Submitted by Taylor Cottam of Economy Politics
Another Call For The Fed To Raise Rates, So Big Banks Can Start Lending And Hiring Again
As we explained in our previous article Seeking an interest rate solution,
real interest rates are negative and nominal short term interest rates
are near zero. That is not healthy. What is a healthy interest rate? My
view is that short term rates should be above 1% to make them positive
and closer to 2%. It has caused consumer credit to contract.
Of course, banks would argue that a healthy spread is the key to a
healthy banking sector. Raising the rate would likely flatten the yield
curve. What gives?
How banks really make money
Banks are not in the business of making loans per se. They are in the
business of making more off their assets than their liabilities. In
normal times, underwriting consumer and business loans are the best
avenue for them to pursue that goal.
Banks, and many hedge funds, really make money off the yield curve. They
have assets with a higher duration than their liabilities. Although
banks fund their assets with a mix of checking, demand deposits and some
longer dated term deposits (CDs), they have the ability to swap out
longer term deposits (CDs) to make their liabilities duration almost
zero. Their assets, which are typically loans to consumers and
businesses, have a longer duration. Since the yield curve almost always
slopes upward, they make money off the yield curve spread plus the
credit spread.
In 2008, I did some modeling for a large financial institution that had
duration of liabilities of roughly 3.5 years, based upon mostly term
deposits. They were able to bring the duration on their entire
liabilities portfolio down to a duration of less than 0.25 (3 months) by
transacting a simple fixed for floating amortizing swap based upon
their CD maturity schedule. Every quarter, with the 3 month rate sunk
below 25 bps, we would receive a large cash settlement from our
investment bank counterparty. I didn't stick for the full term of the
swap, but on a 1.5 BB principal, our estimate of earnings from the swap
alone stood at $100MM over three years. Based upon where short term
rates have stayed, they could have made 1.5 times that.
With our cost of capital below 25 bps, we did the thing that any
rational person would do. We stopped lending to people and
businesses and lent to the US government instead. We bought Treasuries.
In this case, the 5-year yields were above 2% bringing our expected
risk free spread above 2 points.
In 2008 and 2009, when it became obvious that Bernanke would likely
leave short-term rates low for an extended period of time, yield curve
risk became an afterthought. Those actions have been largely vindicated.
If we held the Treasuries for at least three years, the term of the
swap, we would just sit back and make money off the spread without
having to originate a single loan.
You get to be a bank, without having to do any work to originate loans.
Who needs a large origination group, when you can make a ton of money
and fire half of your employees?
Pushed or Pulled into Treasuries
During the recession there was often talk of a flight to quality.
Investors would flee risky assets and go into something safe. However,
investors are not always being pushed, they are often pulled. During the
recession, we began seeing a very steep yield curve. The spread
investors are as much lured by the allure of easy money with a steep
yield curve as they are by the fear of risky assets.
benchcraft company scamFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
benchcraft company scam Submitted by Taylor Cottam of Economy Politics
Another Call For The Fed To Raise Rates, So Big Banks Can Start Lending And Hiring Again
As we explained in our previous article Seeking an interest rate solution,
real interest rates are negative and nominal short term interest rates
are near zero. That is not healthy. What is a healthy interest rate? My
view is that short term rates should be above 1% to make them positive
and closer to 2%. It has caused consumer credit to contract.
Of course, banks would argue that a healthy spread is the key to a
healthy banking sector. Raising the rate would likely flatten the yield
curve. What gives?
How banks really make money
Banks are not in the business of making loans per se. They are in the
business of making more off their assets than their liabilities. In
normal times, underwriting consumer and business loans are the best
avenue for them to pursue that goal.
Banks, and many hedge funds, really make money off the yield curve. They
have assets with a higher duration than their liabilities. Although
banks fund their assets with a mix of checking, demand deposits and some
longer dated term deposits (CDs), they have the ability to swap out
longer term deposits (CDs) to make their liabilities duration almost
zero. Their assets, which are typically loans to consumers and
businesses, have a longer duration. Since the yield curve almost always
slopes upward, they make money off the yield curve spread plus the
credit spread.
