How To Calculate Money Market Interest

How market news affect business and investment decisions

How market news affect business and investment decisions

News has become a part and parcel of modern lifestyle. No matter whether you are watching television news or reading a newspaper or reading news stories at a news portal, the objective is the same – getting updated with what is happening around you in all aspects. Businessmen, investors, and corporate people give more importance on business news rather than other news. And for investors and businessmen in the Indian market, business news on India caters to their thirst for information every now and then. Most people rely on a market news portal that carries detailed information related to business news on India. The greatest advantage of reading news at such a platform is that you can read a relevant news article several times and browse through the numerous pages at ease to your heart’s content and to your convenience.

The influence of business is such that even those who are not involved in any stock market investment or business do read business news on India. In the future if they happen to start investing, they will set sail easily no matter what the tide is. To assess the direction of a trend, especially for short term and long term trading, collect statistical data records of market fluctuations over a certain period of time.

You can also view the up-to-the-minute currency exchange rates at a market news platform. Almost all financial sites do run online calculators to help you calculate the currency values and thus find the currency exchange rates of the desired countries. For international traders and forex traders, getting updated with the latest currency exchange rates is a must. Once you are updated with market news, you will no doubt stay away from confusion in case of taking an investment decision.

The activities in the money market change according to what the investors do with stocks and commodities. There are varied investment options in the market today. If you read market news regularly you will know about the latest investment products as well as existing ones that are lucrative. This way you can diversify your investment plans and facilitate yourself and your family with a secured present and future.

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25 Random Things About Money

25 Random Things About Money

In the barely-a-month-old tradition of the “25 Random Things About Me” phenomenon currently taking over Facebook’s servers, here is a random list of oft-overlooked, occasionally quirky tidbits and observations compiled from my personal finance archives. They include the up-to-the-minute and the tried-and-true, personal experience and general knowledge, local as well as national. Hope you find some gems you can use!

The tax credit to aid first-time homebuyers enacted as part of the Housing and Economic Recovery Act of 2008 is actually a loan, not a credit. And you don’t actually have to be a first-time homebuyer, only someone who hasn’t owned a home in 3 years.
That is in contrast to the NEW tax credit for first-time homebuyers, part of the brand new stimulus plan of 2009, which actually IS a credit.
Attention, prospective Cabinet appointees: If you pay someone ,700 or more in a calendar year, or ,000 or more in a calendar quarter, for domestic service in your home, you need to pay the so-called “nanny tax”.
Those who buy a qualifying hybrid vehicle can receive a tax credit of between 0 and ,000. (NOTE: The key word is “qualifying.” Believe it or not, vehicles cease to qualify after a certain number are sold, so visit the IRS Web site for a current list.)
The laundry list of tax breaks for college includes 529s, CESAs, Hope and Lifetime Learning Credits, tax-free employer reimbursements, tuition deduction, student loan interest deduction, US Savings bond interest exclusion… Warning: No double dipping!
Having trouble tracking medical expenses that qualify for reimbursement by your Cafeteria Plan? Check your store receipts! These days, some drugstores indicate right on the receipt whether or not a particular purchase qualifies.
From the Dave Barry “I swear I am not making this up” files… being a member of AAA got me a big discount at Walgreens on medicine for my cat, Morsel.
Enrolling him in the Walgreens Prescription Savings Club saved still more on his next refill, even taking into account the Club’s annual fee. (In case you’re wondering… yes, he does have his own login on Walgreens.com, so he can mail order as well.)
By the third visit, they’d lost track of the fact that he was a member of the Club, and would have charged the higher AAA rate, were it not for a gentle reminder. Lesson: Paying attention to detail pays.
MA buyers of auto insurance – If you haven’t researched your options since the state passed a law allowing for competition between insurers, the recent Boston Globe article “Shopping auto insurers can really pay off” suggests you may be missing out on big savings.
Want to know what it will take to pay off a debt? Use “What will it take to pay off my balance?” calculator on Kiplingers.com.
Did you ever notice (with apologies to Andy Rooney)… although most people will go to great lengths to minimize their income tax bill, many are not just willing, but insistent, on giving Uncle Sam an interest-free loan every year? If you’re one of those still getting a giant income tax refund check every April, consider spending some quality time with the IRS Withholding Calculator to determine how to set your income tax withholding so you keep more of this cash working on your behalf throughout the year.
I usually get a chuckle out of people whose name matches their vocation, e.g. Ed McMahon’s spokesman Howard Bragman, 2008 Olympians Deedee Trotter (track), Peter Waterfield (diving), Trey Hardee (decathlon.) But a money manager named Madoff who “made off” with clients’ money – well, that’s not so funny. Besides the obvious (choosing me as your financial planner), check out the article “Consumers Can Protect Themselves” for tips on how to to avoid this fate.
Speaking of getting burned… Did you prepay for heating oil this year, only to see the price plummet immediately after the check cleared? Being a member of Our Town Consumers Choice, the largest Fuel group in NH, ME or MA, saved us from that fate this year, and has provided excellent guidance – as well as other benefits – in years past.
After quite a few years of marching in lockstep with savings/money market accounts, you can now find CDs that reward you with a higher interest rate for the privilege of hanging onto your money for a pre-defined period. Rates, terms, and FDIC coverage vary, but I’ve seen attractive offers everywhere from big banks to local credit unions to online-only institutions, so shop around.
Not all lifecycle funds are created equal. Before choosing a fund because its name matches your retirement or college time horizon (e.g. “BrokerX Target 2025 Fund”), make sure the manager for that fund has chosen an asset allocation model that’s right for you, neither too aggressive nor too conservative.
Investors are now allowed to make up to two changes in investment strategy per year in their 529 Plan, instead of one as previously.
One of the few “silver linings” in the cloud that was last year’s financial crisis: Some excellent mutual funds long closed to new investors, including some from Dodge & Cox, Oakmark, and Third Avenue, are open again.
OK, one more: Losses incurred on the sale of securities in currently taxable accounts can be used to offset income, and reduce tax liability, probably for many years into the future for some folks.
If you don’t begin taking Required Minimum Distributions (RMDs) from tax-deferred accounts such as 401k’s and Traditional IRAs every year starting at age 70½, you will owe a tax of 50% (!) of the required amount.
Except if you’re working, except in certain circumstances.
And it’s not really exactly 70½, since you have until April 1 of the following year to actually take the RMD.
And you can skip 2009, for which an RMD “holiday” has been enacted. (Gee, an RMD holiday sure is nice, but how about a simpler tax code? Now that would be a reason to celebrate.)
The 0,000 income limit, which kept some folks from doing a Roth conversion, goes away in 2010
Finally… there’s good news if you are one of the few whose biggest financial challenge this year will be what to do with surplus cash. In 2009, the maximum contribution to a 401k, 403b, etc., plans has jumped to ,500 (+ ,500 catch-up for age 50+).

