Financial Blog

Gas prices already top $4 a gallon at many stations. 

The slow and seemingly inexorable rise in gas prices over the past two years has reached a fever pitch in recent months. That’s taking its toll on many Americans, especially when coupled with weakness in the housing market and increasing costs for things like groceries. Faced with paying more at the pump, some say they are cutting back on restaurant outings, shutting off cable or Internet access, paring clothing budgets and even scrimping on necessities such as food.

Economists say there’s no doubt that Americans are tightening their budgets.

“There’s less consumption going on,” said Brian Bethune, U.S. economist with Global Insight. He cites a slight decline in gas consumption and a steep pullback in spending on automobiles.

Bethune also suspects that more Americans are substituting higher-priced goods with cheaper ones — choosing McDonald’s coffee over Starbucks, for example, or hitting a bulk warehouse chain such as Costco or Sam’s Club instead of a pricier grocery store.

The situation could get worse soon. Prices at the pump have been pushed to levels many couldn’t conceive of even a year ago, and analysts and the Energy Department are both expecting the cost of gas to rise even further this spring and summer.

For many, obligatory commutes and a lack of public transportation make it tough to cut back much on the one thing that could make the most difference — driving itself. Still, faced with paying $3.50 or more per gallon, some Americans say they have been forced to drop their cars altogether, or at least to reduce trips to the mall or even grocery store.

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The US and world economy continues to slow down, it leads to interest rates decrease. Mortgage interest rates decline as well. This situation can make refinancing even more attractive than it has been before.

Interest rates have dropped almost 1% off their most recent highs and they tend to drop further. People who bought a house or refinanced several years ago should consider whether the new loan rates make it attractive to refinance again. Doing so now may significantly decrease monthly payments and you can easily spend extra money on anything else. Just check your mortgage quote and maybe you will find it worthwhile to refinance.

One may think, that it is still too early to refinance now as interest rates tend to decrease. Be very careful with that; it is very hard to predict the direction of interest rates and home values. If the economy continues to decline, expect interest rates to stay low or get even lower. This may be a good time to refinance, but the market can recover very fast and lending rates will increase. You may lose the right moment for refinancing in order to save good amount of money for your household. Be careful with waiting for too long.

Before getting into action, learn as much information as possible. There are some good financial resources online, I advice you to study the material and estimate your financial state. If you feel unable to do so yourself consult professionals.

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More and more people around the world can afford an expensive cosmetic surgery with the help of cosmetic surgery loans.

It’s quite natural that all people prefer to look good but not all of them are satisfied with their appearance and they do their best to look better. This desire is typical not only for women but due to changing time more and more men wish to possess an ideal body and good looking face.

Celebrities and people with high income can afford all kinds of cosmetic surgeries. The result is quite obvious and could be seen on TV and in real life. Cosmetic surgeries can change one’s personality (and life) tremendously.

There is only one problem about cosmetic surgeries; they are very expensive for middle class citizens. One has to save money for several years to make a change in his body he has been dreaming about for long years. A common man can’t afford even a small and easy plastic surgery as it costs a good sum of money; besides that cosmetic surgery expenses are not covered under health insurance scheme.

So, “What can the way out be?” you may ask. Cosmetic surgery loan is almost the only opportunity for a working class to afford a desired change. Cosmetic surgery loan covers all kinds of cosmetic operations, e.g.: dental cosmetic surgery, hair transplant, liposuction, breast modification (revision), skin resurfacing, face lifting and many more.

You can finance any cosmetic surgery with a cosmetic surgery loan. The sum of the loan ranges usually from $1000 to $25000, it depends on the operation you wish to undertake. Usually the loan is granted for a period of 6 to 60 months.

Dental financing is one of the most popular loans. That’s no wonder, if you have problems with your teeth, you can’t afford waiting. With time passing by you destroy your health and home budget. If you put the problem off till you have enough money, the bill for dental operations will reach astronomical heights. Plastic surgery financing keeps the second place in popularity. It results from a human desire to look good. People do anything it takes to make a long desired change it their appearance.

Before applying for a loan, get as much information about the topic as possible. Internet offers you a lot of online opportunities to get a cosmetic surgery loan you need. I wish you luck in staying as beautiful as you desire.

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An MBNA credit card customer recently expressed his concern after he was charged a small fortune by the credit card company for a small oversight. Paul Williams, aged 39, said he took out the 0% balance transfer credit card to try and sort his finances out, and he set up a direct debit for the £5 minimum monthly repayment right away.

However, MBNA then increased the minimum repayment to £10 per month, but Mr Williams did not realise and therefore did not increase the direct debit. As a result of this Mr Williams paid less than the minimum required repayments, and was hit with a £12 charge.

However, it did not end their. As a result of this oversight the credit card provider also decided to withdraw the 0% balance transfer facility from Mr Williams, and told him that he would have to pay £170 more in interest on his credit card balance. However, after some discussion the card company agreed to reinstate the offer and refund the charges.
Mr Williams said: ‘I was shocked and stunned when this happened. ‘I put my hands up that I made a mistake, but to ruthlessly withdraw my 0% credit card rate and charge me interest at the full rate because of one basic error is harsh.’

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British house prices fell for a fourth month running in February to post the lowest annual rate of inflation in more than two years, the Nationwide Building Society said on Friday.

