Word: discount
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Dates: during 1980-1989
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According to Government figures, 76% of American households do some snipping and clipping. More than 1,000 manufacturers now use these discount devices, spending at least $1 billion a year in payouts and redemptions. Some 100 billion coupons will be circulated this year in newspapers, magazines and direct-mail bundles. Not all of them are authentic, it seems. The Chicago Tribune reported last week that it had uncovered evidence of widespread theft and counterfeiting of newspaper coupons and special inserts...
...must carry the cost of the goods he has already sold and shipped. To get his money earlier, an exporter often negotiates a short-term bank loan. The bank then stamps the note ACCEPTED, which guarantees repayment even if the borrower reneges, and sells the document at a discount on New York's short-term money market. Many millions of dollars in such-notes are sold daily in New York, and last week they yielded interest rates as high as 19%. As confirmed by Peck, Wiggins apparently operated a disarmingly straightforward scheme. First, he dreamed up a borrower...
...central bank moved swiftly to counter the expansion in the money supply. On Monday it raised its discount rate from 13% to a record 14%. Banks that borrow from the central bank to meet their own reserve requirements will now have to pay that rate, plus a 4% penalty if they borrow too frequently, bringing the total cost of funds to some banks to 18%. At the same time, the central bank allowed the federal funds rate, the interest charged by banks on overnight loans to each other, to rise above 20%. The hoped-for result of last week...
Laudable though these goals may be, the Fed's action was not joyously welcomed on Wall Street, where investors have much the same attitude toward escalating interest rates as W.C. Fields had toward children and small animals. The day of the discount rate hike, the Dow Jones industrial average plunged 16 points; the next day it lost another 7. There was some recovery as the week wore on, and the Dow closed Friday at 976.40, still well below its high this year of 1024, set only a few days before the discouraging money-supply report...
...meaningless as a guide to what most borrowers-big or little -actually pay. The report, which mainly addresses the prime rate's application to business borrowing, found that it rarely applies to large, profitable corporations. They can usually borrow money at three to four points below prime, a discount reflecting the importance of the volume of their business with their banks...