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	<title>Business &#38; MoneyCategory: Markets &#124; Business &#38; Money &#124; TIME.com</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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		<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>
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			<media:title type="html">michaelsivy</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>
		<category><![CDATA[Bonds]]></category>
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		<category><![CDATA[Economic Indicators]]></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>
		</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>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>
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		<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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	<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>
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			<media:title type="html">christopherrmatthews</media:title>
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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>
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		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Mutual Funds]]></category>
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		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Tourism]]></category>
		<category><![CDATA[Travel]]></category>
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		<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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	<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>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>
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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>
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		<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>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Currency]]></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>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>
		<category><![CDATA[Bonds]]></category>
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		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
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		<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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			<media:title type="html">michaelsivy</media:title>
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		<title>Why Can&#8217;t This Economy Really Get Going?</title>
		<link>http://business.time.com/2013/02/12/why-cant-this-economy-get-going/</link>
		<comments>http://business.time.com/2013/02/12/why-cant-this-economy-get-going/#comments</comments>
		<pubDate>Tue, 12 Feb 2013 13:00:18 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
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		<category><![CDATA[Financial Reform]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=70353</guid>
		<description><![CDATA[It’s no secret that the U.S. economy isn’t doing especially well. But there’s a cliché – one that I’ve repeated myself – that conditions are improving, even if progress is disappointingly slow. That notion was exploded two weeks ago when the Department of Commerce estimated that GDP actually declined in the fourth quarter of 2012. It’s true that the drop wasn’t very big and was offset to some extent by better-than-expected results earlier in the year. But when you average results for the past four quarters, overall growth last year amounted to only half the normal rate, and there’s not really any upward trend. Those results are even worse than they sound. After a recession ends, the economy typically enjoys a bit of a boom. And the deeper the slump, the more powerful the rebound usually is. For brief periods, GDP growth can get up as high as 9% (at an annual rate). And over several years, the economy can expand considerably faster than the historical average rate of 3.25%. In short, after a recession there’s typically a catch-up period, in which the economy makes up some of its lost ground. (MORE: 9 Easy Ways to Save Money on Your Next Vacation) So the problem is not just that business conditions are taking a long time getting back to normal. What’s a lot more disappointing is that there hasn’t been any real rebound at all. In fact, GDP growth hasn’t outpaced the historical average rate for two consecutive quarters since the recession ended. This chronic weakness isn’t result of any single problem. Instead, there are a host of factors that have combined to produce the entrenched stagnation we see today. Among them: The housing bust. Home prices have stopped falling and have turned up over the past year. But many American families still have not recovered from the 30% drop in prices between 2006 and 2009. By some estimates, a fifth of all the homes with mortgages are worth less than is owed on them. Not only does this prevent many homeowners<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=70353&#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/rtr3dn1w.jpg?w=240</featured_image>
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			<media:title type="html">Traders work on the floor of the New York Stock Exchange after the opening bell Feb. 11, 2013.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Has the Banking Industry Really Been Fixed?</title>
		<link>http://business.time.com/2013/02/05/has-the-banking-industry-really-been-fixed/</link>
		<comments>http://business.time.com/2013/02/05/has-the-banking-industry-really-been-fixed/#comments</comments>
		<pubDate>Tue, 05 Feb 2013 13:00:45 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
		<category><![CDATA[Companies & Industries]]></category>
