Central Banks and Global Crises – Who Really Controls the Global Economy?

The worldwide credit crisis that began with the collapse of the housing market in the United States in 2008 was just one of many crises that central banks and other financial authorities have had to deal with during the first part of the 21st century.

But the enormity of the 2008 financial collapse required government and central bank intervention never before seen in the global economy. After Lehman Brothers, one of America’s biggest investment banks, was allowed to go bankrupt, the Federal Reserve was required to bail out AIG, the world’s largest insurance company. The $85 billion bailout was, until then, the biggest bailout in American economic history.

When banks began failing across the globe- primarily because of bad investments in U.S. subprime securities, but also because of the freeze in interbank lending- it was clear that a full- blown worldwide crisis had arrived. Stock market declines of more than 50% in some countries presaged a global economic meltdown. The concerted action of the world’s central banks, including the U.S. Federal Reserve, the Bank of England, the European Central Bank, and the Bank of Japan, helped calm things down for a while. But when countries began failing-Iceland and the Ukraine were the first of many national economies that had to be bailed out- it was clear that the fallout of the 2008 crisis would last for years to come.

The key to finding the right solution to economic crises is to somehow solve the immediate problem without making things worse in the future. Some say that the reaction of the Fed to the meltdown of the dot- com sector at the end of the 20th century- increased liquidity and drastically lower interest rates- set the stage for the meltdown of financial markets several years later, with massive defaults of mortgage holders who probably shouldn’t have been given home loans to start with, but were lured in by artificially low interest rates. The result was a recession that was much worse than that which the central bank was trying to avoid.

Just as the speed of an engine is regulated by its fuel supply, a country’s economy is controlled by regulating its money supply- and each country’s monetary policy is the responsibility of its central bank. In Britain, it’s the Bank of England; in Switzerland, it’s The Swiss National Bank; in the United States, it’s the Federal Reserve; in the euro zone countries, it’s the European Central Bank; and in Japan, it’s the Bank of Japan. These quasi- public institutions are set up by governments, but are then given the independence needed to keep an economy under control without undue interference from dabbling politicians. Despite the tendency of the media to concentrate on the latest economic statistic, there is no one single indicator that tells us how fast an economy is growing- or if that growth will lead to inflation down the road. And, unfortunately, there is no way to know how quickly an economy will respond to changes in monetary policy. If a country’s central bank allows the economy to expand too rapidly- by keeping too much money in circulation, for example- it may cause “bubbles” and inflation. If it slows down the economy too much, an economic recession can result, bringing financial turmoil and rampant unemployment.

Central bankers, therefore, need to be prescient- and extremely careful- keeping one eye on inflation, which is the product of an overheating economy, and one eye on unemployment, which is the product of a slowing economy. In the 21st century economy, however, regulating money supply has become a much more difficult task. With the amount of capital flowing around the world dwarfing many countries’ money supplies, it’s almost impossible to know with certainty what the effect of any monetary decision will have on a local economy-let alone on the world.

Inflation and unemployment have become the yin and the yang of the 21st- century economy. When one rises, the other tends to fall. Although neither is perceived as good, in recent years, inflation has become the dominant preoccupation of economic decision makers. It used to be that reports of a surging economy brought euphoria to the markets. If factories and businesses were producing at full capacity and everyone had a job, the markets would greet the news with approval, confident that in a booming economy, everyone would be better off. However, after the severe inflation scares of the past decades, with prices rising out of control in many countries, leaders realized that an economy growing too quickly can be too much of a good thing. Reduced unemployment means that companies are forced to pay higher wages for scarce workers, and prices of goods and services need to be raised to pay for the increased cost.

In a booming economy, inflation can grow quickly as consumers and businesses begin to compete for increasingly scarce goods and services- and scarcity leads to higher prices. The result is usually a vicious circle of wage and price increases that end up hurting almost everyone- especially those on fixed incomes, who see their buying power decline when prices rise.

