Why the United States is Doing Better than Europe


Whilst we feel like the economic squeeze is tight in the United States, what we don’t realise is that we are fairly lucky in comparison to our brothers across the water.

The economic downturn in 2008 eliminated banks in both the United States and in Europe, without much difference to be seen between the two. However, this year has seen the Federal Reserve decide to pull out bond-buying injections of money into the banks here, whilst Europe is still struggling along.

Credit is being held under tight control over the pond, but American banks are opening their coffers to lend – although, unsurprisingly, not to Europe.

Nomura, a bank based in the United States, estimates that the loan growth in this yearly quarter is the most rapid since the year of the economic crisis. That is an amazing statistic.

So why are banks here doing so much better? It is because our banks have managed to raise some serious capital since 2008, to a level where core capital has been met on 9% of assets. This is above the United States’ regulations on core capital.

The Federal Reserve, the United States’ central bank institution, has created a surplus of dollars by buying governmental and mortgage bonds and creating money reserves to the sum of €1.5 trillion.  This has helped keep the economy flush with money, and the scheme has been so successful that the Federal Reserve is due to stop its “quantitative easing” program very shortly.

Moody’s, the financial ratings agency, estimates that the largest banks in the United States are in possession of three to eleven times their short-term borrowings in their liquid assets. At least half of these assets are thought to be in the keeping of the American branches of European banks, especially from Germany, Switzerland, Scandinavia and France.

This seems confusing when you think about it – surely if Europe has a hold on a fair bit of American dollars, the dollar shortage that has been causing the increase in LIBOR should not be happening. However, though there are banks holding United States dollars, the ones seeking dollars are not subsidiaries of American banks.

Though Europe is slowly pulling out of the recession, America seems to have found its feet a lot quicker. We can be thankful that we’ve seen the worst of it off, and hope for better across the water.


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No Budget Cuts Due to Obama Care for Starbucks Employees!


Howard Schultz, Starbucks CEO, says they will not be making any budget cuts in lieu of the Obama Care budget cuts for the 2014 fiscal year; Stating that all employee insurance plans will stay in place, just as they are. This is important for current and future employees of the company because as the budget cuts deepen, so will the number of the unemployed. 

Don’t kid yourself with statistics and think that the unemployment rate is dropping, it isn’t. There are more people being turned away for unemployment and thousands have been cut off in the past 6 months. It isn’t that there are less unemployed, it is that there are less people on unemployment. Statistics don’t count those who are not on unemployment, applying for it, or receiving some type of government aid. That leaves hundreds of thousands of American citizens being uncounted in the polls. Many believe that they won’t qualify for unemployment, and some don’t believe it is worth the time because you only get a fraction of what you made while you were working, not enough to pay the bills and put food on the table. 

Starbucks employees are lucky in that even part-timers receive healthcare benefits. Last year alone, the company spent more than $300 billion dollars on healthcare for its’ 160,000 employees. This says to the people that Starbucks cares about its’ people, no matter how low in the ranks they might be. This is a big difference from the actions most business owners are taking. People have been losing their jobs left and right, taking pay cuts, or being furloughed in lieu of Obama Care. Starbucks CEO stated that it may cost a little more but the company wanted to make sure it’s’ employees were taken care of.  

Other major companies such as Macy’s and Cisco have made decisions to cut their workforce, and do things in a cheaper, more “cost effective” way. What they don’t realize is that if less people are working, less money will be spent on their products. We are already seeing the devastating effects of lay-offs and budget cuts, the 2014 fiscal year is sure to be disastrous for many Americans. However, if you are an employee of Starbucks, you won’t have to worry.


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Gay Married Couples Might End up Paying More Taxes instead of Less

ImageGay couples who have decided to wed have been waiting for the IRS to implement the equal tax rights and benefits so that they can file taxes. Some states still refuse to recognize gay marriages so this could cause some issues for couples. Many of these couples have delayed filing their 2012 taxes in lieu of the ruling on this issue. 

Now they are waiting on implementation, this could end up costing some, especially if they owe taxes. IRS fines for late filings and payments are generally expensive. Some couples are also trying to obtain clarity on the issue so they can use the 3-year statute of limitations to their advantage and get refunds from previous year filings. Some may end up owing more taxes if they do this though. Each couple would have to review their previous year’s filings and go from there.

For those who wish to amend previous filings, they should make sure there is no reason for the IRS to audit them. If so, it could open couples up to IRS debt, or other issues with their tax returns. The IRS may state that they filed incorrectly in previous years if they were married. An audit is something that most people do not want to go through. Pending the IRS guidance on the issue, couples should wait to attempt to amend previous years filings.

Couples who have extended their tax deadline to October will most likely file jointly and notate that they are doing so based on the decision of the court. Awaiting guidance from the IRS is taking a toll on many couples as that October deadline is swiftly approaching. Most people do not want to wait until the very last second to file their taxes. Many couples who intend to file together most likely have their documentation together, and have already begun the process, but haven’t filed.

Gay couples should await the guidance of the IRS to file their tax returns just to save themselves a lot of time and effort. The court ruling was in July, and they are working as quickly as possible to get everything together for the couples.


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Investing 101! How to Invest for Beginners

Investment Isas

With the recent stock market uncertainty, it might be difficult to figure out which companies to invest in. Some companies stocks have plummeted over the last quarter and continue to do so,while some are like yo-yo’s with some good days and some bad. It is important to remember that you are taking a gamble when you invest so it is best to start out small. In other words, don’t put all of your hard earned money into one company expecting to see huge returns. The stock market is too uncertain for that to work out 100% of the time.

When starting out, if you have a small amount of money to invest, it might be wise to do direct-buy invest. Direct buying is where you buy stocks with money in your checking account. It is a very simple process. Stocks are pieces of a company that you can either purchase on the open market or through a private sale. Once you purchase company stock you are generally issued a certificate of some sort, which will contain the registration number, how many shares you own, and identify you as the owner.

If you decide you want to invest in mutual funds, it works a little differently. You would be investing with a group of other individual investors, and most likely into a specific group of companies. The money from each investor is put into a single mutual funds account. A team manages the funds and which stocks are traded (bought or sold) and the money is held until an investor sells their individual shares, then the proceeds from those sales are added to the investors core cash brokerage account. Mutual funds are a little more difficult and if you prefer to manage your investments yourself; may not be the best way to invest when first starting out.

There are other options for investing such as bonds, going through a brokerage, and others, however, if you have a small amount of money and wish to manage it yourself; it might be best to stick with the direct-buy method of investing. Just remember to buy low and sell high so you make a decent profit.

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