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Phew! When I started this list, 25 sure seemed like a lot of “Random Things” but, as it turns out, there are plenty more where these came from. So I will be posting new ones as I think of them – randomly, of course – on the new New Means Financial Planning Facebook page. If you have learned some Random Things you think others might benefit from, please drop by and share them. And while you’re there, become a “fan”

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The Contribution of the Euro-dollar Market to the Modern Financial World

The Contribution of the Euro-dollar Market to the Modern Financial World

The Euro-dollar market* had caused many changes to the modern financial world in which, the open competitive effect of the international money market caused the liberalization by almost all industrialized countries of domestic money and banking markets. The market acted as a fully international mechanism for attracting deposits and offering loans, over a broad range of maturities and at highly competitive rates. The first important development of Euro-dollar business came after the Second World War, when Soviet bloc holders of dollar balances wanted to keep them in a form not subject to control by the US authorities. They kept them with London banks. However, the development of the market as a large-scale international structure really dates from 1957. It was given its impetus then by a rise in UK Bank rate to 7% and the imposition of restrictions on sterling credits to finance trade between non-sterling countries. At that time, banks in the US were limited (by Regulation Q) as to the amount of interest they might pay on deposits. Banks outside the US were able to offer a higher rate for dollar deposits, and yet, by operating on finer margins, to offer competitive terms for dollar loans. Many banks were well placed to take advantage of this situation. This was because of their wide overseas connections, long experience of international business and variety of outlets for making international loans. The first substantial development of the market took place in London, and London conducted much of the largest share of the business, which contributed considerable invisible earnings to the UK balance of payments.

The role of sterling has been a central point to the development of the Euro-dollar market. To the sense that, the control of sterling has not only been a central preoccupation of British governments, but largely determined Britain’s strategy towards the international financial market. Since 1958, governments have found themselves in a “dilemma” by the pressures of which the international use of sterling had placed on the British economy where “depleted” reserves of the entire sterling area constituted the most significant constraint on achieving economic growth. The management of sterling was the heart of governing Britain until conditions allowed the convertibility of the currency in the late 1950s. The central point that, throughout the postwar period, the British government sought agreements that enabled US dollars to flow to Britain whilst restricting the convertibility of sterling in domestic and foreign hands, (the Washington Loan Agreement, the Marshall Plan, and military assistance programmes encouraged a flow of dollars to Britain).

The UK government placed particular emphasis on exports to the dollar area (dollar-earning exports), with sterling area exports deemed next in importance. As early as the 1950s, Conservative governments, set about reasserting the international status of sterling and the importance of the City of London as the world’s premier financial centre. In 1953, commodity markets and exchanges for raw materials were re-opened in London. March 1954 saw the long awaited return of London Gold Market (open to all non-residents of the sterling area). Changes were made in currency regulations in 1955, which allowed the partial convertability of the pound for non-sterling area residents and non-dollar area residents. This was followed finally by the full convertability of sterling in December 1958, and by the Bank of England’s decision in 1962 to provide cheap foreign exchange cover and allow non-residents to hold dollar balances with the Bank of England (thus signalling the beginning of the Euro-dollar market). Dollars could now be deposited with the Bank of England in an external account, thereby escaping US exchange regulations and earning a higher rate of interest than obtainable in the US. The aim here was well calculated. London’s position as the main financial centre would be re-established and the City would quickly become the world’s leading Euro-dollar market.

However, the real significance of the Euro-dollar market lay in the fact that it originally drew its funds from non-bank suppliers and ultimately lent them to non-bank users, in which the established market was not dependent upon the existence on the USA remaining in deficit. As, the market soon become an integrated international money market providing its own specialised service which had shown considerable powers of survival. Merchant banks simply turned to the expatriate dollars, and used them in the way they have used sterling, operating freely on a global scale in the financing of international trade and the arrangement of longer term loans. American and other foreign banks wanting to take advantage of the paucity of financial controls in the UK soon joined this new market that was dominated by the merchant banks. Hence, between 1967-1978 the representation of foreign banks in London grew from 113 to 395. As, for the City’s banks, the establishment of sterling convertability in 1958 “was arguably the most important event of this century”, for it heralded the rise of the London Euro-dollar market. The table below shows how dramatic the Euro-dollar market had indeed become. A total of 91 international Euro-currency issues totalling the equivalent of ,884m took place in 1967. The firms shown below are ranked in order of the aggregate amount of issues for which they acted either as managers or as co-managers. Apart from those listed, there were 45 firms active in such management .