The international markets watch each country’s inflation rate carefully- always on the lookout for signs that an economy is stalling or overheating. International investors, including gigantic pension funds, hedge funds, and international banks, move billions and sometime trillions of dollars, pounds, euros, and yen around the world on any given day, looking for the best return on their investment. When a country’s economy looks like it is growing too strongly, and inflation is about to rear its ugly head, international investors can move their money out of an economy at a moment’s notice, preferring to invest their funds in countries with more stable economic growth and low inflation.

Just as a prudent driver keeps an eye on the road ahead, a country’s central bank tries to keep the economy on a steady course. Central bankers need to look at all the economic data, such as factory orders, housing starts, consumer credit, retail sales, manufacturing, construction and employment figures-some of which are leading and some of which are lagging indicators-in an ongoing effort to keep the economy from overheating or sliding into recession.

A Guide to Buying and Using Travel Insurance

Is Travel Insurance Really Necessary?

Travel is already expensive enough, isn’t it? The cost of air fare, cruises, hotels, ground transportation, food and activities and entertainment are already high enough. I don’t know about you, but I work hard for my money, and when I travel, I want to keep as much of my money in MY pocket as possible. Is travel insurance a necessity or a luxury? Why not cut a few corners here and there. Why buy something if it’s not really needed?

My personal answer is, of course, that I am not independently wealthy and can’t withstand the potential financial losses I would incur if I require medical care while I’m traveling. Not being independently wealthy also means that I’m in the market for adequate but cheap travel insurance. I suspect that you are in the same position, so you, too need cheap travel insurance. If you’re still not sure about that, consider the following.

Did you know that if you get sick or are injured while traveling abroad, your medical plan may not cover all the expenses you will incur? If the costs of treatment are higher than the maximums of your medical plan, you will be responsible for the difference, unless you have already purchased travel insurance. In fact, you may not even be admitted into hospitals in some countries without proof that you have health or medical insurance.

This is true for everyone, regardless of age or length of time abroad. Suppose you fall ill just a few hours after arriving at your destination. Or suppose you make a day-trip to another country, and you are injured in a traffic accident. Or suppose one of your children is part of a group making a class visit abroad, gets food poisoning and requires hospitalization. In all cases, without adequate travel health insurance, you will be responsible for the costs above and beyond the limitations of your existing medical plan.

Therefore, before going abroad, you need to make sure that you are adequately covered by travel medical insurance that won’t break your budget. You should check to see if appropriate coverage is already available to you through your medical plan, employee benefits, or even through a credit card. If the coverage is sufficient for your needs, then you can enjoy your trip without incurring the extra expense of travel insurance. However, if you are not sure of your coverage, or if your coverage is inadequate or non-existent, then your next step should be to research and purchase the travel insurance coverage you need.

How Much Can You Expect To Pay?

When I bought my first plane ticket to China a few years ago it cost around $2000 round-trip, and my travel insurance cost me over $500 because I didn’t shop around for cheap travel insurance online.

A few years later, a little bit older and wiser, and my travel insurance for another trip to China cost me much less–about $300 for roughly the same coverage. The difference? Before buying my travel insurance for the second trip, I shopped around online and got the coverage I needed, at the right price. If I’d have purchased my travel insurance for this latest trip from my travel agent, it would’ve cost me about $600 for the trip, and my plane tickets only cost $1,500! Not exactly the smart way to go.

So how much will it cost you? Not as much money as it will cost you if you get sick or injured abroad and you don’t have any travel insurance coverage! That’s the obvious answer to the question.

In fact, how much travel insurance costs will depend on your age and the type of coverage you choose. Basic policies cost as little as $5.50 USD per $1000 of coverage. On the other hand, you can expect a full coverage policy to cost you from 7 to 10% of the cost of your trip, depending on your age. The older you are, the more you will pay. No matter what the cost of the policy, however, it’s sure to be much less than the cost of medical evacuation!

The good news is that you can easily, conveniently and quickly research and locate excellent but cheap online travel insurance and reduce the costs while making an informed purchase. This is much better than taking what you are offered at the travel agency because you can choose from hundreds of travel insurance companies and polices and save yourself a lot of money in the process. One place you can start your search is at Travel Insurance Central, [http://www.travel-insurance-central.com]

What You Should Consider When Buying Travel Insurance

To assist you in your research, here are some suggestions to help you make an informed purchase.

