IBQ: Calls grow for new global currency; Euro drops again

The foreign exchange market remained highly volatile last week with the US Dollar starting weaker across the board to end the week on a stronger footing, driven by plans and announcements from the US Federal Reserve and US Treasury. The Euro dropped to 1.3255 levels after reaching a high of 1.3735. The Sterling Pound ended the week at 1.4320 after trading between the high and low of 1.4778 and 1.4266. The Japanese Yen dropped to 98.80 levels after reaching a high of 95.40. Finally, the Australian Dollar and Swiss Franc range traded between 0.6893 to 0.7093 and 1.1168 to 1.1435, respectively.

Calls for new global currency
Last week, China’s Central Bank proposed replacing the US Dollar as the international reserve currency with a new global system controlled by the International Monetary Fund (IMF), aiming to create a reserve currency that is disconnected from individual nations and is able to remain stable in the long run. China being the largest holder of foreign exchange reserves, around $2tn, of which around 80 percent is estimated to be in US Dollar, might be concerned about the potential inflationary risk of the US Federal Reserve printing money.
Despite the fact that any shift away from the dollar as a reserve currency would have a massive impact on the US markets, Tim Geithner initially said that the US is willing to explore China’s proposal to give a synthetic global currency a larger role in the international financial system. He also said that the future of the US Dollar in the world system would rest on the US government’s ability to overcome the financial crisis. However, he later mentioned that such a move could take years to implement and that dollar will keep its status as the top reserve currency for a long time. The comments had a major impact on the FX market as the US Dollar dropped substantially when the news came out.

Top Earners in New York

Top Earners in New York ........

Gov. David A. Paterson and leaders of the Legislature have reached a deal to temporarily raise taxes on New York’s highest earners in order to close the state’s yawning budget deficit, lawmakers and officials involved in the talks .

The plan would raise $4 billion a year by creating two new tax brackets, the highest one affecting those who earn $500,000 or more. If approved by rank-and-file lawmakers in the Assembly and State Senate, the tax increases would be a major victory for unions and liberal advocacy groups and a signal of the new balance of power in Albany, where Democrats won control of both houses of the Legislature and the governor’s office in last year’s election.
Although the proposed tax has been called a “millionaires’ tax,” it would affect those with incomes starting at $300,000, who would be taxed at a rate of 7.85 percent. The highest bracket would carry a tax rate of 8.97 percent — the same as New Jersey’s current highest rate.
Officials said that Mr. Paterson, who has argued for months that new income taxes should be a last resort in balancing the budget, accepted the plan after winning significant spending cuts in areas like health care and education.

Mr. Paterson’s willingness to accept the new taxes reflects, in part, how rapidly the state’s finances are deteriorating. Since proposing his budget in December, projected tax revenues for the fiscal year beginning April 1 have dropped by $3.2 billion, while rising Medicaid caseloads will cost $750 million more than originally projected for this year and next year. That shift has left Mr. Paterson and lawmakers with little choice but to employ every possible mechanism to shrink budget gaps.

But the deal also reflects the leverage held by Sheldon Silver, the powerful Assembly speaker, over both Mr. Paterson, whose public approval ratings are low, and Malcolm A. Smith, the Senate leader, whose 32-to-30 Democratic majority has proved difficult to steer.
Mr. Smith’s conference had hoped for a more radical overhaul of income taxes, one that would have created as many as nine brackets and raised as much as $5 billion, some of which could have been used to offset property taxes for homeowners — a major concern for upstate and suburban voters in swing districts. Senate Democrats said Mr. Silver balked at the idea of using any income tax increase to offset property taxes, and Assembly officials said the Senate’s plan was not workable and its financial projections were inaccurate.
However, in a concession to Senate Democrats, Mr. Silver agreed to allow the new taxes to be phased out after three years, rather than the five years he had originally advocated — a time period that would have created enormous political pressure to maintain the increase indefinitely. In a concession to Mr. Paterson, who favored a simpler structure, the three-bracket rate favored by Mr. Silver was reduced to two.
“Raising the personal income tax is going to make it harder for New York to recover economically.

The U.S. economy does not survive

Over the American economy's disappearing jobs and plummeting growth, here's mind bender for you: There is no U.S. economy. The national economy, as we traditionally think of it, is a myth. A fake. Over.
So contend Bruce Katz, Mark Muro and Jennifer Bradley in the latest issue of the journal "Democracy." The United States is not a single unified economy, they say, nor even a breakdown of 50 state economies. Instead, the country's 100 largest metropolitan regions are the real drivers of economic activity, generating two-thirds of the nation's jobs and three-quarters of its output. The sooner we reorient federal economic policies to support this "MetroNation," the quicker we can fix the mess we're in.
"America can no longer pretend that it is a single economy, nor can it imagine that it is a nation of independent, small towns, punctuated by large but isolated urban centers," the Brookings Institution scholars argue. "It must embrace its metropolitan future."
The authors criticize one-size-fits-all federal rules -- on everything from transportation infrastructure policy to workforce training programs -- that stifle the creativity of metro areas and hamper their ability to tailor growth and development efforts to local needs.

But before trying to rework the relationship between the states and Washington, step one may be rethinking what we should even call these places. The "California" economy is really the "San Francisco-Los Angeles-San Diego-San Jose" economy, with those metro areas making up 72 percent of the state's GDP. And Chicago is not Chicago, but the "Chicago-Naperville-Joliet, IL-IN-WI" region, the authors write, almost apologetically. "Unwieldy as they may be, these bureaucratic handles encode the boundary-jumping, state-spanning, increasingly complex reach of metropolitan life."

