In a move that could lead to lower prices for consumers across the country, Maryland has passed a law that prohibits manufacturers from requiring retailers to charge minimum prices for their goods.
The law, which takes effect Oct. 1, takes aim at agreements that many manufacturers have been forcing on retailers, requiring them to charge minimum prices on certain products. The practice has surged since a controversial 2007 U.S. Supreme Court ruling that no longer makes such agreements automatically illegal under federal antitrust law.
Under the new state law, retailers doing business in Maryland -- as well as state officials -- can sue manufacturers that impose minimum-pricing agreements. The law also covers transactions in which consumers in Maryland buy goods on the Internet, even when the retailer is based out of state. That could potentially affect manufacturers throughout the country.
Minimum-pricing agreements keep retail profit margins higher, which in turn keeps retailers from pressuring manufacturers to lower the wholesale prices they pay for those goods. Suppliers also think that eliminating pricing competition can help retailers spend more money promoting their products to consumers. But certain retailers -- particularly online ones -- that attract customers because of low prices say the agreements stifle competition and gouge consumers.
Maryland's legislation is one of a series of recent initiatives aimed at circumventing the Supreme Court decision. A congressional subcommittee is scheduled to hold a hearing today in which several opponents of minimum-pricing agreements are expected to testify, including eBay Inc. and Federal Trade Commissioner Pamela Jones Harbour.http://online.wsj.com/article/SB124087840110661643.html
Wednesday, April 29, 2009
Poll Finds Obama More Popular With Public Than Policies
WASHINGTON -- A hundred days into his presidency, Barack Obama's standing with the public remains high, increasing the odds he can enact his ambitious agenda. Most Americans like their new president, even amid some reservations about his policy goals, a new Wall Street Journal/NBC News poll finds.
The poll paints the image of a popular president, but also offers cautionary notes for the White House, including growing worry over the rising federal deficit, a solid majority opposing his release of Bush-era memos on interrogation techniques and slipping support for his signature economic-stimulus bill. Mr. Obama faces both a rising number of people who view him as a liberal rather than a moderate, and a populist concern that he's not tough enough on Wall Street.
There is early, tentative support for some of Mr. Obama's most complex policy goals, including health-care and energy overhauls, and support for most of the major moves he's already made.
Poll Data
But the poll also finds that the president himself is more popular than his policies, a divide that may catch up with him as Congress begins debate over the big issues in earnest.
The poll finds yet another jump in the portion of the public that sees the nation headed in the right direction, despite the continued hard times, to the point where survey participants are now evenly divided between those who see things going in the right direction, and those who believe things are on the wrong track. That's the most optimistic finding in more than five years, and it suggests that the president himself is injecting this optimism into people, and that his own job approval numbers are likely to stay strong, pollsters say.http://online.wsj.com/article/SB124095605121565495.html
The poll paints the image of a popular president, but also offers cautionary notes for the White House, including growing worry over the rising federal deficit, a solid majority opposing his release of Bush-era memos on interrogation techniques and slipping support for his signature economic-stimulus bill. Mr. Obama faces both a rising number of people who view him as a liberal rather than a moderate, and a populist concern that he's not tough enough on Wall Street.
There is early, tentative support for some of Mr. Obama's most complex policy goals, including health-care and energy overhauls, and support for most of the major moves he's already made.
Poll Data
But the poll also finds that the president himself is more popular than his policies, a divide that may catch up with him as Congress begins debate over the big issues in earnest.
The poll finds yet another jump in the portion of the public that sees the nation headed in the right direction, despite the continued hard times, to the point where survey participants are now evenly divided between those who see things going in the right direction, and those who believe things are on the wrong track. That's the most optimistic finding in more than five years, and it suggests that the president himself is injecting this optimism into people, and that his own job approval numbers are likely to stay strong, pollsters say.http://online.wsj.com/article/SB124095605121565495.html
Home Prices Sink Again, but Pace Is a Bit Slower
The Wall Street Journal - Home prices fell sharply in February, but for the first time in 16 months the annual pace of deterioration slowed.
The Standard & Poor's/Case-Shiller index measuring home prices across 20 major cities declined 18.6% in February from a year earlier. That marked a slight improvement from January's 19% annual decline, but half of the cities posted deeper declines than in prior months. On a monthly basis, home prices fell 2.2% from January.
