Biz Reporting

SEC investigating brokerage firms role in market selloff

2010-05-21T10:32:00.000-04:00

The New York Times - WASHINGTON — The enforcement division of the Securities and Exchange Commission is investigating whether market makers and brokerage firms fulfilled their legal obligations to provide liquidity in the markets by buying and selling stock during the sharp market drop of May 6, the chairwoman of the agency said Thursday.

The S.E.C. is also looking into whether market makers and brokers executed investors’ trades correctly.

Mary L. Schapiro, the S.E.C. chairwoman, said the agency was also considering whether to establish market participation mandates for professional traders like high-frequency traders who were not obligated to continue trading during periods of extreme market stress.

The comments came during testimony to the Senate Subcommittee on Securities, Insurance and Investment, which, like a House subcommittee last week, had called the leaders of various market regulators and exchanges to testify on the causes of the May 6 market plunge.

On May 6, stock prices fell by about 6 percent in a matter of minutes before recovering nearly as quickly. Earlier this week, the S.E.C. said that in reaction to the market tumult, circuit breakers would be installed for individual stocks in the Standard & Poor’s 500-stock index on a six-month test basis beginning in June. Those circuit breakers would halt trading for five minutes in stocks that fell or rose by more than 10 percent in a five-minute period.

Ms. Schapiro said the commission would also re-examine its rules concerning circuit breakers for the overall market, which were not tripped on May 6 because the Dow Jones industrial average did not drop by 10 percent. In addition to reviewing whether that percentage level was appropriate, Ms. Schapiro said, the agency would examine whether the trigger should be based on a broader stock index, like the Standard & Poor’s 500.

Gary Gensler, the chairman of the Commodity Futures Trading Commission, said that his agency would also examine its circuit breakers, as well as whether there should be new rules governing the use of computer-driven, or algorithmic, trading.

Mr. Gensler noted that while human traders could react to an unusual event like the one that occurred on May 6, computers simply did what they were instructed to do, repeatedly. That, he added, was part of the problem on May 6.

During the period of highest market stress on May 6, many institutional investors stopped trading, according to a review of the day’s trading activity by the S.E.C. and the C.F.T.C. .

Among those that legally stepped back from the market during that time were several of the firms that employ computer programs to trade millions of shares a second and that are usually the biggest providers of liquidity in the stock market.

Naked Truth on Default Swaps

2010-05-21T10:27:00.001-04:00

Great column on credit-default swaps by Floyd Norris. - MT

The New York Times - Should people be able to bet on your death? How about your financial failure?

In the United States Senate, Wall Street won one this week when the Senate voted down a proposal to bar the so-called naked buying of credit-default swaps. If that were the law, you could not use swaps to bet a company would fail. The exception would be if you already had a stake in the company succeeding, such as owning a bond issued by the company.

On the other side of the Atlantic, Germany announced new rules to bar just such betting — but only if the creditors were euro area governments.

None of this argument would be taking place if regulators had done their jobs years ago and classified credit-default swaps as insurance.

Credit-default swaps are, in reality, insurance. The buyer of the insurance gets paid if the subject of the swap cannot meet its obligations. The seller of the swap gets a continuing payment from the buyer until the insurance expires. Sort of like an insurance premium, you might say.

But the people who dreamed up credit-default swaps did not like the word insurance. It smacked of regulation and of reserves that insurance companies must set aside in case there were claims. So they called the new thing a swap.

http://www.nytimes.com/2010/05/21/business/economy/21norris.html

Close Call

2010-05-15T10:00:00.001-04:00

Last Wednesday, Arkansas Senator Blanche Lincoln took to the Senate floor and delivered about as fiery a speech as you’ll hear in the chamber, at least on the subject of financial reform. “Currently, five of the largest commercial banks account for ninety-seven percent of the [derivatives market],” she said. “That is a huge concentration of economic power, which is why I am in no way surprised that several individuals are seeking to remove it from the bill.”

The “it” these unnamed individuals were bent on removing is a provision Lincoln wrote that would force banks to spin off their derivatives business if they want access to federal deposit insurance and other safeguards. Lincoln stunned the financial world when she unveiled the hawkish proposal last month and promptly pushed it through the Senate Agriculture Committee, which she chairs. (Derivatives are essentially a bet on the direction of financial data, like bond prices and interest rates.)

Economy | The New Republic

More Corruption: Bear Stearns Falsified Information as Raters Shrugged

2010-05-14T18:35:00.000-04:00

The Atlantic - Made up FICO scores? Twenty-minute speed ratings to AAA? If government prosecutors like New York Attorney General Andrew Cuomo want answers to why the mortgage-backed securities market was so screwed up, they should talk to Matt Van Leeuwen from Bear Stearn's servicing arm EMC.
Reports indicated on Thursday that Cuomo is pursuing a criminal investigation surrounding banks supplying bad information to rating agencies about the quality of the mortgages they signed off on. But so far he hasn't been able to prove where in the chain of blame the due diligence for the ratings broke down.
What Cuomo needs to establish is: whose shoulders does it fall on to verify the information lenders were selling to investment banks about the quality of their loans? And who was ultimately responsible for the due diligence on the loans that created toxic mortgage securities that were at heart of our financial crisis?

False Information and the Grey Area
Employed during the go-go years of 2004-2006, and speaking in an interview taped by BlueChip Films for a documentary in final production called Confidence Game, Van Leeuwen sheds some light onto the shenanigans going on during the mortgage boom that might surprise even Cuomo. As a former mortgage analyst at Dallas-based EMC mortgage, which was wholly owned by Bear Stearns, he had first-hand experience working with Bear's mortgage-backed securitization factory. EMC was the "third-party" firm Bear was using to vet the quality of loans that would purchase from banks like Countrywide and Wells Fargo.
Van Leeuwen says Bear traders pushed EMC analysts to get loan analysis done in only one to three days. That way, Bear could sell them off fast to eager investors and didn't have carry the cost of holding these loans on their books.

Jim Cramer During the Market Meltdown

2010-05-10T07:50:00.002-04:00

YouTube For Traders - Searchable News Video Streams

2010-05-10T07:50:00.000-04:00

One reason why local TV can start packing its bags. Video will be big and dominate the landscape, but it will be video streamed via the Internet as NYT media writer David Carr points out in this column. Journalism schools need to start training students for this market. -MT

New York Times -For half an hour last Thursday afternoon, CNBC was the most exciting place on television. Watching Erin Burnett and Jim Cramer try not to freak out — they acquitted themselves nicely — while the market tumbled like a drunken rag doll down a long staircase was amazing television, David Carr writes in The New York Times.

The rest of the time, as when the market is not suffering the largest drop within a single day of trading? Um, not so much. Even if you are an avowed business bobble-head, most of the time, CNBC and other financial channels are a kind of wallpaper. Business people mostly live in narrow verticals. If you follow and trade in uranium, it’s not going to pop up all that often on the linear channels of television.

So Thomson Reuters is trying to change television. Its new product, Reuters Insider, is a Web-based video service that captures myriad streams of information produced by the company’s reporters and 150 partners. The service, which will begin Tuesday, is something like a You Tube for the financially interested, albeit one that is available only to Reuters subscribers, who pay as much as $2,000 a month.

Using the main window of the service, called Channel One, subscribers can navigate by sector, date, markets or region, or apply filters to create their own personalized channels.

Thomson Reuters, which was formed in a merger in 2008, creating a $30 billion behemoth in financial news and information, is making a big bet on Insider, about $100 million. While its chief competitor, Bloomberg, is making inroads into consumer media with its purchase of Businessweek, Thomson Reuters is going in the opposite direction.

Why try to sell advertisers on a broad television network when you can get subscribers — investment banks, analysts, market players — to pay and pay dearly for the information ginned up by 2,800 reporters from 200 bureaus around the world, not to mention lots of other technical business intelligence from a curated group of partners?
The effort also tells us something about the place online video now occupies. “The trend that we are seeing in professional information is not all that different than consumer media,” said Devin Wenig, chief executive for the markets division of Thomson Reuters. “People are increasingly visual, and they expect to access information in that way. They want to be able to look at a chief executive and see the expression on the analyst’s face.”

Of course, just about anybody could go out on the Web and find gobs of people spouting off about financial matters. But Reuters Insider also produces almost real-time transcripts through voice recognition technology — the renderings are pretty rough, but useful — and then humans come behind and clean up some of those transcripts, while adding additional tags, links and other relevant information.

Exxon Valdez Lessons

2010-05-08T08:31:00.000-04:00

Regulators Warnings Weren't Act On

2010-05-08T08:24:00.000-04:00

WASHINGTON — Federal regulators warned offshore rig operators more than a decade ago that they needed to install backup systems to control the giant undersea valves known as blowout preventers, used to cut off the flow of oil from a well in an emergency.

The warnings were repeated in 2004 and 2009. Yet the Minerals Management Service, the Interior Department agency charged both with regulating the oil industry and collecting royalties from it, never took steps to address the issue comprehensively, relying instead on industry assurances that it was on top of the problem, a review of documents shows.

In the intervening years, numerous blowout preventers and their control systems have failed, though none as catastrophically as those on the well the Deepwater Horizon drilling rig was preparing when it blew up on April 20, leaving tens of thousands of gallons of oil a day spewing into the Gulf of Mexico.

Agency records show that from 2001 to 2007, there were 1,443 serious drilling accidents in offshore operations, leading to 41 deaths, 302 injuries and 356 oil spills. Yet the federal agency continues to allow the industry largely to police itself, saying that the best technical experts work for industry, not for the government.
Critics say that, then and now, the minerals service has been crippled by this dependence on industry and by a climate of regulatory indulgence.
“Everything that’s done by the oil industry is done for profit,” said Senator Bill Nelson, Democrat of Florida, who demanded this week that the Interior Department investigate these backup safety systems. “Throw in the fact that regulators have taken a lax attitude toward overseeing their operations, and you have a recipe for catastrophe.”

Last year, BP, the owner of the well that blew up in the gulf, teamed with other offshore operators to oppose a proposed rule that would have required stricter safety and environmental standards and more frequent inspections. BP said that “extensive, prescriptive” regulations were not needed for offshore drilling, and urged the minerals service to allow operators to define the steps they would take to ensure safety largely on their own.

Computer meltdown on Wall Street still baffles officials

2010-05-08T08:20:00.000-04:00

Traders applauding Duncan L. Niederauer, chief of NYSE Euronext, on Friday. He had defended his exchange in an interview.

The New York Times - A day after a harrowing plunge in the stock market, federal regulators were still unable on Friday to answer the one question on every investor’s mind: What caused that near panic on Wall Street?

Through the day and into the evening, officials from the Securities and Exchange Commission and other federal agencies hunted for clues amid a tangle of electronic trading records from the nation’s increasingly high-tech exchanges.

But, maddeningly, the cause or causes of the market’s wild swing remained elusive, leaving what amounts to a $1 trillion question mark hanging over the world’s largest, and most celebrated, stock market.

The initial focus of the investigations appeared to center on the way a growing number of high-speed trading networks interact with one another and with venerable exchanges like the New York Stock Exchange. Most investors are unaware that these competing systems have fractured the traditional marketplace and have displaced exchanges like the Big Board as the dominant force in stock trading.

The silence from Washington cast a pall over Wall Street, where shaken traders returned to their desks Friday morning hoping for quick answers. The markets remained on edge, as the uncertainty over what caused Thursday’s wild swings added to the worries over the running debt crisis in Greece.

In a joint statement issued after the close of trading, the S.E.C. and the Commodity Futures Trading Commission said they were continuing their review. And the two agencies indicated they were looking particularly closely at how different trading rules on different exchanges, which temporarily halted trading on some markets while activity in the same stocks continued on other markets, might have contributed to the problem.

Derivatives Dividing Democrats

2010-04-24T14:45:00.000-04:00

The Wall Street Journal - WASHINGTON—Ahead of a pivotal vote Monday on financial regulation, divisions are emerging among Senate Democrats over how best to strengthen oversight of the market for the exotic financial instruments known as derivatives.

All 59 members of the Democratic caucus are still expected to stand together Monday on whether to begin action on legislation overhauling regulation of the financial system. But the differences underscore the complexity of the coming debate, and will have to be resolved later this spring.

At issue is whether the derivatives oversight bill written by Senate Agriculture Chairman Blanche Lincoln (D., Ark.) will be folded into the broader regulatory overhaul. The Lincoln measure would beef up oversight and increase transparency of the market, and includes a proposal that could push Wall Street banks to spin off their derivatives trading operations.

"I want to make sure that without a doubt...I have a privileged ability to be able to be a part of this bill," Sen. Lincoln said in a statement forwarded Friday by her office.

Sen. Chris Dodd (D., Conn.), who is leading the broader overhaul effort, has pushed a competing proposal that would increase oversight but not push banks to spin off derivative operations. He's opened negotiations with Sen. Lincoln.

Arizona signs tough new immigration law

2010-04-24T14:40:00.000-04:00

The New York TImes - PHOENIX — Gov. Jan Brewer of Arizona signed the nation’s toughest bill on illegal immigration into law on Friday. Its aim is to identify, prosecute and deport illegal immigrants.

The move unleashed immediate protests and reignited the divisive battle over immigration reform nationally.
Even before she signed the bill at an afternoon news conference here, President Obama strongly criticized it.
Speaking at a naturalization ceremony for 24 active-duty service members in the Rose Garden, he called for a federal overhaul of immigration laws, which Congressional leaders signaled they were preparing to take up soon, to avoid “irresponsibility by others.”

The Arizona law, he added, threatened “to undermine basic notions of fairness that we cherish as Americans, as well as the trust between police and our communities that is so crucial to keeping us safe.”

The law, which proponents and critics alike said was the broadest and strictest immigration measure in generations, would make the failure to carry immigration documents a crime and give the police broad power to detain anyone suspected of being in the country illegally. Opponents have called it an open invitation for harassment and discrimination against Hispanics regardless of their citizenship status.

Work Force Fueled By High Skilled Immigrants

2010-04-19T10:03:00.001-04:00

ST. LOUIS — After a career as a corporate executive with her name in brass on the office door, Amparo Kollman-Moore, an immigrant from Colombia, likes to drive a Jaguar and shop at Saks. “It was a good life,” she said, “a really good ride.”

As a member of this city’s economic elite, Ms. Kollman-Moore is not unusual among immigrants who live in St. Louis. According to a new analysis of census data, more than half of the working immigrants in this metropolitan area hold higher-paying white-collar jobs — as professionals, technicians or administrators — rather than lower-paying blue-collar and service jobs.

Among American cities, St. Louis is not an exception, the data show. In 14 of the 25 largest metropolitan areas, including Boston, New York and San Francisco, more immigrants are employed in white-collar occupations than in lower-wage work like construction, manufacturing or cleaning.

The data belie a common perception in the nation’s hard-fought debate over immigration — articulated by lawmakers, pundits and advocates on all sides of the issue — that the surge in immigration in the last two decades has overwhelmed the United States with low-wage foreign laborers.

Over all, the analysis showed, the 25 million immigrants who live in the country’s largest metropolitan areas (about two-thirds of all immigrants in the country) are nearly evenly distributed across the job and income spectrum.
http://www.nytimes.com/2010/04/16/us/16skilled.html

2010-04-19T10:02:00.001-04:00

Lehman Hid Risks by Channeling Billions of Dollars Through Alter Ego

2010-04-13T10:38:00.001-04:00

Lehman Brothers’ headquarters in Midtown Manhattan in 2008. It is now the offices of Barclays Capital.

The New York Times - It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow through Lehman Brothers.

In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees.

None of this was disclosed by Lehman, however.
Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.

Critics say that such deals helped Lehman and other banks temporarily transfer their exposure to the risky investments tied to subprime mortgages and commercial real estate. Even now, a year and a half after Lehman’s collapse, major banks still undertake such transactions with businesses whose names, like Hudson Castle’s, are rarely mentioned outside of footnotes in financial statements, if at all.

Distorted Jobless Numbers Loom

2010-04-12T16:55:00.000-04:00

Greek Debt Fears

2010-04-11T20:36:00.002-04:00

European Nations Offer $40 Billion to Help Greece

2010-04-11T20:33:00.000-04:00

The New York Times - BRUSSELS — European leaders sought Sunday to quash any doubts about their resolve to help Greece, offering the country a one-year aid package of up to €30 billion at a much lower interest rate than investors have been demanding.

The plan, under which countries in the euro zone would lend Greece money at 5 percent interest — compared with as much as 7.5 percent the government paid on the bond markets last week — brought the currency union significantly closer to what would be the first rescue of a member in its history.

At the same time, the size of the financial commitment, the equivalent of $40.5 billion, which was above market expectations, could at least postpone the need for aid by reassuring investors and helping Greece refinance debt that comes due by the end of May.

Interest Rates Have No Where to Go But Up

2010-04-11T20:30:00.000-04:00

The New York Times - Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession.

The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing.

“Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”

The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.

Along with the sell-off in bonds, the Federal Reserve has halted its emergency $1.25 trillion program to buy mortgage debt, placing even more upward pressure on rates.

“Mortgage rates are unlikely to go lower than they are now, and if they go higher, we’re likely to see a reversal of the gains in the housing market,” said Christopher J. Mayer, a professor of finance and economics at Columbia Business School. “It’s a really big risk.”

Each increase of 1 percentage point in rates adds as much as 19 percent to the total cost of a home, according to Mr. Mayer.

The Mortgage Bankers Association expects the rise to continue, with the 30-year mortgage rate going to 5.5 percent by late summer and as high as 6 percent by the end of the year.

Another area in which higher rates are likely to affect consumers is credit card use.

And last week, the Federal Reserve reported that the average interest rate on credit cards reached 14.26 percent in February, the highest since 2001. That is up from 12.03 percent when rates bottomed in the fourth quarter of 2008 — a jump that amounts to about $200 a year in additional interest payments for the typical American household.