Euro-dollar Bond League

Firm – Total Dollar Equivalents (000)- Number of Issues:

Banque de Paris et des Pays-Bas – 490,000 – 21

Banca Commerciale Italiana – 445,000 – 19

S.G. Warburg & Co – 385,700 – 21

Deutsche Bank A.G. – 367,500 – 17

Kuhn, Loeb & Co – 295,000 – 15

White Weld &Co – 285,200 – 14

Lazard Freres & Co – 265,000 – 14

N.M. Rothschild & Sons – 260,000 – 11

Morgan & Cie International S.A. – 260,000 – 8

Lehman Brothers – 250,000 – 9

Banca Nazionale del Lavoro – 194,000 – 9

First Boston Corporation – 168,000 – 8

Banque Nationale de Paris – 152,500 – 6

Societe Generale de Banque – 135,000 – 7

Amsterdam-Rotterdam Bank N.V. – 135,000 – 6

Credit Commercial de France – 131,200 – 7

Kredietbank – 130,200 – 9

Smith, Barney & Co Inc. – 130,000 – 8

Societe Generale – 125,000 – 5

Credit Lyonnais – 122,200 – 5

(Source: The Times, the Euro-dollar bond league 29 December 1967)

The City of London proved to be a highly successful international commercial banking and financial centre, despite growing fears of competition from other centres. It presented strength, derived largely from the generalised “trust” with which the world views the City. The survival and revival of London as an international financial centre after the disruptions of the Second World War and the weakness of sterling as an international reserve currency had been largely based upon the development of the Euro-currency markets. In specific the growth of new or “parallel” markets alongside the old “classic” discount market, which with the relative decline of sterling as an international currency, had become a domestic concern. These new markets had revitalised the foreign exchange markets in response to the emergence of barriers of various kinds between ultimate borrowers and lenders. On the one hand, the domestic parallel money market in sterling evolved out of responses which were intended to evade the credit restrictions which successive British governments had attempted to impose during the 1960s through their participation in the old discount market. On the other hand, the decline of sterling and the difficulties associated with the US governments’ restrictions on the use of the dollar as an international currency gave rise to new markets in Euro-dollars and other Euro-currencies. New money markets where money is lent and borrowed between banks, companies and other organisations without the control of the monetary authorities (governments and central banks). It was a measure of the City’s autonomy that such developments took place.

The development of the Euro-dollar Market can be described by using a Marxist analysis of capitalism, in particular, the workings of the capitalist economy and its political and social implications. In specific, to the theory of the state in advanced capitalism, and on the basis of the materialist conception of history and Marx’s general theory of capitalist production. As any attempt to develop a theory of the state, must deal with a Marx’s works on the state. In the sense that, capitalism is analysed predominantly as “civil society”, as a more or less self-contained sphere in which all citizens, including capitalists and workers, confront each other as competing individuals on the market. Using this conception, the state occupies another sphere standing outside civil society, which purports to represent universality or the community between people, but is constantly undermined by the antagonistic individualism of its basis, namely civil society.

Karl Marx claimed that, “the abstraction of the state as such belongs only to modern times. The abstraction of the political state is a modern product” . The Euro-dollar market inherently being a new phenomenon proved some uncertainty to the British Labour government during the mid-1960s, which had to approach the new market through an analysis of the world in which the Labour Party sought to govern. Such an analysis posed a variety of questions. Firstly, why particular institutions and processes posed such a set of problems for the individual Labour governments? Secondly, why particular issues come to preoccupy political debate in one period only for it to dwindle in importance in the next? Finally, why particular patterns of political and social cleavage prove so tenacious? With such questions, and a new market developing, the British Labour Government had to respond with a set agenda in order to control specified targets including the sequence of booms and slumps, the differing strengths of the national economy, the rise and significance of multinational corporations, the role of international financial agencies, and the changing role of the government in economic and social life. Such a task seems a formidable one, but one that was not considered impossible. As what holds the analysis together is the recognition that the world during the 1960s was capitalist to the sense that Marx used the term. The law of value still operated throughout the major economic and social processes. Due to this reason, the preceding outline of Marx’s analysis remains relevant, as it provides the means by which the true nature of the British government’s dilemmas can be explained and understood.

To Marx, the executive of the modern state is portrayed as “a committee for managing the common affairs of the whole bourgeoisie”. However, there is a problem, which must confront any contemporary theory of Marxism, namely the relation between appearance and reality. The state appears as independent from the sphere of market exchange, but in reality it is a different matter. The Euro-dollar is an example of such a case, in essence a phenomenon of the 1960s, an international money market where commercial banks undertook wholesale transactions involving foreign currencies. It had been a growing market, which has often involved conflicts with the state. As governments change, the market had been growing at a rapid pace, which had proved to be difficult to regulate. It seems that the Euro-dollar market was one of the initiating processes, which led to what is known today as globalization. To the sense that, the market had caused many changes to the modern financial world which, evolved on a global scale. The open competitive effect of the international money market had caused the liberalization by almost all industrialized countries of domestic money and banking markets. Where, successful participants in the money market of today, have a far more sophisticated understanding of financial risk, and the tools to manage them. As the changes in the markets have required many banking institutions to change in the way of financial regulation.

