The United State’s international status as a world superpower is typically associated with a thriving economy, and while American business is expanding, there exists a bubble of uncertainty which surrounds the future of retirees. Present day American retirees tend to rely on financial systems such as Social Security, pensions, and a 401(k) plan to fund their retirement. However, in today’s economy, the increasing number of retirees, coupled with a steady number of workers, has began a trend of deficit spending by the Social Security system. Furthermore, the increasing deficits of state legislatures owed to participants of pension plans present the issue of how to both reverse the current trend, while simultaneously continuing to provide for
Social Security was developed to help the elderly, but considering the economical and governmental changes, it may not be a dependable source of retirement income. According to the Social Security Administration’s Website, the economic conditions and an increased concern for the well being of the elderly population were the determining factors in enacting the Social Security Administration. The Great Depression of the 1930s triggered the Social Security Act, before this time many elderly people either lived in poverty or depended on the support of their families to survive. The Social Security Act was signed by Franklin D. Roosevelt in 1935, it was designed to be paid out of a large reserve to people who were too old to work, disabled, unemployed, and to assist children who up until this time, had no financial assistance. In 1939 the Program added benefits for the spouse and minor children of retired workers.
When you purchase an immediate annuity, you hand a sum of money over to an insurance company, bank, or other financial institution, and you immediately begin getting monthly checks, which you will continue to receive until you die. Commonly, payments can continue for the life of you and your spouse, ending when the surviving spouse passes away. The advantages are obvious: you will have a guaranteed stream of income for the rest of your life (or for a specific number of years, if you choose to set it up that way). The interest rate that you are earning on your annuity might not beat current market rates, and you might not earn what you would in the equities markets, but then again security has its price. You won't lose anything, as you might in the stock market, and you won't need to worry about falling interest rates eroding your monthly
The first weakness is that as more stocks are outstanding, the amount of dividends payable increases. The value of the stock may also decrease if there are too many shares available. Another disadvantage is that stock financing is not tax deductible. Finally, as stocks are issued, there are more shareholders to please. Organizations face many opportunities when selecting a means to meet capital needs.
On the other hand MI backed mainly by shareholders equity and performing assets and thus would be able to issue new debt increasing value for both shareholders and the corporation. Thus the shareholders would gain at the expense of bond holders and the equity value of the company would increase. b) Bondholders Bondholders had a lot to lose as according to Project Chariot almost all the debt would be assigned to HM. Given the problems in real estate and hotel markets there was a concern of HM’s ability to meet its debt payment and there was a high probability of default. This meant that the risk was issued at investment grade but now was not backed by valuable assets of the companies which were to be spun off to MI which was to be backed by equity.
Banks have a reserve requirement, which is set by the fed. A reserve requirement is the minimum percentage of a bank’s total reserves that they are required to keep, for security reasons. (Schiller) The fed can change the reserve requirement to allow a bank to loan more/less money, which is used to control the economy. Many critics use this to determine that annual deficit spending has a negative impact on the economic stability of our country. The fed has to set a lower reserve requirement, which allows banks to loan out more money, which generates more interest, which could lead to periods of inflation and could have worse consequences if the government does not react quickly enough.
The basic answer is that share repurchases are great when the share price is undervalued, and not-so-great when the share price is overvalued. To put it into a more useful context, if you would otherwise reinvest your dividends or invest new capital into the company at current stock prices, then share repurchases are useful to you because the company basically does it for you. The alternative is that the company could pay you a higher dividend, but you’d be taxed on that dividend and reinvest it into the company anyway. On the other hand, if you would not reinvest dividends or invest new capital into the company at current prices, then share repurchases are not in alignment with your current outlook, and it would be better for you to receive a higher dividend. Something else to be considered is that when a company uses money for share repurchases when it could be paying a higher dividend instead, the company’s management is limiting your control and increasing theirs.
I’m sure it sounds ridiculous, but this is a scenario credit card debt can create. Learning to use credit cards responsibly can save thousands of us from having to dig out of debt after graduation. It will also prevent from having a bad credit history in the future that will affect other things we may want to do like obtaining a job or buying a house. Remember, the loans that we take out for college have to be paid back after graduation. Now add on a hefty credit card bill to that amount, and you will find yourself in an extremely difficult situation financially.
We can ask questions such as: Who is benefiting from outsourcing? What types of jobs are outsourced? What are the effects of outsourcing on Americans? Where are American jobs outsourced to? The Effects of Outsourcing on the Economy In recent years, outsourcing has become an increasingly popular alternative for some of the largest corporations in North America, who are looking for inexpensive ways of lowering overall costs.
So if the economy picks up firms will tend to lag a little bit in hiring workers at least permanent workers. Firms can use the information from leading and lagging indicators to make decisions. If a set of economic indicators suggest that the economy is going to do better or worse in the future than they had previously expected, they may decide to change their investing strategy. A lagging indicator is immensely significant because of its ability to confirm that a pattern is happening or about to occur. Firms need to look out for economic indicators.