Meanwhile, the Conference Board's measure of consumer confidence surged to 39.2 in April, from 26.9 in March, based on consumers' expectations that the U.S. economy is nearing a bottom. But confidence remains at historically low levels and well below readings associated with strong economic growth.
The latest home-price figures offered an early sign of hope that some of the worst price declines are abating. A separate measure of home prices by the Federal Housing Finance Agency has posted monthly increases for two straight months, though economists doubt that is a sustainable trend. The Case-Shiller measure is expected to fall through much of the year, with smaller declines that would eventually turn into a flattening of home prices.
Prices "are no longer falling off a cliff," said Patrick Newport, an economist at IHS Global Insight. "Instead, they are rolling down a steep hill."
While all cities posted monthly declines, 16 of the 20 declined at a slower pace than they did in January. The Cleveland, Charlotte, N.C., New York and Washington markets showed larger monthly declines in February than they did in the prior month.http://online.wsj.com/article/SB124092346703363431.html
The Standard & Poor's/Case-Shiller index measuring home prices across 20 major cities declined 18.6% in February from a year earlier. That marked a slight improvement from January's 19% annual decline, but half of the cities posted deeper declines than in prior months. On a monthly basis, home prices fell 2.2% from January.
Meanwhile, the Conference Board's measure of consumer confidence surged to 39.2 in April, from 26.9 in March, based on consumers' expectations that the U.S. economy is nearing a bottom. But confidence remains at historically low levels and well below readings associated with strong economic growth.
The latest home-price figures offered an early sign of hope that some of the worst price declines are abating. A separate measure of home prices by the Federal Housing Finance Agency has posted monthly increases for two straight months, though economists doubt that is a sustainable trend. The Case-Shiller measure is expected to fall through much of the year, with smaller declines that would eventually turn into a flattening of home prices.
Prices "are no longer falling off a cliff," said Patrick Newport, an economist at IHS Global Insight. "Instead, they are rolling down a steep hill."
While all cities posted monthly declines, 16 of the 20 declined at a slower pace than they did in January. The Cleveland, Charlotte, N.C., New York and Washington markets showed larger monthly declines in February than they did in the prior month.http://online.wsj.com/article/SB124092346703363431.html
Fed Gets a Test on Treasurys
The Wall Street Journal - Treasurys slumped Tuesday, and the 10-year note's yield rose above 3%, as the market tested the Federal Reserve ahead of the end of its monetary-policy-setting meeting on Wednesday after a so-so five-year note auction and stronger data.
The 10-year yield rose as high as 3.03% following the auction as losses picked up speed. Treasurys had started to weaken midmorning after data that showed a surprise jump in consumer confidence this month. That figure erased early gains spurred by continued worries about the health of the banking sector.
The 10-year yield has bounced around 3% for most of the month, but had failed to close above that level since mid-March, before the Fed began its Treasury-buying program. Late Tuesday, the 10-year note was yielding 3.002%.
Strategists are focusing on 3.04% as the next key level if supply concerns continue to push yields higher, followed by 3.10% and then 3.25%.
Reaching 3.25% would likely concern policy makers, said Carl Lantz, interest-rate strategist at Credit Suisse in New York, as it could force mortgage rates to rise above 5%. The Fed may then decide to increase its purchases of Treasurys, a program it kicked off March 25 to help drive down consumer borrowing rates.
"There's more of a sense we could see the market break now and test the Fed's resolve to be more aggressive" in its buying, Mr. Lantz said, adding he doesn't believe the Fed will refer to any added buying in its policy-meeting statement Wednesday.
Instead, the Fed is likely to stress that it will work to keep long-term borrowing rates low. If it words the statement correctly, Treasurys could rally.
The Fed, though, could choose to surprise market participants Thursday when it buys Treasurys in 10- to 17-year maturities. Its previous foray into buying longer-term Treasurys was relatively small, at $2.5 billion. The Fed could decide to purchase more than it has in the past and send a message to the bond market that it wants to keep long-term yields in check, Mr. Lantz said.
Microsoft and Verizon Plot an iPhone Rival
The Wall Street Journal - Microsoft Corp. and Verizon Wireless are in talks to launch a touch-screen multimedia cellphone on the carrier's network early next year, in an ambitious effort to challenge Apple Inc.'s iPhone, according to people familiar with the matter.
The discussions are a gambit by Microsoft Chief Executive Steve Ballmer to energize a mobile business that has lost buzz among consumers and software developers to Apple's iPhone and Google Inc.'s Android.
