Corporate Finance

Managerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock.

Long term funds are provided by ownership equity and long-term credit, often in the form of bonds. The balance between these forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit.

Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management – in choosing a portfolio – one has to decide what, how much and when to invest. To do this, a company must:

• Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
• Identify the appropriate strategy: active v. passive – hedging strategy
• Measure the portfolio performance

Financial management is duplicate with the financial function of the Accounting profession. However, financial accounting is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm

Personal Finance

An entity whose income exceeds its expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary pockets the difference.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays the interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Banks are thus compensators of money flows in space.

A specific example of corporate finance is the sale of stock by a company to institutional investors like investment banks, who in turn generally sell it to the public. The stock gives whoever owns it part ownership in that company. If you buy one share of XYZ Inc, and they have 100 shares outstanding (held by investors), you are 1/100 owner of that company. Of course, in return for the stock, the company receives cash, which it uses to expand its business in a process called "equity financing". Equity financing mixed with the sale of bonds (or any other debt financing) is called the company's capital structure.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments, with consideration to their institutional setting.

Finance is one of the most important aspects of business management. Without proper financial planning a new enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization.

[edit] Personal finance

Main article: Personal finance

Questions in personal finance revolve around

* How much money will be needed by an individual (or by a family) at various points in the future?
* Where will this money come from (e.g. savings or borrowing)?
* How can people protect themselves against unforeseen events in their lives, and risk in financial markets?
* How can family assets be best transferred across generations (bequests and inheritance)?
* How do taxes (tax subsidies or penalties) affect personal financial decisions?
* How does credit affect an individual's financial standing?
* How can one plan for a secure financial future in an environment of economic instability?

Personal financial decisions may involve paying for education,financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.

Personal financial decisions may also involve paying for a loan.

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Investment-Real estate

Real estateIn real estate, investment is money used to purchase property for the sole purpose of holding or leasing for income and where there is an element of capital risk. Unlike other economic or financial investment, real estate is purchased. The seller is also called a Vendor and normally the purchaser is called a Buyer.
Residential Real EstateThe most common form of real estate investment as it includes the property purchased as other people's houses. In many cases the Buyer does not have the full purchase price for a property and must engage a lender such as a Bank, Finance company or Private Lender. Herein the lender is the investor as only the lender stands to gain returns from it. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky.
Commercial Real EstateCommercial real estate is the owning of a small building or large warehouse a company rents from so that it can conduct its business. Due to the higher risk of Commercial real estate, lending rates of banks and other lenders are lower and often fall in the range of 50-70%.

Investment

FinanceIn finance, investment=cost of capital, like buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing whether a potential investment is worth its price. Returns on investments will follow the risk-return spectrum.
Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are then expected to provide income or positive future cash flows, and may increase or decrease in value giving the investor capital gains or losses.
Trades in contingent claims or derivative securities do not necessarily have future positive expected cash flows, and so are not considered assets, or strictly speaking, securities or investments. Nevertheless, since their cash flows are closely related to (or derived from) those of specific securities, they are often studied as or treated as investments.
Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies, collective investment schemes, and investment clubs. Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary

Personal financeWithin personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation.
In many instances the terms saving and investment are used interchangeably, which confuses this distinction. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.

investment/economics

Economics
In economics, investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment I is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX, where C is consumption, G is government spending, and NX is net exports. Thus investment is everything that remains of production after consumption, government spending, and exports are subtracted.
I is divided into non-residential investment (such as factories) and residential investment (new houses). Net investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year.
Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).
Investment is often modeled as a function of Income and Interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.

Investment

Investment or investing is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. The word originates in the Latin "vestis", meaning garment, and refers to the act of putting things (money or other claims to resources) into others' pockets.The basic meaning of the term being an asset held to have some recurring or capital gains. It is an asset that is expected to give returns without any work on the asset perse.
Types of investments
The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset.

Business ManagementThe investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.
A business might invest with the goal of making profit. These are marketable securities or passive investment. It might also invest with the goal of controlling or influencing the operation of the second company, the investee. These are called intercorporate, long-term and strategic investments. Hence, a company can have none, some or total control over the investee's strategic, operating, investing and financing decisions. One can control a company by owning over 50% ownership, or have the ability to elect a majority of the Board of Directors.

