Daily Archives: June 7, 2011
NEW YORK (CNNMoney.com) — In its latest move to jump start the sluggish recovery, the Federal Reserve announced it will pump billions into the economy.
The central bank will buy $600 billion in long-term Treasuries over the next eight months, the Fed said Wednesday. The Fed also announced it will reinvest an additional $250 billion to $300 billion in Treasuries with the proceeds of its earlier investments.
The bond purchases aimed at stimulating the economy — a policy known as quantitative easing — will total up to $900 billion and be completed by the end of the third quarter of 2011.
Ever since the Fed first signaled back in August that it was considering a second round of monetary stimulus, dubbed QE2, investors have been preoccupied with speculating on how much the Fed would buy.
Now the verdict is in, and is roughly in line with forecasts. Mainstream estimates had predicted a total between $500 billion and $1 trillion.
“It was all largely as expected,” said Calvin Sullivan, chief strategy officer at Morgan Keegan. “The markets are responding as one would expect.”
Stocks seesawed between gains and losses, as investors digested the news. The real surprise was in the bond market, where yields on the longer term 10-year and 30-year rose, after traders realized the Fed’s plan called for 91% of its purchases at shorter maturities than expected.
The Fed also reiterated its bearish view on the stalling economy, saying “the pace of recovery in output and employment continues to be slow.”
Amid sluggish consumer spending, businesses have been reluctant to hire and the economy has grown at a snail’s pace. At the same time, inflation is dangerously low, causing some economists to warn that the United States may even be flirting with deflation — a debilitating drop-off in prices and demand.
The Fed has already kept the federal funds rate, a benchmark for interest rates on a variety of consumer and business loans, at historic lows near zero since December 2008. The Fed said Wednesday that it would continue to hold the rate at “exceptionally low levels” for an “extended period.”
The federal funds rate is the central bank’s key tool to spur the economy and a low rate is thought to encourage spending by making it cheaper to borrow money.
When already low rates failed to get consumers and businesses to spend, the Fed decided to resort to the more unconventional tool of quantitative easing, to lower interest rates even further.
But critics of QE2, including some Fed members, believe that too much monetary stimulus might lead to runaway inflation that could derail the economy, or future asset bubbles that could endanger economic stability over the long term.
The most outspoken voting member of the Fed, Kansas City Fed President Thomas Hoenig, was once again the lone dissent among policymakers, saying he believed the risks of additional securities purchases outweighed the benefits.
Other opponents have argued that it simply won’t work. The Fed already made nearly $2 trillion in similar purchases during the Great Recession, and current low interest rates have not jolted spending, they say.
“I don’t think this is going to make any difference at all,” said Paul Ashworth, senior U.S. economist with Capitol Economics, who feels the plan is too small. “This is a slippery slope. Once you’re on it, it’s very hard to get off.”
He predicts a repeat of what happened with the first round of quantitative easing two years ago. The Fed initially announced a $600 billion program in November 2008, but then four months later, increased that to $1.8 trillion, when it wasn’t enough.
The Small Business Development Center at the University of North Florida continues its 35-year tradition of assisting small businesses in the 18-county region with a variety of resources — one of the most visable of which is its workshop seminars.
This time, a couple of the seminars offers are free of charge to attend. Both are June 8 and have to do with web marketing and communication.
To register or for more information on any upcoming workshops call 620-2476 or go to the SBDC website. Unless otherwise noted, all workshops are at the UNF University Center, 12000 Alumni Drive.
• How to S-T-A-R-T-U-P Your Own Business, 6-9 p.m. May 17. $40 in advance or $50 day of workshop. Thinking of starting a business? This workshop will give you an overview of the seven basic requirements for business STARTUP. A business startup kit for Duval and surrounding counties is included in the workshop fee.
• QuickBooks for Small Business Owners 1-4 p.m. May 19. Cost is $60. QuickBooks got you stumped? Not sure where to start? This workshop will provide you with the information you need to get started on the right foot. Students will work in a computer lab with Instructor on examples for real experience using QuickBooks.
• Nonprofit Startup 101 6-7:30 p.m. May 24. Cost is $25. The process of transforming your idea into an operating organization can be complicated. This workshop will provide the information you need to start a nonprofit organization in Northeast Florida – begin with an understanding of why you may or may not want to start a nonprofit organization and what opportunities may be available to you.
• Business Plan Basics 6-8 p.m. June 2. Cost is $40 in advance or $50 day of workshop. No matter what the purpose – to evaluate the feasibility of starting a business, or to present to a bank for financing, or to serve as a roadmap for the future – a business plan is a critical tool for successful small businesses. This workshop provides an overview of the format and content of a business plan. Participants will be introduced to the key components of a plan and resources to help get them started.
• Marketing 101 6-9 p.m. June 7. Cost: $40 in advance or $50 day of workshop. Achieve your sales and marketing goals by understanding your product or services, customers, prospects and competitors. This class is taught by a marketing professional.
• Social Media Marketing Strategy Made Simple 10:30 a.m. – 12 p.m. June 8. Cost is Free. Not sure how (or why) to incorporate social media (FaceBook, Twitter, Linked-In) into your marketing strategy? This session is for you! Participants will review: why use social, media marketing to promote your organization, what are the differences between FaceBook, Twitter and LinkedIn, and which ones are best for you; how to come up with good content for your social media marketing campaign and how to allocate resources (time and energy!) for social media marketing.
• Getting Started With Constant Contact 1:30-3 p.m June 8. Cost: Free. Review the basics of Constant Contact’s email marketing system and showcase how to link it to all of your social media marketing efforts. Participants will review: how to work with templates, how to include images, links and .pdf files in your emails, how to link emails to FaceBook and Twitter, how to encourage your email readers to share your communication on their social media pages, and how to find out who is opening your emails and what their interests are.
• Nonprofit Fundraising 9 a.m. – 12 p.m. June 17. Cost is $40. A feasibility and planning study provides you with the data and tools you need to raise funds by exploring both internal and external issues, including organizational capacity and capabilities, public perception, and sources and levels of financial support. This workshop will teach you what questions to ask, who to ask, and how to analyze the results.
• The Steps to Starting a Business Webinar 5:30 – 7 p.m. June 29. Cost is $20. This live webinar will take you through the seven basic steps of starting a business. Registration fees include a downloadable start-up kit and workbook. All attendees must have internet access and a telephone. For more information please click here