WHAT DOES THE FEDERAL RESERVE DO ANYWAY?

With the economy in the news every day, more attention is being focused on the Federal Reserve than ever before. Let's look at some of the facts, and understand exactly what they do and how they do it.

The Federal Reserve System was created on December 23, 1913 by President Woodrow Wilson to act as the central bank of the United States. It was created to provide the nation with a safer, more flexible, and more stable monetary, banking and financial system.

The Federal Reserve System is made up of twelve Federal Reserve Banks, overseen by the Board of Governors. The Board of Governors is located in Washington DC and is comprised of just seven members, who are appointed by the President and confirmed by the Senate. The full term of each member of the Board of Governors is 14 years, and the appointments are staggered such that one term expires on each even-numbered year. This system ensures that "fresh blood" will be brought to the Board every two years. When your term is up as a Board Governor, you are done, and cannot be reappointed. But if a member leaves the Board before his or her term expires, the person appointed to fill the remainder of the term can be reappointed for another full term. The terms for the Chairman and Vice Chairman are four years, but may be reappointed for additional four-year terms. The current Chairman, Ben Bernanke, and Vice Chairman Donald Kohn lead the Board of Governors.

So What Does the Fed Do on a Daily Basis?
The main responsibilities of the Fed include:

* Researching US national and regional economies
* Providing financial services to depository institutions, the US government, and foreign official institutions
* Supervising and regulating banking institutions to ensure the safety of the nation's financial system and protect the credit rights of consumers
* Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy (i.e. hiking or cutting the Fed Funds Rate, as they did recently) in pursuit of maximum employment, stable prices, and moderate long-term interest rates
* Communicating information about the economy via publications, speeches, seminars and websites

But the communication method that typically grabs the attention of most individuals is the statement given by Federal Chairman Ben Bernanke, following the eight formal meetings that take place about every six weeks throughout the year. At these meetings, the Fed has the opportunity to make changes to the Federal Funds Rate, and make their decision by reviewing economic and financial conditions. They can also make adjustments to the Fed Funds Rate outside of these meetings, but rarely do so because they don't want to deliver a surprise that could rattle the financial markets.

Overall, the Fed's main responsibility is to keep the economy growing at a steady pace by keeping inflation stable and rates moderate. When inflation is low and stable, businesses and households can spend, knowing that their purchasing power can remain strong.

Teaching Moment for Children...

While you're watching the news on television or listening to it on your car's radio, your kids can probably hear--but not completely understand--the news too. That means now's a perfect time to turn the current economic news into a lesson on money and finances. One terrific website can be found at www.federalreserve.gov/kids, which gives a very simple overview of the Fed and what they do, including a great definition of inflation that any small child can understand.

www.mortgageguide.com

P.S. I am sure this is more than you ever wanted to know.

Current Situation

Many people are taking advantage of the low interest
rates to lower their housing expense. History has
shown that this can be a great stimulus for the
economy. The savings are for many years and give
the consumers (that's is us) money to put back in the
economy.

The next step is for the folks who want to
move to a different home or buy that first home to step
up. If a persons job is secure, I believe the timing
could not be better to make that step.

If you would like to take the first step give me a call at 777-HOME
(4663) or e-mail me at : george.margrave@migonline.com

An Optimist

"AN OPTIMIST STAYS UP UNTIL MIDNIGHT TO SEE THE NEW YEAR IN. A PESSIMIST STAYS UP TO MAKE SURE THE OLD YEAR LEAVES." Bill Vaughan. 2008 turned out to be a historic year on many counts, and optimists and pessimists alike were glad to close the books and say goodbye to the old year. In observance of the New Year's holiday, the Bond market closed early last Wednesday and was closed all day Thursday, but there was still plenty of time for volatility due to several noteworthy news items. With a great deal of midweek activity, Bond pricing ended the week slightly worse with home loan rates about .125% higher than where they began.

Early last week, a renewal of military conflict between Hamas in Palestinian Gaza and Israel sent crude oil jumping higher on concerns of supply disruption, causing volatile activity in both Stocks and Bonds. The strife in the region continues, and may cause more movement in the financial markets over the coming weeks.

GMAC received a $6 Billion lifeline from the Treasury to help stave off a bankruptcy protection filing or complete shutdown. This would have spelled big trouble for GM, as GMAC helps to finance purchases of most GM vehicles. This assistance is part of a larger effort to help aid the troubled auto industry, and GMAC announced that they will immediately resume financing to a wider range of car buyers. Stocks moved higher on the good news, which pulled a bit of money out of Bonds and caused home loan rates to rise.

