money market mutual fund assets rose by $461 million to $3.906 trillion for the week

Investment Company Institute said Money fund assets rose to $3.906T in latest week.
Assets of the U.S. retail money market mutual funds rose by $10.67 billion in the latest week to $1.365 trillion.
Assets of taxable money market funds in the retail category rose $11.04 billion to $1.075 trillion for the week ended Wednesday, the Washington-based mutual fund trade group said. Tax-exempt fund assets fell by $361 million to $289.83 billion.

Assets of institutional money market funds fell by $10.21 billion to $2.541 trillion for the same period. Among institutional funds, taxable money market fund assets fell by $12.05 billion to $2.349 trillion; assets of tax-exempt funds rose by $1.84 billion to $192.18 billion.

The seven-day average yield on money market mutual funds fell in the week ended Tuesday to 0.29 percent from 0.32 percent the previous week, said Money Fund Report, a service of iMoneyNet Inc. in Westboro, Massachusetts. The 30-day average yield fell to 0.33 percent from 0.36 percent, according to Money Fund Report.

The online service Bankrate.com said its survey of 100 leading commercial banks, savings and loan associations and savings banks in the nation's 10 largest markets showed the annual percentage yield available on money market accounts fell to 0.49 percent as of Wednesday from 0.50 percent week earlier.

South Carolina will soon get $75 million in extra money from earmarks

What is an earmark?
Earmark is a politicized term that denotes money designated within legislation for the funding of a specific project. Opponents characterize it as a back-door approach to grant political favors and fund pet projects. Supporters view it as a way to channel tax dollars back home for valuable purposes.

South Carolina will soon get $75 million in extra money from earmarks in the $410 billion spending bill that President Barack Obama signed this week. Among the extra federal spending for the state is money for educating seafood lovers about the dangers of eating raw oysters, an oaktree-planting bonanza and a robotics training center in Union.

U.S. House Majority Whip Jim Clyburn boasts of his role in bringing nearly half of that money home to the state to provide for improvements and economic development. He's responsible for $35 million of the total.

Meanwhile, another member of the state's congressional delegation, Sen. Jim DeMint, is on a crusade against the deficit spending and corruption that he argues is caused by earmarks, including ones going to other states for tattoo removal, pig stench and midnight basketball.

"Americans are suffering in this economy, but Washington appears to be recession-proof, with billions wasted on politicians' pet projects," DeMint, a Republican, said after the Senate passed the bill Tuesday. DeMint, who sponsored no earmarks, blasted Obama for signing the bill.

Fellow Republican Sen. Lindsey Graham agrees that earmarks can be abused but said they also can be for worthwhile endeavors. He sponsored seven earmarks, including several with Rep. Henry Brown, a Republican from Hanahan whose 1st District includes much of the Charleston area.

Clyburn, a Democrat who represents South Carolina's 6th District, said the earmarks are federal investments that produce real results.

Financial Q&A..............

Q: I took my credit cards and created myself a summer job – when I am not teaching – by building a house. I am almost finished building the house with my credit cards and about to go bankrupt. The banks tell me they will not make me a loan even when I finish the house, as my credit-card debt is too high. I tried to explain to them that I wanted to pay off the credit cards, but they said it made no difference. What should I do?

A: If Joel Doelger had the power to turn back the clock, the director of counseling at Credit Counseling of Arkansas says that he would have recommended that you use a traditional builder's spec loan to cover the initial cost of building the home. That would have allowed you to purchase supplies, but with a lower interest rate than the credit cards have charged.

Unfortunately, that's not the case. And to worsen matters, given the current soft housing market, it may be difficult to sell a completed home, much less an almost completed home.

It's a bit of a long shot, but Mr. Doelger knows of one loan product that could help both you and any potential home buyer. The FHA offers a rehab loan that allows the buyer to roll the cost of home improvements into the initial loan.