Superannuation

Do you rule your superannuation or does it rule you?
It's easy to fall for some myths about your super unless you do some clear thinking about who is in charge. Virtually all Australian employees now have a superannuation account, many have several, even more than they know about. We all hope to use this money to fund our retirement, but unless you look after your super then you are in danger of losing some of your money along the way.
Myth number 1. Someone else can look after my super. Only partly right. It is possible go through your working life letting your super run on autopilot, but you may be in for an unpleasant surprise if you don't keep an eye on your super. Make sure your employer is paying the correct amount, and that if your employer goes broke your super is still available.
If you change jobs you need to decide if you wish to 'roll over' the money into another fund. This is especially important if you change jobs frequently. You can find that you have relatively small amounts scattered over several funds, and in each you will be paying a management fee before you earn any distribution or interest. In the long term inflation will eat away at the value of your principle, even though the dollar amount stays the same. Many super companies provide a free service to consolidate small accounts for you. Use them.
Myth number 2. It's not my money until I retire. Dead wrong. It's your money, just like the rest of the money in your pay packet. Super funds are providing a service of managing your money until you can legally access it when you retire. You have control of it. After July 2005 you will have even more say about your money. If you are not happy with the service you should tell the service provider. If they can't fix your problem, then you can sack them and put your money elsewhere.
Myth number 3. I don't need to worry about it until I am at least fifty-something. Not really. Australians are enjoying longer lives and better health. You will need more money if you want to have more options in retirement. You will probably need to top up your super to achieve financial independence in your golden years. The sooner you start the better.
The Australian Government is generously giving away our money to help lower and middle income earners top up their super. It's called the superannuation co-contribution scheme. If you, or your spouse, are eligible you should make sure you get your share.
Fact number 1.Our superannuation is our money. To look after your super you need to learn about your rights and options. It's a long term task. You need to get information and advice. Don't rush, but start soon.


About The Author
Darby Higgs is a Melbourne-based web writer. He is the manager and editor of its-our-money.com a website aiming to empower investors in retirement funds to take a more active role in the governance of their money.

Franchise

It seems completely absurd that franchise buyers lie about their financial position, available cash and abilities in order to buy a franchise. After spending 8 years setting up franchises around the nation and fielding inquiries I am appalled at the lack of integrity of the average business buyer. If you wonder why franchisors make franchise buyers fill out forms and ask lots of questions it is because 75% or more of every franchise inquiry to a franchise company is misrepresentative of their reality. A franchise opportunity seller should beware of franchise buyers lying on forms.
Why do we have laws for franchise companies and yet none for franchise buyers or investors? It is appalling the lack of integrity of the average American or in this case investor of a franchise. Some of these liars waste our valuable time as the fraudulently make up a falsehood picture of their financial ability and business acumen. They ought to be thrown in jail.
Well, I guess I really went off on the franchise buyers. At the time of this statement in 1999 I had just hung up on four franchise buyers that week, feeling it hopeless to even have further conversations with anyone inquiring. Turned out not all these potential franchise candidates or buyers were real, many were competitors and even some believe it or not were working for the government as entrapment phone solicitors. One we later got to know was a 26-year old homosexual Attorney working for the Federal Trade Commission, who upon my visit to the FTC office in Washington DC, starred at my rear end the entire time?
We franchisors work very hard and can usually help a franchisee into a very small business of their own position, but we need straight answers; such as their true financial picture. If we get a song and a dance about how much money they have, and then we start the process only to find out that they really do not have as much as they said then we have a franchisee who may fail simply due to being under capitalized.
The most common reason small businesses fail as surveyed time and time again by the SBA; Small Business Administration and other groups is the fact that the business was under captialized. If we have franchise buyers who want colorful brochures, great, but level with us. Tell us you just want someone to tell you, you are great and you just want someone to yell at due to your personal frustrations. If you have little money state that, there maybe a plan to help you along. Then after that is over we can be serious about winning market share and having all the game plan laid out carefully. I doubt if the US Military wants to fight a war with generals who do not have bad information, pilots who do not follow orders, Navy Seal Teams who are untrained, an intelligence agency who lies or allies who are actually hostile and full of misinformation. To win a war in franchising you must above all be on the same team, from the beginning. It is imperative that every one understands each other's goals to win.
Franchise buyers who want to be argumentative towards their future business partner in order to vent off anger from their previous downsizing company and tyrant boss should wait until they are better understanding of their current situation and ready to review why they are where they are, before they try to buy a franchise. A franchisor that puts up with such non-sense has no business franchising, because that franchisor is clearly out for just the money and that short term attitude will kill the long term win-win partnership that is needed to dominate the market place. A franchisor such as that should not be in the franchising business. Franchisees who lie from the start are not good team members and once that bond of integrity is broken there can be no more trust. Advice; if you are going to buy a franchise, be upfront and honest with your future business partners, you moron. Think about it.

"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs

About Health Insurance: Group vs Individual

Group vs Individual Insurance

Before deciding on a type of health plan, it's important to know what kind of coverage is out there. There are a lot of different ways to get health insurance and it's good to know what you may be eligible for before you start your health insurance search.

