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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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Monday, May 05, 2008
IDC Finds Workforce Performance Management Market Still Maturing and Still Hot with Revenues Expected to Reach $2.5 Billion by 2012
Comtex
FRAMINGHAM, Mass., May 05, 2008 (BUSINESS WIRE) ----IDC is forecasting that the market for workforce performance management (WPM) software and services will reach $2.55 billion by 2012, increasing at a compound annual growth rate (CAGR) of 10.1%. Consulting services still make up the largest share of spending given the complexity organizations face when redesigning performance management for strategic advantage. Although the performance management market is maturing with some standardization emerging in terms of vendor offerings, it remains a relatively new market with ample room for growth and innovation.
"Despite a potential business downturn, employee retention will continue to be a key concern for HR executives in 2008, given the very real demographic shifts occurring in the workforce," says Lisa Rowan, program director, HR and Talent Management Services. "Employers will be seeking ways to both automate and integrate talent functions, with the goal of identifying and retaining top performers. Performance management is a linchpin in this process."
Other key trends examined in this IDC report include:
-- Popularity of the software as a service (SaaS) model is growing and surveyed vendors report that on average, 82% of their performance management implementations are delivered via SaaS.
-- Performance management still has the highest buyer interest of the talent management offerings while many vendors are reporting buyer interest in integrated talent management even if buyers are not yet in a position to implement all functions simultaneously.
-- Vendors are advised to pay special attention to the various client constituencies served. There needs to be something in it for everyone, especially the employees, if a project is to be successful.
This IDC study, Worldwide Workforce Performance Management Forecast 2008-2012: Still a Hot Market (IDC #211971) provides IDC's forecast for the worldwide workforce performance management (WPM) software and services market. The forecasts presented in this study represents IDC's best estimates and projections for 2008-2012 and are based on reported and observed trends and events in 2007 and their predicted effects on the workforce performance management (WPM) market for the five-year period as well as in-depth vendor responses to an IDC-created survey on the WPM market and offerings.
About IDC
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
All product and company names may be trademarks or registered trademarks of their respective holders.
SOURCE: IDC
IDC Lisa Rowan, 508-988-6988 lrowan@idc.com or Michael Shirer, 508-988-7892 mshirer@idc.com
Copyright Business Wire 2008
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