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However, when examining the Euro-dollar market, one has to turn to the 1960s which witnessed the focus of the changing relationship between the national state and the global financial markets, where the policies of Keynesian sought to bring “economic forces” under control. The idea was that the state should assume responsibility for the economy, intervening where the market fails to stimulate economic growth. In times of a recession, the state should stimulate demand through deficit financing (such as, state expenditure based on credit). The state was thus charged with creating demand through an increase of the money supply. Keynesian raised these means to the principle of capitalist reproduction. Governments used these methods in a form of expansionary policies. Keynesianism depended upon the use of money for expansive industrial development and the management of “sound” finance.

One major question arose, throughout the paper: what are the risks and problems of the Euro-dollar market, and is the growth of this market a “welcome tonic or a slow poison” to the international financial system (with particular emphasis to the United Kingdom)?

There was no doubt that the growth of the Euro-dollar market had contributed spectacularly to the easing of the world liquidity problem. In less than a decade, the market grew from nothing to ,000 million compared with an increase in official world reserves of only ,000 million from 1951 to 1965. However, the growth of this market merely “put-off” the evil day when the reserve currency countries, and in particular the United States, had to adjust their payment situations to the facts of life. On the technical level the growth in the Euro-dollar market exposed the world in general and Britain in particular to every similar dangers to those experienced in the early thirties. Of its nature it was a market notable for its lack of regulation and control. No one country could exercise control over it. Euro-dollar deposits were no longer used solely for trade finance, and hence were not self-cancelling. Although individual banks observed limits to the amount of dollars they were to lend to individual “names”, countries or areas, deposits passed through many hands before they had reached the final user. It was almost impossible to tell the extent to which any country or individuals were committed to repaying Euro-dollars. If a serious breakdown occurred anywhere in the system, the strain would be transmitted to the centre. Britain’s involvement in this market was so extensive with £2,773 million liabilities and £2,487 million credits, by 1968, that a breakdown would inevitably throw doubt on Sterling .

The risks and problems associated with the Euro-dollar market made themselves felt at three levels: the individual bank, the individual country, and at the level of the international financial system as a whole. For an individual bank the main risk was the possibility that a borrower may not repay his Euro-dollar loan. The borrower for any number of purposes – over which because of their unsecured nature, the lending bank had very little control, may use Euro-dollar funds. For an individual country, the problems created by the Euro-dollar market were two-fold: Firstly, the danger that the domestic banks involved in the market may over-extend themselves and thereby place demands on the official foreign exchange reserve. Secondly, the fact that the existence of the Euro-dollar market had provided another channel through which short-term capital can flow internationally and, hence, had tended to increase the volume of short-term capital moving into or out of any particular country”.

There were difficulties in establishing a mechanism that could bring about the necessary degree of international control over the Euro-dollar market. The most important was the fact that there was no single institution, either national or international, that could control the market, and act as an international lender of last resort in the same way that a national central bank can in the case of a national money market. There seemed to be a system of informal understanding among the central banks, developing probably as part of their co-operation in fighting exchange crisis, under which substantial volumes of US dollars could be mobilised quickly to meet any serious destabilising forces in the Euro-dollar market. In circumstances where the needs of the Euro-dollar market did conflict with other policy objectives, however, it was doubtful the national central banks would give priority to the Euro-dollar market. This was the basic weakness. As, in order to avoid this situation, the US dollar funds needed to stabilise the Euro-dollar market would have had to be made available on a more formal basis – such as by means of pre-arranged swap and stand by arrangements between the national central banks and the BIS. In this situation the BIS would be free to call on these swap funds in accordance with the needs of the Euro-dollar market. In addition, to meet these requirements during a period of crisis the volume of US funds at the disposal of the BIS would have had to be substantial. Undoubtedly, the major portion of these swap funds had to originate from the Federal Reserve System.

Generally, however as far as the international financial system was concerned, one heard nothing but good of the Euro-dollar market and of its rapid expansion. Whitehall had generally welcomed it as a means of financing the UK’s overseas mandate (investments) without putting undue strain on sterling. The City of London virtually created the market and had made a good deal of business out of it. The Chancellor of the Exchequer stated way back on the 8th December 1960, of using US dollars to improve the UK balance of payments, and to improve the UK dollar indebtedness. Throughout the end of the 1960s, it was apparent that the Euro-dollar market not only financed the UK economy, but assisted in the UK’s balance of payment’s problems. The British government foresaw the Euro-dollar Market as a way for advancing its own interests and concerns. The role of the public authorities and the nationalised industries proved to be very crucial to the UK government. These industries became a way for the UK government to raise foreign currency on a medium and long-term basis in order to finance its repayments of shorter-term debt and to improve the UK reserves. Both the Inland Revenue and the Treasury agreed on one thing that, something had to be done to “helping local authorities to obtain access to the Euro-dollar market” . To the sense that, both parties considered it desirable to include a provision in the Finance Bill of 1970 to the effect that “the interest on securities issued by a local authority in the currency of a country outside the scheduled territories shall be payable in full without deduction of tax at source, and be exempt from income tax where the beneficial owner of the securities is not resident in the UK”. This was the combined view of the Treasury and the Inland Revenue as a “means of removing an impediment to foreign currency borrowing by UK authorities in the Eurobond market” . The reason for this was that, “it was in the public interest for nationalised industries and large local authorities to borrow on the Euro-dollar market” .

Controls in the UK had been designed to protect the reserves by restricting access to the market by UK residents and restricting of “switching” out of sterling by banks in the UK. UK residents who were able to show a need were allowed to maintain foreign currency deposits (which earned Euro-dollar rates) with UK banks. These deposits soon accrued dramatically. Also control was permitting UK residents (especially the local authorities) to borrow foreign currencies in this market, or overseas where this allowed beneficial transactions to take place without recourse to the reserves (e.g. for foreign investment). Banks in the UK were allowed to maintain an excess of foreign currency claims over liabilities (i.e. to switch out of sterling) only to the extent necessary for them to maintain working balances.

