 30-year loan instead of an 8% one can mean you pay $1,264 per month instead of $1,468 — a savings of about $200 per month, or $2,400 per year. That’s a big deal. Savings: $2,400.
• Look for small ways to save, too. For example, I rarely buy sodas when I dine out. If I dine out four times per week and forego four $2 sodas, that’s $8 per week not spent, at little inconvenience to me. For the year, it’s a whopping $400. Savings: $400.
Wednesday, June 27, 2007
Money Center Banks: Overview
As of early 2007, commercial banks in the US had total assets of $9,700 billion, and total liabilities of $8,900 billion. Almost 90% of each were due to domestically-chartered institutions.The ten largest banks control assets of $4,900 billion, $3,700 billion being domestic assets. With the exception of HSBC, all of the top ten are entirely US-owned institutions.2006 saw feverish M&A activity in the US, with a total deal value of $1,500 billion; activity in Europe was also intense. While private equity firms are increasingly involved, money center banks are still generating substantial revenues through these deals. The regulatory framework for large banks is due to change, with Basel II compliance likely to demand greater capital reserves, and increase costs. As banks grow larger, the requirement that none should hold more than 10% of the nation's deposits is being seen as restrictive. The fate of this federal cap on deposits may affect banks' organic and inorganic growth.Citigroup, Deutsche Bank, Bank of America, and HBSC Holdings are all leading players in this sector. They are continuing to adjust their financial product portfolio to client demand, with asset-based loans, for example, showing a rapid increase in popularity. M&A is a common strategy for players to expand, especially into lucrative overseas growth markets.
Tuesday, June 19, 2007
Consumer Financial Services: Overview
At the end of 2006, outstanding consumer credit (excluding loans secured on real estate) in the US amounted to $2,390 billion, an increase of 2.6% on the previous year. This marked a slowdown from the annual growth rates for consumer during the 2001-2004 period. The main creditors were commercial banks, who lent 30% of these funds, while finance companies accounted for a further 22%.In 2006, home mortgages outstanding exceeded $10,000 billion, up by 10% on 2005. Home ownership rates are currently historically high in the US, although there has been a slight downturn in 2005 and 2006 since the peak of 2004, and by late 2006, hitherto soaring house prices were beginning to slow down their rate of increase.At the end of 2006, outstanding consumer credit (excluding loans secured on real estate) in the US amounted to $2,390 billion, an increase of 2.6% on the previous year. This marked a slowdown from the annual growth rates for consumer during the 2001-2004 period. The main creditors were commercial banks, who lent 30% of these funds, while finance companies accounted for a further 22%.In 2006, home mortgages outstanding exceeded $10,000 billion, up by 10% on 2005. Home ownership rates are currently historically high in the US, although there has been a slight downturn in 2005 and 2006 since the peak of 2004, and by late 2006, hitherto soaring house prices were beginning to slow down their rate of increase. A strong stock market performance is encouraging the growth of margin loans, secured on investments rather than real estate. During the 2005-2006 period, the prime rate of interest was increasing, which in principle should dampen demand for consumer credit. More stringent legislation introduced in 2005 has greatly reduced the number of individuals having recourse to bankruptcy to deal with unsustainable debt. Leading players in the industry include Fannie Mae, Freddie Mac, American Express, and Countrywide Financial. The US has a large number of banks and related institutions when compared to Japan or Europe, and a long-term trend for consolidation persisted in 2006. Mortgage facilitators such as Fannie Mae are committed to extending home ownership among lower income- and minority groups in the US through the development and marketing of appropriate financial products. For credit card providers, a focus of investment has been the upgrading of transaction security, and the offering of innovative hardware, such as RFID-enabled cards.
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