Microsoft is a major player in software for cellphones, but it is working hard to develop a new device that will rival Apple's.
Verizon, meanwhile, is pushing on several fronts to extend its smart-phone offerings and compete with AT&T Inc., which is the iPhone's exclusive U.S. carrier.
Verizon has also had discussions in recent months with Apple about partnering on devices other than the iPhone, people familiar with the matter say.
In a recent interview, Verizon CEO Ivan Seidenberg declined to comment on whether Verizon and Microsoft were planning an iPhone-like device.
Microsoft's project, which is code-named "Pink," aims to produce a phone that will extend the tech giant's Windows Mobile operating system, adding new software capabilities. It would also likely include Microsoft's new Windows Marketplace for Mobile, a store for cellphone downloads along the lines of Apple's App Store, these people said.http://online.wsj.com/article/SB124093915558664239.html#mod=testMod
Monday, April 27, 2009
Conde Nast to Shut Portfolio Magazine
CHICAGO (MarketWatch) -- Publisher Condé Nast will shutter Portfolio and its Web site by the end of the second quarter, it said Monday, as declining advertising sales across the industry claim another casualty, this time after only 21 issues.
Portfolio staffers received the news Monday morning from Editor-in-Chief Joanne Lipman.
Condé Nast had previously decided to scale back Portfolio to 10 issues a year from 12.
Last October, Condé Nast, whose other titles include the New Yorker, Vanity Fair and Wired, informed top executives at all 26 of its magazines to make two separate 5% cuts within its budget, reducing both payroll and nonpayroll expenses.
It also said it would fold Men's Vogue into Vogue, the long-running women's magazine, and cut it to two issues a year from a previous 10.
Portfolio, launched in May 2007, centers on the business of media, and as such has chronicled the painful decline of newspapers and magazines as a consumer shift to online readership and a devastating recession have combined to endanger the model that sustained such publications for generations. See First Take item on Portfolio's shutdown.
While newspapers and magazines have tried to create strong presences online, the money they receive for digital ads is not enough to sustain both Web-based and print versions.
Even without the overhead of printing presses and other costs related to the delivery of a print product, an online-only entity could struggle to maintain a newsgathering organization large and experienced enough to do battle amid ever-growing competition. http://www.marketwatch.com/news/story/cond-nast-shut-portfolio-magazine/story.aspx?guid={1DCD02AC-32E9-4BDD-A8C2-6FDE32A41330}&dist=msr_1&print=true&dist=printMidSection
Portfolio staffers received the news Monday morning from Editor-in-Chief Joanne Lipman.
Condé Nast had previously decided to scale back Portfolio to 10 issues a year from 12.
Last October, Condé Nast, whose other titles include the New Yorker, Vanity Fair and Wired, informed top executives at all 26 of its magazines to make two separate 5% cuts within its budget, reducing both payroll and nonpayroll expenses.
It also said it would fold Men's Vogue into Vogue, the long-running women's magazine, and cut it to two issues a year from a previous 10.
Portfolio, launched in May 2007, centers on the business of media, and as such has chronicled the painful decline of newspapers and magazines as a consumer shift to online readership and a devastating recession have combined to endanger the model that sustained such publications for generations. See First Take item on Portfolio's shutdown.
While newspapers and magazines have tried to create strong presences online, the money they receive for digital ads is not enough to sustain both Web-based and print versions.
Even without the overhead of printing presses and other costs related to the delivery of a print product, an online-only entity could struggle to maintain a newsgathering organization large and experienced enough to do battle amid ever-growing competition. http://www.marketwatch.com/news/story/cond-nast-shut-portfolio-magazine/story.aspx?guid={1DCD02AC-32E9-4BDD-A8C2-6FDE32A41330}&dist=msr_1&print=true&dist=printMidSection
Along With New Money, IMF Gets Politically Perilous Tasks
International Monetary Fund officials were nearly giddy in early April when they learned that leaders at the G-20 summit backed a fourfold increase in fund resources to $1 trillion. During a press briefing, IMF Managing Director Dominique Strauss-Kahn used the phrase "the IMF is back" six times.
But at the IMF's spring meeting this past weekend, reality set in. In exchange for the money, the IMF has been handed tough assignments in fighting the global recession and staving off another one. The work will require a political dexterity and willingness to stand up to powerful IMF members that the fund has rarely shown in the past.
