Money

Consumer prices in the United States fell 0.1%

2010-05-19T12:33:00.000-07:00

Regulators on the flash crash: it's complicated
If market regulators had a Facebook page to describe their relationship with the investors, their status would be “it’s complicated. See full story.

Rejection of Democrat measures may slow bank bill
The Senate is set to vote on a key motion that if approved could lead to enactment of a sweeping bank reform bill by the end of the week, but rejection of some Democratic provisions could cause a late obstacle to final passage. See full story.

SEC proposes creating unified stock-halt system
Top regulators and stock-exchange officials call for a unified circuit-breaker system for all exchanges to halt or slow down trades of a particular stock if the price moves 10% or more in a five-minute period. See full story.

Europe shares down after German short-sale ban
Europe stocks fall on Wednesday as a solo effort from Germany to crack down on speculators highlights policy-making disparity in the region and alerts investors to the possibility of a crisis. See full story.

MARKETWATCH COMMENTARY
Facebook is in the eye of a storm, writes Therese Poletti. See full story.

MARKETWATCH PERSONAL FINANCE
The global recession had largely muzzled inflation's bite, but actions being taken to cure the developed world’s economic ills could revive threats to bond investors and savers and spoil many Americans’ retirement plans

Biggest economies try

2009-10-17T22:57:00.001-07:00

The World Climate Change conference will take place in the Danish capital in December.
A senior Republican in the United States Senate, conservative Senator Lisa Murkowski, said she would consider voting for a "cap and trade" climate change bill Democrats are pushing if it also contains a vigorous expansion of nuclear energy and domestic oil drilling.

In an interview set to air on Sunday on the C-SPAN cable TV network, Murkowski said cap and trade legislation, which aims to mandate reductions of carbon dioxide and other greenhouse gas emissions, must protect consumers from energy price increases and contain safeguards against market manipulation of pollution permits that would be traded by companies.

Some of these elements already are included in Democratic legislation in the Senate and House of Representatives.

"Count me as one of those who will keep my mind open as we move forward," said Murkowski, the senior Republican on the Senate energy panel and a member of her party's leadership.

Murkowski's remarks came after her fellow conservative, Senator Lindsey Graham, published a column in The New York Times with liberal Senator John Kerry, in which they vowed to work together to advance legislation tackling global warming.

In signaling her willingness to work on a bill, Murkowski said Democrats must include tangible incentives for building nuclear power plants and stepping up domestic oil drilling, offshore and on land. It has got to be "more than just window dressing," she warned.........

Representatives of the world's 17 biggest and most polluting nations gather Sunday to search for a breakthrough on financing efforts to contain climate change and reduce gas emissions causing global warming.

Pressure has been mounting for the United States to finalize its position before a decisive December conference in Denmark meant to cap two years of negotiations on a global climate change treaty.

"With only 50 more days to go before the final talks at Copenhagen, we have to up our game. Britain is determined to throw everything at this because the stakes are so high," British Environment Minister Ed Miliband said in a statement released Sunday.

Earlier Miliband had said it was "important that the U.S. makes as much progress as possible" at the two-day meeting of the Major Economies Forum.

The Obama administration said the pace of its action was determined by the U.S. Congress, where climate bills were making their slow way toward legislation — an argument which cut little ice with other negotiators.

"The rich countries of the Major Economies Forum must urgently put new money on the table to ensure the developing world can grow cleanly and adapt to the effects of climate change, which are already putting millions of lives at risk," said Asad Rehman of Friends of the Earth.

Miliband said there had been some progress.

"We have seen countries moving toward each other: India, Japan, China and Indonesia have all made significant shifts in the past few weeks," Miliband said.

"As the deadline races toward us, it becomes more important to narrow the gaps between countries as fast as we can," he said.

One further negotiating session is set for November in Barcelona, Spain.

But pessimism was mounting that a deal can be struck without policy changes at the highest level.

"In recent months, the prospects that states will actually agree to anything in Copenhagen are starting to look worse and worse," Rajendra Pachauri, head of the U.N. scientific panel studying climate change, wrote on the Newsweek Web site posted Friday.

President Barack Obama initiated the Major Economies Forum earlier this year as an informal caucus to quietly deal with the toughest problems. Participants agree to keep the talks confidential.

A key issue is helping poor countries adapt to changes in the Earth's climate that threaten to flood coastal regions, make farming unpredictable and spread diseases. They also need funds and technologies to develop their economies without overly increasing pollution.

Estimates range in the hundreds of billions of dollars needed every year, but a formula for raising, administering and distributing the funds has proved elusive.

"Only bold pledges by rich countries to slash their emissions by at least 40 percent by 2020 without carbon offsetting and a commitment to provide at least $200 billion of new money will break the current logjam," Rehman said.

Biggest economies try

2009-10-17T22:57:00.000-07:00

US retail sales fell in September by the largest amount in 2009

2009-10-14T07:52:00.000-07:00

The Commerce Department said sales slid 1.5%, not as bad as expected, but the biggest drop since December last year.
Car sales dropped by 10.4% but when vehicles were stripped out, retail sales actually rose by 0.5%, better than the 0.2% which had been forecast.
Consumer spending makes up more than two thirds of US economic activity.
A late Labor Day holiday helped retailers last month because consumers purchased some items in September that they would normally have bought in August, analysts said.
'Expected'
The 1.5% drop in September's retail sales followed a 2.2% rise in August, which was revised down from an earlier estimate of 2.7%.
That came as demand for new cars surged in August as buyers took advantage of the final month of the government's incentives of up to $4,500 to trade in old models for more fuel-efficient cars.
The Commerce Department figures showed that sales in furniture stores jumped 1.4%, reflecting the rebound in the housing industry. Meanwhile, sales at general merchandise stores such as Wal-Mart and Target, rose 0.9%.
"Certainly the numbers were better than expected," said Scott Brown, chief economist at Raymond James Associates.
"You did see a big drop in vehicle sales as cash for clunkers expired, which was in line with expectations."

New York Late Money Rates

2009-07-07T03:59:00.000-07:00

New York Late Money Rates ,,,,,,
Wall Street Journal ...........
Money Rates Monday, July 6, 2009 The key U. S. and foreign annual interest rates below are a guide to general levels but don't always represent actual transactions. Prime Rate: 3.25% (effective 12/16/08). The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks. Discount Rate (Primary): 0.50% (effective 12/16/08). Call Money: 2.00% (effective 12/16/08). Commercial Paper: Placed directly by General Electric Capital Corp.: 0.21% 30 to 30 days; n.q.31 to 49 days; n.q.50 to 89 days; n.q.90 to 119 days; n.q.120 to 125 days; n.q.126 to 141 days; n.q.142 to 151 days; n.q.152 to 161 days; n.q.162 to 270 days. Euro Commercial Paper: Placed directly by General Electric Capital Corp.: 0.36% 30 days; 0.56% two months; 0.75% three months; 0.83% four months; 0.90% five months; 0.98% six months. Dealer Commercial Paper: High-grade unsecured notes sold through dealers by major corporations: 0.35% 30 days; 0.40% 60 days; 0.45% 90 days. Certificates of Deposit: 0.35% one month; 0.45% three months; 0.80% six months. Bankers Acceptances: 0.40% 30 days; 0.48% 60 days; 0.55% 90 days; 0.55% 120 days; 0.75% 150 days; 0.85% 180 days. Source: Tullett Prebon Information, Ltd. Eurodollars: 0.65% - 0.25% one month; 0.75% - 0.35% two months; 1.00% - 0.40% three months; 1.00% - 0.40% four months; 1.15% - 0.45% five months; 1.25% - 0.55% six months. Source: Tullett Prebon Information, Ltd. London Interbank Offered Rates (Libor): 0.30188% one month; 0.54813% three months; 1.03125% six months; 1.51375% one year. Effective rate for contracts entered into two days from date appearing at top of this column. Euro Libor: 0.66000% one month; 1.03625% three months; 1.26500% six months; 1.45375% one year. Effective rate for contracts entered into two days from date appearing at top of this column. Euro Interbank Offered Rates (Euribor): 0.684% one month; 1.048% three months; 1.268% six months; 1.456% one year. Source: Reuters. Foreign Prime Rates: Canada 2.25%; European Central Bank 1.00%; Japan 1.475%; Switzerland 0.51%; Britain 0.50%. Treasury Bills: Results of the Monday, July 6, 2009, auction of short-term U.S. government bills, sold at a discount from face value in units of $1,000 to $1 million: 0.190% 13 weeks; 0.285% 26 weeks. Tuesday, June 30, 2009 auction: 0.160% 4 weeks. Overnight Repurchase Rate: 0.23%. Source: Garban Intercapital. Freddie Mac: Posted yields on 30-year mortgage commitments. Delivery within 30 days 4.95%, 60 days 5.05%, standard conventional fixed-rate mortgages: 2.50%, 2% rate capped one-year adjustable rate mortgages. Fannie Mae: Posted yields on 30 year mortgage commitments (priced at par) for delivery within 30 days 4.932%, 60 days 5.027%, standard conventional fixed-rate mortgages. Merrill Lynch Ready Assets Trust: 0.05%. Consumer Price Index: May, 213.9, down 1.3% from a year ago. Bureau of Labor Statistics. Federal Funds: 0.313% high, 0.125% low, 0.150% near closing bid, 0.250% offered. Source: Tullett Prebon Information, Ltd. Federal-funds target rate: 0.000% (effective 12/16/08).

Microsoft Money Plus ....

2009-06-11T06:35:00.000-07:00

As proof that a combination of a large bank account and persistence aren’t everything, Microsoft is discontinuing its Microsoft Money software. The notification has officially been released:

With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of Money Plus in 2008, Microsoft is announcing today that we will no longer offer Microsoft Money Plus for purchase after June 30, 2009.

We would like to thank the many dedicated users who have been enthusiastic supporters of Microsoft Money over the years, as well as our partner financial institutions who helped pioneer a digital vision of financial management.

Well, perhaps that would be more truthfully stated as following the pioneer in a digital vision of financial management, otherwise known as Intuit. In the 1990s, Microsoft heavily dogged the maker of Quicken, hoping to take a significant portion of what became a popular type of consumer application. But Intuit managed to out-maneuver and out-compete Microsoft time and time again.

The writing was on the wall for this move. Last August, Microsoft took Money off retail shelves and ended its commitment to annual updates. The explanation was that people were changing the ways they bought software. That might be another way of saying that selling anything at retail is an expensive business, with money going to retailers and distributors and, in the large chains, the demand for contributions for “marketing” the product. Given the cost of supporting an application, you have to wonder whether Microsoft might not have come out farther ahead by dropping the product years ago.

Money talk at conventions

2009-04-27T04:48:00.000-07:00

Money talk at conventions
When roughly 5,000 museum professionals from across the country descend on Philadelphia this week for two conventions, they will represent institutions that exhibit everything from Old Masters to old rocks.

But despite the multiplicity of interests and the range of institutional sizes and locations, there will be one thing on everyone's mind.

Money.

"That is topic A, B, C, and D," said Dewey Blanton, spokesman for the American Association of Museums, which holds its annual meeting at the Convention Center from Thursday through next Monday.

The same could be said for members of the Association of Children's Museums, which meets at the Sheraton Philadelphia City Center tomorrow through Thursday.

While museum attendance is largely steady - or even up - and tickets have not taken a heavy hit, contributed income is down almost everywhere. Corporations are just not in a giving mood these days. Public funding from states and municipalities is down across the country. And endowment investments have been uniformly walloped.

So museums, like other nonprofit groups, are in pain. Budgets have been frozen, staffs cut, and costs reduced wherever possible. At the same time, fiscal angst has forced a relentless rethinking of operations and programming. The isolated, high, and mighty temple of culture is out; the networking community partner is in.

Nancy Kolb, head of the Please Touch Museum at Memorial Hall, host of the children's museum convention, said that despite building recessionary pressures, the number of U.S. museums for young people continues to grow. Her museum's move into Memorial Hall in West Fairmount Park, she said, has produced attendance numbers well ahead of projections.

The UK economy could decline for another year and take a further two years to recover

2009-04-08T03:43:00.000-07:00

A National Institute of Economic and Social Research study says the current economic decline is "very similar" to the slowdown at the start of the 1980s.

The latest estimate predicts a 1.5% decline in the first quarter of 2009.

In a separate study by Nationwide, UK consumer confidence fell in March as worries continued about jobs.

The building society's consumer confidence index dropped two points to 41.

The Bank of England's Monetary Policy Committee (MPC) begins its latest interest rate-setting meeting on Wednesday, with its decision due to be announced at midday (1300 GMT) on Thursday.

The MPC is not expected to cut the Bank rate further from its current record low of 0.5% having cut the rate six times since October in attempt to boost the economy.

Jobs market

UK unemployment recently hit two million for the first time since 1997.

Nationwide said consumer confidence was "broadly stable since the start of the year, but feelings about the current labour market have weakened".

"Further reports of job losses are likely to have affected consumers' views of this," the report said.

Nationwide said consumers' confidence fell for the ninth consecutive month in March.

The building society's survey came as a report from the Recruitment and Employment Confederation/KPMG showed little sign of a strong recovery in the number of permanent jobs available in the UK.

Although its "permanent placements indicator" rose to 33.5 in March from 30.3 in February, that was still well below the 50 level, where growth begins.

"These latest figures leave no doubt that the UK jobs market is at its worst in the 11-year history of the survey and recovery might take longer and be more protracted than many hope," said Mike Stevens, partner and head of business services at KPMG.

However, the Nationwide's survey of 1,000 consumers indicated that they had became more optimistic about UK economic conditions.

"Increased optimism towards the current and future economy is encouraging," said Nationwide's Fionnuala Earley.

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

2009-03-29T21:28:00.000-07:00

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

2009-03-28T21:35:00.000-07:00

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

2009-03-24T21:48:00.000-07:00

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

2009-03-23T21:58:00.000-07:00

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.

2009-03-22T23:34:00.000-07:00

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.

2009-03-22T04:57:00.000-07:00

American consumers are at their lowest level of confidence

2009-03-18T23:06:00.000-07:00

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.

2009-03-17T21:03:00.000-07:00

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

2009-03-16T07:11:00.000-07:00

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

2009-03-15T21:35:00.000-07:00

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

2009-03-15T08:26:00.000-07:00

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

2009-03-14T22:50:00.000-07:00

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

2009-03-14T06:42:00.000-07:00

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.

2009-03-14T04:08:00.000-07:00

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.

2009-03-13T22:00:00.000-07:00

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

2009-03-13T07:34:00.000-07:00

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

2009-03-13T04:38:00.000-07:00

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

2009-03-11T23:39:00.000-07:00

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..............

2009-03-07T02:49:00.000-08:00

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

2009-03-06T19:24:00.000-08:00

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%

2009-03-05T06:19:00.000-08:00

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

2009-03-04T22:53:00.000-08:00

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

2009-03-03T08:47:00.000-08:00

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

2009-03-02T07:51:00.000-08:00

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.

2009-03-02T07:27:00.000-08:00

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.

UBS May Face Trial on U.S. Demand.

2009-02-24T00:00:00.000-08:00

People walk past the UBS building on Park Avenue in New York February 19, 2009. UBS may face a mini-trial in a U.S. court in July as it fights efforts to force it to disclose the names of 52,000 U.S. clients suspected of offshore tax evasion, the New York Times reported
UBS feels the wrath of investors and the US.........
Shares in embattled Swiss bank UBS fell to an all-time low on Monday ending the day at SFr10 ($8.58) or 9.1 per cent lower than at Friday's close at the bourse.
The decline came as a federal judge decided it would take months to determine if and when the Internal Revenue Service (IRS) would gain access to accounts of 52,000 UBS clients in the US suspected of tax evasion.

