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	<title>Business &#38; MoneyCategory: Investing &#124; Business &#38; Money &#124; TIME.com</title>
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		<title>Bernanke’s Dilemma: No Good Moves Left</title>
		<link>http://business.time.com/2013/05/22/bernankes-dilemma-no-good-moves-left/</link>
		<comments>http://business.time.com/2013/05/22/bernankes-dilemma-no-good-moves-left/#comments</comments>
		<pubDate>Wed, 22 May 2013 17:28:18 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Economics]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=80573</guid>
		<description><![CDATA[There’s a term in chess called zugzwang, which describes the point in a game when it&#8217;s your turn to move but every move you could make would worsen your situation. That’s pretty much what the chessboard looked like for Federal Reserve chairman Ben Bernanke when he testified before Congress this morning. What everyone most wants to know is when the Fed is going to start tapering off its bond-buying program (called Quantitative Easing), which has flooded the banking system with money for the past five years and kept interest rates abnormally low. And that was something Bernanke couldn&#8217;t answer. In his testimony, the Fed chairman gave a carefully hedged commitment that the central bank would continue buying bonds – currently $85 billion a month – until the economy is stronger. And he repeated last December&#8217;s official statement that the Fed intends &#8220;to maintain highly accommodative monetary policy as long as needed to support continued progress toward maximum employment and price stability.&#8221; When asked at what point the bond-buying policy might change, Bernanke was more evasive, saying that the Fed might need a few more meetings to make that decision. Asked if it would be decided by Labor Day, he demurred. Bernanke&#8217;s hedging isn&#8217;t primarily a sign of indecisiveness. His real problem is that given current economic conditions, there aren&#8217;t any good moves he can make. The conventional wisdom – and the presumption behind the Fed&#8217;s current policy – is that the economy is steadily improving, even if progress is slow. And while easy money eventually leads to higher inflation, that threat could still be several years away. So ideally, the Fed&#8217;s stimulus could get the economy back to a normal rate of growth before inflation becomes a problem, at which point the Fed could taper off its bond buying little by little and gracefully exit the picture. (MORE: The Unspeakably Wonky Idea That Can Solve the Corporate Tax Debate) But what if the economy isn&#8217;t getting better, or is improving so sluggishly that it will take years to get back to normal?<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=80573&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Federal Reserve</primary_category><primary_category_link>http://business.time.com/category/economy-policy/federal-reserve-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/169246414.jpg?w=240</featured_image>
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			<media:title type="html">Federal Reserve Board Chairman Ben Bernanke at a hearing before the Joint Economic Committee  on Capitol Hill, in Washington, D.C., on May 22, 2013.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Stock Market Rises Back Into Record Territory</title>
		<link>http://business.time.com/2013/05/14/stock-market-rises-back-into-record-territory/</link>
		<comments>http://business.time.com/2013/05/14/stock-market-rises-back-into-record-territory/#comments</comments>
		<pubDate>Tue, 14 May 2013 22:12:46 +0000</pubDate>
		<dc:creator>AP / Steve Rothwell</dc:creator>
				<category><![CDATA[Stocks]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=80022</guid>
		<description><![CDATA[(NEW YORK) — The stock market marched back into record territory Tuesday as investors seized on the latest encouraging news about the economy. This time, it was a report on the health of small businesses. Small business owners were slightly more optimistic in April, according to a survey released by the National Federation of Independent Business before the stock market opened. That helped push the Russell 2000, an index of small-company stocks, up 1.3 percent, ahead of other major indexes. &#8220;Small businesses are in many ways the backbone of the economy &#8230; to see that index move up was a positive surprise,&#8221; said Quincy Krosby, market strategist for Prudential Financial. &#8220;Overall, the market wants to move higher and it&#8217;s hard to fight that.&#8221; The Russell index is 16.1 percent higher since the start of the year, and is up more than the Standard &#38; Poor&#8217;s 500 index, which includes larger, global companies. Small stocks are doing well partly because they are more focused on the U.S., which is recovering, and don&#8217;t get as much revenue from recession-plagued Europe as larger companies do. (MORE: Dow 15,000: Don’t Fight the Fed, But Be Afraid) The advance in small-company stocks is another sign of how optimistic investors have become. Smaller stocks are more risky than large ones, but also offer investors the prospect of greater returns in a rising market. Another closely watched stock market indicator has also been on a tear: transportation stocks. The Dow Jones transportation average rose 1.9 percent Tuesday and is up 21.8 percent this year, far more than other major indexes. Investors often see these stocks as an indicator of where the economy is headed. When companies make and ship more goods, the thinking goes, truckers, airlines and railways do more business. The market rose from the opening of trading and climbed steadily throughout the day. The Dow Jones industrial average rose 123.57 points, or 0.8 percent, to 15,215.25. The S&#38;P 500 index rose 16.57 points, or 1 percent, to 1,650.34. Both closed at all-time highs after stalling on<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=80022&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Stocks</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/stocks-investing/</primary_category_link>
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			<media:title type="html">timeassociatedpress</media:title>
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		<title>Dow 15,000: Don&#8217;t Fight the Fed, But Be Afraid</title>
		<link>http://business.time.com/2013/05/09/dow-15000-dont-fight-the-fed-but-be-afraid/</link>
		<comments>http://business.time.com/2013/05/09/dow-15000-dont-fight-the-fed-but-be-afraid/#comments</comments>
		<pubDate>Thu, 09 May 2013 09:45:53 +0000</pubDate>
		<dc:creator>Rana Foroohar</dc:creator>
				<category><![CDATA[Curious Capitalist]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Stocks]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79588</guid>