If you found a buyer who would qualify for such a loan, he or she could buy the home now – as is – and roll the completion of the home into the initial loan. That would prevent the borrower from having to turn around right away to qualify for a second mortgage to complete the home.

Second mortgages typically have higher interest rates than first mortgages. If a buyer can purchase the home in its present state, you may be able to get out of this venture now, without having to sink additional money into it to make it marketable.

If you aren't able to pay the credit-card bills with the sale of the house but are hesitant about filing for bankruptcy, you might be able to use the services of a credit counseling agency, Doelger says. You'll want what is called a debt management plan (DMP). A legitimate agency will help you determine your current financial situation and assess the suitability of a DMP, as well as other options, for helping you repay the debt.

The Federal Trade Commission produces a variety of useful brochures on financial issues, including one on how to select a credit counseling agency (ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm).

Q: Could you help me find the best and safest annuity company in Switzerland? I would rather have a fixed annuity, but they aren't available at this time in Switzerland.

A: One source of information on this might be swissannuities.com. On this website you can learn a lot about the ins and outs of Swiss annuities – who sells them, who regulates them, what the advantages are to owning one, etc.

What you won't find is direct advice on which particular annuity to buy. And when we contacted the Swiss Financial Planners Organization, in Bern, CEO Nicholas Koechlin said that, by law, financial advisers in his country cannot dispense such guidance. For general information on personal finances you can ring them at 011-41-31-326-2730, or e-mail them at info@sfpo.ch.

Back stateside, Rich Arzaga, a financial planner in San Ramon, Calif., can't vouch for a Switzerland-sold annuity (nor could we find anyone else in the United States with Euro-specific experience on annuities). Regardless of the country of sale, there are common threads to annuities that Mr. Arzaga says a buyer should consider:

•Time horizon. How long are you willing to tie up your money? How big a penalty are you willing to take if you withdrew more on an annual basis than the annuity contract allows?

•Risk tolerance. You say you can't buy a fixed annuity. That would leave you with a variable annuity in the US, and they mostly invest in the stock market.

•Fees. Annuities carry sales charges, as well as other fees for add-ons such as death or survivor benefits. The more add-ons, the more fees.

Annuity sales and marketing are regulated in the United States at either the federal or state level, depending on their type. There also are rating agencies that assess the claims-paying ability of insurance companies that market these products.

new sales contracts on existing homes fell a seasonally adjusted 7.7% in January amid job losses

Pending U.S. home sales sank to a new record low in January as economic woes turned buyers away from the staggering housing market.

Supply of unsold homes rises to record-high 13.3 months
Despite a record drop in prices, sales of new homes fell 10.2% in January to a record-low seasonally adjusted annual rate of 309,000, the Commerce Department estimated Thursday. Sales were down 48.2% compared with a year earlier, the government reported, an indication that the downturn in the housing market was still accelerating as the recession headed into its second year.

The index is now down 6.4% from a year earlier, the National Association of Realtors said.
"We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit" in the stimulus package, said Lawrence Yun, NAR's chief economist, in a statement.
January's pending sales rose more than 2% in the West. Elsewhere, pending sales fell, declining almost 13% in the Northeast, almost 12% in the South, and more than 9% in the Midwest.
The Tuesday report points to weak upcoming sales data, wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.
"It will be awful, the only question is the degree of awfulness," Shepherdson wrote.
In December, the pending home sales index rose 4.8%, compared with a prior estimate of a 6.3% gain.
The index is based on signed sales contracts, which usually occur a month or two before the sale is closed, when sales are reported in the NAR's existing-home sales report.
Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales," Lawrence Yun, the Realtors chief economist, said in a statement.

UBS May Face Trial on U.S. Demand.