With losses from credit card defaults rising and with capital to back credit cards harder to come by, issuers are likely to increase rates to 16 or 17 percent by the fall, according to Dennis Moroney, a research director at the TowerGroup, a financial research company.

Bernanke Says U.S. Should Tackle Debt

2010-04-11T20:24:00.000-04:00

Federal Reserve Chairman Ben Bernanke said Wednesday that huge U.S. budget deficits threaten the nation's long-term economic health and should be addressed soon. Obama administration officials have argued that the economy, while improving, is still too weak to bear all the new taxes and spending cuts that would come with an aggressive deficit-reduction campaign. In remarks to the Dallas Chamber of Commerce Wednesday, Mr. Bernanke agreed, but said merely articulating a plan for reducing the deficit in the long run would help the economy now."The economist John Maynard Keynes said that in the long run, we are all dead. If he were around today he might say that, in the long run, we are all on Social Security and Medicare," Mr. Bernanke said.
Cutting the deficit ultimately will mean choosing between cutting those entitlements, raising taxes, or other spending cuts

Greenspan on Capitol Hot Seat

2010-04-11T20:21:00.002-04:00

Former Fed chief Alan Greenspan faced some of the toughest questioning yet about his role in the financial crisis at a hearing Wednesday marked by tense exchanges with a longtime foe. Later in the day, members of the congressionally chartered Financial Crisis Inquiry Commission also ripped Citigroup Inc. executives for their role in the subprime meltdown, where Citigroup was a major casualty. The commission is holding three days of hearings on the evolution of the subprime market. Panel members repeatedly questioned why Mr. Greenspan didn't do more to stem the flow of risky subprime loans, pop the resulting real-estate bubble or prevent use of exotic derivatives to expand the market. Commissioner Brooksley Born, a former federal regulator, said the Fed "utterly failed to prevent the financial crisis." She used the word "fail" nine times in a lengthy series of questions.
"Didn't the Federal Reserve System fail to meet its responsibilities, fail to carry [out] its mandates?" she said.
Commission Chairman Phil Angelides added his own criticisms of the Fed's approach to subprime regulation. "My view is…you could have, you should have, and you didn't," he told Mr. Greenspan.

New Ways to Read the Economy

2010-04-11T20:17:00.003-04:00

SAN FRANCISCO—When the city's top economist needs a rough prediction of sales tax revenues, he watches the number of subway passengers emerging from the Powell Street Station on Saturdays.
Ted Egan, chief economist in the San Francisco Controller's Office, said he could wait six months for California to release the detailed sales-tax data he needs for city revenue projections. But it's quicker to look at passenger tallies from the station closest to the Union Square shopping district, which generates roughly 10% of the city's sales-tax revenue. The Bay Area Rapid Transit District releases the data within three days, he said: "Why should I have to wait?" Mr. Egan is among a growing number of economists and urban planners who scour for economic clues in unconventional urban data—oddball measures of how people are moving, spending and working.

Consumer Lending Sagged in February

2010-04-11T20:16:00.000-04:00

More consumers are keeping up with payments on their credit cards and other loans. But that is coming at a cost: They are cutting back sharply on borrowing as they pare back debt. While that is good for the long-term financial health of households, the development could slow spending and the overall economic recovery.
Consumer borrowing declined at a 5.6% annual rate in February to $2.45 trillion, the Federal Reserve said Wednesday. Consumer borrowing, which includes most loans outside of real estate, had increased 2.1% in January, reflecting how borrowers typically slow payments after running up card balances over the December holidays. Revolving credit, largely credit-card borrowing, declined at a 13.1% annual pace in February. Nonrevolving credit—including loans for cars, boats and education—fell at a 1.6% annual rate that month. Analysts attributed part of the February decline to winter storms that kept consumers at home.

Criminals Prey on The Unemployed

2010-04-11T20:13:00.000-04:00

Out of work for six months, Mary Long spent hours each day surfing the Web. She found a job listing this fall for a logistics manager that paid $65,000 a year and fired off her resume.But the company, Advanta Transportation Network LLC, appears to be part of an increasingly common scam that has snared Ms. Long and many others, according to cybercrime experts. As U.S. job seekers grow more desperate, criminals are using the Internet to con participants into so-called mule operations.These operations generally follow a formula, say security experts: Cybercriminals post an ad on a job board. Successful job applicants are "hired" or asked to complete a trial project. Scam operators wire stolen money to the applicant's credit card and applicants are asked to purchase such goods as expensive electronics. The applicant ships the goods, often to Eastern Europe, where scam operators sell them. Applicants end up with neither a job nor a paycheck

U.S. Airways-United Airlines Talks Intensify

2010-04-11T20:11:00.000-04:00

Merger talks that came to light last week between UAL Corp.'s United Airlines and US Airways Group Inc. have become "very serious," said one person close to the matter. But they remain sensitive and it is just as likely the discussions will fall apart as result in a done deal, this person noted. Any transaction would be an all-stock merger, with United being the surviving entity, this person said. The share premium to be paid to US Airways shareholders hasn't been settled. Another person familiar with the talks said the two sides haven't yet agreed who would run the combination. A deal would create the No. 2 U.S. airline by traffic after Delta Air Lines Inc. If it comes to fruition, it would be announced within two or three weeks. A third person close to the situation suggested that Glenn Tilton, UAL's chief executive officer, recently restarted the talks, not his counterpart at US Airways, Doug Parker.

Light At The End of The Bailout Tunnel

2010-04-11T20:09:00.002-04:00

As momentum grows at companies that looked like zombies just a few months ago to repay taxpayers for lifelines they got during the financial crisis, the projected cost of the bailout is shrinking to just a fraction of previous estimates. Treasury Department officials say the tab is likely to reach $89 billion, which includes the Troubled Asset Relief Program, capital injections into Fannie Mae and Freddie Mac, loan guarantees by the Federal Housing Administration and Federal Reserve moves such as buying mortgage-backed securities and propping up the commercial-paper market. Treasury officials are increasingly optimistic that even American International Group Inc. could be on its own within a year, with officials discussing ways to extricate the government from its 80% stake in the insurer, according to people familiar with the situation. AIG is on track to repay its loan to the Fed through asset sales that will raise $51 billion.

WSJ Current News April 5-7

2010-04-07T07:57:00.001-04:00

Massey Has History of Safety Violations

Massey Energy Co.'s Upper Big Branch coal mine has been cited more than 100 times since the start of this year for safety violations including failing to properly control methane levels, according to the U.S. mine-safety agency.The cause of an explosion Monday that killed at least 25 miners at the mine has yet to be determined, but federal mine-safety officials say they suspect something ignited methane gas that had built up in the mine. The buildup of the dangerous gas was delaying rescuers' attempts Tuesday to enter the mine to search for victims.
http://online.wsj.com/article/SB10001424052702304172404575168261419876920.html

Mr. Dimon Goes to Washington
As Congress prepares to push finance regulation to the front burner, plenty of bank executives—stung by Washington's Wall Street bashing—are keeping a low profile.James Dimon, chairman and chief executive of J.P. Morgan Chase & Co., isn't one of them. Buoyed by J.P. Morgan's relative good health, he's spent the past year launching his own campaign to stave off government proposals that would rein in profits, boost consumer protections and impose new fees.
http://online.wsj.com/article/SB10001424052748703416204575145743093039972.html?mod=WSJ_hps_LEFTWhatsNews
Euro-zone Growth Accelerates
LONDON—Euro-zone private-sector output grew at its strongest rate for 31 months in March, fueled by a surge in activity in Germany, final data from financial-information firm Markit showed Wednesday.The currency area's composite output index, a measure of private-sector output based on a monthly survey of about 4,500 companies, rose to 55.9 in March from 53.7 in February—the highest reading since August 2007. It marks the eighth consecutive month that the index has been above the "no change" 50.0 level.
http://online.wsj.com/article/SB10001424052702304505204575169272763486034.html?mod=WSJ_hps_LEFTWhatsNews

U.S. Appeals Court Backs Comcast
A U.S. appeals court ruled Tuesday that the Federal Communications Commission overstepped when it cited cable-giant Comcast Corp. for slowing some Internet traffic on its network, dealing a blow to big Web commerce companies and other proponents of "net neutrality."In a unanimous decision, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit said the FCC exceeded its authority when it sanctioned Comcast in 2008 for deliberately preventing some subscribers from using peer-to-peer file-sharing services to download large files.
http://online.wsj.com/article/SB10001424052702303411604575167782845712768.html?mod=WSJ_hps_LEFTWhatsNews

Jury Still Out on Replacing Steel Mill with Casino
BETHLEHEM, Pa.—Five years ago, this former steel town took a gamble on Las Vegas Sands Corp., allowing the company to put a casino on the site of its historic steel mill. Las Vegas Sands promised to build a hotel, shopping mall and events center on a corner of the 126-acre Bethlehem Steel site, which was shuttered in 1995. Anchoring it all would be the casino filled with 5,000 slot machines, where even the ceiling lights, made to look like molten iron rods, would evoke the site's old industrial legacy. But revenue from the slots parlor, which opened last May, has been disappointing. The hotel and events center are both 20% complete, and the planned shopping mall is 70% complete, all stalled because of the economic downturn.
http://online.wsj.com/article/SB10001424052702303411604575168181715632168.html?mod=WSJ_hps_LEFTWhatsNews

Greek Bonds Remain Under Pressure
LONDON—The cost of insuring Greek sovereign debt remained elevated after rising dramatically Tuesday, as worries about the lack of resolution of the Greek debt crisis continued to weigh on financial markets.
The euro was also under pressure, trading at $1.3378 against the dollar,reece's five-year sovereign credit default swaps were unchanged in early trading at 3.90 percentage points--nearly 0.50 percentage point wider than last week—according to CMA DataVision, having touched four percentage points at one point Tuesday.The spread between 10-year bonds and the benchmark German bund was 3.868 percentage points, tighter than Tuesday's widest levels, but wider than a spread of 3.789 percentage points at 1500 GMT Tuesday.
http://online.wsj.com/article/SB10001424052702304505204575169330537185858.html?mod=WSJ_hps_MIDDLEThirdNews

No Jobs And When You Do Find One It is For Less Pay

2010-03-15T09:55:00.000-04:00

The New York Times - A YEAR ago, I wrote about a job fair at the Sheraton in Midtown Manhattan, where over 5,000 mainly white collar, middle-aged jobless men and women waited in the cold for more than two hours, hoping to find work. The turnout was a sign of desperate times; until then, the organizer, Tory Johnson, who’s been conducting these fairs in 10 cities for a decade, had never had more than 2,000 people at one of these events.

For that column, I interviewed two dozen boomers. Given recent reports from the federal government and Manpower, the employment agency, that the hiring outlook is beginning to improve, I thought it would be worthwhile to go back to those highly motivated people. Among them are Jo Fagan, a former vice president at Crown publishing who had applied for over 500 jobs in 22 months, and Greg Kramer, 54, a former buyer for a video company, who had attended three job fairs a month, typically arriving three hours before doors opened.

I wanted to know how they’re doing a year later.

The short answer is, of the 16 I interviewed again, 9 describe themselves as still struggling. Eight continue to be unemployed or are working part-time jobs that pay near minimum wage. Several were so concerned about bias, they did not want to give their ages.

Unemployment is slightly lower than the national average for workers older than 45 (8.1 percent). But once those people lose a job, it takes them longer to be rehired. In February, jobless workers over 45 were unemployed an average of 34 weeks versus 27 for younger workers.

And while there are no numbers yet for this recession, in past recessions, the older the workers, the bigger the wage loss when they were rehired, according to Steven Hipple, a Bureau of Labor Statistics economist. After the 1991-93 recession, rehired workers age 55 to 64 on average suffered a 27 percent wage loss, versus a 7 percent loss for workers age 25 to 34. After the 2001-3 recession, workers age 45 to 54 had a 23 percent wage loss when rehired, versus 6 percent for younger workers.

Report Shows Lehman hide Its Financial Problems

2010-03-12T07:32:00.001-05:00

The Wall Street Journal - A scathing report by a U.S. bankruptcy-court examiner investigating the collapse of Lehman Brothers Holdings Inc. blames senior executives and auditor Ernst & Young for serious lapses that led to the largest bankruptcy in U.S. history and the worst financial crisis since the Great Depression.

In the works for more than a year, and costing more than $30 million, the report by court-appointed examiner Anton Valukas paints the most complete picture yet of the free-wheeling culture inside the 158 year-old firm, whose chief executive Richard S. Fuld Jr. prided himself on his ability to manage market risk.

The document runs thousands of pages and contains fresh allegations. In particular, it alleges that Lehman executives manipulated its balance sheet, withheld information from the board, and inflated the value of toxic real estate assets.

Lehman chose to "disregard or overrule the firm's risk controls on a regular basis,'' even as the credit and real-estate markets were showing signs of strain, the report said.

In one instance from May 2008, a Lehman senior vice president alerted management to potential accounting irregularities, a warning the report says was ignored by Lehman auditors Ernst & Young and never raised with the firm's board.
http://online.wsj.com/article/SB10001424052748703625304575115963009594440.html?mod=WSJ_hps_LEFTWhatsNews

Americans Pare Debt

2010-03-12T07:29:00.001-05:00

The Wall Street Journal - U.S. consumers are shedding debt at the fastest rate in more than six decades, largely through a wave of defaults, in a trend that underscores the depth of their financial troubles but could also help clear the way for a stronger economic recovery.

Total U.S. household debt, including mortgages and credit-card balances, fell 1.7% in 2009 to $13.5 trillion, the Federal Reserve reported Thursday—the first annual drop since records began in 1945. The debt amounts to $43,874 per U.S. resident.

The drop reflects the extent to which job losses and a moribund housing market are forcing people to default on mortgages and other obligations, a painful process that has slammed millions of families and hit banks and investors with hundreds of billions of dollars in losses.

At the same time, the defaults are leaving many people with more cash to spend and save, jump-starting the financial rehabilitation, or "deleveraging," that economists see as a crucial prerequisite to robust growth.

Top News - WSJ & NYT

2010-03-03T09:59:00.003-05:00

Borrowers Miss Out in Billions in Savings
The Federal Reserve has pushed mortgage rates to near half-century lows, but millions of U.S. homeowners haven't benefited from that because they can't—or won't—refinance.Falling home prices have left many owners with little or no equity, making it harder to qualify for refinancing. Moreover, stricter lending standards and higher fees by banks and mortgage giants Fannie Mae and Freddie Mac and declining incomes have made it tougher and less attractive for borrowers to seek new loans.
http://online.wsj.com/article/SB10001424052748704358004575096020101445724.html?mod=WSJ_hps_LEFTWhatsNews

Apple sues HTC for Alleged Patent Violations
Apple alleged numerous patent violations in lawsuits against HTC Corp., a Taiwan-based manufacturer of smart phones. HTC makes several phones that run Google's Android operating system, including the Nexus One phone that Google is selling directly to consumers.Apple's two complaints—filed Tuesday in federal court in Delaware and the U.S. International Trade Commission—allege HTC devices, including the Nexus One, infringe a total of 20 Apple patents. The complaints claim the patents cover an array of cellphone technologies, everything from power-management functions to a method of unlocking a handset with a finger swipe on a touch screen.
http://online.wsj.com/article/SB10001424052748703807904575097392317555912.html?mod=WSJ_hps_LEFTWhatsNews

Private Sector Sheds 20,000 Jobs
Private payrolls fell less than expected in February and layoff announcements dropped to their lowest level since 2006, according to data released Wednesday.Private-sector jobs in the U.S. fell 20,000 in February, according to a national employment report published Wednesday by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.
The ADP loss is below the 50,000 drop projected by economists in a Dow Jones Newswires survey. The estimated change of employment for January 2010 was revised down, from a decline of 22,000 to a decline of 60,000.
http://online.wsj.com/article/SB10001424052748703862704575099243703727742.html?mod=WSJ_hps_LEFTWhatsNews

U.S. Postal Service Pushes to End Saturday Deliveries
The U.S. Postal Service stepped up its campaign to end Saturday deliveries to help stem losses, but the move met with skepticism that signals an uphill battle for approval by regulators and Congress.Postal officials sought support for a broad restructuring from a gathering in Washington on Tuesday that included big postal clients, congressional aides and postal workers' labor representatives. Without the restructuring, the agency potentially faces $238 billion in projected losses in the next 10 years, Postmaster General John E. Potter warned as he released assessments of the agency's operations from three consulting firms.
http://online.wsj.com/article/SB10001424052748703807904575097204116932126.html?mod=WSJ_WSJ_US_News_5

Britain Grapples With Debt Problem
LONDON — As Greece’s debt troubles batter the euro, Britain has done its utmost to stay above the fray.
Until now, that is. Suddenly, investors are asking if Britain may soon face its own sovereign debt crisis if the government fails to slash its growing budget deficits quickly enough to escape the contagious fears of financial markets.The pound fell to $1.4954 on Tuesday, its lowest level against the dollar in nearly 10 months. The yield on 10-year government bonds, known as gilts, slid as investors fretted that Parliament would be too fragmented after a crucial election in May to whip Britain’s messy finances back into shape.
http://www.nytimes.com/2010/03/03/business/global/03pound.html?ref=business

WSJ plans New York edition
News Corp. Chairman and Chief Executive Rupert Murdoch confirmed Tuesday that The Wall Street Journal will launch a section devoted to covering New York next month, in the company's first public acknowledgment of the project. The planned section will put the Journal squarely in competition with established New York media organizations, including the New York Times Co. and News Corp.'s own New York Post.The new section comes more than two years after News Corp. bought the Journal's parent company, Dow Jones & Co., and set out to broaden the readership and advertising base of the paper to compete with general-interest national newspapers including the New York Times and Gannett Co.'s USA Today.
http://online.wsj.com/article/SB10001424052748704548604575097662026613580.html?KEYWORDS=New+York+edition