A succesful U.S. Treasury plan to rid bank balance sheets of poorly performing assets may be the key to unclogging the arteries of global credit marke

New U.S. bank diagram welcomed by funds and debt markets. U.S. Treasury Secretary Timothy Geithner provided further details of the complex program which could rid U.S. bank balance sheets of up to $1 trillion of bad assets. The highlight of the programs was the generous financing offered by the government to persuade private investors to participate.
The Treasury plans to team with investors to buy up to a half-trillion dollars of bad bank assets in hopes of opening up lending again.

An earlier smaller $80 bln plan, known as the Super SIV, failed in October 2007, and the original $700 bln Troubled Assets Relief Program (TARP) failed in late 2008 due to a lack of participation by private investors.
Early market reaction to the U.S. Treasury's latest plan appeared to be more positive on Monday.
"My own view is the plan is a sensible one," Byron Wien, chief investment officer of Pequot Capital Management, told the Reuters Private Equity and Hedge Fund Summit on Monday. "This is a PIMCO, BlackRock sort of thing, where some credit-oriented hedge funds will participate."
The plan is being launched at a time when lawmakers are furious about big bonus payments to executives at bailout recipient American International Group.
In an effort to spur investor participation, U.S. Treasury Secretary Timothy Geithner said private partners in his plan will not face the tough executive pay restrictions that apply to recipients of government bailouts.
GENEROUS INCENTIVES
The main incentive for private investors to participate in the latest U.S. Treasury plan appeared to be generous financing terms to boost the return on the investment.
As well as the initial financing from the Treasury and private investors, the Federal Deposit Insurance Corp (FDIC), a U.S. banking regulator, and the Federal Reserve will be tapped to offer further financing.
Under one part of the plan focused on bad loans, the Treasury will provide up to 80 percent of initial capital alongside investment by private funds. The FDIC would then offer debt financing for up to six times the pooled amount.
In addition, the Treasury will approve up to five investment managers and match their money one-for-one. It will then offer debt financing for 50 percent of the combined capital pool to buy securities banks want to unload.
Two major U.S. money managers, BlackRock and PIMCO, expressed interest in participating in the toxic-assets plan, which could produce big profits.
"From PIMCO's perspective, we are intrigued by the potential double-digit returns as well as the opportunity to share them with not only clients but the American taxpayer," Bill Gross, PIMCO's co-chief investment officer, told Reuters in an interview.

The Australian share market ended higher Monday amid growing expectations U.S.

Australia Shares End 2.4% Higher on US.The Australian share market ended higher Monday amid growing expectations U.S. Treasury will please investors with details of its plans to rid troubled banks of toxic assets.

The big local banks and miners led the S&P/ASX 200 up 2.4%, or 84.5 points, to 3550.3 despite the Dow Jones Industrial Average falling 1.65% Friday.

U.S. Treasury Secretary Timothy Geithner is expected to reveal a three-pronged program to deal with troubled assets on banks' books later Monday involving a series of public-private investments.

A senior trader at a large investment bank noted that DJIA futures had risen 1.7% in anticipation of Geithner's announcement.

"There are press reports circulating that it's going to be a pretty proactive plan of significant size," the trader said.

There is also mounting speculation that Japan is devising another national stimulus package, the trader said. Asian stocks rose in afternoon trading Monday, with the Nikkei up 2.5% and the Hang Seng up 3.1%.

Australian banking stocks all posted solid gains with Australia & New Zealand Banking Group up 4.8% to A$15.25 and Westpac Banking Corp. up 4.3% to A$18.95.

Market leader BHP Billiton added 3.5% to A$33.32 and rival diversified miner Rio Tinto surged 7.9% to A$50.53.

The senior trader said that in the short-term, there still seems to be momentum behind a recent two-week rebound in global equities. "But what we're finding is more clients would like to see the market consolidate for a while before continuing the recovery," he said. "But in these extraordinary markets, who knows."

Lisa Jarvis, a private client advisor at ABN AMRO Morgans in Sydney, said sentiment remains cautious, with the market still watching for signs of whether the U.S. stimulus and bailout packages are making a significant impact.

Also making news Monday, Oz Minerals requested a trading halt on its shares ahead of an announcement on regulatory approvals relating to the A$2.6 billion takeover offer for the struggling copper, gold and zinc miner by China Minmetals Nonferrous Metals Co.

factors are personal characteristics and evolutionary explanations.

American consumers are at their lowest level of confidence

According to the government report, the CPI rose 0.4% in February, the largest one-month gain since July of last year and to make matters worse, the rate of inflation came on top of a 0.3% increase the prior month.

With lawmakers focusing on the governments economic bailout plan, the price of gasoline was to blame for the largest segment of consumer inflation whereas prior to the presidential election Democrats were grandstanding loudly about manipulation of fuel prices until after their Party won the White House. Now that Dems are in control of Congress its all about spending while taxpayers are put on the line to foot the bill.

Tuesday, energy prices rose as hints of an end to the US recession took hold on the commodity exchange trading floor in New York. If the recession is showing signs of ending, energy price speculation will only inflate the cost consumers pay at the pump and could give rise to even more inflation when the government releases its next Consumer Price Index for March.

Today's CPI report showed that February core consumer prices, which exclude energy and food, rose 0.2%, the same level of inflation when compared to January.