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		<category><![CDATA[Financial Reform]]></category>
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		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Investment Banking]]></category>
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		<category><![CDATA[Private Equity]]></category>
		<category><![CDATA[Real Estate & Homes]]></category>
		<category><![CDATA[Real Estate Markets]]></category>
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		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=69750</guid>
		<description><![CDATA[The biggest economic puzzle of the past few years is why the recovery has remained so weak. The underlying cause of the 2007-2009 recession was the bursting of the real estate bubble. But it was the banking crisis resulting from the drop in home prices that actually sent the U.S. tumbling into the worst economic downturn since the Great Depression. Continuing problems in the banking industry have been among the chief factors holding back the recovery. The key question now is whether the banks have finally tackled their problems, so that the economy can start to grow more robustly. It certainly seems as though the banking sector should be on the mend. Home prices have turned up after hitting bottom early last year. And other borrowers are in better shape, too. Corporate profits have rebounded powerfully, and consumers have got their household debt under control. So you might think that banks would be in a stronger position to finance economic growth. The reality, however, is more complicated. The losses banks suffered because of falling home prices exposed a host of fundamental problems in the industry. Here’s a look at what needs to be addressed to get the financial system back to full strength: (MORE: Misguided? Half of Adult Children Think Parents Made No Money Mistakes) Regulation. There are two key types of regulation. The first limits the amount of risk a bank can take. Only trouble is, it’s hard for regulators – or anyone else – to monitor the riskiness of bank portfolios. Indeed, the major credit-rating agencies have come under sharp criticism for failing to recognize the risk of some sophisticated investments. The second type of regulation separates aggressive forms of banking from more mundane lending for mortgages, businesses, and consumer finance. That prevents speculative losses from leading to a cutback in credit available for ordinary business activities. A provision known as the Volcker Rule restricts banks from making risky investments with the same capital that they use to make loans to clients. But the rule does not require the nearly complete separation<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=69750&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Banking</primary_category><primary_category_link>http://business.time.com/category/banking-2/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/02/rtxdamt.jpg?w=240</featured_image>
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			<media:title type="html">Traders stand outside the New York Stock Exchange on March 27, 2009.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>6 Reasons the Stock Market Could Do Surprisingly Well in 2013</title>
		<link>http://business.time.com/2013/01/22/6-reasons-the-stock-market-could-do-surprisingly-well-in-2013/</link>
		<comments>http://business.time.com/2013/01/22/6-reasons-the-stock-market-could-do-surprisingly-well-in-2013/#comments</comments>
		<pubDate>Tue, 22 Jan 2013 14:00:37 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<category><![CDATA[Stocks]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=67363</guid>
		<description><![CDATA[The S&#38;P 500 hit a five-year high last week, and now some experts are saying that stocks are overpriced and that the overall market is vulnerable to a 20% drop this year. There are certainly plenty of things to worry about, from a lousy economy and political gridlock in Washington to the possibility of a financial crisis in the euro zone. But there’s an equally compelling case that stocks could do quite well in 2013. Indeed, it wouldn’t be hard for the Dow to sail through its all-time high of 14,164 and go on to top 15,000 before the year is out – a gain of 10% or more from current levels. There’s no denying the economy’s current problems. Since the recession ended more than three years ago, growth has been consistently disappointing for a recovery. Moreover, the economy has actually been slowing down recently – from a 3.1% annualized growth rate in last year’s third quarter to less than 1.5% in the fourth quarter. In addition, analysts project that the fiscal cliff deal, combined with attempts to cut the deficit, will knock as much as a full percentage point off GDP growth in 2013. In short, this year’s economy figures to be just as sluggish as last year’s – and maybe worse. But the pessimists’ case for a bear market is based on more than a limping U.S. economy. They think the bull market – up more than 100% over the past three-and-a-half years – has run its course. They expect a global slowdown that will cause 2013 corporate profits to fall short of expectations. Finally, they think the Federal Reserve’s extreme easy-money policies will either lead to inflation, or that the Fed will have to raise interest rates. Either way, it would send the prices of Treasury bonds into a tailspin and unsettle the stock market as well. Whew! That’s a lot to worry about. But today’s bearish commentators are making one crucial incorrect assumption – that share prices move in lockstep with the economy. It’s true that over the long term, share prices follow<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=67363&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Markets</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/markets/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Do We Have Another Financial Bubble On Our Hands? Or Three?</title>