"There's been a huge expansion of IMF resources and huge attention to the IMF, but nothing has been done to make members fear IMF surveillance" or oversight, says Adam Posen, deputy director of the Peterson Institute for International Economics, a Washington think tank.
The new facility has won plaudits from some developing countries, but the IMF will still have to make tough political calls. Only nations ranked highly by the IMF can qualify for credit line. The IMF often forces other borrowers to cut spending or raise interest rates even if that deepens a downturn, though the IMF has taken steps to protect some programs for the poor.
The disparate treatment has prompted complaints in Turkey, Pakistan, Eastern Europe and elsewhere that the IMF is playing favorites, and it may lead to pressure on the fund to ease its standards. The World Bank has tried to reduce the effect of the budget cuts by financing infrastructure projects that otherwise might be jettisoned.
Pressure on the IMF will ramp up when it must decide whether to renew the credit lines after their one-year terms. Saying "no" would undermine a country's economic standing; saying "yes," if the country's policies don't warrant it, would undermine IMF credibility.http://online.wsj.com/article/SB124078041608357051.html#mod=todays_us_page_one
About $500 billion of the new funds are earmarked for the IMF's main job of bailing out troubled countries. The IMF has introduced a credit line that doesn't require borrowers to make the kinds of painful economic changes -- cutting spending, slashing subsidies -- that have turned the IMF into political poison in much of Latin America and Asia. Mexico, Poland and Colombia have signed up for the credit line.
But at the IMF's spring meeting this past weekend, reality set in. In exchange for the money, the IMF has been handed tough assignments in fighting the global recession and staving off another one. The work will require a political dexterity and willingness to stand up to powerful IMF members that the fund has rarely shown in the past.
"There's been a huge expansion of IMF resources and huge attention to the IMF, but nothing has been done to make members fear IMF surveillance" or oversight, says Adam Posen, deputy director of the Peterson Institute for International Economics, a Washington think tank.
The new facility has won plaudits from some developing countries, but the IMF will still have to make tough political calls. Only nations ranked highly by the IMF can qualify for credit line. The IMF often forces other borrowers to cut spending or raise interest rates even if that deepens a downturn, though the IMF has taken steps to protect some programs for the poor.
The disparate treatment has prompted complaints in Turkey, Pakistan, Eastern Europe and elsewhere that the IMF is playing favorites, and it may lead to pressure on the fund to ease its standards. The World Bank has tried to reduce the effect of the budget cuts by financing infrastructure projects that otherwise might be jettisoned.
Pressure on the IMF will ramp up when it must decide whether to renew the credit lines after their one-year terms. Saying "no" would undermine a country's economic standing; saying "yes," if the country's policies don't warrant it, would undermine IMF credibility.http://online.wsj.com/article/SB124078041608357051.html#mod=todays_us_page_one
About $500 billion of the new funds are earmarked for the IMF's main job of bailing out troubled countries. The IMF has introduced a credit line that doesn't require borrowers to make the kinds of painful economic changes -- cutting spending, slashing subsidies -- that have turned the IMF into political poison in much of Latin America and Asia. Mexico, Poland and Colombia have signed up for the credit line.
Eight Years After Bank's Seizure, a Depositor Waits
The Wall Street Journal - Fran Sweet was an early victim of the subprime-mortgage fiasco. Now, the Downers Grove, Ill., retiree feels victimized again -- this time by Uncle Sam.In 2001, Ms. Sweet says she put her life savings of nearly $600,000 into accounts at Superior Bank of Hinsdale, Ill. About a month later, the Federal Deposit Insurance Corp. seized Superior because of alleged improper financial and accounting practices related to its subprime business. Much of her money, along with deposits of hundreds of other Superior customers, was frozen because it exceeded the $100,000 limit on FDIC insurance at the time. Since then, the FDIC has been making periodic payments to such depositors to cover some of their losses.
[Fran Sweet]
Earlier this year, FDIC officials told Ms. Sweet her payments had been interrupted, she says. The reason: The agency needed any available Superior-related funds to pay off a $90 million lawsuit settlement with Beal Bank. The Plano, Texas, bank had accused the FDIC of misleading it about the quality of a portfolio of Superior mortgages bought from the agency for $340 million. Beal alleged some of the loans were made with fraudulent appraisals or inaccurate information about a borrower's income. Many of the loans were made after the FDIC took over Superior. The lawsuit was the subject of a page-one article in The Wall Street Journal last year.