Group Health Insurance
The majority of people under the age of 65 have medical insurance through their employers' group insurance. According to the National Coalition on Helath Care, in 2005, over 80 percent of employees were eligible for employer-group insurance and 83 percent of those who were offered, opted for these types of plans. This is usually because employers and other organizations can get better rates because they have a large number of people to cover. The insurance company sees it as good risk because they'll probably end up paying out very little for many people in the group, while collecting premiums from everyone. Normally, this translates into premiums that are much lower than those found in individual health insurance plans and are the same price for everyone in the group regardless of their health.

While employers aren't required by law to provide health insurance, they may have a difficult time finding good employees if they don't. Also, once group insurance is offered, it falls under the protection of the Health Insurance Portability and Accountability Act (HIPAA) regulations. These regulations protect employees by ensuring that everyone is given access to the employer's health insurance plan regardless of their health status. The act also helps regulate waiting periods of health plans to help achieve continuous coverage for most employees and helps ensure that employees have access to health care if they lose their job.

Because health insurance rates are re-negotiated each year based on the previous year's health care costs, some employers offer wellness programs for their employees. By keeping employees healthier, they can lower medical costs. Participation in these programs can sometimes make employees eligible for reduced health insurance premiums. For employees who pay a portion of the premium themselves (which is typical), this can mean eliminating some or all of that charge.

Most employer's group insurance plans are managed care plans, typically either HMOs or PPOs. Both of these types of plans will be explored in detail later in this article.

Individual Health Insurance
Individual health insurance is the most expensive option for people who don't have coverage (or don't have enough coverage) through employers. Physical exams and questionnaires are usually a part of the application process, so poor health can really make a difference in the cost and eligibility. Types of insurance plans include fee-for-service plans, PPOs, HMOs and catastrophe insurance. Many companies offer health insurance for individuals and specialize in short-term coverage to fill in between employer coverage.

Tips about investing in the stock market

• The stock exchange is rarely a place where anyone 'gets rich quick'. Sure, some occasional stocks and shares will rise quickly making their owners money, but rarely will you become rich. Bear in mind that if an investment doubles in one year (which is pretty rare) you needed to be already wealthy to make a lot of money. If you invested a thousand, you will have just 'made' a thousand. You aren't wealthy or rich yet.
• Investment risk is lowered by knowledge. Every time. If you are buying shares on the stock exchange, what does the seller know that you don't? What do you know that the seller does not? You can bet your life that the buyer or seller opposite you in any transaction has done some serious research. If you don't do yours, who do you think will win? You or the market?
• It might help to find areas in which you have useful knowledge already. Either that or decide on an area and slowly become an expert. For example, if you worked in a bank for 10 years, you must know something about banking. When you read an annual report from a bank, do you laugh and see through the waffle or does it make real sense? If you can see through the waffle of some far off CEO and CFO, you can start to compare the relative prospects in the same market of competing firms. Hey - that could be an opportunity
• It isn't easy. If everyone could become a billionaire by investing, Warren Buffett would not be famous. It takes time, study and effort and most importantly - independent thought. Not everyone has the will or stamina to carry that through. Who doesn't suffer setbacks and confidence knocks?

Getting started in stock markets

1.)Try to understand why you want to invest. This is the hardest thing - looking at yourself objectively. Search for an area where you hold some strength. It is tough to make money in the markets at the best of times, so don't disadvantage yourself by investing in things that you don't understand. You'll have areas of expertise that fund managers don't. Use that advantage if you can. Warren Buffett describes this as his 'circle of competence'.
2.)Do loads of research. There's more valuable information available online than we can imagine.
3.)Learn to think independently. This is the biggest skill you can learn towards becoming a successful investor.
4.)Don't forget about dividends. Studies show that dividends make up most of an investors return over the long term. Find a way to reinvest those dividends for improved returns.
5.)Look for investments, not gambles. Learn to understand the difference.
6.)Consider a long-term perspective on your investment portfolio. These tend to earn more but over a long period of time.

CRAZY!!!!!!!!

Clear and to the point, eh?