Energy prices rose 3.3% in February, the biggest month-over-month gain since last July when prices jumped 8.3%. But the good news is, when comparing the rate of inflation for energy in February to the year-ago period, consumer prices were down 18.5%. But a year-ago, consumers were still in a spending mood, unaware that a recession was at hand.

The US Department of Labor also indicated in its February CPI report that clothing costs increased 1.3%, the biggest monthly gain in 18 years. Auto prices also rose in February, gaining 0.8%, which was the highest rate of inflation since the Fall of 2004.

In other economic news, producer prices inched up 0.1% in February compared to a 0.8% gain the prior month. The PPI, which tracks the rate of inflation on prices received by farms, factories and refineries, indicates alongside today's consumer inflation rate that economic deflation concerns have decreased.

Deflation would mean an economic downward spiral that could push the US economy into a depression. But in looking back to February of 2008, the government now admits that the US economy was already headed towards a recession. That being the case, a year from now, the Obama administration may come clean in calling the current economy depressed.

The rate of unemployment will continue to remain high and while signs of recovery are around, factory workers at the world's biggest heavy equipment maker, Caterpillar (NYSE: CAT), were told that an additional 2,400 of them were being laid off, 1,700 of those in Illinois where Caterpillar is headquartered.

Thursday, the US Department of Labor will release its weekly initial jobless claims report that is expected to show continuing high levels of unemployment.

While the rate of inflation continues to rise for consumers, job security remains the number one issue in US households.

The U.S. mantra of spend, spend, spend is starting to wear thin on the other side of the pond.

Treasury Secretary Timothy Geithner testifies on Capitol Hill Thursday before the Senate Budget Committee.

Europeans Could Balk at Geithner's Call for More Spending.the U.S. calls for more spending to jumpstart the global economy, more Eastern European countries are coming to the table hat in hand, looking for financial help from the International Monetary Fund and other groups .

European countries appear to be at odds with Treasury Secretary Timothy Geithner's fresh calls to unleash more stimulus money and free up a half-trillion dollars to lend to struggling countries.
It could lead to a tense discussion as Geithner heads to Britain to meet with finance officials from the Group of 20 nations Friday and Saturday. Those meetings come ahead of an April 2 summit of the G-20 in London.
As the U.S. calls for more spending, more Eastern European countries also are coming to the table hat in hand, looking for financial help from the International Monetary Fund and other groups -- but does the rest of the world have the money to give?
"We're just getting into the worst of the crisis in a global sense," said Ralph Bryant, a senior fellow at the Brookings Institution who specializes in international economic issues. "Many developing countries ... are just beginning to feel the really bad effects."
But European Union leaders recently rejected a request from Hungary for $241 billion in bailout money for the region.
"I think they're on a different page," Bryant said of U.S. and European financial officials. He said the calls by the U.S. for more stimulus money and international aid likely will stir controversy at the upcoming meetings.
Geithner on Wednesday called for a tenfold increase in the size of an emergency fund the IMF uses to help countries in trouble -- to as much as $500 billion. He also endorsed the IMF's call for countries to enact stimulus packages worth, on average, 2 percent of their GDP.
But in a report last week, the IMF said the U.S. was the only one of the world's seven rich industrial nations -- the Group of Seven -- on track to meet that goal.
"I think that the United States has actually taken a significant lead on a number of these steps that are required," President Obama said Wednesday, calling for "concerted action around the global to jumpstart the economy" at the G-20 meeting.
Some European nations are reticent to take on the kind of national debt the United States has been accumulating in recent months. European critics have charged that the United States' demand for increased stimulus spending was an effort to divert a European call for a major overhaul of regulations governing the financial system to curb the types of excesses in the U.S. that spawned the crisis. At a meeting this week of finance ministers of the 27-nation European Union, officials said they were doing enough already to support the world economy.
"Recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis were not to our liking," Luxembourg Finance Minister Jean-Claude Juncker was quoted as saying after the meeting.
German Finance Minister Peer Steinbrueck recently said finance ministers from the EU's 27 nations were not pleased at U.S. suggestions that Europe has not done enough to stimulate the global economy.
Germany has been criticized for its reluctance to spend and stimulate its economy, Europe's largest. Their stimulus package was about 1.5 percent of its GDP this fiscal year, according to the IMF report. France's was about half that. (Meanwhile, countries like China and Saudi Arabia met or exceeded the United States' level of stimulus spending.)
However, European nations apparently are preparing to sign on to at least a partial version of the calls by the U.S. for more IMF funding.
The Times of London reported Thursday that the European Union was considering lending between $75 billion and $100 billion to the IMF to boost its lending ability. The Union also reportedly is calling for countries to help double IMF resources from $250 billion to $500 billion.
That $250 billion includes the $50 billion fund that the United States is talking about increasing. Calls to boost the fund have mounted as developing countries hit hard by the global downturn, particularly in Eastern Europe, have so far tapped about $50 billion from the IMF since November.
It's unclear whether European nations will go as far as Geithner is suggesting in helping the IMF, however. Bryant said a number of European countries favor raising some of the money from powerhouses like China, rather than shouldering so much of the cost.
The IMF reacted favorably to Geithner's announcement.
"We welcome the proposal from the U.S. Treasury. It's a very positive step toward assuring the global financial system that the IMF has the appropriate level of resources to meet the needs of its members," IMF spokesman William Murray said. He said the IMF is "optimistic" it can at least double its resources in the way the EU is suggesting.
Japan already has committed to lending an additional $100 billion.
Obama and Geithner kept high hopes about the upcoming meetings.
"I'm actually optimistic about the prospects," Obama said Wednesday, citing recent meetings he had with British Prime Minister Gordon Brown and Japanese Prime Minister Taro Aso.
"Everybody understands that we're in this together. I think the G-20 countries are going to be seeking a lot of cooperation."
Geithner said he would seek to build a "new consensus" in London on how to establish a "substantial and sustained program of support for recovery and growth."