It said house prices fell 0.5 percent on the month in February after a downwardly revised 0.3 percent fall in January. Analysts polled by Reuters had forecast a flat reading on the month.

Annual house price inflation fell to 2.7 percent — its lowest since November 2005 — from 4.2 percent in January.

“The trend in prices is clearly weakening, but the size of the drop in the annual rate between January and February perhaps overstates the rate of cooling as it partly reflects the particularly strong increase in prices in February last year,” said Fionnuala Earley, Nationwide chief economist.

The average house price fell to 179,358 pounds($356,688) from 180,473 pounds.

The figures add to evidence of a downturn in the housing market and may heighten worries of a sharp retrenchment in consumer spending.

A survey earlier this week showed consumer confidence fell in February to its lowest in more than 13 years with shoppers more reluctant to splash out on big purchases than at any time since 1990.

Nationwide is forecasting flat house prices in 2008 as a whole but many private economists are predicting falls of up to 5 percent.

The Bank of England has cut interest rate twice in the past three months and investors expect further cuts over the course of the year.

Information is taken from: Reuters

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An impending stock sale from Visa could amount to the largest initial public offering in U.S. history.

The credit-card network giant announced the proposed terms of its long-anticipated IPO�today, saying it intends to sell up to $17 billion in stock. Visa said it plans to sell 406 million shares, priced between $37 and $42 a share. An additional 40.6 million shares will be available for purchase by underwriters to cover any excess demand. Visa said it plans to offer the stock “as soon as practicable” after the registration statement takes effect.

Even if its shares price at the low end of its estimated range, Visa’s IPO would far surpass the $10.6 billion AT&T Wireless raised when its stock debuted in 2000.

“Visa operates the world’s largest retail electronic payments network and manages the world’s most recognized global financial services brand,” the company said in its prospectus filed with the Securities and Exchange Commission. “Based on the size of our network, the strength of the Visa brand and the breadth and depth of our products and services, we believe we are the leading electronic payments company in the world.” Visa’s transactions by both number and dollar amount exceeded those of rivals MasterCard and American Express in 2006.

While credit card issuing banks have been impacted by consumer credit woes, as a card processor, Visa’s revenues are tied to the use of plastic payments, which continue to gain ground against more traditional payment methods involving cash and checks.

Visa plans to follow in the footsteps of rival MasterCard in going public. MasterCard raised $2.39 billion in May 2006 with its IPO, and its stock has surged in value since that time. Meanwhile, credit card issuer Discover Financial Services went public with its stock in July 2007.

In June 2007, Visa had outlined its “restructuring” plan to establish a new corporation known as Visa Inc. via mergers involving Visa USA, Visa Canada and Visa International.

Visa said it has applied to list its shares on the New York Stock Exchange under the symbol “V.”

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The sharp drop in mortgage rates has sparked a wave of refinancing. But not everyone qualifies.

When Elaine Chen, a 39-year-old marketing executive in New York, saw interest rates falling in January, she called her mortgage broker to see if she could get a lower rate to finance Manhattan condo. She estimated the lower rate could save her $300 per month.

Her broker said she could get a 5.625 percent rate on a 30-year, fixed-rate mortgage if she hurried and paid $5,000 in closing fees. But Chen, suspecting that rates would fall more, didn’t bite. By the time rates fell further, she couldn’t get her busy broker on the phone.

“I never heard back from him,” she said. “I still haven’t decided what I’m going to do. I’m not sure I can act fast enough to catch the best rates.”

Ted Woelken, a 51-year old telecom manager in Sammamish, Wash., said he and his wife decided against refinancing their adjustable rate mortgage, which is not due to reset for two more years. To justify moving to a 30-year fixed loan, Woelken said they would need to get 5.1 percent rate rather than the 5.4 percent rate their lender offered.

“When you have a first and second mortgage, just because rates on 30-year fixed loans are coming down doesn’t mean you’ll benefit right away by converting,” he said. “We have two more years below 5 percent, so we’ll wait and look again.”

Chen and Woelken, like many borrowers, are finding that their options aren’t as attractive as they’d expected. They’re lucky though. With full-time jobs, good credit, and more than 20 percent equity apiece in their properties, refinancing is largely a matter of optimizing affordable loans. Other borrowers with spotty credit or job histories, and those facing adjustable rate mortgage resets or living in a home that’s lost value, will have a harder time refinancing and may face difficult repercussions for failing to do so.

Wondering if you can refinance? Here’s a look at possible scenarios:

You can consider refinancing if …

You have a fixed or adjustable mortgage with an interest rate over 6 percent. With rates on 30-year fixed loans below 6 percent, many homeowners want to lower monthly payments or move from an adjustable to a fixed mortgage. You’ll need to run numbers to see if closing costs justify the new rate’s monthly payment savings, but many lenders say that if you can save 50 basis points (0.5 percent), or even 25 basis points with no closing costs, it might be worthwhile.

Your credit score is over 650. To get a good rate on a non-government loan, your score needs to be at least 650 — maybe 680, depending on the lender and market. It’s worth pulling scores before approaching lenders, as scores help determine your rates.

You live in an expensive urban market and have a mortgage over $417,000. Government-set maximum limits on conforming mortgages, previously capped at $417,000 in most markets, will rise starting in March to $729,750 in California and other pricier markets. If your loan exceeds $417,000, you could refinance from a “non-conforming” to a more desirable “confirming” loan.

