7/24/2012
Perhaps no two words in the entire expanse of economics
Any attempt at clarity of thinking must start by ensuring the use of proper words. It is said that when Winston Churchill became Prime Minister of Great Britain during the Second World War, he issued a circular that exigencies of war and critical state with which the country was faced made it of prime importance that exactitude of impression should be given high priority. In his view war could not be won without writing correct English, of which he himself took particular care. Whatever be the relationship between writing correct language and winning a war, the evolution of any science, any systematic development of thought, must become stunted by misuse of words, particularly the key ones.
Perhaps no two words in the entire expanse of economics are of a more cardinal importance to the evolution of any variety of socio-economic philosophy than the words 'interest' and 'profit'. No distributional analysis or validity of any particular factor payment can be visualized, much less established or repudiated without clear demarcation between these two categories. This is in particular is the case in relation to these two words because, because most question marks in the history of economic thought have been raised in relation to interest, and with the evolution of socialist thought the doubts and dissatisfaction with distributional justice have tended to shift the target of denunciation to profit. No one can either accept or repudiate any point of view, or avoid slipping over the judgment to an area other than the one to which he may like to confine it, so long as demarcation between interest and profit is not clearly visualized and adhered to. It was for this reason that Schumpeter regards confusion between these two terms as a fundamental error. Surprisingly, capitalistic economics is as eager to confuse the two terms as is the socialistic one. Both have something which they are equally eager to hide, though for very different, even opposite reasons. Let us first see how at times, capitalistic economists misuse the word 'profit' for interest, and on occasion even the word 'interest' for profit.
The trouble starts with Adam Smith himself, who rightfully distinguishes interest as a separate economic category, but also designates interest as 'profit' and the rate of interest as the 'rate of profit' and the natural rate of interest as the 'natural rate of profit'. Not only does the father of political economy confuse the two terms, but many who came after him also commit the same mistake. The story of capitalistic economy ends with the Samuelson, as competent and dependable an economist as anyone. He uses the 'profit' as many times for what it means as for the entirely different meaning of 'interest'. He closes the discussion by declaring that there is virtually no difference between profit and interest.
Capitalistic economists are not alone in committing this mistake, for the position of socialist economists is no better. This common confusion in both the systems of economic thought has hurt them equally grievously, persuading capitalistic economists to justify both profit and interest and the socialist ones to reject them both without any persuasive analytical reason to herd them together.
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In such a situation it is not a matter of surprise that billions of dollars
While economists may be willing to concede that their institution of interest, generally, and that of its validity, social implications, and public policy projections in particular, leaves much to be desired, they in practice assume the amoral stance of accepting what exists. Haberler states that 'the theory of interest has for a long time been a weak spot in the science of economics', but little fundamental analysis of this persistent confusion and how it can be overcome is available. One of the major stumbling blocks is the confusion which exists to this delay between profit and interest. There has been a consistent blurring of socio-economic objectives dictated by enforced identification between profit and interest, which is only partially reflected in the frequency of misuse of the word 'profit' in the meaning of interest. This loosens our grasp on issues relevant to distributional justice and deprives us of the capability to identify or analyze, much less overcome, exploitative manifestations which prima facie, appear to flow primarily out of one of these two categories. The confusion between interest and profit, and the misdirection of public policy which this confusion entails, is the fundamental support on which the entire superstructure of various economic disequilibria rests. In any social arrangement in which both nectar and poison are equally available and equally valued to the extent that the word 'nectar' means both what it should and also its opposite, the likelihood of healthy survival of that community cannot exceed 50 percent.
In such a situation it is not a matter of surprise that billions of dollars are spent on curtailing agricultural production while millions die of hunger and malnutrition every year, nor that unemployment is so pervasive notwithstanding endless unsatisfied human wants, nor the situation that all our efforts to overcome it only inflict inflation without creating an enduring dent.
