Word: discounters
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Dates: during 1960-1969
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While publicly faulting the Federal Reserve for kicking up the discount rate last December, Johnson was privately happy that the Fed could take the rap for any restraints. The price of money has inflated dramatically. Since 1964, the Treasury's three-month bill rate has climbed from 3.5% to a high of 4.6%, and the prime rate for top corporate borrowers has soared from 4% to a record 51% . By leaning too hard on monetary policy and taking it easy on tax policy, the Government has further distended and unbalanced the economy. One result: many investors have shifted their...
...beleaguered auto industry last week came under stress from a new quarter-with serious implications for its nationwide dealer-franchise setup. In a unanimous decision, the Supreme Court ruled that General Motors and three Chevrolet dealers' associations, in fighting discount-house car sales in the Los Angeles area in 1960-61, had violated the Sherman Antitrust Act in "a classic conspiracy in restraint of trade...
When the case was first tried in a Los Angeles federal district court in 1964, G.M. won by arguing that, according to the terms of their franchises, dealers could not open "branches" without G.M.'s permission-and that, in effect, the discount operations constituted branches. Thus, G.M. reasoned, it was only enforcing a legal contract, not restraining trade...
Housing's chief woe, of course, is a shortage of mortgage money more severe than at any time in the past 30 years. It began when the Federal Reserve, to fight inflation, boosted the discount rate last December. It has rapidly worsened in recent weeks as commercial banks have bid up interest rates on savings, thereby luring huge deposits away from such major sources of mortgage loans as savings and loans and mutual-savings banks. For lack of funds, several savings banks in Massachusetts, a traditional source of housing loans for the capital-shy South and West, have stopped...
With mortgage money as costly as it is now, the only way builders can persuade lenders to make 5¾% FHA loans at all is to pay them a 5?; penalty on every borrowed dollar. Though FHA theoretically prohibits builders from passing that 5% "discount" on to home buyers, the industry has long since learned how to hide such costs in the sale price of its product. In the sale of existing homes under FHA, the "discount" inflates prices almost automatically because the seller must absorb the entire amount...