		<description><![CDATA[It’s hard to know what to make of this week’s record Dow performance except to say, “Don’t fight the Fed.” More than four years after the peak of the financial crisis, quantitative easing—the Federal Reserve strategy of buying up assets like bonds and mortgage-backed securities in order to goose the economy – is still going strong, and so is the market. The Fed is on track to purchase $85 billion worth of assets each month for the rest of this year, and “QE3” as this third round of Fed ammo is called may last even longer than that, given the latest jobs report. The Fed has said it won’t let off the monetary gas until unemployment is at 6.5%. April’s jobs numbers were better than expected, bringing the rate down to 7.5%, but most of the growth was in low wage sectors like retail and tourism. What’s more, most of the incoming economic indicators for the second quarter of the year – like factory orders, consumer spending, corporate profit margins, and GDP growth – will likely be weaker than in the first. If the economy remains sluggish, the Fed will remain active. But what’s bad for the real economy is—or at least has been&#8211;good for stocks. As I’ve explained before, the disconnect between underlying economic data and record stock prices is largely down to the Fed and its firepower. It’s worth noting that each round of QE has slightly less of an effect on the markets than the one before. But even people like PIMCO’s Bill Gross, who has publicly fretted for over a year about the bubble making effects of QE, are advising clients to take advantage of the Fed’s largesse and stay in equities for the time being, before gradually reducing riskier positions throughout the year. (Gross has a coffee mug on his desk that reads, “Don’t fight the Fed – but Be Afraid.”) (MORE: Viewpoint: Ben Bernanke, Enabler of America&#8217;s Fiscal Dysfunction) But how afraid should we be? And how soon? That’s the magic question. Almost no<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79588&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Curious Capitalist</primary_category><primary_category_link>http://business.time.com/category/curious-capitalist/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/168316336.jpg?w=240</featured_image>
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			<media:title type="html">Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, on May 8, 2013.</media:title>
		</media:content>

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			<media:title type="html">ranaforoohar</media:title>
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		<title>Viewpoint: Ben Bernanke, Enabler of America&#8217;s Fiscal Dysfunction</title>
		<link>http://business.time.com/2013/05/08/viewpoint-ben-bernanke-enabler-of-americas-fiscal-dysfunction/</link>
		<comments>http://business.time.com/2013/05/08/viewpoint-ben-bernanke-enabler-of-americas-fiscal-dysfunction/#comments</comments>
		<pubDate>Wed, 08 May 2013 09:45:34 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
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		<category><![CDATA[Taxes]]></category>
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		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79402</guid>
		<description><![CDATA[Federal Reserve chairman Ben Bernanke doesn’t get much respect. PIMCO’s Bill Gross, who oversees some of the country’s biggest bond portfolios, has warned that Bernanke risks rousing inflationary dragons.  NYU professor Nouriel Roubini, who correctly anticipated the 2008 financial crisis, has argued that Bernanke’s policies are failing to help the economy and are instead fueling a stock market bubble that will end in a financial crisis. Even experts who are sympathetic have been cutting at times. New York Times columnist Paul Krugman has acknowledged that the Fed chairman is a fine economist.  But his long-running disputes with Bernanke – known in some quarters as the Battle of the Beards – have included charges that Bernanke was assimilated by the Fed Borg, a reference to Star Trek’s collective alien intelligence that overwhelms individuality and personal will. Renowned investor and business magnate Warren Buffett has described Bernanke as &#8220;a gutsy guy,&#8221; but he has also criticized the Fed&#8217;s policies as brutal toward retirees, who depend on interest payments from their investments. Indeed, Bernanke himself acknowledged as much in a 2011 press conference: &#8221;We are quite aware that very low interest rates, particularly for a protracted period, do have costs for a lot of people. They have costs for savers. We have complaints from banks that their net interest margins are affected by low interest rates. Pension funds will be affected if low interest rates for a protracted period require them to make larger contributions. So we are aware of those concerns, and we take them very seriously. I think the response is, though, that there is a greater good here, which is the health and recovery of the U.S. economy.&#8221; (MORE: How Silicon Valley is Hollowing out the Economy) It’s understandable that a public official would feel obliged to do whatever is best for the country at any given moment. If the lack of sound long-term fiscal policies is holding back growth, then up to a point the Fed can justify pumping large quantities of money into the banking system as additional stimulus. But there is a limit. In the long run, excessive money creation may engender<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79402&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Federal Reserve</primary_category><primary_category_link>http://business.time.com/category/economy-policy/federal-reserve-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/162795895.jpg?w=240</featured_image>
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			<media:title type="html">Ben S. Bernanke, chairman of the U.S. Federal Reserve, during a House Financial Services Committee hearing in Washington, D.C., on Feb. 27, 2013.</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/b8875a12f713f52ecc28fe72efed7fd4?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">michaelsivy</media:title>
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		<title>Dow Has Its First Close Above 15,000 Points</title>
		<link>http://business.time.com/2013/05/07/dow-has-its-first-close-above-15000-points/</link>
		<comments>http://business.time.com/2013/05/07/dow-has-its-first-close-above-15000-points/#comments</comments>
		<pubDate>Tue, 07 May 2013 20:14:37 +0000</pubDate>
		<dc:creator>AP / Matt Craft and Steve Rothwell</dc:creator>
				<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79462</guid>
		<description><![CDATA[(NEW YORK) — Just two months after recovering the last of its losses from the financial crisis, the Dow Jones industrial average charged higher Tuesday, closing above 15,000 for the first time. It was another milestone in the market&#8217;s epic ascent of 2013. Good economic reports, strong corporate earnings and fresh support from central banks have eased investors&#8217; concerns about another economic slowdown. Many had been on the lookout for signs that a spring swoon would derail the rally, as happened in each of the past three years. Instead, Wall Street has climbed almost 15 percent since Jan. 1. &#8220;The thing that&#8217;s been driving stocks is rising confidence,&#8221; said James Paulsen, chief investment strategist at Wells Capital Management. &#8220;Economic growth, job creation and the housing market have been better than expected.&#8221; News of stronger hiring over the past three months briefly propelled the Dow over 15,000 on Friday, but it ended the week below that mark. Wall Street followed Japanese and European markets higher after they responded to good news about central bank stimulus and the German economy. In the U.S., the market got a lift from higher quarterly profits at satellite TV company DirecTV and watchmaker Fossil. The Dow closed at 15,056.20, up 87.31 points, or 0.6 percent. The Standard &#38; Poor&#8217;s 500 index added 8.46 points to 1,625.96, a gain of 0.5 percent. Both indexes reached all-time highs earlier this year, then kept climbing, largely driven by optimism that the U.S. economy will continue gaining strength. &#8220;We don&#8217;t think people are giving enough credit to the strength of the economy,&#8221; said Ryan Detrick, a senior technical strategist at Schaeffer&#8217;s Investment Research. &#8220;We still like the market.&#8221; The gains piled up with the growing realization among investors that the traditional threats to a rising market — higher interest rates, falling profits, a possible recession — are unlikely to appear anytime soon. What&#8217;s more, with interest rates near record lows, they see few other places to put their money. (MORE: How Silicon Valley is Hollowing Out the Economy) In a round of interviews on<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79462&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Stocks</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/stocks-investing/</primary_category_link>