The FDIC didn't acknowledge wrongdoing in the Beal suit and has said it acted in good faith in its dealings with the bank. An FDIC spokesman says Superior-related funds had to be used to pay the Beal settlement because the litigation is related to the collapsed bank's loans. The spokesman didn't say when payments to depositors might resume. The FDIC has repaid about 70% of Superior's uninsured deposits, about average in such cases. Some of the $340 million from the initial Beal transaction went to depositors, he added. Still, given the cost of the Beal settlement, some observers estimate it could be years before payments resume to Superior's depositors, still owed over $16 million, according to FDIC records. At least one Superior depositor has died waiting for her money.http://online.wsj.com/article/SB124079290213557875.html?mg=com-wsj
Friday, April 24, 2009
States help with downpayments
The Wall Street Journal - Don’t have enough money to put down on a house? No problem.
States looking to jump-start their housing markets are tapping tactics that fueled the housing boom–and bust. They’re getting creative to help low-to-moderate income buyers make it to the closing table.
Programs differ from state-to-state. Some offer interest-free bridge loans that essentially convert to piggyback mortgages. They loan money to fund down payments and/or closing costs — possibly getting buyers keys for nothing out-of-pocket. The aim is to be a short-term lender, getting the money back once qualified first-time buyers claim a federal tax credit of up to $8,000 for purchases before Dec. 1. States offering deals include Missouri, Ohio and New Jersey in efforts led chiefly by their housing finance agencies.
Participants are screened carefully to ensure they are occupants with documented income and sound credit. Prices are scrutinized to avoid overpayment, buyers undergo education and the loan of choice is a 30-year fixed mortgage, not adjustable-rate loans that reset with crippling payments.
“The borrowers are not entering into more of the exotic loan products that caused a lot of the problems out there today,” said Greg Spurgeon, single-family homeownership administrator for the Missouri Housing Development Commission, which led the way on such programs earlier this year.http://blogs.wsj.com/developments/2009/04/24/cant-afford-the-down-payment-some-states-putting-up-cash/
States looking to jump-start their housing markets are tapping tactics that fueled the housing boom–and bust. They’re getting creative to help low-to-moderate income buyers make it to the closing table.
Programs differ from state-to-state. Some offer interest-free bridge loans that essentially convert to piggyback mortgages. They loan money to fund down payments and/or closing costs — possibly getting buyers keys for nothing out-of-pocket. The aim is to be a short-term lender, getting the money back once qualified first-time buyers claim a federal tax credit of up to $8,000 for purchases before Dec. 1. States offering deals include Missouri, Ohio and New Jersey in efforts led chiefly by their housing finance agencies.
Participants are screened carefully to ensure they are occupants with documented income and sound credit. Prices are scrutinized to avoid overpayment, buyers undergo education and the loan of choice is a 30-year fixed mortgage, not adjustable-rate loans that reset with crippling payments.
“The borrowers are not entering into more of the exotic loan products that caused a lot of the problems out there today,” said Greg Spurgeon, single-family homeownership administrator for the Missouri Housing Development Commission, which led the way on such programs earlier this year.http://blogs.wsj.com/developments/2009/04/24/cant-afford-the-down-payment-some-states-putting-up-cash/
Wednesday, April 22, 2009
Sign of the Times: Manor Price Cut by $50 Million
Leona Helmsley's Dunnellen Hall in Greenwich, Conn., seen here in 1986, went on the market a year ago for $125 million. It's now listed at $75 million.
The Wall Street Journal - Talk about deep discounts. The property downturn has wiped $50 million off the asking price of a single home in what may be the biggest cut ever on a U.S. house.
Now, for a mere $75 million, a buyer can snare the Greenwich, Conn., manor house of the late Leona Helmsley, complete with two pools, more than 13 bedrooms (six for servants) and a walk-in silver closet.
The original asking price was $125 million, and industry veterans can't remember a bigger dollar discount. Last July, a Russian billionaire paid Donald Trump $95 million for a Palm Beach, Fla., mansion originally listed at $125 million.
Helmsley-estate representatives put the 40-acre property up for sale just over a year ago. Even then it was an aggressive price, local brokers said. In October, the estate slashed the price to $95 million.
Called Dunnellen Hall, the 20,000-square-foot Jacobean-style brick mansion is set on a park-like property in the Greenwich back country with views of the Long Island Sound. Brochure photos show a large marble reflecting pool and fountain in front and a back terrace leading to a rock- and plant-lined koi pond, flower beds, a large rectangular pool, many trees and a vast green lawn. The home has more than seven main bedrooms plus a staff wing with six bedrooms.