Beige Book Finds Economy Improving
U.S. economic conditions kept improving slightly at the start of 2010, but the blizzards that hit the East Coast in February hurt several areas, the Federal Reserve said in a report Wednesday.In its latest beige book report, the Fed said nine out of its 12 regional districts reported that economic activity improved, but in most cases the increases were modest, with activity held back by the Feb. 4-7 and Feb. 9-11 snowstorms.
The beige book is a summary of economic activity prepared for use at the U.S. central bank's next policy-setting meeting, March 16. The latest report, prepared by the Federal Reserve Bank of Kansas City, examined economic conditions across the Fed's districts based on information collected on or before Feb. 22.
http://online.wsj.com/article/SB10001424052748703862704575099740217465042.html?mod=WSJ_hps_LEFTWhatsNews

The Bankruptcy Boys - Why GOP Won't Help Cut the Deficit

2010-02-22T11:47:00.000-05:00

By PAUL KRUGMAN

O.K., the beast is starving. Now what? That’s the question confronting Republicans. But they’re refusing to answer, or even to engage in any serious discussion about what to do.
For readers who don’t know what I’m talking about: ever since Reagan, the G.O.P. has been run by people who want a much smaller government. In the famous words of the activist Grover Norquist, conservatives want to get the government “down to the size where we can drown it in the bathtub.”
But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?
The conservative answer, which evolved in the late 1970s, would be dubbed “starving the beast” during the Reagan years. The idea — propounded by many members of the conservative intelligentsia, from Alan Greenspan to Irving Kristol — was basically that sympathetic politicians should engage in a game of bait and switch. Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit.
And the deficit came. True, more than half of this year’s budget deficit is the result of the Great Recession, which has both depressed revenues and required a temporary surge in spending to contain the damage. But even when the crisis is over, the budget will remain deeply in the red, largely as a result of Bush-era tax cuts (and Bush-era unfunded wars). And the combination of an aging population and rising medical costs will, unless something is done, lead to explosive debt growth after 2020.
So the beast is starving, as planned. It should be time, then, for conservatives to explain which parts of the beast they want to cut. And President Obama has, in effect, invited them to do just that, by calling for a bipartisan deficit commission.
Many progressives were deeply worried by this proposal, fearing that it would turn into a kind of Trojan horse — in particular, that the commission would end up reviving the long-standing Republican goal of gutting Social Security. But they needn’t have worried: Senate Republicans overwhelmingly voted against legislation that would have created a commission with some actual power, and it is unlikely that anything meaningful will come from the much weaker commission Mr. Obama established by executive order.
http://www.nytimes.com/2010/02/22/opinion/22krugman.html

Apple Is in TV-Pricing Talks

2010-02-18T08:40:00.002-05:00

WSJ Recent News Feb12-18

2010-02-17T22:03:00.010-05:00

Retirees Trade Work For Rent at Cash-Strappled Parks
ROMA, Tex. —An itinerant, footloose army of available and willing retirees in their 60s and 70s is marching through the American outback, looking to stretch retirement dollars by volunteering to work in parks, campgrounds and wildlife sanctuaries, usually in exchange for camping space.
Park and wildlife agencies say that retired volunteers have in turn become all the more crucial as budget cuts and new demands have made it harder to keep parks open.Estimates of the number of work-campers nationally vary, but a spokesman for Kampgrounds of America Inc., a private company that franchises camps, said that 80,000 or so might be a good guess, based on KOA’s percentage of the camping market and the number of its work-campers.

http://www.nytimes.com/2010/02/18/us/18campers.html

Manufacturers are gearing up to hire
Manufacturers are seeing more signs that the U.S. economic recovery is on a solid footing, opening the way for new hiring as well as call-backs for factory workers laid off during the depths of the recession. Caterpillar Inc., the Peoria, Ill.-based heavy-equipment maker, has brought back 600 workers in the past 60 days, including 100 recalled to an engine plant in Indiana last week. Allen Edmonds Shoe Corp. has been relying on overtime to meet growing demand, but is now preparing to start adding new workers at its U.S. plants in coming week.
http://online.wsj.com/article/SB10001424052748704398804575071652158793106.html?mod=WSJ_hps_LEFTWhatsNews

U.S. To Investigate Possible Toyota Corolla Steering Problems
Toyota Motor Corp. and U.S. regulators are looking into possible steering problems in the company's popular Corolla compact, the latest quality issue to surface in the wake of two recalls that covered millions of vehicles and forced Toyota to halt U.S. sales of eight models.
http://online.wsj.com/article/SB10001424052748703444804575070701759933496.html?mod=WSJ_hps_LEFTWhatsNews

Simon might drop $10 billion takeover of General Growth
Mall giant Simon Property Group Inc. warned General Growth Properties Inc. late Wednesday that Simon might drop its $10 billion takeover bid for the company or go hostile if General Growth didn't come to the bargaining table soon.
http://online.wsj.com/article/SB10001424052748703444804575071611963839430.html?mod=WSJ_hps_sections_business

Is Whole Foods Amid a Turnaround ?
Whole Foods Market Inc.'s fiscal first-quarter earnings soared 79% as sales at stores open at least a year rose for the first time in six quarters, a sign that discounts and a refocus on natural foods are paying off.ittle has gone right for the natural-foods company since 2006, when investors realized it was overexpanding. By the time the recession struck, Whole Foods couldn't hit the brakes fast enough. After a rally, the stock is still down 66% from its high.Recent signals suggest it is on the road to recovery. Even with unemployment around 10%, customer traffic rose during the September quarter and comparable-store sales finally turned positive in the following weeks.Investors might be troubled that Whole Foods trades at 23 times consensus earnings for calendar 2010, higher than most retailers.

http://online.wsj.com/article/SB10001424052748703894304575047810085288250.html?KEYWORDS=Whole+Foods
http://online.wsj.com/article/SB10001424052748704804204575069511609696540.html?KEYWORDS=Whole+Foods

U.S. to Press China on the Yuan
The mounting political tension between U.S. and China is poised to take on a more pronounced economic component—with Washington, in coming months, expected to press China over what officials see as an undervalued yuan. For U.S. officials, China's exchange rate is emerging as a top concern. President Obama and other administration officials argue that the Chinese currency is undervalued. That makes Chinese exports artificially cheap in terms of other foreign currencies, contributing to the U.S.'s large trade deficit with China and, they say, depriving Americans of jobs.
http://online.wsj.com/article/SB10001424052748704804204575069321056720944.html?mod=WSJ_hps_sections_world

Wal-Mart Profit Ries, but Current Quarter Weak
Wal-Mart Stores Inc. beat its guidance to post a 22% profit increase for the fiscal fourth quarter, but sales at the world's largest retailer fell short of expectations.Shares in Wal-Mart were down 1.5% at $53.25 premarket as the company's first-quarter view largely underwhelmed analysts' estimates, too. The company projects earnings between 81 cents and 85 cents a share, while analysts on average projected 85 cents, according to Thomson Reuters. For the year, its target of $3.90 to $4, compared with analysts' $3.97 forecast.
http://online.wsj.com/article/SB10001424052748703315004575073053485572576.html?mod=WSJ_hps_LEFTWhatsNews

State Governments Face Trillion Dollar Gap
State governments face a trillion-dollar gap between the pension, health-care and other retirement benefits promised to public employees and the money set aside to pay for them, according to a new report from the Pew Center on the States.States promised current and retired workers a total of $3.35 trillion in benefits through June 30, 2008, said the report from the nonprofit research group, a division of Pew Charitable Trusts. But state governments had contributed only $2.35 trillion to their benefit plans to pay current and future bills, the report said.
http://online.wsj.com/article

/SB10001424052748704398804575071873547372514.html?mod=WSJ_hps_LEFTWhatsNews

Municipalities Consider Filing Chapter 9
Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9. The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.
http://online.wsj.com/article/SB10001424052748704398804575071591602878062.html?mod=WSJ_hps_sections_news

Walgreen buys Duane Reade for $618 million
Walgreen announced Wednesday it will pay $618 million for Duane Reade, New York City's largest drugstore chain. The deal will increase Walgreen's total drugstore count by nearly 4%, adding 257 stores in the New York area, where it currently operates just 70 locations.Duane Reade is Walgreen's largest drugstore purchase, a shift from a past strategy that plowed money into often disappointing purchases such as specialty-pharmacy Option Care. Walgreen previously relied heavily on rapid organic growth to expand its drugstore count.
http://online.wsj.com/article/SB10001424052748703444804575071811006043210.html?KEYWORDS=Apple

How to Hide Your Surfing From Your Boss

Labor Market Shows Signs of Rebirth in New Data

2010-02-06T17:09:00.000-05:00

The New York Times - The unemployment rate unexpectedly dipped to 9.7 percent in January, from 10 percent in December, the government reported Friday, buoying hopes that the worst job market in at least a quarter-century is finally improving. But a different survey in the Labor Department’s report found that the economy lost 20,000 net jobs during the month, muddying the picture and underscoring the formidable struggles still confronting millions of Americans. Yet with the pace of decline slowing, most experts focused on signs that the economy was recovering after the longest recession since the Great Depression.

Investors Fear Europe’s Woes May Extend Global Slump

2010-02-06T17:04:00.002-05:00

The New York Times - Just as America’s recession begins to ebb, trouble is brewing in Europe that may prolong a downturn on the Continent and ricochet through the global economy as it struggles toward a recovery.

A rout in stock markets that began in Europe spread to Wall Street on Thursday and around the globe to Asia on Friday, amid fears that Europe may be the world’s next financial flashpoint. Pressure has been mounting across the Atlantic as Greece, Portugal and a handful of struggling countries that use the euro scramble to pay off mountains of debt accumulated from years of profligate spending.

The Dow Jones industrial average slid 2.61 percent, or 268.37 points, to 10,002.18 Thursday, after briefly falling below 10,000 for the first time since November, as American investors grew more uncertain about Europe’s economy.

Stock markets across Europe slumped as much as 6 percent, and worries that the troubles might push even big European nations like Spain into a financial crisis drove the euro to $1.37, a seven-month low against the dollar.

Markets in Europe slipped further on Friday, after a sharp sell-off in Asia, amid continued worries about government debt in several European countries and about the state of the U.S. labor market.

Related Story:
http://www.nytimes.com/2010/02/06/business/global/08euro.html?ref=europe

Rising U.S. Job Worries Add to Upheaval

2010-02-06T16:58:00.000-05:00

Job seekers line up to speak to a representative from the U.S. Customs and Border Protection agency at the Houston Diversity Job Fair in Humble, Texas, this week.

The Wall Street Journal - Concerns about the ability of the U.S. economy to create jobs added to a broader wave of fear about European finances, as fresh data showed unemployment claims rising and companies managing to boost production without adding workers.
The Labor Department reported initial claims for jobless benefits rose by a larger-than-expected 8,000, to 480,000 claims in the week ended Jan. 30. A separate report showed that companies managed to increase output for each hour worked at a seasonally adjusted annual rate of 6.2% in the 2009 final quarter, down from the third quarter's 7.2%, but still well above average.
The data reinforced doubts that a strong rebound in jobs will give U.S. consumers the wherewithal they need to contribute to a sustainable economic recovery. The market will learn more early Friday when the U.S. unemployment number for January is reported.
The latest reports "confirm that the recovery in the labor market is likely to be quite slow," said Conrad DeQuadros, an economist at consultancy RDQ Economics. "That suggests consumer spending is not going to be the major driver of growth in 2010."

WSJ Top News Feb. 5 &6

2010-02-06T16:51:00.000-05:00

Sign of Hope As Jobless Rate Dips
The unemployment rate dropped sharply last month, but employers continued cutting jobs in January as businesses remained insecure about the economic outlook. The jobless rate fell to 9.7% from 10% in December, the Labor Department said Friday, because its survey of households found more people landed jobs than entered or returned to the labor market. But a separate survey of employers, which counts how many workers are added or cut from payrolls, found that 20,000 jobs were eliminated last month. And revisions to last year's data found far more jobs were lost over the 12 months than previously predicted.
http://online.wsj.com/article/SB10001424052748704533204575046960669803550.html?mod=WSJ_hps_LEFTWhatsNews
Toyota plans to repair Prius brakes
DETROIT -- Toyota Motor Corp, has told dealers it's preparing a plan to repair the brakes on thousands of hybrid Prius cars in the U.S. In a message sent Friday night to dealers, a Toyota group vice president, Bob Carter, said the company is working on a plan and will disclose more details early next week. More than 100 drivers of 2010 Prius cars have complained that their brakes seemed to fail momentarily when they were driving on bumpy roads. The U.S. government says the problem is suspected in four crashes and two minor injuries.
http://online.wsj.com/article/SB10001424052748704829704575049241913621402.html?mod=WSJ_hpp_LEFTWhatsNewsCollection&mg=com-wsj

Goldman Bows on CEO Pay
Goldman Sachs Group Inc., trying to show it is responsive to public pressure over its pay, said Chairman and Chief Executive Lloyd Blankfein would get a $9 million bonus for 2009, a fraction of the $68.5 million payout he got in 2007. Friday's announcement was one of the most highly anticipated pay figures in Wall Street history. As Goldman rebounded in 2009 to its most profitable year ever, the 55-year-old Mr. Blankfein became the focus of anger about sky-high bonuses on Wall Street. That criticism continued even after Goldman said last month that it would make the smallest employee payouts relative to revenue since the firm went public in 1999.
http://online.wsj.com/article/SB10001424052748704533204575047132761932208.html?mod=WSJ_hps_LEFTWhatsNews

WSJ & NYT Feb. 3 Top News

2010-02-02T22:11:00.003-05:00

Ron Burkle Seeks 37% of Barnes & Noble
Activist investor Ron Burkle sent a letter to Barnes & Noble Inc. seeking to acquire as much as 37% of the company, up from his current stake of 19%, and blasting the book retailer for having different sets of anti-takeover rules for big investors: one applying to insiders and one applying to outsiders.
http://online.wsj.com/article/SB10001424052748703422904575039713084867850.html

Gannett reports fourth quarter profit

Gannett Co. returned to the black for the fourth quarter, helped by lower expenses and no big writedowns as it had in the year-earlier period. The publisher of USA Today and more than 80 other daily newspapers saw advertising slide another 18%, but the drop wasn't as steep as last year's, and was characterized as a stabilization.
http://online.wsj.com/article/SB10001424052748704107204575038981134299578.html

Battle over UK cigarette packaging heats up
Tobacco companies are digging in to fight a possible U.K. ban on one of their last marketing tools: cigarette packaging.The U.K.'s Department of Health said Monday that it would consider mandating generic packaging for all cigarettes as part of an aggressive campaign to halve smoking rates by 2020.
Such packs would be white or brown with the brand name written in simple type and no logos or colors allowed. The packs would continue to carry large health warnings.
http://online.wsj.com/article/SB10001424052748703422904575039410524001480.html

AIG Plan to Pay $100 million in bonuses draws fire
The American International Group has agreed to cut employee bonuses by $20 million and will distribute about $100 million on Wednesday, according to people with knowledge of the negotiations. But the reductions may not be enough to appease the company’s critics, who do not accept the company’s argument that it has to honor contracts from before its government bailout.
http://www.nytimes.com/2010/02/03/business/03aig.html

Time Warner Posts Fourth Quarter Profit
Time Warner Inc. moved back into the black for the fourth quarter, rebounding from a large write-down a year earlier and benefiting from strength in its film and television businesses.The media giant also raised its quarterly dividend 13% to 21.25 cents a share. That move comes a day after competitor News Corp. raised its six-month dividend for both classes of its stock by 25%.
http://online.wsj.com/article/SB10001424052748704259304575042800323826926.html

Home Builders Cut Prices, Warn about Foreclosures
LAS VEGAS—Home builders have lost half their share of the U.S. housing market in the past two years, largely because of competition from cheap foreclosed houses. In 2009 only 7.6% of the homes sold were newly constructed, down from the average of about 16% over the previous two decades.
But home builders are fighting back, cutting prices, promising to complete homes faster, and warning about the risks of buying foreclosed property.
http://online.wsj.com/article/SB10001424052748703422904575039691675728982.html?mod=WSJ_WSJ_US_News_5

Toyota's Troubles Deepen
Toyota Motor Corp.'s quality crisis deepened Tuesday, as U.S. regulators accused the company of dragging its feet on fixing defective gas pedals and threatened civil penalties and further reviews of Toyota products.
The move means that Toyota's efforts to address its biggest-ever safety and public-relations mess are far from over. Last week, the administration indicated it had no issues with how Toyota had responded to the sudden-acceleration reports, which led the company to recall about six million vehicles and have been linked to at least five fatalities.
http://online.wsj.com/article/SB10001424052748704107204575040353375520866.html?mod=WSJ_WSJ_US_News_6

Lee Fisher commentary: Third Frontier is key to nurturing Ohio recovery

2010-02-01T12:08:00.000-05:00

In the midst of a punishing recession, Ohio's Third Frontier program has been a rare bright spot and a critical driver of economic growth across our state. Since the bipartisan economic-development program was enacted under former Gov. Bob Taft, state grants have helped create more than 41,000 jobs and $6.6 billion in economic activity through 2008. That was a $10 return on every dollar invested by the state.
And yet, despite the undisputable success of this effort to nurture home-grown, high-tech companies, some Republicans in the legislature oppose a robust renewal of this vital program. The Ohio House has passed a measure to extend the program for five years at a cost of $950 million, while the Republican-controlled Senate has proposed a far smaller effort of $500 million over the same time frame.

http://www.dispatch.com/live/content/editorials/stories/2010/01/31/fisher31.ART_ART_01-31-10_G5_GHGES52.html#story-continues