Until we know what is the difference between profit and interest and insist on keeping their substantially antithetical significance under proper spotlight, we cannot have an answer to the endemic friction between growth and stability, we do not have it. We cannot have an answer to the problem of unemployment, not the limping ones of which we have any number, but the two-legged one which may ensure its extinction, and we do not have it. We cannot have a real answer to the problem of inflation, and we do not have it. We cannot have an explanation for the coexistence of the vast installed capacity of idle machinery and of unsatisfied demands that the working of inactive mills could have met, and we do not have it. We cannot explain the trade cycle, much less overcome it, notwithstanding our success in containing its amplitude, but the areas of uncertainty and unawareness refuse to shrink. We cannot explain or overcome the plight of the Third World, unless we know what interest has done to it. The fact is that no creative macroeconomic policy formulation is possible without our understanding of the role of interest, in contradistinction from that of profit. Without delineating the difference between these two, theoretical appraisal would be as sterile as any enunciation of public policy, regardless of which compartment of economics we are dealing with at a given point of time. Policies relating to consumption, production and distribution directly, and the ones relating to exchange indirectly, hinge on the understanding of this differentiation and clarity of its comprehension.
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If you are looking for any type of loan, it is a great idea for you to learn about using loan directories. These internet pages are helpful in a variety of ways to keep you updated on current information and help you find the perfect loan for you. Here we will look at what you can find in an online loan directory website and why it is will benefit you to keep them in mind.
Types of Loans
There are many types of financial arrangements listed in a loan directory site. You can find information about banks that are offering mortgages, personal and payday loans. If you want to buy a car, you can find one for automobiles. For students, there is information about getting enough money to go to the school you truly want. For the adults, there is information about financial assistance that can help you buy a home or work with bad credit. You can find out about getting help with credit cards or borrowing money to start your small business off on the right foot.
There is really no end to the amount of things you can find financial help for. The problem with going to a site that just has information about auto financial help, for instance, is that if you are also looking for information about purchasing the home of your dreams you may need to keep finding other websites with virtually no end to the search. The online loan directory can help you to do quick searches and see a wide variety of companies with a single webpage.
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You can also have an easier time staying updated with an online loan directory website. You can sign up for mailing lists and bookmark the pages in your browser so that you can check back often to see what developments are being made. Perhaps the arrangement that you could not file for became more available or there is a new kind of financial help available that interests you.
There is no end to the information that comes out on the internet and an online loan directory can help you to get all the different types of information in one place. This is especially useful if you are looking for different kinds of financial assistance at once.
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It is also important to keep in mind that online loan directories are not for everyone. If all you need is help buying a car, then you might indeed find yourself in a better position to just go to a website focused on financial help for automobiles. The bonus of an online loan directory is that you have many types of information at your fingertips. This is primarily useful only if you need all these different types of information.
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With the market conditions the way they are and the global economy
With the market conditions the way they are and the global economy as unstable as ever, it's very to hard to know which direction interest rates are heading and for how long they may be heading that way...Never have we had such a time where outside influences in the world can effect our economy here at home. Sure, there are expert opinions in the media, however we all know how wrong some of these experts can be...
So let's look at the basics of each. A fixed rate is exactly that...FIXED, for a period of time that you choose. You are betting on interest rates rising and being higher than your fixed rate for the amount of time that is beneficial to you in saving on interest had you remained on a variable rate. A fixed rate often has a premium built into the rate, sometimes two rate rises in fact. So if you choose this, you are in a way betting that the interest rates are going to rise twice and then keep rising so you will recoup the additional interest you had been paying when the variable rate was lower. Trying to time the rises or when to fix can be very difficult as in trying to time anything perfectly. However, in such unstable times there are some very competitive one and two year fixed rates out in the marketplace.
A variable interest rate loan is one that rises and falls over the term of the loan. The term of the loan is very long and we know that rates are going to rise and rates and going to fall but as with most things they tend to even themselves out. This is why I prefer a variable rate because trying to time the market is very difficult. I would not want to fix my loan when rates are high, only to them fall and be stuck with a fixed rate paying higher interest. Which brings me to my next point which is flexibility.
Fixed rates are often less flexible and can occur fees and penalties if paid off quickly, where as a variable rate has more flexibility in this aspect. If timing is poor, then you may find yourself stuck with a fixed rate when the variable rates are far lower. Of course, on the other hand you may be in a winning position. You may have a low fixed rate and be set with that while the variable rates are rising. This is a great position to be in..
A third option is to hedge your bets and split your loan into both a fixed and a variable portion. You can make additional repayments on the variable portion while leaving part of your loan fixed. In these unstable times, this is a great option to think about.
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There are many reasons why you would want to use an online free loan
When you want to get a loan it is great to know about is the use of a loan payment calculator. This handy internet device can help you with planning out your bills and understanding what it really means for your tomorrow to take out a loan today. Here we will talk about some of the things that are involved with using a loan calculator as well as why you would want to use one.