		<link>http://business.time.com/2012/12/19/do-we-have-another-financial-bubble-on-our-hands-or-three/</link>
		<comments>http://business.time.com/2012/12/19/do-we-have-another-financial-bubble-on-our-hands-or-three/#comments</comments>
		<pubDate>Wed, 19 Dec 2012 14:00:17 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Finance]]></category>
		<category><![CDATA[Financial Reform]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Jobs]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Mortgages]]></category>
		<category><![CDATA[Municipal Government]]></category>
		<category><![CDATA[Real Estate & Homes]]></category>
		<category><![CDATA[Real Estate Markets]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Taxes]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=64489</guid>
		<description><![CDATA[More than two years ago, economists started talking about a bubble in Treasury bonds that would eventually burst, just as the dot.com bubble and the housing bubble had. If that happens, the prices of long-term bonds could fall by 10% to 20%. So far, that bond bust hasn&#8217;t materialized. But one of the characteristics of bubbles is that they often go on longer than anyone expects. What is most troubling now is that the problem is spreading beyond Treasuries. Excessive borrowing and ultra-low interest rates are now distorting all the debt markets. As a result, there is no longer just one bubble – there are many. The details vary, but debt bubbles have two things in common. First, there is a big increase in borrowing often promoted by government policies and sometimes accompanied by a decline in lending standards. Second, there is a huge increase in the amount of money available that keeps interest rates low. Sometimes the cash comes from the government and sometimes it is provided by the banking sector, as it was during the housing bubble. The current debt market bubbles are largely the result of Federal Reserve Chairman Ben Bernanke’s decision to pump huge amounts of money into the banking system. Because of the recession, interest rates would probably have fallen somewhat anyway. And because bond prices normally move in the opposite direction from rates, prices would have risen. But the Fed&#8217;s policies over the past couple of years have depressed interest rates and pushed up bond prices far more than normal. Only trouble is, the Fed can&#8217;t keep this up forever. Rapid money growth can be absorbed if the economy is slack. But once a recovery picks up speed, consumers start spending more exuberantly and businesses become more willing to invest. Excess cash then begins to encourage inflation unless the Fed turns around and drains money from the banking system. Interest rates are likely to rise either way, whether the Fed allows inflation or restrains money growth. (MORE: Why the Fiscal Cliff May Cost You $6,000 in<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=64489&#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/2012/12/money-in-pockets.jpg?w=240</featured_image>
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			<media:title type="html">Do We Have Another Financial Bubble On Our Hands?</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>Is Dollar-Cost Averaging Dumb?</title>
		<link>http://business.time.com/2012/11/15/is-dollar-cost-averaging-dumb/</link>
		<comments>http://business.time.com/2012/11/15/is-dollar-cost-averaging-dumb/#comments</comments>
		<pubDate>Thu, 15 Nov 2012 16:00:10 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Financial Education]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Psychology of Money]]></category>
		<category><![CDATA[Retirement]]></category>
		<category><![CDATA[Saving]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=60861</guid>
		<description><![CDATA[Few savings strategies are more ingrained than dollar-cost averaging, where an individual invests a set amount at set intervals through thick and thin. This is essentially how your 401(k) works. Saving in this manner minimizes risk and keeps you on a steady path. Yet this time-tested formula isn’t necessarily for everyone. Some math majors at mutual fund giant Vanguard poked a hornet’s nest earlier this month, when they advised that investors with a lump sum are better off putting their money in the market all at once. Financial planners everywhere instantly cried foul, and the dollar-cost averaging pioneers of the 1940s rolled over in their graves. Do you know what it feels like to inherit, say, $50,000 and sink it all in a stock index fund just ahead of a 20% decline? Yet the math doesn’t lie. Vanguard basically found that the gut-wrenching scenario just described happens so seldom you should ignore it and plow forward. (MORE: Does a Low Price Mean Good Value or Bad Quality?) Vanguard looked at two sums—$1 million and $20 million, representative of some extremely fortunate heirs. The math majors ran thousands of simulations over rolling 10-year periods since 1926. They looked at money invested all at once, and compared the returns against money invested over periods ranging from six months to three years. This was done for markets in the U.S., U.K. and Australia. The chief finding: The longer one took to invest, the lower the total return. For example, those who invested the entire lump sum on day one outperformed those who took a year to get fully invested two-thirds of the time. A $1 million portfolio invested all at once in a mix of 60% stocks and 40% bonds turned into $2,450,264, on average, compared to $2,395,824 when invested over the course of a year—a difference of more than $54,000. In many ways, the hoopla surrounding this finding was the biggest surprise of all. After all, the market has a tendency to rise over time. So those who invest the most the<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=60861&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Financial Planning</primary_category><primary_category_link>http://business.time.com/category/planning/financial-planning/</primary_category_link>