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			<media:title type="html">timeassociatedpress</media:title>
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		<title>Is the Price of Gold Signaling an Economic Slowdown?</title>
		<link>http://business.time.com/2013/04/29/is-the-price-of-gold-signaling-an-economic-slowdown/</link>
		<comments>http://business.time.com/2013/04/29/is-the-price-of-gold-signaling-an-economic-slowdown/#comments</comments>
		<pubDate>Mon, 29 Apr 2013 09:45:40 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=78807</guid>
		<description><![CDATA[Friday’s GDP number was a disappointment. The consensus among economists was that growth for the first quarter would be at least 3% (at an annual rate adjusted for inflation). The actual number was only 2.5%. And even that wasn’t as good as it looked. Growth late last year was very weak, so part of the first-quarter gain was simply a short-term bounce back from the previous quarter. Nonetheless, those results appear to fit with conventional wisdom: A lethargic economy has managed to crank out minimal but steady growth for almost four years. And the outlook is slowly getting better rather than getting worse. Some contrarians challenge that view. They sees signs that the U.S. economy is losing momentum and is heading for another slowdown, if not another recession. The leading indicators of such a future downturn include price trends for important commodities, as well as for Treasury bonds. The most significant bellwether is the recent drop in the price of gold – the sharpest in 30 years. Since the U.S. abandoned the gold standard in the mid-1970s, consumer prices have quadrupled, but gold has risen more than ten-fold. The gold price hasn’t moved higher consistently – it was relatively flat during much of the 1980s and ’90s. But there have been only three periods in which gold prices suffered a significant and rapid decline. The first was from 1980 to ’82, when Federal Reserve chairman Paul Volcker raised interest rates to crush double-digit inflation and the U.S. economy experienced two closely spaced recessions. The second was in 2008, when the financial crisis caused a credit crunch and a worldwide recession. (MORE: A Nation of Renters: Should We Be Worried That Fewer Americans Own Homes?) The third period began in 2011, when gold peaked at $1,896 an ounce. Since then, the price has fallen to $1,440. Strikingly, this decline is occurring at a time when the Fed is pumping money into the banking system, interest rates are extremely low, and the U.S. economy has not had a negative quarter for nearly four years. Why<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78807&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/rtxymy9-copy.jpg?w=240</featured_image>
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			<media:title type="html">Watches and gold jewellery in a display case inside the Gold Standard jewellery store, specializing in purchasing raw gold and silver in New York City, on April 15, 2013.</media:title>
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		<media:content url="http://2.gravatar.com/avatar/b8875a12f713f52ecc28fe72efed7fd4?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">michaelsivy</media:title>
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		<title>10 Steps to Spring Clean Your Finances</title>
		<link>http://business.time.com/2013/04/29/10-steps-to-spring-clean-your-finances/</link>
		<comments>http://business.time.com/2013/04/29/10-steps-to-spring-clean-your-finances/#comments</comments>
		<pubDate>Mon, 29 Apr 2013 09:45:18 +0000</pubDate>
		<dc:creator>Martha C. White</dc:creator>
				<category><![CDATA[401(k) Savings]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Health Insurance]]></category>
		<category><![CDATA[Insurance]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>
		<category><![CDATA[Taxes]]></category>
		<category><![CDATA[401k]]></category>
		<category><![CDATA[budgeting]]></category>
		<category><![CDATA[credit cards]]></category>
		<category><![CDATA[insurance]]></category>
		<category><![CDATA[IRS]]></category>
		<category><![CDATA[saving money]]></category>
		<category><![CDATA[savings]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78144</guid>
		<description><![CDATA[When it comes to spring cleaning, you probably haul the junk out of your garage, scrub your fridge, and wash the rugs and drapes. But don&#8217;t forget about your personal finances. Just after tax season is the perfect time to perform an annual evaluation and tidying up of your budget, bank accounts, debts, and investments. Here are ten steps for straightening up your finances: Evaluate your debt load. How much do you owe, and how much are you paying the lenders in interest? Comparison shop what you&#8217;re paying in interest with what&#8217;s available now, and consider refinancing your mortgage or asking your credit card company for a lower interest rate. If you want to take advantage of the 0% balance transfer offers that are all over the place, make sure you’ll be able to pay off the transferred balance in full before the promotional period expires — and resist the temptation to run up new debt on the old card. Chip away at that debt. The question has always been whether you should you start paying off the balance with the highest interest or knock out the smallest bills first. Although starting with the highest interest rate makes the most sense mathematically, researchers found that people are more motivated to continue with a debt-reduction plan if they knock out a small debt in its entirety rather than merely a chunk of a bigger one. Also known as the &#8220;snowball approach&#8221; as advocated by personal finance expert Dave Ramsey, paying off one debt gives you the momentum to keep chipping away until that debt is history. Update your budget. If you’ve undergone a major job-related change like getting a big promotion or switching from two incomes to one, revisit your household budget. If you&#8217;d like to have one partner stay home with a child or go back to school full-time in 2013, the best way to adjust to being a single-breadwinner family is to start living like one six months beforehand. This will expose any weak spots in your budget or expenses you’ve<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78144&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Personal Finance</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/145629365-copy.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2013/04/145629365-copy.jpg?w=240" />
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			<media:title type="html">Piggy Bank</media:title>
		</media:content>

		<media:content url="http://0.gravatar.com/avatar/9a5a9e4f28beb5afb59b1202632d219a?s=96&#38;d=http%3A%2F%2F0.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">marthacwhite</media:title>
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		<title>Trouble With Your Investment Portfolio? Google It!</title>
		<link>http://business.time.com/2013/04/26/trouble-with-your-investment-portfolio-google-it/</link>
		<comments>http://business.time.com/2013/04/26/trouble-with-your-investment-portfolio-google-it/#comments</comments>
		<pubDate>Fri, 26 Apr 2013 17:06:48 +0000</pubDate>
		<dc:creator>Christopher Matthews</dc:creator>
				<category><![CDATA[Google]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Technology & Media]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78731</guid>