Switzerland is relaxing key bank secrecy laws

UK Prime Minister Gordon Brown yesterday hailed announcement that Switzerland is relaxing key bank secrecy laws .Switzerland, Austria and Luxembourg announced a relaxation of their banking secrecy laws on Friday (13 March) following mounting pressures on both sides of the Atlantic to crack down non-cooperating tax zones.
The news comes only one day after Liechtenstein and Andorra made similar declarations, as a number of financial centres around the world attempt to pre-empt any decision coming out of the G20 leaders summit on 2 April.

As western governments feel the pinch due to expensive stimulus spending projects coupled with reduced tax receipts, the spotlight has been turned on a handful of geographic locations that profit by harbouring capital owned by companies and wealthy individuals from abroad.

The Swiss government said on Friday that it intends to adopt OECD standards on the sharing of banking information between different countries, citing its desire to avoid being placed on the organization's 'black list' of tax havens.
UK Prime Minister Gordon Brown said the changes were "the beginning of the end of tax havens." "Tax evasion, which costs the global economy billions of pounds each year, will become more difficult in future."

UBS bank plans to cut up to 5,000 senior and management jobs

Switzerland's biggest bank UBS cutting 5,000 senior and management jobs in the next few weeks.
2,500 management positions could go in UBS's dominant and profitable wealth management division, which accounts for 50,000 of the bank's total 77,000 staff.

A UBS spokesman declined to comment on the report.

Last week UBS said it was restructuring its Swiss business structure into four regions from eight, and trimming its top management. But it said the changes did not mean any more job cuts than the 600-800 positions it already plans to cut in Switzerland as part of thousands of job losses globally.

In February UBS said after announcing a record loss it would cut 2,000 jobs to take staff to about 75,000 by the middle of this year.

UBS is struggling to rebuild its once powerful brand and focus on its core Swiss business after massive investments in risky U.S. assets forced it to make more writedowns than any other European bank and accept government backing.

Private money helping US banks

The San Francisco Chronicle's largest employees' union has approved a tentative labor agreement

Chronicle union agrees to agreement concessions.SF record workers agree cost-cutting actions.Union members passed the agreement Saturday by a 10-1 margin, said Chronicle reporter Michael Cabanatuan, president of the Northern California Media Workers Guild. The union represents about 500 editorial, advertising and circulation workers.

The concessions include less vacation time and longer work weeks for the same wage.

"As I've mentioned before, this agreement is critical to ensuring the survival of The Chronicle," said Frank Vega, the paper's chairman and publisher, in an internal memo to employees. "I appreciate the willingness of our employees to work with us to make the difficult decisions that need to be made during these difficult times."

The Chronicle's owner, Hearst Corp., has warned that it would be forced to sell or close the paper if expenses were not reduced quickly. The company reported that The Chronicle lost more than $50 million in 2008 and was expected to lose even more than that this year.

The union is bracing for the paper to cut about 150 guild-covered jobs, Cabanatuan said. The newspaper's management had threatened to lay off 225.

The agreement approved Saturday also includes a better severance package for employees who are laid off or accept buyouts than was previously offered. They will receive two weeks of pay per year of service — not to exceed one year's salary — and health benefits for the length of the severance package.

Even with a tentative agreement approved, there remains another key hurdle: getting similar concessions from the International Brotherhood of Teamsters Local 853, which represents about 420 other employees.

Frank J. Vega, chairman and publisher of The Chronicle, said in a statement earlier this week that an agreement with the Teamsters is needed "to ensure the newspaper's survival."

President Barack Obama says economy is causing a lot of families "incredible pain and hardship

President Barack Obama says Economy causing many 'incredible pain' but the government is providing them help.
The president spoke to reporters in the Oval Office on Friday after getting an update from economic adviser Paul Volcker. Obama said his administration is working on both short-term help and long-term economic recovery plans. He says the capacity of American workers and industry is undiminished.


Obama Voices Optimism on the Economy
Obama said the goal is a new "post-bubble" economic model. He says the days of relying on an inflated housing market and maxed-out credit cards are over.

How will the Recovery Act work?
Very soon, the different agencies -- such as the Departments of Education; Health and Human Services; and Energy -- will decide who will receive award grants and contracts. Sometimes the money will go to a state government; other times, the funds will go directly to a school, hospital, contractor, or other organization. Agencies will then deliver that information to the Recovery.gov team. We will subsequently make the information available on Recovery.gov, and you will be able to track where the money is going. You'll be able to search by state or even by Congressional district; you'll be able to look up names of Federal contractors or other recipients of Federal dollars; and you'll be able to send in comments, thoughts, ideas, questions, and any responses you have to what you find. More from Recovery.gov.

2009 is turning into "a very dangerous year" for the economy.

2009 is turning into "a very dangerous year" for the economy, said The eleventh president of the World Bank...(Robert Zoellick).

Twenty Group

G20 was established in 1999 as a forum for industrialised and developing economies to discuss global economy issues

It groups Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union

The International Monetary Fund (IMF) and the World Bank also participate in meetings

Together, member countries represent around 90 per cent of global gross national product, 80 per cent of world trade and two-thirds of the world's population.