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			<media:title type="html">dankadlec</media:title>
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		<title>Who&#8217;s Better for Markets: Romney or Obama?</title>
		<link>http://business.time.com/2012/11/05/whos-better-for-markets-romney-or-obama/</link>
		<comments>http://business.time.com/2012/11/05/whos-better-for-markets-romney-or-obama/#comments</comments>
		<pubDate>Mon, 05 Nov 2012 15:30:28 +0000</pubDate>
		<dc:creator>Rana Foroohar</dc:creator>
				<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=59919</guid>
		<description><![CDATA[There’s a growing bit of conventional wisdom that says that if Mitt Romney is elected, the stock market will soar, and if President Obama gets another term, we’ll enter a bear market. Romney said as much himself to a group of $50,000-a-plate supporters during his infamous 47% dinner talk. But does historical evidence support this claim? In a word, no. Sure, there are plenty of investors who believe that the markets would favor a Romney victory. A recent Barclays survey of institutional investors, hedge-fund managers and corporate executives found that most thought that stock markets would rally more, and longer, under a President Romney, though their enthusiasm was muted by worries over a more hawkish Fed (Romney has hinted that he’d like a Fed head that would tighten the money spigots) and protectionism. (Romney may score campaign points by talking tough about China, but no corporate leader wants to risk a trade war, or even a trade skirmish, with the Middle Kingdom, which has been responsible for the bulk of the world’s post-financial-crisis growth.) (MORE: U.S. Economy Adds 171,000 Jobs in October, but Challenges Remain) But while much of Wall Street is, of course, going to believe in a candidate that is less likely to raise taxes on the rich and get tougher on banks, I’m more interested in the historical data put out by folks like renowned fund manager Ken Fisher, showing that over the past eight decades or so, stocks tend to rally no matter who is elected President, mainly because it alleviates political uncertainty and (at least for a few months) unleashes pent-up animal spirits. Interestingly, the only scenario in which stocks do tend to dip is when a Republican President is replaced by a Democratic one &#8212; which, obviously, isn’t an option this time around. (PHOTOS: The Recession in Pictures: America Copes with a Stagnant Economy) I think it’s fair to say that bonds will continue to do better with an Obama victory, because that’s likely to indicate a continuation of “business as usual” at the Fed,<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=59919&#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><featured_image>http://timebusinessblog.files.wordpress.com/2012/11/biz-stock-president_1105.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2012/11/biz-stock-president_1105.jpg?w=240" />
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			<media:title type="html">image: Traders work on the floor of the New York Stock Exchange in New York, Aug. 7, 2012.</media:title>
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			<media:title type="html">ranaforoohar</media:title>
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		<title>Is the U.S. Waging a War on Savers?</title>
		<link>http://business.time.com/2012/10/23/is-the-u-s-waging-a-war-on-savers/</link>
		<comments>http://business.time.com/2012/10/23/is-the-u-s-waging-a-war-on-savers/#comments</comments>
		<pubDate>Tue, 23 Oct 2012 12:00:39 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Borrowing]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Psychology of Money]]></category>
		<category><![CDATA[Retirement]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Tax Policy]]></category>
		<category><![CDATA[Taxes]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>
		<category><![CDATA[Wealth]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=56828</guid>
		<description><![CDATA[A recent consumer survey found that 41% of respondents had less than $500 in savings available on short notice. And the more comprehensive Survey of Consumer Finances released by the Federal Reserve in June calculated that only 52% of American families are earning more than they spend – that&#8217;s the lowest figure in 20 years. Moreover, the Fed found that fewer than 40% of families save money on a regular basis (as opposed to putting away a year-end bonus, say). So one has to wonder, is there a reason so many people are failing to save? And more specifically, are there misguided government policies that actually discourage saving? There are, of course, perfectly good reasons that people are unable to put money away. Despite more than three years of economic recovery, many Americans still face tight monthly budgets. Wages adjusted for inflation have fallen in six of the past 12 months, according to the Bureau of Labor Statistics. Moreover, real average weekly earnings are down 1.3% over the past two years. The reason for this continuing deterioration has been the uneveness of the recovery. Incomes are up for the top 20% of the population, but are falling for the middle class. In addition, the typical American family suffered a 39% drop in net worth between 2007 and 2010, which demoralized all those who saw their long-term savings vanish so quickly. (MORE: Are You Saving Too Much? No, Really) While it is harder for many Americans to save regularly, that isn’t the whole story. Many people would doubtless start rebuilding their net worth if they could find attractive enough places to invest their savings. Unfortunately, the extreme low-interest-rate policies that the Federal Reserve is using to try to stimulate the economic recovery actually penalize savers. And prospective changes to the tax laws add another disincentive to save and invest. Here&#8217;s a closer look at those factors: Ultra-low short-term interest rates mean meager returns. Standard operating procedure for the Fed during an economic slowdown is to reduce the Federal Funds rate – the interest rate banks pay to borrow money for one day.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=56828&#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/2011/12/save1.jpg?w=240</featured_image>