		<description><![CDATA[In the stock market, there are countless strategies for making a buck. Some investors like to focus on the fundamentals of the companies they invest in &#8212; poring over financial statements to figure out which firms are over- or under-valued. Others invest based on trends or macroeconomic events, like whether the Fed is raising or lowering interest rates. These may be effective approaches, but the greatest trading strategy of all &#8212; were it possible &#8212; would be to simply learn how much a particular asset will, in the near future, be valued by everybody else in the market. After all, all the hard data in the world cannot compel a seller or buyer to give you the price you want. That&#8217;s why, at the end of the day, stock markets are about mass psychology as much as anything else. And with the proliferation of the internet, it has never been easier to tap into moods and feelings of the masses. This is what researchers Tobias Preis, Helen Moat, and Eugene Stanely had in mind when they set out to prove that you can make money in the stock market just by following what people are searching for on Google. (MORE: How Does One Fake Tweet Cause a Stock Market Crash?) In a study published yesterday in the journal Nature, these researchers showed that from 2004 through 2011, by making trades purely based on the prevalance of specific search terms, they could earn outsized returns. The most lucrative search term these researchers found was, unsurprisingly, &#8220;debt.&#8221; The researchers found that if they had sold a Dow Jones Industrial Index fund during times when the search term &#8220;debt&#8221; spiked, and consistently did this over the 7-year-period between 2004 and 2011, they would have earned a healthy 326% return. By contrast, had they simply bought a broad stock market index fund in 2004 and held it until 2011, they would have earned just 16%. Some of the other terms that would have yielded hefty returns were a little less intuitive, like &#8220;color,&#8221; &#8220;stocks,&#8221; and, oddly enough, &#8220;restaurant.&#8221; The<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78731&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Portfolio Strategy</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/portfolio-strategy/</primary_category_link>
		<media:content url="http://2.gravatar.com/avatar/8f9a71742e964af96ca58c01a0577a0d?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">christopherrmatthews</media:title>
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		<title>Stocks Briefly Drop, Recover, on Fake Bomb Tweet</title>
		<link>http://business.time.com/2013/04/23/stocks-briefly-drop-recover-on-fake-bomb-tweet/</link>
		<comments>http://business.time.com/2013/04/23/stocks-briefly-drop-recover-on-fake-bomb-tweet/#comments</comments>
		<pubDate>Tue, 23 Apr 2013 18:02:40 +0000</pubDate>
		<dc:creator>AP / Steve Rothwell</dc:creator>
				<category><![CDATA[Stocks]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78349</guid>
		<description><![CDATA[(NEW YORK) — The stock market briefly dropped, then recovered, after the Associated Press&#8217; Twitter account was hacked and a fake tweet about an attack on the White House was posted. The AP released the following statement at 1:12 p.m.: &#8220;The (at)AP twitter account has been hacked. The tweet about an attack at the White House is false. We will advise more as soon as possible.&#8221; The Dow Jones industrial average fell more than 150 points after the fake Twitter posting, then quickly recovered. Other markets also reacted to the fake posting. (LIST: Top 10 Twitter Controversies) The price of crude oil fell, then rose back. The yield on the benchmark U.S. government bond, the 10-year Treasury note, briefly dropped as traders shifted money into low-risk investments. The turmoil lasted for about five minutes. By about 1:13 p.m., stocks, bonds and crude oil were all trading about where they were before the fake tweet was posted. The stock market started higher Tuesday following strong earnings across a range of U.S. industries. Makers of handbags, jet planes and chemical products all turned in good results for the first quarter, reviving investors&#8217; confidence after a sharp downturn in the stock market last week. Coach, Lockheed Martin, DuPont and Travelers were among the winners after they reported results that were better than analysts expected. The Dow Jones industrial average and the Standard &#38; Poor&#8217;s 500 index both rose nearly 1 percent in morning trading, putting them on track for a third straight day of gains. A resurgence in corporate profits after the Great Recession has been one of the drivers that pushed both the Dow Jones industrial average and the Standard &#38; Poor&#8217;s 500 index to record levels this year. However investors are starting to question how much further company earnings can improve without the outlook for growth in the global economy improving as well. Tuesday&#8217;s upturn in stocks put both indexes back in the black for April and closer to the record high closes they reached on April 11. It was a sharp<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78349&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Stocks</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/stocks-investing/</primary_category_link>
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			<media:title type="html">timeassociatedpress</media:title>
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		<title>Europeans Are Thinking the Unthinkable: That Debt Defaults Might Make Sense</title>
		<link>http://business.time.com/2013/04/23/europeans-are-thinking-the-unthinkable-that-debt-defaults-might-make-sense/</link>
		<comments>http://business.time.com/2013/04/23/europeans-are-thinking-the-unthinkable-that-debt-defaults-might-make-sense/#comments</comments>
		<pubDate>Tue, 23 Apr 2013 07:00:01 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Europe]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Labor]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>
		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78185</guid>
		<description><![CDATA[The euro-zone crisis has slipped off the radar screen during the past couple of weeks as gun control and the Boston bombers have dominated U.S. news. But none of the euro zone’s problems have gone away. Political crises beset France, Italy and Spain. Smaller countries, from Portugal to Cyprus, face even more pressing financial troubles. Germany grows less and less willing to foot the bill for bailouts. And for the first time, serious public figures in Europe have begun openly discussing the pros and cons of allowing countries to default on their national debt. There is, in fact, a historical case for tolerating default. Argentina suffered a financial crisis in 1999 that led to a period of high unemployment. Over the next several years, it became harder and harder to maintain the value of currency. In 2002, the country defaulted on more than $100 billion in debt. Inflation soared, and workers&#8217; purchasing power plummeted. Savers lost a big chunk of their money. But a year later, growth bounced back to an 8% to 9% annual rate, and wages rose even faster. The same issues arose during the 2008 banking crisis. Ireland bailed out its banks, while Iceland couldn’t afford to and allowed a partial default. The results were that Ireland had no inflation, but unemployment topped 14% as growth ground almost to a halt. By contrast, in Iceland the currency lost almost half its value and inflation reached 5.4%. However, economic growth picked up slightly and unemployment didn’t rise much above 6%. (MORE: Why the Case for Austerity Took a Big Hit) In all these cases, policymakers had to choose whether working people or financial interests should be the ones to suffer most during a serious economic crisis. Default hurt affluent savers and financial institutions, but proved to be better for ordinary workers over the long term. What is happening now in Europe is that populations are resisting further austerity. In response, politicians and technocrats are beginning to question whether default might ultimately be less painful than doing what will be required to keep<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78185&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Europe</primary_category><primary_category_link>http://business.time.com/category/economy-policy/europe-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/biz-euro-default-130422.jpg?w=240</featured_image>