People walk past the UBS building on Park Avenue in New York February 19, 2009. UBS may face a mini-trial in a U.S. court in July as it fights efforts to force it to disclose the names of 52,000 U.S. clients suspected of offshore tax evasion, the New York Times reported
UBS feels the wrath of investors and the US.........
Shares in embattled Swiss bank UBS fell to an all-time low on Monday ending the day at SFr10 ($8.58) or 9.1 per cent lower than at Friday's close at the bourse.
The decline came as a federal judge decided it would take months to determine if and when the Internal Revenue Service (IRS) would gain access to accounts of 52,000 UBS clients in the US suspected of tax evasion.

District judge Alan S. Gold set a July 13 hearing on the IRS lawsuit, unless an agreement is reached first. He gave UBS until April 30 to prepare their defence.

UBS has argued that handing over the account names would violate Switzerland's banking secrecy legislation and jeopardise the bank's licence to stay in business.

"Such violations would expose these [UBS] employees to substantial prison terms, as well as fines, penalties and other sanctions," UBS lawyers said in a court filing.

The lawsuit seeking details of the 52,000 accounts containing an estimated $14.8 billion in assets was issued last week.

It came a day after Switzerland's largest financial institution came to a settlement with the Justice Department on revealing the names of up to 300 US customers and payment by the bank of $780 million.

Under the terms of the settlement, UBS admitted helping US taxpayers hide accounts from the US Internal Revenue Service, the agency responsible for tax collection and tax law enforcement.

The matter is also particularly contentious because of the number of client identities and records that the I.R.S., backed by the Justice Department, is seeking to acquire. The total of 52,000 is more than twice the 19,000 accounts under investigation in the Justice Department’s criminal investigation and suggests that UBS has had a much larger role in undeclared offshore banking services than the bank has previously suggested.


comments.....

Thomas, Switzerland
Any normal person or government would start a lawsuit in the country where the business accused of some wrong-doing is located. So why does the U.S. think they have the jurisdiction for a Swiss bank and Swiss law? Would be a good time for the U.S. government to accept international law and courts.

you can leave your comments .here.......

U.S. financial regulators will soon launch a series of "stress tests"

U.S. financial regulators to determine which of the largest banks may need additional capital cushions if recession deepens.
largest U.S. banks should get bigger capital cushions in the event of a deeper recession, a person familiar with Obama administration plans said Saturday.
Banks are expected to receive additional information about the tests in the coming week from regulators.

The largest U.S. banks are "well capitalized" for current conditions, the source said, but the Obama administration wants to ensure that they can withstand a more severe economic climate and can play an important role in maintaining the flow of credit.
Initial plans for the stress tests were announced Feb. 10 as part of Treasury Secretary Timothy Geithner's bank stabilization plan, but the source Saturday for the first time linked the tests to additional government support for large banks. This person did not specify what form any extra capital cushion may take.

Little is known about the form of the stress tests, but the person described them as "consistent, forward looking and conservative."

The Obama administration on Friday tried to ease market fears that the government was poised to nationalize some large banks that are continuing to struggle with losses and a lack of confidence, notably Citigroup and Bank of America.

White House spokesman Robert Gibbs said Friday that "this administration continues to strongly believe that a privately held banking system is the correct way to go

U.S. Economy May Suffer for ‘Long Time’

The U.S. economy will suffer from the effects of the global financial crisis for “a long time” as a slowdown in demand spreads to other countries, former Federal Reserve Chairman Paul Volcker said.

“We’re in the middle of a kind of massive economic crisis,” Volcker, who heads President Barack Obama’s Economic Recovery Advisory Board, said today at a Columbia University conference in New York. “We’re going to hear the reverberations about this for a long time.”

Volcker characterized the downturn that started in December 2007 as “not like a typical recession in the U.S. or elsewhere.” He also cautioned that U.S. government and central bank efforts to revive credit markets should only be temporary to alleviate the risk of inflation.

Volcker said he is “shocked” by the international reach of the slowdown.

“The rest of the world has not held up,” making it harder for the U.S. to rely on strong export growth to emerge from its economic slump, he said.