Humor

The 2 most common elements in the universe are hydrogen and stupidity.
2. If at first you don't succeed, skydiving is not for you.
3. Money can't buy happiness. But it sure makes misery easier to live with.
5. Psychiatrists say that 1 of 4 people are mentally ill. Check three friends. If they're OK, you're it.
6. Nothing in the known universe travels faster than a bad check.
8. It has recently been discovered that research causes cancer in rats.
9. Always remember to pillage BEFORE you burn.
10. If you are given an open-book exam, you will forget your book.
11. COROLLARY: If you are given a take-home test, you will forget where you live.
12. The trouble with doing something right the first time is that nobody appreciates how difficult it was.
13. It may be that your sole purpose in life is simply to serve as a warning to others.
14. Sky's Law: You can't fall off the floor.
15. The average woman would rather have beauty than brains, because the average man can see better than he can think.
17. Vital papers will demonstrate their vitality by moving from where you left them to where you can't find them.
19. Poker rules supplement: A .44 Magnum beats 4 aces.
20. I just got lost in thought. It was unfamiliar territory.
21. Everyone has a photographic memory. Some don't have film.
23. Seen it all, done it all, can't remember most of it.
24. Those who live by the sword get shot by those who don't.
25. I feel like I'm diagonally parked in a parallel universe.
26. He's not dead, He's electroencephalographically challenged.
27. She's always late. Her ancestors arrived on the Juneflower.
28. You have the right to remain silent....Anything you say will be misquoted, then used against you.
29. I wonder how much deeper would the ocean be without sponges.
30. Honk if you love peace and quiet.
31. Pardon my driving, I am reloading.
32. Despite the cost of living, have you noticed how it remains so popular?
33. Nothing is foolproof to a sufficiently talented fool.
34. Diplomacy is saying "nice doggy" until you find a rock.
35. A day without sunshine is like, you know, night.
36. Save the whales. Collect the whole set.
37. Atheism is a non-prophet organization.
38. On the other hand, you have different fingers.
39. Change is inevitable. Except from a vending machine.

Insurance Deductibles

Auto Insurance Deductibles

Purchasing auto insurance is not simply about the value of your car or how often you get into accidents, it is also about how much money you are willing to pay for your coverage. All auto insurance policies have a deductible. The deductible is the part of your policy that you are responsible for paying. Auto insurance policies don't take care of all expenses. You are required to pay for some of the damages depending on your policy. Deductibles vary , but are most often in amounts of $100, $250, $500 or $1,000. For example, if you are in an accident that causes $2,500 worth of damage and your deductible is $500, you are required to pay the $500 and the insurance company will take care of the remaining $2,000.
When deciding what insurance policy you want to purchase, choosing a deductible is an important step. After all, you will have to pay the deductible for each and every situation in which you require your insurance company to cover damages. Deciding how much you are willing to pay and how often you think you will need to make an insurance claim will help you decide what deductible amount is right for you. In addition, the premium you pay, or the price of your total coverage annually, can be lowered by choosing a higher deductible. In other words, if you are willing to pay higher out-of-pocket costs, you can lower the total cost of your insurance.
Purchasing an auto insurance policy doesn't have to be confusing. You want a policy to take care of your expenses in the event of accident, theft, vandalism or most any other instance in which there is damage to your own or someone else's vehicle. By knowing what your state requires, what your needs are, what discounts you qualify for and how much coverage you want for your car, you will be able to choose the right policy.

Courtesy of HowStuffWorks

Bringin Auto Insurance Costs Down

Bringing the Costs Down

There are four factors that keep auto insurance rates down.
If you are looking to buy a car, consider buying a car that looks good to insurance companies. For instance, insurance companies know what kinds of cars are prone to problems. They also know what kinds of cars are most often stolen. If you haven't purchased your car yet, find out what cars make this good list among auto insurers.
Most insurance companies offer discounts for a variety of reasons - for example, good students, having more than one car insured and accident-free driving are all worth a discount. Ask insurance companies about specific discounts that may be available to you.
Consider carpooling or using public transportation to get to work. The less you use your car, the less your insurance will cost you.
Finally, drive carefully! Insurance companies are not happy to insure accident-prone drivers, so the safer you drive, the less you will have to pay for auto insurance. Don't be afraid to ask your insurance company about any discounts they offer - it could save you a little cash.

All About Auto Insurance

The Price of Auto Insurance
Several factors that affect auto insurance price. Prices vary by company and you should compare prices thoroughly before you purchase a policy. The first thing that affects your policy's price is, what kind of car you drive. For instance, a sports car costs more to insure than a family sedan. If you purchase a vehicle that has a high theft rate, your coverage will probably be more expensive. Essentially,though, your coverage will be based on the value of your car.
Another factor that affects auto insurance costs is where you live. If you live in an area where there is a high occurrence of accidents or vandalism, insurance will cost more. For instance, since more cars are damaged in urban areas than in rural areas, you will probably pay more for insurance if you live in a city.
How often you drive will also affect your insurance costs. The more you drive, the higher the chances you will be an accident. Drivers who have long-distance commutes will pay more than people who live near their workplace. Meanwhile, if you only use your car on weekends, your insurance rates should be lower than someone who commutes to work daily.
The final factors that affect the price of auto insurance have to do with who you are. Your age, sex, marital status and driving record are all taken into account when you buy an insurance policy. Accident rates are higher for drivers under the age of 25, so if you are young, expect to pay a little more. Also, accident rates are higher for young males and single males. It doesn't seem fair, but if you are an unmarried 19-year-old male, your insurance rates will definitely be affected. If your driving record is impeccable, though, your rates will be lower. Obviously, drivers who are prone to traffic violations or accidents will have to pay more for insurance than safe drivers.