District judge Alan S. Gold set a July 13 hearing on the IRS lawsuit, unless an agreement is reached first. He gave UBS until April 30 to prepare their defence.

UBS has argued that handing over the account names would violate Switzerland's banking secrecy legislation and jeopardise the bank's licence to stay in business.

"Such violations would expose these [UBS] employees to substantial prison terms, as well as fines, penalties and other sanctions," UBS lawyers said in a court filing.

The lawsuit seeking details of the 52,000 accounts containing an estimated $14.8 billion in assets was issued last week.

It came a day after Switzerland's largest financial institution came to a settlement with the Justice Department on revealing the names of up to 300 US customers and payment by the bank of $780 million.

Under the terms of the settlement, UBS admitted helping US taxpayers hide accounts from the US Internal Revenue Service, the agency responsible for tax collection and tax law enforcement.

The matter is also particularly contentious because of the number of client identities and records that the I.R.S., backed by the Justice Department, is seeking to acquire. The total of 52,000 is more than twice the 19,000 accounts under investigation in the Justice Department’s criminal investigation and suggests that UBS has had a much larger role in undeclared offshore banking services than the bank has previously suggested.

comments.....

Thomas, Switzerland
Any normal person or government would start a lawsuit in the country where the business accused of some wrong-doing is located. So why does the U.S. think they have the jurisdiction for a Swiss bank and Swiss law? Would be a good time for the U.S. government to accept international law and courts.

you can leave your comments .here.......

Europe's major economies said a global solution was needed to the current financial crisis.

2009-02-23T05:42:00.000-08:00

Capitalism must be given new moral foundations
Nicolas Sarkozy
French President
German Chancellor Angela Merkel highlighted that leaders faced an "extraordinary international crisis".
But leaders including UK Prime Minister Gordon Brown warned against reverting to protectionism in such a difficult economic climate.

The Berlin gathering is a precursor to the next meeting of the G20 group of major developed and developing countries in London on 2 April, which aims to rewrite the rules of the global financial system.

French President Nicolas Sarkozy said participants at the London summit would bear a "historical responsibility" to reform the global system.

"We have to succeed and we cannot accept that anything or anyone gets in the way of that summit. If we fail there will be no safety net," he said.

What role can France and other European Union countries play towards encouraging the GCC and the rest of the Arab World to take an active role in finding ways to solve the crisis?
France has experience and knowledge of the constraints that apply in different parts of the region. It is time for responsibility and respect to be shown by all sides. In the past we have seen Europe taking the initiative and then the US or some of the countries from the Arab World taking the initiative. Today, we need a global approach where all these countries act together with one goal, that is taking concrete measures to show people in the region that a solution can be found. If the crisis is not dealt with seriously and collectively the consequences may touch everybody

'Supervision'

However, despite the encouraging words from key leaders, Czech Prime Minister Mirek Topolanek, whose country currently holds the EU's rotating presidency, voiced concern at what he saw as divisions between Europe's major economies.

"If I put it very tenderly, the divergence in opinions was rather big," the AFP news agency reported him saying as he headed back to Prague.
"It was obvious that the four countries representing the EU in the G20 [France, Germany, Britain, Italy] do not have the same opinion on a number of issues."

Mr Brown said there was a need to create an economy that is based on the "soundest principles", saying the world needed a "global new deal".

Leaders said there was a need for international institutions, including the International Monetary Fund, to play a greater role not just to help countries in financial trouble but to prevent countries from getting into such difficulties.

Mr Brown said leaders had agreed that the IMF needed access to at least $500bn (£348bn).

The comments in Berlin come amid ongoing volatility in world financial markets and uncertainty over the future of some of the world's key banks.

Ms Merkel said: "We are making a commitment that all financial markets, products, and participants - including hedge funds and rating agencies - are of course subject to supervision and regulation."

Details on such a plan need to be worked out before the meeting in London, she added.

Hedge funds, which typically attract wealthy private investors, have been criticised for their lack of transparency and oversight.
Bonuses

As well as greater supervision of all financial markets and instruments, leaders underlined the need to reassess the issue of pay at finance firms.

Mr Sarkozy added said people could "no longer tolerate the reward package system for traders and bankers".

There has been much criticism of bankers' bonuses, which have been high despite their bank's poor performance.

Different opinions
French, Italian, Spanish, Dutch, UK and German leaders are hoping to take a common approach at the London summit.

But analysts say reaching agreement among EU powers will not be easy.

Both Mr Topolanek and the European Commission have voiced concern at attempts by France, Italy and Spain to shelter their car industries from the effects of the downturn.

Mr Sarkozy has suggested that in order to secure government aid, French carmakers should move production out of their East European factories and back to France.

J.C. Penney and Lowe’s made headline how much the nation’s retail sector is feeling the blow of the economic downturn

2009-02-22T06:11:00.000-08:00

J.C. Penney said its fourth-quarter profit fell 51 percent as consumers curtailed spending. Sales at stores open at least a year, fell 10.8 percent.

The department store chain saw its profit plummet more than 50% in the fourth quarter as consumers held onto their wallets in what was a markedly less cheery holiday season for retailers. The company also issued a first-quarter forecast weaker than what analysts were predicting.

For the three months ended Jan. 31, the Plano, Texas-based retailer reported a net income of $211 million, or 95 cents a share, compared with a net income of $430 million, or $1.93 a share, during the same period a year ago.

Sales for the quarter came in at $5.76 billion -- a 9.8% drop from $6.39 billion a year earlier. J.C. Penney’s same-store sales, or sales in stores opened at least a year, fell 10.8% despite moves to battle light customer traffic.

The results, although grim, beat Thomson Reuters analysts’ per-share estimates of 92 cents and matched in revenue.

"Throughout the year, we took steps to significantly reduce our inventories and operating expenses in order to withstand the impact of the economic conditions. At the same time, we stepped up the style we offer and focused on effectively communicating the newness, excitement and value in our merchandise,” said J.C. Penney Chairman and CEO Myron E. Ullman III in a statement.

The company is projecting a first-quarter loss of 20 cents to 30 cents. Analysts polled by Thomson Reuters were expecting a loss of 19 cents, on average.

The retailer also said it would hold its annual meeting in New York on April 22 as opposed to in Plano, Texas, given the fact that many firms’ travel budgets have been snipped.
The nation’s No. 2 home-improvement chain posted worse-than-expected fourth-quarter earnings results and issued a full-year forecast that also fell short of Wall Street’s estimates.

For the three months ended Jan. 30, the Mooresville, N.C.-based retailer said it earned $162 million, or 11 cents a share -- a 60% decline from the $408 million, or 28 cents a share, it earned during the same period a year earlier.

The company said sales fell 4% to $9.98 billion and same-store sales fell 9.9%. Analysts polled by Thomson Reuters were expecting a profit of 12 cents per share on sales of nearly $10.1 billion.

"The economic pressures on consumers intensified in the fourth quarter, resulting in a further decline in consumer confidence and dramatic reductions in consumer spending," said Lowe’s Chairman and CEO Robert A. Niblock in a statement. "As a result, our comparable store sales for the quarter remained weak and fell at the low end of our expectations.”

The company said the “extreme promotional environment” driven by competition and cutbacks in consumer spending led the company to take more markdowns than expected, reducing its inventory, but cutting into its bottom line. The company also said it has taken steps to adjust its staffing needs in response to the “slowing” retail environment.

Going forward, the company said it expects full-year earnings of $1.04 to $1.20 a share -- a drop from the $1.27 analysts were expecting. The company said its revenue could decline as much as 2% or increase as much as 2%, and predicts same-store sales will slide between 4% and 8% for the year.

more......

J.C. Penney reported a large drop in fourth-quarter earnings as customers sharply cut spending on clothing and other items. The results beat Wall Street expectations, but the chain projected a wider first-quarter loss than analysts had predicted.

J.C. Penney said profit for the three-month period ending Jan. 31 fell 51 percent from the comparable period a year ago, to $211 million. Sales fell 10 percent, to $5.76 billion. For the whole fiscal year, profit fell 49 percent, to $567 million. Sales for the year fell 7 percent, to $18.5 billion.

Department stores have been among the hardest hit retailers in the recession as shoppers have focused on necessities. But Penney hasn't yet resorted to widescale layoffs -- unlike Macy's, which announced this month that it will cut 7,000 jobs, almost 4 percent of its workforce.

Lowe's Earnings Down 60 Percent
Lowe's said its fourth-quarter profit fell 60 percent, to $162 million from $408 million in the comparable period a year earlier, as the dismal housing market continued to weigh on results at the home-improvement chain. Revenue fell 4 percent, to $9.98 billion.

To cope with the worsening recession, Lowe's said it was further cutting back the number of stores it plans to open in 2009 and offered a profit forecast for the year that was short of Wall Street's expectations.

U.S. financial regulators will soon launch a series of "stress tests"

2009-02-21T21:09:00.000-08:00

U.S. financial regulators to determine which of the largest banks may need additional capital cushions if recession deepens.
largest U.S. banks should get bigger capital cushions in the event of a deeper recession, a person familiar with Obama administration plans said Saturday.
Banks are expected to receive additional information about the tests in the coming week from regulators.

The largest U.S. banks are "well capitalized" for current conditions, the source said, but the Obama administration wants to ensure that they can withstand a more severe economic climate and can play an important role in maintaining the flow of credit.
Initial plans for the stress tests were announced Feb. 10 as part of Treasury Secretary Timothy Geithner's bank stabilization plan, but the source Saturday for the first time linked the tests to additional government support for large banks. This person did not specify what form any extra capital cushion may take.

Little is known about the form of the stress tests, but the person described them as "consistent, forward looking and conservative."

The Obama administration on Friday tried to ease market fears that the government was poised to nationalize some large banks that are continuing to struggle with losses and a lack of confidence, notably Citigroup and Bank of America.

White House spokesman Robert Gibbs said Friday that "this administration continues to strongly believe that a privately held banking system is the correct way to go

Florida is slated to receive $12.2 billion of the $787 billion included in the American Recovery and Reinvestment Act over three years.

2009-02-21T05:59:00.000-08:00

Crist Presents Optimistic Budget
Gov. Charlie Crist on Friday outlined his proposed $66.5 billion budget, which includes $4.7 billion in federal stimulus dollars.

His recommendations include investments in education, workforce development and career training, transportation and energy conservation.

The governor said his proposed 2009-10 budget will create or retain 314,590 jobs.

proposals:

■$31.2 billion in funding for all phases of education, including almost $1.8 billion of federal stimulus funds.
■$8.9 billion for economic development projects that create or retain 314,590 jobs. These jobs are in addition to the 206,000 Florida jobs expected to be created by the $12.2 billion pumped into Florida’s economy by the American Recovery and Reinvestment Act of 2009 over three state fiscal years.
■$5.1 billion to build and maintain the roads, bridges and public transportation facilities, which Crist said would create or retain an estimated 142,800 jobs throughout the state. An additional $1.4 billion provided by the American Recovery and Reinvestment Act of 2009 will go toward shovel-ready projects that can be initiated within 180 days, creating or retaining an additional 24,200 jobs.
■$157.1 million for the Office of Tourism, Trade and Economic Development, which he said will create or retain 43,291 jobs.
■$4.9 billion to maintain support for Florida’s increasing prison population and continue programs to reduce recidivism, prevent juvenile crime and keep violent criminals off the streets.
■An increase of $45 million for cash assistance program and food stamps, which provides temporary assistance to families and their children, to ensure funds are available for families and children critically impacted during these challenging times.
■$294 million for the Medicaid for the Aged and Disabled Program to restore 12 months of Medicaid health care coverage for 13,000 elderly and disabled individuals.
■$470 million for the Medically Needy Program to restore 12 months of Medicaid health care coverage for 21,000 individuals who have extremely high medical bills in relation to their annual income.
■$52 million for increased enrollment in the KidCare program to support an additional 46,000 children.

The agreement, signed in November 2007, would allow the tribe to install Las Vegas-style slot machines and card games in their casinos in exchange for $375 million over the first three years of the agreement, and at least $100 million a year after that.

However, in July, the Florida Supreme Court ruled that Crist did not have the authority to sign the pact.

U.S. Economy May Suffer for ‘Long Time’

2009-02-20T22:53:00.000-08:00

The U.S. economy will suffer from the effects of the global financial crisis for “a long time” as a slowdown in demand spreads to other countries, former Federal Reserve Chairman Paul Volcker said.

“We’re in the middle of a kind of massive economic crisis,” Volcker, who heads President Barack Obama’s Economic Recovery Advisory Board, said today at a Columbia University conference in New York. “We’re going to hear the reverberations about this for a long time.”

Volcker characterized the downturn that started in December 2007 as “not like a typical recession in the U.S. or elsewhere.” He also cautioned that U.S. government and central bank efforts to revive credit markets should only be temporary to alleviate the risk of inflation.

Volcker said he is “shocked” by the international reach of the slowdown.

“The rest of the world has not held up,” making it harder for the U.S. to rely on strong export growth to emerge from its economic slump, he said.

“Industrial production in most countries is going down faster than in the United States,” Volcker said.

The U.S. economy will contract 2 percent this year, making it the deepest annual slump since 1946, according to a Bloomberg News survey of economists taken this month. Gross domestic product shrank at a 3.8 percent annual pace in the last three months of 2008, the Commerce Department said in January.

Volcker also discussed rising prices, saying even “a little inflation is bad.” The cost of living in the U.S. rose last month for the first time in six months as the consumer price index rose 0.3 percent, the Labor Department said today in Washington.

The Crisis Takes Hold
The first shoe to drop was the collapse in June 2007 of two hedge funds owned by Bear Stearns that had invested heavily in the subprime market. As the year went on, more banks found that securities they thought were safe were tainted with what came to be called toxic mortgages. At the same time, the rising number of foreclosures helped speed the fall of housing prices, and the number of prime mortgages in default began to increase.

The Federal Reserve took unprecedented steps to bolster Wall Street. But still the losses mounted, and in March 2008 the Fed staved off a Bear Stearns bankruptcy by assuming $30 billion in liabilities and engineering a sale to JPMorgan Chase for a price that was less than the worth of Bear’s Manhattan skyscraper.

Economic Concerns Send international Shares inferior

2009-02-20T07:52:00.000-08:00

10 Global Economic Challenges report focuses on the most critical issues facing America’s 44th president. From restoring financial stability to establishing a U.S. policy on climate change and engaging the emerging economic powers, the report contains timely analysis and recommendations by Brookings leading global economic experts.

A global sell-off set in motion by losses on Wall Street came back home on Friday morning, sending markets in New York sharply lower.

The Dow burrowed even lower, a day after it recorded at its lowest close in six years. Gold prices flirted with $1,000 an ounce. And markets from Hong Kong to London fell sharply on more glum economic data and a round of disappointing corporate news, including the bankruptcy filing of the automaker Saab.

“You can look at everybody’s trading screen and see nothing but red,” said Tim Smalls, head of United States stock trading at Execution LLC in Greenwich, Conn.

At 10:45 a.m., the Dow Jones industrial average was down 65 points to 7,402, while the broader Standard & Poor’s 500-stock index was off o.8 percent. The technology-heavy Nasdaq fell essentially unchanged.

Financial stocks slid the farthest, with shares of Bank of America falling below $3.35 a share and Citigroup sinking to less than $2.10 a share — a tenth of what it cost a year ago.

Analysts said that fear and uncertainty were driving trading once again. They said investors remained skeptical about the Obama administration’s plan to shore up the banking system and were uncertain that the $787 billion economic stimulus package would be able to prop up the floundering economy.