“Industrial production in most countries is going down faster than in the United States,” Volcker said.

The U.S. economy will contract 2 percent this year, making it the deepest annual slump since 1946, according to a Bloomberg News survey of economists taken this month. Gross domestic product shrank at a 3.8 percent annual pace in the last three months of 2008, the Commerce Department said in January.

Volcker also discussed rising prices, saying even “a little inflation is bad.” The cost of living in the U.S. rose last month for the first time in six months as the consumer price index rose 0.3 percent, the Labor Department said today in Washington.

The Crisis Takes Hold
The first shoe to drop was the collapse in June 2007 of two hedge funds owned by Bear Stearns that had invested heavily in the subprime market. As the year went on, more banks found that securities they thought were safe were tainted with what came to be called toxic mortgages. At the same time, the rising number of foreclosures helped speed the fall of housing prices, and the number of prime mortgages in default began to increase.

The Federal Reserve took unprecedented steps to bolster Wall Street. But still the losses mounted, and in March 2008 the Fed staved off a Bear Stearns bankruptcy by assuming $30 billion in liabilities and engineering a sale to JPMorgan Chase for a price that was less than the worth of Bear’s Manhattan skyscraper.

A combination of higher food and utility bills, falling house prices

Many people have seen bills eat into their income
Households have less spare cash
Household finances have been squeezed by an "abrupt" change in circumstances in the past year, according to a survey for the Bank of England.

A combination of higher food and utility bills, falling house prices and scarcer credit have reduced household budgets and spending.

Nearly 2,500 households were interviewed for the survey in late September and early October.

Typically, they said they now had less spare cash either to spend or save.

"The typical household reported that the income it had available after meeting household bills had fallen over the past year and that it had saved less than it had expected," said the Bank.

Changing circumstances
The Bank's report said that, after a period of steady growth and low inflation, the last year had seen a sharp turnaround in the finances of British households.

More than half of those who took part in the survey had seen a decline in their available income after paying tax, debt repayments and utility bills.

A rise in mortgage costs for some borrowers earlier in the year, when they had come off fixed or discounted mortgage rates, had also played a part.

However, the financial situation of many households has changed since the survey was carried out in late September and early October.

About 40% of households have a mortgage and most of these will see their borrowing costs cut sharply because of the Bank of England's successive rate cuts in October, November and December.

These cuts have taken the official bank rate down from 5% to just 2%, with many economists expecting further reductions as the impending economic recession in the UK deepens.

£1.6 trillion debt
The Bank's survey reveals that total household debt in the UK has now reached £1.6 trillion, when mortgage debt is added to unsecured debt such as credit cards, overdrafts, hire purchase agreements and other personal loans.

And the survey has also found that more than 50% of all households now have some sort of unsecured debt.
The most exposed landlords were the 6% of landlords with high loan-to-value ratios on their main residence


However, the reluctance of banks and other lenders to extend much further credit, except at high rates of interest and to the most credit-worthy customers, is clearly contributing to the downturn in consumer spending.

In the survey, 16% of households said they were worried they might not be able to get any more credit, up from 12% who said this in 2007, and that this was causing them to defer their spending plans.



"Some households had been put off spending by tighter credit conditions, and more households were finding their debts to be a burden than in similar surveys carried out since the mid-1990s," the Bank said.

Banks can legally take from current accounts to cover credit card debts

Banks are departure people not capable to pay mortgages by taking money from their current accounts to cover credit card and loan debts, a charity has claimed.
Citizens Advice is calling on banks to scrap the practice, which allows them to transfer funds without permission.

It says it has seen a 25% rise in the number of such cases in each of the past two years.

The British Bankers' Association says the onus is on customers to talk to their banks if they are in difficulty.

In most cases, companies can only force someone to pay a debt by taking them to court.

However, as BBC Radio 4's Money Box discovered, the Right of Set Off allows banks to legally transfer cash to pay credit card or loan arrears without account holders' permission.

