Tuesday, August 25, 2009

Announcement & Quick Notes for the Day - August 25

Rollins Financial has made some changes in the past few days in regards to our web presence. After more than a year, we have changed the look of The Rollins Financial Blog (blog.rollinsfinancial.com). We have also added a "News" area so you can view our press releases (news.rollinsfinancial.com). Go to the sites, look around, and let us know what you think - mail@rollinsfinancial.com.

Quick Notes

Obama to Reappoint Bernanke to Second Term, Stable Markets the Goal - President Obama removed some of the tension about who will lead the Fed in the coming years and made it official Tuesday morning by stating that he will nominate Ben Bernanke to a second term as chairman of the Federal Reserve. In a short statement in Martha's Vineyard, with Bernanke standing at his side, Obama said, "Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outside-the-box thinking that has helped put the brakes on our economic freefall."

Bernanke said the goal of his second four-year term at the central bank will be stable economy and markets. "Mr. President, I commit today to you and to the American people that, if confirmed by the Senate, I will work to the utmost of my abilities--with my colleagues at the Federal Reserve and alongside the Congress and the Administration--to help provide a solid foundation for growth and prosperity in an environment of price stability," Bernanke said in brief remarks after Obama. "We have been bold or deliberate as circumstances demanded, but our objective remains constant: to restore a more stable economic and financial environment in which opportunity can again flourish," Bernanke said.

The response around the world was overwhelmingly in favor of the decision by Obama. The European Central Bank's (ECB) President, Jean-Claude Trichet, said in a statement that he was "extremely pleased." "The Federal Reserve and the European Central Bank have, together with other central banks, initiated an unprecedented level of close cooperation, which has been key in coping with the present situation. I am very much looking forward to continuing our close cooperation," Trichet said.

Consumer Confidence Rises - The Conference Board reported Tuesday that the consumer confidence index rose to 54.1 in August from 47.4 in July which was well above expectations. Consumers were increasingly optimistic about what the next 6 months held for the economy and them personally.

Home Prices Rise in June - The latest Case-Shiller home price index was released Tuesday by S&P, and it showed the prices of single-family homes in 20 major cities rose a seasonally adjusted 1.4% in June versus May but were still down 15.4% over the past year. According to the last two reports, home prices have risen two months in a row in 20 selected cities. For the second quarter, the national Case-Shiller index rose 2.9%, the first time in three years that prices have risen.

White House, CBO Announce Deficit Projections With Different Conclusions - The short term view by the White House Budget Office and Congressional Budget Office (CBO) are very similar - The White House forecasts a $1.58 trillion deficit in fiscal 2009, matching the numbers of the CBO, while it has the deficit at $1.5 trillion in 2010, a touch higher than the $1.48 trillion projected by CBO.

Over the next 10 years though, the White House and CBO are quite different. The CBO took a somewhat more optimistic view with the deficit being $7.1 trillion over the time frame due to assumed higher tax revenues and spending limits. Meanwhile the White House projected a cumulative $9 trillion deficit between 2010 and 2019 on lower tax revenues.

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