WSJ News Feb. 1

2010-02-01T10:37:00.003-05:00

Windows 7 fails to boost PC makers profits
Microsoft Corp.'s new Windows 7 operating system has fattened the company's earnings and boosted personal-computer sales at retailers like Best Buy Co. But it hasn't increased the profits of PC giants Hewlett-Packard Co., Dell Inc. and others. While consumers purchased more than 90 million new PCs during the holiday quarter, when Microsoft released Windows 7, up 22% from a year earlier, PC revenue grew at just a single-digit rate, analysts say.
http://online.wsj.com/article/SB10001424052748704343104575034233214601248.html?mod=WSJ_business_whatsNews

Obama proposes a $3.8 trillion budget
WASHINGTON—President Barack Obama proposed a $3.8 trillion budget for fiscal 2011 that will add fuel to the debate over the size and scope of government. The plan includes big increases in personal and business taxes, modest spending cuts and increased outlays for education, defense and jobs initiatives.The Obama administration has focused in the days leading up to Monday's formal release on proposals to cap so-called discretionary spending, roughly 17% of the total budget, as part of a plan to start narrowing the record $1.6 trillion gap between proposed budget outlays and tax receipts.
http://online.wsj.com/article/SB10001424052748704107204575038733246595218.html?mod=WSJ_hps_LEADNewsCollection

Factory sector books best performance in five years
U.S. factory sector activity booked its best performance in more than five years in January, amid a rebound in hiring and rising price pressures. In a key report, private research group the Institute for Supply Management said Monday its index of manufacturing activity moved to 58.4 in January, the best reading since August 2004, from 54.9 in December and 53.7 in November. Readings over 50 indicate growth and describe the breadth, but not magnitude, of the change. Economists had expected the index to come in at 55.3.
http://online.wsj.com/article/SB10001424052748704107204575038941133108482.html?mod=WSJ_hps_LEFTWhatsNews

Exxon Mobil's fourth quarter profit falls
Exxon Mobil Corp.'s fourth-quarter earnings fell 23% as lower profit margins for refining and fuels and lower natural-gas prices were partly offset by higher prices for crude oil.
Prices for oil products like gasoline and diesel have failed to keep pace with the rising price of crude, putting intense pressure on refining profit margins, and leading to losses, shutdowns and some refiners putting operations on the block.
http://online.wsj.com/article/SB10001424052748703422904575038930311563198.html?mod=WSJ_business_whatsNews

Crude oil prices climb to $72 a barrel
NEW YORK -- Crude futures rose Monday on positive corporate earnings and due to geopolitical tensions.
Light, sweet crude for March delivery recently traded 42 cents, or 0.6%, higher at $73.31 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 47 cents, or 0.7%, higher at $71.93 a barrel.
http://online.wsj.com/article/SB10001424052748704107204575038870579452504.html

Obama proposes boosting education department spending
WASHINGTON—President Barack Obama's proposal to boost the Education Department by 9%, even as other areas get squeezed, highlights one area where the administration and Republicans have found some common ground.Most of the additional $4.5 billion in spending proposed for the Education Department new money is slated to fund competitive programs, making the budget a key part of an administration bid to transform how local school officials interact with the federal government.
http://online.wsj.com/article/SB10001424052748704107204575039090128849972.html

Toyota has fix for gas pedal problems
DETROIT – Toyota Motor Corp. said on Monday that it has already begun shipping a fix to the gas pedal problem involved in the recall of millions of vehicles and forced the company to stop selling eight of its models in the U.S. and some other countries around the world.Toyota has pinpointed the issue that could, on rare occasions, cause accelerator pedals in recalled vehicles to stick in a partially open position. The issue involves a friction device in the pedal designed to provide the proper "feel" by adding resistance and making the pedal steady and stable, Toyota said. The device includes a shoe that rubs against an adjoining surface during normal pedal operation.
http://online.wsj.com/article/SB10001424052748704107204575038802851805726.html?mod=WSJ_hps_LEFTWhatsNews

Trustbusters Try to Reclaim Decades of Lost Ground

2010-02-01T10:21:00.001-05:00

John Sherman, author of the act bearing his name.

The Wall Street Journal - WASHINGTON—If populism is emerging as a potent new force in American politics, then government trustbusters and sympathetic Democrats in Congress stand ready to offer a new outlet. But first, they'll have to overcome a major hurdle: the judges.

Over the past three decades, U.S. courts have sharply limited the scope of the 120-year-old Sherman Antitrust Act, which has been used to target companies from Standard Oil to Microsoft Corp. In so doing, judges have clipped the wings of two agencies charged with policing anticompetitive behavior: the Justice Department and the Federal Trade Commission.

Now Democrats on Capitol Hill are joining forces with antitrust cops to push back against the judicial tide. Congress is preparing measures to reverse the effect of court rulings that have made it harder for the government to win antitrust cases and break up monopolies, while the FTC and Justice Department are trying out new legal tactics to reclaim lost powers

If successful, the efforts could presage an upswing in antitrust cases against America's leading companies and reverse the legal trends of recent years.

Sensing a shift in the political landscape, big business is girding for a fight. "Voters are demanding jobs and growth, but Washington is moving in the opposite direction by advancing an agenda focused on increased litigation against business," said Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, an offshoot of the Chamber of Commerce that seeks to ease the burden of civil litigation for businesses.

Antitrust enforcers since the 1980s have had an increasingly hard time winning cases against accused monopolists. Judges have largely agreed with the reasoning of the so-called Chicago School of economists, which holds that big companies aren't necessarily bad and that the market—not government—is best placed to promote competition.

Existing-Home Sales Plunge

2010-01-26T07:43:00.002-05:00

Two Big Printers Expected to Merge

2010-01-26T07:41:00.002-05:00

Privately held Quad/Graphics Inc. of the U.S. is expected to acquire Canadian rival World Color Press Inc. for roughly $1.3 billion to $1.4 billion, said people familiar with the matter, in a deal that would create North America's second-largest commercial printer by sales, behind industry giant R.R. Donnelley & Sons Co.

Under the plan, these people said, shareholders of Toronto-listed World Color, which prints such magazines as Sports Illustrated and Rolling Stone, as well as the Crate & Barrel catalog and Yellow Book directory, would get a 40% stake in the newly combined company. The new company would then list on a U.S. stock exchange, they said, in effect bringing Quad/Graphics, whose clients include Newsweek, GQ and the L.L. Bean catalog, to the public market for the first time since its founding in 1971.

Quad/Graphics, based in Sussex, Wis., has 11,500 employees and 11 plants, most of them in the U.S. Its annual sales are around $2 billion. Montreal-based World Color, with a market capitalization of around $730 million, has about 18,000 employees and annual sales of around $3 billion, with about 30% of that coming from Canada and Latin America.

Demand for Macs, iPhones Fuels Apple

2010-01-26T07:39:00.001-05:00

Wall Street Journal - Two days before it's set to unveil a major new product, Apple Inc. reported a surge in quarterly profit and revenue that showed demand for its technology hasn't cooled off.

The Cupertino, Calif., company continued to power through the weak economy. Apple, after adjusting for a key accounting change, posted a 50% rise in profit and a 32% increase in revenue for its fiscal first quarter ended Dec. 26.

The growth was fueled by strong sales across most of Apple's product lines as iPhone shipments more than doubled and Macintosh computer sales climbed 33%.

"What this demonstrates is the strength of Apple's brand in good and bad times," said Bill Kreher, an analyst with Edward Jones.

Overall, Apple reported a quarterly profit of $3.38 billion, or $3.67 a share, up from $2.26 billion, or $2.50 a share, a year earlier. Revenue increased to $15.68 billion from $11.88 billion.

One Third U.S. is Now Below the Poverty Line

2010-01-23T08:30:00.000-05:00

A new study from the Brookings Institution tells us that the largest and fastest-growing population of poor people in the U.S. is in the suburbs. You don’t hear about this from the politicians who are always so anxious to tell you, in between fund-raisers and photo-ops, what a great job they’re doing. From 2000 to 2008, the number of poor people in the U.S. grew by 5.2 million, reaching nearly 40 million. That represented an increase of 15.4 percent in the poor population, which was more than twice the increase in the population as a whole during that period.

Job losses, stagnant or reduced wages over the past decade, and the loss of home equity when the housing bubble burst have combined to take a horrendous toll on families who thought they had done all the right things and were living the dream. A great deal of that bleeding is in the suburbs. The study, compiled by the Brookings Metropolitan Policy Program, said, “Suburbs gained more than 2.5 million poor individuals, accounting for almost half of the total increase in the nation’s poor population since 2000.”

Democrats in search of clues as to why voters are unhappy may want to take a look at the report. In 2008, a startling 91.6 million people — more than 30 percent of the entire U.S. population — fell below 200 percent of the federal poverty line, which is a meager $21,834 for a family of four.

http://www.nytimes.com/2010/01/23/opinion/23herbert.html

WSJ Top News Friday-Sat, Jan. 22-23, 2010

2010-01-22T10:15:00.004-05:00

New Bank Rules Sink Stocks
WASHINGTON—President Barack Obama proposed new limits on the size and activities of the nation's largest banks, pushing a more muscular approach toward regulation that yanked down bank stocks and raised the stakes in his campaign to show he's tough on Wall Street. With former Federal Reserve Chairman Paul Volcker at his side, Mr. Obama said he wanted to toughen existing limits on the size of financial firms and force them to choose between the protection of the government's safety net and the often-lucrative business of trading for their own accounts or owning hedge funds or private-equity funds.
http://online.wsj.com/article/SB10001424052748703699204575016983630045768.html?mod=WSJ_hps_LEFTWhatsNews

GE Earnings Fall
General Electric Co. posted a 19% slump in fourth-quarter profit, dinged again by weakness at its finance arm and NBC Universal, but offered an upbeat outlook that foresees a return to growth in 2011.
Orders have improved since its investor update in December, with delinquencies in its problematic finance unit also trending down, though commercial real-estate remains a key concern.
http://online.wsj.com/article/SB10001424052748704509704575018672407762274.html?mod=WSJ_hps_LEFTWhatsNews

Birth Weights Fall in U.S.
Mothers are giving birth to lighter babies in the U.S., and no one is quite sure why.
The finding, published Thursday in the Journal of Obstetrics and Gynecology, has potentially troubling public-health implications, if the trend continues. Low-birth-weight babies are at higher risk for a host of health problems.
http://online.wsj.com/article/SB10001424052748704423204575017471267586344.html?mod=WSJ_hps_MIDDLEFifthNews

Court Kills Limits On Corporate Campaign Spending
WASHINGTON—A divided Supreme Court struck down decades-old limits on corporate political expenditures, potentially reshaping the 2010 election landscape by permitting businesses and unions to spend freely on commercials for or against candidates.President Barack Obama attacked the ruling and said it gave "a green light to a new stampede of special-interest money in our politics," particularly "big oil, Wall Street banks, health-insurance companies and the other powerful interests" that "drown out the voices of everyday Americans." He pledged to work with lawmakers to craft a "forceful response."
http://online.wsj.com/article/SB10001424052748703699204575016942930090152.html?mod=WSJ_hps_MIDDLEForthNews

Restaurants Begin to Count Calories
Restaurants from Applebee's to Starbucks are pushing new low-calorie menu items in an effort to attract customers who say they want healthier options.Chain restaurants, traditionally known for peddling fatty food and sugary drinks, hope that offering healthier fare will give them a competitive advantage, especially with the prospect of a federal nutrition labeling law looming.
http://online.wsj.com/article/SB10001424052748704381604575005530811257728.html?mod=WSJ_hps_MIDDLEFifthNews

Google Earnings Soar
Google Inc. reported its strongest revenue growth in a year and issued its firmest public statement saying it would like to continue doing business in China, a week after it said it may pull out of the country due to a sweeping cyber attack.The Mountain View, Calif., company said its revenue rose 17% in the fourth quarter to $6.67 billion from a year earlier, up from only 7% revenue growth in the third quarter and 3% growth in the second quarter.http://online.wsj.com/article/SB10001424052748703699204575017451974056226.html?mod=WSJ_hps_LEFTWhatsNews

Time to Sell Health-Care Stocks?

2010-01-20T20:22:00.002-05:00

Aetna Inc. (AET)

Barron's - HEALTH-CARE STOCKS seemed to get a late Christmas gift last night in the form of a Republican victory in Massachusetts.

But as stunning as the final result might be coming from the liberal state, the market saw it coming.
The sector rallied in recent days, as a victory by Republican Scott Brown looked increasingly possible. Managed-care stocks were up significantly in the last five days, including 12% for UnitedHealth Group (ticker: UNH), 8% for Aetna (AET) and 7% for WellPoint (WLP). Pharmaceutical giant Pfizer (PFE) was up 7% and medical-device maker Boston Scientific (BSX) gained 5%. All of those returns are well ahead of the Standard & Poor's 500 index's 1% gain over the last week.

Given those impressive returns, we would "sell on the news" today. To be sure, analysts are generally dire in their predictions for health-care reform. "We think the Democratic push for the government takeover of health care is dead or effectively dead," David Maris, a well-respected health-care analyst for Calyon Securities wrote this morning.

Falling Beer Sales Have Brewery Mergers Over a Barrel

2010-01-20T20:03:00.003-05:00

The Wall Street Journal - U.S. beer sales volumes fell 2.2% last year, the highest rate since the 1950s, with demand worsening late in the year in a sign of the pressures on big brewers to make their mergers pay off.

The decline, the industry's first since 2003, raises demands for industry leaders Anheuser-Busch InBev NV and MillerCoors LLC to come up with better advertising and to rethink recent price increases, said retailers and analysts.

But they must tread carefully, balancing price moves against a need to drive profits in the wake of the mergers that created the two.

The two giants increased prices by about 5% last year, fresh off InBev NV's acquisition of Anheuser-Busch Cos. and the move by SABMiller PLC and Molson Coors Brewing Co. to combine U.S. operations. Those increases, along with a weak job market and lackluster advertising, contributed to the sales drop, industry analysts said.

Starbucks Growth Revives, Perked by Via

2010-01-20T19:58:00.000-05:00

Starbucks Corp. posted its first quarter of same-store sales growth since the end of 2008, citing the unexpected success of its Via instant coffee in the U.S. and strong holiday coffee sales in international markets.

U.S. same-store sales rose 4%, mainly due to a 4% increase in customers' average ticket that the company attributed mostly to Via.

"We expected a contribution from Via, but it was even more than we expected," said Starbucks Chief Financial Officer Troy Alstead in an interview. "We knew it fit perfectly for people on the go, but there was much bigger single-serve, at-home usage than we anticipated or hoped we could get in these early days."

New York Times to Charge for Web

2010-01-20T19:53:00.000-05:00

New York Times Co. unveiled a plan to charge readers for unlimited access to the Web version of its flagship newspaper, a seminal—and risky—move in the industry's broader push to stem the free flow of proprietary news online.

Under the plan, to be launched in early 2011, people who read more than a certain number of articles in a month will be prompted to pay a flat monthly fee for additional access. Print subscribers will have full access to the site.

Most newspaper publishers are exploring options for charging for Web articles. But few papers have actually erected a so-called pay wall, reflecting concerns that readers will turn to countless other news sources before paying for something they are used to getting free. The Times is the most prominent newspaper so far to revise its Web strategy to cope with the recent flight of readers and advertisers from print.

Apple Sees New Money in Old Media

2010-01-20T19:45:00.001-05:00

The Wall Street Journal - With the new tablet device that is debuting next week, Apple Inc. Chief Executive Steve Jobs is betting he can reshape businesses like textbooks, newspapers and television much the way his iPod revamped the music industry—and expand Apple's influence and revenue as a content middleman.
In developing the device, Apple focused on the role the gadget could play in homes and in classrooms, say people familiar with the situation. The company envisions that the tablet can be shared by multiple family members to read news and check email in homes, these people say.

For classrooms, Apple has been exploring electronic-textbook technology, these people add. The people familiar with the matter say Apple has also been looking at how content from newspapers and magazines can be presented differently on the tablet. Other people briefed on the device say the tablet will come with a virtual keyboard.

Apple has recently been in discussions with book, magazine and newspaper publishers about how they can work together. The company has talked with The New York Times Co., Conde Nast Publications Inc. and HarperCollins Publishers and its owner News Corp., which also owns The Wall Street Journal, over content for the tablet, say people familiar with the talks.

New York Times Chairman Arthur Sulzberger declined to comment in an interview Wednesday on its involvement in the new device except to say, "stay tuned."

Apple is also negotiating with television networks such as CBS Corp. and Walt Disney Co., which owns ABC, for a monthly TV subscription service, the Journal has reported. Apple is also working with videogame publisher Electronic Arts Inc. to show off the tablet's game capabilities, according to one person familiar with the matter.

WSJ Top News Tuesday, Jan 19

2010-01-19T07:54:00.000-05:00

JAL Files for Bankruptcy
TOKYO -- Japan Airlines Corp launches Wednesday a painful three-year restructuring that will significantly shrink its operations to make it a viable financial concern, after the former flag carrier suffered the ignominy of filing one of the country's largest-ever bankruptcy protection petitions.

A pillar of Japan Inc. founded in 1951 to help the country rise out of the ashes of World War II, JAL Tuesday sought court protection for help in handling a crushing debt load of $25 billion, a level well above its cash flow.
http://online.wsj.com/article/SB10001424052748703837004575012323580338724.html?mod=WSJ_hps_LEFTWhatsNews

NBC To Pay Conan O'Brien $40 million
Conan O'Brien is close to signing a nearly $40 million deal to walk away from his dream job hosting NBC's "The Tonight Show," bringing down the curtain on one of the entertainment industry's biggest debacles in years.
The comedian's exit agreement, which could be completed as early as Tuesday, bars Mr. O'Brien from bad-mouthing his former NBC bosses, according to people familiar with the matter, but paves the way for him to land another television gig within a year.
The expected departure ends a nearly two-week public spectacle that engulfe
http://online.wsj.com/article/SB10001424052748704541004575011482898148788.html?mod=WSJ_hps_LEFTWhatsNews
Senate Race in Massachusetts Key to Health Bill
White House and Senate Democratic officials said Monday that they believed asking the House to pass the Senate health bill unchanged was likely to be their best hope if their party loses a Senate seat in Massachusetts. But House Speaker Nancy Pelosi's office signaled Monday that the House wouldn't go along with that, and the bill's fate dimmed.