This would accommodate a significant and useful benefit to the UK balance of payments. The idea was considered to be of such importance that large steps were taken to encourage UK borrowers to “tap” into the foreign currency sources of finance. The UK government passed powerful legislation through parliament, which involved serious sensitive issues such as tax measures encouraging foreign currency borrowing (i.e. tax allowances, tax evasion, and payment of gross interest), and double taxation agreements.

However, certain issues arose which showed the sensitivity of the situation of whether the UK government were favouring business interests, when pursuing its policies, and whether HM government would relieve these industries of the loss should-ever there be a change in the exchange rates (in a form of a Government Exchange Guarantee). The argument being that the government could not allow a nationalised industry to default and by encouraging the nationalised industries to borrow for the sole purpose of easing the balance of payments, the interest rates would be more than counter-balanced by the increased production that would be made possible. Given successful management of demand, such production would either find its way into exports or into the satisfaction of needs, which would otherwise be placed into imports. This meant that external sources of capital financed a large part of the UK’s portfolio and direct investment abroad, and UK borrowers were allowed under exchange control to raise foreign currency loans to finance domestic investment. This was implemented by providing an “off-shore” regulation-free environment devised to trade financial assets denominated in foreign currencies.

One situation concerned the Ford Motor Company in the USA. The company had entered into a contract to purchase for dollars, the sterling required to enable the company to undertake their offer to buy 45% shareholdings in the Ford Motor Company of the UK, which they did not already own. The UK Government on the 13th December 1960, received 0 million for value for this offer . Secondly, it was a market that even interested the IBRD. On 18th August 1960 Mr Miller of the IBRD’s Paris Office wrote to the UK Treasury, to discuss with the Bank of England, the question of whether the International bank could follow the example that was apparent, with many other institutions investing dollars in the UK at short term, and to place these into what was identified as the “Euro-Dollar Market”. At the end, the IBRD eventually dropped the idea of placing certain liquid dollar assets in London, because of the unfavourable attitude of the US Treasury. Although the IBRD decided not to process this further, it nevertheless resembled the importance and relevance of the Euro-dollar market, and of the City of London itself .

In 1968, the progress in reducing the UK balance of payments deficit was much slower than the UK Government had either anticipated or desired. As, the third quarter figures of 1968 experienced an unprecedented net inflow of nearly £200m on long-term capital account and a further reduction in the current account deficit. On the combined current and long-term capital accounts there was an identified surplus of around £105m: the best quarterly result since the fourth quarter of 1966, and following deficits of about £310m and £170m in the first and second quarters. Official long-term capital transactions benefited in the third quarter. There was a very large net inward movement of private long-term capital amounting to around £175m . However in 1969, there was a considerable turnaround between the first and second halves of the year, when the current and long-term capital deficit fell from £427m to £31m. Apart from the substantial progress in cutting the trade deficit, a significant part of the improvement resulted from changes on the capital account. The outflow on official capital (in the capital account) inevitably rose. Bond issues overseas by UK public corporations provided a counterbalance to the increase. Tighter credit in the UK tended to check outward movements and encouraged inward movements of long and short-term capital. As investment of this kind involved no call on the UK reserves, in the standard form of the balance of payments, the investment was recorded as a debit, but the Euro-dollars which financed it were recorded not as a credit, but as a monetary inflow. In general, it seemed that there had been an encouraging start towards the UK achieving its immediate objective for 1969-70, and that the outlook for achieving a larger continuing surplus thereafter was good .

However even though it is easy to view these events by their own logic, in order to understand their real significance, they must be set in the context of the negotiations which took place between Britain and Europe in the mid-1950s. In the summer and autumn of 1955, Britain was invited to discussions on closer European economic integration by the six nations, which eventually signed the Treaties of Rome in March 1957. After a flurry of activity in Whitehall, the Cabinet Office circulated the Trend Report, which pointed out to four decisive considerations against membership . Firstly, the Cabinet Office and the Treasury had concluded that membership would weaken the UK’s economic and consequently its political relationship with the Commonwealth and the colonies. Secondly, it was judged that the UK’s economic and political interests were worldwide and that a European common market would be contrary to the approach of freer trade and payments. Thirdly, it was thought that participation would gradually lead to political federation, which was unacceptable to Britain. Finally, the Cabinet Office concluded that membership would be detrimental to the British economy since it would involve the removal of protection for British industry against European competition. When placed alongside the earlier considerations relating to sterling, the Trend Report convinced the Eden government that Britain should withdraw from the Messina Talks. Instead of negotiating with the Six, Thornecroft at the Board of Trade convinced the Cabinet to launch an alternative non-discriminatory scheme aiming to “disunite” the Six away from the idea of the common market. This scheme, labelled Plan G, later developed into Britain’s free trade proposals, which became the basis of the European Free Trade Area (EFTA) established after the Stockholm Conference in 1959 . Whilst, Plan G proposed a free trade area designed to eliminate industrial tariffs, it carried no further implications regarding wider economic integration. Within a free trade area, Britain could retain its traditional trading structure, and as Board of Trade concluded, this would be entirely different from a European discriminatory bloc in which Britain came under domination of Germany.

