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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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Tuesday, July 22, 2008
Jenny Craig Inc. Co-Founder Sid Craig Dies at 76
Comtex
CARLSBAD, Calif., July 22, 2008 /PRNewswire via COMTEX/ ----Jenny Craig Inc. Co-Founder and former Chief Executive Officer and Chairman of the Board Sidney Craig, who with his wife Jenny built the largest and most successful centre-based weight loss company in the world, died on Monday, July 21st. He was 76. Sid Craig is survived by his wife, their five children and 13 grandchildren.
"Sid was a true pioneer in the weight loss industry having been involved for over 40 years. Together, he and Jenny built the strong foundation of our Company's values, culture, and mission of improving people's lives by helping them lose weight and keep it off. I personally feel so very fortunate to have known such a talented and generous mentor and friend. He will be dearly missed," said CEO Patti Larchet.
Born March 22, 1932 in Vancouver, British Columbia, Craig came from a family of three children. His career began in the mid-1950s as a part-time instructor and entrepreneur at Arthur Murray Dance Studios, where Sid purchased five studio franchises over time. Upon the company's takeover, he was elected to the new Board of Directors.
In the 1970s, he would own a stake in a small chain of salons before forming a new corporation of ladies figure control salons, Body Contour, Inc. and positioned it for rapid expansion including the New Orleans market where he met Jenny Guidroz Bourcq, who would soon become his National Director of Operations and, in 1979, his wife.
In her 2004 autobiography, "The Jenny Craig Story: How One Woman Changes Millions of Lives," Jenny said, "Sid ... has the charisma of a Jack Kennedy, the intelligence of an Alan Greenspan, the creative mind of a Steven Spielberg, and the humor of a Jackie Mason, along with the good looks of a Clark Gable."
"I've learned that everyone has a soul mate somewhere, and if we're lucky enough to find them to share our life with, then we are more fortunate than most. I thank God every day for allowing me to find mine. Sid has enriched my life in more ways than I can count."
In 1982, the Craigs sold their interest in the 200+center Body Contour, Inc., moved to Melbourne, Australia, and developed Jenny Craig Inc., a chain of weight loss centres whose comprehensive approach emphasized health, moderation and long-term weight maintenance.
A marketing expert, Sid boosted the young weight management company into overnight success when he placed live advertisements on "New Faces," Australia's top talent show, earning Jenny Craig Inc. the 14th-highest company name recognition in the country.
Sid's leadership built Jenny Craig, Inc. from a small Australian company into a multi-national business with 655 Centres operating in four countries. In 2006, Nestle purchased Jenny Craig Inc. for $600 million.
An avid sportsman, Sid and Jenny Craig purchased a 237-acre thoroughbred horse racing stables, breeding operation and training center in Rancho Santa Fe, California in 1995. They also own a minority partnership in the Phoenix Suns of the National Basketball Association. An active car enthusiast, Sid collected classic cars previously owned by high profile celebrities and political figures including Franklin D Roosevelt's touring limousine, Dean Martin, and Al Capone among many others. Sid especially enjoyed the history behind his cars, which was the prime motivation behind each purchase.
In April 2007, Sid and Jenny were awarded the Horatio Alger Award in Washington D.C. It was the first time in the organization's 60-year history that the award was presented to a couple. Sid considered that to be one of the highlights of his career.
Philanthropically, Sid and Jenny Craig have contributed their support to organizations such as San Diego Hospice, Easter Seals, United Way/CHAD, and the Susan G. Komen Breast Cancer Foundation. In 1992, Sid Craig pledged millions to CSUF for the School of Business and Administrative Sciences, which was renamed The Sid Craig School of Business. In 1996, Sid and Jenny Craig committed another very large donation to the University of San Diego, which was used to build the Jenny Craig Pavilion, a multi-use sports pavilion that was dedicated in October 2000.
The Craigs were quick to come to the aid of Hurricane Katrina victims as one of the largest donors. They were among the first to respond to the needs of fire victims in San Diego, where they reside. Their support and concern for the disadvantaged was their way of giving back in appreciation for their many blessings.
SOURCE Jenny Craig Inc.
Copyright (C) 2008 PR Newswire. All rights reserved
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