Dick Lepre, senior loan officer at Residential Pacific Mortgage in San Francisco, says he expects more than 50 percent of mortgage loans in California have balances that fall in the new, higher range, and thus his state will see what he called “a massive refinancing boom.” Dave Zitting, chief executive of Primary Residential Mortgage in Salt Lake City, agrees, saying: “It’s going to fend off a recession.”

You’re eligible to refinance to an FHA loan. Loans offered by Federal Housing Administration, typically targeted at first-time or smaller-budgeted buyers, are usually offered to people buying a property priced below a local market’s median price. New rules going into effect in March are lifting FHA lending limits to 125 percent of median prices in a local market (up to $729,750 in some markets) and will help many borrowers, says Bob Walters, chief economist for Quicken Loans.

Bill Glavin, special assistant to the FHA commissioner, says FHA refinance loans don’t have strict credit score criteria and those who use them can qualify with as little as 3 percent equity in their property —even in a so-called “declining market” where other lenders demand more equity.

You have at least 10 percent equity in your home and aren’t FHA-eligible. To get good rates, you’ll need to have equity in the home. In most markets, 10 percent equity is a minimum. In more volatile markets like California, lenders want to see as much as 30 percent equity, says David Zugheri, president of First Houston Mortgage, which lends in Texas, Florida and California. If you have minimal equity but have poured work into your home, an appraisal may reveal that remodeling has increased your home value sufficiently to create the equity you need.

Source: msnbc

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Concerned consumers, breathe a sigh of relief: A report released yesterday by Javelin Strategy & Research reveals that identity fraud is on the decline in most of America. It also reinforces a three-year trend that the majority of information stolen by criminals is taken from personal belongings and phone calls — not online.

A key survey finding is that identity fraud is down an estimated 12 percent since 2006, which means criminals illegally obtained $6 billion less than the year before. While overall fraud has declined over the last three years, the report noted that out-of-pocket expenses for identity fraud victims have risen. Fortunately, approximately 300,000 fewer American adults became identity victims in 2007 than in 2006.

The lowest risk for fraud was found to be in the Northeast, while residents in California, Illinois, Idaho, West Virginia and Delaware have the highest incidences of identity fraud.

The report found that traditional criminal methods still pose the greatest risk. In 2006, only 3 percent of identity theft victims’ information was accessed through mail or telephone transactions. In 2007, the figure leapt to 40 percent. The main phone method was through vishing, in which criminals use voice over Internet protocol (VoIP) or other telecommunications to make calls posing as a nonprofit organization, billing company or financial institution. Many of the consumers hand over their Social Security numbers, bank account numbers and credit card information thinking they are giving it to a legitimate business, when they are actually placing it into the hands of a criminal.

The report presumes that the decline in fraud can be attributed to “greater consumer vigilance and awareness, improvements in systems and practices by companies that manage personal information, the increased frequency of viewing personal account information and consumers more frequently updating spyware and anti-virus software.” Javelin expects fraud reduction to continue as businesses and consumers work together to protect sensitive data — especially financial information online.

“Javelin’s 2008 Report confirmed what we believe to be true: that while fraud is declining, it is still a concern for the American public,” says Javelin’s president and founder, James Van Dyke, in a press release. “The good news is the leadership role many businesses are taking in educating consumers about ID fraud risk factors is paying off. Still, fraudsters are getting creative and leveraging new techniques to commit fraud, so Americans need to be as diligent as ever in protecting their personal information.”

Remember, just because someone asks for your personal information over the phone instead of through e-mail does not mean it is legitimate. Never give out personal or financial information when you have been solicited. It is only wise to do so when you have placed the call, and you know you are dealing with a trusted business. If you get a call and it sounds like it’s from a trusted institution, hang up, look up and call the customer service number and find out whether that business truly needs your information. Better safe than sorry!

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Now that presidential candidates, senators and the Federal Reserve have all weighed in with their thoughts on credit card reform, it looks like the House of Representatives has decided to have its turn.

House Financial Institutions and Consumer Credit Subcommittee Chairwoman Carolyn B. Maloney today introduced the “Credit Cardholders’ Bill of Rights Act of 2008” (H.R. 5244), “comprehensive credit card reform legislation aimed at leveling the playing field between credit card companies and consumers.”

The bill is aimed at “major industry abuses that unfairly hurt consumers while fostering fair competition and free market values,” A summary of the bill provides the highlights:

• Requires card companies give cardholders 45 days notice of any interest rate increases.

• Prevents the so-called “universal default” rate increase.
• Prevents the so-called “double-cycle billing” practice.
• Gives cardholders time to pay their bills by requiring card companies to mail billing statements 25 calendar days before the due date (14 days is the current minimum).
• Requires that payments made before 5 p.m. EST on the due date are considered timely.
• Prohibits card companies from charging late fees when a cardholder presents proof of mailing his/her bill within 7 days of the due date.
• Prevents card companies from charging over-the-limit fees on a cardholder with a fixed credit limit.

“A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees,” said Maloney, a Democrat who represents Manhattan and Queens. “This balanced, moderate bill simply levels the playing field between card companies and cardholders while fostering fair competition and free market values. It sets no rate caps, fees, or price controls, nor does it dictate any business models to card companies.”