The Dow Jones Euro Stoxx 50 index, a benchmark for the euro region, was down 3.6 percent in late-afternoon trading, to its lowest level at least five years. The DAX in Frankfurt slid 3.6 percent as investors shed financial and industrial stocks, while the CAC 40 in France was down about 3 percent and FTSE 100 in London fell 2.4 percent.

“We thought the low points of last fall were behind us, but we seem to be in for more disappointments,” said Vincent Juvyns, a strategist at ING Investment in Brussels. “The markets have lost all sense of direction, which makes it hard to take a position.”

Jean-Claude Trichet, president of the European Central Bank, said Friday that markets were experiencing an “ongoing correction,” but would not put a timetable on when the crisis might lessen.

“We have to be very cautious in qualifying the duration,” Mr. Trichet told the European American Press Club.

The Labor Department reported that consumer prices had increased 0.3 percent in January, rising for the first time since July. The increase eased fears that the American economy was heading into a deflationary spiral of lower prices and lower economic growth, but consumer prices remained flat year-over-year, a sign of continuing pressure on prices as the recession deepens.

“It’s not terrible to see a break in the disinflationary spiral we’re in even if such a break is only temporary,” Dan Greenhaus, an analyst with the equity strategy group of Miller Tabak & Company, wrote in a note.

Corporate news across the region seemed to confirm fears.

Anglo American, the mining giant, was down nearly 16 percent by midday after announcing it would cut 19,000 jobs, or a tenth of its work force, and suspend dividend payments for 2008 as its business deteriorated on weak global demand.

In France, Compagnie de Saint-Gobain, which supplies construction materials, tumbled 16 percent after announcing it would seek to sell shares to raise 1.5 billion euros, or $1.9 billion, in capital, while confirming yet more job cuts.

And UBS, the Swiss bank, is facing more problems with prosecutors in Washington. A day after the bank agreed to pay $780 million to settle claims that it defrauded the Internal Revenue Service, the federal government went to court seeking the release the names of 52,000 wealthy clients. UBS shares fell more than 16 percent at midday, after rallying almost 5 percent Thursday on news of an initial settlement.

AXA, on of the largest insurers in Europe, was down nearly 14 percent in Paris after Standard & Poor’s downgraded its credit rating, citing uncertain earnings.

The Swedish automaker Saab filed for bankruptcy to seek protection from its creditors after General Motors said it would cut ties with the company after decades of losses.

“We’re at a stage in the economic cycle where we have to prepare for the worst,” Mr. Juvyns said. “Companies are firing to cut costs, since we face a contraction in G.D.P. for the first half of the year.”

Arnaud Cayla, a fund manager at Barclays Asset Management France in Paris, said that while most companies would survive the crisis, they would have to adjust to lower demand.

“We’re flirting with deflation,” Mr. Cayla said, “but it’s still too early to say.”

Discouraging economic news for the euro zone added to the slide. The purchasing managers’ index, which estimates business activity, showed the downturn accelerating in the first weeks of February in the 16 nations that share the euro. The index is based on a survey of purchasing managers by Markit Economics.

The composite index of activity in services and manufacturing slipped to 36.2 in February, from 38.3 in January, with services hit hardest. Any number below 50 indicates an economic contraction.

In Britain, the Council of Mortgage Lenders reported Friday that 40,000 people had lost their homes in 2008, an increase of 54 percent on a year earlier, and the number is expected to nearly double in 2009 to 75,000.

“The next trap for the financial markets is state debt,” Cayla said. “We’re concerned about the health of governments, and what their signatures mean.”

Asia saw a less dramatic sell-off, led by the Kospi index in South Korea, which fell 3.72 percent dragged down by financial and industrial stocks. In Japan, the Nikkei 225 slipped 1.6 percent, with equities in banks, retail and communications falling furthest. The Hang Seng in Hong Kong dropped 2.49 percent, with financials there also seeing the heaviest losses.

The top 10 global economic issues, as identified and ranked by Brookings Global, include:1
1.Restoring Financial Stability
With U.S. financial troubles at the center of the current global vortex, the U.S. has important obligations to strengthen the global financial system, including by enhancing financial regulation and diminishing reliance on foreign credit.

2.Setting the Right Green Agenda
Adele Morris and Peter WilcoxenFor the U.S., it is time to muster the political will to act on climate change at the national level while also working to forge international agreement so that markets and regulatory policy will provide a consistent set of incentives to wean the economy from carbon foundations.

3.Exercising Smart Power
Investing in the education, health, livelihoods, and the security of the world’s poorest not only makes Americans feel good about themselves but also makes the world feel good about America. It is critical to increase not only resources but also the impact of each dollar spent.

4.Reimagining Global Trade
Americans feel most secure about global engagement when they are well equipped to compete and have insurance against economic risks. This requires vigorously enforcing the trade rules and investing in economic competitiveness.

5.Navigating China’s Rise
On issues such as climate change, enforcement of trade rules and exchange rate adjustment, where the stakes are simply too high to ignore, America should look for cooperative mechanisms to advance its goals where possible but continue to press bilaterally with China and better deploy regional and international mechanisms where necessary.

6.Deciphering “Russia, Inc
Difficult as it may be to accomplish, America nonetheless has significant interests in alternately coaxing and goading a resurgent, resource nationalist Russia toward international norms and cooperation on energy, trade, financial integration and security more broadly.

7.Engaging an Emerging India
America has enormous interests in India’s successful integration into the global economy as the world’s most populous democracy engages in the task of lifting hundreds of millions out of poverty. America must look for areas of cooperation where possible and deepen bilateral engagement broadly in order to make progress on its agenda.

8.Revitalizing Ties to Latin America
by Mauricio Cárdenas and Leonardo Martinez-Diaz
America must become a stronger partner to its neighbors and engage on issues of mutual concern, including on energy, environmental protection, economic competitiveness and social policies.

9.Supporting Africa’s Growth Turnaround
America can become a stronger and steadier partner to Africa as it navigates economic challenges by supporting global standards for natural resource management, opening markets to African products, supporting vibrant private enterprises, supporting African efforts to enhance regional security and build resilience to climate change, and both increasing and improving the quality of development assistance.

10.Pursuing a Positive Agenda for the Middle East
America can build partnerships in the Middle East based on trust and mutual respect if it aligns its agenda on economic and political reform with the aspirations of the majority of the region’s people: the young who are striving for opportunity and global integration.

Switzerland's largest bank, pay $780 million US clients to resolve criminal fraud charges against it.

2009-02-20T06:06:00.000-08:00

UBS agrees on tax fraud settlement in US

The deal is to settle the claim that UBS helped wealthy American clients evade taxes. It could expose some UBS customers to US Internal Revenue Service scrutiny and law enforcement action.

Officials at the US Justice Department said UBS had entered what is known as a deferred prosecution agreement on charges of conspiring to defraud the US by impeding the IRS, the US tax collection agency.

They described it as one of the biggest settlements ever.
UBS shares drop 10 pct amid concern over US probe
Shares in UBS AG are down 10 percent amid concern about the impact of an ongoing tax evasion probe in the U.S.

The bank's share price fell to 11.50 Swiss francs in early trading on the Zurich exchange Friday.

Investors reacted to the news overnight that U.S. authorities want UBS to hand over the names of up to 52,000 American customers suspected of failing to declare all of their taxable assets.

On Wednesday, UBS announced it had reached an agreement to give up some 250 to 300 names to U.S. investigators in an unprecedented breach of Swiss banking privacy.
Swiss ready to pass UBS client
UBS is at the center of a high-profile U.S. investigation that alleges the Swiss bank helped rich Americans avoid paying taxes by hiding money away in undeclared Swiss bank accounts.

A combination of higher food and utility bills, falling house prices

2009-02-20T03:17:00.000-08:00

Many people have seen bills eat into their income
Households have less spare cash
Household finances have been squeezed by an "abrupt" change in circumstances in the past year, according to a survey for the Bank of England.

A combination of higher food and utility bills, falling house prices and scarcer credit have reduced household budgets and spending.

Nearly 2,500 households were interviewed for the survey in late September and early October.

Typically, they said they now had less spare cash either to spend or save.

"The typical household reported that the income it had available after meeting household bills had fallen over the past year and that it had saved less than it had expected," said the Bank.

Changing circumstances
The Bank's report said that, after a period of steady growth and low inflation, the last year had seen a sharp turnaround in the finances of British households.

More than half of those who took part in the survey had seen a decline in their available income after paying tax, debt repayments and utility bills.

A rise in mortgage costs for some borrowers earlier in the year, when they had come off fixed or discounted mortgage rates, had also played a part.

However, the financial situation of many households has changed since the survey was carried out in late September and early October.

About 40% of households have a mortgage and most of these will see their borrowing costs cut sharply because of the Bank of England's successive rate cuts in October, November and December.

These cuts have taken the official bank rate down from 5% to just 2%, with many economists expecting further reductions as the impending economic recession in the UK deepens.

£1.6 trillion debt
The Bank's survey reveals that total household debt in the UK has now reached £1.6 trillion, when mortgage debt is added to unsecured debt such as credit cards, overdrafts, hire purchase agreements and other personal loans.

And the survey has also found that more than 50% of all households now have some sort of unsecured debt.
The most exposed landlords were the 6% of landlords with high loan-to-value ratios on their main residence

However, the reluctance of banks and other lenders to extend much further credit, except at high rates of interest and to the most credit-worthy customers, is clearly contributing to the downturn in consumer spending.

In the survey, 16% of households said they were worried they might not be able to get any more credit, up from 12% who said this in 2007, and that this was causing them to defer their spending plans.

"Some households had been put off spending by tighter credit conditions, and more households were finding their debts to be a burden than in similar surveys carried out since the mid-1990s," the Bank said.

Banks can legally take from current accounts to cover credit card debts

2009-02-20T02:24:00.000-08:00

Banks are departure people not capable to pay mortgages by taking money from their current accounts to cover credit card and loan debts, a charity has claimed.
Citizens Advice is calling on banks to scrap the practice, which allows them to transfer funds without permission.

It says it has seen a 25% rise in the number of such cases in each of the past two years.

The British Bankers' Association says the onus is on customers to talk to their banks if they are in difficulty.

In most cases, companies can only force someone to pay a debt by taking them to court.

However, as BBC Radio 4's Money Box discovered, the Right of Set Off allows banks to legally transfer cash to pay credit card or loan arrears without account holders' permission.

Citizens Advice says there have been cases of people having benefit payments removed from accounts, leaving them unable to meet "priority debts" like mortgages and council tax.

The British Bankers' Association says cases where money has been removed "inappropriately" are regrettable but that banks take their responsibilities under the banking code seriously

Times Money Matters

2009-02-18T00:37:00.000-08:00

Money matters, and it has never mattered more than in the current economic climate as we all take a long hard look at our household balance sheets and batten down the hatches for what's likely to be a pretty turbulent year ahead.

If you are planning a spot of financial spring cleaning to recession proof your hard earned cash, then the Money Matters Roadshow is here to help.

A team of money experts - plus a smattering of BBC financial journalists - will be at Manchester's Trafford centre on Wednesday.

If you cannot get along in person then sit back and absorb the coverage across BBC TV, radio and online throughout the day.
"Like many pensioners I buy all my clothes from charity shops & buy yellow stickered reduced food"
Horace, Scotland

Japan's economy contracted by 3.3% in the last quarter of last year

2009-02-16T20:42:00.000-08:00

Japan downturn: Toyota next?
Toyota just reported big losses - $1.1 billion for the second half, their largest since using the dollar.
They're cutting operations over the globe, cutting salaries and bonuses.
Having the "Cosworth option" might be the saving grace for F1 next year, IMO.

Japan's economy in quarterly dive
People(JAPAN) had been saying for some time that GDP would be bad, so while the market didn't welcome the numbers there was no excessive reaction .
Japan's economy contracted by 3.3% in the last quarter of last year - its worst showing since the oil crisis of the 1970s, official figures show.

The contraction means the economy shrank at an annual pace of 12.7% during the October to December period.

Economic Minister Kaoru Yosano said Japan faced its worst economic crisis since the end of World War II.

The slowdown in the world's second-biggest economy is steeper than that being experienced in the US or Europe.

Japan has been hit particularly hard by falling global demand for its products.
Exports, particularly of electronics and cars, have slumped and production has been slashed.
Consumers have cut back too, alarmed by rising unemployment.

"This is the worst economic crisis in the post-war era. There is no doubt about it," Mr Yosano said at a news conference.

"The Japanese economy, whose growth is heavily dependent on exports of automobiles, machinery, and IT equipment, was literally battered" by the global downturn, he said.

Mild reaction

However, Japan's stock market largely brushed off the latest economic news.

The Nikkei share index lost 0.4%, while the broader Topix rose 0.7%.

"People had been saying for some time that GDP would be bad, so while the market didn't welcome the numbers there was no excessive reaction," said Hiroaki Osakabe at Chibagin Asset Management.

"The next quarter is likely to also be tough because consumption may well fall off."

Mr Yosano said the government would consider new stimulus measures to aid the economy.

"Japan alone won't be able to recover. The economy has no border. It is our responsibility to rebuild the domestic economy for other countries," he added.

Prime Minister Taro Aso is hampered in his response by a divided parliament and a fractious ruling party.

There were reports over the weekend that he is considering another stimulus package of government spending worth 20 trillion yen ($218bn; £152bn).

But the latest opinion poll has showed that fewer than 10% of people support the prime minister, who must call a general election by September.

European economies contracted in the fourth quarter of last year

2009-02-15T01:46:00.000-08:00

Europe hit by economic slowdown

The French economy minister has warned of tough times ahead
Germany is being punished for its heavy dependence on exports
European economies contracted in the fourth quarter of last year, with some countries registering the worst figures in decades, official data shows.

The eurozone economy shrank by 1.5% in the previous quarter and 1.2% on the year, Eurostat said.

Germany's economy shrank by 2.1% compared with the previous quarter, its worst quarterly performance since 1990.

France shrank by 1.2%, initial data shows, while Italy registered a drop of 1.8%, the steepest drop since 1980.
The data puts pressure on the European Central Bank to cut interest rates.

In the whole of 2008, the economy in the 15 countries using the euro grew by 0.7% against the previous year, Eurostat said. Slovakia joined the eurozone on 1 January 2009, making it a 16-country club.
The Dutch economy shrank 0.9% during the quarter while the Austrian economy eased by 0.2%, the first drop in nearly eight years. In the same quarter, Portugal's economy contracted by 2% on the previous quarter and 2.1% on the previous year.

"These are huge contractions in Europe, the largest in living memory in most cases," said Ken Wattret, economist at BNP Paribas.

Companies have cut investment and exports have dropped as the global recession has taken hold.

European companies hit by the slowdown include Air-France KLM, which reported a third-quarter operating loss on Friday, and Michelin, whose final-year profits fell as the crisis in the global car industry took its toll on the tyre maker.

The decline in demand for cars was further highlighted by data released on Friday.

The number of new cars sold in Europe in January was down 27% compared with January 2008, the European carmakers' association, Acea, said.

German gloom

The slowdown was the most dramatic in Germany, which registered the biggest fall since German reunification in 1990.
The 2.1% contraction was the third consecutive quarterly drop in Europe's biggest economy, according to the initial data from the Federal Statistics Office, worse than the 1.8% anticipated by analysts.

Year-on-year, the German economy shrank by 1.6%, after growing by 1.4% in the third quarter.

Many are now gloomy about the prospects for 2009.

"This shows things went downhill sharply at the end of the year," said Juergen Michels, an economist at Citigroup. "We'll likely head down again the first and second quarter."

"This number makes it plain that we're in a very serious recession - the most serious since World War Two. It's no surprise that exports and investment have tumbled," said Dirk Schumacher at Goldman Sachs, adding that the rise in inventories did not bode well for the first quarter.