A defeat in Massachusetts would not only deprive Democrats of their filibuster-proof majority in the Senate but also underscore the unpopularity of the health legislation and possibly lead some wavering party members to reverse their support.

Cadbury accepts Kraft's offer
Kraft Foods Inc. on Tuesday clinched a deal to acquire Cadbury PLC for £11.9 billion ($19.44 billion), in a trans-Atlantic tie-up that ends the nearly 200-year independence of Britain's most famous candy company.http://online.wsj.com/article/SB10001424052748703837004575012330202258818.html?mod=WSJ_hps_LEADNewsCollection

Sweden calls for EU to levy U.S.-style tax on banks
BRUSSELS--Swedish Finance Minister Anders Borg said Tuesday he is proposing to his European Union colleagues to apply a levy on banks similar to the one being discussed by the U.S. administration.
"The financial system should pay for the actual cost it incurs to society and the taxpayers in the form of implicit state guarantees for systemically important banks," Mr. Borg wrote in a letter to Spanish Finance Minister Elena Salgado, who chairs the two-day meeting of EU finance ministers in Brussels.

Detroit Pistons' owner asks $47 million for Snowmass estate
Roaming through her 10,000-square-foot, eight-bedroom vacation home, clad in a gray hooded sweatshirt, Karen Davidson said it was time for a change. "It's got everything but a post office," she said of her 10-acre property here, which in addition to the main house also has two guest houses, a former stable and two barns. "I just want to downsize."

On Dec. 29 Ms. Davidson—whose husband Bill Davidson, owner of the Detroit Pistons, died last March at age 86—put her property on the market. The asking price: $47 million, making the estate, called Stony Creek Ranch, one of the most expensive listings in the country, in a resort area that has been hard-hit by the housing bust. In 2006, four area homes priced at $20 million or more sold; in 2009, just one did. After more than a year on the market, the asking price of a $60 million home on 44 acres in West Buttermilk was cut earlier this month to $47.5 million.
http://online.wsj.com/article/SB10001424052748704586504574654431721393864.html?mod=WSJ_hps_sections_realestate

JPMorgan Chase Earns $11.7 Billion

2010-01-17T13:07:00.000-05:00

The New York Times - JPMorgan Chase kicked off what is expected to be a robust — and controversial — reporting season for the nation’s banks on Friday with news that its profit and pay for 2009 soared.

In a remarkable rebound from the depths of the financial crisis, JPMorgan earned $11.7 billion last year, more than double its profit in 2008, and generated record revenue. The bank earned $3.3 billion in the fourth quarter alone.

Those cheery figures were accompanied by news that JPMorgan had earmarked $26.9 billion to compensate its workers, much of which will be paid out as bonuses. That is up about 18 percent, with employees, on average, earning about $129,000.

Workers in JPMorgan’s investment bank, on average, earned roughly $380,000 each. Top producers, however, expect to collect multimillion-dollar paycheck.

http://www.nytimes.com/2010/01/16/business/16morgan.html

Taxing the Banks For the Bailout

2010-01-17T12:35:00.001-05:00

President Obama with his economic team at the White House on Thursday. He said he planned to “recover every single dime” of bailout losses.

The New York Times - WASHINGTON — President Obama laid down his proposal for a new tax on the nation’s largest financial institutions on Thursday, saying he wanted “to recover every single dime the American people are owed” for bailing out the economy.

With both anti-Wall Street sentiment and the budget deficit running high, Democratic leaders on Capitol Hill welcomed the proposal, which could ultimately raise up to $117 billion to cover projected bailout losses. Republicans were uncharacteristically silent, their instinctive opposition to tax increases apparently checked by their fear of defending big bankers. And the financial industry lobby seemed splintered, with small community banks happily exempted
http://www.nytimes.com/2010/01/15/us/15tax.html

WSJ News Jan. 16-17

2010-01-17T12:30:00.000-05:00

Fed Stays the Course Despite Worries
Although Federal Reserve officials expect the economy to grow too slowly this year to bring the jobless rate down substantially, they are likely to conclude at their Jan. 26-27 meeting that there isn't much more they can do about it.

That means sticking to their stated plan to end purchases of mortgages at the end of March, roll back emergency lending programs in February and maintain the vow to keep interest rates exceptionally low for at least several more months.
http://online.wsj.com/article/SB10001424052748703657604575004961390797800.html?mod=WSJ_WSJ_US_News_5&mg=com-wsj

Paperwork Woes Plague Mortgage Plan
Thousands of homeowners participating in the Obama administration's foreclosure-prevention plan could miss a government deadline for completing necessary paperwork, putting them at risk of disqualification.
http://online.wsj.com/article/SB10001424052748703657604575005112496393670.html?mod=WSJ_hps_LEFTWhatsNew

Democrats plan tax to punish banks
WASHINGTON—Democrats' last-minute scramble to salvage the special U.S. Senate election in Massachusetts is offering the first test of a populist pitch that party strategists hope to take to other campaigns this year.

Central to the strategy is the new White House plan to tax big banks as punishment for their role in the financial crisis. President Barack Obama announced the proposal Thursday amid reports that financial institutions bailed out by the government are enjoying healthy profits and paying generous bonuses, and as a bipartisan commission began hearing testimony on banks' role in the economic crisis.
According to data released by the Treasury Department Friday, more than 900,000 borrowers have begun trial modifications under the program, but just 7% of them have received permanent changes so far.
http://online.wsj.com/article/SB10001424052748704381604575005361644727140.html?mod=WSJ_hps_LEFTWhatsNews s

MediaNews Group to seek bankruptcy protection
The holding company of MediaNews Group Inc., the publisher of dozens of newspapers including the Denver Post and San Jose Mercury News, said Friday that it plans to seek bankruptcy protection, the latest in a string of troubled newspaper companies to seek refuge from creditors amid unsustainable debt loads.
The holding company, Affiliated Media Inc., said it reached an agreement with its lenders for a streamlined bankruptcy that will hand a majority of new stock to creditors, a group led by Bank of America Corp. The company's existing equity will be canceled, the holding company said.
MediaNews Chairman and Chief Executive William Dean Singleton and company president Joseph Lodovic IV will control the restructured company through a special class of stock.
http://online.wsj.com/article/SB10001424052748703657604575005813195786280.html?mod=WSJ_hps_sections_business

Why Investors Keep Fooling Themselves
A nationwide survey last year found that investors expect the U.S. stock market to return an annual average of 13.7% over the next 10 years.
Robert Veres, editor of the Inside Information financial-planning newsletter, recently asked his subscribers to estimate long-term future stock returns after inflation, expenses and taxes, what I call a "net-net-net" return. Several dozen leading financial advisers responded. Although some didn't subtract taxes, the average answer was 6%. A few went as high as 9%.
We all should be so lucky. Historically, inflation has eaten away three percentage points of return a year. Investment expenses and taxes each have cut returns by roughly one to two percentage points a year. All told, those costs reduce annual returns by five to seven points.
So, in order to earn 6% for clients after inflation, fees and taxes, these financial planners will somehow have to pick investments that generate 11% or 13% a year before costs. Where will they find such huge gains? Since 1926, according to Ibbotson Associates, U.S. stocks have earned an annual average of 9.8%. Their long-term, net-net-net return is under 4%.
http://online.wsj.com/article/SB10001424052748704381604575005291706758502.html?mod=WSJ_hps_sections_markets

A Window Opens on Pay for Bosses

2010-01-17T10:17:00.000-05:00

By Floyd Norris

The New York Times - Is it possible that shareholders will finally get a reliable view of what the bosses are getting paid? And that it will come this spring? Yes.

There is no doubt that pay consultants are now looking for ways to keep that from being the case, and it would be a risky wager to say they will not succeed. But it appears that new disclosure rules that take effect with this year’s proxies will provide the most accurate view ever.

Anger over executive pay, particularly at banks, is high. That may have been one reason the Securities and Exchange Commission moved to improve the rules this year, but it was something that would have needed doing even if business leaders were widely deemed to be geniuses. Shareholders need good information, and the disclosures required by the S.E.C. before made the figures unnecessarily confusing.

There is still one area where companies could play games to make their bosses look less well paid than they really are. That is in the area of performance-based awards, where the payout will depend on how well the executive or the company performs relative to undisclosed goals. A company that wants to do so may be able to obscure just how likely a rich reward is for an executive.
http://www.nytimes.com/2010/01/15/business/15norris.html

Shares Edge Higher as Investors Await Earnings

2010-01-12T07:36:00.000-05:00

Stock prices held to narrow ranges on Monday as traders at the New York Stock Exchange awaited news on corporate earnings

The New York Times - As companies began releasing fourth-quarter results on Monday, the question on Wall Street was not so much whether businesses turned a profit but how they did so.

Investors are looking for signs that employers moved beyond heavy cost-cutting and established a steady stream of revenue in the last part of 2009. On Monday, traders seemed cautious about that prospect: stocks searched for direction for much of the day, but a late rally pushed most indexes into positive territory. Oil briefly touched a 15-month high and the dollar weakened.

Expectations for fourth-quarter results are high. Over the last year, many employers have slashed work forces and reined in spending to spruce up earnings. Now, investors are looking for substantial revenue growth and indications that global demand is picking up.

Wall Street, the Depression and the Lords of Finance

2010-01-12T07:28:00.000-05:00

These six books — about financial history and how economics went astray — are informative and enjoyable.

What follows is my list of six for 2009, books that I found informative and enjoyable this year. Three of the books cover aspects of financial history, including one on the greatest capitalists ever and two on the era that led to the Great Depression. The other three deal with how economics went astray.

The Fox News Architect

2010-01-11T09:13:00.002-05:00

Bruce Headlam and Tim Arango on Roger Ailes, the head of Fox News whose success has placed him at the pinnacle of power in three corridors of American life: business, media and politics

A Fox Chief at the Pinnacle of Media and Politics

2010-01-11T08:54:00.001-05:00

The New York Times - In the fall of 2008, Roger Ailes, the head of Fox News, went to his boss, Rupert Murdoch, with two complaints: he had heard that Mr. Murdoch was considering endorsing Barack Obama for president in The New York Post, and he had read a book excerpt in Vanity Fair suggesting that Mr. Murdoch was sometimes embarrassed by the right-leaning Fox News.

Mr. Ailes threatened to quit, a person familiar with the conversation said. Instead, Mr. Murdoch soon rewarded him with a new, more lucrative contract — he made $23 million last year in salary, bonuses and other compensation, more than Mr. Murdoch — and The New York Post endorsed John McCain.

In an interview in late December in his office at News Corporation headquarters in Midtown Manhattan, Mr. Ailes conceded that he had opposed an Obama endorsement. (“I didn’t think he had the experience,” he said, adding, “I don’t tell Rupert Murdoch who to endorse.”) He was outraged by the Vanity Fair article but said he “demanded nothing” and did not threaten to quit. He said he did not have to.
“If you’re making money and you’ve hit your targets for five years, you don’t need to demand a new contract,” he said.

Mr. Ailes is certainly making money. At a time when the broadcast networks are struggling with diminishing audiences and profits in news, he has built Fox News into the profit engine of the News Corporation. Fox News is believed to make more money than CNN, MSNBC and the evening newscasts of NBC, ABC and CBS combined. The division is on track to achieve $700 million in operating profit this year, according to analyst estimates that Mr. Ailes does not dispute.

http://www.nytimes.com/2010/01/10/business/media/10ailes.html

WSJ Top News - Monday, Jan 11, 2010

2010-01-11T08:42:00.000-05:00

U.S. to Sell More Inflation Protected Bonds
The government on Monday is set to ramp up the sale of bonds that provide protection against inflation, known as TIPS, with its biggest offering in five years.TIPS, which account for less than 10% of the $7 trillion Treasury market, offer investors a way to hedge against inflation as their value rises along with the increase in consumer prices. The fixed returns on nominal Treasurys, in contrast, can be eroded over time by inflation, which especially affects long-term bonds.
http://online.wsj.com/article/SB10001424052748703535104574646680342322404.html?mod=WSJ_hps_LEFTWhatsNews
Banks Brace For Bonus Fury
Critics of Wall Street firms are grumbling that this year's bonuses are far too generous. But some recipients are none too happy, either: They're complaining too much of the payout is coming in stock instead of cash.
Banks and securities firms have told workers their bonuses will contain a bigger percentage of stock to demonstrate that Wall Street is sensitive to public anger over the big paychecks. The idea is that stock reduces employees' temptation to take too many financial risks, since they have an ownership stake.
http://online.wsj.com/article/SB126317064618124057.html?mod=WSJ_hps_LEFTWhatsNews

Crude Oil Surges to 15 Month High
LONDON -- Crude-oil futures extended their surge to 15-month highs Monday amid strong Chinese import data and a weaker dollar.In late morning trading, the front-month February Brent contract on London's ICE futures exchange was up $0.94 at $82.31 a barrel after earlier hitting a 15-month high at $82.45 a barrel.
http://online.wsj.com/article/SB10001424052748703652104574651902882333112.html?mod=WSJ_hps_MIDDLESecondNews

WSJ Top News - Fri-Saturday Jan 8-9 2010

2010-01-09T11:03:00.001-05:00

WSJ Roundup

O'Brien May Jump To Rival Network
Comedian Conan O'Brien and his advisers were mulling career options Friday, including jumping to a rival television network, people familiar with the matter said, leaving the fate of NBC's late-night shake-up in limbo.
http://online.wsj.com/article/SB10001424052748703481004574646660133894126.html?mod=WSJ_hps_LEFTWhatsNews

California Seeks Billions From U.S.
SACRAMENTO, Calif. -- Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.
http://online.wsj.com/article/SB126297948893221947.html?mod=WSJ_hps_MIDDLEThirdNews

Economy Still Bleeding Jobs
Employers cut another 85,000 jobs last month, dashing hopes of a turnaround in employment, even as the U.S. economy grows. With December's losses, there were 7.2 million fewer jobs than in December 2007, when the recession began. Although the unemployment rate was unchanged at 10% from November, that's only because many workers stopped looking for work and weren't counted in the numbers. A broader measure of unemployment, including those who have quit job hunting as well as those working part time because they can't find full-time work, remained about the same at 17.3% in December from 17.2% in November.

Wages Still Under Pressure
Wages of U.S. employees are generally stagnant and likely to remain so as the pool of unemployed workers helps employers keep wages from rising even as productivity, or output per hour of work, soars.
http://online.wsj.com/article/SB126300214621122539.html?mod=article-outset-box

UPS Lifts Forecast, Still Cuts Jobs
United Parcel Service Inc. boosted its fourth-quarter profit projections by more than 15% Friday, signaling the economy is improving, but the package-delivery giant also announced 1,800 job cuts and said it still expects the recovery to be gradual.
http://online.wsj.com/article/SB10001424052748703481004574646103310976342.html?mod=WSJ_hps_LEFTWhatsNews

Big Deficits Cloud Britain's Future
BIRMINGHAM, England -- John Murray's electrical engineering firm here has made it through the recession thanks in part to work generated by local government contracts on projects like schools. Yet as the financial crisis winds down, Mr. Murray is "kept awake" by the idea that his prospects may get worse, not better.http://online.wsj.com/article/SB126291111336920699.html

If Fed Missed This Bubble, Will It See a New One?

2010-01-06T09:22:00.002-05:00

Ben Bernanke, the Fed chairman, has said it is difficult “to know in real time if an asset price is appropriate or not.”

Excellent piece by David Leonhardt, economics writer for the New York Times. - MT

By DAVID LEONHARDT

Published: January 5, 2010

The New York Times - If only we’d had more power, we could have kept the financial crisis from getting so bad.

That has been the position of Ben Bernanke, the Federal Reserve chairman, and other regulators. It explains why Mr. Bernanke and the Obama administration are pushing Congress to give the Fed more authority over financial firms.

So let’s consider what an empowered Fed might have done during the housing bubble, based on the words of the people who were running it.

In 2004, Alan Greenspan, then the chairman, said the rise in home values was “not enough in our judgment to raise major concerns.” In 2005, Mr. Bernanke — then a Bush administration official — said a housing bubble was “a pretty unlikely possibility.” As late as May 2007, he said that Fed officials “do not expect significant spillovers from the subprime market to the rest of the economy.”