NOTE: Stocks have made some nice moves higher of late, breaking above a key line in the sand at their own 50-day Moving Average. And with a great deal of cash on the sidelines waiting to be put back to work, as well as retirement money getting ready to be invested before tax time, this could spell better days ahead for Stocks. While money flowing into Stocks can sometimes pull money from Bonds and cause home loan rates to rise, the Fed has said they will be doing some buying of Mortgage Bonds, which could help home loan rates weather the storm much better than they have in the past.

In economic report news, the Chicago Purchasing Managers Index - which measures manufacturing activity - came in at 34.1, very close to estimates of 33.0. But Consumer Confidence somewhat unsurprisingly missed advance expectations of 45.5, arriving at a dismal, record low of 38.0. Just by way of perspective, last year at this time, Consumer Confidence was at 88.6...so there's been quite a decline during 2008.

Also adding to the movement in the markets last week, the Securities and Exchange Commission recommended against suspending FASB 157, otherwise known as fair-value accounting rules or "mark to market". These rules led to the failure of many financial institutions that really weren't in bad shape, but simply made them appear to be overleveraged as they were forced to value their assets against distressed institutions selling at steep discounts. This announcement was not a surprise, as it wasn't expected that they would completely eliminate the rule and go back to the days of Enron-style accounting and valuation systems which lacked transparency. For now, the SEC is instead suggesting "improvements" to deal with illiquid markets and reducing the number of models used to measure impaired assets...but the details of those "improvements" are yet unknown.

Rest assured that as 2009 kicks into full gear, I will be watching closely and keeping you updated as to all the latest financial news stories, market action, and home loan rate developments. Because windows of opportunity can be fleeting, please call me to look over your own financial situation so that we are ready to act on your behalf.

Mortgage Market Guide

Merry Christmas

I want to wish you and your family a very Merry Christmas season and a Happy and Safe New Year. I ask you to remember the folks that are not as fortunate. It is cold and we have many needy among us. Also, please not get so caught up in the hustle and bustle that we forget that Jesus is the reason for the season! Have a Wonderful Hoiday Season!
George

Wild Speculations!

This 4.5% mortgage rate speculation is spreading like wildfire and fast taking on some of the characteristics of an “urban legend.” There are lobbyists who are trying to get mortgage rates lowered to 4.5%. As usual the press is being the press and getting people all stirred up when they don’t know anymore than we do. No one knows what will happen.

I had people call me yesterday with: 1) Rates are going to 4.5% on Monday and will be at 4.5% for a year and 2) All mortgage loans are going to be required to have 4.5% rates (even existing mortgages). I just don’t see either of those scenarios happening. It is possible if the Fed continues to buy the mortgage backed securities that we will see rates come down a bit more. I really don’t see them “posting” a mortgage rate of 4.5% and leaving it there. Rates this last 18 months have been wildly fluctuating. Until this most recent dip in rates the noticeable decreases in rate have basically been for a blink of an eye; increases in rate have been more predominate in the market this year.

Our Vice President of secondary marketing thinks that rates could drop; “could” being the key word. How much and for how long? Nobody knows. I would suggest selecting a realistic target rate and when it gets there lock it. Then quit shopping and don’t second guess your decision. I will even watch for that rate for you and let you know when we get it. You do need to be prepared to act quickly when your target rate is reached as there is no guarantee how long it will be around.

Not many folks are fortunate enough to truly hit the bottom of the market. After 30 years in the business I have never managed to get the lowest rate on my personal loan. Hitting the bottom of the market involves a lot of luck. The media does not know what is going to happen; the politicians do not know what is going to happen; I do not know what is going to happen. Anyone that is running around “predicting” what will happen to rates has a 50% chance of being right; they will definitely go up or down.

*****************

This was written by my friend Terre Webb. I couldn’t say it any better myself so I used her quotes. With that said I will say that the rates today in the lower 5’s are fantastic. To see how that would affect your numbers let me know and the numbers I provide you will cost you nothing. I have closed my own refinance by the time you get this. That is how much I think the rate is going to come down more.

Also this is from Mortgage Market Guide a periodical we receive

The Fed has indicated that they would like to be a buyer of Mortgage Bonds, which has resulted in attractive, lower rates right now. But as stated above, the trading environment is extremely volatile, and opportunities to capitalize on lower rates that make sense should be taken advantage of. There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Like many other recent legislative "solutions", the restrictions might be very tight, with income limits set very low, and as a result, helping very few people. Remember, it may make sense for you to act now, and take advantage of current historically low rates...with the possibility of refinancing should rates decline further.