The successful conclusion of the Treaty of Rome in March 1957, came as a major surprise to the British state. It was fundamental to British thinking that the Six would not go ahead without the participation of the UK. In a frank memorandum titled “What went wrong?”, the Treasury surveyed the scene in July 1959, and concluded that the government had made a number of serious errors . Britain had misunderstood the US position, not realising that the US State department would always back the Community given its political and defence implications. It had made a number of tactical errors, in trying to divide the Six, in believing that the UK would be allowed to join at any stage once the Community was formed and in failing to establish a “negotiating machinery” to match that of the French. Finally the British government had continued to pursue the half-hearted 17 nation EFTA strategy when it was clear that neither the French nor the Germans were attracted to the idea, which in any case the Treasury concluded “does not bear examination for five minutes”. The next 14 years would be spent struggling with the legacy of the British state’s failed attempt to prevent the creation of the Community.

A further examination must make reference to the form of Britain’s postwar integration into international trade and money markets. Although a number of events began to weaken Britain’s position in the global political economy (Suez and the relentless process of decolonisation), access to privileged markets had enabled the economy to reconstruct and prosper in the early 1950s. Moreover, the British governments could utilise the international prestige of sterling and the City of London to counter, (at least in theory), the effects of balance of payments deficits. Once it became clear that, de Gaulle would not sanction UK entry to the Community, Britain was caught in a bind and was forced to pin its economic hopes on the revival of the City of London.

In the 19th century, it was the competitiveness of “British industry” which led to the international use of sterling. However, by the late 1950s, the lack of competitiveness of Britain’s industrial base (particularly “via” Europe) now meant that the international use of sterling could quickly turn from an asset to a liability. As sterling was made convertible, short-term capital inflows and outflows increased in volatility. In these circumstances, the Bank of England found it increasingly difficult to defend the exchange rate – where the slightest “rumour” could lead to a massive speculation against the pound, destabilising the domestic economy. Although these pressures were seen to exist even as early as 1956 (when sterling was only partially convertible) over the first two days of Britain’s invasion of Egypt there was a massive outflow of million – (they became more acute over the next 20 years). From the early 1960s, the “British economy” was dominated by a pattern which saw rising levels of imports, falling exports, and when the balance of payments surplus diminished the introduction of high interest rates to attract short-term capital (hot money) to London.

On entering office in 1964, Wilson found that convertibility and the establishment of the Euro-dollar markets had produced a situation whereby financial markets could validate or disapprove of policy measures within hours. In many ways, the story of the Wilson’s government is one of speculative action against the pound followed by international rescue operations to shore up the sterling exchange rate. Deflationary measures pursued throughout 1965, and 1966 failed to stem the tide of speculation, forcing the government to devalue in November 1967 and to negotiate a ,5 billion standby credit from the IMF. Wilson agreed with the Bank of England and the Treasury that devaluation was a strategy to be avoided unless the Labour Government was willing to destroy confidence in sterling and the City as the premier financial centre.

So relatively, the development of the Euro-dollar market coincided with the recoveries of the capitalist economies and the growing pressure of the US economy. The shortage of dollars gradually changed into dollar saturation. This market took over aspects of a developed domestic credit system, which was operating globally and independently from the central banks. Speculative capital assumed the function of national and international institutions, financing budget and balance of payments deficits. Such “money” existed as a claim on central bank money in national states on unregulated financial markets. The global role of the City foresaw the result as the dominance of financial over industrial capital. To the sense that although Britain was a low-wage and low-productivity country, it was a centre of global finance (due to the contribution of the Euro-dollar market). However, this did not mean that British industry had been undermined as a consequence of financial interests and policies favouring the concerns of financial markets, although the global role of the City “has had” a detrimental effect on British industrial development. Rather, the development of London as the centre for the global circulation of capital expressed the organisation of “British” capital at the most developed level of global capitalist relations. However, this development of the dominance of financial capital over productive capital must be treated with caution, since it was high interest rates that attracted money capital to London and the fact that the UK is one of the main countries attracting productive investment (particularly from US-based multinationals).

So what can we learn from the British experience? The British case illustrates that there is nothing simple about the choice between government and the market: both are flawed mechanisms in terms of maximising efficiency and both require a deeply rooted underlying consent about their manner of operation and acceptance of their distributional outcomes. Lever later acknowledged in 1974/75 that, “modern governments, overestimated their ability to shape and manage the complex drives of a mature economy. They wrongly assumed that they understood all the reasons for its shortcomings and so, not surprisingly, were all too ready to lay hands on superficial remedies for overcoming them. And all this without any attempt to understand the economies of an increasingly interdependent world” .

It remains to be said that that the nation-state provides the domestic political underpinning for the stability of global capitalist relations. Therefore in order to maintain the position of a nation state’s integration into the “world market” nation states are under constant pressure to make more efficient use of available resources. Failure to achieve this will result in a loss of reserves, precipitated by balance of payments difficulties, and inflationary pressure, provoking global exchange instability and financial crisis.

ENDNOTE

* Here are two very similar definitions of the term Euro-dollars:

Robert Gilpin, (The Political Economy of International Relations, Princetown University Press, 1987, p. 314-315), states that: The Euro-dollar market received its name from American dollars on deposit in European (especially in London) banks yet remaining outside the domestic monetary system, and the stringent control of national monetary authorities.

Enzig and Quinn (The Euro-dollar System: practice and theory of international interest rates, MacMillan Press, 6th edition, 1977, p. 1) state that: the Euro-dollar system is a term used to describe the market in dollar deposits and credits which exists outside the United States of America.

FCO 59/212: Economie Affairs (External), International Monetary Matters, Euro-dollar Market, (1/11/1967-8 /5/1968) (Foreign Office – Economic Relations Department), File Number: UE 4/44

Marx Karl, Contribution to the Critique of Hegel’s Philosophy of Law, in Marx/Engels 1975, vol: 3, p32.