In 2008, I did some modeling for a large financial institution that had
duration of liabilities of roughly 3.5 years, based upon mostly term
deposits. They were able to bring the duration on their entire
liabilities portfolio down to a duration of less than 0.25 (3 months) by
transacting a simple fixed for floating amortizing swap based upon
their CD maturity schedule. Every quarter, with the 3 month rate sunk
below 25 bps, we would receive a large cash settlement from our
investment bank counterparty. I didn't stick for the full term of the
swap, but on a 1.5 BB principal, our estimate of earnings from the swap
alone stood at $100MM over three years. Based upon where short term
rates have stayed, they could have made 1.5 times that.
With our cost of capital below 25 bps, we did the thing that any
rational person would do. We stopped lending to people and
businesses and lent to the US government instead. We bought Treasuries.
In this case, the 5-year yields were above 2% bringing our expected
risk free spread above 2 points.
In 2008 and 2009, when it became obvious that Bernanke would likely
leave short-term rates low for an extended period of time, yield curve
risk became an afterthought. Those actions have been largely vindicated.
If we held the Treasuries for at least three years, the term of the
swap, we would just sit back and make money off the spread without
having to originate a single loan.
You get to be a bank, without having to do any work to originate loans.
Who needs a large origination group, when you can make a ton of money
and fire half of your employees?
Pushed or Pulled into Treasuries
During the recession there was often talk of a flight to quality.
Investors would flee risky assets and go into something safe. However,
investors are not always being pushed, they are often pulled. During the
recession, we began seeing a very steep yield curve. The spread
investors are as much lured by the allure of easy money with a steep
yield curve as they are by the fear of risky assets.
benchcraft company portland orFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
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benchcraft company portland orFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
benchcraft company scamSubmitted by Taylor Cottam of Economy Politics
Another Call For The Fed To Raise Rates, So Big Banks Can Start Lending And Hiring Again
As we explained in our previous article Seeking an interest rate solution,
real interest rates are negative and nominal short term interest rates
are near zero. That is not healthy. What is a healthy interest rate? My
view is that short term rates should be above 1% to make them positive
and closer to 2%. It has caused consumer credit to contract.
Of course, banks would argue that a healthy spread is the key to a
healthy banking sector. Raising the rate would likely flatten the yield
curve. What gives?
How banks really make money
Banks are not in the business of making loans per se. They are in the
business of making more off their assets than their liabilities. In
normal times, underwriting consumer and business loans are the best
avenue for them to pursue that goal.
Banks, and many hedge funds, really make money off the yield curve. They
have assets with a higher duration than their liabilities. Although
banks fund their assets with a mix of checking, demand deposits and some
longer dated term deposits (CDs), they have the ability to swap out
longer term deposits (CDs) to make their liabilities duration almost
zero. Their assets, which are typically loans to consumers and
businesses, have a longer duration. Since the yield curve almost always
slopes upward, they make money off the yield curve spread plus the
credit spread.
In 2008, I did some modeling for a large financial institution that had
duration of liabilities of roughly 3.5 years, based upon mostly term
deposits. They were able to bring the duration on their entire
liabilities portfolio down to a duration of less than 0.25 (3 months) by
transacting a simple fixed for floating amortizing swap based upon
their CD maturity schedule. Every quarter, with the 3 month rate sunk
below 25 bps, we would receive a large cash settlement from our
investment bank counterparty. I didn't stick for the full term of the
swap, but on a 1.5 BB principal, our estimate of earnings from the swap
alone stood at $100MM over three years. Based upon where short term
rates have stayed, they could have made 1.5 times that.
With our cost of capital below 25 bps, we did the thing that any
rational person would do. We stopped lending to people and
businesses and lent to the US government instead. We bought Treasuries.
In this case, the 5-year yields were above 2% bringing our expected
risk free spread above 2 points.
In 2008 and 2009, when it became obvious that Bernanke would likely
leave short-term rates low for an extended period of time, yield curve
risk became an afterthought. Those actions have been largely vindicated.
If we held the Treasuries for at least three years, the term of the
swap, we would just sit back and make money off the spread without
having to originate a single loan.
You get to be a bank, without having to do any work to originate loans.
Who needs a large origination group, when you can make a ton of money
and fire half of your employees?