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			<media:title type="html">save</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Why Risk is Back in Fashion</title>
		<link>http://business.time.com/2012/10/03/why-risk-is-back-in-fashion/</link>
		<comments>http://business.time.com/2012/10/03/why-risk-is-back-in-fashion/#comments</comments>
		<pubDate>Wed, 03 Oct 2012 12:00:20 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Mortgages]]></category>
		<category><![CDATA[Mutual Funds]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Real Estate Markets]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[Ben Bernanke]]></category>
		<category><![CDATA[federal reserve]]></category>
		<category><![CDATA[QE3]]></category>
		<category><![CDATA[quantitative easing]]></category>
		<category><![CDATA[stimulus]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=45263</guid>
		<description><![CDATA[In one respect, at least, Ben Bernanke may be getting his way. When the Fed chief last month unleashed his latest round of stimulus, known as QE3, it was (among other things) a shot across the bow of investors who have been squirreling away assets in super-safe securities like short-term Treasuries, bank CDs, and money-market funds. These investments yield less than the rate of inflation, and with the third installment of his “quantitative easing” strategy, Bernanke all but guaranteed that things will stay that way until the economy is really moving again. But the point of QE3 wasn&#8217;t just to keep rates down and encourage home buying. It was also intended to frustrate holders of conservative, low-yielding assets, pushing them to seek higher returns in riskier investments and thereby fund job-generating business activity &#8212; and it seems to be working. (MORE: 4 Key Financial Moves After Landing a New Job) Frustrating savers shouldn&#8217;t be difficult. In fact, the job is largely done: In the second quarter, U.S. households earned $252 billion in interest payments, according to the Commerce Department. That&#8217;s down from an inflation-adjusted $355 billion in the fourth quarter of 2007. This is one result of falling yields and it is playing havoc with the finances of retirees. The Bernanke push is partly what’s behind impressive gains in the stock market the past few months, and now it seems as if home prices are getting a welcome bounce as well. After years of playing it safe, at least some folks have tired of paltry returns and are gaining the confidence to stick their necks out a bit. In a survey of affluent investors, Merrill Lynch recently found that far fewer describe themselves as conservative today. Just 30% say they are leaning toward low-risk investment options—down from 36% last year and 50% two years ago. The shift is most apparent among those with the longest time horizons. Among those 18 to 34 years old, 23% describe themselves as conservative, down from 52% two years ago. (MORE: 10 Questions for Gerhard Richter) There’s<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=45263&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Financial Planning</primary_category><primary_category_link>http://business.time.com/category/planning/financial-planning/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/06/bernanke1.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2011/06/bernanke1.jpg?w=240" />
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			<media:title type="html">Ben Bernanke</media:title>
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			<media:title type="html">dankadlec</media:title>
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		<title>Are Dividend Stocks the Next Bubble?</title>
		<link>http://business.time.com/2012/07/24/dividend-stocks-the-next-bubble/</link>
		<comments>http://business.time.com/2012/07/24/dividend-stocks-the-next-bubble/#comments</comments>
		<pubDate>Tue, 24 Jul 2012 12:00:45 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Retirement]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[bubble]]></category>
		<category><![CDATA[dividend-paying stocks]]></category>
		<category><![CDATA[Dividends]]></category>
		<category><![CDATA[investing]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=42437</guid>