Mrs. Helmsley, one of the most famous names in New York real estate, and her husband, Harry, paid $11 million for the 1918 house in the early 1980s. They later bought more acreage. The ensuing renovation played a role in her undoing. Among the charges leveled at Mrs. Helmsley when she was convicted in 1989 of tax evasion was that she billed her company for millions of dollars in renovation costs. She served time in federal prison and died in 2007 at age 87.http://online.wsj.com/article/SB124024652556335513.html
Roots of $3 Billion Fraud Case Lie in DVD Players, Not CDOs
MINNEAPOLIS -- Bernard Madoff bilked the public with fictitious securities transactions. Tom Petters, prosecutors allege, gulled his victims with nonexistent DVD players and flat-screen TVs.
Among the spate of alleged scams that have come to light in recent months, the $3.5 billion one that Mr. Petters is charged with is among the most unusual. The Minnesota businessman promised fat returns to investors who lent him money to buy surplus merchandise and resell it to famous retailers like Wal-Mart Stores Inc.
"In fact, there were no such purchases or resales," says a federal indictment. It says both were faked. Mr. Petters denies the charges.
Two months before Mr. Madoff burst onto the public stage last year charged with a Ponzi scheme, authorities here accused Mr. Petters, a gregarious 51-year-old appliance wholesaler, of running a multibillion-dollar fraud of his own. http://online.wsj.com/article/SB124035239814540625.html
Among the spate of alleged scams that have come to light in recent months, the $3.5 billion one that Mr. Petters is charged with is among the most unusual. The Minnesota businessman promised fat returns to investors who lent him money to buy surplus merchandise and resell it to famous retailers like Wal-Mart Stores Inc.
"In fact, there were no such purchases or resales," says a federal indictment. It says both were faked. Mr. Petters denies the charges.
Two months before Mr. Madoff burst onto the public stage last year charged with a Ponzi scheme, authorities here accused Mr. Petters, a gregarious 51-year-old appliance wholesaler, of running a multibillion-dollar fraud of his own. http://online.wsj.com/article/SB124035239814540625.html
Monday, April 20, 2009
For Fed, Big Test Will Be When to Turn Off the Money Pump
The Wall Street Journal - During the past eight months, the Federal Reserve has pumped more than $800 billion of cash into the nation's financial system, an action that in normal times could lead to an ugly inflation surge.
Fed Chairman Ben Bernanke is confident that isn't going to happen this time around. To quiet skeptics and reassure markets, he and his lieutenants have been going out of their way the past few days to explain why inflation isn't in the outlook and to lay out the tools they have in hand to fight it.
The focus on inflation isn't just coming from the Fed. In a report this month, Goldman Sachs economists sought to knock down what they described as a wave of "inflation hype" they had been hearing from clients and bond-market traders.
The focus on the issue comes with the Fed's next policy meeting, set for next week. With so many programs already in train, the central bank looks unlikely to take dramatic new actions at the meeting. Assessing signs of improvement in the economy, contingency planning and deliberations on long-term exit strategies are likely to be important parts of the discussions.
Inflation might seem like a distant worry today. Last week, the Labor Department reported that consumer prices in March fell year over year for the first time in 54 years. Rising unemployment and idle factory floors mean businesses have little incentive or capacity to raise wages or the prices they charge customers. There's a risk, in fact, that if the economy weakens much more, the opposite of inflation -- deflation -- could become a serious threat.
That's why the Fed's goal for now is to get inflation higher, not lower. It has effectively been printing money as part of its rescue efforts. When it buys mortgage-backed securities or makes commercial-paper loans, as it has been doing, it electronically credits its counterparty banks with cash in return, which pumps new cash into the financial system.http://online.wsj.com/article/SB124018636521933417.html#mod=todays_us_page_one
Fed Chairman Ben Bernanke is confident that isn't going to happen this time around. To quiet skeptics and reassure markets, he and his lieutenants have been going out of their way the past few days to explain why inflation isn't in the outlook and to lay out the tools they have in hand to fight it.
The focus on inflation isn't just coming from the Fed. In a report this month, Goldman Sachs economists sought to knock down what they described as a wave of "inflation hype" they had been hearing from clients and bond-market traders.