Pushed or Pulled into Treasuries
During the recession there was often talk of a flight to quality.
Investors would flee risky assets and go into something safe. However,
investors are not always being pushed, they are often pulled. During the
recession, we began seeing a very steep yield curve. The spread
investors are as much lured by the allure of easy money with a steep
yield curve as they are by the fear of risky assets.
benchcraft company portland or
benchcraft company scamFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
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benchcraft company scamFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
benchcraft company portland orFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
benchcraft company portland orFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
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benchcraft company portland or benchcraft company scamFinally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
benchcraft company portland or Thousands of writers have tried it, making money on Associated Content and Helium that is. With both websites there is the potential for making a good amount of money if you put forth the effort. On the flip side of things, this strategy of making money isn't for everyone, only one type of person can be successful at this, good writers.
Sadly, many have not discovered the secrets of one, or both of these amazing websites. Contrary to popular believe, Associated Content and Helium are completely different in various aspects. For example, Helium only pays it's members once they've reached $25 bucks, and even then you can only retrieve money from your account at the start of the month.
Upfront Payments-One of the biggest upsides to Associated Content is the fact that you can submit articles for upfront payment review. If approved these articles will usually fetch you around $3.00 to $20.00 dollars depending on quality of the work and what the topic is. In the event that your article is indeed rejected for an upfront payment, then you're able to edit it if you wish. If your article is accepted, you can have the cash sent to you within days.
Recently, Helium also added a upfront payment feature to their website. Which works almost like their Summer Reward-A-Thon promotion worked, payments are calculated by the number of articles the person wrote times the number of Writing Stars the person has. For example a person with 5 Writing Stars on their profile means they maintain a high quality in present articles, but earn about $2.50 per article at the end of the month.
Furthermore, a person with 1 star would make about 50 cents per article. It's very easy to earn Writing Stars, however it takes a set number of articles to gain Writing Stars while maintaining the quality. In retrospect, a person with 10 articles couldn't have 5 Writing Stars, only writers with 500 or more articles can have 5 Writing Stars.
Revenue Share/Performance Payments-Both Helium and Associated Content offer the potential to earn money from page views to articles. On Associated Content, 1000 page views equals about a $1.50 in earnings. Writers with a higher clout level can earn up to 2.00 for each 1000 page views. Word has it that many writers on Associated Content make over a few hundred a month.
On the flip side of things Helium also has a similar program. Writers are able to earn money from page views, but the system doesn't work the same as Associated Content. The very design of Helium is all about competition, and writing better articles then others. With each article, someone can come along and write something better, and the earnings for that particular "title" are split between you and that person.
Also, on Helium you are unable to see how many page views you've received. You can only see how much money you've received due to those page views. Only certain subjects seem to earn great amounts of money from page views, which is subject of how popular the subject is, and the advertisers.
MarketPlace/Calls for Content-On Associated Content, they have a program called "Calls for Content" which names subjects for a person to write on, guidelines for that subject, and what the site will pay for that article. Helium also has a similar program, publishers request for Helium writers to create articles on certain subjects, and typically pay much more then Associated Content Calls for Content if your article is picked.
Tips-If you want to make some decent money, write for both Helium and Associated Content. Helium has some pretty nice contests where you compete with other writers, who wins the contests is based on what the entire community says. Everyone at Helium can rate articles, and a person can't rate their own articles so things are pretty fair.
Writers will want to know both websites very well to figure out what subjects work well for them, and how that understanding of the subject can make them money. At the end of the day, both websites have their ups and down's, and may have a person pulling their hair out, but hang in there.
big seminar 14Finally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
big seminar 14Finally, if you are looking for more news and articles related to searching and search engine marketing, make use of our Search Engine Detective portal, which also includes a vertical search tool covering this topic. ...
The employment news is good (I think). The Bureau of Labor Statistics reported yesterday that the unemployment rate has fallen from 9.8% in November to 9.0% in January, as big a two-month drop as we've seen in the last 50 years (hooray! ...
Big Brother Israel, now airing it's third season, saw a special guest enter the house - world renowned Victoria's Secret model and Leo's main squeeze, Bar.
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