The fact that Mr. Bernanke and other regulators still have not explained why they failed to recognize the last bubble is the weakest link in the Fed’s push for more power. It raises the question: Why should Congress, or anyone else, have faith that future Fed officials will recognize the next bubble?
http://www.nytimes.com/2010/01/06/business/economy/06leonhardt.html

WSJ Top News - Wednesday 1-6-10

2010-01-06T09:08:00.001-05:00

Private-sector jobs in the U.S. fell by 84,000 in DecemberPrivate-sector jobs in the U.S. fell by 84,000 in December, the smallest drop since March 2008, and service providers added jobs, according to a national employment report published Wednesday by payroll company Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.
http://online.wsj.com/article/SB126278421347117805.html?mod=WSJ_hps_LEFTWhatsNews

Buffet wades into Kraft-Cadbury Battle
Investor Warren Buffett waded into the rancorous battle for Cadbury PLC, issuing a rebuke of Kraft Foods Inc.'s just-sweetened, nearly $17 billion takeover offer for the British confectionary company.
http://online.wsj.com/article/SB10001424052748703580904574639440907695468.html?mod=WSJ_hps_LEFTWhatsNews

Retailers discounting down during holiday season
Clothing stores discounted less and sold fewer items last month than a year ago, a combination that undercut sales but likely will translate into higher fourth-quarter profits, according to figures released Tuesday.
Apparel and department stores remain among the weaker retailers, with sales well below pre-recession levels. December clothing sales fell 1.8% and department store sales fell 2.3%, both from the same month a year ago, according to MasterCard Inc.'s SpendingPulse unit.
http://online.wsj.com/article/SB10001424052748703436504574640611592478386.html?mod=WSJ_hps_LEFTWhatsNews

Economists warn that repairs to regulatory system are still needed
ATLANTA -- Wall Street investors may be breathing a sigh of relief as the financial crisis fades, but academic economists gathered here for the annual meeting of the American Economic Association say we're nowhere close to making sure it won't happen again. Over the past few days, economists here highlighted the many ways in which the lessons of the crisis have yet to sink in. Few think the U.S. and other governments have made needed repairs to the financial regulatory system. And some suggest governments' response has increased the chances of a repeat, making the banking system more crisis-prone, putting new strains on institutions such as the Federal Reserve and stretching government finances closer to the breaking point.
http://online.wsj.com/article/SB126274058881517243.html?mod=WSJ_hps_sections_news

New Google Nexus Unveiled
Mobile phones may be almost indispensable to modern life, but they are costly, too–far more than most people realize. These little gadgets pick your pocket while they sit in it, filching many thousands of dollars from you over the years. The Google Nexus, unveiled Tuesday, may mark a healthy step in a better direction.
Other people will focus on the phone's software, hardware, "apps" and the like. I'm more interested in something simpler: How it's sold–direct, unsubsidized and without a contract.
http://online.wsj.com/article/SB10001424052748703436504574640641358732198.html?mod=WSJ_hps_sections_personalfinance

Could Apple's Tablet be a Savior for Print Publications?

2010-01-04T08:47:00.000-05:00

The New York Times - Later this month, we all might get a glimpse of that future. According to The Financial Times, Apple has rented a stage at the Yerba Buena Center for the Arts in San Francisco and is expected to make a major product announcement on Tuesday, Jan. 26, where many have speculated that some version of the Apple tablet will be unveiled. The Web site Gizmodo guessed that the device was likely to be called the iSlate, will cost around $800, and won’t hit store shelves until March or possibly April. (And it’s not just Apple: Word of a color tablet device called Courier from Microsoft made a big splash on the site as well, and a company called HTC reportedly has one in the works that uses the Google Chrome operating system. And there are others.)

The secretive Apple has made fools out of predictors in the past, but Kai-Fu Lee, the former head of Google in China, posted an item on his personal blog suggesting the Apple tablet would feature a 10.1-inch multitouch screen with three-dimensional graphics. And it’s worth pointing out that many publishers are building content in the belief that when it comes to the tablet, it’s not if, it’s when.

So, is the Apple tablet a figment of so much Web-borne pixie dust or is it the second coming of the iPhone, a so-called Jesus tablet that can do anything, including saving some embattled print providers from doom?

Cinema Surpassed DVD Sales in 2009

2010-01-04T08:44:00.000-05:00

'Harry Potter and the Half-Blood Prince.'

The Wall Street Journal - Last year was the first since 2002 that U.S. consumers spent more money buying movie tickets than buying movies to watch at home, underscoring the changing economics of Hollywood.

According to new data from Adams Media Research, Americans spent $9.87 billion at the box office in 2009, 10% more than in 2008, according to a report Adams plans to release Tuesday. At the same time, sales in the U.S. of feature films on DVD, long a cornerstone of movie studios' business models, plunged 13% to $8.73 billion, including Blu-ray high-definition discs. (Other companies that track box-office receipts include Canada in their North American figures, adding about 7% to the total and pushing the year's gross above $10 billion.)

The figures indicate that studios will likely have to continue looking for ways to survive in a marketplace where they can't count on hefty home-entertainment revenue to offset giant production costs. Those costs often more than eat up the studios' half of the box-office receipts, which are split with theaters.
The ongoing decline in home-entertainment revenue has already fundamentally altered the way studios do business, forcing them to place big financial bets on hoped-for mass-market blockbusters at the expense of features that cost less to make but that also have smaller earnings potential.

In recession, one road led back home

2009-11-22T15:18:00.001-05:00

Missoula native Melissa Meyer never expected that she would return home to Montana to rethink her future plans. After graduating Summa Cum Laude from George Washington University, moving home has become an unexpected time out to rethink future plans and the various roads she could take in the coming year.

The Washington Post - Her parents redecorated her bedroom soon after she left for college, as sure as everyone else in this town that Melissa Meyer would not be moving back. They took down the photos of Melissa meeting the Dalai Lama and laughing alongside Joe Biden, placing them in the closet. They packed away dozens of high school honor certificates -- valedictorian, class president, outstanding chemistry student -- and stored them in plastic boxes under the bed.

Melissa had always been too big for this town, her father liked to say. She was editor of the school newspaper, an intern in the U.S. Senate and the only student from Sentinel High School's Class of 2005 to attend college on the East Coast. On her rare visits home from George Washington University, longtime friends liked to tease her: "Hey, Melissa, are you president yet?"

So, how to explain this? Each morning, Melissa wakes up in her old bedroom, scans the foreign decor and thinks: This is the guest room now. I am the guest. I am not supposed to be here.

She graduated magna cum laude from the GW Business School in May, applied for 30 jobs at some of the nation's best-known companies, and it went nowhere. After visiting the campus career center and redesigning her résumé, she applied for 10 more jobs. Still nothing. The lease on her Foggy Bottom apartment expired in June. There was no place to go but home, with a collection of rejection letters and a haunting sense of betrayal. For 23 years, she had advanced down America's path to success -- perfect grades, a $200,000 college degree, a folder overstuffed with business cards -- only to have it dead-end back where she started.
"What was the point?" she asks.

For Melissa, that question is the legacy of the recession as she rises one Tuesday morning in early fall and begins her day with the same routine that defined her adolescence. She rummages through the refrigerator, eats leftovers from a dinner party her parents threw the night before and then retreats upstairs to prepare for a fill-in shift at the same job she held throughout high school. After changing into cowboy boots and a skirt, she borrows her parents' car and drives three minutes to work at Rockin Rudy's, a record store with a peace sign hanging at the entrance.

At Bloomberg, Modest Strategy to Rule the World

2009-11-17T09:39:00.001-05:00

Michael R. Bloomberg, right, with Matthew Winkler in 1991. Mr. Winkler has overseen the Bloomberg news operation from its beginning.

The New York Times - PLOPPED in a white leather chair in a small office in Bloomberg L.P.’s Manhattan headquarters, Andrew Lack knows exactly how to articulate the aspirations of this 28-year-old media and technology company.

“We want to be the world’s most influential news organization,” says Mr. Lack, who oversees Bloomberg’s television, radio and dot-com endeavors.

Very clear. The most influential. On the planet.

It’s a goal several other Bloomberg executives have already mentioned to a pair of visitors. And when Mr. Lack, 62, a former head of NBC News, hears his guests wonder if something funny is in his company’s coffee — a special sauce that keeps all Bloombergians marching so efficiently and effectively to the same tune — he looks a tad chagrined.

“Oh, my! I don’t want to sound as if I’m on message,” he says, laughing apprehensively while also sending a “help me” look to a Bloomberg spokeswoman nearby.

These days, truth be told, the entire company is on message. That’s because the data behemoth that Michael R. Bloomberg created and named after himself in 1981, long before he became mayor of New York, finally has the reach, resources and appetites to try snaring the mantle of Most Influential — at least in the rarefied world of business news.

After years of being an underdog pushing its troops to be better and faster, Bloomberg now has an upper hand. Publishing giants like Condé Nast, Time Inc. and The New York Times, with their veteran scribes and rich histories, have laid off people and scaled back. Bloomberg may lack the pedigree and gloss of some of its rivals, but it has one thing they don’t right now: money to throw around.

This year alone, Bloomberg, deploying the cash spouting from its data business, has recruited refugees from The Wall Street Journal and Fortune and opened bureaus in places like Ecuador and Abu Dhabi. Its editorial staff (which includes radio, TV and Web site workers) now numbers 2,200, compared with 1,250 journalists at The Times and 1,900 at Dow Jones (a figure that includes the newswires and the Journal staff).

When the 80-year-old BusinessWeek went on the block, Bloomberg opened its wallet and snatched it away from circling private equity firms in October for just $5 million in cash — a relatively small sum that still represents a big change. For the last decade, Bloomberg has barely bothered to venture outside the realm of high finance; its news was produced to help subscribers to its terminals make more money for themselves.

With BusinessWeek, likely to be renamed Bloomberg BusinessWeek, the company is setting its sights on a much broader audience. That includes Main Street readers and, much more important for Bloomberg, senior executives, government leaders and other global movers and shakers. It’s also trying to revamp its Web site and television programming — long neglected inside the company — into services that appeal to people who don’t trade securities for a living.

At a time when most media companies can barely pay for cake at going-away parties, Bloomberg appears to be rolling in dough.

From Treasury, an Invitation to Financial Bloggers

2009-11-16T11:43:00.001-05:00

The New York Times - The Treasury Department opened its doors to economic bloggers this month, and the meeting was productive in at least one respect: as John Jansen of the blog Across the Curve concluded, “After meeting them, I feel I cannot refer to them as Timothy Geithner and his minions” anymore.

Mr. Geithner, the Treasury secretary, was among the senior officials who talked with bloggers at an outreach session on Nov. 2. The two-hour round table was held on background, meaning that the bloggers could describe the sessions, but not attribute quotes to specific officials. Lengthy posts about financial system reforms — and the bloggers’ disagreements with the Treasury’s strategies — ensued.

New-media scribes have gradually made their way inside most governmental institutions over the years, but the meeting was the first for bloggers at the Treasury. Tyler Cowen, an economics professor at George Mason University who has written at the Marginal Revolution blog for six years, said it was the first time he had heard from any Treasury official.

Bills Would Set Limits on Financial Companies to Alleviate Risk

2009-11-10T07:30:00.004-05:00

President Franklin D. Roosevelt signed the Glass-Steagall Act, passed in 1933, separating commercial and investment banking.

Wall Street Journal - Democrats are advancing proposals in Congress designed to limit the size and complexity of financial companies so that any collapse wouldn't damage the broader economy, a sign that lawmakers are responding to anti-Wall Street sentiment by toughening the administration's rewrite of finance rules.

The proposals would allow the government to break up healthy financial companies, and in some cases, would reassert rigid demarcations within finance that were cleared away in 1999, such as barring commercial banking firms and investment banking firms from merging.

Large financial companies, and even some Obama administration officials, are nervously watching the debate. Lobbyists for large financial-services companies, including J. P. Morgan Chase & Co., Bank of America Corp., Prudential Financial Inc., and MetLife Inc. scrambled in recent days to reach out to Capitol Hill aides, people familiar with the matter said.

Why Health Care Bill Is Good For The Economy

2009-11-07T19:47:00.002-05:00

U.S. Unemployment Rate Hits 10.2%, Highest in 26 Years

2009-11-07T18:43:00.001-05:00

The Labor Picture: October 2009

Unemployment Rate Grew 0.4 percentage points in Oct.

One month change	+0.4 pts
One year change	+3.6 pts

Number of Jobs 12-month change, in thousands

One month change	-0.1%
One year change	-4.0%

Discouraged WorkersNot looking for work because of the economy, in thousands

One month change	+14.4%
One year change	+66.9%

Duration Length of unemployment, in weeks

	Oct.	1 month change	1 year change
Average	26.9	+2.7%	+35.9%
Median	18.7	+8.1%	+76.4%

People With Jobs Percentage of people who are employed

	Oct.	1 month change	1 year change
Employed	58.5%	-0.3 pts.	-3.2 pts.

'Hidden' Unemployment In millions

	Oct.	1 month change	1 year change
Part time, but want full-time	9.3	+1.1%	+35.6%

Avg. Weekly EarningsFor rank-and-file workers

	Oct.	1 month change	1 year change
Average	$617.76	+0.3%	+0.9%

DemographicsTeenagers continue to have the highest unemployment rate.

	Oct.	1 month change	1 year change
White	9.5	+0.5 pts.	+3.5
Black	15.7	+0.3 pts.	+4.4
Hispanic	13.1	+0.4 pts.	+4.3
Teenagers	27.6	+1.7 pts.	+6.9

Education The unemployment rate has risen the most for those with less than a high school diploma.

	Oct.	1 month change	1 year change
Less than high school	15.5	+0.5 pts.	+5.1 pts.
High school	11.2	+0.4 pts.	+4.7 pts.
Some college	9.0	+0.5 pts.	+3.7 pts.
Bachelor's or higher	4.7	-0.2 pts.	+1.6 pts.

Source: Bureau of Labor Statistics. Chart: The New York Times

As the unemployment rate surged to 10.2 percent in October, reaching double digits for the first time in 26 years, it suddenly seemed possible that the nation might yet confront the worst joblessness since the Great Depression.

Forbes Magazine Plans More Layoffs

2009-10-30T08:59:00.001-04:00

The New York Times - Forbes magazine said on Monday that it planned to lay off several staff members from the editorial and business sides, a cost-cutting move in response to decreasing advertising revenue.
The announcement was made in an internal memorandum sent Monday afternoon by Steve Forbes, the company’s chief executive and editor in chief of the magazine. “We — and the entire media world — have been hit hard by both the severe recession and the seismic shifts wrought by the Web,” Mr. Forbes wrote. “Given these dramatic events, further layoffs, unfortunately, are necessary across the entire organization.”
Monie Begley, a Forbes spokeswoman, declined to specify the number of layoffs. She said that some people had been dismissed Monday, and she expected layoffs to continue throughout the week.
The layoffs came after other cuts at Forbes over the last year, including dismissing about 100 employees, having employees take five days of unpaid leave, and ceasing matching contributions to its 401(k) program.
Although circulation has been holding relatively steady at Forbes, with reported circulation at 914,000 for the first six months of this year, according to the Audit Bureau of Circulations, ad pages have not. Ad pages dropped 32.5 percent in the third quarter, according to the Publishers Information Bureau, to just above 300 pages.

Chinese Drywall Found to Differ Chemically

2009-10-30T08:50:00.002-04:00

Florida is a center of homeowner complaints that Chinese drywall is causing health problems. A housing development in Boynton Beach, Fla., tries to take advantage of that to bolster its sales.

The New York Times - Federal investigators reported Thursday that imported Chinese drywall that homeowners have linked to health problems and odors had higher levels of some chemicals than its domestic counterparts.

The investigators, however, were unable to link the chemicals, sulfur and strontium, to the health problems and smells in thousands of homes built during the recent housing boom, and said further testing was under way to determine any possible connection.

The preliminary findings are part of a larger study by federal agencies, including the Consumer Product Safety Commission and the Environmental Protection Agency, into complaints from nearly 2,000 homeowners that their recently built homes emit odors and cause nosebleeds and respiratory problems. The owners also say their electrical appliances have failed and their wiring has corroded. It has been estimated that more than 60,000 homes could have the imported drywall. Large amounts of Chinese drywall were imported over the last few years when domestic supplies ran short. An estimated seven million sheets made in China were used as a substitute. Most of the complaints come from Florida, Virginia and Louisiana, where the widespread destruction after hurricanes lead to rapid rebuilding of damaged homes.

Gloom Spreads on Economy, but GOP Doesn't Gain

2009-10-28T11:22:00.004-04:00

Americans are growing increasingly pessimistic about the economy after a mild upswing of attitudes in September. But Republicans haven't been able to profit politically from the economic gloom, according to a new Wall Street Journal/NBC News poll.

The survey found a country in a decidedly negative mood, nearly a year after the election of President Barack Obama. For the first time during the Obama presidency, a majority of Americans sees the country as being on the wrong track.

Fifty-eight percent of those polled say the economic slide still has a ways to go, up from 52% in September and back to the level of pessimism expressed in July. Only 29% said the economy had "pretty much hit bottom," down from 35% last month.

But a dark national view of how everybody in Washington is conducting the public's business appears to be preventing Republicans from benefiting from concerns about the direction of the country or the Democrat-led government's handling of the economy, as the minority party often does.

In fact, disapproval of the Republican Party actually has ticked upward, along with the public's general pessimism. Asked which political party should control Congress after next year's midterm elections, Democrats now hold a clear edge over the GOP, 46% to 38%, a month after the Republicans were nearly as popular. In September, the Democratic edge was 43% to 40%.

U.S. Considers Reining In ‘Too Big to Fail’ Institutions

2009-10-26T10:15:00.000-04:00

A protester in March of 2008 framed the question that Barney Frank, chairman of the House Financial Services Committee, and Treasury Secretary Timothy F. Geithner will try to answer this week with proposals to tighten regulation.

New York Times - WASHINGTON — Congress and the Obama administration are about to take up one of the most fundamental issues stemming from the near collapse of the financial system last year — how to deal with institutions that are so big that the government has no choice but to rescue them when they get in trouble. The White House plan as outlined so far would already make it much more costly to be a large financial company whose failure would put the financial system and the economy at risk. It would force such institutions to hold more money in reserve and make it harder for them to borrow too heavily against their assets.
Setting up the equivalent of living wills for corporations, that plan would require that they come up with their own procedure to be disentangled in the event of a crisis, a plan that administration officials say ought to be made public in advance.

Still on the Job, but Making Only Half As Much

2009-10-14T09:37:00.001-04:00

Good example why the economy is likely to sit slow or no growth mode for a long time. Lots of people don't have jobs. Those who do have jobs are earning less. Louis Uchitell talks about how pay cuts are more common than at any time since the Great Depression. - MT

The New York Times - MECHANICSVILLE, Va. — The dark blue captain’s hat, with its golden oak-leaf clusters, sits atop a bookcase in Bryan Lawlor’s home, out of reach of the children. The uniform their father wears still displays the four stripes of a commercial airline captain, but the hat stays home. The rules forbid that extra display of authority, now that Mr. Lawlor has been downgraded to first officer.