Profit From Today's Slowdown

The super rich are getting richer. Cash is King. Warren Buffett is salivating.

What does this have to do with us? Unless you own a home in the upper prices ranges of our market (and only a small percentage of my readers own these homes)

You too can profit. Lets say you have a $300,000 home (or it was worth that last year). Lets say you can sell it now for $260,000. Then you can buy that dream home that was a half million dollar home for say $430,000. You took a $40,000 loss but picked up $$70,000 and got your dream home.

Similarly the first time buyer can buy a home with prices rolled back to those early in this decade.

Almost everybody wins.


Credit Card Scams You Need to Know About

How To Avoid These Common Credit Card Scams

In a perfect world, credit card scams would not exist. Unfortunately we don't live in a perfect world. The scams abound and the scammers seem to breed like rabbits. If you want to avoid credit card threats you need to know what common credit card scams to look out for. Here are the ones most likely to hit you at one point or another.

Let Me Take Your Card To The Back

This is when someone at a restaurant or other business needs to take your credit card "to the back" to run your transaction. There's no guarantee that those people won't copy your credit card details when you're not looking. In fact, it's been done many many times to other innocent cardholders.

To avoid this scam only pay by credit card when you can see exactly what they are doing with your card at all times. In all other situations, pay cash.

I Need Your Those Three Digits

This scam happens when someone calls you pretending to be from the security department of your credit card company. Supposedly there's been suspicious activity on your card and they have to verify that you're in possession of the card. They ask you to read the three digit "security code" on the back.
While that is indeed as security number, it's not your credit card company calling. It's another one of those annoyingly-deceptive credit card scams. When you get this call it means that a scammer already has your credit card number and expiration date. He just needed those three little numbers on the back of your card. If you fall for the scam, he got them.

You've Been Approved

This scam is also done over the phone. You get call saying you've been approved for a great credit card. High limit, low interest rate - what more could you ask for? Of course you want to jump on the deal so you go for it.

To process your new account the person on the phone needs to verify just a few things. Your name, social security number, address, phone number and income. Don't fall for it.
If you are ever pre-approved for a card, they'll send you something in the mail and you'll need to call them. No credit card company is going to call you over the phone asking for such personal information. Do yourself a favor. Next time you get a call like this, tell the person you need a number where you can call them back. Call the authorities with the time of the call and give them the number. It's the only way to stop these credit card scams.


Be Weary, Be Wise

While you don't want to feel as though you're paranoid or overly-suspicious, the fact of the matter is that we live in a changing world and credit card scams are becoming more and more common. Do yourself a favor and protect yourself from these scams. Be on the lookout at all times and keep the above information in mind.

http://www.creditcardwhizkid.com/2008/06/credit-card-scams-you-need-to-know-about.html

Sent by Jennifer Hamby


"Where is Your Paint Can?"

A man landed a job painting the yellow line down the center of the highway, by hand. After three days his foreman complained about the job he was doing. "Your first day out, you did great," he said. "You painted that line for three miles. Your second day wasn't bad. You painted two miles. But today you painted only one mile, so it looks like I will have to fire you."

On his way out of the foreman's office, the employee looked back and said, "It's not my fault. Everyday I got further and further from the paint can."

# # # # # # # # # # # # #

This humorous story illustrates how we can complicate our lives at work and at home, if we are lacking insight into how we create additional stresses in our lives. Many times we look to a time management seminar or a book to tell us how to gain more time. Perhaps, we might do better to ask, "How can I simplify my life?"

Here is a brief questionnaire that can be used to evaluate whether you are unnecessarily making your tasks more difficult.

1. What systems do I have, or need, that will make sure that I use my time, resources and materials in a practical manner?
2. In what ways am I making my job more difficult because I walk back and forth between the unfinished "yellow line" and my paint can?
3. Have I let a habit lock me into a routine that is not only counter productive, but also costs me time and a peaceful existence?
4. How can I further simply my life at work and home so that I feel more in control and more productive?
5. What unnecessary steps can I eliminate at work that will reduce the stress that I feel?

Like the man painting the yellow line by hand, if we fail to plan how to accomplish a task. We then lose sight of our ability to re-evaluate our activities and we may find ourselves walking the same path over and over again, but accomplishing less and less. If this becomes a habit, we may find ourselves on the road to burnout.

