Latest reports by the S&P/Case-Shiller Index is that compared to a year ago, home sales in February were down by almost 13%. That’s the largest decline since 2001, the year records were first kept. Sagging inventories and a lack of qualified buyers are reported reasons for the decline. It doesn’t help matters that mortgages on many homes are worth more than the value of the homes, and that wages are failing to keep pace with inflation, or that many of us are also worried about finding or holding on to existing jobs.
The sharpest declines were in Las Vegas, Miami and Phoenix. According to experts, the housing slump is more severe than it was during the worst point of the 1990s recession.
The U.S. Supreme Court recently ruled that workers can sue employers over 401(k) losses. 50 million workers have more than $3 trillion invested in 401(k) and other retirement plans. The ruling allows workers to sue employers over fees they are charged in connection with these plans and potentially hold employers liable for losses.
In the past most pensions guaranteed benefits for life. Workers were faced with few decisions on how to handle the money. Today 401(k)s and programs known as defined contribution plans are affected by investment decisions, movements in financial markets and fees charged by fund managers. Fees are often hidden and can significantly limit the growth of retirement funds over time. For example, blue-chip companies such as Lockheed Martin Corp. and the Bechtel Group charge excessive fees for managing retirement accounts, fees that are unjustified and that hurt workers long-term profits. Money managers may also choose to invest your funds in high risk stocks, even if you expressly tell them not to do so. The ruling provides employees and retirees with the right to seek financial redress when these types of conflicts occur.
Although, it makes sense to offer workers some redress from decisions made by money managers whose sole motivation seems to be their own pocketbook, a possible downside is that it could lead small employers to abandon pension plans. This is because it’s unlikely that they have the resources to withstand costly litigation. For them it may be in their best interest to simply not offer the benefit. Even so I wholeheartedly agree with the Supreme Court’s decision.
I found this info in an L.A. Times article, dated 2/21/2008.
First it’s necessary to understand what it meant by rate cuts. Just like consumers, banks borrow money, except they borrow their money from federal banks. And like consumers, they pay interest rates on the money they borrow. When the feds cut rates, it means that the interest rates banks pay for borrowing money decreases. The feds cut the rates hoping that the cheaper money will act as an incentive for banks to reduce the rate at which they loan money.
To answer the question, “How have these cuts benefited the average consumer?” As far as I can tell, the answer is there has been little to no benefit. After a series of rate cuts, mortgage rates for consumers are pretty much where they were before they started.