He is now in the co-pilot’s seat in the 50-seat commuter jets he flies, not for any failure in skill. He wears his captain’s stripes, he explains, to make that point. But with air travel down, his employer cut costs by downgrading 130 captains, those with the lowest seniority, to first officers, automatically cutting the wage of each by roughly 50 percent — to $34,000 in Mr. Lawlor’s case.

The demotion, the loss of command, the cut in pay to less than his wife, Tracy, makes as a fourth-grade teacher, have diminished Mr. Lawlor, 34, in his own eyes. He still thinks he will return to being the family’s principal breadwinner, although as the months pass he worries more. “I don’t want to be a 50-year-old pilot earning $40,000 a year,” he said, adding that his wife does not want to be married to a pilot with so little earning power.

In recent decades, layoffs were the standard procedure for shrinking labor costs. Reducing the wages of those who remained on the job was considered demoralizing and risky: the best workers would jump to another employer. But now pay cuts, sometimes the result of downgrades in rank or shortened workweeks, are occurring more frequently than at any time since the Great Depression.

State workers in Georgia are taking home smaller paychecks. So are the tens of thousands of employees in California’s public university system. The steel company Nucor and the technology giant Hewlett-Packard have embraced the practice. So have several airlines and many small businesses.

The Bureau of Labor Statistics does not track pay cuts, but it suggests they are reflected in the steep decline of another statistic: total weekly pay for production workers, pilots among them, representing 80 percent of the work force. That index has fallen for nine consecutive months, an unprecedented string over the 44 years the bureau has calculated weekly pay, capturing the large number of people out of work, those working fewer hours and those whose wages have been cut. The old record was a two-month decline, during the 1981-1982 recession.

“What this means,” said Thomas J. Nardone, an assistant commissioner at the bureau, “is that the amount of money people are paid has taken a big hit; not just those who have lost their jobs, but those who are still employed.”

Bloomberg Buys BusinessWeek From McGraw-Hill

2009-10-14T09:27:00.000-04:00

Editor's note: Watch for Bloomberg to dump a bunch of money into money-losing BusinessWeek. The company still needs to be repositioned away from a weekly business magazine, a dying format, if it is going to make money. All the weekly news magazines are in trouble except for The Economist. - MT

The New York Times - Bloomberg is taking another step from the trading floor into the corner office.

The company said Tuesday that it was the winning bidder for BusinessWeek, the troubled 80-year-old title that McGraw-Hill had put on sale this summer.

Terms of the deal were not disclosed, but the price was said to be near $5 million, plus assumption of liabilities, which were $31.9 million as of April.

The magazine will continue to be a weekly print publication, rechristened Bloomberg BusinessWeek. Decisions have not been made about BusinessWeek’s staff of more than 400 people; Bloomberg will select which of those employees it wants by the end of the year, when the deal closes. Those not selected will receive severance from McGraw-Hill, said a BusinessWeek executive.

The deal is expected to close by the end of the year.

BusinessWeek was in a tough spot financially, and lost more than $800,000 dollars a week last year. Investors had pressured McGraw-Hill to get it off its books. While there was interest from parties in the private equity world, Bloomberg was seen as the preferred buyer.

“We are committed to the partnership,” said BusinessWeek president Keith Fox in an interview. “Bloomberg is acquiring a really powerful brand with strong reach among business professionals.”

Faced with slowing sales of its financial data terminals during the recession that have since improved, Bloomberg had been looking to expand its presence in consumer media. Clients for Bloomberg’s terminals are largely financial professionals, and the purchase of BusinessWeek, with its consumer and executive readers, gives the media company more access to the corporate offices as well.

With its gigantic newsroom of about 2,200 people and its aggressive reporting, Bloomberg has won a growing number of awards, but it is frustrated by its lack of cachet in the journalism world. Reporters and editors have long been frustrated by the lack of access to business executives, and they believed that limited their ability to break news and be a player in larger news coverage.

With the acquisition, Bloomberg adds name recognition and a consumer publication. The company was considering combining the Bloomberg.com and BusinessWeek.com Web sites and adding the BusinessWeek brand and journalists to Bloomberg TV. The company will continue Bloomberg Markets, a monthly magazine.

E. Coli Path Shows Flaws in Beef Inspection

2009-10-09T11:46:00.002-04:00

Stephanie Smith, 22, was paralyzed after being stricken by E. coli in 2007. Officials traced the E. coli to hamburger her family had eaten.

Editor's Note: Great story on the dangers of E coli and how it gets into the food chain because of lax safety inspection. - MT

The New York Times - Stephanie Smith, a children’s dance instructor, thought she had a stomach virus. The aches and cramping were tolerable that first day, and she finished her classes.

Then her diarrhea turned bloody. Her kidneys shut down. Seizures knocked her unconscious. The convulsions grew so relentless that doctors had to put her in a coma for nine weeks. When she emerged, she could no longer walk. The affliction had ravaged her nervous system and left her paralyzed.

Ms. Smith, 22, was found to have a severe form of food-borne illness caused by E. coli, which Minnesota officials traced to the hamburger that her mother had grilled for their Sunday dinner in early fall 2007.

“I ask myself every day, ‘Why me?’ and ‘Why from a hamburger?’ ”Ms. Smith said. In the simplest terms, she ran out of luck in a food-safety game of chance whose rules and risks are not widely known.

Meat companies and grocers have been barred from selling ground beef tainted by the virulent strain of E. coli known as O157:H7 since 1994, after an outbreak at Jack in the Box restaurants left four children dead. Yet tens of thousands of people are still sickened annually by this pathogen, federal health officials estimate, with hamburger being the biggest culprit. Ground beef has been blamed for 16 outbreaks in the last three years alone. This summer, contamination led to the recall of beef from nearly 3,000 grocers in 41 states.

Stephanie Smith’s reaction to the virulent strain of E. coli was extreme, but tracing the story of her burger, through interviews and government and corporate records obtained by The New York Times, shows why eating ground beef is still a gamble. Neither the system meant to make the meat safe, nor the meat itself, is what consumers have been led to believe.

Ground beef is usually not simply a chunk of meat run through a grinder. Instead, records and interviews show, a single portion of hamburger meat is often an amalgam of various grades of meat from different parts of cows and even from different slaughterhouses. These cuts of meat are particularly vulnerable to E. coli contamination, food experts and officials say. Despite this, there is no federal requirement for grinders to test their ingredients for the pathogen.

The frozen hamburgers that the Smiths ate, which were made by the food giant Cargill, were labeled “American Chef’s Selection Angus Beef Patties.” Yet confidential grinding logs and other Cargill records show that the hamburgers were made from a mix of slaughterhouse trimmings and a mash-like product derived from scraps that were ground together at a plant in Wisconsin. The ingredients came from slaughterhouses in Nebraska, Texas and Uruguay, and from a South Dakota company that processes fatty trimmings and treats them with ammonia to kill bacteria.

Using a combination of sources — a practice followed by most large producers of fresh and packaged hamburger — allowed Cargill to spend about 25 percent less than it would have for cuts of whole meat.

Those low-grade ingredients are cut from areas of the cow that are more likely to have had contact with feces, which carries E. coli, industry research shows. Yet Cargill, like most meat companies, relies on its suppliers to check for the bacteria and does its own testing only after the ingredients are ground together. The United States Department of Agriculture, which allows grinders to devise their own safety plans, has encouraged them to test ingredients first as a way of increasing the chance of finding contamination.

Mining Companies Hit Wall on Mountaintop Blasting

2009-10-07T20:56:00.000-04:00

The Wall Street Journal - WHITESVILLE, W.Va.—The coal-mining industry is trying to regroup in the wake of a move by the Obama administration to curtail mountaintop mining to extract coal.

Last week, the Environmental Protection Agency said it was holding up 79 permit applications for mining projects in Central Appalachia due to concerns the projects would damage water quality in nearby streams and violate the Clean Water Act. Another 180 applications are pending.

The companies can resubmit the applications, but uncertainty around permit approval makes planning risky.

"They're trying to find a way to kill us a little bit at a time—death by a thousand cuts," said Michael Snelling, head of surface operations for Richmond, Va.,-based Massey Energy Co., which had five permits delayed by the EPA last week. Mr. Snelling said EPA requirements to protect streams might be too burdensome for other projects.

Mountaintop mining involves blasting off the tops and dumping unused rock and dirt into valleys and streams.

The EPA has long had oversight authority over permits that relate to mining's impact on waterways but has challenged few of them--until this year.

Lost Jobs May Never Return

2009-10-05T14:20:00.001-04:00

The Wall Street Journal - The U.S. has shed 7.2 million jobs since the recession began in December 2007. How long will it take for the economy to replace them? And where will the jobs come from?

The questions haunt people from the unemployed in San Francisco to officials in Washington. Glenn Atias lost his job as a $100,000-a-year statistician at a market-research firm in the Bay Area last summer when the work was outsourced to India. At 46 years old, he pores over job ads and online postings daily. "I'm stuck watching hundreds of thousands of people in my position grow in ranks each and every month," said Mr. Atias, who lives in Salton City, Calif., in a house worth less than the mortgage.

When unemployment benefits run out, he said, "I literally don't know how I'll pay my mortgage, how I'll pay my health care."

Economists say that when demand picks up -- as it is starting to do -- jobs eventually will follow. History shows that has always been true. But guessing which jobs will be created over the long run is often fruitless. Many of tomorrow's jobs don't exist today.

In 2003, Treasury Department chief economist Alan Krueger, then at Princeton, calculated that a quarter of U.S. workers at the time were in jobs the Census Bureau didn't even list as occupations in 1967.

Determining which fields will become popular is next to impossible. "It is very difficult, without a crystal ball, to know where the economy will be in 10 years," said Susan Wolff, chief academic officer of Columbia Gorge Community College in The Dalles, Ore. "Sometimes we think we're doing a pretty good job if we can guess where the economy is going to be in five years."http://online.wsj.com/article/SB125470053662262957.html

Profits for Buyout Firms as Company Debt Soared

2009-10-05T13:51:00.000-04:00

Noble Rogers worked at Simmons for 22 years, mostly at a factory outside Atlanta. When the plant closed last year, he was left with a bitter tast.

Editor's note: Great story about the lessons of debt, buyouts and private equity.

The New York Times - For most of the 133 years since its founding in a small city in Wisconsin, the Simmons Bedding Company enjoyed an illustrious history.

Presidents have slumbered on its mattresses aboard Air Force One. Dignitaries have slept on them in the Lincoln Bedroom. Its advertisements have featured Henry Ford and H. G. Wells. Eleanor Roosevelt extolled the virtues of the Simmons Beautyrest mattress, and the brand was immortalized on Broadway in Cole Porter’s song “Anything Goes.”

Its recent history has been notable, too, but for a different reason.

Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company — the seventh time it has been sold in a little more than two decades — all after being owned for short periods by a parade of different investment groups, known as private equity firms, which try to buy undervalued companies, mostly with borrowed money.

For many of the company’s investors, the sale will be a disaster. Its bondholders alone stand to lose more than $575 million. The company’s downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons, most of that time at a factory outside Atlanta. He is one of 1,000 employees — more than one-quarter of the work force — laid off last year.

But Thomas H. Lee Partners of Boston has not only escaped unscathed, it has made a profit. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company’s fortunes have declined. THL collected hundreds of millions of dollars from the company in the form of special dividends. It also paid itself millions more in fees, first for buying the company, then for helping run it. Last year, the firm even gave itself a small raise.

Wall Street investment banks also cashed in. They collected millions for helping to arrange the takeovers and for selling the bonds that made those deals possible. All told, the various private equity owners have made around $750 million in profits from Simmons over the years.http://www.nytimes.com/2009/10/05/business/economy/05simmons.html

Video: http://www.nytimes.com/packages/html/business/2009-private-equity/index.html

BusinessWeek, on the Block and Ailing

2009-09-14T09:50:00.000-04:00

Editor's Note: BusinessWeek rode high on tech advertising during the 1990s making a lot of money for its owner, McGraw Hill. But during the past ten years, the publication has been squeezed between dailies like the New York Times and the Wall Street Journal on one end and monthly and bi-monthly publications Forbes and Fortune on the other end.

The New York Times - Numbers sometimes tell a story. And the figures for BusinessWeek suggest it is having one tough time.

Bids are due Tuesday for the magazine, which McGraw-Hill has owned for 80 years. A handful of potential investors, including Bloomberg L.P., are still looking at the company. But before buyers had a chance to comb through the magazine’s finances, initial interest had been much higher. BusinessWeek lost more than $43 million last year, though that included certain costs like rent and overhead, which a document sent to potential investors suggests McGraw-Hill has been charging too much for. A buyer would also have to assume much of the $31.9 million in debt.

As the thwarted sellers of The Rocky Mountain News and The Seattle Post-Intelligencer have discovered, this year is not a good time to sell news media outlets. Print advertising is down, and readers’ attention is being diverted to the Web. Business magazines, including BusinessWeek and rivals like Forbes and Fortune, have been hit particularly hard, as automotive, financial services and technology advertisers have pulled back their marketing spending.

So far, about six investors appear interested in BusinessWeek, including OpenGate Capital, which bought TV Guide for $1 last year; Warburg Pincus; and Platinum Equity, which is also bidding for The Boston Globe.

Other candidates include Bloomberg; Joe Mansueto, the founder of the ratings firm Morningstar who bought Inc. and Fast Company in 2005; and Bruce Wasserstein, the chairman and chief executive of Lazard, who also owns New York magazine.

But Peter P. Appert, who is an analyst at Piper Jaffray, argued that BusinessWeek’s future was cloudy. “I don’t think the prospect of meaningful earnings recovery is particularly good,” he said.

BusinessWeek executives declined to comment for this article, as did a McGraw-Hill spokesman, Steven H. Weiss. He referred a reporter to a July news release in which McGraw-Hill said it was “exploring strategic options” for the magazine.http://www.nytimes.com/2009/09/14/business/media/14bizweek.html

'Fastest Dying Cities' Meet for a Lively Talk

2009-08-13T12:00:00.000-04:00

Wall Street Journal - DAYTON, Ohio -- Here's an idea for saving Rust Belt cities: Tell bloggers and radio stations to stop calling your town a basket case.

That was one suggestion from representatives of eight of the 10 cities labeled last year as America's fastest dying. They met at the Dayton Convention Center last weekend to swap ideas about how to halt the long skid that's turned cities like Detroit, Cleveland and Buffalo, N.Y., into shorthand for dystopia.

The city representatives lunched on $6 sloppy Joes and commiserated through Power Point strategy sessions: Lure back former residents, entice entrepreneurs and artists, convert blighted pockets into parkland.

What emerged was a sense of desperation over the difficulty of rebounding from both real problems -- declining populations, dwindling tax bases -- and perceived woes.

Valarie McCall expressed frustration at marketing a city that still echoed the image of the polluted Cuyahoga River catching fire. "That was 1969," said Ms. McCall, Cleveland's chief of governmental affairs. "Come on, I wasn't even born then."

Last year, Forbes.com used long-term trends of unemployment, population loss and economic output to devise a list of "America's Fastest Dying Cities." A few months later, Peter Benkendorf was eating chicken tacos when he hatched the idea for the symposium.http://online.wsj.com/article/SB125011106498326993.html

Inside G.E., a Little Bit of Enron

2009-08-13T11:54:00.000-04:00

The New York Times - A decade ago, General Electric was the shining star of American business. Its longtime chief executive, Jack Welch, was named manager of the century by Fortune Magazine, and its stock seemed always to go up.

It ran a bewildering array of businesses but somehow always managed to make the expected profits. That record was viewed as proof of superior management, and the battle to succeed Mr. Welch in 2001 was watched all over the business universe. When a winner emerged, the losers quickly were hired to run other major companies.

G.E. is different now. The stock has fallen and the aura has dissipated.

This week General Electric agreed to pay $50 million to settle a suit filed by the Securities and Exchange Commission that said the company fiddled with its books repeatedly early in this decade. In at least one case, that allowed it to preserve its reputation for making the numbers. Some of the details are eerily reminiscent of Enron.http://www.nytimes.com/2009/08/07/business/07norris1.html

Sources say Forbes.com CEO stepping down

2009-07-19T15:19:00.000-04:00

For years, Forbes.com has been the envy of the financial press, with Web traffic far surpassing that of competitors such as BusinessWeek.com and WSJ.com.

But the site's fortunes have taken a turn for the worse lately, and now someone is apparently answering for it: Jim Spanfeller, president and CEO of Forbes.com and executive vice president of electronic publishing, is stepping down, according to sources. The announcement is expected as soon as Thursday, when the company has a scheduled sales meeting.http://www.dailyfinance.com/2009/07/15/sources-say-forbes-com-ceo-stepping-down/

State Budget Woes Are Poised to Get Worse

2009-06-29T08:30:00.000-04:00

The Wall Street Journal - State budgets look bad now, but they are set to get worse.

The bulk of funds from the federal government's stimulus package will be allocated by 2011, but tax collections aren't likely to be enough to take their place -- even if the economy is recovering.

The drop in tax revenue is set to be deeper and last longer as collections have become more sensitive to business cycles in recent years. At the same time, states face growing health-care costs and the need to replenish pension programs funded by decimated investments. And some of the stimulus funds expand programs that will require state money to sustain them after the federal largesse runs out.http://online.wsj.com/article/SB124398568837379031.html

Credit Relief May Not Last Long

2009-06-01T07:53:00.000-04:00

The New York Times - The experience of being choked to death can concentrate a person’s attention. When the chokehold is removed, a feeling of relief, perhaps even of exhilaration, is to be expected.allowing a person to breathe may not be enough to restore him to health.