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			<media:title type="html">A man walks past a closed down business in Madrid</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/b8875a12f713f52ecc28fe72efed7fd4?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">michaelsivy</media:title>
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		<title>Tale of Two Supermarkets: Why Fresh &amp; Easy Flopped and Fairway Flies High</title>
		<link>http://business.time.com/2013/04/18/tale-of-two-supermarkets-why-fresh-easy-flopped-and-fairway-flies-high/</link>
		<comments>http://business.time.com/2013/04/18/tale-of-two-supermarkets-why-fresh-easy-flopped-and-fairway-flies-high/#comments</comments>
		<pubDate>Thu, 18 Apr 2013 09:45:48 +0000</pubDate>
		<dc:creator>Brad Tuttle</dc:creator>
				<category><![CDATA[Companies & Industries]]></category>
		<category><![CDATA[Food and Beverage Industry]]></category>
		<category><![CDATA[Future of Retail]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Retail]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>
		<category><![CDATA[Aldi]]></category>
		<category><![CDATA[Arizona]]></category>
		<category><![CDATA[california]]></category>
		<category><![CDATA[Fairway]]></category>
		<category><![CDATA[Fairway Market]]></category>
		<category><![CDATA[Fresh & Easy]]></category>
		<category><![CDATA[groceries]]></category>
		<category><![CDATA[grocery store]]></category>
		<category><![CDATA[las vegas]]></category>
		<category><![CDATA[Nevada]]></category>
		<category><![CDATA[New York]]></category>
		<category><![CDATA[supermarket]]></category>
		<category><![CDATA[Tesco]]></category>
		<category><![CDATA[Trader Joe's]]></category>
		<category><![CDATA[Whole Foods]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77975</guid>
		<description><![CDATA[This week, the death of one high-profile grocery chain, and the ascendancy of another, tells us a lot about what Americans want in a supermarket—and what we&#8217;re just not buying. On Wednesday, Fairway, the beloved New York-centric supermarket chain, went public, and shares of the company quickly shot up 39%. Born as a produce stand on Manhattan&#8217;s Upper West Side, Fairway now has a dozen locations, and it plans on opening as many as 300 stores around the country. Also on Wednesday, news spread that Fresh &#38; Easy, the supermarket brand launched in the U.S. five years ago by Tesco, Britain&#8217;s biggest grocery company, was officially a failure. Tesco announced it would cut its losses on Fresh &#38; Easy, taking a write-off of roughly $1.8 billion. The 200 existing Fresh &#38; Easy stores, all in the American West, are up for sale. Most would agree with Philip Lempert, editor of Supermarket Guru, who said in a phone interview, &#8220;Tesco is one of the smartest retailers on the planet. They&#8217;re not a dumb company at all.&#8221; And yet, as Burt Flickinger III of the retail consulting firm Strategic Resource Group put it in a Los Angeles Times article, &#8220;Tesco&#8217;s failure will rank as one of the biggest among food retailers in modern supermarket history.&#8221; (MORE: The 5 Big Mistakes That Led to Ron Johnson&#8217;s Ouster at JC Penney) What happened? And what has Fairway done differently that has it headed in exactly the opposite direction of Fresh &#38; Easy? While both are in the same business, Lempert said, &#8220;They really represent the two extremes of what&#8217;s going on in grocery retail.&#8221; Here are a few of areas where the differences are readily apparent. Understanding Customers &#38; Locations The first Fresh &#38; Easy opened in the U.S. in 2007. Tesco originally planned on having 200 stores by the end of 2009, and upwards of 400 locations by early 2013. Instead, by the fall of 2010, when the total stood at 168 U.S. locations, the company announced it was &#8220;mothballing&#8221; 13 stores, including<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77975&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Food and Beverage Industry</primary_category><primary_category_link>http://business.time.com/category/companies-industries/food-and-beverage-industry/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/166829339.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2013/04/166829339.jpg?w=240" />
		<media:content url="http://timebusinessblog.files.wordpress.com/2013/04/166829339.jpg?w=240" medium="image">
			<media:title type="html">Fairway Group Jumps in Trading After Pricing IPO Above Range</media:title>
		</media:content>

		<media:content url="http://0.gravatar.com/avatar/f8de938518e7b986d552694ed99aa54d?s=96&#38;d=http%3A%2F%2F0.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">bradtuttle</media:title>
		</media:content>
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		<title>What the Boston Bombing Means for the Economy and the Stock Market</title>
		<link>http://business.time.com/2013/04/16/what-the-boston-bombing-means-for-the-economy-and-the-stock-market/</link>
		<comments>http://business.time.com/2013/04/16/what-the-boston-bombing-means-for-the-economy-and-the-stock-market/#comments</comments>
		<pubDate>Tue, 16 Apr 2013 12:23:11 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Exchanges]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Mutual Funds]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Tourism]]></category>
		<category><![CDATA[Travel]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77856</guid>
		<description><![CDATA[Terrorism poisons everything. The greatest damage, of course, results from the lives that are lost and the people who are injured. Nonetheless, it’s natural to wonder whether an event such as yesterday’s bombing at the Boston Marathon is likely to have a longer-term impact on the economy and the stock market. Anything that makes people more anxious and uncertain about the future has a negative effect on business and on stocks. The bombing occurred shortly before 3 p.m. E.T., and the Dow — which had earlier in the day started to rally from the day’s lows — fell another 120 points in the last hour of trading. Is that likely to be it? Or should investors expect further big losses over the coming days and even weeks? The attack on September 11, 2001, seems to suggest that the effects of a terrorist attack might be long lasting. Following that tragedy, the Dow dropped 1,400 points and needed more than two months to get back to even. However, it’s worth noting that at the time of the attack on the World Trade Center, the Dow was already down 1,500 points from the year’s high. And after the market made up its losses from 9/11, it went on to gain another 1,000 points in the first four months of 2002. So clearly there were other factors driving stock prices. Moreover, not all incidents have such a drastic impact. In fact, it’s possible to divide terrorist acts into four categories with dramatically different economic results: Attacks on individual companies. Terrorism that targets a specific company — such as the kidnapping of employees or the bombing of offices — has a damaging effect on the shares of the company targeted. In some cases, a stock can be hit hard and have a sizable loss. But overall, the effect tends not to be very great. A recent study found that in 75 incidents, the average stock-market loss was only 1% or 2%. Competitors were not affected one way or the other. Attacks on the energy sector.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77856&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Wall Street &amp; Markets</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>10 Biggest 401(k) Mistakes—and How to Avoid Them</title>
		<link>http://business.time.com/2013/04/10/10-biggest-401k-mistakes-and-how-to-avoid-them/</link>