The situation "can hardly get worse," said Carsten Brzeski at ING Financial Markets.

"The German industrial production has run out of steam with companies working only off their backlogs. Foreign demand has plummeted over the last months," he added.

Last month, the German government forecast that the economy would shrink by 2.25% this year.

France slowdown
The slowdown in the French economy was slightly worse than analyst expectations of a 1.1% drop.
The French economy expanded slightly in the third quarter, by 0.1%, which means that France has not officially entered a recession - which is defined as two consecutive quarters of contraction.

With consumer spending up by 0.5%, some analysts found cause for hope.

"Consumer spending has held up quite well so you can say there is still money out there to be spent and French households are spending it," Alexander Law, chief economist at Xerfi said.

Companies also reduced their inventories in the fourth quarter, shaving 0.9% off gross domestic product, a fact that could bode well for industrial production in the first quarter. With warehouses emptier, companies may increase production.

Many say that tough times lie ahead. "The first quarter will be difficult," Christine Lagarde, France's economy minister, said. "We will have a difficult year. "

The data increases pressure on the European Central Bank to cut rates. The bank cut the benchmark rate to 2% in January, the lowest in the bank's 10-year history and kept the rate unchanged in February. Its next decision is due on 5 March

Wall Street banks have taken billions of taxpayer dollars

2009-02-12T03:58:00.000-08:00

A number of Banks Want to go back Government Money..

Wall Street banks have taken billions of taxpayer dollars. Now some of them are starting to wonder if they should give the money back.

Even before the government announced its latest efforts to fix the troubled banking industry on Tuesday, executives at Goldman Sachs and Morgan Stanley said they wanted to repay the money quickly. Both banks received $10 billion under the first rescue plan last fall.
Paying back all those funds would be difficult in this tough economic environment. But banking executives worry that the government may intrude further into their businesses as long as they are beholden to Washington.
“We just think that operating our business without the government capital would be an easier thing to do,” said David A. Viniar, the chief financial officer of Goldman. “We’d be under less scrutiny, and under less pressure. Not that we’d be out of the public eye; we’re still going to be in the public eye.”

The issue is likely to draw close scrutiny on Wednesday, when executives from eight banks are scheduled to testify on Capitol Hill. The efforts to break free of government support reflects a growing trepidation among Wall Street’s largest players about their independence and the new rules that may be imposed on them because they accepted federal capital.
In recent weeks, the Obama administration has announced that banks will have to disclose more information about their spending and cap executive pay at $500,000. Several lawmakers have gone further with proposed measures about compensation for all bank employees as well as halting certain types of immigration visas for companies that received government money.
Industry groups say the new rules are unfair.
“The contract says that Congress can change the law, and we were obviously concerned,” said Scott Talbott, senior vice president for government affairs for the Financial Services Roundtable. “But we didn’t think they would tip the scales this far. The more of these retroactive rules they place on institutions, the more institutions will look for an exit strategy.”
But the banks are likely to find that escape is a distant hope, analysts said. The government required banks to replace taxpayer money with new equity — in the form of common stock or preferred shares — before any repayment. And the markets for raising capital are all but dead, especially for financial companies.
Banks are not allowed to repay the government money out of their earnings for three years, though some bank executives are privately saying they think the government may reverse that rule for banks if they start earning money again. After all, bank executives said, it may be beneficial for the government to show taxpayers that some banks are regaining their financial strength.
Still, it is unclear that it would make sense for banks to repay the government money, given the uncertain outlook for their businesses, analysts said. One chief executive of a major bank said last week that he feared returning the money first would leave his bank as “the only one in the water without shark repellent.”
And, in a market of quickly shifting fortunes, any bank that returned capital could find itself in need again months later. Bank of America, for instance, was among the companies that appeared to be in a stronger position last fall when regulators met with chiefs of the eight banks. But at the end of the year, as the outlook for its merger with Merrill Lynch soured, the bank returned to the government for a second round of assistance. Citigroup has also received a second bailout.
And government funds are cheap with interest payments of only 5 percent and a few percentage points more for related warrants. Banks are unlikely to find other parties that would offer them such low rates, analysts said.
“I don’t think anyone should be in a hurry to pay it back,” said Jeffery Harte, a banking analyst at Sandler O’Neill. “But if you could prove able to pay it back, especially when other institutions are coming back for a second or third helping, it would send a pretty strong message to the market.”
Many banks have also issued new debt in recent months backed by the government. The program, run by the Federal Deposit Insurance Corporation, has received far less attention than the capital injections, but it represents another subsidy to banks, which otherwise would have found issuing debt more expensive, or impossible. Banks that repay taxpayer money may still be beholden to the government if they issued these government-backed bonds.

residential property valuation firm said: U.S. home prices sank nearly 14 percent last year and show few signs of stabilizing

2009-02-11T08:01:00.000-08:00

U.S. home prices sank nearly 14 percent last year and show few signs of stabilizing, even though much of the gains posted during the housing boom have been erased.

The recession and foreclosures battered house prices in 2008, dragging down values by 13.8 percent nationally and down 19.1 percent from their 2006 peak, according to the IAS360 House Price Index from Integrated Asset Services.
"We're seeing house prices returning to pre-bubble levels and there are no signs of leveling off just yet," Dave McCarthy, president and chief executive of Integrated Asset Services, said in a statement.
Home prices sagged by 5.9 percent in 2007, after rising 1.4 percent in 2006, according to IAS.
Location "is still everything," he added, with the markets that soared the most during the record five-year housing spree now faring the worst.
All of the 10 hardest-hit counties from peak to trough are in California or Florida, based on IAS data.
The three hardest hit counties are all in California, with prices down 51 percent from their high in San Joaquin County, down 49 percent in Monterey County, and down 45 percent in Kern County.
At the U.S. Census region level, home prices fell most in the West and the South. In the West prices dropped 18.4 percent last year and are down more than 24 percent from the 2006 peak. In the South, prices skidded by 12 percent in 2008 and are off about 18 percent from their high.
The hardest hit metropolitan areas last year were San Francisco, San Diego and Miami. Prices fell 23.9 percent in San Francisco, 22.7 percent in San Diego and 20.8 percent in Miami. Within the San Francisco metro area, Contra Costa County tumbled 35.5 percent last year, bringing prices 42.2 percent below the peak.
Denver-based Integrated Asset Services tracks the monthly change in the median sales price of single-family homes in the United States.

U.S. to lay out diagram to sop up bad mortgage property

2009-02-10T05:58:00.000-08:00

U.S. Treasury Secretary Timothy Geithner will lay out a rescue plan on Tuesday that will rely on public and private funds to take $500 billion of bad assets off banks' books, sources said.
The plan would also extend a Federal Reserve program aimed at shoring up consumer lending to the troubled mortgage sector, allowing the U.S. central bank to extend up to $1 trillion in loans to holders of a wide variety of asset-backed securities, according to sources.
Details on Geithner's proposal for stabilizing a U.S. financial sector undermined by soaring losses on mortgage-related debts emerged following briefings Treasury officials provided for Capitol Hill lawmakers.
President Barack Obama told a news conference on Monday that cleaning up banks' balance sheets was a priority and didn't rule out the possibility that it will take more money than the $700 billion Congress already has approved to complete the job.
"We don't know yet whether we're going to need additional money or how much additional money we'll need until we see how successful we are at restoring a level of confidence in the marketplace," Obama said.
Clearly aware that shaky global financial markets are intently watching what steps Washington will take to right the world's largest economy, Obama called on Congress to speedily approve an economic stimulus package to complement the revamped bank-rescue proposals that Geithner was to unveil.
"If you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of," Obama said. "This is not your ordinary, run-of-the-mill recession, we are going through the worst economic crisis since the Great Depression."
Geithner will outline the Obama administration's plan to revamp a U.S. financial bailout program that his predecessor, Hank Paulson, persuaded Congress to approve last year. About half of that money has been committed to pump capital into banks and ailing U.S. automakers.
Before taking over Treasury, Geithner was president of the New York Federal Reserve Bank and worked closely with Paulson on the prior administration's rescue effort but acknowledged it was inadequate and unpopular.
"The spectacle of huge amounts of taxpayer money being provided to the same institutions that helped cause the crisis, with limited transparency and oversight, added to public distrust," Geithner said in remarks prepared for delivery when the new measures are released.
He pledged banks will go through "a carefully designed comprehensive stress test" in future to make sure their balance sheets are clean and they meet requirements for capital.
Banks will continue to receive capital injections but they will have to meet tough new rules that require them to disclose how the money they receive is leading to more lending.
Geithner will also expand a joint Treasury-Fed program currently aimed at stimulating consumer and small business loans by allowing use of mortgage-backed securities and private label mortgage securities as collateral, sources said.
The program currently allows the Fed to lend up to $200 billion dollars to holders of top-rated securities backed by credit car, education, auto and small business loans. That program would be expanded to $1 trillion, sources familiar with the plan said.
Treasury also is expected to announce $50 billion aimed at stemming home foreclosures, several sources said. On Monday the director of the White House National Economic Council, Lawrence Summers, said on CNN more measures to help the battered housing sector will be coming within about two weeks.
In recent days, as Treasury worked to finalize details of its rescue package, attention has shifted to how to draw in private-sector investment to help clean up balance sheets littered with growing numbers of non-performing assets.
Summers said the administration wants private investors to be more active in buying compromised mortgage assets that are clogging bank balance sheets.
RESTORING CREDIT
Soaring defaults on U.S. mortgages have led to deep losses at banks worldwide, leading them to cut off lending and undercutting the global economy. The United States has been stuck in a recession for more than a year, and appears on a steepening slope downward.
In effect, having a combination of public and private investment to take bad assets from banks would have the same impact as setting up a government-run "bad bank," an option that had been under consideration, and would be more cost-effective than a stand-alone bank.
"Government capital is a last resort, and wherever possible, we want to catalyze the private sector to take responsibility for a situation that in many ways was created in the private sector," Summers said on CNN.
An announcement on the bank plan had been set for Monday, but was pushed back so the administration could focus its efforts on pushing a huge economic stimulus bill through Congress. The Senate is set to vote on the stimulus proposals later on Tuesday.
Sources have said the administration is also working on a mortgage rescue program under which government-controlled mortgage enterprises Fannie Mae and Freddie Mac would ease payments for hundreds of thousands of borrowers and offer a model for Wall Street to do the same.

US senators be in agreement economy bill

2009-02-09T00:35:00.000-08:00

There have been a series of meetings to try to find a compromise position

The American people want us to work together - they don't want to see us dividing along partisan lines on the most serious crisis confronting our country

Senators in Washington say they have reached agreement on a huge economic stimulus package designed to revitalise the US economy.
Senior Democrats say they will back a plan worth $780bn (£534bn), instead of the $900bn sought by the president, in order to gain vital Republican support.
President Barack Obama denounced delays to the legislation, which mixes big spending plans and tax cuts.
The Senate is now due to hold a vote in the coming days.
President Obama has spoken of "an urgent and growing crisis" and said further Senate delays would be "inexcusable and irresponsible" and lead to "a catastrophe".
His comments came as the latest unemployment figures showed that the US had had its single worst month for job losses for 35 years.
Almost 600,000 people lost their jobs in January alone - figures Mr Obama described as devastating.

Rough water
President Obama is desperate to pass the package, the BBC's Adam Brookes in Washington says.

This is the president's first big legislative initiative since he took office, and it has hit some very rough water, our correspondent says.
The new $780bn plan is composed of 42% tax cuts and 58% new government spending, Democratic Senator John Kerry said, according to Reuters news agency.
Other details of the slimmed-down package are sketchy, but one Democrat told Reuters that the homebuyer tax credit and car tax credit were still in the bill.
The Democrats need to persuade two Republicans to vote in favour of the bill for it to gain the necessary 60 Senate votes.
Although Democrats hold a 58-41 majority, 60 votes are required to ensure the Republicans cannot block the bill with a filibuster.
Senate Finance Committee Chairman Max Baucus said that at least three or four Republicans would vote for the bill.
"The American people want us to work together," said Senator Susan Collins, a Republican who will vote in favour.
"They don't want to see us dividing along partisan lines on the most serious crisis confronting our country."
However, the Senate minority leader, Republican Senator Mitch McConnell, said that "most of us are deeply sceptical that this will work".
And his Republican colleague, John McCain, defeated by Mr Obama in last year's presidential election said: "You can call it a lot of things but bipartisan isn't one of them."
'Echo chamber'
Mr Obama described as "devastating" the news that nearly 600,000 Americans lost their jobs in January.
"The situation could not be more serious. These numbers demand action," he said.

'Echo chamber'
Mr Obama described as "devastating" the news that nearly 600,000 Americans lost their jobs in January.
"The situation could not be more serious. These numbers demand action," he said.

Mr Obama's remarks came as he unveiled a new board of economic advisers, chaired by Paul Volcker, former chairman of the Federal Reserve.
"I created this board to enlist voices that come from beyond the echo chamber of Washington DC," said Mr Obama, "and to ensure that no stone is unturned as we work to put people back to work and to get our economy moving."
Republicans and some centrist Democrats are keen to reduce the number of spending commitments in the bill, and without their support the bill may not have enough votes to pass in the Senate.
The House of Representatives approved its version of the package last week, worth $825bn, without any Republican support.
If the Senate gives its approval to the bill, the two different versions will then have to be reconciled in a joint House-Senate committee before facing a final vote.
President Obama has said he wants the passage of the bill to be completed by 16 February.

Are you in the US? Are you in favour of the stimulus bill? Is President Obama right to urge swift action on the measures? You can send us your comments

The Obama administration is about to face its first significant financial test.

2009-02-08T01:54:00.000-08:00

Treasury Secretary Tim Geithner is preparing to announce his comprehensive financial stability plan.

The long-awaited Obama administration plan to shore up the banking system is due Monday. Here's what the government should be doing.