The bill has broad Democratic support, with the release naming House Financial Services Committee Chairman Barney Frank and 40 representatives as original co-sponsors.

A spokeswoman for Maloney’s office said hearings are likely to begin in early spring.

Source: CreditCards.com

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It’s something most consumers dread — a debt collector calling to ask about an unpaid credit card debt, past due student loan or medical debt.

Consumer credit counselors, debt collectors and state regulators all agree that ignoring debt collectors’ letters and phone calls is a bad idea. Deal with it, they say, otherwise matters can only get worse.

Experts offer the following 11 tips for dealing with debt collection:

1. Avoid debt collection altogether. Try to negotiate with the original creditor and work out a reasonable payment arrangement before the account is sold to a third-party debt collector.

2. Educate yourself about your rights. The U.S. Federal Trade Commission (FTC) has several publications designed to educate consumers about their rights under the Fair Debt Collection Practices Act. Harassing and nuisance phone calls, threats and abusive language are illegal and should be reported to the FTC and your state attorney general’s office. Find your state attorney general through the National Association of Attorneys General.

3. Take your head out of the sand. Don’t ignore letters or phone calls about debts or court notices about debt lawsuits. The law allows consumers to send written requests for verification of debt within 30 days of being contacted by a debt collector. Don’t dawdle if the debt isn’t yours: Debt collectors can place negative information on your credit report that remains there for seven years, which can affect your ability to get a mortgage or other loans, cheaper car insurance rates or even jobs.

4. Find a consumer lawyer. If you are served with a notice of a lawsuit, find an attorney who specializes in consumer law to represent you in court. Some suits are filed by debt collectors who have little or no proof of the original debt owed, says Mary Spector, an associate law professor at Southern Methodist University’s Dedman School of Law. Depending on the state, the statute of limitations may have expired on the debt. “Without a party appearing in court to challenge the sufficiency of the evidence, the creditor wins — often based on scanty information,” she says. Chances of having the lawsuit dismissed in court may be greater if you show up in court and have representation, Spector says.

5. Keep copies and records. There is no consensus on how long documents should be kept. Some experts say keep them as long as you would keep tax documents; some believe they should be kept for as long as the statute of limitations for the state where the original purchase was made or your home state, whichever is longer. Still, others say keep documents — especially proof of settlement or resolution of debts — forever. If a question ever arises about the debt, you will have documentation.”I still have proof where I paid off my student loans,” says Kurt Johnson, president of the North American Collection Agency Regulatory Association, a group of collection industry regulators from 20 states. “I’ve seen cases where they came after someone after 18 years for a student loan.”

6. Safeguard bank accounts. Debt collectors can file suit against consumers for nonpayment of debts. Freezing savings or checking accounts is one of the court-ordered options for collecting debts. This can be extremely problematic for family budgets and cash flow, and experts advise having separate bank accounts for funds such as Social Security or disability checks, which are exempt and cannot be used as a source of court-ordered debt payments. “I would urge people not to co-mingle other funds into the bank account to which the Social Security and disability payments are going. That would help a lot of people,” says Rozanne Andersen, executive vice president of ACA International, the largest credit and debt collection industry trade group. “It would be a lot easier for the consumer to clarify to the debt collector that the only funds in this account are my Social Security payments.”

7. Don’t make it too easy. Some experts say consumers should avoid giving debt collectors their bank account and routing numbers. Make payments with money orders or some other third-party payment service so that you have proof of payment but avoid paying with a personal check. They also advise against allowing collectors to make direct electronic withdrawals from bank accounts.

8. Record conversations. If abusive language or threats are used, recording the conversation will document it. In a dozen states, you need the other party’s permission to record the conversation. “I just feel that that’s a prudent thing to do if you’re really in a pickle and you’re getting lots of collection calls,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. “I doubt that anyone would cross any of those lines if they know the call is being taped.”

9. Get it in writing. Any agreements for making debt collection payments should be confirmed in writing and signed by a representative of the debt collector before sending in any payments. This avoids misunderstandings about the amounts to be paid or time period to make payments.

10. Certify that mail. Letters can be lost in the mail. Most experts advise sending all correspondence with debt collectors via certified mail; some suggest getting a return receipt as proof that your letter was received.

11. Debt management. Find an accredited counseling agency to help you sort through the bills and draft a payment plan. “If a client is enrolled in our program, generally, creditors, if they have questions, will call us,” says Leesa Kumley, an accredited counselor for nonprofit Pioneer Credit Counseling of Rapid City, S.D. The two major accrediting agencies for credit counselors are the National Federation of Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. Work out a payment plan that works for your family budget. The FTC advises consumers to avoid for-profit credit repair companies.

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Americans love the convenience of shopping online, but many still get a twinge of nervousness when typing that credit card number into the computer, and those who have the least harbor the most fear.

That’s the major finding of research released this month by the Pew Internet & American Life Project.

Americans have largely gotten over their initial resistance to using their credit cards online, with 66 percent of those who have online access saying they have purchased a product online. But ambivalence remains: Three out of four Internet users either agree or strongly agree that they don’t like giving out their card numbers or personal information online.

“Our analysis suggests that if concerns about the safety of the online shopping environment were eased and if shoppers felt that online shopping saved them time and was convenient, the number of online shoppers would be higher,” concludes John Horrigan, associate director at the nonprofit research firm.