		<comments>http://business.time.com/2013/04/10/10-biggest-401k-mistakes-and-how-to-avoid-them/#comments</comments>
		<pubDate>Wed, 10 Apr 2013 18:14:43 +0000</pubDate>
		<dc:creator>Martha C. White</dc:creator>
				<category><![CDATA[401(k) Savings]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
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		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=76088</guid>
		<description><![CDATA[As traditional defined-benefit pensions become increasingly rare, more Americans instead are offered employer-sponsored 401(k)s, defined-contribution plans that require participants to be more proactive and educate themselves. Here are the biggest pitfalls experts say can do the most damage to your nest egg. Not having one. Let’s get this one out of the way. The experts unanimously agree that the biggest mistake you can make is to not have a 401(k), especially if your employer matches your contributions. Collectively, we’re ridiculously underfunded for retirement Going with the default contribution level. Some people assume that their plan’s &#8220;default&#8221; contribution level is sufficient to fund retirement: It’s not. The most common default contribution level is 3% of an employee&#8217;s income, but Stephen Utkus, principal and director in the Vanguard Center for Retirement Research says people with a household income of between $50,000 and $100,000 should be saving 12% to 15%, between their contributions and whatever their company matches. People who make more than that should aim to save 15% to 20%, and workers earning below $50,000 should ideally be socking away 9% to 12%. Abandoning a 401(k) after you switch jobs. With all of the upheaval that comes with switching jobs, it can be easy to forget about rolling over your 401(k). But letting one languish can have serious consequences, says Dana Levit, owner of Paragon Financial Advisors, a fee-only financial planning firm. The funds themselves where your money is parked could change to the point where they no longer fit your investment goals, and if the plan changes hands, your money could get dumped into cash by default, where it won&#8217;t even keep up with inflation. So don&#8217;t put off a rollover once you&#8217;re eligible to join your new company&#8217;s plan. (MORE: We Talk a Big Game But Don&#8217;t Follow Through When it Comes to Saving for Retirement) Withdrawing funds too soon. Cashing out your retirement fund is a horrible idea all around. The money will be taxed at your regular income tax bracket, plus you&#8217;ll get hit with a 10% penalty fee. On top of this,<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=76088&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>401(k) Savings</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/401k-savings-personal-finance/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/91830055-1.jpg?w=240</featured_image>
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			<media:title type="html">91830055 (1)</media:title>
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			<media:title type="html">marthacwhite</media:title>
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		<title>Is the Global Economy Slowly Falling Apart?</title>
		<link>http://business.time.com/2013/04/05/is-the-global-economy-slowly-falling-apart/</link>
		<comments>http://business.time.com/2013/04/05/is-the-global-economy-slowly-falling-apart/#comments</comments>
		<pubDate>Fri, 05 Apr 2013 12:00:39 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Economy]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=76345</guid>
		<description><![CDATA[It’s conventional wisdom that the U.S. economy is steadily recovering from the recession, even if progress is slow and disappointing. But there’s also a widespread sense that long-term economic prospects are deteriorating all around the world. Young people can’t find jobs. Budgets keep being cut in both the public and the private sectors. And the projected increase in debt over the next decade figures to be a huge burden for the most highly developed economies. Political systems seem unable to cope with problems that ought to be fairly easy to solve, or at least contain. As the recent crisis in Cyprus demonstrates, a minor dislocation can become a threat to the entire global financial system overnight. The U.S. is deeply troubled too. Deficits remain enormous, and the checks and balances of the political system have turned into a logjam. In a new book, David Stockman, President Ronald Reagan’s budget director, chronicles the relentless downward spiral of America’s political and financial systems. He concludes: “The future is bleak &#8230; When the latest bubble pops, there will be nothing to stop the collapse.” This view may be extreme, but there’s hard evidence to substantiate the idea that the global economy is becoming more rickety. Although the developed world today is considerably richer overall than it was when Stockman worked in the Reagan Administration, creditworthiness has been steadily declining. The global supply of AAA-rated government bonds has shrunk by more than 60% since the financial crisis began. And while dozens of big U.S. corporations had top bond ratings 30 years ago, today that group has dwindled to four: Automatic Data Processing, Exxon Mobil, Johnson &#38; Johnson and Microsoft. How seriously should we take these bellwethers? Although there are real problems that need to be solved, the long-term picture doesn&#8217;t look entirely bleak. Four major trends will determine global economy stability in the long run: (MORE: Marx&#8217;s Revenge: How Class Struggle Is Shaping the World) Demographics Populations develop bulges because of changing birthrates. In the most simplistic terms, a bulge of high-spirited young people correlates with<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=76345&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Why Derivatives May Be the Biggest Risk for the Global Economy</title>
		<link>http://business.time.com/2013/03/27/why-derivatives-may-be-the-biggest-risk-for-the-global-economy/</link>
		<comments>http://business.time.com/2013/03/27/why-derivatives-may-be-the-biggest-risk-for-the-global-economy/#comments</comments>
		<pubDate>Wed, 27 Mar 2013 15:06:48 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Economy]]></category>
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		<category><![CDATA[Exchanges]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Financial Reform]]></category>
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		<category><![CDATA[Investment Banking]]></category>
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		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Too-Big-To-Fail]]></category>
		<category><![CDATA[Wall Street]]></category>
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		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=75881</guid>