Treasury Secretary Tim Geithner is expected to lay out the government's strategy for reviving the banking system in a speech Monday.
Since taking office last month, top Obama administration officials have promised to present a comprehensive plan to address the problems in the financial system, which has been struggling with losses on bad loans and souring mortgage-related securities.
Fixing the problems at the banks won't be simple or cheap. Economists say it will likely take more than the $350 billion remaining under the Troubled Asset Relief Program to fund the next round of federal programs.
One senior administration official told CNN the package being put together by Geithner and other top economic advisers to the President would "be an overhaul of the whole program."
Whatever shape the plan takes, it's crucial that officials reassure investors worried about the health of financial institutions and their capacity to extend credit to consumers and businesses.
Bank stocks have fallen sharply again this year, deepening a plunge that started in late 2007. Some fear that a plan the market deems insubstantial or ill-advised could lead to another leg down.
"We have to repair the banking system," said George Kaufman, an economics professor at Loyola University Chicago. "You have to do that first before you can address any other problems."
A number of options have been under discussion in Washington, notably a government-funded bad bank that would remove toxic assets from bank balance sheets as well as a taxpayer-funded insurance plan to cover losses on troubled bank investments.
Skepticism growing about bad bank idea
The bad bank idea has gotten the lion's share of the attention, with officials including Federal Deposit Insurance Corp. chief Sheila Bair speaking out in favor of a variation of the plan. Proponents say the nation's banks won't be able to lend aggressively and support economic growth until troubled assets like illiquid trading securities are removed from their balance sheets.
Recently, though, there has been some talk of a shift toward a program that focuses more on the asset guarantee approach.
Sen. Charles Schumer, D-N.Y., said earlier this week that the upfront cost of a bad bank approach -- projected by some observers to run into the trillions of dollars -- was among the factors leading legislators and administration officials to turn increasing attention to the guarantee concept. The government has already guaranteed some troubled assets held by Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500).
Whatever their merits, the bad bank and guarantee approaches share a common Achilles heel: They would commit hundreds of billions of additional taxpayer dollars at a time when Americans are wondering if aiding well-paid bank employees is the best use for their money.
Many taxpayers are up in arms about the gobs of money being made by employees of failing financial firms, despite President Obama's proposed new rules to cap compensation at banks requiring federal assistance.
Meanwhile, U.S. workers are losing their jobs at a sobering clip, and states and municipalities are cutting back on services as tax receipts plunge.
"The bad bank idea is just ridiculous," said Len Blum, a managing director at New York investment bank Westwood Capital. "The problem with these sorts of approaches is that for the government to help the institutions, it has to overpay -- which is bad for taxpayers and adds to this lack of transparency."
Having the government provide financing for private-sector purchases of troubled assets is another idea that may come into play.
This approach, in which private investors could commit funds and then borrow from the Fed or other government bodies to expand their buying power, could accomplish two important objectives. It could draw new capital into the markets, and help establish market prices for securities that have traded only infrequently and at deeply distressed prices in recent months.
One question mark hanging over this concept is how willing the banks will be to sell toxic assets at the market prices.
If the newly established market prices are below the prices at which the banks have marked the assets on their balance sheets, the banks could face more writedowns -- which could force the government to pour in even more capital.
Shouldn't some banks be allowed to fail?
Whatever the government does, there is a rising call to get taxpayers more than they got in return for the first round of TARP funding under former Treasury Secretary Henry Paulson.
"There has been a reticence on the part of the government to give out capital with appropriate restrictions," said Blum. "The problem with that approach is that it is bad for taxpayers and adds to the lack of transparency."
Estimates by the Congressional Budget Office and the Congressional Oversight Panel put the federal overpayments in the first half of TARP -- which focused on buying preferred stock from both troubled and healthy institutions -- in the range of $64 billion to $78 billion.
With questions about how taxpayer funds are being used growing, some observers say the best answer is to stop trying to prop up troubled institutions and instead resolve failing banks through the existing FDIC process - essentially letting banks fail and finding new buyers for them after the FDIC has taken them over.
The advantage to this approach, said Garett Jones, an economics professor at George Mason University in Fairfax, Va., is that it would help to spread the losses in the financial system to shareholders and bank creditors, instead of leaving the whole tab with taxpayers.
He said the government should force debt-for-equity swaps at institutions needing assistance. Existing shareholders would be wiped out and current creditors would give up some of their debt claims in exchange for ownership of the restructured firm.
In addition to being fairer, Jones said, swapping debt for equity would reduce the amount of debt weighing on the economy. That's a crucial concern at a time when the amount of domestic nonfinancial debt outstanding more than doubles gross domestic product, according to Ned Davis Research data - a ratio that's well above its long-run average.
"Why should taxpayers be bailing out firms when debtholders have plenty of skin in the game?" Jones said. "In the current bailout, what you're really doing is converting the debt of these problem banks to government debt -- and that's not what you need to do."

Very important Signs: Economic increase Looks Even Weaker

2009-02-07T21:41:00.000-08:00

The dramatic downturn gripping the global economy has breathed new life into old questions about how best to run our economic systems.
Politicians, business leaders and policymakers searched for solutions at this year's World Economic Forum in Davos.
Meanwhile, different debates were taking place at the "alternative" World Social Forum in Belem, Brazil.
There, an eclectic mix of some 100,000 campaigners, thinkers, and working people came to starkly different conclusions about the causes of the downturn, and how best to address it.
We asked four participants from around the globe to give us their opinions. Click on the links below to read their arguments.

New World Order

In recent weeks, the world has been politely standing by and watching how things play out with the fiscal stimulus and latest bank-bailout plans in Washington. Yes, there's been some grumbling overseas about "buy American" provisions in the stimulus bill, but for the most part, officials elsewhere don't want to step on the toes of a new President to whom they are favorably disposed. They also don't want to endanger legislation that they hope will help jump-start the global economy.

Just wait a couple of months, though. Politicians from Beijing to Berlin to Brasília see the current crisis as the product of a messed-up global financial infrastructure dominated by the U.S., and they will soon be pushing for big changes--whether Americans like them or not.
All this will begin to gel on April 2, when the newish international organization known as the G-20--the leaders of 19 of the world's biggest national economies, plus the European Union--meets in London. An unofficial meeting has already taken place, at the World Economic Forum in Davos, Switzerland, where G-20 officials (with the conspicuous exception of those from the U.S.) made speeches, conversed in the halls and gave a sense of the direction in which the world outside the U.S. wants to head. (Read TIME's special report on Davos 2009.)
The global discussion of the financial crisis is strikingly different from the one in the U.S. Here there's still something of a debate over whether the mess is the result of too much government interference in the housing market or too little government regulation of financial markets. In the rest of the world, that's no debate: inadequate and inconsistent financial regulation is uniformly blamed. What's more, a consensus seems to have emerged among the world's finance ministers and central-bank bosses that the chief underlying cause of the crisis was an unbalanced and out-of-control system of global capital flows in which some big-spender countries (namely the U.S.) ran up huge debts while big savers (China and India, for example) hoarded surpluses.
On the regulatory front, the path to a new global approach is pretty clear. Last spring the leaders of the G-7, a club of wealthy nations, agreed to create a "college of supervisors" to more closely coordinate regulation of multinational banks. The Group of Thirty, an influential organization of current and former central bankers and financial regulators, recommended in January that "systematically significant" financial institutions (those that are too big to fail) be identified in advance and subjected to higher capital requirements and tougher regulation. (See who's to blame for the financial crisis.)
Yet regulators around the world were already jointly setting bank-capital standards before the current crisis hit. A lot of good that did us. So there is also much talk about the need for a new architecture--"a new Bretton Woods" was a phrase that echoed around Davos--to rein in global financial flows.

Bretton Woods is the mountain resort in New Hampshire where in 1944 the Allied nations met--with the U.S. calling almost all the shots--to plan a postwar financial system. The Bretton Woods creations included the International Monetary Fund (IMF), the World Bank and a quarter-century of fixed exchange rates built around a U.S. dollar that was linked to gold. The fixed exchange rates and gold standard unraveled in the 1970s, and ever since we've had a system in which the IMF occasionally steps in to help countries in currency crises (usually imposing harsh terms in the process) but exercises no real control over the global financial system.

After the emerging-market currency collapses of the late 1990s, in which IMF aid wasn't much help, the lesson that emerging economies such as China and India took was that they needed to build up gigantic reserves of U.S. dollars to protect their currencies. To build those reserves, they ran big trade surpluses, which were in turn enabled mainly by record trade deficits in the U.S., which were in turn enabled by massive borrowing from around the world. It was an extremely unbalanced financial ballet, and it has now come crashing to the ground.

latest........On deck: foreign trade, federal budget, retail sales, business inventories, consumer sentiment, and some timely talk from key Fed officials

Last week’s smaller-than-expected 3.8% drop in real gross domestic product in the fourth quarter was hardly good news for economic growth in the first half of 2009. The reason is the split between very weak demand and an unexpected rise in business inventories. The upswing in inventories contributed 1.3 percentage points to economic growth, while economists had anticipated a subtraction.

The problem is that overall spending last quarter dropped at a 5.1% annual rate, led by declines of 3.5% in consumer spending and 19.1% in capital spending by businesses. That’s 80% of U.S. demand right there. That sudden dropoff in demand, in addition to a huge 19.8% plunge in exports, caught businesses by surprise. Companies had been trimming their inventories for four consecutive quarters, but last quarter they couldn't cut fast enough to prevent an unwanted buildup, and ratio of inventories to sales has spiked sharply higher across all business sectors. That portends a steep liquidation in the first quarter, which will likely extend into the second quarter.
The resulting cutbacks in output and employment will weigh heavily on GDP growth, especially in the first quarter. Economists are now shifting their views of the pattern of GDP declines this year, and most now expect the first quarter contraction to be even sharper than last quarter.
This week’s data will help to determine just how weak current-quarter growth will be. The Bureau of Economic Analysis, which assembles the GDP numbers, did not have December data on business inventories and foreign trade when it issued its initial estimate of fourth-quarter GDP. The week offers reports on both, which could result in a significant revision to last quarter’s top-line number. Plus, the impact of those two reports on the mix of fourth-quarter GDP could have implications for growth this quarter. In addition, the government will issue data on January retail sales, which will offer guidance on how much drag consumers are exerting on overall demand this quarter.
Also of key market interest this week, two top Federal Reserve officials will be speaking on Tuesday. Bill Dudley, in his first public appearance since taking over as President of the New York Fed from current Treasury Secretary Tim Geithner, will speak on Treasury Inflation Protected Securities (TIPS) at a conference in New York. His remarks will most likely include the subject of inflation. In addition, Fed Chairman Ben Bernanke will be testifying before Congress on the Federal Reserve’s program to stem the financial crisis.

World Leaders Wary of U.S. Economic actions

2009-02-02T07:15:00.000-08:00

This was supposed to be the year the United States came in from the cold at the annual gathering of world leaders here. But instead of receiving a warm embrace, American policies were rebuked again and again in rhetoric that recalled the anger of the Bush years — mainly aimed at what the world views as the new threat of protectionism by the United States.

Certainly, there is a deep reservoir of good will for President Obama and the change in direction he represents. But despite the pledges to encourage international trade and economic cooperation that accompanied the closing sessions of the gathering, the World Economic Forum, on Sunday, there were clear signs that deep divisions between the United States and the rest of the world remained.
“There is such a level of concern, despair and anxiety that as welcome as the new president is, no one is inclined to cut the U.S. much slack,” said Richard Haass, president of the Council on Foreign Relations.
Or as Niall Ferguson, the Harvard historian, put it, “If G.M. got a new C.E.O., does that mean people would suddenly want to buy their cars?”

The criticism came from the usual sources, like Prime Minister Vladimir V. Putin of Russia and Premier Wen Jiabao of China, who both criticized a long pattern of excessive consumption, risky borrowing and inadequate regulation in the United States.
But more significant, the brickbats also came from economic and political leaders of European allies like Germany and France.
Whether the issue was the recent bailout for the American auto industry or proposals favoring American steel producers in the stimulus package now being debated on Capitol Hill, foreign officials warned that any move toward protectionism would have serious consequences for Washington and the rest of the world.
“We must not allow market forces to be completely distorted,” Angela Merkel, the German chancellor, warned in a speech on Wednesday. “For instance, I am very wary of seeing subsidies injected into the U.S. auto industry. That could lead to distortion and protectionism.”
By the weekend, as word of the “Buy American” provision in the stimulus package to help the United States steel industry spread through Davos, the tone had become sharper.
“It’s extremely preoccupying that one of the first acts of the new Obama administration could be a measure that is clearly protectionist and a distortion of competition,” said Anne-Marie Idrac, the French trade minister, who tried to draw Pascal Lamy, director general of the World Trade Organization, into the battle.
Mr. Lamy, however, said the organization would only act if there has been a “breach of the rules.” “I am not that big cop,” he added.
For all the global affection for Mr. Obama, Washington sent a relatively low-profile contingent to Davos, with Valerie Jarrett, a White House adviser, serving as the administration’s headliner here.
Ms. Jarrett did not address the issue of protectionism directly in her brief speech on Thursday, preferring to stick with the big picture as well as Mr. Obama’s connection to Chicago, her hometown.
Instead, the task of defending American economic policy fell to attendees like Representative Brian Baird, a Democrat from Washington State, who has served in Congress for the last decade.
“The steel issue is vastly overplayed here,” he said. “Even Adam Smith himself said certain key industries deserved to have protection.”
Noting that his district is home to two steel plants — down from three a few years ago — he added, “Steel is one of those industries.”
He suggested that this was not the time to push free-trade dogma on American taxpayers already worried about surging levels of unemployment.
“If you want to kill the W.T.O., that would be the way to do it,” he said.
Davos has always stood for globalization, and the benefits of free trade are an article of faith here. But even Davos die-hards concede that national economic interests have come to the fore amid the global downturn, and voter support for easing trade barriers is at low ebb.
To be sure, for all the foreign criticism over the help for the Detroit automakers, European countries including France, Britain and Sweden have offered up billions in aid for local auto manufacturers. What’s more, France has long protected the French companies it calls “national champions” from the threat of foreign takeover while providing huge subsidies for its farmers.
But beyond the public sparring, many foreign officials are also concerned about how the United States government will pay for Mr. Obama’s proposed stimulus package, which could ultimately cost $1 trillion.
A binge of new borrowing by Washington could effectively crowd out other borrowers by pushing interest rates higher over the long term, and would be especially painful for developing countries that rely on foreign capital. Or, it could stoke inflation when the global economy eventually begins to recover.
Ernesto Zedillo, the former president of Mexico who helped steer his country through a financial crisis in 1994, said developing countries were already having a hard time finding the capital they needed without competing with increased borrowing by the United States. And his country does not have the option of printing money, he said, because the Mexican peso is not a reserve currency like the dollar.
Even the praise for Mr. Obama from other leaders was balanced by criticism of Mr. Bush and past United States policies. “He seems to be very keen to interact with other nations as equals, rather than talking down,” said Kgalema Motlanthe, the president of South Africa. “It is a breath of fresh air.”
But for all the complaining from abroad, no other economic power — not Europe, not Japan and not China — seems ready to step up and fill the role traditionally played by the United States.
“The irony of the situation,” said Mr. Haass, of the Council on Foreign Relations, “is that everyone is still looking to the U.S. for leadership to fix things or at least make things better.”

How is this a great investment plan?

2009-02-01T21:23:00.000-08:00

Diversifying won't totally protect you from losses, but it can boost your returns by limited your risk.