Robert Zoellick also warned G20 members against protectionist policies, ahead of a G20 finance ministers' meeting in the United Kingdom on how to tackle the economic downturn.

"If the leaders feel they are running out of constructive tools, they might start to point fingers and take protectionist and isolationist actions and those are the negative spiral of events you saw in the [19]30s", Zoellick said on Friday.

He spoke to reporters a day after warning that growth in the world economy was likely to fall by up to two per cent this year - the first contraction since the second world war.

The G20 finance ministers are gathering in Horsham, outside London, on Saturday to lay the groundwork for a G20 heads of state summit on April 2.

Zoellick said that governments may have to provide fiscal stimulus into 2010, but stressed that such action should come "within a framework of fiscal sustainability".

Finance ministers and central bank leaders from the United States and Europe are divided on whether stimulus packages or tighter regulation of the finance sector should be the way forward.

Conflicting statements made in the last week suggest the meeting on Saturday could be hampered by disagreements.

While the US wants a co-ordinated international stimulus to fight the slowdown, some European leaders favour tightening regulation of markets and institutions.

Angela Merkel, the German chancellor, said on Friday that she did not favour a new package of economic stimulus measures.

Timothy Geithner, the US treasury secretary, said on Wednesday that he
would recommend the G20 nations to support "substantially increasing emergency IMF resources" and called for them to lend to countries hit hard by the financial crisis.

Tax and tax planning.

Do you understand how the tax system works?
Money Box Live, Vincent Duggleby will take your questions about personal and small business tax planning.

With the end of the financial year just weeks away you may want to consider making the most of your tax free and tax deductible allowances?
When do you need to pay capital gains tax and what happens if you make a loss?

You may have a query about tax refunds or reclaiming overpaid tax.

Or perhaps you you have a question about record keeping.

money market mutual fund assets rose by $461 million to $3.906 trillion for the week

Investment Company Institute said Money fund assets rose to $3.906T in latest week.
Assets of the U.S. retail money market mutual funds rose by $10.67 billion in the latest week to $1.365 trillion.
Assets of taxable money market funds in the retail category rose $11.04 billion to $1.075 trillion for the week ended Wednesday, the Washington-based mutual fund trade group said. Tax-exempt fund assets fell by $361 million to $289.83 billion.

Assets of institutional money market funds fell by $10.21 billion to $2.541 trillion for the same period. Among institutional funds, taxable money market fund assets fell by $12.05 billion to $2.349 trillion; assets of tax-exempt funds rose by $1.84 billion to $192.18 billion.

The seven-day average yield on money market mutual funds fell in the week ended Tuesday to 0.29 percent from 0.32 percent the previous week, said Money Fund Report, a service of iMoneyNet Inc. in Westboro, Massachusetts. The 30-day average yield fell to 0.33 percent from 0.36 percent, according to Money Fund Report.

The online service Bankrate.com said its survey of 100 leading commercial banks, savings and loan associations and savings banks in the nation's 10 largest markets showed the annual percentage yield available on money market accounts fell to 0.49 percent as of Wednesday from 0.50 percent week earlier.

South Carolina will soon get $75 million in extra money from earmarks

What is an earmark?
Earmark is a politicized term that denotes money designated within legislation for the funding of a specific project. Opponents characterize it as a back-door approach to grant political favors and fund pet projects. Supporters view it as a way to channel tax dollars back home for valuable purposes.

South Carolina will soon get $75 million in extra money from earmarks in the $410 billion spending bill that President Barack Obama signed this week. Among the extra federal spending for the state is money for educating seafood lovers about the dangers of eating raw oysters, an oaktree-planting bonanza and a robotics training center in Union.

U.S. House Majority Whip Jim Clyburn boasts of his role in bringing nearly half of that money home to the state to provide for improvements and economic development. He's responsible for $35 million of the total.

Meanwhile, another member of the state's congressional delegation, Sen. Jim DeMint, is on a crusade against the deficit spending and corruption that he argues is caused by earmarks, including ones going to other states for tattoo removal, pig stench and midnight basketball.

"Americans are suffering in this economy, but Washington appears to be recession-proof, with billions wasted on politicians' pet projects," DeMint, a Republican, said after the Senate passed the bill Tuesday. DeMint, who sponsored no earmarks, blasted Obama for signing the bill.

Fellow Republican Sen. Lindsey Graham agrees that earmarks can be abused but said they also can be for worthwhile endeavors. He sponsored seven earmarks, including several with Rep. Henry Brown, a Republican from Hanahan whose 1st District includes much of the Charleston area.

Clyburn, a Democrat who represents South Carolina's 6th District, said the earmarks are federal investments that produce real results.

The rich get of poorer quality

Microsoft founder Bill Gates regain the top spot, despite his wealth declining $18bn (£13.06bn) to $40bn.

The financial crisis is taking its toll on the world's richest people, wiping 332 names off Forbes magazine's "rich list" of world billionaires.

Just 793 people can now lay claim to a place on the list, but on average they have lost 23% of their wealth.

Don’t go looking for them in soup lines just yet, but the world’s billionaires have suffered too as the economy has tanked.

Where there were 1,125 billionaires on last year’s Forbes list, there were 793 when the new list was released Wednesday.

There was some jostling at the top. Bill Gates moved to No. 1 from No. 3, bumping investing guru Warren Buffett and Mexican telecommunications magnate Carlos Slim to No. 2 and No. 3, respectively. All of the top 10 billionaires saw their net worths fall.