There are billions of dollars at stake in easing those doubts. If retailers and the card industry can allay the lingering fears — something that the steady drumbeat of identity theft reports makes unlikely soon — the number of Americans willing to shop online would rise from 66 to 73 percent, the study estimates. The amount of money spent online, which stood at $34.7 billion in the third quarter of 2007, would rise accordingly.

Gender and race have little to do with people’s attitudes toward shopping online, but income is a very large factor.

If you compare people in households with less than $25,000 in income and compare them to those in households with annual incomes of $100,000 or more, those with less are far more nervous about using credit cards, and far less likely to describe the online shopping experience as convenient.

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Having stunned investors one week ago by unexpectedly slashing short-term interest rates, the Federal Reserve appears poised to announce another rate cut on Wednesday as insurance against a recession.

But policy makers face difficult questions about how deep to cut rates, given that a recession has yet to materialize and that inflation pressures remain a nagging concern in the background.

On Wall Street, where the clamor about a recession remains at a fever pitch, investors are betting heavily that the central bank will lower the overnight federal funds rate by an additional half a percentage point, to 3 percent.

That decrease would come on top of last week’s surprise reduction of three-quarters of a percentage point, and could set the stage for lower interest rates on home equity loans, car loans and business lending.

But the outcome of the meeting is far from certain. While recent data on the housing market and retail sales has reinforced the impression of a stalling economy, economists were surprised on Tuesday by an unexpectedly strong jump in orders for durable goods in December.

The Commerce Department reported that orders for all durable goods — big-ticket items like commercial aircraft and auto parts — jumped 5.2 percent last month. Excluding orders for transportation goods, which are volatile from month to month, orders climbed 2.6 percent, the first increase since September.

Ben S. Bernanke, the chairman of the Federal Reserve, and other Fed officials are already under fire from two directions. Many analysts on Wall Street complain that the central bank has moved too slowly in response to signs of a faltering economy. They point to a plunge in housing that does not seem to have hit bottom, slowing growth in retail sales and tight credit.

But a significant minority of economists argue that policy makers have let themselves be unnecessarily alarmed by panicky swings in the stock market. If the central bank props up the economy with easy money, they warn, the result will be higher inflation in the future.

Richard DeKaser, chief economist at the National City Corporation, a Cleveland bank, is skeptical that the economy is headed for a recession, despite the common assumption that it is. “Few seem to take seriously the prospect that we are not going into a recession,” said Mr. DeKaser, who cites the latest labor market data, showing fewer weekly claims for unemployment benefits and encouraging layoff numbers, which suggest to him that the nation has added a hefty number of jobs in January.

And despite the huge losses and write-offs stemming from subprime mortgages, he added, business borrowers have yet to face a credit squeeze.

Members of the central bank’s Federal Open Market Committee, which decides interest rates, have shown clear signs of disagreement among themselves.

At the meeting last week, conducted by videoconference, the president of the Federal Reserve Bank of St. Louis, William Poole, voted against any rate cut. The committee’s previous rate cut, in December, a quarter-point cut to 4.25 percent, provoked a dissent from another member, the president of the Boston Fed, Eric S. Rosengren. He wanted a bigger reduction.

Fed officials acknowledged this month that they had lowered their forecasts for economic growth this year, even though their previous forecast had already assumed a slowdown in the first half of this year.

Mr. Bernanke acknowledged on Jan. 10 that the housing market was still in a free fall and that the turmoil in subprime mortgage markets had shaken the broader credit markets.

Warning that financial markets were “fragile” and that the labor market appeared to be weakening, Mr. Bernanke bluntly declared that “additional policy easing may be necessary” and that the Fed stood ready to take “substantive additional action.”

When the Fed surprised investors by cutting its overnight rate at an unscheduled meeting on Jan. 22, officials left little doubt that they would lower the rate yet again at their regularly scheduled two-day policy meeting this Tuesday and Wednesday.

To the extent that investors remain fearful about credit risks, markets for mortgage-backed securities are likely to remain dysfunctional and banks will be forced to write down even more of their loan portfolios. That could aggravate a broader credit problem, which in turn could slow investment and economic activity.

But analysts say Mr. Bernanke faces a difficult challenge in trying to manage expectations. On the one hand, they say, the Fed wants to act decisively enough to reassure investors and the public that it will prevent the economy from sinking. On the other hand, they say, Mr. Bernanke does not want to be seen as panicking in response to a plunge in the stock market.

Fed officials say they have changed their outlook primarily because of considerably grimmer economic data over the past month. Net job creation almost stopped in December, and unemployment jumped to 5 percent, from 4.7 percent.

Mr. Bernanke made it clear in his speech on Jan. 10 that the Fed was paying particular attention to the housing market, and the recent data had been unremittingly bad. New-home sales in December dropped 4.7 percent, to an annualized rate of 604,000 units — down 41 percent from a year earlier and the lowest level in 13 years.

On Tuesday, Standard & Poor’s, the bond ratings agency, reported that its S.& P./Case-Shiller index of home prices dropped at a record rate in November. The index for 10 major metropolitan areas was down 8.4 percent from a year earlier.

Source: NY Times

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The market’s tough for homebuyers, so renting may make more sense now.