Citizens Advice says there have been cases of people having benefit payments removed from accounts, leaving them unable to meet "priority debts" like mortgages and council tax.

The British Bankers' Association says cases where money has been removed "inappropriately" are regrettable but that banks take their responsibilities under the banking code seriously

Times Money Matters

Money matters, and it has never mattered more than in the current economic climate as we all take a long hard look at our household balance sheets and batten down the hatches for what's likely to be a pretty turbulent year ahead.

If you are planning a spot of financial spring cleaning to recession proof your hard earned cash, then the Money Matters Roadshow is here to help.

A team of money experts - plus a smattering of BBC financial journalists - will be at Manchester's Trafford centre on Wednesday.

If you cannot get along in person then sit back and absorb the coverage across BBC TV, radio and online throughout the day.
"Like many pensioners I buy all my clothes from charity shops & buy yellow stickered reduced food"
Horace, Scotland

residential property valuation firm said: U.S. home prices sank nearly 14 percent last year and show few signs of stabilizing

U.S. home prices sank nearly 14 percent last year and show few signs of stabilizing, even though much of the gains posted during the housing boom have been erased.

The recession and foreclosures battered house prices in 2008, dragging down values by 13.8 percent nationally and down 19.1 percent from their 2006 peak, according to the IAS360 House Price Index from Integrated Asset Services.
"We're seeing house prices returning to pre-bubble levels and there are no signs of leveling off just yet," Dave McCarthy, president and chief executive of Integrated Asset Services, said in a statement.
Home prices sagged by 5.9 percent in 2007, after rising 1.4 percent in 2006, according to IAS.
Location "is still everything," he added, with the markets that soared the most during the record five-year housing spree now faring the worst.
All of the 10 hardest-hit counties from peak to trough are in California or Florida, based on IAS data.
The three hardest hit counties are all in California, with prices down 51 percent from their high in San Joaquin County, down 49 percent in Monterey County, and down 45 percent in Kern County.
At the U.S. Census region level, home prices fell most in the West and the South. In the West prices dropped 18.4 percent last year and are down more than 24 percent from the 2006 peak. In the South, prices skidded by 12 percent in 2008 and are off about 18 percent from their high.
The hardest hit metropolitan areas last year were San Francisco, San Diego and Miami. Prices fell 23.9 percent in San Francisco, 22.7 percent in San Diego and 20.8 percent in Miami. Within the San Francisco metro area, Contra Costa County tumbled 35.5 percent last year, bringing prices 42.2 percent below the peak.
Denver-based Integrated Asset Services tracks the monthly change in the median sales price of single-family homes in the United States.

How is this a great investment plan?

Diversifying won't totally protect you from losses, but it can boost your returns by limited your risk.