Dough.

Money, basics. Got this article from some site on the Net. Will post when I get the address.

Money is a token that is widely accepted as a medium of exchange. The token can be tangible like a coin or note, or intangible like a bank deposit. If the token is convertible on demand into a valuable commodity like gold, the token is known as commodity money. The exchange value of commodity money varies, but is normally greater than its value as a commodity. A precious metal coin is simply a token potentially convertible into the bullion that comprises it.
If the tokens are intrinsically worthless and inconvertible, the government must endow them with a special status to make them viable as money. Such tokens are known as fiat money. Except for collector’s items, all government-issued tokens today are fiat money. One must therefore avoid thinking in terms of commodity money to understand modern money.
In the era of commodity money, the issuer was constrained by the need to hold a sufficient supply of the underlying commodity. There is no such constraint in the case of fiat money. The value of fiat money therefore depends on the policies and actions of the issuer, normally the central bank of a country. The remainder of this essay applies to the monetary system of the U.S. and not necessarily to other countries

Fiat Money as a Tax Credit
The general acceptance of the government’s fiat money derives from its status as legal tender and from the fact that it is required in payment of federal taxes. Those who have no tax liability have reason to acquire fiat money because it is of value to those who do. Thus fiat money can be viewed as a tax credit, which will be used as a medium of exchange as long as the government widely enforces tax collection.

Base Money
Fiat money held by the private sector is known as the monetary base, which we will refer to as base money. The Fed issues base money when it buys securities from the public for its own portfolio, mainly Treasury debt. It pays by simply creating a deposit at the Federal Reserve Bank for the seller’s own bank. This is known as monetizing the debt.

Bank Money
Banks create deposits, known as bank money, when they issue loans by simply crediting the borrower’s account with a new deposit. The total amount of bank money increases when a bank issues a loan. When a loan is paid off, that amount of bank money vanishes.
The value of bank money is based on the promise that it can be converted on demand into base money at par. Current rules require a bank to hold reserves of base money equal to at least 10% of its transaction deposits. Reserves can be held in any combination of vault cash and deposit at the Fed. There is no required reserve for other bank liabilities, such as savings accounts or certificates of deposit.

Controlling the Price of Reserves
Even if there were no reserve requirement, a bank would have to hold enough reserves at the Fed to cover its depositors' checks, and enough vault cash to meet the demand for withdrawals by depositors. The need for reserves thus creates an active interbank market in which banks lend or borrow reserves among themselves. The interest rate on these short-term transactions is called the Fed funds rate.
The Fed steers the Fed funds rate toward its target through its open market operations. These involve buying or selling securities in the open market to add or drain system reserves as needed to balance the supply and demand at its target for the Fed funds rate.
Any bank in good standing and with adequate collateral can borrow on a short-term basis at the Fed’s discount window. The interest rate the Fed charges is 100 basis points above its target rate for Fed funds. With that large a spread, the discount window is used by banks to cover temporary liquidity problems rather than as a source of reserves to back further lending.

The Fed's Reactive Role
Why does the Fed control the price of reserves rather than the quantity? The answer is that targeting the quantity risks endangering the liquidity of the banking system. For example, an increase in cash holdings by the public drains vault cash from the banking system. Unless the Fed responded by injecting reserves, one or more banks might be unable to meet either the reserve requirements or the withdrawal demands of its depositors.
Targeting the price of reserves is also more effective in controlling the volatility in the Fed funds rate, and thus the interest rate banks must charge on their loans. Firms cannot plan efficiently when the price of credit is subject to large and unpredictable variations.
As a result of the Fed’s focus on price, the bank money supply will vary with demand. It expands or contracts according to whatever factors influence private sector borrowing. Thus the Fed plays an essentially reactive role, adding or draining reserves as needed for bank liquidity and to hold the Fed funds rate on target.

Limiting Bank Lending
Since the reserve ratio requirement doesn’t really impede bank lending, what prevents a bank from responding to any and all loan demands? The answer is that every bank must also comply with an equity capital requirement. This is a complex formula that rates a bank’s assets by risk, and requires that its capital exceed a certain fraction of its risk-weighted assets.
A bank can get into trouble by creating too many assets through lending. A bank with insufficient capital relative to its assets will be placed under supervision by its regulator who may then demand to approve any new lending.