Let’s face it: Given the current state of the housing market in many parts of the country, it might make more financial sense for you to rent for the time being rather than buy a home.

Such a move truly could work to your advantage in the coming months. Many experts predict that home prices will continue to drop for a while longer, so waiting to buy could pay off for you.

What’s more, because houses and condos are staying on the market for longer stretches of time, many developers and would-be sellers are eager to rent them out. This jump in the inventory of available rental properties puts you in a good position to haggle for more desirable rent prices. You also may encounter landlords who are willing to lower security deposits, cover your utilities or allow you to move in rent-free for the first month.

Even though the tide has turned in renters’ favor for now, renters still need to understand their rights and protect themselves. Whether you’re a longtime renter, a short-term renter or a young person who’s on the prowl for your very first apartment, these tips can help you avoid some of the potential pitfalls of renting.

1. Become an expert on your local rental market. No matter how pressed for time you might be, don’t rent the first place you find. Take time to shop around, visiting several places so you can compare prices and amenities offered. Check the classified ads online at your local Craigslist site and in a variety of daily and weekly newspapers, and ask friends and co-workers if they know of any available rental units. Use a professional rental service only if the fee charged is not too exorbitant.

2. Don’t tolerate discrimination. Federal laws prohibit discrimination on the basis of race, color, national origin, religion, gender, family status or disability. State and local laws prohibit other kinds of discrimination. For information, call the U.S. Department of Housing and Urban Development’s housing discrimination hotline at (800) 669-9777. Renters also can file discrimination-related complaints through this Web site.

3. Eyeball the lease closely. Unless the lease says differently, the landlord cannot raise your rent during the term of the lease. In turn, the lease usually commits you to rent payments for a fixed amount of time, whether or not you live in the unit. If you must move out, clarify in writing what would happen if you or your landlord are able to find another person to rent the space. Make sure you’d be liable for rent only during the time the unit is vacant.

4. Watch out for lease provisions that are undesirable or downright illegal. Undesirable provisions may restrict your guests, pets, minor design alterations or ability to run a home business. They also may include phrases such as: “automatic lease renewal”; “tenant agrees to obey all future rules of landlord”; “rent may increase”; “no one but tenant and immediate family may live in apartment”; and “unannounced or unlimited entry of landlord.” Illegal provisions include: an exculpatory clause that protects the landlord from liability for his own negligence; excessive penalties for late rent; or automatic forfeiture of deposit, which means you’ll lose your security deposit no matter what. Before you sign the lease, make sure you understand everything in it and that all blanks are either filled in or crossed out. If you don’t like certain provisions, negotiate to cross them out, write in changes and have both parties initial the new wording. Do this on all copies of the lease.

5. Know the skinny on security deposits. Landlords typically collect security deposits from tenants up front to cover unpaid rent or damage to the rental unit. As mentioned in the introduction to this column, you may be able to have the amount of your security deposit reduced while the housing slump continues. If you can’t, though, keep these details in mind: All security deposits are refundable; landlords only can keep compensation for unpaid rent, damage to the unit or a failure on your part to leave the unit as clean as it was when you moved in. Before you move in, do a walk-through with the landlord and document any damage that you see, both in writing and via photographs. Take good care of the unit while you live there, and clean it meticulously when the time comes for you to leave. For more details on security deposits, check out this helpful Nolo article on the subject.

6. Clarify exactly when and how the landlord can enter your unit. Do you value your privacy? Then the significance of this tip can’t be overstated. Generally speaking, landlords cannot simply enter your home without giving you some kind of advance notice. Rules on this thorny issue vary from state to state, so it’s important to understand what’s allowed and what isn’t where you live. To find out, check out this chart. In states where landlords’ access to rental properties is regulated, landlords typically are permitted to enter in cases of emergency, in instances when repairs are needed or at times when they need to show the unit to potential renters or buyers. But because statutes do vary, take the time to read up on the rules that apply to you.

7. Understand how to proceed if repairs are needed. Landlords are responsible for keeping their rental properties “livable” and “habitable.” That means your unit should have heat, water, electricity and sufficient weatherproofing, and it also should be structurally sound and sanitary. It doesn’t mean that your landlord is on the hook for purely cosmetic repairs. If a cosmetic repair is really bugging you and you really want to tackle it, don’t assume that doing so will give you a break on that month’s rent. Any such arrangement must be agreed upon by your landlord in advance and spelled out in writing. For those more serious repairs that fall in the “livable” or “habitable” category, though, do this: Write to your landlord about the problem and keep a copy of the letter. Give him or her reasonable time to make the repairs. If the problem never gets addressed even after you follow up about it, you have a variety of rights. For instance, you could withhold a portion of your rent, handle the repairs yourself and deduct the cost from your rent, or report your landlord to local building or housing authorities.

8. Invest in renters insurance. Renters insurance is really a form of homeowners insurance. It covers losses to your property from a variety of perils, including fire, lightning, windstorms, hail, explosions, riots, aircraft, vehicles, smoke, vandalism, theft, falling objects, electrical current damage and accidental overflow of water. Flood damage is not covered, however, so you must buy flood insurance separately through the National Flood Insurance Program. You may think you can’t afford the added expense of renters insurance, but that probably isn’t the case. Many insurers offer decent policies for $150 to $250 a year, or about $12 to $21 a month.