		<description><![CDATA[Four years after the U.S. recession ended, the global economy is still beset by problems. The present danger comes from Cyprus – where the sea foam once gave birth to the goddess Aphrodite but now only creates froth in panicky financial markets. The proposed bailout plan for troubled Cypriot banks would impose losses of up to 40% on the largest depositors. And that, in turn, could undermine confidence in the banks of other troubled euro zone countries. Cyprus is only the latest challenge for global financial stability, however. In the U.S., deteriorating urban finances – from Detroit to Stockton, Calif. – threaten municipal bond holders, public-sector workers, and taxpayers. In addition, a rise in long-term interest rates seems inevitable sooner or later, either because of inflation or because the Federal Reserve backs away from its easy-money policies. Higher interest rates would mean big losses for bond investors, and also for government-sponsored entities, such as Fannie Mae and Freddie Mac, that hold mortgage-backed assets. The greatest risk of all, however, may be one of the least visible – namely, the expanding, shadowy market for derivatives. These highly sophisticated investments have contributed to financial disasters from the 2008 bankruptcy of Lehman Brothers to J.P. Morgan’s 2012 trading losses in London, which totaled more than $6 billion. (MORE: The $600 Billion the IRS Can&#8217;t Collect) Basically, derivatives are financial contracts with values that are derived from the behavior of something else – interest rates, stock indexes, mortgages, commodities, or even the weather. Just as homebuyers make only a down payment when they buy a house with a mortgage, derivatives traders put down only a small amount of cash. Moreover, one derivative can be used to offset or serve as collateral for another. The result is that a massive edifice of derivatives can be supported by a relatively small amount of real money. Some derivatives, such as typical stock options, trade on exchanges. But many are simply private contracts between banks or other sophisticated investors. As a result, it’s hard to know the total<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=75881&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Can the U.S. Dollar Become Almighty Once Again?</title>
		<link>http://business.time.com/2013/03/20/can-the-u-s-dollar-become-almighty-once-again/</link>
		<comments>http://business.time.com/2013/03/20/can-the-u-s-dollar-become-almighty-once-again/#comments</comments>
		<pubDate>Wed, 20 Mar 2013 14:35:25 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=75257</guid>
		<description><![CDATA[Financial turmoil in Cyprus, where the parliament rejected a plan an eurozone bailout deal that would have taxed bank deposits, is prompting investors to shift cash from the euro zone to the U.S. That’s boosting the value of the dollar &#8212; and it’s just the latest installment in a story that has helped the dollar strengthen for more than a year. Despite gridlock in Washington and a string of economic mishaps, the dollar has risen by 7% since late 2011. That’s a striking turnaround for a currency that was in relentless decline for decades. If the upward trend continues – and there are good reasons to think it will – then the U.S. dollar could become almighty once again. The dollar’s decline over the past 30 years has been far greater than most Americans realize. It has lost almost half its value against other major currencies since 1985 and is down 33% in the past 11 years alone. Indeed, the value of the U.S. dollar is lower today than it was in 2009 when the recession ended. In part, this fall occurred because of government policies in Europe and Japan that kept the euro and the yen overvalued. A weak currency can bolster a country’s economy in the short run, by making goods cheaper for foreign buyers and thereby encouraging exports. But over the longer term, a robust economy is typically accompanied by a strong currency. A currency rises in value when more foreign money is flowing in than is flowing out. These inflows occur not only because of export sales but also because foreigners see investment opportunities or are seeking safe places to park their cash. As a result, a stronger dollar is a bellwether of an improving economy and a brighter outlook for U.S. stocks. And there are three reasons economists think the dollar’s rise could continue: (MORE: Cyprus: The E.U. &#8216;Rescue That Risks Backfiring) Other major countries are worse off economically. The U.S. economy may be sluggish, but it has grown for 14 straight quarters since the recession ended<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=75257&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>World Finance</primary_category><primary_category_link>http://business.time.com/category/world-finance/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>If There’s No Inflation, Why Are Prices Up So Much?</title>
		<link>http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/</link>
		<comments>http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/#comments</comments>
		<pubDate>Tue, 12 Mar 2013 09:45:03 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economic Indicators]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=74397</guid>
		<description><![CDATA[Last week, I ran out of ink for my printer and ordered some more online. My computer automatically pulled up the previous order, and I was shocked to see that the price of the ink cartridges I was buying had gone up 25%. To my mind, ink always seems overpriced. Manufacturers sell printers cheaply because they know that they can make lots of money on the ink. For the same reason, John D. Rockefeller’s Standard Oil is said to have sold millions of cheap kerosene lamps in order to make big profits selling kerosene. But since ink cartridges were already priced way above cost and official statistics show little general inflation, why had ink gone up 25% in less than a year? Price hikes for a particular item here or there don&#8217;t qualify as inflation. If one thing gets more expensive but something else gets cheaper, that’s what economists call a relative price change. Inflation is a simultaneous increase in prices across the board. Some measures of inflation, such as the GDP Deflator, track price changes that affect businesses as well as those that affect consumers. But the Consumer Price Index is supposed to focus on inflation at the consumer level. And the CPI has recorded minimal increases over the past four years. Since the recession ended, the 12-month change in consumer prices has averaged 2% and has never been as high as 4%. (MORE: Online &#8216;Predictions&#8217; Market Intrade Shuts Down Months After Federal Lawsuit) There are lots of other ways to gauge inflation, however, that give very different signals. Gold was $930 an ounce when the recession ended, and today it’s $1,583. So if you believe in the gold standard, prices have increased 70% in four years – or an annualized rate of 14.2%. Of course, many economists dismiss the gold price as an archaic indicator. So it may be more meaningful to look at price increases over a broad range of commodities. The Reuters CRB Commodity Index, which tracks the prices of coffee, cocoa, copper, and cotton, as well as<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=74397&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/01/inflation.jpg?w=240</featured_image>
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			<media:title type="html">inflation</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Dow Jones Closes at Record High — So What?</title>
		<link>http://business.time.com/2013/03/06/dow-jones-closes-at-record-high-so-what/</link>
		<comments>http://business.time.com/2013/03/06/dow-jones-closes-at-record-high-so-what/#comments</comments>
		<pubDate>Wed, 06 Mar 2013 10:45:15 +0000</pubDate>
		<dc:creator>Martha C. White</dc:creator>
				<category><![CDATA[Bonds]]></category>
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		<category><![CDATA[Wall Street]]></category>
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		<category><![CDATA[short-term interest rates]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=73949</guid>