Taking a few minutes to analyze situations in which we have left our paint can far behind, rather than bringing it along, can lead to a happier more productive life.
www.workplaceissues.com

Save on Your Credit Score this Holiday Season

With the economy slowing and holidays just around the corner, many consumers may be looking to credit cards to help them get through the heavy shopping season. While that may be a good short-term solution, you want to make sure you don't overlook the long-term impact on your credit rating. After all, the actions you take today could hang over your head for years to come--and may make it tough for you to get the home loan or car loan you want in the future.

To help you make sure you manage your credit cards--and your credit score--during the upcoming holiday spending season, follow these steps:

Double-check your card limits. Many credit card companies today have started lowering credit limits. That means you have less credit available, but it also may mean that your credit score is about to take a hit. That's because approximately 30% of your credit score is based on the amount you owe in relation to your available credit. So, if a credit card company cuts back your limit, you may find that you're suddenly almost maxed out. That's not a good sign for your long-term credit score rating.

Ask, pay down, or move around. If some of your credit limits have changed or are nearly maxed out, you can take a few steps to help alleviate the problem. First, consider simply asking for a higher limit to your card...not necessarily to use up with spending, but to allow more unused credit line to be available and therefore boost your credit score. You can also pay more money to the cards that are near the credit limit, if you can. Or, if you have cards with little to no remaining credit line, transfer some of the larger balances onto the cards with lower balances. That'll give you a more... well... balanced financial picture.

Leave home without it. One of the best tips for the holiday season is to: make a budget, identify specific items, and then leave home without your credit card. Instead, bring just enough cash to purchase the items on your list. That will help you resist the urge to impulse buy, and keep your credit card balances lower.

Pick a card... not just any card. If you can't bring cash, make a credit card plan. Identify specific items that you'll pay for on specific cards. By making a plan and spreading your purchases to different cards, you won't overspend and you won't risk running up one or two cards that are near the credit limit, which will hurt your credit rating.

Resist card offers at the counter. Retailers are famous for offering "savings" when you open a credit card. But those savings often don't outweigh the long- and short-term negatives. For one thing, opening a new account--or multiple accounts in a short period of time--can negatively impact your credit score. In addition, consumers often spend more than planned when a new card is suddenly available. So this holiday season, resist the temptation.

Stay active. If you have older cards that you don't use, make sure you keep them active. For one thing, some of those older cards help establish a longer history of positive credit. For another, the available credit on those older cards can help keep your credit score higher because it improves your overall debt-to-credit ratio. To keep those cards active, make sure you charge one or two items on them throughout the year... like, say, when you go shopping for the holidays. Then, pay them off when the bill comes in.

Always pay on time. Your payment record is a very large part of your credit score, so it's crucial that you have an idea how your holiday shopping will impact your credit card bills and that you make a plan to pay those bills on time. If you have trouble for any reason, contact your card companies right away to work out a plan that helps you pay down your debt... and save your credit rating from a huge hit.

Mortgage Market Guide

Happy Thanksgiving Tips

A Caterer's Tricks to a Well-Timed Thanksgiving Dinner

Pat Raitanen
Truffles Catering Ltd.

Thanksgiving dinner is an exercise in timing. Many different dishes need to be ready at the same moment. Is there a secret to getting it right? Moist bird, fluffy mashed potatoes, crisp vegetables with less stress. That's what we asked Pat Raitanen, a caterer who has cooked hundreds of Thanksgiving dinners over the years, including 45 quarts of gravy one year. She says most people don't realize that they can do much more in advance than they have been doing.

Turkey. Buy a fresh turkey the Sunday or Monday before Thanksgiving to avoid lines at the supermarket. A frozen turkey can be bought weeks in advance and defrosted in the refrigerator starting on Sunday.

On Tuesday or Wednesday, unwrap and rinse the bird. Pat dry with paper towels. Brush inside and outside with marinade. I use two cups of olive oil, one-half cup of Grand Marnier and various spices and herbs, including sage, thyme, rosemary, marjoram and parsley. Refrigerate until time to cook on Thursday.

Once the turkey is fully cooked and the stuffing removed, it can rest for as long as 90 minutes before serving -- freeing up oven space for other dishes.

Stuffing. Chop celery, onions, etc., on Sunday or Monday. Store in the refrigerator in sealed containers or plastic bags. If you dry bread for stuffing, set it out on Monday at the latest.