9. Stay safe. Are you thinking about renting in an up-and-coming area that may still have its share of crime? Regardless of the neighborhood you’re considering, it’s a good idea to contact that area’s local police precinct and inquire about crime statistics. If you have children, ask the police to help you determine whether any sex offenders live nearby. Also check state and local laws to find out whether your landlord is obligated to provide renters with certain safety devices, such as window locks or deadbolts. You can get help finding this information at your local library or through this Web site.

10. Is an eviction looming? If, for whatever reason, you receive an eviction notice from your landlord, you have a decision to make: Should you fight it, or should you walk away? If you’re absolutely convinced that you’re in the right, you may want to follow through with an eviction lawsuit. This may be a wise course to take if your unit is clearly uninhabitable or your landlord didn’t give you adequate notice about the eviction. In other cases, though – particularly if you’ve done anything to warrant the eviction – you should probably just move out. In addition to costing you hundreds if not thousands of dollars, an eviction lawsuit could hurt both your credit score and your ability to get other landlords to rent properties out to you in the future.

Source: msnbc 

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The wind turbines that recently went up on Louis Brooks’s ranch are twice as high as the Statue of Liberty, with blades that span as wide as the wingspan of a jumbo jet. More important from his point of view, he is paid $500 a month apiece to permit 78 of them on his land, with 76 more on the way.

Texas, once the oil capital of North America, is rapidly turning into the capital of wind power. After breakneck growth the last three years, Texas has reached the point that more than 3 percent of its electricity, enough to supply power to one million homes, comes from wind turbines.

Texans are even turning tapped-out oil fields into wind farms, and no less an oilman than Boone Pickens is getting into alternative energy.

Wind turbines were once a marginal form of electrical generation. But amid rising concern about greenhouse gases from coal-burning power plants, wind power is booming. Installed wind capacity in the United States grew 45 percent last year, albeit from a small base, and a comparable increase is expected this year.

At growth rates like that, experts said, wind power could eventually make an important contribution to the nation’s electrical supply. It already supplies about 1 percent of American electricity, powering the equivalent of 4.5 million homes. Environmental advocates contend it could eventually hit 20 percent, as has already happened in Denmark. Energy consultants say that 5 to 7 percent is a more realistic goal in this country.

The United States recently overtook Spain as the world’s second-largest wind power market, after Germany, with $9 billion invested last year. A recent study by Emerging Energy Research, a consulting firm in Cambridge, Mass., projected $65 billion in investment from 2007 to 2015.

Despite the attraction of wind as a nearly pollution-free power source, it does have limitations. Though the gap is closing, electricity from wind remains costlier than that generated from fossil fuels. Moreover, wind power is intermittent and unpredictable, and the hottest days, when electricity is needed most, are usually not windy.

The turbines are getting bigger and their blades can kill birds and bats. Aesthetic and wildlife issues have led to opposition emerging around the country, particularly in coastal areas like Cape Cod. Some opposition in Texas has cropped up as well, including lawsuits to halt wind farms that were thought to be eyesores or harmful to wetlands.

But the opposition has been limited, and has done little to slow the rapid growth of wind power in Texas. Some Texans see the sleek new turbines as a welcome change in the landscape.

Texas surpassed California as the top wind farm state in 2006. In January alone, new wind farms representing $700 million of investment went into operation in Texas, supplying power sufficient for 100,000 homes.

Supporters say Texas is ideal for wind-power development, not just because it is windy. It also has sparsely populated land for wind farms, fast-growing cities and a friendly regulatory environment for developers.

“Texas could be a model for the entire nation,” said Patrick Woodson, a senior development executive with E.On, a German utility operating here.

The quaint windmills of old have been replaced by turbines that stand as high as 20-story buildings, each capable of generating electricity for small communities. Powerful turbines are able to capture power even when the wind is relatively weak, and they help to lower the cost per kilowatt hour.

Much of the boom in the United States is being driven by foreign power companies with experience developing wind projects, including Iberdrola of Spain, Energias de Portugal and Windkraft Nord of Germany. Foreign companies own two-thirds of the wind projects under construction in Texas.

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The day after the federal government cut interest rates, online lending companies saw record traffic to its site for connecting borrowers and lenders.

As a result, the marketing team at LendingTree pulled back on search engine advertising campaigns that are used to draw visitors, according to company spokeswoman Allison Vail.

“With the fed changes in January, we were driving natural traffic. It’s smarter for us,” said Vail, whose Charlotte, N.C., company can pay an average of $2.70 per click for a search engine listing on Google or Yahoo, according to industry estimates.

Trends from search-engine companies and some anecdotal evidence suggests that the biggest buyers of paid search and online advertising–financial services companies–have cut back on spending online in the face of a housing crunch. It seems like an obvious shift, but one that spooked financial analysts enough last year to trim earnings estimates for search engines like Yahoo and Google, as well as online advertising on the whole. (In 2007, online ad revenue jumped 25 percent year over year to a record $21.1 billion, according to a report out this week.)

Signs of slowing growth in spending by financial services companies haven’t appeared until the first quarter of this year. According to research firm Nielsen Online, spending growth in the sector plummeted year over year in January 2008 compared with the previous year’s rise. Financial services firms spent roughly $132 million on online ads–including paid search and banner ads–in January 2007, up 58 percent from the comparable month in 2006. But this January, overall spending in the category went up year over year by 12.7 percent to roughly $149 million, according to Nielsen.