Limiting Money Supply Growth
Another important question is what limits the bank money supply from growing excessively? Banks are in the business of selling credit. If a creditworthy borrower is willing to pay the bank’s rate, the bank will normally make the loan even if it must borrow the required reserves after the fact. The only defense against the creation of an excessive supply of bank money is for the Fed to increase the price of reserves to the point that it slows net demand.
The Fed’s basic monetary policy challenge is to keep the supply of bank money in reasonable balance with the needs of producers and the availability of goods and services. That calls for a great deal of knowledge about the economy as well as skill in interpreting the data. Mismanagement of the price of reserves can readily drive the economy off track towards inflation or recession. This is a difficult task, and the Fed has made its share of mistakes over the years that are usually obvious only in retrospect.

Random Humor 4

We had a "visit" here in my house earlier this weekend from someevangelist missionaries. Not that I have anything against evangelists, but Ithink prosteltyzers rank up there with Direct Sales over the phone, thePsychic friends network, and, door-to-door, are not nearly as cute asGirl Scouts (plus, they don't have cookies).
The players:
Me, Tristan Clair de Lune, the extremely handsome, talented and witty Rialto junkie Rachyl, my girlfriend, also a Rialto reader.
Keith, (or, Phil-in-the-Blank Clair de Lune) a 6'6", 280-pound stick jock (and my brother)
My "other brother," William, a collegiate fencer, busy cooking up a Chinese banquet for my parents who were coming.

Scene: Tristan is nibbling on Rachyl's ear, washing dishes for dinner,or playing with his armor [recollections vary].

William: B! Could you come here?
Me: What is it?
William: Just come here!
Me: OK (puts down the hamster)Ken walks down the hall to see his brother and girlfriend conversing withtwo Nordic-looking, clean-cut gimp-types with name tags.
Gimp #1: Hello! My name is Todd, and I'm from the Mormon Church of Latter-Day saints.
Me: How special for you.
Gimp #2: Have you heard about the Mormons?
Me: Yes, I have. Sometime in the 19th century, some guy thought he was a prophet, went insane, moved out to Salt Lake City, got into trouble witha lot of seagulls, and, hey, y'know Roseanne Barr is from out there?
Gimp #1: So, you've heard of us?
Me (washing dishes): Yes, but we already have a religion, thank you very much. We're Jewish.
Rachyl: We rather like it...
Me: But should it ever break down, we'll be sure to call you.[Rachyl and Keith collapse laughing]Me: That reminds me... Rachyl... isn't it time to light Shabbos candles?
Rachyl: Yeah...
Me: Excuse me for a minute...[Rachyl and Keith continue to talk to the Mormons]
Me (picking up a very large sword from my bedroom wall and shouting down thehall):
RACHYL! IS IT TIME TO SACRIFICE THE GOAT YET?!?!?!?!?!?!
Rachyl: No, you have to wait until the moon comes out!

[Gimp #1 looks at Gimp #2. William continues to chop up the tofu]
Gimp #1: Excuse us. We must be going.
[Switch camera. Tristan is rooting through his closet]Gimp #2: Thankyouverymuchforyourtime...
[The Wonder Gimps turn to leave. Quickly].
Me (running from the bedroom in his black cloak, waving a large sword): CHRISTIAN BLOOD! WE NEED CHRISTIAN BLOOD!!!!
[Switch to: Benny-Hill-esque shot of Mormons running away down the drivewayof House of No X, AKA House Four Down From Ogami].
Me: Damn. We lose more Mormons that way.

Random Humor 3

From RHF:

The following is is original:This is an answer to the age-old question, "Why did the chicken cross theroad?" in the style of Herodotus (Greek historian, fifth century BC, called the Father of History, but also the Father of Lies):

Another story that is told among the Cimmerians is this, that in past times Chickens, and in particular that one Chicken, who was called Misgetomenos the son of Aidoion, were wont to cross the Road. I myself, however, having seen with my own eyes the Road of the Cimmerians, am convinced that the Road is not, and never was, crossable by Chickens, nor yet by Misgetomenos. The Road is in appearance wondrous, and unlike any other thing in the world. It is a straight, flat band, made of a material that the Cimmerians call "asphalt" (which in the Cimmerian language means, "asphalt.") It is possessed of two yellow lines, being both in the center of the band, such that the center itself is between the yellow lines, and is black. As it is wide, dirty, and not seemly in the matter of U-turns, I am of the opinion that no Chicken ever crossed it.
There are three stories which are told about Misgetomenos the son of Aidoion, of which the following is in my opinion the most probable, the others being, so it would seem, completely untrue. This is that Misgetomenos was not a Chicken at all, but rather a slave who, charged with the painting of crosswalks, was called by the name of "Tsicken," which, in the Greek language, means "chicken.
There is, however, a different tale which is told of the son of Aidoion, and this I heard from the Greeks who live in Asia. This I will recount, though I do not believe it. This is that Misgetomenos was, in fact, a Chicken; further, that he did cross the Road of the Cimmerians, simply for this reason: that he might get to the Other Side.

