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Durable goods are just that: hard goods; they don't wear out quickly and can be used over and over again for at least several years. Think your car, TV, refrigerator or computer. These are certainly not disposable, one-time use items.
The opposite of a hard good is (surprise!) a soft good or, if you like, a non-durable good. These are products you use once, like your lunch at McDonald's, the gas in your car and the ugly sweater your grandmother bought you for your birthday. These items have an intended lifespan short of three years, or are consumed immediately.
Investors pay attention to the monthly durable orders report released by the Commerce Department around the end of each month. When durable goods are strong, it means that U.S. manufacturing is humming along, though economists tend to parse the numbers pretty closely. Big-ticket items can skew the overall results, since an order for, say, 75 Boeing 747s has a bigger impact than 75 iPods. Luckily, the data lets economists break down the sectors.
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Friday, March 28, 2008
The Final Score
Bankers and Brokers: Could Separating Them Save Us?
David Asman
FOXBusiness
Scoreboard doesn’t like regulations. But there’s an old regulation that was tossed out during the Clinton administration
that deserves another look.
We used to have a wall that separated the business of banking and the business of selling
stocks and bonds. It was erected by Congress during the Great Depression to prevent Wall Street traders from speculating with
bank deposits and mortgages. The 60-year-old law, called the Glass-Steagall Act, was finally pulled down in 1998, though Fed
Chairman Alan Greenspan had been picking away at it for years before that.
Greenspan’s predecessor, Paul Volcker
argued against tearing down Glass-Steagall. Volcker was more traditional than Greenspan. He thought it was dangerous to mix
the high-flying world of complex financial instruments with the more conventional world of bank deposits and mortgages. He
also thought it was dangerous for investment banks to use conventional mortgages as leverage against really risky loans and
investments. But Greenspan and Wall Street were against him. They argued that Glass-Steagall was an outdated relic from the
Depression and that U.S. banks would be left in the dust if they couldn’t mix traditional banking with the high-rolling world
of investment banking.
In 1987, right before he turned the Fed over to Greenspan, Paul Volcker met with the heads of Citi, J.P. Morgan and Bankers Trust. Volcker knew he’d eventually be outvoted, but he stuck to his guns. He read aloud the following from a 1934 letter to shareholders from National City Bank of New York, Citicorp's predecessor:
“I personally
believe the bank should be free from any connections, either directly or in any way, which might be taken by the public to
indicate a relation with any investment banking house.”
The bankers and traders must have thought Volcker was totally
behind the times. But think about the trouble we're in now because investment banks have used mortgages as leverage against
so many risky loans and investments. Think also about how the Fed has become the lender of last resort not just for Ma and
Pop’s bank deposits, but also for millionaire gamblers at investment houses.
Paul Volcker doesn't sound like such an old crank, after all.
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