		<description><![CDATA[When the trading day ended on Tuesday, the Dow Jones Industrial Average closed at a record high of 14,253.77. It surpassed the index&#8217;s previous closing high of 14,164.53 reached back in the pre-recession days of October 2007. For all the headlines devoted to the event, you&#8217;d think this was a really big deal — either a signal that our economy has zoomed past the lingering aftereffects of the Great Recession, or evidence of a bubble about to pop, as CNBC wondered a little while ago. The reality is probably much less exciting. &#8220;Investors should curb their enthusiasm,&#8221; says Mitchell O. Goldberg, president of ClientFirst Strategy. Experts say the Dow&#8217;s record high means relatively little in the grand scheme of things. Here are a few reasons why: The Dow Doesn&#8217;t Reflect the Entire Economy &#8220;To the average guy in the public, the Dow means the market,&#8221; says Wayne S. Kaufman, chief market analyst at John Thomas Financial. &#8220;But it’s only 30 stocks.&#8221; What&#8217;s more, the index is price-weighted, meaning more expensive stocks have an outsized impact on the number. The 30 stocks that currently constitute the Dow Jones Industrial Average make up a pretty narrow slice of American economic output. Analysts say the S&#38;P 500, a much bigger index, is more reflective of the market as a whole. (It ended Tuesday at a five-year high, but fell short of record-breaking status.) (MORE: Are We Already Planting the Seeds of the Next Financial Crisis?) Also, the companies included in the Dow have changed over the years, and inflation is not factored in, so measuring today&#8217;s record against its previous high is an apples-to-oranges comparison. &#8220;When you see the Dow hitting new highs, it’s not the same Dow we had in &#8217;07,&#8221; Goldberg says. He points out that manufacturing stalwart General Motors was booted out, as were Citigroup and Kraft, and he argues the current index skews too tech-heavy to encompass the true scope of the U.S. economy. The Fed Did This &#8212; and It Can Undo It Too Stocks have been particularly buoyant because they&#8217;re floating<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=73949&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Stocks</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/stocks-investing/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/03/163135776-1.jpg?w=240</featured_image>
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			<media:title type="html">Dow Jones Average Passes Its All Time High</media:title>
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			<media:title type="html">marthacwhite</media:title>
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		<title>What Happens When the Fed Really Does Run Out of Ammunition?</title>
		<link>http://business.time.com/2013/02/27/what-happens-when-the-fed-really-does-run-out-of-ammunition/</link>
		<comments>http://business.time.com/2013/02/27/what-happens-when-the-fed-really-does-run-out-of-ammunition/#comments</comments>
		<pubDate>Wed, 27 Feb 2013 10:45:01 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Economics]]></category>
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		<category><![CDATA[Economy]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=72950</guid>
		<description><![CDATA[Stocks dropped sharply last week, with the Dow falling some 200 points, after the Federal Reserve released the minutes of its January Open Market Committee meeting. Although the minutes reaffirmed the Fed’s easy-money policy, they also showed that some members of the committee had voiced concerns. The dissenters cautioned that quantitative easing, the current program of massive bond buying, could not be continued indefinitely without serious risks. Loading the Fed up with bonds creates the danger of big losses for the central bank if interest rates rise (which causes bond prices to fall). In a worst-case scenario, those losses could total half a trillion dollars over three years, according to one estimate. As a result, the January minutes included a carefully worded caveat: “Evaluation of the efficacy, costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.” Fed Chairman Ben Bernanke remains undaunted, however. In his testimony before Congress on Tuesday he defended his easy-money policy, noting that it has &#8220;supported real growth in employment and kept inflation close to our target.&#8221; With consumer prices up only 1.6% over the past year, Bernanke declared: &#8220;My inflation record is the best of any Federal Reserve chairman in the postwar period — or at least one of the best.&#8221; (MORE: Italy&#8217;s Political Mess: Why the Euro Debt Crisis Never Ended) In addition he argued that worries about potential losses on the Fed&#8217;s ballooning bond holdings were overstated. Careful portfolio management, he said, would allow the central bank to absorb the losses over time by trying to hold bonds to maturity rather than selling at a loss. &#8220;We could exit without ever selling,&#8221; Bernanke said. This debate raises profound questions — probably not for the last time — about the effectiveness of the Fed&#8217;s easy-money policy. Why hasn&#8217;t it worked better? How long can it be continued? And, most important, what will happen when the Fed finally runs out of ammunition and quantitative easing comes to<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=72950&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/02/biz-ben-bernanke-130227.jpg?w=240</featured_image>
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			<media:title type="html">Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill in Washington</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Is the World on the Brink of a Currency War?</title>
		<link>http://business.time.com/2013/02/21/is-the-world-on-the-brink-of-a-currency-war/</link>
		<comments>http://business.time.com/2013/02/21/is-the-world-on-the-brink-of-a-currency-war/#comments</comments>
		<pubDate>Thu, 21 Feb 2013 10:45:44 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<category><![CDATA[Stocks]]></category>
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		<category><![CDATA[Wall Street & Markets]]></category>
		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=72468</guid>
		<description><![CDATA[The latest hot topic among economic talking heads is the coming currency war. According to conventional wisdom, there’s a risk that major countries will – simultaneously – try to revive their sluggish economies by pushing down the value of their currencies. That strategy could backfire, according to this line of thought, stifling international trade, tipping economies back into recession, and possibly causing Depression-style hyperinflation to boot. Get ready to sell apples on the nearest street corner and buy your morning coffee with a wheelbarrow full of paper money. It all sounds very unpleasant. But the dogs of war are unlikely to slip their leash. In a classic currency war, a country prints money, holds interest rates down, or intervenes in foreign exchange markets in order to depress the value of its own currency. That makes the country&#8217;s exports cheaper and more attractive for foreign buyers. In theory, this can enable an economy to grow faster than would be possible on the basis of domestic demand alone. Only trouble is, if every country pursues a similar strategy, they all devalue their currencies at the same time and no country gains an advantage over its trading partners. It may look as though that’s what’s happening now, since many of the largest economies are following policies that could depress the value of their currencies. But they’re doing so for fundamentally different reasons – to address domestic economic problems rather than to boost exports. And while this creates some real risks, they aren’t the ones that the term &#8220;currency war&#8221; implies. (MORE: Why Can&#8217;t People with Student Loans Refinance at Better Rates?) Currency wars – and trade wars generally – have their origins in a 17th and 18th century economic theory known as mercantilism. The idea was that a country’s wealth comes from selling more than it buys. A colonial empire could achieve this positive balance of trade by acquiring cheap raw materials from its colonies and then ensuring that it exported more finished goods than it imported. This was usually accomplished with tariffs that made<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=72468&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/07/2100_ml_foreignmoney_0713.jpg?w=240</featured_image>
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