The focus on the issue comes with the Fed's next policy meeting, set for next week. With so many programs already in train, the central bank looks unlikely to take dramatic new actions at the meeting. Assessing signs of improvement in the economy, contingency planning and deliberations on long-term exit strategies are likely to be important parts of the discussions.
Inflation might seem like a distant worry today. Last week, the Labor Department reported that consumer prices in March fell year over year for the first time in 54 years. Rising unemployment and idle factory floors mean businesses have little incentive or capacity to raise wages or the prices they charge customers. There's a risk, in fact, that if the economy weakens much more, the opposite of inflation -- deflation -- could become a serious threat.
That's why the Fed's goal for now is to get inflation higher, not lower. It has effectively been printing money as part of its rescue efforts. When it buys mortgage-backed securities or makes commercial-paper loans, as it has been doing, it electronically credits its counterparty banks with cash in return, which pumps new cash into the financial system.http://online.wsj.com/article/SB124018636521933417.html#mod=todays_us_page_one
White House to Put Credit-Card Rates in Cross Hairs
The Wall Street Journal - WASHINGTON -- President Barack Obama will soon turn his attention to high credit-card rates, giving a potential boost to congressional efforts to put limits on the industry.
Banks have come under increasing pressure over raising their credit-card rates in recent weeks. Consumer groups are particularly critical of those that raised rates on some existing card holders even as the banks received federal bailout funds. Banks have said credit-market conditions and changes in borrowers' credit scores necessitated the increases.http://online.wsj.com/article/SB124015800037232541.html#mod=testMod
Banks have come under increasing pressure over raising their credit-card rates in recent weeks. Consumer groups are particularly critical of those that raised rates on some existing card holders even as the banks received federal bailout funds. Banks have said credit-market conditions and changes in borrowers' credit scores necessitated the increases.http://online.wsj.com/article/SB124015800037232541.html#mod=testMod
AIG Delays Proxy Filing to Reshuffle Its Board
The Wall Street Journal - A potential shakeup of the board of American International Group Inc. has precipitated a delay in the filing of the insurer's annual proxy statement, according to a person familiar with the matter.
The aim is to expand and reshuffle the company's 11-member board, this person said.
AIG's board has remained largely intact since the government rescued it from the brink of bankruptcy in September.
The maneuvers around the proxy illustrate the complicated oversight of AIG. Upon the rescue, the government took a nearly 80% stake in the company. The government has appointed three trustees to oversee taxpayers' stake.
Now, the American International Group board is accountable mostly to the trustees but also to the other shareholders owning a remaining stake that is slightly more than 20%.
It has been previously disclosed that three board members are expected not to stand for re-election to the board at AIG's coming annual meeting. In recent days there has been uncertainty at top levels of the company about reasons for the delay in the proxy filing, according to people familiar with the matter
The aim is to expand and reshuffle the company's 11-member board, this person said.
AIG's board has remained largely intact since the government rescued it from the brink of bankruptcy in September.
The maneuvers around the proxy illustrate the complicated oversight of AIG. Upon the rescue, the government took a nearly 80% stake in the company. The government has appointed three trustees to oversee taxpayers' stake.
Now, the American International Group board is accountable mostly to the trustees but also to the other shareholders owning a remaining stake that is slightly more than 20%.
It has been previously disclosed that three board members are expected not to stand for re-election to the board at AIG's coming annual meeting. In recent days there has been uncertainty at top levels of the company about reasons for the delay in the proxy filing, according to people familiar with the matter
Consumer Confidence Rebounding in April
The Wall Street Journal - The University of Michigan's reading of consumer confidence climbed in April to its highest point since the financial crisis hit in September, though it remains at historically low levels.
The index rose to 61.9 from 57.3 in March. Consumers expressed more confidence in buying houses and cars because of low prices or discounts. The index fell to a three-decade low of 55.3 in November after credit markets froze and stocks tumbled.
The one-year outlook for inflation deteriorated to 3%, from 2% in March, while the five-year inflation outlook stood at 2.7%, from 2.6% the month before. http://online.wsj.com/article/SB124002391385731451.html
The index rose to 61.9 from 57.3 in March. Consumers expressed more confidence in buying houses and cars because of low prices or discounts. The index fell to a three-decade low of 55.3 in November after credit markets froze and stocks tumbled.
The one-year outlook for inflation deteriorated to 3%, from 2% in March, while the five-year inflation outlook stood at 2.7%, from 2.6% the month before. http://online.wsj.com/article/SB124002391385731451.html
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