Vegetables. Most vegetables can be washed and cut up on Monday or Tuesday. (Carrots, however, should be cut no earlier than one day prior to cooking.) Store in the refrigerator in sealed containers or plastic bags.

Gravy. Make stock anytime between now and Thanksgiving week, or use packaged chicken stock. (I prefer the organic brands in the natural foods section of the grocery store.)
Start preparing the gravy on the Sunday or Monday before Thanksgiving. Sauté one cup of chopped onions and one-half tablespoon of finely chopped garlic in one-quarter cup of olive oil or other fat. Add one-quarter cup of flour to thicken, creating a roux. Cook this over medium-to-low heat until golden brown. Slowly add three quarts of stock, and reduce to desired consistency. Refrigerate until the turkey is cooked. Before serving, add pan drippings and heat over the stove. Makes about one quart.

Mashed potatoes. Peel potatoes on Tuesday (don't cut them up yet), and immerse in water to prevent them from turning brown. (Sweet potatoes can be peeled and cut up -- they do not need to be put in water.) Store covered in the refrigerator. Cut up, cook and mash the potatoes on Wednesday. Refrigerate in a covered dish.

Just before the meal, warm them up in a preheated oven (300°F to 325°F) for about one hour. Mashed potatoes hold heat well. If you are short on space, get them ready before the other dishes, cover and let them sit.

Cranberry sauce. Cook fresh cranberries a week in advance. Store in the refrigerator. I like to add about two teaspoons of orange zest and one to two tablespoons of Grand Marnier to the recipe on a 12-ounce package of fresh cranberries.

Breads. Buy fresh bread on Wednesday (bakeries are too crowded on Thursday morning), and freeze it. Just before dinner, heat, uncovered, on a cookie sheet, in a 375°F oven for 15 minutes. Corn bread can be baked on Wednesday. Store in an airtight container. Cut before heating in foil.
Pies. Make pastry dough on Sunday or Monday. Chill as a ball or rolled out in a pie pan. Fill the shells and bake on Wednesday.

Q: What's the best way to thaw a turkey?

A: Best way to thaw a turkey: Thaw the turkey breast-side up in its unopened wrapper on a tray in the refrigerator. Allow one day of thawing for every four pounds of turkey -- if you need a faster method, submerge the turkey breast down in its unopened wrapper in sufficient cold water to cover. Change the water every 30 minutes. Allow a minimum thawing time of 30 minutes per pound for a whole turkey. Warning: Thawing turkey at room temperature allows bacteria to grow and, therefore, is not recommended.

Bottom Line Experts

"What We Have Here Is A Failure To Communicate"

This quotation is from an old Paul Newman movie entitled, "Cool Hand Luke." I don't remember much about the movie, but I do remember that one line. This quote can also apply to the following scenarios.

Mark and Emily agreed to meet for dinner at a restaurant at a particular time on a particular day. Both arrived at the right time, on the right day, but at the wrong restaurant. Each presumed that the "agreed upon" meeting place was the same restaurant location, but it wasn't and they were aggravated with each other for showing up at the wrong place.

Debra and Skylar were working together on a project. When they came to a crucial stage of the project, they realized that an important task had not been completed. Both thought that the other one had responsibility for handling the assignment. Their erroneous assumptions cost them time and delayed their project. It also caused unnecessary conflict.

Zoie's son, 16-year-old son Ethan, was late getting home from a party. Zoie was very angry with him because she was afraid that something disastrous had occurred. She began yelling at him immediately before he was able to explain why he was late. She rebuffed his attempts to explain and ordered him to go to his room. The next morning she read in the newspaper about her son's heroic actions of saving a child who had been a car accident. He was late getting home because he was helping a family in need.

The moral of these stories... Whenever we fail to ask for information that will confirm our understanding or when we presume to know what another person is thinking or doing, we open ourselves up to erroneous thoughts and actions, which can lead to unnecessary conflict. If we develop the habit of asking for additional information, we may enjoy better relationships and a more peaceful existence.

The habit of asking at least three more questions than you think is necessary may be a valuable one. In fact, if we adopt the "who, what, when, where, why and how" method of questions, we can be assured of making better decisions and taking right actions. It takes time, but so does correcting undesired outcomes.

I must confess that if I had applied the "ask more questions" methods recently, I would have saved myself some time and frustration. What would have happened if the people in the above scenarios had applied it as well? How different would the outcomes have been for each of them?

For further information, visit website at :http://www.workplaceissues.com/