Efficient Frontier, one of the largest buyers of paid search listings for marketers, has traced similar trends more specific to the search industry, but with even less percentage growth. Ellen Siminoff, chairman of Efficient Frontier, said search advertising spending in the financial sector has typically risen by 30 percent to 50 percent annually, but this year it’s either flat or down for some companies. It’s no wonder with companies like LendingTree and Countrywide struggling in a housing crisis. From January 2006 to January 2007, credit and mortgage advertisers raised their spending by 24 percent, but this year, their spending has risen only 3 percent year over year, according to its data.

“It’s either not the kind of growth we’ve seen in the past or there are spending changes altogether,” Siminoff said.

How that might play out for the biggest search engines, Yahoo and Google, remains to be seen. Yahoo declined to comment for this story, and Google did not immediately respond to requests for comment.

The financial services sector spends as much as $2.7 billion annually on online advertising in the United States, and about one-third of that pie, or $900 million, is related to mortgages, according to estimates by Oppenheimer. Between 30 percent and 45 percent of those advertising dollars gets funneled into paid search and for that reason, Oppenheimer analyst Sandeep Aggarwal said, any pullback could affect earnings of sites that depend on paid search for revenue.

Siminoff and others were positive that growth in spending in other markets would offset any losses from the financial sector.

“Yahoo has bigger issues by being distracted by what’s going on with Microsoft, but retail advertising spending is still strong,” Siminoff said. “I do not think Google would be hugely impacted because they have enough growth outside the United States.”

This week, Google’s stock price fell by about 8 percent on fears that people weren’t paying as much attention to its search engine ads. Research firm ComScore said this week that it tracked about flat growth in advertisements viewed on Google pages from January 2007 to January 2008. Google shares also fell on analysts’ concerns that its overseas growth wouldn’t be as strong this quarter.

The financial services spending slowdown could add to that concern. Financial services are the highest-spending category in online advertising, accounting for 15 percent to 20 percent of the revenue annually in the United States, according to figures from PriceWaterhouseCoopers and the Interactive Advertising Bureau. And the sector pays among the highest rates for search listings–nearly six times that of retail advertisers, according to industry estimates.

The average cost per click (or the amount the advertiser pays per click) for a mortgage or credit services ad in Web search results is $2.70, according to figures from Efficient Frontier. That’s more than seven times what a retailer pays at about 36 cents per search click and almost four times what travel marketers pay at 65 cents per click. So cost-cutting in the lending sector is more meaningful in terms of dollars than cutbacks in retail, travel, or dating ads.

Similarly, financial services companies pay an average of $1.24 per click when their text ad appears next to related content. In comparison, retailers pay 24 cents per click and auto companies pay 58 cents per click for the same deal.

“If financial advertisers pull back their online ad spending it’s going to have an impact on all the companies receiving a share of that money,” said Pete Petrusky, an online advertising analyst with PriceWaterhouseCoopers.

Still, Petrusky and others say that in a recession, search advertising should remain strong because it provides a more immediate return for marketers compared with traditional advertising.

“Our experience is that on the search side, any performance-based media is less likely to be affected because marketers are paying on a price per lead. Our feeling is that as ad budgets get cut–and if the economy gets soft they will get cut–performance will less likely be cut than general impression or branding ads,” said Geoff Yang, a venture capitalist and partner at Redpoint Ventures, which has investments in search companies Oodle.com and TheFind.com.

Yang added that the industry might see 10 percent cutbacks across the board in such an event, and that his companies are already seeing signs of recession in the online advertising business.

Other data backs that less-than-gloomy notion. A recent report from JupiterResearch said financial services would continue to be the strongest category for online ad spending. (The companies typically split their online budgets 50/50 between paid search and display ads, according to the research firm.) Financial services will boost online ad spending from $3.5 billion in 2007 to $6.3 billion in 2012, a rise of 76 percent with a compound annual growth rate of 12 percent, according to JupiterResearch.

Certainly, LendingTree’s marketing team “pulls levers at all hours of the day” to respond to market changes, Vail said. It’s just that online marketers can change gears in paid search advertising with more ease and speed (without contract penalties by the search engines) than banner-ad campaigns, she said. Vail clarified that the company, which has lost about 60 percent of its staff since May, hasn’t made any drastic cuts to its online ad spending.

Executives in the online performance advertising business are less clear about how much mortgage lenders have cut their spending. But at least one online ad executive said ad aggregators like LowerMyBills.com, which is owned by Experian, and NexTag aren’t buying the same amount of inventory that they once did.

One shift is already happening. Aggregators are beginning to offset a downturn in the mortgage business by advertising education opportunities, as part of a philosophy that when the economy sours, people turn to education. LendingTree and NexTag are both moving into the education lead generation market, according to the source. NexTag and LowerMyBills.com didn’t respond immediately to requests for comment.

Similarly, one ad company has noticed that auto lending advertising has picked up in recent months. The thinking behind that change is that people who were previously prepared to go into debt for a home–now without that option–are looking at car debt instead.

“Mortgage brokers are collapsing daily and the business is moving back to where it belongs, at the banks,” said one insider who asked to remain anonymous. “How it will shake out for the overall business will be interesting; there isn’t enough history to predict.”

Information is taken from: NY Times

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