		<description><![CDATA[Dividend-paying stocks have been on a tear, and if you believe the experts it has all gone much too far. We are now in yet another bubble, this one comprising just about any stock with a yield. Look out below. Certainly, there is reason to take notice. In the last three months, traditional dividend-paying industries including telecom (13.7%) and utilities (7.5%) have far outperformed the broad S&#38;P 500 (-1.2%) and individual sectors like materials (-3.4%) and financials (-5.4%).  The Wall Street Journal reports that dividend-payers are now valued in the market at 25% more than non-dividend payers. (MORE: Subprime Private Student Loans: No Way Out) And the money keeps rolling in. From The Journal: “Investors have plowed a net $16 billion into U.S. dividend equity funds since the beginning of the year, with inflows picking up in recent weeks. By contrast, some $25 billion has been withdrawn from non-dividend funds, says data tracker EPFR Global.” So something is afoot. But every rally is not a bubble. What’s happening to dividend stocks seems analogous to the housing market in, say 2002. That’s when the bubble talk began and, of course, a bubble was building. But it took another five years and prices rose another 50% before the bubble burst. Even with the brutal decline since 2007, most who bought real estate in 2002 are about even. Bubbleologists may be misreading the dividend frenzy. Wall Street generally attributes the latest rush to dividends as a result of the persistent Euro crisis and recent hiccups in the China growth story. Fearing a global slowdown, the thinking goes, investors are shifting out of economy-sensitive stocks into sectors like healthcare and consumer staples—considered defensive because of their steady cash-flow even in hard times and their commitment to paying a dividend. (MORE: U.S. Authorities Ramp Up War on Offshore Tax Havens) Yet this defensive shift is but a small part of the story. What’s really driving the trend to dividends is the low yield environment that has retirees, especially, so desperate to secure an income stream<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=42437&#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><featured_image>http://timebusinessblog.files.wordpress.com/2012/07/74356685.jpg?w=240</featured_image>
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			<media:title type="html">Stock Index</media:title>
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		<media:content url="http://1.gravatar.com/avatar/d69b05e696e822e7e41ae630be72226a?s=96&#38;d=http%3A%2F%2F1.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">dankadlec</media:title>
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		<title>Millionaires Can Afford to Play It Safe &#8212; For The Rest of Us, It&#8217;s A Risky Strategy</title>
		<link>http://business.time.com/2012/07/23/you-not-millionaires-can-least-afford-to-avoid-risk/</link>
		<comments>http://business.time.com/2012/07/23/you-not-millionaires-can-least-afford-to-avoid-risk/#comments</comments>
		<pubDate>Mon, 23 Jul 2012 15:00:49 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Financial Education]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Retirement]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[bonds]]></category>
		<category><![CDATA[investing]]></category>
		<category><![CDATA[millionaires]]></category>
		<category><![CDATA[Porfolios]]></category>
		<category><![CDATA[stock market]]></category>
		<category><![CDATA[stocks]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=42357</guid>
		<description><![CDATA[People who have a lot of money favor stocks. That may seem logical. The rich can afford to take risks. But they can also afford not to—and in a painfully slow economy where stocks have returned next to nothing for a dozen years you might think they’d rather play it safe and protect what they have. Yet individual domestic stocks are the No. 1 place that millionaires have been putting their money in the past year, according to a Fidelity survey. This runs directly counter to the behavior of the average investor, who has been steadily lightening up on stocks in favor of bonds since the financial crisis. Nobody says the millionaires have it right. Bonds have been a better investment the past few years. But folks with money seem to be placing their bets on an eventual recovery where stocks again rise faster than any other asset class, as they have for much of the last 100 years. Indeed, in the survey millionaires expressed the highest level of confidence in the stock market’s future returns since Fidelity started the survey in 2006. (MORE: Proof That Workplace Financial Education Works) The millionaire set isn’t what you might imagine. For starters, the average millionaire in the survey has assets of around $3 million—comfortable, for sure, but in today’s low interest rate environment far from able to live like royalty. Meanwhile, 86% of millionaires describe themselves as self-made; they got there in large part through jobs that include profit sharing and stock options. That may help explain their affinity for stocks. The other 14% inherited family money. Those born to millions are decidedly more conservative in their portfolios and rely far more on a financial adviser. They own fewer stocks and more real estate. Yet both groups feel equally financially secure. A lot of millionaires are mainly focused on wealth preservation—30% of those in the survey, while just 20% are focused mainly on generating more wealth. The survey strongly suggests that those focused on generating more wealth come from the self-made camp,<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=42357&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Financial Planning</primary_category><primary_category_link>http://business.time.com/category/planning/financial-planning/</primary_category_link>
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			<media:title type="html">dankadlec</media:title>
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		<title>Aiming High, Pension Funds Bet Wrong</title>
		<link>http://business.time.com/2012/04/04/aiming-high-pension-funds-bet-wrong/</link>
		<comments>http://business.time.com/2012/04/04/aiming-high-pension-funds-bet-wrong/#comments</comments>
		<pubDate>Wed, 04 Apr 2012 11:15:41 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Retirement]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[bonds]]></category>
		<category><![CDATA[pensions]]></category>
		<category><![CDATA[savings]]></category>
		<category><![CDATA[stocks]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=36459</guid>