More About Forex Trading

Factors affecting forex Trading:

Tthough xchange rates are fx'ed by many factors, currency prices are ultimately a result of supply and demand forces. Currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses as much of what is going on in the world at any given time as forex.
Supply and demand for any given currency (and therefore its value) aren't influenced by any single element, but rather by several.

Economic factors
Include economic policy
Economic policy comprises government fiscal policy and monetary policy.

Economic conditions include:
Government budget deficits/surpluses: Market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.
Balance of trade levels and trends: The trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.
Inflation levels and trends: Typically, a currency will lose value if there is a high level of inflation in the country or if inflation levels are perceived to be rising. This is because inflation erodes purchasing power, thus demand, for that particular currency. However, a currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.
Economic growth and health: Reports such as gross domestic product (GDP), employment levels, retail sales, capacity utilization and others, detail the levels of a country's economi growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.

A friend of mine nearing the end of a long battle with cancer was beinginterviewed for a new experimental drug protocol and the administeringphysician was asking some probing questions about the status of his immune system:
Doctor: I can see from your chart that you aren't married. Are youinvolved in a monogamous relationship at present?Without flinching, my friend replied, "Well actually, several"

Random Humor 2

The Toronto Star has a weekly column by an attorney, consisting of humorous excerpts from court transcripts. The following appeared a few weeks ago:
In a jury trial in Battleford, Sask., a few decades back, a farmer was charged with bestiality after he became amorous with one of his cows.
The chief Crown witness, the hired man, testified that he saw his boss place a milk stool behind the cow, then stand on the stool and take liberties with the cow. Moments later, the witness said, the cow kicked over the stool and the farmer fell to the floor of the barn.
Upon hearing this, a farmer in the jury box slapped his thigh and exclaimed, "They'll do that every time!"

Random Humor

witzelsucht (vit'sel-zoocht) [Ger.]

"A mental condition characteristic of frontal lobe lesions and marked by the making of poor jokes and puns and the telling of pointless stories, at which the patient himself is intensely amused."

How To Invest In Forex

Through:
Investment Management Funds-Usually run accounts on behalf of large organizations such as pension funds and endowments.

Hedge funds
Such as George Soros' Quantum fund. Gained a reputation for aggressive currency speculation. Control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor. Sweet. New world order :-)

Retail forex brokers
2 types of retail brokers: brokers offering speculative trading and brokers offering physical delivery i.e.bought currency is delivered to a bank account.
They handle a minute fraction of the total volume of the foreign exchange market. According to CNN, one retail broker estimates retail volume at $25–50 billion daily, which is about 2% of the whole market.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the international three-letter code of the currency into which the price of one unit of XXX is expressed (called base currency). For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.3045 dollar. Out of convention, the first currency in the pair, the base currency, was the stronger currency at the creation of the pair. The second currency, counter currency, was the weaker currency at the creation of the pair.
The factors affecting XXX will affect both XXX/YYY and XXX/ZZZ. This causes positive currency correlation between XXX/YYY and XXX/ZZZ.
On the spot market, according to the BIS study, the most heavily traded products were:
EUR/USD: 28 %
USD/JPY: 18 %
GBP/USD (also called sterling or cable): 14 %
and the US currency was involved in 88.7% of transactions, followed by the euro (37.2%), the yen (20.3%), and the sterling (16.9%) . Note that volume percentages should add up to 200%: 100% for all the sellers and 100% for all the buyers.
Although trading in the euro has grown considerably since the currency's creation in January 1999, the foreign exchange market is thus far still largely dollar-centered. For instance, trading the euro versus a non-European currency ZZZ will usually involve two trades: EUR/USD and USD/ZZZ. The exception to this is EUR/JPY, which is an established traded currency pair in the interbank spot market.

Intro- Forex Trading and how to make money online

I am interested in making money. Yes. Like no one else is. So I will be posting some stuff about doing exactly that. The posts may either be fragmented or whole. Today I would like to talk about Forex(Foreign Exchange) trading. Forex trading is virtually limitless. As long as you have good internet connection and a nice seat. It can happen 24 hours a day except on weekends.