The Information
You will need some information on hand when you use a loan payment calculator. You will need to know the amount that you would like to borrow, as well as whether you want a fixed or variable loan. You will also need to have the period of time in which you want to repay the loan and the frequency of your payments. You will also need to know the interest rate of the loan you want to get.
When you type in this information into the loan calculator, they will be able to tell you what your payment amount will be. Some of them will also tell you the amount that you have ended up paying over the course of the entire loan including the interest and the principle. There are many different kinds of loan calculators that will help you to find out different sorts of information.
The important thing is to find the loan calculator that most meets your needs for the information you need to find out. Since there are so many free loan calculators, you will surely be able to find one that requires the information you have on hand and gives you the information you want.
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Some banks will offer special services that you can also find out the cost of with the loan payment calculator. The Royal Bank of Canada, for instance, has an option to add LoanProtector life and disability insurance coverage to the loan, which might be something you are interested in. Different banks may have different features you can find on their loan payment calculator website.
Types of Loans
You can use a loan calculator on any type of loans provided you make sure that the calculator you find is applicable to that type of loan. They also each have slightly different information that is required to be input depending on the type of loan you are calculating. There is an abundance of free loan calculators on the internet that you can use.
There are many reasons why you would want to use an online free loan calculator. They can help you find out the amount you will pay over the course of the loan, help you to figure out your monthly payment depending on the length of time you want to pay and generally help you to figure out the best way to work with your finances. When you are considering taking out a loan, using a free loan calculator is a great idea to help you see the long-term realities of your loan.
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with which the mortgage lending industry is particularly interested.
Amid the frenzy surrounding implementation of new Loan Officer Compensation rules, on March 29, 2011 the mortgage industry received the first of two major regulatory proposals issued in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The proposed rule is a first look at details of the hotly debated "skin-in-the-game" requirements included in Dodd-Frank. Pursuant to these requirements, "sponsors" of asset-backed securities must retain 5% of the credit risk associated with a security's collateral. In addition, Dodd-Frank exempts certain types of securitization transactions from these risk retention requirements-among them, securities collateralized exclusively by "qualified residential mortgages." The proposal also sets forth definitions for such key terms as "qualified residential mortgage" with which the mortgage lending industry is particularly interested.
Importantly, the proposed risk-retention rules permit "securitizers" to allocate a portion of the credit risk which must be retained to the originators of the securitized assets. Because this definition of "originator" refers to the person that creates a loan, only the original creditor of a loan (not a subsequent purchaser) is an originator for the purpose of this rule. As a result of the potential allocation of risk to original creditors, the mortgage lending industry has a vested interest in the final rules governing risk-retention requirements and should take the opportunity to review the proposal in its entirety and submit comments. Below are key points regarding the proposed definition of "Qualified Residential Mortgage" which, since no risk will be allocated to the originator of such assets, is of particular concern to creditors seeking to avoid risk-retention altogether.
Qualified Residential Mortgage (QRM)
Dodd-Frank requires the definition of QRM to be "no broader than" the definition of "qualified mortgage" set forth, ironically, in the later proposal issued on April 19, 2011.
Since sponsors of asset-backed securities collateralized exclusively by QRMs will be exempt from risk-retention requirements entirely, the proposed definition is intended to ensure that such mortgages are of very high credit quality.
Whether a residential mortgage is a QRM will be determined at or prior to origination of the mortgage loan. The proposal allows for modification of an individual QRM loan after securitization without jeopardizing the QRM status of the loan in order to promote appropriate loan modification.
QRM eligible loans must be a closed-end, first lien mortgage or refinance of a one-to-four family property (at least one unit must be the borrower's principal dwelling).
A mortgage loan may qualify as a QRM only if the originator verifies and documents within 90 days prior to closing that the borrower satisfies the following credit history requirements: not currently 30 or more days past due on any debt obligation; not 60 or more days past due on any debt obligation within the preceding 24 months; and, not a debtor in a bankruptcy proceeding, not subjected to property repossession or foreclosure, not engaged in a short sale or deed-in-lieu of foreclosure and not subject to a federal or state judgment for collection of unpaid debts within the preceding 36 months.