Spread your money around

Answer: There have always been a lot of misconceptions and erroneous expectations when it comes to the benefits of diversification.Back in the go-go '90s I remember having lunch with a financial planner who sarcastically referred to diversification as "di-worse-ification." His contention was that it made no sense to diversify into different asset classes. Stocks clearly offered the highest returns over long periods, so it was foolhardy for anyone investing for the long-term to put their money in anything but stocks. You were just lowering your potential return. Funny thing is, back then, this "hooray, hooray, stocks all the way" approach wasn't that uncommon.Today, many people are having second thoughts about diversification because they feel that diversifying didn't offer their portfolio the protection they thought it should. For example, all but a handful of Morningstar's 69 fund categories were down in 2008. So even if you spread your money around quite liberally, you still might have eked out only a paltry return or suffered significant losses last year.Looked at from these two vantage points, it's easy to see why you and others would question the value of diversifying. If it holds you back in bull markets and doesn't offer much shelter during bears, what's the point?In fact, there is a real benefit to diversifying. But in order to make reasonable investing choices and set a coherent investment strategy, it's important to understand what its advantages are, as opposed to what we might think they are or wish they were. Otherwise, you may be investing on the basis of false hopes, which is a good recipe for disappointment.What diversification can do for youThe first thing you should know is that it can't guarantee you the highest possible return. In fact, it guarantees you won't earn the highest possible return. By spreading your money around you assure that you will have at least some of your money in lagging investments, which will reduce your portfolio's potential return.By the same token, diversification can't totally immunize you from losses. To do that, you would have to do the opposite of diversifying -- i.e., plow all your money into the most secure investments, such as Treasury bills or short-term bank CDs.What diversification can do for you, though, is give you a shot at higher returns than you will get in the most secure investments while limiting your risk somewhat.Notice I said "somewhat." Fact is, if you want the value of your money to grow more than it will in T-bills and the like, you've got to invest in asset classes that have the potential for higher long-term returns, such as stocks and bonds. But those higher returns come with more risk. In the investment world, that risk can take several forms, but generally the riskier an investment, the more volatile it is, the more its value will jump around from year to year.You can't eliminate that risk. But by investing your money in a mix of secure and more volatile assets, you can reduce the potential downside in a given year. For example, if you'd had all your money in a diversified portfolio of U.S. stocks last year, you'd have lost just under 40%. If, on the other hand, you'd had 60% of your money in stocks, 30% in a broad bond index fund and 10% in cash last year, you would have lost roughly half that amount, or around 20%.(See'>http://www.blogger.com/post-create.g?blogID=7564789355139535583#Note">See editor's note.)That kind of cushion is important for a couple of reasons. For one thing, it makes you less likely to panic in a bad year and sell off riskier investments with higher long-term return potential at what may be the worst possible time. A less volatile portfolio is also less likely to take a devastating hit that may be difficult to recover from. That's an especially important consideration when you're dealing with 401(k)s or other retirement accounts and you're nearing retirement age or are already retired and withdrawing money from such accounts.So the key to getting the benefit of diversification is settling on a mix that's right for you.Ideally, your mix should consist of assets that don't all move in sync with each other or, to put it in investing terms, that aren't too highly correlated with each other.It's okay for gains in some investments to offset losses in others in some years. But on balance your gains should outweigh losses most years. And, while down years are inevitable with growth-oriented investments, whatever assets you're investing in should have a positive long-term return. Diversification isn't a magic formula that can turn recurring sizeable losses in your investments or your portfolio overall into long-term wealth.What diversification can't do for youBut as big an advocate as I am of diversifying among a variety of asset classes, I also feel that the concept has been stretched out of shape over the years, in some cases even beyond recognition.Specifically, I think the benefits of diversifying have been oversold by some advisers who seem intent on making themselves come off like investment wizards capable of creating all-upside-no-downside portfolios. But I'm wary of these supposedly more sophisticated portfolios.So I suggest keeping things simple. Start with a realistic sense of how much risk you can handle and then build a diversified portfolio of stocks, bonds and cash. If you want to get more fancy, you can throw in some foreign stock funds and maybe some REITs or real estate-related mutual funds. But don't go overboard. The more complicated your portfolio is and the more wide-flung your holdings, the more attention and care it will need.Finally, remember that to get the full benefit of diversifying you ought to rebalance periodically to restore your portfolio to its proper proportions.For guidance on how to divvy up your money given your goals and risk tolerance, you can use our asset allocator tool. And if you want to see how different combos of assets might perform, check out the asset allocator tool on T. Rowe Price's site.Of course, you can always take the other route you suggest and just buy CDs. But unless you have so much money that you can accumulate a large enough nest egg despite their low yields, I'm not sure that you can do this and also not worry.Editor's note: An earlier version of this story incorrectly stated that a theoretical portfolio of 60% stocks, 10% broad bond index fund and 10% cash would have lost around 20% last year. The correct example is 60% stocks, 30% broad bond index fund and 10% cash.

Private Equity Firm Buys Real Money Trade Website

2009-01-30T05:26:00.000-08:00

Even in these bad economic times the RMT business is still going strong. Considered a recession proof industry, money is still flowing strong in this market.
Santa Monica, CA (PRWEB) January 29, 2009 -- Web site MyMMOShop.com has been acquired by My MMO Inc. for $10 million. MyMMOShop.com sells in-game currency, for some of the most popular Massively Multiplayer Online Role Playing Games (MMORPGs) such as World of Warcraft Gold, Final Fantasy XI Gil and EverQuest II Platinum.

Considered the #3 Real Money Trading (RMT) site in overall sales, MyMMOShop.com is known for its focus on customer service. MyMMOShop.com's Customer Support Department is accessible 24 hours a day, 7 days a week via Live Chat. The company has tenacious privacy and anti-fraud initiatives in place, requiring voice authorization for every new order.

"MyMMOShop.com appealed to us because of its strong reputation for providing optimal customer service," says Hunter Crowell, My MMO Inc.'s Media Relations Agent. "That focus will continue with our purchase."

RMT in online gaming had suspect beginnings. Purchasing virtual currency rather than earning it by playing the games successfully seemed, at first, unfair to those who put in the actual playing time to earn the currency themselves. Beginners could often have unfairly large accounts when compared to veteran gamers. But it caught on. People began spending thousands of dollars to fund and equip their gaming characters. Using real world money to purchase in-game money got a further boost in validity when Sony created its own RMT site, Station Cash in 2008. Now a $2 billion industry in the U.S., RMT is rapidly growing. In fact, gaming may well be a recession proof industry.

"This is a risky time for any kind of traditional investing," says Crowell. "People are staying home more and choosing less expensive forms of entertainment, like playing video games."

Applying money trading basics to virtual economies yields tremendous growth potential, even in a volatile time. In-game currency is a highly desirable product with a pandemic customer base that is increasing at viral rates.

Technorati : Private Equity Firm, Real Money, Trade, Website, bank, business, money websites, moneynews, world, worldmoney

US President Barack Obama's $825bn (£576bn) economic stimulus package

2009-01-28T20:51:00.000-08:00

US House passes economic package

Passed by 244 votes to 188, no Republicans backed the plan, saying it was too expensive and would not work.
The Senate debates the plan next week, and it could face stiff opposition as the Democrats have a slimmer majority.
After the vote, Mr Obama urged members of Congress not to "drag our feet or allow the same partisan differences to get in our way".
The president has said his package, which he hopes to sign into law next month, would help create a favourable climate for American business to thrive.
The bill would cut taxes for people and businesses by $275bn, while pumping more than $540bn into a range of initiatives including road and bridge repair, increased unemployment benefits, investment in new technology and renovations to 10,000 schools.
Heated debate
Mr Obama has pledged to try to end partisan division in Washington, but the debate on how best to kick start the US economy has devolved into a bitter squabble along party lines, says the BBC's Richard Lister in Washington.

In a heated debate, a succession of Republicans in Congress have condemned the stimulus package as a wasteful government spending exercise that will do little to create jobs.
They promoted their own bill, focussing more on tax cuts, which they said would create more jobs for half the investment.
"Fast-acting tax relief will create more jobs in America than a lot of slow-moving government programmes," said the Republicans' House minority leader John Boehner.
But this was a battle they could not win in the House, where Democrats have a large majority.
It is slimmer in the Senate where Republicans could slow the bill's progress, but Democrats are confident they can get the measure through there, and they have set a target for mid-February to have the bill on Mr Obama's desk to be signed into law.
Failing to attract significant Republican support for the bill, our correspondent says, is a blow to Mr Obama's hopes of forging a new consensus in Washington, at this time of economic crisis.
Greater accountability
Mr Obama said earlier workers were looking for "bold and swift" action from leaders, and called on businesses to play their part in economic recovery by creating jobs in a "favourable climate" started by government.

"I am confident that we are going to get it passed," Mr Obama said.
The US "cannot afford inaction or delay", he said after meeting business leaders at the White House.
Laying the blame for the economic crisis partially on a "sense of irresponsibility" on Wall Street and the government in Washington DC, he said corporate America had to take responsibility for its workers, but that Washington needed to provide leadership with the stimulus plan.
The president has said most of the money in his package would be used "immediately", creating as many as 4m jobs - the vast majority in the private sector - and that there would be a greater measure of accountability.
Treasury Secretary Timothy Geithner, who was sworn in on Monday, has the task of trying to get the US economy back in shape.
Meanwhile, Mr Obama attended his first Pentagon session with the joint chiefs of staff on Wednesday, telling them the military had carried out its missions under enormous pressure, and pledging his support to the troops.
Mr Obama, who campaigned on a promise to end the war in Iraq responsibly and withdraw troops next year, said his administration faces tough decisions on Iraq and Afghanistan.

dear readers

Are you in the United States? Do you agree with President Obama's proposals? leave your comments and experiences ..

Where to secrete your cash now

2009-01-26T03:15:00.000-08:00

You're not going to find eye-popping interest rates, but there are lots of ways to earn modest returns -- with the priceless assurance that your balance won't drop.

You (and your savings) may have been bruised and bloodied by the stock market, but that's no reason to seek comfort by tucking your money under a mattress. Although Treasury bills are paying next to nothing, banks and brokerages are still offering safe alternatives that pay at least a little bit more -- nearly 4% -- are insured by the Federal Deposit Insurance Corp., and are backed by the full faith and credit of Uncle Sam.
Banks are particularly eager to cut you a deal. "They need deposits to boost capital and to have funds available to lend when markets loosen up," says Tom Brogan, director of retail banking practices at TowerGroup, a consulting firm.
You'll generally find the best terms at online banks, many of which are offshoots of traditional institutions. And take a good look at interest rates at community banks, which often offer incentives designed to retain current depositors as well as entice new ones. Your bank may have tiered rates -- the higher your balance, the more you earn -- which is a boon if you're moving a chunk of cash from the sale of stocks or mutual funds.
Certificates of deposit CD fans, rejoice. Interest rates are guaranteed, and the feds have temporarily increased insurance protection on bank deposits.
The FDIC raised its ceiling on deposits from $100,000 to $250,000 per depositor per bank in October. (The ceiling reverts to $100,000 on Jan. 1, 2010, so if you're thinking about depositing more than $100,000 in a CD that matures after Dec. 31, 2009, consider dividing the money among two or more banks instead.) CD maturities range from six months to five years. Some have no minimum-deposit requirement, and others require as much as $10,000 (a higher minimum does not ensure a better rate).

Despite the many recent mergers, there are still thousands of banks, so you want to be comfortable as a customer. Aaron Fine, a partner at Oliver Wyman, a financial-services strategy consulting firm, says you should find out how customer-friendly the bank's procedures are -- and, of course, make sure it is FDIC-insured. "If the Web site is cumbersome and it's difficult to make deposits, I wonder how hard it will be to take money out," says Fine. "If the process is fluid, transparent and easy to use, then I'm comfortable with it."
That said, the rate's the thing, and it pays to shop around. Yields on the highest-paying CDs range from 3.21% to 3.88%, depending on maturity (from one year to five years).

Parcel out your savings. Let's say you bailed out of the stock market, and now you're sitting on a pile of cash that exceeds the FDIC's expanded limits. To be fully covered, you could divide your money among a number of banks, but it takes a lot of time and effort to research banks and open accounts.
As an alternative, you could place as much as $50 million (honest!) through the Certificate of Deposit Account Registry Service program, and all of it would be FDIC-insured. This is how it works: You deposit your cash in one of 2,700 participating banks. The bank then parcels out the money to other banks in $100,000 chunks. The FDIC has issued an opinion that CDARS is a deposit-placement service, which means that all the money in the program is eligible for insurance. The original bank sets the interest rate and takes care of the paperwork, so you receive one consolidated statement. If you're investing $1 million or more, you should be able to negotiate a slightly higher rate than the ones that are advertised.

Build a CD ladder. Interest rates are generally low because the economy is weak and because people are flocking to safe investments, pushing down yields. But rates are likely to rise when the economy recovers. Two or three years from now, 3.88% might seem like an even-less-than-adequate return.
You can protect yourself by building a CD ladder -- that is, staggering the maturities of your CDs. If rates fall, you've locked in today's higher yields for some time; if short-term rates start to rise, you can take advantage of higher yields as your CDs mature.

Laddering your emergency fund

FYI: Banks with the highest rates in one category -- say, six-month CDs -- often show up as leaders in other CD maturities as well. Just be sure not to exceed the insurance limit at any one institution. (See "What if your bank fails?)
Or, as with the CDARS program, you could get help in selecting top-paying certificates. Some investment firms, such as T. Rowe Price and TD Ameritrade, will invest your money for you, although you may sacrifice some yield in return for the convenience.
To enroll in T. Rowe Price's Smart Ladder CDs, you fill out one application and deposit a minimum of $25,000, which is equally distributed among five CDs, with maturities from one to five years. Current rates are 1.35% to 2.7%; higher rates are available for larger deposits. When a CD matures, it is automatically reinvested in a five-year CD to rebuild the ladder.
One big advantage: CDs bought from brokerages may be redeemed without penalty before the term expires, although their values may fluctuate.

Economists: slump getting inferior

2009-01-26T00:29:00.000-08:00

Analysis at private-sector companies forecasts greater job losses and deterioration economic conditions in the months to come.

Economists expect an already deep recession to get even worse in 2009, according to a survey released Monday.
Companies will lay off more workers and hoard more cash during the next 12 months, according to the National Association for Business Economics survey, a quarterly take from a panel of economists at private-sector companies in various industries. A vast majority of the 105 economists polled believe the country's gross domestic product will continue to sink in 2009.
If business conditions indeed worsen during the year, they will be sinking from already historic lows. The survey's measures of consumer demand, profit margins and capital expenditures all hit their lowest-ever levels in January's edition of the 27-year old survey.
"NABE's January 2009 Industry Survey depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," said Sara Johnson, a NABE economist.
Nearly half - 47% - of surveyed economists said overall industry demand was falling, compared with 35% who said so in the October survey. Just 10% of respondents said profit margins were rising, compared with 52% who believe they are falling. And 38% of economists said capital expenses are falling, up from just 15% in October.
Credit conditions hurt businesses, according to the economists, as customers had less leverage to buy discretionary products. 78% of respondents said tightening credit conditions affected customers, and 52% said the credit crunch directly hurt businesses in their industries.
Pessimistic outlook on weak environment
With business conditions souring, the outlook for jobs has grown increasingly negative. 39% of economists believe their industries will lay off employees in the next six months, compared with 32% in October.
The forecast was particularly poor for the goods-producing sector, in which 69% of economists saw layoffs in the future, and no one believed the industry would be adding jobs. Service-sector economists were the most optimistic, with only 9% seeing layoffs and 29% saying their industry would be hiring in the next six months.
Companies will likely curtail spending in the coming months as well, according to the survey. 44% of the economists believed capital spending in their industries would fall off in the coming year, compared with just 16% who believed their businesses would increase spending.
Rising unemployment, tightening credit conditions and a difficult lending environment led economists to give a more pessimistic outlook on growth for 2009.
Just 22% believed the U.S. economy would expand this year, down from 62% who thought so in October. Although 26% now believe the economy will shrink less than 1% this year, 52% now think the economy will shrink by more than 1%, which no one predicted in October.

more....

Global outlook to be slashed - again

The International Monetary Fund (IMF) will cut its 2009 global growth forecast again, this time to between 1% and 1.5%, as economic conditions deteriorate further, an IMF official said on Sunday.
The IMF's latest forecast, made in November, was for growth of 2.2%.
"It will be revised to 1 to 1.5% in 2009, which is huge," Axel Bertuch-Samuels, deputy director of IMF's monetary and capital markets department, told Reuters on the sidelines of a conference in the United Arab Emirates.
"Global economic prospects have deteriorated in recent months, consumer and business confidence have dropped to levels that we have not seen in decades and activity too has dropped sharply," he said.
The 2009 year will be enormously challenging for the world's economy, he said.
In November, the IMF cut projections sharply for world growth in 2009 to 2.2%, down 0.8 percentage points from an October forecast, noting industrialised economies were headed for the first full-year contraction since World War Two.
An official release of updated IMF economic forecasts is expected on Wednesday, he said, and even forecasts for emerging markets like China and India will see downward revisions.

