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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (25277)	11/10/2002 11:59:54 AM
From: calgal	Read Replies (2) \| Respond to of 74559

Businesses hope for new fiscal stimulus URL:http://www.usatoday.com/money/economy/2002-11-07-bizecon_x.htm By Barbara Hagenbaugh, USA TODAY WASHINGTON — A surprising Republican victory in the Senate and an unexpectedly large rate cut by the Federal Reserve this week may do more to boost beleaguered U.S. businesses than consumers. Business owners and economists believe a Republican majority in both chambers on Capitol Hill paves the way for passage of new corporate tax incentives as well as other "business-friendly" policies. The Federal Reserve's decision to reduce interest rates by a half-percentage point will aid businesses by reducing borrowing costs across the economy, including on current and new loans held by companies. "The climate is far more conducive right across the board for business" after this week, says Greg Valliere of Schwab Washington Research Group. But underscoring continued uncertainty, investors sent stocks lower Friday to end the week mixed. The Dow Jones industrials posted their fifth straight week of gains, while the Nasdaq composite and S&P 500 snapped their four-week winning streak. For the week, the Dow rose 0.2%, the Nasdaq fell 0.1% and the S&P 500 dropped 0.7%. Construction company owner Patrick McLain of St. Louis is happy not only because the interest rate on his business loan has fallen, but "The confidence level of our customers is going to be higher now because the threat of making money that will be turned into taxes is lessening." Some economists question if consumers will benefit all that much from the Fed move because rates were already at four-decade lows and consumer borrowing costs are not expected to drop much further. But many say this week's developments will help businesses in a variety of ways: Many businesses, mostly small and midsize, depend onlines of credit from banks to maintain cash flow, pay workers and finance inventories. The interest rates on the loans are tied to the prime rate, which is influenced by the Fed's target for short-term interest rates. After the Fed cut rates Wednesday, the prime rate at banks fell to 4.25%, the lowest since 1956. That reduces monthly loan payments for companies. "Right now, there are a lot of hard-pressed businesses that rely on those bank lines so when rates go down it helps immediately," says Mark Zandi, chief economist at Economy.com. Banks have been tightening lending standards throughout the year and some small businesses have been having problems getting loans, says Jerry Jasinowski, president of the National Association of Manufacturers. He hopes the Fed's move will "stabilize credit markets so that we can get the banks and others to be a little bit more liberal about making loans." With Republicans soon to control Congress, businesses are hopeful more fiscal stimulus focused on efforts to spur corporate investment and spending will be enacted. President Bush Thursday advocated making the $1.35 trillion tax package passed last year permanent. Some business groups became nervous as corporate scandals multiplied earlier this year that government would tighten the regulatory noose on Corporate America. But those worries softened this week. "Any fear in the markets that Washington was going to go anti-business has evaporated," Schwab's Valliere says.

To: maceng2 who wrote (25277)	11/10/2002 4:46:29 PM
From: Moominoid	Read Replies (2) \| Respond to of 74559

btw, just to state something. If anyone was offended by my remarks yesterday (about salary), please accept my apology. It was meant as a friendly jibe, not as an insult or intended to offend I'm not offended by this LOl - just curious. I'll easily believe that a plumber working for himself will get the amount you stated - with time getting to the jobs, expenses etc. it probably will go down to a lower annual average. I was just questioning the comparison with US "salaries". In 1988 my immigration lawyer processed my green card for about $1200. I phoned her last week. Her rate is now $400 per hour That seems a high billing rate for an immigration lawyer. I think mine is charging something like $125 per hour. But not every hour is a billable hour and yes there are overheads. I haven't doubted that business owners can make lots of money. Salaries and wages in the $US 1/4 million plus range are very rare as a percent of the workforce. The kind of people who post on SI of course know a lot more people in this category than is represented in the avergae population. I remember a survey they did that showed average incoem around $100k. So what does that tell me? $200k+ jobs are not that rare in the USA in reality. I am exrapolating from 1995 plus the knowledge that a company that had 600+ employees also had over 20 directors, vice presidents, and senior executives. They earned less then me??? Pull the other one -lol- 20/600 is 3.3% and that was in a high wage part of the economy to start with.... If you bring home a net wage of (say) $1000 that is hell of a lot of purchasing power in the USA. If you earned the same gross in the UK in pounds. What you end up with is chicken feed by comparison. B-I-G tightening of the belt required. My Australian colleagues think that I am earning a big salary here as I'm paid more than any professor at any Australian University at the current exchange rate and you need to be pretty senior in the public service where others work to earn that. Also marginal tax rates on middle income people are lower here than in Australia. US $1000 after tax a week in Canberra would be really big spending power! Cost of living here is higher or the same as in Australia for almost everything. if you want real big spending power reture to Australia :) David