1. Consider the worst-case scenario. If you can financially withstand the worst-case scenario then maybe you don’t need travel insurance or maybe you don’t need a comprehensive policy.

2. Make sure the policy you are considering provides adequate medical/dental coverage, including medical evacuation coverage just in case you need medical care in a place where the best treatment available is below the standards you are accustomed to in your country. This can happen if you fall ill in a developing country or even on a cruise ship.

3. Check your existing insurance policies for possible coverage. There is no sense in paying more for what you already have in your homeowner or tenant policy, such as theft and loss coverage.

4. If you are a frequent traveler, you should consider annual or year-round travel insurance policies. Sometimes they are called multi-trip travel insurance policies. Whatever the name, these policies can be relatively cheap when compared to single-trip travel insurance policies.

5. Know what you are buying, so read the fine print. Make sure that you understand what the company considers to be a legitimate reason for cancellation or interruption. If the list is too restrictive, maybe you should consider another policy.

6. Don’t restrict yourself to buying only from your travel agent. He/She will probably only have one company’s product(s) available, and it’s there for your convenience, but that convenience can be quite costly!

7. Ask lots of questions about the coverage. Play the “what if” game. Ask for clear explanations of terminology. Make sure that you and the travel insurance company are speaking the same language.

8. Don’t buy the insurance through your transportation provider. If the airline goes bankrupt, how adequate will your insurance coverage be?

Once You’ve Bought Your Travel Insurance

Remember that your travel insurance policy covers you between certain specific dates, so don’t start your trip early or extend your trip without first changing the dates of coverage on your travel insurance policy. Of course, this might cost you extra, but that’s cheaper than finding yourself without coverage when you need it the most.

Also, it almost goes without saying that you should bring your travel insurance policy with you when you go abroad. You can’t consult the policy if it’s sitting on your desk at home. You should also carry your travel insurance company’s toll-free assistance phone number and other contact information with you wherever you go. It does you no good if you get ill or hurt and the necessary policy information is sitting in your hotel room. It’s also a good idea to bring your regular medical coverage cards and info with you.

I hope these tips will help you by the best travel insurance for you. Then take your trip with the peace of mind that comes from knowing that you are insured by the right travel insurance policy at the right price. Bon voyage!

Finding Great Central Heating Insurance Deals on the Net

If you run your own business then you obviously have to make sure you are covered for all sorts of things. Firstly of all, you will want to make sure you are never liable for anything in the work place, which means having a very good insurance policy, but once people have this very obvious insurance policy in place, it is not uncommon for people to forget about other insurance policies which could protect their businesses.

One such policy is central heating insurance. It is an easy thing to overlook. You have a decent heating system, and that is all there is to it for most people, but remember that if it all goes wrong, it can cost you thousands of pounds to put it right. Even if you have a small problem, you can end up paying hundreds of pounds for the call out alone, and that disregards the potential cost even for small parts.

The best thing to do is to go on the internet and track down a great insurance policy for your heating system for your business. You will be best served by visiting the comparison sites online which will help you to assess a range of different quotes. By doing this you should be able to find the best priced and most comprehensive policy for your individual business. You obviously have to match quality with value, because the last thing you need in a professional set up is to be without heating for a prolonged period of time. This means finding an insurance company who is going to be able to react quickly and efficiently to any problems you might have.

Once you have this sorted out you are in a position to look at a few other things related to your electricity prices and energy bills. As a business electricity user you should be able to find some pretty good deals for your electricity, and it is again important to search for these online and use the price comparison guides. You will find some big sways in terms of the prices that are available, so make sure you know the ins and outs of your unit price for your current deal so that you can be sure to find a better deal.

Running a business is never easy, and failing to do things like insuring your boiler system is really unforgivable. It is all about protecting yourself from difficult costs further down the road. Many businesses are struggling out there these days, so it is important to consider just how debilitating it could be for your business to have to fork out thousands of pounds to replace a broken boiler and heating system. It is better to deal with the small outlay of insurance every month, safe in the knowledge that if anything does go wrong, you are covered.