		<description><![CDATA[How many times must we learn that slow and steady wins the race? It was true 2,600 years ago, when Aesop told the story of the Tortoise and the Hare. It’s true today, when pension fund managers are piling into exotic investments in search of better returns—only to find that their performance winds up lagging peers content to plod along with plain old stocks and bonds. That’s right. The professional money managers in charge of your guaranteed retirement income have been loading up on hedge funds, real estate and private equity investments—paying big fees in the process and earning scant returns, according to a report in The New York Times. Over the last five years, pension funds with the most alternative investments returned an average of 4.1% a year while those with the fewest alternative investments returned an average of 5.3% a year. (MORE: 6 Myths About Saving for Retirement) It’s easy to see why pension fund managers have gone the alternatives route. In a tough economy where the stock market had been dead for a decade, fund managers came under pressure to find higher returns that would help keep their pension plans on solid footing. Pension systems have blown up in places like Rhode Island and Alabama. Private equity and hedge funds, in particular, held the promise of providing much needed gains in a directionless market. So in the aftermath of the financial crisis, pension fund managers began shifting into alternatives. Two of the more aggressive were the $26 billion Pennsylvania State Employees and the $51 billion Pennsylvania Public School Employees funds. About 46% of their portfolios were in alternative investments. Together they paid almost $700 million in fees, roughly 10 times more than they might have paid with a traditional approach. Their returns the last five years were under 4% a year—at least a percentage point lower than the average pension fund return. The move by pension funds into alternatives is a little like the mistake that retirees have been making in recent years—shifting into riskier investments in search of<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=57436&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>The Economy</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/economics-policy/the-economy/</primary_category_link>
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			<media:title type="html">dankadlec</media:title>
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		<title>Another Green Shoot: Millionaire Households Rising</title>
		<link>http://business.time.com/2012/03/22/another-green-shoot-millionaire-households-rising/</link>
		<comments>http://business.time.com/2012/03/22/another-green-shoot-millionaire-households-rising/#comments</comments>
		<pubDate>Thu, 22 Mar 2012 16:47:19 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Careers & Workplace]]></category>
		<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Job Markets]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[millionaires]]></category>
		<category><![CDATA[recession]]></category>
		<category><![CDATA[recovery]]></category>
		<category><![CDATA[U.S. economy]]></category>
		<category><![CDATA[wealth]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=35742</guid>
		<description><![CDATA[Plenty of questions linger about the economic recovery. But along with a mildly improving housing market and jobs picture, add this to the list of economic green shoots signaling better times: the U.S. is minting millionaires again. The number of millionaire households rose for the third consecutive year in 2011, according to a report from Spectrem Group. The U.S. now has 8.6 million households with a net worth of at least $1 million above and beyond any equity in a primary residence. That’s up from 6.7 million in 2008 but still shy of the 9.2 million millionaire households in 2007. (MORE: Buying is Now Cheaper Than Renting 98% of the Time) The wealth of the affluent is coming back at every threshold. According to Spectrem: Those with $100,000 or more in net worth rose to 36.7 million from 36.2 million. Those with $500,000 or more in net worth climbed to 13.8 million from 13.5 million. Those with $5 million or more in net worth rose to 1.08 million from 1.06 million. Those with $25 million or more in net worth grew to 107,000 from 105,000. These gains come largely on the back of a rising stock market, underscoring how far the market has climbed since the Dow Jones Industrial Average bottomed at 6,547 on March 9, 2009. The Dow recently topped 13,000, though it remains shy of its all-time high of 14,164. Affluent households managed to hang on for the recovery. But it’s not like it was easy. Spectrem found that 83% of households with more than $100,000 net worth, not counting home equity, remain worried about the future. They say the American Dream will become increasingly difficult to attain. Those under the age of 40 defined the American Dream as home ownership; those over 40 defined it as having sufficient retirement assets. (MORE: Why America&#8217;s Recovery is Slow, Spotty and Anemic) The wealthiest group of millionaire households overwhelmingly said that smart investing was the key to their wealth. That’s in stark contrast to the least of the mass affluent—those<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=57373&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Markets</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/markets/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/03/rise-of-millionaires.jpg?w=240</featured_image>
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			<media:title type="html">Rise of Millionaires</media:title>
		</media:content>

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			<media:title type="html">dankadlec</media:title>
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