Is your Bank safe ??

With three banks going down and are taken over by the FDIC (Federal Deposit Insurance Corporation) in the last month, check whether investments in your bank are safe.

What is the FDIC

FDIC or the Federal Deposit Insurance Corporation is a US government entity that insures deposits in saving, checking and retirement accounts in member banks. Individual accounts are insured up to an amount of $100,000. There are different rules for different kinds of accounts. Some Retiree accounts may be insured up to $250,000 under the Federal Deposit Insurance Reform act of 2005. More information can be found at the official FDIC site.

Find out whether your savings are safe

Find the list of Banks insured by the FDIC at the following location.

http://www4.fdic.gov/IDASP/main_bankfind.asp

Also, if you are one of those whose Bank is already failed, you can check if you deposits are safe or not at the following location.

http://www4.fdic.gov/dip/index.asp

Precautionary steps to take

1. Do not have all your money in one Bank account, if you have say $100,000 in one account and another $100,000 in another account of another Bank, and both Banks are insured by FDIC, then you don't lose any money.

2.

Technorati Tags: US,FDIC,Failed Banks

Look at the quarterly report published by FDIC on Banks. Member Banks insured by FDIC have to adhere to regulations set by the FDIC, still they can fail. FDIC publishes a quarterly report of member banks depending on various parameters to look at Banks and rates them accordingly.

Circuit Breakers

Circuit breakers on the stock market work in a similar way to how an electrical fuse halts the working of the devices once there is too much load. It helps in stopping the system for a small period of time rather than breaking the system.

Technorati Tags: Indian Stock Markets,BSE NSE Circuits

Index Circuits

In case the index(BSE or NSE) rises or falls by more than ten percent, the circuit breaker kicks in and halts trading. Depending on the change in indexes, different period of break times are put in. Complete information related to the how much time the trading is halted can be found here. In case of a 10% movement of either of these indices, there would be a one-hour market halt if the movement takes place before 1:00 p.m. In case the movement takes place at or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for ½ hour. In case movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and market shall continue trading. In case if the market hits 10% before 1 p.m. then as explained there would be a one hour halt in trading and after resumption of trade in case if the market hits 15% in either index, then there shall be a two-hour halt. If the 15% trigger is reached on or after 1:00p.m. but before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00 p.m. the trading shall halt for the remaining part of the day. If the market fails to resume at 10% then the next limit is placed at 15% and finally at 20%. In case if market fails to resume from 15% and if it hits 20% irrespective of the time, the trading shall be halt for remaining part of the day.

Circuits on Individual stocks

Circuits are also present on individual stocks. The stocks present in the BSE 30 and the Nifty 50 do not have any circuits built on them. These are known as the Non Index scripts. Incase there is huge percentage swings in these stocks, the whole market circuits can be triggered. For the other stocks on the nifty, circuits are built at 2,5 or 10 percent. This limit is determined by the impact cost and other things related to the script. These values are calculated monthly and for  a new stock ,it is placed in a group which has most companies in the same market cap.

How ya doin’

To start with, apologies for my prolonged absence here. I have had the opportunity in the last couple of months to see the financial and energy crisis unfold from the Big Apple. Here in the US, people are very polite and friendly to each other – asking How ya doin? To anyone who catches your eye. Usually the answer happens to be - I am fine.

There have been 2 long weekends in the US past me now, Memorial Day and the other American Independence Day. The gas prices here have risen by more than 30% since I landed. So there were fewer cars planning long trips on these weekends. Oil prices have already started their round of Beijing Olympics, smashing one record after the other. The prices at the supermarket too have been rising, with a woman balking at how much a bunch of asparagus costs. Since start of this year, around 500,000 people have lost their jobs in the US. Some of the companies are rethinking their strategies of manufacturing in China, as the cost of shipping goods to US offsets the cost advantage. It’s pretty much the downward slide which has been ongoing.

So what’s the real deal? People here are taking a more pragmatic approach towards things instead of believing in blind pessimism. They are just avoiding what hurts the most. Like the gas prices. Instead they just choose to stay back and go for dinners with their families at closer locations. It helps to look around for pockets of opportunity, like today Warren Buffet is financing a deal for Dow Chemicals, even though he has long concluded that US is in recession. Job data today, shows there has been a biggest drop in claims in over 3 years. The economic stimulus package seems to have worked for the retailers. So there are indeed reasons for hope. The Presidential elections are around the corner and people are hoping that things will turn around for the good.

So where are we headed. As for the oil scenario, which is the cause for bad sentiment all around, will only get worse with speculation with winter approaching in the US. The financial crisis seems to worsen day by day – the latest being government bailouts feared for Fannie Mae and Freddie Mac. It’s a period of incertitude and hoping for the best.

So the real answer to the question above is – Not so good.

PS: Recession or otherwise some people can still afford to pay $2.1 million for a lunch with Warren Buffet at Smith & Wollensky.

Ten things India needs to do...

Following are the ten things listed in a Goldman Sachs economics paper that India needs to do to achieve its potential. The complete paper can be found here.

www.livemint.com/2008/06/16235741/CB9BCB3C-5825-4AD6-9604-042202BBC985ArtVPF.pdf

1. Improve Governance
2. Raise Educational Achievement
3. Increase quality and quantity of universities
4. Control Inflation
5. Introduce a credible fiscal policy
6. Liberalise financial markets
7. Increase Trade with neighbours
8. Increase Agricultural Productivity
9. Improve Infrastructure
10. Improve Environmental Quality

Goldman Sachs book on the emerging economies of BRIC (Brazil, Russia, India and China) " BRICs and Beyond" can be found here.