Saturday, April 26, 2008

Is The Credit Crunch Pushing the US Federal Reserve To Its' Limit?

Update for investors - Since the onset of the global credit crunch in August 2007, the US Federal Reserve has resorted to a slew of innovative and sometimes unconventional approaches to dealing with the problems faced by distressed financial institutions.

The effort has been part of the Fed's attempt to stave off a full-fledged financial sector meltdown and to blunt the adverse impact of the ongoing disruptions on US economic activity. Despite the massive amounts of liquidity injected into the money market, it doesn't appear that the measures introduced will pose any significant inflationaary risks to the US economy.

Analysts don't believe that the Fed's ability to provide futher liquidity injections into the financial system is compromised by its current level of commitment. Should the Fed's cupboard become bare, there are several options that it can pursue to address any shortcoming it may face.

Ensuring stability in the financial markets has enormous implications for the economic wellbeing and prosperity for any society such that it becomes imperative for it be be pursued at reasonable costs.

Warmly,
Mary Wozny

Friday, April 25, 2008

Bank of Canada Lowers Prime by 0.50%

For the second time in a row, the Bank of Canada has cut the overnight rate by 50bps, bringing the target rate to 3.00%. This is now the first time since 2001 - when Canada was last concerned about the fallout from a U. S. recession - that the Bank has seen fit to cut rates by a full percentage point in just six weeks time.

While the latest statistics have underscored a resurgent strength in Canadian home construction, manufacturing and international trade, the Bank is looking past these red herrings and has their sights set squarely on the formidable risks looming over the horizon.

The Bank noted that buoyant growth in domestic demand has been substantially offset by the fall in net exports. Due to a 'deeper and more protracted slowdown in the U.S. economy', this drag from trade is expected to remain. Low levels of unemployment and aggressive easing from the Bank to date highlights why many Canadians have remained fairly sheltered from the U. S. and financial centered woes.

When the updated Monetary Policy Report is reported, it is expected to report dramatically lower expectations for the U.S. and global growth compared with January forecasts. The Bank hopes to ease these pressures. Lower rates will help shield the economy from externally-driven weaknesses, but the imbalances in the financial sector continue to impair short term borrowing.

The Banks forecast for Canadian economic growth in 2008 and 2009 still seems optimistic which is a good sign overall.

Warmly,
Mary Wozny

Saturday, April 19, 2008

Divorce and Your Credit

With the record high divorce rates in Canada and the United States, one should ask themselves how will a divorce impact my credit report?

A divorce decree alone will have no impact on jointly held accounts that are a part of your credit report. For joint accounts, including credit cards, car loans, home mortgages and lines of credit, you and your ex-spouse continue to have joint liability. You are both responsible, and if one of you defaults, creditors will seek payment from the other.

Just because your divorce may be finalized and you think that "finally it's all over!" the reality is that if you were a co-signer on anything with your previous spouse then you are still liable for these debts. Failure on the part of either party to make payments on time and/or pay off these debts will result in your own personal credit being potentially ruined! Often this happens and you are not even aware of it!

Check your own personal credit and FICO/Beacon Score to avoid these surprises before it's too late.

In Canada, you may check your credit online using the link to Trans Union at www.MaryWozny.com.

Warmly,
Mary Wozny