Virtual Worlds Invested $594 Million in 2008

2009-01-25T21:43:00.000-08:00

63 virtual world companies benefitted, but spending is down drastically from the $1.4 billion invested in 2007. Where did the money go?
A report released earlier this week from Virtual Worlds Management estimates that roughly $594 Million was invested in various virtual world companies throughout 2008. That's an impressive sum given the oppressive economic climate in the latter half of the year, but the numbers are way down from 2007's spending binge, where investors poured $1.4 billion into this space.
Where is this money going? Interestingly, only a fraction is going toward funding for large, triple-A worlds aimed at mature gamers. If you look at the complete breakdown at the bottom of the report, the majority of investments are aimed at smaller companies producing web-based games for kids and tweens. Investors are obviously hoping to see a lot of upside from a small company, as we've seen in the past with Club Penguin or Webkinz.
That's not to say that some of this money isn't going toward companies aimed at the core gamer. In Q2, Realtime worlds (creator of GameSpy favorite Crackdown) brought in $50 million to help fund its upcoming online game. That same quarter, Turbine (the developer behind The Lord of the Rings Online) finished up a round of financing with $40 million in order to fuel company growth.If you enjoy fan-made game movies, you'd be pleased to see that Machinima.com got a $3.85 million investment in Q4 of 2008, even as the economy was going haywire. Another interesting company to get financing in the turbulent Q4 was Metaplace, Raph Koster's experimental MMO platform where anyone can create their own virtual world.Digging down into where the money went, some unusual projects are uncovered. For instance, Trion Worlds received a $70 million investment in the third quarter. The company is working on a fantasy MMO as well as an unannounced project with the Sci-Fi Channel to simultaneously launch a new TV series and an associated virtual world. Could this be a game based off of the Battlestar Galactica prequel, Caprica, coming out in early 2010? We can only guess.Looking at the numbers, it's interesting to note that in 2007, a single property (Club Penguin) was purchased by Disney for $350 million, with another $350 million promised if the game hit projected growth targets. That single $700 million investment was more than the total of every virtual world investment in 2008!Times may be difficult for virtual world developers (employees of Cheyenne Mountain, developers of the Stargate Worlds game, haven't been paid for 69 days), but some investors still see potential in the marketplace even as the economic climate makes it harder and harder to fund new development.

Standard Life material about its Pension Sterling Fund was "misleading."

2009-01-25T07:45:00.000-08:00

Standard Life facts 'misleading'

A financial services lawyer says Standard Life material about its Pension Sterling Fund was "misleading."
He says the city regulator should be examining the fact sheets to consider if compensation should be paid.
Standard Life has already said it will compensate people who invested after it revalued the fund on 23 December.
But it insists "customer literature [showed] the fund was invested... in a range of short dated money market instruments."
Subprime involvement
However, documents seen by BBC Radio 4's Money Box programme show that in March 2008 a fact sheet issued by Standard Life showed 100% of the fund - sold as a safe harbour for pension money shortly before retirement - was in cash

And Standard Life has admitted that up to 40% of the fund is still held in what are called "mortgage backed securities" - the products which have been involved in the subprime banking crisis which has swept around the world.
Adam Samuel, a lawyer who advises companies on whether their product information conforms to regulations, which say it must be "clear, fair and not misleading" told Money Box the documents failed that test.
"There's a description of the asset type as being 100% in cash, which in the small print says could indicate some short term money market instruments.
"Mortgage backed securities tend to be over quite a long term so that's wrong.
"The documents are not clear, not fair and definitely misleading."
Due compensation?
His comments were made a week after Standard Life told Money Box there were no grounds to compensate its customers.

Three days later it said it would compensate those who invested after it revalued the fund downwards on 23 December, but before it made that information public on 14 January.
Adam Samuel says the documents show there is a case for taking the compensation back much further.
"The Financial Services Authority should be sitting down with Standard Life and going through documentation for each year and deciding whether their descriptions of the fund pass the clear, fair and not misleading test.
"In reality that may mean compensating everybody."
Standard Life response
Standard Life told the programme that the information provided to customers was not misleading and in a statement said:
"It has been detailed in our customer literature that the fund was invested not only in deposits but also in a range of short-dated money market instruments.
"As soon as sufficiently reliable information was available, the securities held in the fund were revalued.
"That led to a reduction in the unit price."
The company would not comment in writing on the suggestion that compensation should be extended.

Obama wants access to remaining bailout money

2009-01-10T06:57:00.000-08:00

Barack Obama's economic team is talking with the Bush administration about having Treasury Secretary Henry Paulson ask Congress within the next week for access to the $350 billion remaining in the financial bailout fund, officials on both sides said Friday.

A request by Paulson would allow Obama to begin tapping the fund — the last half of a $700 billion rescue package authorized by Congress in October — promptly after his Jan. 20 inauguration.

Obama's transition team also has asked Neel Kashkari, the head of the rescue program at the Treasury Department, to stay on for "a couple of weeks" under the new Obama administration to ensure a smooth transition, an Obama official said.

Paulson has said for a number of weeks that he has been having talks with the Obama team on when a request should be presented to Congress seeking the second $350 billion. He has said that the decision on timing has been left up to the incoming administration.

Eager to shift the course of the government's financial sector bailout fund, Obama and congressional Democrats want a more defined mission for the beleaguered $700 billion rescue program.

The House could act as early as next week on a new tack for the Troubled Asset Relief Program that would set tougher conditions on recipients of the money, including limits on executive pay, and require the Treasury Department to use some of the money to reduce mortgage foreclosures.

At the same time, Obama's selection for treasury secretary, Timothy Geithner, is broadening the program's goals, aiming to unfreeze credit for homeowners, consumers, small businesses and local governments.

Geithner and Obama's economic team are developing a "comprehensive set of investment principles" that would also embrace restrictions on how the money is spent, limits on executive compensation for fund recipients and a plan to address rising foreclosures, an Obama transition official said.

The changes come amid bipartisan criticism that the Bush administration's handling of the first $350 billion of the program has been unfocused, confusing and inconsistent. But the new approach also signals a significantly greater government intrusion into the workings of financial institutions than the Bush administration was willing to undertake.

The money so far has been used to support ailing companies such as insurance giant American International Group Inc. and automakers General Motors Corp. and Chrysler LLC. It also has pumped billions of dollars into banks in hopes of freeing up credit for loans. But critics have complained that the money has had few strings attached and has not been used effectively to address the nation's housing cris

2008-12-18T02:24:00.000-08:00

Wall Street surges on hopes credit market easing will help temper recession; Dow rises 400

2008-10-21T02:36:00.000-07:00

A rising wave of optimism lifted Wall Street Monday, propelling the Dow Jones industrials up more than 400 points on more signs of a reviving credit market and support from Federal Reserve Chairman Ben Bernanke for further steps to aid the economy. All the major indexes finished with gains of 3 percent or more.
Investors who had sold furiously in recent weeks in response to immobile credit markets became more optimistic as bank-to-bank lending rates eased further. There's also less demand for ultra-safe Treasury bills, another sign that the credit markets are gradually returning to a healthier state.
The improvement in lending rates helped temper concerns that tight credit will contribute to a prolonged recession, but Bernanke still warned that the economy is likely to be "weak for several quarters, and with some risk of a protracted slowdown."
But he also told the House Budget Committee that a fresh round of government measures might help ease the country's economic weakness. There were no details but the White House said it was open to ideas that Congress might put forth.

"The market liked what Bernanke had to say, and there were hints that he's leaving the door open for further moves in terms of rate cuts or economic stimulus," said Ryan Larson, head of equity trading at Voyageur Asset Management. "And, with credit easing in slow baby steps, the market has started to realize that this is going to be a process."

Wall Street was also sifting through the first of hundreds of earnings reports expected this week, seeking clues about future business conditions. Among those reporting, oilfield services provider Halliburton Co. topped estimates, and CEO Dave Lesar told investors and analysts in a conference call, "We expect that any major macroeconomic disruptions will ultimately correct themselves."
Trading was orderly for much of the day, but the final hour again saw frenetic activity, this time to the upside, with the Dow rising nearly 140 points in the last 25 minutes. The market's tone was clearly better than during the previous two weeks, when investors' heightened anxiety about credit markets and the economy sent stocks plunging. The relative calm in Friday's session, when the Dow fell 127, and Monday's trading, had more investors feeling confident that the worst of the market's losses was behind it.Still, with back-and-forth trading a hallmark during recoveries from plunges in the past, analysts and investors were also expecting that Wall Street would be subject to volatile price swings for some time.

"We don't have any sense if this kind of a run is sustainable," said Phil Orlando, chief equity market strategist at Federated Investors. "We're groping quite literally for a bottom right here, but I'm not going to discount that we won't retest lows over the next couple of weeks."
The Dow rose 413.21, or 4.67 percent, to 9,265.43. The blue chips' gain were in line with a 4.68 percent gain registered Thursday, when the Dow jumped 401 points.
The rally marked the Dow's 23rd triple-digit move in 26 sessions. Most sessions have brought losses, however, with 11 of the past 14 showing declines.
Broader indexes also rose sharply Monday. The Standard & Poor's 500 index jumped 44.85, or 4.77 percent, to 985.40. The Nasdaq composite index rose 58.74, or 3.43 percent, to 1,770.03.Todd Leone, managing director of equity trading at Cowen & Co., said many investors were feeling optimistic that credit is slowly becoming more available. He also believes that Bernanke's remarks, along with the fact earnings haven't been dismal, are helping markets move higher.The benchmark 10-year Treasury note rose. The yield, which moves opposite its price, fell to 3.87 percent from 3.93 percent late Friday.

"People are just getting comfortable with buying again," said Todd Leone, managing director of equity trading at Cowen & Co. "We still could see another big drop, but those big drops are going to get less and less."
Investors also received a bit more detail about how Treasury Secretary Henry Paulson plans to roll out a $250 billion plan to recapitalize banks. Paulson said the government will own shares in the banks that should be paid back with a reasonable return, and expects that the investment will eventually make money.

Money Earning Tutorials & Resources

2008-10-18T06:54:00.000-07:00

What's Affiliate Marketing? How do you turn your traffic into profit? Pay-per-Click vs. Pay-for-Performance? Pay-per-Click: the need for huge traffic? Pay-for-Performance Drives Results? How do large affiliate networks function? How / when do you get paid? Why is there a minimum amount policy? What if my revenue is below the minimum amount? How do you get a sponsor? A bit on rights & duties - How free are you?Earn Money Opportunities, Affiliate Marketing - Info + Tips, Search for one or more Sponsors for Your Web Site, Guide to Find the right Sponsors for Your Web Site, Tips for Beginning Webmasters, have a Business or Commercial Web Site? Here's an Excellent Opportunity for You, other Profitable and/or Advantageous Opportunities Available to You on our Web Site. The right sponsor(s) for Your Web Site - a Hot tip!

How to create a page that is: easy to make, beautiful, interesting, and profitable!E.g. add images and content royalty free to your pages and make money with them!

Earn Money Opportunities, Affiliate Marketing - Info + Tips, Search for one or more Sponsors for Your Web Site, Guide to Find the right Sponsors for Your Web Site, Tips for Beginning Webmasters, have a Business or Commercial Web Site? Here's an Excellent Opportunity for You, other Profitable and/or Advantageous Opportunities Available to You on our Web Site.

Free marketing resources for Webmasters and online entepreneurs. Free articles, free sales letters, free web-scripts, free promotion tools, etc.

Tutorial on advertisement and promotion related to making money through affiliate programs; also has a directory of affilate programs,

How to Make Money From Your Website

Now that you've created a website, how do you make money from it? There are at least two ways in which sites can make money:
1..Advertising Revenue
2..Selling Goods and Services
I shall deal with the second case, "Selling goods and services", in another article. In this article, I will address the issue of how your site can actually make money from advertising.

Making Money From Advertising
If you look at many websites, you will probably notice that there are banner advertisements displayed on most pages. If you are a newcomer to the scene, you might think that you must either be a company or that your site must be famous before you can get advertisers, just as it is the case in hardcopy publications.
In reality, anyone with a website can get advertisers. While it is true that if your site is well-known, you may get companies contacting you to offer to advertise on your site, you can get advertising revenue even if you are just starting out and your site is relatively unknown.
The way to do this is to join as an "affiliate" of various sites, either directly, or through an affiliate network. An affiliate network is simply an intermediary where you can select from a variety of advertisers.
Payment Schemes
Before joining any program, you should probably be aware of the different payment schemes available.
Pay Per Impression (CPM)
Here, you are paid according to the number of times the advertiser's banner is displayed on your site. The amount you earn is typically calculated based on the number of thousand impressions of the banner (impressions = number of times the banner is displayed), often abbreviated CPM (cost per thousand, with the M being the Latin numeral for thousand). That is, $5 CPM means that you get paid $5 for 1,000 displays of the banner. In general, the amount paid is usually small, but it is easy to earn since everytime a visitor loads the page, you earn. This is known as a "high conversion rate". Needless to say, this method will allow you to automatically earn more if your site attracts a lot of visitors.
Pay Per Click (PPC)
When you are paid per click, you are only paid when visitors click the advertiser's banner on your site. The amount paid is usually higher than the pay per impression scheme. Whether you get a high conversion rate here depends on the banner (whether it attracts people to click it), although in general, it has a higher conversion rate than the pay per sale method. A high traffic site will probably enjoy a higher click rate than a lower traffic site, although you will probably get better results if your banners are carefully selected to suit the target audience of your site.
Pay Per Sale or Lead
While you will probably get the highest payment rates with this method, it has the lowest conversion rate of the three schemes. You will only earn if your visitors click through the banner and either purchase an item from the advertiser or take some other prescribed action (eg, sign up for a service). Like the Pay Per Click method, you get much better results if you carefully select your advertisers to suit the target audience of your site.
In general, to avoid wasting resources in issuing cheques for very small amounts, advertisers will usually accrue the amount owing to you until it reaches a certain level (such as $25) before they pay you.
Where to Find Affiliate Programs
You can find a list of affiliate programs and affiliate networks on thefreecountry.com's Affiliate Program page at http://www.thefreecountry.com/webmaster/affiliate.shtml
To join an affiliate network or program, simply go to the site and complete their online application form. Some programs will give you instant approval while others require a human to check out your application before it is approved. Once it is approved, you'll be given some HTML code which you can cut and paste into your web page. Note that some affiliate networks and programs will not accept you unless you have your own domain name. If you are planning to earn from your site, you should seriously consider registering your own domain name.
How To Choose An Affiliate Program
How should you choose an affiliate program? My suggestion is not to choose a program according to the payment scheme, but rather according to the kind of people who are likely to visit your website. For example, if you are targeting parents on your site, links to affiliates with educational software, books and the like may generate more revenue than banners that link to web hosting companies. The most important rule of choosing an affiliate program is to know your target audience.
Another point to consider is whether you really want to join every single affiliate program that comes your way. Some studies suggest that sites that make the most money from affiliate programs are affiliates of only a small handful of programs. Furthermore, concentrating your advertisements from one network may allow you to be paid faster. If you advertise for hundreds of different affiliate networks on your site, you may wind up earning only (say) a few dollars per month from each network. If your advertiser's minimum payment amount is higher than what you can earn each month, it may take you a long time before you accrue enough to be paid.
On the other hand, that formula does not necessarily hold true for every site (or every page on your site, for that matter). For example, if your site has a particular theme, and an affiliate network only supports one or two suitable advertisers, you might want to sign up for a few affiliate networks so as to get a greater number of relevant advertisers. After all, advertisements that are relevant to your audience are more likely to be taken up than general advertisements. (What's the point of putting banners from only one affiliate if nobody is going to click them?)
Automated Context-Sensitive Advertising
One of the latest trends in website sponsorship is to sign up with an advertising network like Google AdSense The advertising network automatically checks your web page and determines the most relevant advertisement for the page. As a result, without much additional effort from you, you get advertisements targeted at the interests of your visitors. As mentioned earlier, targeted ads tend to result in better performance and returns.
Get Started
Advertising revenue is one of the most effortless way to earn money from your site. You merely have to put the banner there and wait for the money to roll in. (Well, okay, not quite. You will still need to have some visitors first before you can make anything.)
Why wait? If you already have a website, let it earn even while you sleep (literally). Every day you let your site "idle" without advertising is a day of lost opportunity.