Foreign exchange market exists wherever a currency is traded for another. It is the largest financial market in the world and includes interbank trading, large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex and related markets currently is over US$ 3,000,000,000. Retail traders are only a small fraction of this market and may only participate indirectly through brokers or banks, and are subject to forex scams.

The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account.
Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

Gluteal muscles

The gluteus maximus-is the largest of the gluteal muscles.The most powerful muscle in the body. It inserts at the iliotibial band and the gluteal tuberosity of the femur. Its action is to extend and outwardly rotate hip, and extend the trunk.

Problems associated with the gluteal muscles
Sitting for long periods can lead to the gluteal muscles atrophying through constant pressure and disuse. This may be associated with (although not necessarily the cause of) lower back pain, difficulty with some movements that naturally require the gluteal muscles, such as rising from the seated position, and climbing stairs. Some attribute severe menstrual cycles including mood swings and irritability to gluteal muscle atrophy, however, there are a vast array of known contributors to dysmenorrhoea, and currently clinical evidence of such a causative association is lacking.
The bulk of the gluteal muscle mass contributes only partially to shape of the buttocks. The other major contributing factor is that of the panniculus adiposus of the buttocks, which is very well developed in this area, and gives the buttock its characteristic rounded shape. Although the gluteal muscle bulk and tone can be improved with massage and exercise, it is the disposition of the overlying panniculus adiposus which may be responsible for the "sagging butt" phenomenon.
Treatment
Studies have shown that exercise and massage are effective at reversing and protecting against atrophy of these muscles. Poisoning by eating Lathyrus sativus Indian Pea or khesari dhal will lead to emaciation of Buttock muscles.Lathyrus Sativus. Neurolathyrism. Homeopathy Repertory.

Exercise and stretching
Any exercise that works and/or stetches the buttocks is suitable, for example lunges, climbing stairs, fencing, bicycling, squats, arabesque, aerobics, and various specific exercises for the bottom.
Powerlifting exercises which are known to significantly strengthen the gluteal muscles include the squat and the deadlift. Another weight training exercise involving the glutes is the leg press.

Massage
Gluteal exercise and stretching must be accompanied by therapeutic massage both in the relaxed muscle condition and during the neuron firing of muscle flexing and stretching. In order to properly restore the gluteal muscle group, the first step is to relax the entire neck, shoulders, arms and back region with massage. Once the patient's upper body is relaxed, effleurage (light but thorough stroking with fingers and palms) of the top, middle, bottom and side portions of the gluteal muscles (entire buttock and top thigh areas) is used to initiate the gluteal muscle group massage while the buttocks are in the relaxed condition with the patient lying face down with the hips slightly elevated, a pillow having been placed under the pelvis. The purpose of the effleurage is to fire the neurons near the surface of the muscle group. Attention should also be given to the gluteal fold, the crease where buttocks meet thighs, as this is a sensitive area where major muscles are joined.
At least 10 minutes of effleurage should be used before moving to a deeper muscle massage... but only as the muscles loosen sufficiently. The top, middle and bottom areas of the buttocks as well as the tops and all sides of the thighs are massaged with increasing firmness in order to stimulate the neurons deeply embedded within the muscle group. Liberal amounts of massage lotion should be used as this area can require very deep massage as the muscles loosen and permit it.
Some massage schools reportedly teach the use of the double handed repetitive "chop" alternating with slapping of the maximus area. The chop fires the deeply embedded neurons while the slap fires the surface neurons. If this is done while the patient is alternately flexing and relaxing, the result is almost total neuron firing and should be followed up with additional effleurage to totally relax the muscle group. Obviously communication between therapist and patient is important at this stage.
Attention should be given to the gluteal fold with increasing pressure. This being a sensitve area, the therapist should communicate freely with the patient to determine the proper amount of pressure needed to relax these muscles. The therapist can simultaneously use both of his or her thumbs beginning in the middle where the thighs and buttocks meet, and slowing moving the thumbs outward and around the tops of the thighs to eventually use the fingers to massage the fold where thigh meets abdomen (another area where muscles are joined).
The two massage regimes (effleurage and deep muscle massage) are then repeated with the gluteal muscle group in the process of active neuron firing. That is, the areas should be massaged while the patient is actually performing the various exercises and stretches outlined above as well as others tailored by the therapist. It is reported that this results in exterior and interior neuron firing in such a way that the entire muscle group's shape, tension and overall health is restored rapidly. A weekly cycle of massage is required to achieve good results.

La Post Uno

So. Being the savvy fellow that I(presume) I am, I have decided to start blogging. Now. I don't know how to go about this since I don't even keep a dictionary, but yes, I will try. Life goes on. Most of my posts will be medical stuff- personal stuff is coming soon. So till then...