Forbes reported that those on the list of billionaires had an average net worth of $3 billion, down 23 percent.

American billionaires this year accounted for 44 per-cent of the money and 45 percent of the slots. That’s up 7 percentage points and 3 percentage points, respectively.

Houston lost two of its billionaires, with money manager Fayez Sarofim and W&T Offshore founder Tracy Krohn falling off the list. But the city gained another: Bud Adams, the former Houston Oilers owner who still takes heat for moving the team to Tennessee more than 10 years later. He broke in at No. 647 with an estimated net worth of $1.1 billion.

Houston’s richest man, energy baron Dan Duncan, saw his rank rise to 81st, despite a $2 billion drop in his net worth. Rich Kinder, CEO and chairman of Kinder Morgan, and hedge fund manager John Arnold, were the only Houston billionaires on last year’s list whose values increased this year.

Oilman Jeffrey Hildebrand and lawyer Joe Jamail held steady at $1.5 billion each but moved up more than 300 spots to No. 468 on the list.

R. Allen Stanford wasn’t listed as a Houston resident when Forbes put his worth at $2 billion on last year’s list. Now the Mexia native whose company has its headquarters here has been removed from the list.

Financial Q&A..............

Q: I took my credit cards and created myself a summer job – when I am not teaching – by building a house. I am almost finished building the house with my credit cards and about to go bankrupt. The banks tell me they will not make me a loan even when I finish the house, as my credit-card debt is too high. I tried to explain to them that I wanted to pay off the credit cards, but they said it made no difference. What should I do?

A: If Joel Doelger had the power to turn back the clock, the director of counseling at Credit Counseling of Arkansas says that he would have recommended that you use a traditional builder's spec loan to cover the initial cost of building the home. That would have allowed you to purchase supplies, but with a lower interest rate than the credit cards have charged.

Unfortunately, that's not the case. And to worsen matters, given the current soft housing market, it may be difficult to sell a completed home, much less an almost completed home.

It's a bit of a long shot, but Mr. Doelger knows of one loan product that could help both you and any potential home buyer. The FHA offers a rehab loan that allows the buyer to roll the cost of home improvements into the initial loan.

If you found a buyer who would qualify for such a loan, he or she could buy the home now – as is – and roll the completion of the home into the initial loan. That would prevent the borrower from having to turn around right away to qualify for a second mortgage to complete the home.

Second mortgages typically have higher interest rates than first mortgages. If a buyer can purchase the home in its present state, you may be able to get out of this venture now, without having to sink additional money into it to make it marketable.

If you aren't able to pay the credit-card bills with the sale of the house but are hesitant about filing for bankruptcy, you might be able to use the services of a credit counseling agency, Doelger says. You'll want what is called a debt management plan (DMP). A legitimate agency will help you determine your current financial situation and assess the suitability of a DMP, as well as other options, for helping you repay the debt.

The Federal Trade Commission produces a variety of useful brochures on financial issues, including one on how to select a credit counseling agency (ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm).

Q: Could you help me find the best and safest annuity company in Switzerland? I would rather have a fixed annuity, but they aren't available at this time in Switzerland.

A: One source of information on this might be swissannuities.com. On this website you can learn a lot about the ins and outs of Swiss annuities – who sells them, who regulates them, what the advantages are to owning one, etc.

What you won't find is direct advice on which particular annuity to buy. And when we contacted the Swiss Financial Planners Organization, in Bern, CEO Nicholas Koechlin said that, by law, financial advisers in his country cannot dispense such guidance. For general information on personal finances you can ring them at 011-41-31-326-2730, or e-mail them at info@sfpo.ch.

Back stateside, Rich Arzaga, a financial planner in San Ramon, Calif., can't vouch for a Switzerland-sold annuity (nor could we find anyone else in the United States with Euro-specific experience on annuities). Regardless of the country of sale, there are common threads to annuities that Mr. Arzaga says a buyer should consider:

•Time horizon. How long are you willing to tie up your money? How big a penalty are you willing to take if you withdrew more on an annual basis than the annuity contract allows?

•Risk tolerance. You say you can't buy a fixed annuity. That would leave you with a variable annuity in the US, and they mostly invest in the stock market.

•Fees. Annuities carry sales charges, as well as other fees for add-ons such as death or survivor benefits. The more add-ons, the more fees.

Annuity sales and marketing are regulated in the United States at either the federal or state level, depending on their type. There also are rating agencies that assess the claims-paying ability of insurance companies that market these products.

Stanford Group Co.’s court-appointed receiver fired about 1,000 workers

Stanford Receiver Fires 1,000 of Firm’s Workers
85 percent of the firm’s employees, to help conserve the value of the estate for investors.

STANFORD INVESTMENT MODEL
The objective of the Stanford Investment Model (SIM) is to provide consistent returns regardless of market volatility, and it is based on the investment philosophy that has been used successfully for all of Stanford's proprietary funds. We target a consistent yield or income stream as agreed upon with our clients, while monitoring risk and managing the overall volatility of the portfolio.

Our strategy for diversification to minimize the effects of market volatility is sophisticated and far-reaching. We pursue true global diversification with relentless intensity to meet our objective of targeted returns. We carefully consider asset classes, investment strategies, sectors, and regions of the world that most investors either don't have easy access to or rarely receive information about. SIM was developed first and foremost to minimize the downside risk of a portfolio.

We recognize taking risk is essential to achieve investor goals, but there is a difference between accepting the risk the market gives you and managing that risk.