In that regard, 2009 is starting to feel a little like 1980.

Then, as in recent months, a sudden credit contraction choked off economic activity. When the credit squeeze eased, a sense of relief spread. Within a few months, consumer confidence leaped amid expectations that both employment and business conditions would soon improve.

The improvement came, but it did not last long.

When the current credit crisis was at its worst, even financially solid companies could not get short-term financing. Banks did not trust one another, and trade financing dried up. One result was a collapse in inventories, as imports sagged even more than final demand.

Now, thanks to government financing of debts as diverse as mortgages and commercial paper, credit is more readily available. That should provide a lift to orders and at least a temporary boost for countries, including China and Germany, that rely on export marketshttp://www.nytimes.com/2009/05/29/business/economy/29norris.html

Preparing to Sell E-Books, Google Takes on Amazon

2009-06-01T07:47:00.000-04:00

The New York Times - Google appears to be throwing down the gauntlet in the e-book market.

In discussions with publishers at the annual BookExpo convention in New York over the weekend, Google signaled its intent to introduce a program by that would enable publishers to sell digital versions of their newest books direct to consumers through Google. The move would pit Google against Amazon.com, which is seeking to control the e-book market with the versions it sells for its Kindle reading device.

Google’s move is likely to be welcomed by publishers who have expressed concerns about Amazon’s aggressive pricing strategy for e-books. Amazon offers Kindle editions of most new best sellers for $9.99, far less than the typical $26 at which publishers sell new hardcovers. In early discussions, Google has said it will allow publishers to set consumer prices.

Google’s e-book retail program would be separate from the company’s settlement with authors and publishers over its book-scanning project, under which Google has scanned more than seven million volumes from several university libraries. A majority of those books are out of printhttp://www.nytimes.com/2009/06/01/technology/internet/01google.html

Low Mortgage Rates Are Going, Going…

2009-06-01T07:40:00.000-04:00

The Wall Street Journal - If you're looking for a new 30-year mortgage, last week's events from the financial markets carry a very simple message: Get 'em cheap while you still can.

Rates on conforming 30-year loans jumped dramatically in just a few days, ending the week at an average of 5.27% according to Bankrate.com. That's still OK by historic standards, but it's a jump from the levels seen just a few weeks ago, when you could get loans at 4.75% or below.

The underlying cause isn't hard to find. Rising government debts, and burgeoning hopes of an economic recovery, are pushing up long-term interest rates on government debt. The yield on the 10-Year Treasury, which was barely 2% near the end of last year, surged to 3.67% late last week before settling back slightly. And that, in turn, pushes up rates on other long-term loans.

What does this mean for you?

This surge in mortgage rates, if it continues, is ominous news all around. It's bad for those trying to refinance an existing mortgage, those looking to buy a new home, and those looking to sell their home. It may also be bad for the stock market, and maybe even for the dollar, too. More on that later.
For those trying to refinance: If you hadn't locked in the rate already, you are probably out of luck. You may be stuck with higher rates.

Ironically, if you were stuck crawling through the refi process when the rates jumped, you may be a victim of new mortgage rules. These were introduced in the last year to prevent another subprime scandal. They have slowed down the loan approval process and have discouraged most lenders from offering rate locks until other steps have been completed. "Lenders are not locking in borrowers' rates until the (home) appraisals are in," says Paul Sapienza, broker at Drew Mortgage in Boston. Until last year you could lock in a rate while you refinanced, or even looked for a new home. "That's over," Mr Sapienza says.

For those looking to buy a new home: Be aware this rate hike -- to 5.25%, from 4.75% recently -- can add quite a bit to your expenses. It will cost an extra $50 a month for someone buying a typical $200,000 residence with an 80% loan. http://online.wsj.com/article/SB124381108186970343.html

Dollar's Woes Not Over

2009-06-01T07:37:00.000-04:00

The Wall Street Journal - After three months of losses for the U.S. dollar against the euro, what's one more week?

Traders say the dollar, which fell to its lowest level this year on Friday, is likely to continue to trend lower this week as investors sift through a number of key data reports, as well as news from the European Central Bank policy meeting, and react to another round of Federal Reserve Treasury purchases.

The bond purchases may be the key to the dollar's performance in the first part of the week, as they could drive down yields, particularly as the Treasury won't have any note sales this week.

With market rates falling, inflation fears will come to the fore again.

Not that the dollar's chances for a bounce are nil.

"The dollar-positive scenario comes if the Fed allows a bond market selloff to undermine housing," said John Normand, a foreign-exchange analyst at J.P. Morgan Chase. "But officials are unlikely to take this gamble so early in the recovery."

Ultimately, the most vulnerable currency in the near term is the one that is most exposed to quantitative easing.

Given the Fed's commitments on asset purchases, the dollar fits the bill, which will give the euro room to advance after hitting $1.4168 Friday, a level unseen since Decemberhttp://online.wsj.com/article/SB124381671772870785.html

Fed Mortgage Efforts Prove Costly

2009-06-01T07:34:00.000-04:00

The Wall Street Journal - The U.S. Federal Reserve's program to keep mortgage rates low by buying securities and Treasury bonds so far has been costly and seems to be having a fleeting impact.

An analysis of the timing of the Fed's purchases of mortgage-backed securities by J.P. Morgan Chase & Co. shows the Fed is "under water" on its portfolio by about 10%, and it would have to take about $5 billion in losses if it were to mark its portfolio to the market.
Since last autumn, the Fed has purchased more than $480 billion, out of an allowance of $1.25 trillion, in mortgage-backed securities and more than $130 billion, of $300 billion, in Treasury bonds to help keep mortgage rates low. Keeping rates low lets people refinance their mortgages to reduce payments and stay in their homes. It also encourages them to consider snapping up bargains in the still-ailing housing market. Many analysts believe the Fed plans to hold these securities until they mature in 10 years or so, with no plans to sell them into the market, so the losses will probably never be realized.

The central bank owns the majority of securities sold in 2009, with interest payments of 4%, 4.5% and 5%, according to J.P. Morgan's research. As interest rates rise, the value of these securities falls because new bonds are backed with higher-interest mortgage loans and thus pay higher coupons.

The Fed has spent about $2,500 per borrower, by J.P. Morgan's analysis -- more than it costs a typical mortgage borrower to refinance their debt. Higher fees and adjustments based on a borrower's credit score or home's value have been an impediment to borrowers looking to refinance a mortgage, damping the refinancing wave the Fed hoped for, analysts sayhttp://online.wsj.com/article/SB124380834210470271.html#mod=testMod

Jittery Bond Market Threatens President's Agenda

2009-05-30T07:09:00.000-04:00

The Wall Street Journal - WASHINGTON -- Senior Obama administration officials said Friday that policy adjustments necessary to contain soaring budget deficits would be made once an economic recovery takes hold, in response to growing concerns about a run-up in long-term interest rates.

Treasury Secretary Timothy Geithner, National Economic Council chief Lawrence Summers and Office of Management and Budget director Peter Orszag said in separate interviews that the administration was acutely aware that rising interest rates pose a threat to the improving U.S. economy.
[chart]

Yields on 10-year Treasury notes have risen 1.5 percentage points this year as bond traders pull back amid worries about rising federal debt. Higher yields will leave the government with higher interest costs and still higher deficits. They could also push up other forms of interest rates, making borrowing more expensive for many people.

On Thursday, the Treasury Department is expected to announce an auction of roughly $65 billion in three-year, 10-year and 30-year notes and bonds, and the result will be closely watched.

"We're going to do what's necessary," Mr. Geithner said. "That's the only way you're going to get a strong, sustainable recovery." As soon as a recovery takes hold, the administration will reduce the deficit to a sustainable level, he said, adding, "That's difficult, but critically important."

Mr. Orszag said the administration's commitment to fiscal rectitude would become clear in coming weeks when President Barack Obama demands that any health-care plan drafted in Congress be fully paid for. That pledge, he said, "is ironclad, no ambiguity, not up for negotiation."

Additional steps on the deficit may become necessary, he added, and the administration is committed to turning to Social Security next.

"There is not a day that goes by that the president and the economic team do not focus on the long-term commitment to decrease the deficit," Mr. Summers said.

The comments by the administration officials were aimed at calming worries on Wall Street, and indicated concern that rising interest rates might imperil the president's domestic agenda, as they have done to the plans of previous Democratic administrations.

Some officials tried to play down market fears about federal borrowing. The jump in long-term interest rates, both in Treasurys and mortgages, is more a product of technical factors, they argue, than a reaction to Washington's borrowing.http://online.wsj.com/article/SB124364263595268139.html

Consumers Are Dealt a New Hand in Credit Cards

2009-05-27T08:00:00.000-04:00

The New York Times - At first glance, the sweeping credit card legislation that passed the Senate on Tuesday looks like a huge victory for consumers. The bill, after all, contains relief from penalty fees and certain interest rate spikes.

But for people who pay off their bills each month, and milk the card rewards programs for everything they’re worth, there is some cause for concern.

For months now, the card companies have been threatening to cut rewards programs sharply to make up for revenue lost because of the new restrictions.

My guess, however, is that this talk is just so much saber-rattling.

Card companies want to make money, and big spenders help them do it, even if those cardholders do not go into debt.

First, let’s lay out the things we know will change because of the new legislation. The bill is chock-full of new rules, which will take effect at various points in the year after President Obama signs the final legislation.

¶There are new restrictions on when card companies can increase the interest rate on balances you’ve already run up. The bill says that banks generally must wait until you’re 60 days late in making the minimum payment before applying a penalty interest rate to your existing debt.

¶Card companies will have to give 45 days’ notice before raising their interest rates. There’s also a notice requirement for any significant change to a card’s terms, which may keep companies from surprising customers who have been saving their loyalty points for years with huge alterations in rewards programs.

¶Banks must send out your bill no later than 21 days before the due date. They cannot send it with, say, 14 days to go, hoping that you won’t get a check to the bank in time to avoid a late fee.

¶If the card company gets your payment by 5 p.m. on the due date, it’s on time, according to the new rules. No more of this early morning deadline nonsense, which led to late fees for payments that arrived with the afternoon mail. Also, no more late fees if the due date is a Sunday or holiday and your payment doesn’t arrive until a day later.

¶Let’s say you’re paying different interest rates on the debt on a single card — one for a cash advance, another for a balance transfer and a third for new purchases. Now, when you make a payment over the minimum balance, banks will have to apply it to the highest-interest debt first. I bet you can guess how some banks used to handle this sort of situation.

¶Banks will need your permission before allowing you the “privilege” of spending more than your credit limit and paying a fat $39 fee for that privilege. The card companies should be ashamed that they needed a law to make this “opt in” requirement a reality.

¶If you’re a student, it will become harder to get a credit card. No one under 21 can have a card unless a parent, legal guardian or spouse is the primary cardholder. Students with their own income can submit proof and ask for an exception to the co-signer requirement. http://www.nytimes.com/2009/05/20/your-money/20money.html

Credit vs. Debit: http://topics.nytimes.com/your-money/credit/credit-and-debit-cards/index.html?scp=1-spot&sq=credit%20card&st=cse

Video:http://www.nytimes.com/2009/05/20/your-money/20money.html

U.S. Expected to Own 70% of Restructured G.M.

2009-05-27T07:57:00.000-04:00

DETROIT — In better times, many employees of General Motors called their company “Generous Motors” because of its rich benefits.

Now G.M. may stand for something else: Government Motors.

The latest plan for the troubled automaker, which is expected to file for bankruptcy by Monday, calls for the Treasury Department to receive about 70 percent of a restructured G.M.

Including the more than $20 billion that has already been spent to prop up G.M., the government will provide G.M. at least $50 billion to get the company through Chapter 11, people with direct knowledge of the situation said Tuesday. By some estimates in Detroit, tens of billions beyond that amount may be required.

The United Automobile Workers, meanwhile, will hold up to 20 percent through its retiree health care fund, and bondholders and other parties will get the remaining share. Shareholders would be virtually wiped out.

Although it has been clear for weeks that Treasury would have a majority stake of a reconstituted G.M., a 70 percent share — a figure that could still change — is higher than what had been expected. http://www.nytimes.com/2009/05/27/business/27auto.html

Stocks of Retailers Surge on Consumer Optimism

2009-05-27T07:52:00.000-04:00

After a report showing increased consumer confidence, stocks in the U.S. rose following several days of declines. At the New York Stock Exchange on Tuesday, Glenn Pohs worked on the exchange’s options floor.

The New York Times - After several days of declines on concerns about the government’s borrowing needs and the soundness of the dollar, stock markets rebounded Tuesday on a surprising bounce in consumer confidence. The private Conference Board reported that consumer sentiment rose again in May, hitting its highest levels in eight months.

As traders returned to Wall Street after the holiday weekend, the glints of good news in those numbers were enough to outweigh other figures showing that housing prices continued to tumble as fast as ever. Every sector of the Standard & Poor’s 500-stock index was higher, led by financial stocks and consumer-geared companies like McDonald’s, the Home Depot and Lowe’s home improvement chains, and the Walt Disney Company.

The Dow Jones industrial average was up 196.17 points, or 2.37 percent, to 8,473.49, while the S.& P. 500 was 2.6 percent, or 23.33 points, higher at 910.33.

The technology-focused Nasdaq outpaced other indexes, rising 3.5 percent, or 58.42 points, to 1,750.43, on gains among computer makers, search engines and Internet firms as analysts upgraded Apple. Apple, the maker of iPhones and iPods, rose 6.8 percent to $130.78 a share.

Big banks like Goldman Sachs, Wells Fargo and JPMorgan Chase closed higher, bolstered by optimism that improving consumer sentiment could translate into stability for the financial system. Investors also edged back toward the dollar, a week after they pushed it to its lowest point in five months on concerns about inflation, the expanding supplies of new currency and big federal deficits. The dollar index, which measures the dollar’s performance against six major currencies, was up 0.1 percent.

As the dollar gained ground, gold prices fell moderately.

The jump in consumer confidence also helped the oil markets, where prices settled 78 cents higher, to $62.45 a barrel.http://www.nytimes.com/2009/05/27/business/27markets.html

Consumer Confidence Rose Sharply in May

2009-05-27T07:50:00.000-04:00

Associated Press - A private research group said Tuesday that consumer confidence in May soared to the highest level since last September amid tentative signs that the economy was improving.

The Conference Board said that its Consumer Confidence Index, which had sharply increased in April, zoomed past economists’ expectations to 54.9, from a revised 40.8 in April.

Economists surveyed by Thomson Reuters were expecting 42.3.

The reading marks the highest in eight months, when the level was 61.4. The levels are also closer to the year-ago reading of 58.1.

The present situation index, which measures how shoppers feel now about the economy, rose to 28.9 from 25.5 last month. But the Expectations Index, which measures shoppers’ outlook over the next six months, climbed to 72.3 from 51.0 in April.

“Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months,” Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. “While confidence is still weak by historic standards, as far as consumers are concerned, the worst is now behind us.”

The upbeat reading was good news for merchants, which are counting on consumers to be in the mood to spend, after confidence plummeted to record lows.

The Consumer Confidence survey — whose responses were received through May 19 from a representative sample of 5,000 households — showed a marked improvement in consumers’ outlook for jobs. The percentage of consumers expecting more jobs in the months ahead increased to 20.0 percent, from 14.2 percent, while those anticipating fewer jobs declined to 25.2 percent, from 32.5 percent. The proportion of consumers anticipating an increase in their incomes edged up to 10.2 percent, from 8.3 percent.http://www.nytimes.com/2009/05/27/business/economy/27consumer.html

Recession Turns Malls Into Ghost Towns

2009-05-22T13:08:00.000-04:00

The Wall Street Journal - CHARLOTTE, N.C. -- Malls, those ubiquitous shopping meccas that sprang up in the 1950s, are dwindling in number, with many struggling properties reduced to largely vacant shells.

The long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called "dead malls" -- centers debilitated by anemic sales and high vacancy rates -- will swell to more than 100 by the end of this year.

In the 12 months ended March 31, U.S. malls collectively posted a 6.5% decline in tenants' same-store sales, according to Green Street Advisors Inc., a real-estate research firm. The recent slump was led by an average 7.3% sales drop at Simon Property Group Inc., the operator with the largest number of mall locations.

The industry's woes are worsening. Thinning customer traffic, and subsequent hits to tenants' sales and profits, prompted Standard & Poor's Corp. last month to lower the credit ratings of the department-store sector. That knocked Macy's Inc. and J.C. Penney Co. into junk territory and pushed others deeper into junk. Sears Holdings Corp., a cornerstone tenant at many malls, is expected to close 23 stores this month and next.http://online.wsj.com/article/SB124294047987244803.html

Is the U.S. Going Socialist?

2009-05-20T08:32:00.001-04:00

Slump Creates Lack of Mobility for Americans

2009-05-20T08:31:00.000-04:00

Stranded by the nationwide slump in housing and jobs, fewer Americans are moving, the Census Bureau said Wednesday.

The bureau found that the number of people who changed residences declined to 35.2 million from March 2007 to March 2008, the lowest number since 1962, when the nation had 120 million fewer people.

Experts said the lack of mobility was of concern on two fronts. It suggests that Americans were unable or unwilling to follow any job opportunities that may have existed around the country, as they have in the past. And the lack of movement itself, they said, could have an impact on the economy, reducing the economic activity generated by moves.

Joseph S. Tracy, research director of the Federal Reserve Bank of New York, said the lack of mobility meant less income for movers and the people they employ and less spending on renovation and on durable goods like appliances. But, Dr. Tracy said, the most troubling prospect is that people were no longer able to relocate for work.

“The thing that would be of deeper concern is if job-related moves are getting suppressed and workers are not getting re-sorted to the jobs that best use their skills,” he said. “As the labor market started to improve, if mobility stays low, you can worry about the allocation of workers.” http://www.nytimes.com/2009/04/23/us/23census.html