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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.
Home / Markets / Industries / Energy
Monday, July 07, 2008
Petroleum Geo-Services ASA: Claim Against Arrow Seismic ASA From CGGVeritas
Comtex
OSLO, Norway, Jul 7, 2008 (PrimeNewswire via COMTEX) ----Petroleum Geo-Services ASA ('PGS' or the 'Company') announced today that its subsidiary Arrow Seismic ASA ('Arrow') has received a writ of summons to Asker og Baerum Tingrett from Compagnie Generale de Geophysique -- Veritas ('CGGVeritas') where CGGVeritas claims compensation from Arrow of approximately US$70 million.
In the writ CGGVeritas claims to have a binding agreement with Arrow for a charter and ultimately the purchase of NB 534, a newbuild seismic vessel that Arrow's subsidiary Arrow Seismic V Limited is building in Spain. CGGVeritas claims to have a binding agreement to this effect even though no agreement has been signed between CGGVeritas and Arrow or any subsidiary of Arrow.
CGGVeritas claims that Arrow discontinued the negotiations with CGGVeritas as a consequence of PGS' purchase of Arrow at a stage where, considering the nature of the negotiations, a binding agreement had in fact been entered into.
PGS views the CGGVeritas claim against Arrow as totally unfounded. PGS' position is that neither Arrow nor any subsidiary of Arrow was bound by any agreement with CGGVeritas at the time PGS purchased Arrow.
The availability of NB 534 was a clearly communicated and accepted condition of PGS' bid for GC Rieber Shipping ASA's ('Rieber') shares in Arrow. PGS has put Rieber on notice of the situation and reserves any rights towards Rieber.
Petroleum Geo-Services is a focused geophysical company providing a broad range of seismic and reservoir services, including acquisition, processing, interpretation, and field evaluation. The company also possesses the world's most extensive multi-client data library. PGS operates on a worldwide basis with headquarters at Lysaker, Norway. For more information on Petroleum Geo-Services visit www.pgs.com.
The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to the demand for seismic services, the demand for data from our multi-client data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors we refer to our Annual Report for 2007. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements.
http://hugin.info/115/R/1234019/262767.pdf
This news release was distributed by PrimeNewswire, www.primenewswire.com
SOURCE: Petroleum Geo-Services ASA
Petroleum Geo-Services ASA Gottfred Langseth, EVP and CFO +47 67 51 44 10 Mobile: +47 930 55 580 Bard Stenberg, Investor Relations Manager +47 67 51 43 16 Mobile: +47 992 45 235 U.S. Investor Services Katrina Hendrix +1 281 509 8000
(C) Copyright 2008 PrimeNewswire, Inc. All rights reserved.
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