Spread your money around

Answer: There have always been a lot of misconceptions and erroneous expectations when it comes to the benefits of diversification.Back in the go-go '90s I remember having lunch with a financial planner who sarcastically referred to diversification as "di-worse-ification." His contention was that it made no sense to diversify into different asset classes. Stocks clearly offered the highest returns over long periods, so it was foolhardy for anyone investing for the long-term to put their money in anything but stocks. You were just lowering your potential return. Funny thing is, back then, this "hooray, hooray, stocks all the way" approach wasn't that uncommon.Today, many people are having second thoughts about diversification because they feel that diversifying didn't offer their portfolio the protection they thought it should. For example, all but a handful of Morningstar's 69 fund categories were down in 2008. So even if you spread your money around quite liberally, you still might have eked out only a paltry return or suffered significant losses last year.Looked at from these two vantage points, it's easy to see why you and others would question the value of diversifying. If it holds you back in bull markets and doesn't offer much shelter during bears, what's the point?In fact, there is a real benefit to diversifying. But in order to make reasonable investing choices and set a coherent investment strategy, it's important to understand what its advantages are, as opposed to what we might think they are or wish they were. Otherwise, you may be investing on the basis of false hopes, which is a good recipe for disappointment.What diversification can do for youThe first thing you should know is that it can't guarantee you the highest possible return. In fact, it guarantees you won't earn the highest possible return. By spreading your money around you assure that you will have at least some of your money in lagging investments, which will reduce your portfolio's potential return.By the same token, diversification can't totally immunize you from losses. To do that, you would have to do the opposite of diversifying -- i.e., plow all your money into the most secure investments, such as Treasury bills or short-term bank CDs.What diversification can do for you, though, is give you a shot at higher returns than you will get in the most secure investments while limiting your risk somewhat.Notice I said "somewhat." Fact is, if you want the value of your money to grow more than it will in T-bills and the like, you've got to invest in asset classes that have the potential for higher long-term returns, such as stocks and bonds. But those higher returns come with more risk. In the investment world, that risk can take several forms, but generally the riskier an investment, the more volatile it is, the more its value will jump around from year to year.You can't eliminate that risk. But by investing your money in a mix of secure and more volatile assets, you can reduce the potential downside in a given year. For example, if you'd had all your money in a diversified portfolio of U.S. stocks last year, you'd have lost just under 40%. If, on the other hand, you'd had 60% of your money in stocks, 30% in a broad bond index fund and 10% in cash last year, you would have lost roughly half that amount, or around 20%.(See'>http://www.blogger.com/post-create.g?blogID=7564789355139535583#Note">See editor's note.)That kind of cushion is important for a couple of reasons. For one thing, it makes you less likely to panic in a bad year and sell off riskier investments with higher long-term return potential at what may be the worst possible time. A less volatile portfolio is also less likely to take a devastating hit that may be difficult to recover from. That's an especially important consideration when you're dealing with 401(k)s or other retirement accounts and you're nearing retirement age or are already retired and withdrawing money from such accounts.So the key to getting the benefit of diversification is settling on a mix that's right for you.Ideally, your mix should consist of assets that don't all move in sync with each other or, to put it in investing terms, that aren't too highly correlated with each other.It's okay for gains in some investments to offset losses in others in some years. But on balance your gains should outweigh losses most years. And, while down years are inevitable with growth-oriented investments, whatever assets you're investing in should have a positive long-term return. Diversification isn't a magic formula that can turn recurring sizeable losses in your investments or your portfolio overall into long-term wealth.What diversification can't do for youBut as big an advocate as I am of diversifying among a variety of asset classes, I also feel that the concept has been stretched out of shape over the years, in some cases even beyond recognition.Specifically, I think the benefits of diversifying have been oversold by some advisers who seem intent on making themselves come off like investment wizards capable of creating all-upside-no-downside portfolios. But I'm wary of these supposedly more sophisticated portfolios.So I suggest keeping things simple. Start with a realistic sense of how much risk you can handle and then build a diversified portfolio of stocks, bonds and cash. If you want to get more fancy, you can throw in some foreign stock funds and maybe some REITs or real estate-related mutual funds. But don't go overboard. The more complicated your portfolio is and the more wide-flung your holdings, the more attention and care it will need.Finally, remember that to get the full benefit of diversifying you ought to rebalance periodically to restore your portfolio to its proper proportions.For guidance on how to divvy up your money given your goals and risk tolerance, you can use our asset allocator tool. And if you want to see how different combos of assets might perform, check out the asset allocator tool on T. Rowe Price's site.Of course, you can always take the other route you suggest and just buy CDs. But unless you have so much money that you can accumulate a large enough nest egg despite their low yields, I'm not sure that you can do this and also not worry.Editor's note: An earlier version of this story incorrectly stated that a theoretical portfolio of 60% stocks, 10% broad bond index fund and 10% cash would have lost around 20% last year. The correct example is 60% stocks, 30% broad bond index fund and 10% cash.