Although we may not outperform the indices during a bull cycle, our investment strategy is one of long-term consistency through bull and bear markets. The Stanford Investment Model offers investors a truly different view of wealth management.

All of the terminations were effective today, according to a statement posted on the Web site of the receiver, Ralph Janvey. The workers’ salaries and benefits were discontinued immediately, and they won’t receive any severance pay or bonuses, according to the statement. “A small number” of employees in Houston will be retained to assist in winding down operations and settling the receivership estate.

“After a review of the circumstances, the receiver concluded that continuing employment for these employees is not in the interest of conserving and preserving the value of the estate because there are insufficient resources to continue to compensate all present employees,” according to the statement.

The U.S. Securities and Exchange Commission sued Texas financier R. Allen Stanford, two associates and three affiliated companies on Feb. 17, accusing them of orchestrating an $8 billion fraud involving the sale of high-yield certificates of deposit through Antigua-based Stanford International Bank.

Last month, U.S. District Judge David Godbey in Dallas froze all of Stanford’s corporate and personal assets and appointed Janvey, a Dallas lawyer, as receiver for the companies. Yesterday, Godbey ordered the release of accounts valued at less than $250,000 that aren’t linked to suspected fraud.

Decisions about Stanford’s employees outside the U.S. will be announced in the next few weeks, Janvey said in the statement. Janvey said most of Stanford’s businesses and operations will be wound down.

The case is SEC v. Stanford International Bank, 3:09-cv-00298-N, U.S. District Court, Northern District of Texas (Dallas).

The European Central Bank has cut its key interest rate to 1.5% from 2.0%

Jean-Claude Trichet, President, ECB
Overall inflation rates have decreased significantly and are now expected to remain well below 2% over 2009 and 2010.


Euro rates hit record low of 1.5% .The European Central Bank (ECB) has cut its key interest rate to 1.5% from 2.0%, the lowest since it started setting euro rates in January 1999.

It followed a cut in UK rates by the Bank of England. US and Japanese rates are, in effect, already at zero.

At a news conference, ECB president Jean-Claude Trichet slashed his forecasts for eurozone growth.
The ECB is now predicting GDP this year in the 16-nation bloc will shrink by between 2.2% and 3.2%.

Its last prediction, made in December, was that growth would be between no change and a fall of 1% in 2009.

For 2010 it was predicting growth of between 0.5% and 1.5%. It is now forecasting growth of between 0.7% and minus 0.7%.

Non-standard measures

The revisions reflect Mr Trichet's view that the global economy has "weakened substantially in recent months" but that it will "gradually recover" in 2010.
But there were no new measures announced to help stimulate the eurozone economy, with Mr Trichet stressing that he was already using various "non-standard measures" and saying that the ECB's rate-setters were considering various others.

Slowing growth was confirmed by revised economic growth figures issued earlier on Thursday.

GDP for the last three months of 2008 was down 1.3% from the same quarter of the previous year, worse than the initial estimate of 1.2%.

The figure for the previous quarter was left unchanged at a 1.5% fall.

Thursday's decision was the ECB's fifth rate cut since October 2008, which has brought eurozone rates down from 4.25%.

Mr Trichet said that interest rates could still fall further from their current level, although he pointed out that they are already at a very low level.

He also said that inflation would stay below the ECB's target of below, but close to, 2%.

"Overall inflation rates have decreased significantly and are now expected to remain well below 2% over 2009 and 2010,"

Supreme Court rejects limits on drug lawsuits

Justices rule 6-3 to uphold jury verdict of $6.7 million for woman who lost arm after injection. By Adam Liptak WASHINGTON — In a setback for business groups that had hoped to build a barrier against injury lawsuits seeking billions of dollars

The U.S. Supreme Court on Wednesday upheld a $6.7 million jury award won by a Vermont musician against WyethSupreme Court Upholds $6.7 Million Damage Won By Vermont Amputee Against Wyeth.
Majority of the justices ruled that Wyeth failed to prove that Diana Levine's state liability lawsuit against Wyeth obstruct federal regulation on drug labeling.

The firm had argued that the U.S. Food and Drug Administration (FDA) approved the label for Phenergan, an anti-nausea drug given intravenously on Levine in 2000 to relieve her severe migraine but led to the amputation of her right arm. Levine accused Wyeth of failing to put on the Phenergan label a warning that administering the drug through IV-push method may cause gangrene. Wyeth said it cannot change the label without consent from the FDA.

Levine, who could not longer play the guitar and piano, said she will use the award to make her car and home more adaptable, according to WCAX.com.

new sales contracts on existing homes fell a seasonally adjusted 7.7% in January amid job losses

Pending U.S. home sales sank to a new record low in January as economic woes turned buyers away from the staggering housing market.

Supply of unsold homes rises to record-high 13.3 months
Despite a record drop in prices, sales of new homes fell 10.2% in January to a record-low seasonally adjusted annual rate of 309,000, the Commerce Department estimated Thursday. Sales were down 48.2% compared with a year earlier, the government reported, an indication that the downturn in the housing market was still accelerating as the recession headed into its second year.

The index is now down 6.4% from a year earlier, the National Association of Realtors said.
"We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit" in the stimulus package, said Lawrence Yun, NAR's chief economist, in a statement.
January's pending sales rose more than 2% in the West. Elsewhere, pending sales fell, declining almost 13% in the Northeast, almost 12% in the South, and more than 9% in the Midwest.
The Tuesday report points to weak upcoming sales data, wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.
"It will be awful, the only question is the degree of awfulness," Shepherdson wrote.
In December, the pending home sales index rose 4.8%, compared with a prior estimate of a 6.3% gain.
The index is based on signed sales contracts, which usually occur a month or two before the sale is closed, when sales are reported in the NAR's existing-home sales report.
Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales," Lawrence Yun, the Realtors chief economist, said in a statement.