E. Wayne Clendenning, Euro-dollars: The problem of control, The Banker, April 1968

PRO file FCO 59/212: Economie Affairs (External), International Monetary Matters, Euro-dollar Market (Jan 1967- December 1967)

PRO File IR/40/17474: Memo from J.G. Littler to Mr. Andren on foreign currency Borrowing by local authorities, 31 March 1969.

PRO File IR/40/17474: Confidential letter, from Mr. J.G. Littler to Mr. Andren titled foreign currency borrowing by local authorities, 14 March 1969.

PRO File IR/40/17474: Confidential letter from G.B.N. Hartog to Mr Elliston, titled Finance Bill: Eurobond issues by local authorities, 31 March 1969.

T 308/11: Use of “Windfall” Dollars To (A) Improve UK Balance of Payments Position (B) Reduce UK Dollar Indebtedness, (December 1960)

T 236/6260: IBRD- Placing of Dollars Funds in London, 18th August 1960

PRO File T 230/1056: UK submission to working party No. 3 of OECD Economic Policy Committee 1969 (28/01/69 – 11/11/69). File Number: 2EAS 549/188/02

PRO File T 230/1056: UK submission to working party No. 3 of OECD Economic Policy Committee 1969 (28/01/69 – 11/11/69). File Number: 2EAS 549/188/02

Burgess S and Edwards G, The Six plus One, International Affairs, no: 64, 1988, p407.

Camps M, Britain and the European Community 1955-63, Oxford University Press, Oxford, 1964.

PRO file T234/720, Memorandum titled, What went Wrong? Was prepared by the Treasury, July 1959

Harold Lever, The cabinets of 1964-70 had highly gifted individuals. Why then was so little achieved?, The Listener, 22 November 1984, p24-25.

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Money Market Account

Money Market Account

If you take Aore ready to take advantage of the option by the FDIC above the average interest rate insured to save your money, you want to see ??ll how to open a money market account. This account is part savings and the controls, how to buy stocks the AI is allowed in the money by writing a check every month will be revoked. Banks invest money that you deposit the money market account for you and your money until the FDIC insured limits is protected.

1. Comparison Shop

Before and run a money market account opened with the first bank to take you, you do ??ll take the time to shop ??comparison, Au. You do not have to AOT buy the first car or first house you see, and select investments and savings is not a chance, AOT was different. Money market accounts are not all equal in the various financial institutions, so that you do, ??ll, in accordance with the best terms and the results are available. You can make Web sites on comparisons with several banks and credit unions for you and save time.

2. Select your features

Surprisingly, even money, offers the market a variety of features and concepts to choose from. plan to have reviewed Decide how often you write checks from your money market account, and then narrow down your choices to those accounts that you review the minimum requirements. Decide how often you ??ll to want to withdraw money from your account, and then narrow your choices in this option is that the free withdrawal per month to enable justice to those needs. If it do not need a detailed report on how often you think you are ??ll this feature, select the most appropriate account or go with the lowest costs by more than checks or restrictions on withdrawals.

3. Compare cost calculations

You always want to impose the least cost banking products in the costs could include the features you need to choose to keep more of your money. Try to avoid a monthly maintenance fee payment, if possible. Find don a good change, AOT requires a minimum balance fees or minimum balance requirement to avoid is low enough that you can keep your balance above that amount and know the cost of maintenance.

4. Look and minimum deposits minimum deposit

How much money do you have for your first deposit? This will play a role in determining the money, the market is open for you because they all added to a minimum deposit requirements available. Most of the money market account can be opened 0-500 first, and many will require the same amount for a minimum balance or you to pay a fine or cost of living.

5. Contact the bank that meets your needs

After you find ??ve some banks that offer money market accounts to meet your needs, please call and ask them to mail an application form and all account information. Sometimes you can open an account online or by mail. If you already have a different bank account with certain banks, you can often open new accounts via telephone. Some banks offer special benefits for people who are more types of accounts open at the same bank, so if you already see a checking or savings account at a particular institution to be sure if the additional advantage of a money market is open, even have.

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4 Tips for Getting More Money From Your Savings Account

4 Tips for Getting More Money From Your Savings Account

Do you feel like you’re saving your money with a financial institution in vain? Does it seem like you’ve had your money there forever but you’ve earned very little on your investment?

Even though banks pay very little interest, there are some simple strategies you can use to get the most out of your savings account.

Easy Ways to Improve Returns

If you prefer regular savings accounts to more complex investment arrangements, there are a few things you can do to ensure you make the most returns on your money:

Choose online savings. Online savings accounts are fast becoming the popular choice of people who want to keep it simple where their savings are concerned, yet get good returns.

Online savings accounts offer the option for you to earn good interest rates on your deposit. These accounts would certainly take care of that concern!

You earn your interest safely. As long as your account has 0,000 or less, it’s automatically insured by the FDIC. This means that you won’t be negatively impacted by any financial crisis that could affect monies saved.

Look for higher interest rates. Believe it or not, not all savings accounts are the same. There are actually some that offer better interest rates for depositors and these are the ones to consider if you want to see your money working for you. At the end of the day, your mission is to be able to earn money on your savings, so why not earn all you can?

The more you save, the greater the impact of a higher interest rate – even if it’s only slightly higher. As your savings grow over time, the difference could be significant.

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Look for accounts with high opening bonuses. Some savings accounts offer high bonuses once you open a new account. These accounts give you a good head start where your savings are concerned and can end up working for you, especially if you leave your money to grow.

Know when interest is calculated. If you’re able to study the pattern of your savings account, you should be able to determine at what point during each month interest is calculated on your savings.

