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8:30 AM Wednesday, August 10, 2005: The Fed yesterday lifted its target for the federal funds rate for the tenth time by 25 basis points to 3-1/2 percent. Here's what it's looked like:



What does this rate-hiking mean?

1. It doesn't mean long-term rates -- like what you borrow on a mortgage -- are going up. These rates are determined by the supply of money. And right now there's plenty of money to lend you and me.

2. It doesn't even mean that all short-term rates are going up. For example, with my uninvested cash, I buy short-term, triple tax-free muni bond floaters. I buy them through Smith Barney. These things reset every week. Here's been my recent history:
8/03 2.05%
7/27 2.31%
7/20 2.36%
7/13 2.30 %
7/06 1.91%
Thanks to Smith Barney's Seth Wernick for the chart. The rates have been as high as 2.90% in the past year. I don't see much of a trend. I have, however, managed to badger my savings bank into paying me more, using the Fed's rate hikes as "justification."

3. With the Fed lifting at the low end and the top end not rising, this has got to be bad for banks. Hence their obsession with "fees." This is not the time to be invested in banks.

The double good news is that the economy is getting stronger and inflation has stayed moderate. This is what the Fed actually said yesterday. It's typical economist-speak, meaningless mumbo-jumbo.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually. Core inflation has been relatively low in recent months and longer-term inflation expectations remain well contained, but pressures on inflation have stayed elevated.

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.

Two ways I use to avoid all of the ridiculous foreign currency surcharges: From Minneapolis reader, Jason J. Dalebroux:
1. Join a credit union and open a checking/savings/money market account with an ATM card. My small credit union does not charge me ANY ATM fees. ZERO. Recently, I spent a few weeks in Europe and never once paid any fees. I searched for ATMs there where the host bank or institution did not charge any fees either, so I took out cash pounds or euros at the market exchange rate for the day and nothing more. In fact, with all of the other ridiculous banking fees showing up from time to time on my monthly bank statements, I always threaten to close all accounts and permanently move everything to the credit union. The fees are ALWAYS dropped. My war with the large national chain banks continues.....their only advantage is online services that small banks and credit unions cannot offer.

2. I have an AMEX Corporate Card for business travel that does not charge any additional fees for foreign currency transactions. The bill comes to my home address, and I can use the card for non-business transactions. This works well in Asia, but not so well in Europe, where many businesses do not take AMEX.

Paris reader, Patrick Bullot writes: “To avoid these hefty charges, best is to have an bank account in France in Euros. Also do not buy anything in France. Things are much cheaper in the U.S. Also be aware you cannot return merchandise that easily in France.

For more on these fees, see yesterday's column. Click here.

Remember Baidu.com (BIDU), the Chinese Google. It came public on Friday at $27 and then went crazy as every day trader and their uncle bought, sold and generally amused themselves. This was the chart I published yesterday. I said don't go near this thing. Far too insane. Small float. Crazy valuation. This is what's happened so far.

Buy yourself a Manhattan pied-à-terre: Here's a suggestion. Only $50 million to buy and another $10 million to fix up. That works out to $3,000 a square foot when it's all done. The house is on the corner of Fifth Avenue and 82nd Street.

Vincent Laforet/The New York Times
The Duke Semans Mansion has 20,000 square feet of space.

Here in Kentucky, you don't see too many people hang-gliding.
Bubba decided to save up and get a hang glider. He takes it to the highest mountain, and after struggling to the top, he gets ready to
take flight. He takes off running and reaches the edge. Into the wind he goes.

Meanwhile, Maw and Paw Hicks were sittin' on the porch swing talkin' bout the good ol' days when Maw spots the biggest bird she ever seen!

"Look at the size of that bird, Paw !" she exclaims.

Paw raises up," Git my gun, Maw."

She runs into the house, brings out his pump shotgun. He takes careful aim. BANG! BANG! BANG! BANG! The monster size bird continues to sail silently over the tree tops.

"I think ya missed him, Paw." she says.

"Yeah," he replies, "but at least he let go of Bubba!

Recent column highlights:
+ Manhattan Pharmaceuticals: Click here.
+ NovaDel Biosciences appeals. Click here.
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell your stocks. Click here.

Harry Newton

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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