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Since many typical creditors demand collaterals as well as a good credit score
Everyone is aware of the potential risks of having a poor credit score when getting personal loan - mainly because of its excessive charges set, and several might think that it's not really worthy of to try to get this kind of lending options. However, in a few anxious conditions where by cash is usually exactly the best solution of one's financial problems, you'd likely to end up searching for a magic pill to beat your own monetary difficulties or bad credit and try getting personal loan. Therefore, you have to take into account each and every option that could probably allow you to overcome your own financial difficulties even if you possess a low credit score.
It's totally challenging getting personal loan and cash from your financial institution in case your own credit ranking is very low and also you don't currently have any kind of collaterals in order to support the loan request.
In that case you actually critically need this kind of not-guaranteed unsecured loans terribly, this is exactly what you need to do:
Start off looking for non-standard bank financial institutions
Since many typical creditors demand collaterals as well as a good credit score - you need to look at a good not-guaranteed personal cash loan request through non-standard bank loan providers. It is advisable to locate as much non-bank loan companies as you possibly can to compare and contrast.
Begin a user profile looking into non-bank loan companies
Make sure that their particular business is trustworthy and also identified by Better Business Bureau (BBB). You may search for the actual trustworthiness of their total organization on the BBB's business listing based on their BBB score. Undoubtedly that you won't select a loan service which obtains a "F" BBB position.
Try to find feedback coming from previous clients
The normal method of finding reliable unsecured loans on the internet is trying to find feedback through internet discussion board customers. You will discover some people - specifically ex - clients of non-standard bank financial institutions, who're happy to reveal their own encounters such as the brands associated with genuine non-bank lenders, plus the personal loan specials which they choose. It is possible to observe their own article posts and enquire all of them the suitable queries.
Do you realize the primary needs of obtaining an unsecured loan with a bad credit or poor credit? - Usually this kind of lending options may need a guarantor. As long as they don't - it could be a scam!
What will be the financial loan bundles which are accessible if you have poor credit score or with no property? - It is easy to ask for an offer of numerous personal loan bundles before selecting the most beneficial one.
What is the price of the personal loan offer? - Stay away from any kind of loan providers which demand from their potential customers unusual advance as well as service charges.
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The difference between these two types of loans is clear
The two most common types of federally insured loans are FHA and VA loans. FHA stands for Federal Housing Administration and VA stands for Veteran Affairs. Each is a government agency that offers loans at low rates with little to no down payments, however, both provide different types of help.
What is the Federal Housing Administration (FHA)?
The Federal Housing Administration is a part of the Department of Housing and Urban Development created by congress in 1934 and later becoming part of HUD in 1965. It is the largest provider of insurance for mortgages in the world. The FHA provides mortgage insurance to loans done by FHA approved lenders for single family and multifamily homes which includes hospitals and manufactured homes. This is a more general home insurance program that most people can qualify.
What is Veteran Affairs (VA)?
Known formally as the United States Department of Veteran Affairs, the VA is a government ran military veteran benefit system. The second largest department in the US it provides veteran families and military personnel with low interest, no money down loans. These loans are insured by the federal government as a benefit to our veterans. This is a more specific home insurance program since only a veteran of the United States can qualify.
The difference between these two types of loans is clear, they are two different programs offered by two different government agencies. Each one has its own set of requirements and eligibility but ultimately if you qualify for a VA loan it is a better option due to the fact that there is the possibility of not needing a down payment. FHA loans can have a down payment as low as 3% of the purchase price, much less than the 20% down payment on a traditional loan. Although a VA loan can be received with 0% down, which is better than both a traditional and FHA loans. Also the lender fees are limited by the government on a veteran loan.
Although both types of federally insured loans are different they do share some of the same types of loans. Traditional loan types like fixed rate mortgages and adjustable rate mortgages (ARM) are available from both government agencies. Also, both loans also offer a lower rate than traditional mortgages, so the monthly payments are lower.
So the difference between a FHA loan and VA loans is clear, you just need to find out if you meet the requirements for one of these programs. Remember the VA offers a lower down payment and typically lower rates than the FHA so it is your first option, but if you have never served the military and are not a veteran then at the very least you should try for a FHA insured loan. These two federally insured programs can be your way into your first home or an option for refinancing your current mortgage for lower monthly payments.
Both options offer great benefits however if you are a veteran who is eligible for va loans then you should utilize this program since it offers the best incentives. If you are not eligible you should find an FHA mortgage lender in your area to find out if you meet the requirements for the Federal Housing Administration's program.
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