Switzerland to take on $60 billion of UBS assets

2008-10-16T03:33:00.000-07:00

UBS and Credit Suisse Get Urgent Bailout Funds

As the financial crisis continued to roll through world markets despite massive bailouts, the two leading Swiss banks said Thursday they had secured emergency support totalling some $14.1 billion, either from the Swiss authorities or from outside investors including the Qatar Investment Authority.

At the same time, the Swiss National Bank said it had set up a fund to absorb toxic assets from the country’s biggest bank, UBS. The measures offered a sharp contrast to Switzerland’s previous appearance of aloofness from Europe’s government-sponsored rescue operations.
Jean-Pierre Roth, the president of the Swiss National Bank, said it was “preferable that we go ahead with this operation now, in an orderly fashion — despite the fact that the markets have regained a certain degree of optimism in the past few days — rather than at a later point under potentially more adverse conditions.”
He called the rescue “unprecedented with regards to the reasons for it.”
UBS said it would receive a direct injection of government money in the form of mandatory convertible notes worth some $5.3 billion while Credit Suisse, the second largest Swiss bank, said it had raised $8.8 billion from “a small group of major global investors” including the Qatari authorities, which already hold a significant stake. The government injection of funds into UBS could represent a 9percent stake in the bank, whose $44 billion writedowns related to toxic assets have been Europe’s worst.
Credit Suisse also reported a net third quarter loss of $1.3 billion after further writedowns. UBS reported third-quarter net income of $261 million.
The Swiss National Bank said it had created a fund that would enable UBS to transfer $60 billion worth of toxic assets from its balance sheet. UBS said the fund would be capitalized with $6 billion of equity capital provided by UBS and $54 billion from the Swiss National Bank.
UBS said in a statement: “With this transaction, UBS caps future potential losses from these assets, secures their long-term funding, reduces its risk-weighted assets and materially de-risks and reduces its balance sheet.”
The assets transferred into the new fund included $31 billion related to the United States sub-prime and other markets that included mortgage-based securities and securities backed by student loans.
“At completion of the transaction, UBS’s next exposure in these categories will be reduced to nearly zero,” the UBS statement said.
The UBS chief executive, Max Rohner, called the bailout a “definitive move” to accelerate risk reduction in “the extremely difficult market environment.”
For its part, the Swiss government said in separate statement that it was “confident that this package of measures will contribute to the lasting strengthening of the Swiss financial system.”
“The resulting stabilization is beneficial for overall economic development in Switzerland and is in the interests of the country as a whole,” the statement said.
Previously the Swiss authorities had seemed to be standing apart from the wave of bailouts among European countries who have pledged around $1.8 trillion to free up credit markets and support the continent’s banking system. But such is the size of the Swiss banking industry in relation to the overall economy that the Swiss might not have had the resources to bail out UBS and Credit Suisse if they ran into deep trouble.

MORE...

Switzerland gave UBS AG, the European bank with the biggest losses from the credit crisis, a $59.2 billion bailout and pushed Credit Suisse Group AG to raise funds, joining authorities around the world in shoring up banks.
UBS will get 6 billion Swiss francs ($5.2 billion) from the government and put as much as $60 billion of risky assets into a fund backed by the central bank, the Zurich-based company said. Credit Suisse Group AG raised 10 billion francs from investors including Qatar and Tel Aviv-based Koor Industries Ltd.
Switzerland is the last of the world's financial centers to pour cash into ailing financial institutions after losses on bad debts reached $647 billion globally and credit markets froze. The Swiss government plans to raise deposit guarantees and is ready to back the short- and medium-term interbank loans of the nation's banks, after countries across Europe took similar measures.
``At last the Swiss are doing something,'' said Peter Thorne, an analyst at Helvea in London. ``They risked getting left behind their European rivals and paying the price for slowness.''
UBS rose 40 centimes, or 2 percent, to 20.48 francs by 11:09 a.m. in Swiss trading after falling as much as 10 percent. The stock has declined 56 percent this year, compared with a 52 percent drop in the 69-company Bloomberg Europe Banks and Financial Services Index. Credit Suisse, which reported a third- quarter loss, rose 3.28 francs, or 7.2 percent, to 49.18 francs.
Government Stake
UBS will sell 6 billion francs in mandatory convertible notes to the government. After conversion, the Swiss government would own 9.3 percent in the bank, UBS said.
The Swiss National Bank, the country's central bank, will support the fund holding the risky assets with as much as $54 billion in loans, the government said. The SNB will receive interest on the loans and is entitled to a share in any profits.
UBS posted $44.2 billion of credit losses and writedowns on mortgage-related assets since the start of last year, the most by any bank in Europe, following a wrong-way bet on the U.S. housing market. The Swiss bank had already raised about $27 billion from investors this year to replenish capital.
The measures announced today will help the banks meet tighter capital rules that the Swiss Federal Banking Commission is planning to introduce, the regulator said, and reduce risky assets on UBS's balance sheet.
``This package of measures will contribute to the lasting strengthening of the Swiss financial system,'' the government said. ``The resulting stabilization is beneficial for overall economic development in Switzerland and is in the interests of the country as a whole.''
Losing Rich Clients
UBS will transfer about $31 billion in U.S. assets, including subprime and Alt-A securities, as well as about $18 billion in non-U.S. debt investments to the central bank fund in the fourth or first quarters. The bank also can transfer as much as $9 billion of additional holdings later, including up to $5 billion of auction-rate securities that UBS may buy back from clients.
The transactions will leave UBS with ``essentially zero'' risk related to U.S. subprime, Alt-A, prime, commercial real estate and mortgage-backed securities, as well as student loan- backed securities and reference-linked notes, Chief Executive Officer Marcel Rohner said on a conference call. The bank will still have $4.3 billion in risk related to bond insurers and $4.7 billion in loans pledged for leveraged buyouts, he said.
UBS, which reported third-quarter net income of 296 million francs today, is seeking to stem client defections at the world's largest private bank. Wealth management and business banking clients withdrew a net 49.3 billion francs in the third quarter, with all regions showing outflows.
Credit Suisse Loss
UBS will take a charge of about 4 billion francs in the fourth quarter from the transactions announced today, which will probably result in a net loss, Rohner said. He reiterated that UBS expects a profitable 2009.
Credit Suisse Chief Executive Officer Brady Dougan said the bank decided to raise money now to satisfy new capital rules for 2013 and avoid investors questioning its financial strength.
``Our view is that in these markets being in a position of unquestioned capital strength will be paramount,'' he said.
Credit Suisse reported a loss of 1.3 billion francs in the three months ending Sept. 30 after a pretax loss of 3.2 billion francs from its investment banking division. It had writedowns of 2.4 billion francs in leveraged finance and structured products.
Existing shareholders Qatar Holding LLC, Koor Industries Ltd. and Olayan Investments Company Establishment took part in the capital increase, Dougan said, declining to elaborate on the stakes each investor acquired.
The bank is selling 93 million treasury shares for about 3.2 billion francs, a bond that will convert into about 50 million new shares for about 1.7 billion francs, and a hybrid tier 1 bond for 5.5 billion francs.
The measures raise Credit Suisse's proforma Tier 1 capital ratio to about 13.7 percent as of Sept. 30, from the reported 10.4 percent. That means the bank exceeds Swiss regulator's increased capital requirements for 2013.

Shares in both banking giants fell sharply after the series of announcement by the banks and the authorities, matching early declines across Europe’s stock markets following the huge tumbles on Wall Street on Wednesday and in Asia on Thursday. But the Swiss banking shares recovered slightly and UBS shares posted a modest gain by mid-morning.

Easy Top 10 Ways to Earn Money!!

2008-10-15T09:30:00.000-07:00

The million-dollar question that confronts every would-be entrepreneur
is: What kind of business can I start? Here are the top ten ways to earn huge income while working at home.

You do not have to read many success stories before you start wishing you could work for yourself. The opportunity to be your own boss and the potential for high income are enough to entice us to venture on our own. But what can you do? What kind of business would you be suitable to start? We have compiled the top 10 ways to earn money at home, enough to be a full-time self-employed businessperson!

1// Antiques

The buying and selling of antiques has been and should continue to be a very productive business, financially, for those that do it. Here, you only need an extra room in the house, or the use of your garage -- and you have an office!
If you have a large home that has some antique furnishings, you might consider turning it into a showroom for your antique acquisitions and sales, providing you satisfy any local zoning regulations. The interest in antiques will survive into the foreseeable future. Many people choose to spend their free time on the weekends "antiquating" from place to place to try and pick up a few odds or ends and maybe a jewel or two. If you know anything about antiques, this may be a great opportunity for you.
For more information:
Priceless Guide to the Antique Business by Patrick Campbell How to Make Money in the Antiques-And-Collectibles Business .

2. Baking
Have you ever been told that you have a recipe that people would line up to get if they could? Ever had anyone tell you that you should be selling those cupcakes you make?
There are a number of success stories about people who have launched successful businesses by cooking at home and then marketing to local people first. You may specialize in on just one well-tried and tested food product; or you may innovate on a product that you created yourself and which has never been marketed before. Having perfected the recipe you then turn to packaging and marketing. Word of mouth on a good product may start to get restaurants or bakeries interested in acquiring your culinary masterpieces. Then you progress to selling them statewide and you're on your way to a profitable home-based business.

3. Bed-and-Breakfast Proprietors Have you ever stayed in a bed and breakfast and thought, "Hey, I can do this!" You probably went on vacation and simply chalked your thought up as one of those pipedreams one gets when they stay in a beautiful spot.
Don't toss that thought away! While it's not easy work as the hours can be long and it's usually a seven days per week business, it's often something that you can work into a daily schedule. After all, it's merely an extension of doing the housework for family, right? More and more Americans are taking after Europeans and opening their homes to travelers.
If you have an extra room or two since the kids moved out, you can start a bed and breakfast in your own place! Bed and breakfast popularity will continue as more and more vacationers and business travelers seek a different accommodation away from the predictability of the average hotel room. If they enjoy their stay, many become "repeat" customers, coming back to the same familiar surroundings time and again.
If you don't need to do any major renovations in the house to accommodate this type of establishment, you can be off and running with very little money invested, other than advertising and some new "guest room supplies". If your dream is to buy a bed and breakfast somewhere in a vacation paradise, there are probably houses for sale that will work for this purpose.

4. Childcare
Due to the financial pressures faced by many families today, parents work outside of the home to bring in enough income to pay daily living expenses. A single parent is obviously working but all too often, both members of a two-parent family are in the workforce. This creates a home-based opportunity. Children must be watched, all day if they're not in school, or, otherwise, for a brief time after school before the parents finish work for the day. Most parents want their children immersed in a more stimulating environment than is usual with the average babysitter. You can begin small at home, offering a more stimulating and educational environment setting for client children.
Caring for one additional child may not be that lucrative, but taking care of several children can certainly be a full-time, financially successful business. Often, taking care of several children is made somewhat easier as the youngsters often will play together. You can do this at home for only a small investment in basic equipment and toys for the kids in addition to the advertising of your business.

5. Computer Specialist
The advent of the computer age has changed the concept of self-employment. Having a computer at home has opened a number of opportunities for running your own business utilizing this equipment. Companies everywhere are "outsourcing" work that can be done by someone else on their computer, out of their own home.
If you are a whiz in computers, you may end up working as a consultant, writing programs for companies. If you are a beginner, you may find yourself able to obtain work as a writer, using your computer to produce copy that is easy to edit. You can also keep accounting and payroll records for companies on your computer's database.
Word processing software can be used not only for writers but for those that can offer secretarial services out of their house. Desktop publishing software can allow you to do newsletters for businesses and other organizations. If you can operate a computer, you can find work in the information age today.
Of course, the advent of the Web has opened a lot of business opportunities for the enterprising individuals. If you have skills in lay-outing and graphic design, you can be a website designer. Website designers earn significant amounts of money nowadays.

6. Gardening
If you like working in your garden each year , it's a definite possibility for home-based employment. Imagine clearing a little more space and growing more items that you can sell directly to the consumer. You can produce vegetables, bedding plants, bonzai tree, exotic plants, flower trees, herb, house plants, landscaping plants, orchids and many more.
Most produce stands will buy from you if your product is one of high quality. If you enjoy gardening, this could be your ticket! If you have some more land to use, do it! Plant what you can, when you can! Contact your local produce stands to ascertain their buying habits.
You can even inquire about your own produce stand if you have enough product. The more space you have on your land, the more likely you will be able to generate enough crops to run the business. People love homegrown vegetables. They just do not have the time or want to be bothered doing it themselves. That is your open door!
You can also engage in selling other gardening products and supplies such as compost, earthworms, herb boxes, beneficial bugs, or drip irrigation systems.

7. Importer and Distributor There are a substantial number of products manufactured in other countries that can be bought inexpensively and sold in your country at a profitable level. The Government and the formation of international trade organizations have made it easier to bring in other products from other countries.
This is a business easily operated out of the home, depending on the types of stock you're carrying. You may have to rent some storage space, but the capital required to start should essentially be limited to the products you're buying to sell here.
If you know the type of product you want to import and the market most likely to purchase your goods, you have great potential for a successful home-based business.

8. Interior Decorator Interior decorating is a business that will require you to be mobile, constantly meeting with customers. It offers flexible hours, a good variety of activities, and a very lucrative return. If you have a fascination for decorating a home, this could be your line of work. Many people do not know where to start when they are remodeling or buying a house for the first time.
If you have the knowledge of colors and patterns and what looks good together, plus the expertise of knowing where to get materials and furnishings, this can be a winning home-based business for you. To be able to decorate a room so that it conveys the mood that the homeowner wishes will be your goal. Strive for the skillful, personal touch in all you design.

9. Photographer
The sky is the limit here! Armed with your trusty camera and some good advertising, you can do weddings, models, family portraits, passports, student photos, local newspaper coverage; almost anything that requires a picture!
You can easily start this work, part-time, and work into full-time work based on your success and inclination. Not much equipment is necessary to get going as a camera off the store shelf can often do the trick today. Picking up a tripod and having a room sufficient for developing your pictures, and you're in business -- at home!

10. Sewing and Alterations

Many people love to sew. If you are one of them, consider offering this service out of your home. When someone buys a new outfit, it rarely fits perfectly, meaning some kind of alteration must be done.
People look long and hard to find reliable individuals to do their alterations. If you can sew, you are well on your way to opening the doors of this type of business.
For more information:The Business of Sewing : How to Start, Maintain & Achieve Success by Barbara Wright Sykes

what is money?

2008-10-14T09:37:00.001-07:00

Money is anything that is generally accepted as payment for goods and services and repayment of debts.[1] The main uses of money are as a medium of exchange, a unit of account, and a store of value.[2] Some authors explicitly require money to be a standard of deferred payment.[3]
The term "price system" is sometimes used to refer to methods using commodity valuation or money accounting systems.
The word "money" is believed to originate from a temple of Hera, located on Capitoline, one of Rome's seven hills. In the ancient world Hera was often associated with money. The temple of Juno Moneta at Rome was the place where the mint of Ancient Rome was located.The name "Juno" may derive from the Etruscan goddess Uni (which means "the one", "unique", "unit", "union", "united") and "Moneta" either from the Latin word "monere" (remind, warn, or instruct) or the Greek word "moneres" (alone, unique).

what is money?

2008-10-14T09:37:00.000-07:00