Replies to post #12816 on FinancialAdvisor's College Class (FACC)

[FinancialAdvisor]

Federal Reserve Release

Press Release
Release Date: November 1, 2005

For immediate release

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4 percent.

Elevated energy prices and hurricane-related disruptions in economic activity have temporarily depressed output and employment. However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas. The cumulative rise in energy and other costs has the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis point increase in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.


LINK: http://www.federalreserve.gov/boarddocs/press/monetary/2005/20051101/default.htm

[QuickTrade]

Taking a Drive into the Future...or Now?

The Honda FCX leased by Jon Spallino gets the hydrogen needed to power its fuel cells from a station at Honda's American headquarters in Torrance, Calif.

http://www.nytimes.com/2005/11/02/business/02hydrogen.html?adxnnl=1&adxnnlx=1130938356-V8A/G6oFB...

Beyond Gasoline
Taking the Future for a Drive

By DANNY HAKIM
Published: November 2, 2005

LOS ANGELES - You would never guess that Jon Spallino drives what is probably the most expensive car in this city known for automotive excess. Or that he is the world's most technologically advanced commuter.

"When the cars pull up to me, the Porsches and the Bentleys and all that, I just sort of say, well, that's nice, but for what this costs I could buy 10 of those," said Mr. Spallino, while driving up Interstate 405, the freeway from his office in Irvine toward his home in Redondo Beach.

He was at the wheel of his silver Honda FCX, a car worth about $1 million that looks like a cross between a compact - say, a Volkswagen Golf - and a cinder block. The FCX is powered by hydrogen fuel cells, the futuristic technology that many automakers see as an eventual solution to the world's energy woes, though its real potential is a subject of vigorous debate inside and outside the auto industry.

Mr. Spallino, a 40-year-old executive at a California construction and engineering firm, and his wife, Sandy, have been leasing the FCX for $500 a month since July in one of the more unusual experiments in the auto industry's history.

The Spallinos, including daughters Adrianna, 11, and Anna, 9, "aren't just the first fuel cell family on their block," as one Honda ad recently put it. "They're the first in the world."

So grandiose is the experiment that Honda has made arrangements with a distributor of hydrogen to have a refueling station built near the Spallinos' house. Not that they can use it. The local fire department, wary of this elemental zeppelin gas, has yet to let the station open.

So the car is being refueled at Honda's American headquarters in Torrance. Putting compressed hydrogen in a car sounds more like putting air in a tire than filling up with gas.

Honda is also working on upgrading an existing station that is near Mr. Spallino's office, and California is financing refueling stations to form what is called a "hydrogen highway" in the state.

Honda has been a pioneer in bringing advanced technologies, like hybrid electric cars, to consumers. While every major automaker has built a fuel cell prototype, Honda's is the only one that has been crash-tested.

Why did Honda pick the Spallinos? Mr. Spallino was already one of a few thousand owners of a Civic that runs on natural gas; filling one up is not unlike refueling the FCX. He also lived near the company's headquarters, and its refueling station. And the normality of the Spallino family appealed to the company, which wanted to see how the vehicle held up under the stresses of family driving.

"I use it for everyday life," said Sandy Spallino, 40, who also drives a Ford Taurus station wagon. "I go to the market in it, I take the girls to school in it, I take them to soccer, just little one-mile jaunts here and there."

Ben Knight, a vice president for research and development at Honda, said making the Spallinos pay to be guinea pigs was done to make them more critical.

"The feedback from these consumers will be very astute," he said, adding, "an individual that is paying out of their own pocket for a vehicle will be very conscious of the value received, and the vehicle limitations."

Fuel cells have been around since the 1800's; they were used to provide internal power for the Apollo spacecraft, as well as drinkable water for the astronauts. Cars powered by fuel cells are electric cars that do not rely on batteries, but instead generate their own electricity. Fuel cells combine hydrogen and oxygen from the air in a chemical reaction, with water vapor as their only emission, at least from the tailpipe.

If that sounds utopian, many think fuel cells are ill-suited to power cars.

"We're either talking several decades or never," said Joseph J. Romm, an assistant energy secretary during the Clinton administration, referring to the likelihood of fuel cells' supplanting internal combustion engines in cars. Though Mr. Romm pushed for financing of hydrogen research in the mid-1990's, he has since become deeply skeptical of its prospects, to the point that last year he published a book titled "The Hype About Hydrogen."

General Motors is most bullish on the technology.