We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

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Monday, August 04, 2008

Global Pharmaceutical Outsourcing - Trends and Growth Opportunities

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PALO ALTO, Calif., Aug 04, 2008 (BUSINESS WIRE) ----The Healthcare practice at Frost & Sullivan is pleased to announce its 2008 Quarterly Analyst Briefing Presentation on the North American Pharmaceutical / Biotechnology market to be held on Thursday, August 7, 2008 at 10:00 a.m. PDT.

Pharmaceutical companies increasingly outsource to third parties to save money, speed up processes and get products into the market quicker. It takes an estimated 20 years and $100 million for a drug to reach the market place. Outsourcing allows companies to focus on their core competency areas and expedite the entire process. Functions usually outsourced include manufacturing, clinical trials, packaging and sales force mobilization. Drug discovery outsourcing is the new trend. In Asia pacific, large biopharmaceutical companies outsource to their local and regional partners. CRO's (Contract Research Organizations) move up the value chain with the desire to serve only few global customers rather than diversify in different areas. Additionally, they are slowly converting into SMO's (Site Management Organizations), where protocol development and monitoring takes place in addition to R&D.

The briefing will focus on factors that encourage pharmaceutical outsourcing, current and future trends, challenges faced by companies and initiatives taken by some of the developing countries to provide a conducive environment for outsourcing. Additionally, the briefing will highlight future prospects and growth opportunities for healthcare industry participants in outsourcing. This briefing will benefit drug and medical device manufacturers, distributors and retailers, research organizations, healthcare outsourcing organizations and health insurance companies who have an interest in accessing the growth potential areas in the pharmaceutical outsourcing industry.

"The pharmaceutical outsourcing trend is expected to continue in the future," states Frost & Sullivan Research Analyst Somya Datta. "All process including manufacturing, R&D and clinical trials will be outsourced in huge volumes. Large pharmaceuticals and biotechnology companies will be the main drivers for this market. The global aging, increasing life expectancy, changing disease epidemology, health awareness and rise in disposable income will support the market growth."

To participate, please email Stephanie Ochoa, Corporate Communications, at stephanie.ochoa@frost.com with the following information: your full name, title, company name, company telephone number, company e-mail address, city, state and country. Upon receipt of the above information, a registration link will be emailed to you. You may also register to receive a recorded version of the briefing at anytime by submitting the aforementioned contact details.

Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's TEAM Research, Growth Consulting and Growth Team Membership empower clients to create a growth-focused culture that generates, evaluates and implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents. For more information about Frost & Sullivan's Growth Partnerships, visit http://www.frost.com.

SOURCE: Frost & Sullivan

Frost & Sullivan Stephanie Ochoa, 210-247-2421 Corporate Communications - North America F: 210-348-1003
   stephanie.ochoa@frost.com http://www.frost.com