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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 / Media
Friday, July 18, 2008
Seven Arts Pictures Hits CEOCorner at InvestSourceInc.com
Comtex
HUNTINGTON BEACH, CA, Jul 18, 2008 (MARKET WIRE via COMTEX) ----InvestSource, Inc. invites the public to hear what Peter Hoffman, the CEO of Seven Arts Pictures (OTCBB: SAPXF), has to say about his company. Mr. Hoffman was featured in a recent installment of CEOCorner, "The Fastest 60 Seconds in the Small-Cap Market." Details of the interview can be heard at the company profile for Seven Arts Pictures on the InvestSource, Inc. (ISI) website at: www.investsourceinc.com or on the CEOCorner website at: www.ceo-corner.com.
During the interview, Mr. Hoffman discussed the unique business model of Seven Arts Pictures by which the Company produces films at a favorable cost basis, and further mitigates its expenses through tax preferred investments and incentives available throughout the world. As a result, Seven Arts Pictures is able to realize substantial profits on films with limited theatrical release through video and television revenues. Mr. Hoffman was very optimistic about the prospects for a number of the Company's upcoming releases, including "American Summer" with Tom Arnold ("True Lies") and "Autopsy" with Robert Patrick ("Terminator 2," "The X-Files"). With seven pictures scheduled for release this year, Mr. Hoffman was confident that Seven Arts Pictures was in an excellent position to build on its track record of success, and even exceed the past fiscal year's achievements of $16.5 million in estimated revenues and $4 million in estimated profits.
About Seven Arts Pictures:
Seven Arts Pictures plc was founded in 2002 as an independent motion picture production and distribution company engaged in the development, acquisition, financing, production, and licensing of theatrical motion pictures for exhibition in domestic (i.e. the United States and Canada) and foreign theatrical markets, and for subsequent worldwide release in other forms of media, including home video and pay and free television.
Safe Harbor Statement:
Except for historical information contained herein, the matters set forth above may be forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors such as the level of business and consumer spending, the amount of sales of the Company's products, the competitive environment within the industry, the ability of the Company to continue to expand its operations, the level of costs incurred in connection with the Company's expansion efforts, economic conditions in the industry and the financial strength of the Company's customers and suppliers. The Company does not undertake any obligation to update such forward-looking statements. Investors are also directed to consider all other risks and uncertainties.
Contact: InvestSource, Inc. 714-847-2460 Email Contact
SOURCE: InvestSource, Inc.
http://www2.marketwire.com/mw/emailprcntct?id=92B739669E3692EC
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