Billionaire Warren Buffett said the economy will be “in shambles” this year

Buffett Says Economy ‘In Shambles,’ Promises Recovery
Billionaire Warren Buffett said the economy will be “in shambles” this year, and perhaps longer, before recovering from the reckless lending that caused the worst “freefall” he ever saw in the financial system. The economy and stocks will rebound, and the best days for the U.S. are ahead, said Buffett, chairman of Berkshire Hathaway Inc., in his annual letter to shareholders Feb. 28. Buffett said he’ll spend the recession shopping for new investments for Omaha, Nebraska-based Berkshire.

“The economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond,” said Buffett. “Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so.”

Buffett, an informal adviser to President Barack Obama, said the consequences of the U.S. housing bubble are now “reverberating through every corner of our economy.” Gross domestic product shrank at a 6.2 percent annual pace from October through December, the most since 1982, the Commerce Department said last week.

Late last year, “the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country,” said Buffett, 78. “Fear led to business contraction, and that in turn led to even greater fear.”

Berkshire’s fourth-quarter net income fell 96 percent to $117 million, the firm said Feb. 28. Book value per share, a measure of assets minus liabilities, slipped 9.6 percent for all of 2008, the worst performance under Buffett’s watch, on the declining value of derivatives and the stock portfolio.

‘Socks or Stocks’

Berkshire fell $4,250, or 5.4 percent, to $74,350 at 10:16 a.m. in New York Stock Exchange composite trading. The stock has plunged 47 percent in the past 12 months.

The Standard & Poor’s 500 Index will probably gain in three-fourths of the next 44 years, just as it did in the period since Buffett took over Berkshire in 1965, he wrote. The benchmark dropped 38 percent last year, the most since 1937.

“We enjoy such price declines if we have funds available to increase our positions,” Buffett wrote. “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” Berkshire’s cash hoard was about $25.5 billion at year-end, down from $33.4 billion on Sept. 30.

Buffett disclosed increased holdings of Posco, Asia’s third-largest steelmaker, and Sanofi-Aventis SA, France’s biggest drugmaker. Berkshire sold $4.77 billion of equities in the fourth quarter to help fund private deals for preferred shares in Goldman Sachs Group Inc. and General Electric Co. The sales included shares of Johnson & Johnson, Procter & Gamble Co. and ConocoPhillips, holdings that, Buffett wrote, “I would have preferred to keep.”

‘Major Mistake’
Buffett said he made a “major mistake” in buying shares of oil producer ConocoPhillips when oil and gas prices were near their peak last year.

Flash memory chip maker Spansion has filed for bankruptcy protection.

Worldwide chip sales fall 28.6 percent, Spansion files for bankruptcy

One week after laying off 35 percent of its workers, computer chipmaker Spansion Inc. filed for Chapter 11 bankruptcy protection.

Sunnyvale-based Spansion (NASDAQ: SPSN) listed about $3.8 billion in assets and nearly $2.4 billion in debts in its filing in U.S. Bankruptcy Court in Delaware.

The company said it plans to restructure its debt and refocus on more profitable markets. Each of Spansion’s U.S. subsidiaries also filed Chapter 11 petitions, company officials said.

In December, the company shut down plants for three weeks, citing a weak holiday season and a sluggish economy. In November, Spansion said its fourth quarter sales would be about 20 percent lower than the $631 million reported in the third quarter.

On Jan. 15, Spansion announced it was exploring strategic alternatives for a sale or merger. The company also announced plans to restructure its balance sheet.

During 2007, the company posted a $263.5 million net loss on $2.5 billion in revenue.

Spansion, formerly owned Sunnyvale-based Advanced Micro Devices Inc. (NYSE:AMD) and Fujitsu, was spun off in December 2005. AMD and Fujitsu have remained as major stockholders.


Worldwide chip sales fell 28.6 percent in January compared to a year ago, and flash memory chip maker Spansion has filed for bankruptcy protection. Those are a couple of headlines that show just how grim the economic meltdown has become for the semiconductor industry.

The Semiconductor Industry Assocation said that chip sales were $15.3 billion, down from $21.5 billion a year ago. The January figure is down 11.9 percent from December’s sales of $17.4 billion. George Scalise, president of the industry trade group, said that Januaryis historically a weak month but this year it suffered from the erosion of consumer confidence and sales declined across the board.

Demand weakened for key industry sectors such as personal computers, cell phones, automobiles and general consumer items. The bright spot is that inventory levels are very low and there are some signs that forward visibility is improving. Scalise said he was encouraged that the Economic Recovery Act recently signed by President Obama would help drive demand for chips in markets such as energy, health care, and infrastructure improvements.

Those actions aren’t going to help Spansion, which filed for bankruptcy protection on Sunday and which said last week it would lay off 3,000 people, or a third of its workers. The company named a new chief executive, John Kispert, former president of KLA-Tencor, as a replacement for Bertrand Cambou, Spansion’s longtime chief. The company is still up for sale and says it made the filing in consultation with bondholders who hold $625 million in debt coming due in 2013. Spansion is focusing on flash memory market segments where it can make money going forward, such as wireless chips and devices where flash is permanently built into the device.