A trick to ensuring you collect higher interest each month is to ensure your balance is as high as possible right before interest is calculated. That way, you’ll get the satisfaction of seeing higher interest amounts in your savings account.

Take Your Savings One Step Further

If you have a bit of an adventurous streak, you could consider those savings accounts that are fixed term and offer higher interest rates. These include viable options like certificates of deposit and money market accounts. Of course, there is more risk involved, but nothing that a little focus and research can’t overcome!

Having a fixed term savings account can be challenging, especially if there is an emergency need for the money. However, if you’re able to hold out until the end of the term, then you’ll reap better rewards in more interest earned.

Fixed term savings options like certificates of deposit guarantee higher interest rates the longer you save your money untouched. That might be the option for you if you’re not getting what you feel you deserve from your existing savings arrangement.

It’s frustrating to save with a financial institution for your entire life without seeing positive returns from it in a reasonable timeframe. Put a little thought into the process as well as the options available so you can find the most practical and attainable way to earn on your savings.

To learn more about other personal finance tips, see the resource box below for a free 6 day finance eCourse plus additional financial tips.

Better Money Management in 5 Steps

Better Money Management in 5 Steps

How well do you manage your money? Ultimately, your financial success depends on your ability to take better control of your financial affairs.

Here are 5 positive habits to help you become more effective in managing your money, no matter how much you start with:

1.   Start by involving your whole family in the learning process.

Engage your whole family in learning about how to effectively manage money. Don’t keep your financial affairs or investments a secret. Ongoing communication about your financial matters is an absolute must if you would like to establish trust, accountability and a sense of financial peace within your household.

2.   Reduce your debt load and expenses while increasing your savings.

Could you decrease your expenditures and be content with getting by with a little less? List three to five areas you could cut back on right away that would allow you to reallocate the money not spent to increase your savings over time.

Reducing your debt load may be a long-term goal, but once you eliminate the heavy burden of bad debt, you can begin accumulating wealth.

3.   Gain peace of mind with your emergency fund.

There is nothing like being worry free of knowing how you will pay for the next crisis down the road. Your goal should be to build up enough reserve funds over the course of the next year to cover three to six months of your normal expenses.

Start by opening a savings account or money market account that doesn’t penalize you for deposits and withdrawals. Eventually, you will also be able to set aside additional savings for long-term projects such as vacations, post-secondary education or projects around the home.

4.   Create balance in your money management plan.

The following money management plan allows you to build up your savings and rewards you every month for your efforts. Start by setting up separate accounts for each of the following categories and allocate funds in accordance with the recommended amounts:

10% of your net income for investing in your financial freedom

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Your goal is to set aside money every month, building up your capital in various investments.

At no point in time should you spend the capital that you have already invested. You may reallocate capital to finance a project that is going to create wealth, but avoid the temptation to pay off any expenses.

10% for your education
Your financial literacy is fundamental to becoming a wise investor. This knowledge may be gained from a variety of sources, such as home self-study courses, workshops, seminars, books, CDs, websites and investment clubs.

10% for giving
Giving not only brings joy to others; it also brings you a sense of gratification in knowing that you are adding value to other people’s lives. Get into the habit of supporting your community and helping those in need.

10% for your emergency fund and future projects
As outlined already outlined, set aside money to cover any unforeseen expenses.

10% for play
Life should be enjoyed now and through retirement. A secret to managing money well is establishing balance between hard work and rewarding yourself. Your play account should be spent each month on ways that rejuvenate your body and spirit such as a weekend getaway for two, a meal in a classy restaurant or a day at a health spa.

50% for necessities
The majority of your monthly financial obligations or expenses fall into this category. Make a concerted effort to reduce your expenses in the early goings by cutting back on certain luxuries or desires. A key factor to getting ahead is coming to an agreement with your spouse about how you will manage your financial affairs, including your long-term financial goals.

5.   Track your cash flow and your net worth.

Your cash flow analysis
An important aspect of controlling your money and being successful in the world of finances is keeping tabs on your cash flow on a regular basis. Your cash flow analysis is a written plan of how you spend your money. It is a simple cost-breakdown of your expenses, as seen in most budgets, and involves tracking your income and expenses on a monthly basis. Your cash flow analysis should take into account several important factors, such as:

your budget priorities as a family, based on your passions and dreams
the impact of your specific family values on your cash flow
specific short-term budgeting plans, as well as long-term projections over a six-month to one-year period.

 
One easy way to keep track of your cash flow is to use an electronic spreadsheet.

Your net worth

Besides monitoring your cash flow, it is important to periodically assess your net worth. To calculate your net worth, you need to total up the assets you possess and subtract your liabilities. Assets typically show up in categories such as:

investments,
bank accounts,
pension plans,
chattels or
equity in your personal residence. 

On the other hand, liabilities include such categories as:

credit card debt,
long-term loans,
home mortgage,
taxes owing or
unpaid bills.

Calculate your net worth right now and then monitor your net worth every three to four months. The simplest way to keep track of your net worth is with an electronic spreadsheet.

In summary, by implementing these 5 positive money management habits you will begin to realize your dreams for a better future. Keep in mind that what you focus your attention on will increase.

Return on investment allows an investor to evaluate the performance of an investment and compare it to others in his or her portfolio. Find out how to calculate ROI and how to use to your advantage. Be the first to check out our latest videos on Investopedia Video: www.investopedia.com
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How To Make Easy Fast Money Online? – Become A Success Full Money Market On Internet In 24 Hours With Articles Marketing’s Techniques

How To Make Easy Fast Money Online? – Become A Success Full Money Market On Internet In 24 Hours With Articles Marketing’s Techniques

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